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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.    )

GRAPHIC   Filed by the Registrant   ¨   Filed by a Party other than the Registrant

 

    Check the appropriate box:    
 
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    GRAPHIC       Definitive Proxy Statement    
 
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    ¨       Soliciting Material Under Rule 14a-12    
 

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DEAR FELLOW U. S. STEEL STOCKHOLDERS:

On behalf of the Board of Directors, thank you for your investment in U. S. Steel and the trust you have placed in us to oversee your interests in our corporation. 2019 was a turning point year for U. S. Steel. We made significant progress to advance our strategy of becoming a "best of both" world competitive company. We maintained focus on executing this strategy even as market conditions turned against us. Thanks to the engagement, dedication and hard work of our employees, we remain focused on improving our business by investing in new technologies, our assets and our people.

But, this year we did more than take steps to improve our business – we took actions to fundamentally change our business model so we are better positioned to respond to market conditions that are outside our control. We remain steadfast in our commitment to deliver high quality products and service to our customers and to deliver long-term value to our stockholders by pursuing the right corporate strategy, prudent risk management, effective corporate governance, and attracting and retaining high-performing talent.

The Board of Directors is constructively engaged with management in our overall strategy, business priorities and opportunities to create long-term stockholder value. This past year we welcomed John Faraci and Michael McGarry to our Board – both bring diverse professional expertise that aligns with our corporate strategy and business needs. The Board is also pleased to recommend Jeh Johnson's nomination this year to add expertise in risk management, cybersecurity oversight and public policy.

Executing our "Best of Both" Strategy to Build a World Competitive Company

U. S. Steel is uniquely positioning itself to deliver superior products to our customers by uniting the most advantageous elements of the integrated and mini mill steel making technologies. We took many steps forward in our "best of both" strategy, but none more important than the announcement of a $1.5 billion investment in advanced endless casting and rolling technology at our Mon Valley Works and our minority investment in Big River Steel, which operates the most advanced mini mill and first LEED certified steel mill in North America. Successful execution of these two actions (including ultimately acquiring full ownership of Big River Steel), along with our previously announced investments to upgrade our Gary Works hot strip mill, will establish U. S. Steel as an industry leader in sustainable steel solutions. We are purposeful and deliberate on our path to make the investments needed to become the best customer-focused steel company.

Dedication to Safety and Environmental Stewardship

Over the past year, we continued our outstanding safety performance and built on our best in class safety program. Last year we significantly outperformed all peer industry benchmarks, including the Bureau of Labor Statistics and the American Iron and Steel Institute, and set a company record for best Days Away From Work performance. We will remain vigilant to continue the outstanding progress we see in our safety record.

We made significant environmental improvements in 2019. As a demonstration of our commitment to environmental stewardship, we announced a target to reduce greenhouse gas emissions intensity by 20% by 2030 compared to a 2018 baseline. This bold goal aligns with our strategy to focus more technology investments on sustainable development and sets us apart as a leader in the steel industry.

Investing in our Workforce and Communities

We are making progress in our continued efforts to facilitate a more inclusive and diverse culture. In 2019 we announced a series of enhanced and industry-leading inclusive employee benefits as part of our pursuit to be a workplace of choice for talented employees. The Human Rights Campaign® Corporate Equality Index recognized these efforts and awarded U. S. Steel a perfect "100" rating for the first time in company history. We believe our business thrives when we are engaged and involved in the communities where we make steel. This year we intensified this effort, including entering into a partnership with the NFL's Pittsburgh Steelers to bring STEM education resources to local schools surrounding our Mon Valley Works. We know that commitment to our employees and the communities where we live and work is essential to strengthen one of our greatest strategic assets – our people.

Your Vote Matters

I encourage you to read the accompanying proxy statement for more information about U. S. Steel and vote your shares on the proposals discussed in line with the recommendations made by our Board of Directors. Your support is important to the future of our corporation. In closing, thank you for your interest in U. S. Steel. As we look toward the future, we know that the actions we are taking now will make U. S. Steel better for our many stakeholders, including our customers, suppliers, employees, communities and all of you, our stockholders. Our commitment to creating real, sustainable value for you is as strong as the products we make every day. Now let's get back to work – safely building a more secure future for all our stakeholders.

    Sincerely,

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David B. Burritt

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LOGO

LOGO

U. S. Steel Tower I 600 Grant Street I Pittsburgh, PA 15219

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

When: Tuesday, April 28, 2020, 8:00 a.m. Eastern Time

Where: U. S. Steel Tower, 600 Grant Street, 16th Floor, Pittsburgh, PA 15219

    Items of Business:
   


 

Stockholders are being asked to vote on the following proposals:



 
             
  Proposal 1: To elect thirteen directors nominated by our Board of Directors    
           
    Proposal 2: To consider and act on an advisory vote regarding the approval of compensation paid to certain executive officers    
             
  Proposal 3: To ratify the appointment of PricewaterhouseCoopers LLP as the Corporation's independent public registered accounting firm    
           
     
    Proposal 4: To approve the Amended and Restated 2016 Omnibus Incentive Compensation Plan, which is being amended to request additional shares    
             

Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting of Stockholders to be held on Tuesday, April 28, 2020: our Proxy Statement and 2019 Annual Report are available free of charge on our website at ussteel.com/investors/ reports-filings or www.proxyvote.com.

How to Vote: Your Vote Matters

 
   
     
GRAPHIC     ONLINE   GRAPHIC     BY MAIL
Visit www.proxyvote.com and use the control number that appears on your proxy card when you access the webpage.   Complete and sign the proxy card and return it in the enclosed postage pre-paid envelope.
     
GRAPHIC     TELEPHONE   GRAPHIC     IN PERSON

If your shares are held in the name of a broker, bank or other nominees, follow the telephone voting instructions provided on your voting instruction card. If your shares are registered in your name, call 1-800-690-6903 and follow the telephone voting instructions. You will need the control number that appears on your proxy.

 

You may attend the annual meeting in person and vote by ballot. Admission to the Annual Meeting will be limited to persons who are listed on United States Steel Corporation's records as stockholders or have proof of beneficial ownership as of March 2, 2020 (the "record date").

This proxy statement is provided in connection with a solicitation of proxies by the Board of Directors of United States Steel Corporation (the "Board") to be used at the Annual Meeting of Stockholders to be held on Tuesday, April 28, 2020 at 8:00 a.m., Eastern Time, and at any adjournment or postponement thereof (the "Annual Meeting"). This proxy statement is first being provided to our stockholders on or about March 13, 2020.

Your vote is important and you are encouraged to vote promptly whether or not you plan to attend the 2020 Annual Meeting of Stockholders.

BY ORDER OF THE BOARD OF DIRECTORS

GRAPHIC


Duane D. Holloway
Senior Vice President, General Counsel, Chief Ethics &
Compliance Officer and Corporate Secretary
March 13, 2020


Table of Contents

LOGO

PROXY STATEMENT TABLE OF CONTENTS

PROXY SUMMARY   ii

PROPOSAL 1: ELECTION OF DIRECTORS

 

1

CORPORATE GOVERNANCE

 

10

U. S. STEEL'S SUSTAINABILITY FRAMEWORK

 

18

DIRECTOR COMPENSATION

 

20

COMMUNICATIONS FROM STOCKHOLDERS AND INTERESTED PARTIES

 

21

POLICY WITH RESPECT TO RELATED PERSON TRANSACTIONS

 

21

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

23

COMPENSATION & ORGANIZATION COMMITTEE REPORT

 

23

COMPENSATION DISCUSSION AND ANALYSIS

 

24

EXECUTIVE COMPENSATION TABLES

 

45

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

53

CEO PAY RATIO

 

61

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

62

AUDIT FEES   63

AUDIT COMMITTEE REPORT

 

63

PROPOSAL 4: APPROVAL OF AMENDED AND RESTATED 2016 OMNIBUS INCENTIVE COMPENSATION PLAN

 

64

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

 

71

DELINQUENT SECTION 16(A) REPORTS

 

72

CERTAIN LEGAL MATTERS

 

72

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

72

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

73

APPENDIX A – USE OF NON-GAAP FINANCIAL MEASURES

 

A-1

APPENDIX B – DEFINITIONS OF COMPENSATION METRICS

 

B-1

APPENDIX C – AMENDED AND RESTATED 2016 OMNIBUS INCENTIVE COMPENSATION PLAN

 

C-1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains information that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words "believe," "expect," "intend," "estimate," "anticipate," "project," "target," "forecast," "aim," "should," "will" and similar expressions or by using future dates in connection with any discussion of, among other things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Corporation's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Corporation's control. It is possible that the Corporation's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Corporation's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to the risks and uncertainties described in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, and those described from time to time in our future reports filed with the Securities and Exchange Commission. References to "we," "us," "our," the "Corporation," and "U. S. Steel," refer to United States Steel Corporation and its consolidated subsidiaries.

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PROXY SUMMARY

ABOUT U. S. STEEL

United States Steel Corporation is an integrated steel producer of flat-rolled and tubular products with major production operations in the United States and Europe. U. S. Steel has annual raw steel production capability of 22.0 million net tons, and supplies customers throughout the world.

Flat-rolled

     

Operations: Manufacturer of flat rolled steel products with vertically integrated iron ore and coke production.

   

      End Markets: Automotive, appliances, containers, construction, electrical, packaging, industrial equipment, service centers, and converters    

Tubular

     

Operations: Manufacturer of welded and seamless tubular products, as well as premium and semi-premium connections. Products include Oil Country Tubular Goods (OCTG) and line pipe.

   

      End Markets: Energy markets and construction    

Europe

     

Operations: Manufacturer of flat rolled steel products with vertically integrated coke production.

   

      End Markets: Automotive, appliances, electrical, packaging, containers, construction, service centers and conversion    

EXECUTING OUR STRATEGY TO CREATE LONG-TERM STOCKHOLDER VALUE

Our strategy is to create long-term stockholder value by pursuing a business model that is resilient to market volatility and is profitable through the business cycle. We have defined this approach as our "best of both" model, which combines the capability advantages of integrated mills with the flexibility and cost benefits of mini mills.

Competitive assets with distinct advantages deploying fit for purpose processes

Long-term cash flow generation through higher earnings and lower sustaining capex

Variable cost structure that drives through cycle cash generation

We took significant steps in 2019 to execute on this strategic vision and transform our business model. In 2019, we announced a series of cornerstone investments that form the foundation of our "best of both" strategy, including:

Announcing a $1.5 billion investment in our Mon Valley Works facility to build a world class endless casting and rolling line

Completing the acquisition of a minority ownership interest in Big River Steel, North America's first LEED certified mini mill, with an option to purchase the remaining ownership interests within four years

Restarting the construction of an electric arc furnace at our Fairfield Works facility, which will enable efficient self-production of rounds for our seamless tubular products

Investment of nearly $500 million in the hot strip mill at our Gary Works facility to position it as a competitively advantaged asset that delivers better customer value

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Began investment in a new dynamo line for our European operations that will enable production of sophisticated silicon grades of non-grain oriented electrical steels to support increased demand in vehicles and generators

These investments build on the important revitalization efforts that we began in 2017 and, once complete, will significantly improve our operating performance and transform our ability to be flexible, efficient and profitable even in the face of market headwinds. These investments establish a new foundation to drive future profitable growth and ultimately will center our business around three core market-leading, differentiated and technologically advanced North American Flat-rolled assets. Our future footprint will provide our customers with the sustainable state-of-the-art steel solutions they need to solve their most challenging problems. From light weighting our vehicles to protecting our sources of energy, we are truly transforming the capabilities we have to enhance how and what we sell to our customers.

 

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PROXY SUMMARY


2019 PERFORMANCE AT A GLANCE

The continued focus of our executive team and employees on our long-term strategic goals of transforming our business by investing in advanced technology, optimizing our balance sheet to support our strategy, enhancing operating efficiency and reliability, and ensuring we have a talented and diverse workforce to lead and execute our business plans, was evidenced by many achievements in 2019, and we strive for greater achievement in the year ahead.

Record Setting Safety Performance     All-time best days away from work (DAFW) safety performance

 

 

o

OSHA DAFW rate of 0.10, which is seven times better than the industry average reported by the U.S. Bureau of Labor Statistics (BLS)

 

 

o

U. S. Steel's Tubular Operations and U. S. Steel Košice each completed the year with zero DAFW cases



 


 

Improved Total OSHA Recordable injury rate, which was nearly three times better than the BLS industry average of 2.7


 


 

Best contractor DAFW safety performance since 2009 (when measurement began)


 


 

Longest fatality-free streak since measurement began

Executing Against our Strategic Priorities

 


 

Acquired 49.9% ownership stake in Big River Steel, the world's first LEED certified mini mill, for approximately $700 million

 

 


 

Announced $1.5 billion investment to construct a new endless casting and rolling line at lowest cost mill to increase capability for our customers

 

 


 

Achieved project milestones for construction of electric arc furnace at our Tubular facility, expected to be completed in 2020

 

 


 

Announced new organizational structure focused on commercial, technological and manufacturing excellence to better support customers

 

 


 

Increased market share in high-margin strategic markets

 

 


 

Improved quality and delivery performance to customers

 

 


 

Successfully raised approximately $1.1 billion in incremental capital and ended the year with liquidity of approximately $2.3 billion, including $749 million of cash to support execution of our "best of both" strategy

Delivering Long-Term Value to our Stockholders

 


 

Achieved the best cash conversion cycle time among our peers, demonstrating focus on cash efficiency


 


 

Achieved adjusted EBITDA of $711 million in the face of an approximately 35% decline in steel prices over the course of the year and other market headwinds


 


 

Returned nearly $100 million to our stockholders through dividends and stock repurchases

Demonstrating our Commitment to Environmental Stewardship

 


 

Announced a plan to reduce greenhouse gas emissions intensity by 20% by 2030, compared to a 2018 baseline, in a manner directly aligned with our corporate strategy

Investing in our People and our Community

 


 

Announced enhanced industry-leading inclusive benefits package


 


 

Achieved perfect "100" score by the Human Rights Campaign® Corporate Equality Index and named to Forbes 2000 World's Best Employers


 


 

Reinvigorated community engagement fund and employee resources groups


 


 

Implemented enhanced professional development throughout the organization

 

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PROXY SUMMARY

OVERVIEW OF VOTING MATTERS

Stockholders are being asked to vote on the following matters at the 2020 Annual Meeting of Stockholders:

Board Recommendation
Proposal 1. Election of Directors (page 1)   GRAPHIC   FOR
each Nominee
Proposal 2. Advisory Vote on the Compensation of Named Executive Officers (page 23)   GRAPHIC   FOR
Proposal 3. Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm (page 62)   GRAPHIC   FOR
Proposal 4. Approval of the Amended and Restated 2016 Omnibus Incentive Compensation Plan (page 64)   GRAPHIC   FOR

ELECTION OF DIRECTORS (PAGE 1)

The Board is composed of a diverse mix of highly experienced individuals who oversee the Corporation's strategy and business performance. The Board recommends a vote FOR each of the thirteen nominees listed below. All of the nominees, other than Mr. Johnson, are currently serving as directors.

Director Nominee   Age   Director
Since

 
U. S. Steel Committees*   Other
Public
Company
Boards
David B. Burritt
President and CEO, United States Steel Corporation
  64   2017  

Executive

  1
Patricia Diaz Dennis
Ret. SVP & Assistant General Counsel, AT&T
  73   2015  

Compensation & Organization

Corporate Governance & Sustainability

  2
Dan O. Dinges
Chairman, President and CEO, Cabot Oil & Gas Corporation
  66   2010  

Compensation & Organization (Chair)

  1
John J. Engel   58   2011  

Compensation & Organization

  1
Chairman, President and CEO, WESCO International, Inc.          

Corporate Governance & Sustainability

   
John V. Faraci   70   2019  

Audit

  3
Ret. Chairman and CEO, International Paper Co.          

Compensation & Organization

   
Murry S. Gerber
Ret. Chairman and CEO, EQT Corporation
  67   2012  

Audit (Chair)

  2
Stephen J. Girsky
Managing Partner, VectoIQ
  57   2016  

Corporate Governance & Sustainability (Chair)

  2
Jeh C. Johnson   62         1
Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP                
Paul A. Mascarenas   58   2016  

Audit

  3
Ret. Chief Technical Officer, Ford Motor Company          

Corporate Governance & Sustainability

   
Michael H. McGarry   62   2019  

Audit

  1
Chairman & CEO, PPG Industries          

Compensation & Organization

   
Eugene B. Sperling   61   2017  

Audit

  0
President, Sperling Economic Strategies          

Corporate Governance & Sustainability

   
David S. Sutherland(Chairman of the Board)   70   2008  

Executive

  2
Ret. President and CEO, IPSCO, Inc.                
Patricia A. Tracey
Ret. VP, Homeland Security and Defense Services, HP Enterprise Services
  69   2007  

Audit

Corporate Governance & Sustainability

  0

*    as of March 10, 2020

 

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PROXY SUMMARY

SNAPSHOT OF 2020 DIRECTOR NOMINEES

Our Director nominees possess skills and experience aligned to our current and future strategy and business needs, and demonstrate a high degree of integrity, ability to exercise sound judgment and an understanding of corporate governance and best practices. Annual Board evaluations also include an assessment of whether the Board has an appropriate mix of skills, experience and other characteristics.

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PROXY SUMMARY

CORPORATE GOVERNANCE (PAGE 10)

The Corporation is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability, and helps build public trust in the Corporation. Our governance highlights include:

Annual election of directors
12 of our 13 director nominees are independent, including the Chairman of the Board
Independent Audit, Compensation & Organization, and Corporate Governance & Sustainability committees
Regular executive sessions of independent directors
Robust risk oversight by full Board and committees
Annual Board and committee self-evaluations
Executive compensation driven by pay-for-performance philosophy
Active Board refreshment approach to ensure Board composition aligns with corporate strategy
Proxy access right in line with market standards
Stock ownership and holding guidelines for directors and executives
A robust Code of Ethical Business Conduct that is based on the Corporation's S.T.E.E.L. Principles
Annual stockholder engagement
Best in class compliance commitment
Regular review of CEO and senior management succession planning
Ability of our Board and its committees, at their sole discretion, to hire independent advisors, including counsel, at the Corporation's expense

 

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PROXY SUMMARY

EXECUTIVE COMPENSATION (PAGE 24)

The goal of our executive compensation program is to attract, reward and retain leaders who create long-term value for our stockholders by delivering on objectives that support the Corporation's long-term strategy. Appropriately motivating and incentivizing our leadership team to ensure continuity through the strategic transformation is a top priority of the compensation program. To meet this objective and to align our executives' interests with those of our stockholders, most of the executive 2019 target compensation was awarded in equity, a significant portion of our CEO's compensation is "at risk," and total target compensation is aligned at a level competitive with our peer group.

2019 CEO Compensation Decisions and Results

Majority of CEO target compensation is performance-based and "at risk"

2019 target compensation mix consistent with prior year's target compensation mix; total target direct compensation aligned with peer group median

Below target annual incentive and long-term incentive payouts correlate with performance against rigorous goals

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Compensation Governance Practices

The Compensation & Organization Committee (the "Compensation Committee"), which consists solely of independent directors, has implemented the following best practices with respect to executive compensation:

    GRAPHIC     WHAT WE DO           GRAPHIC     WHAT WE DON'T DO    
   

Consider results of "say on pay" votes when making compensation decisions

Regularly engage with our stockholders about our executive compensation program

Align pay and performance

Cap annual and long term incentive awards, including when TSR is negative

Utilize an independent compensation consultant

Require significant stock ownership of executive officers

Utilize a market based approach (competitive within our peer group) for determining NEO target pay levels

Require a "double trigger" for change in control severance

Provide for clawback of incentive awards if our financial statements are restated

Annually review risks associated with our compensation programs

         

Pay excise tax gross ups for change in control payments

Guarantee minimum payout of annual or long-term performance awards

Reprice options

Allow directors or employees to engage in hedging transactions, short sales or pledging of our common stock

Allow dividends or dividend equivalents on unearned RSUs or performance shares

   

 

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Proposal 1: Election of Directors

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At the Annual Meeting, thirteen director nominees are up for election for a one-year term. Each nominee elected will serve until our next annual meeting of stockholders. All of the nominees, other than Mr. Johnson, are presently members of the Board of Directors. Mr. Johnson's nomination was recommended by an incumbent director. Mr. McGarry was elected to the Board of Directors in July 2019 by the Board to fill a vacancy. The Board is recommending that all thirteen nominees be elected.

Except in the case of contested elections, each director nominee is elected if a majority of the votes are cast for that director's election. The term "a majority of the votes cast" means that the number of votes cast "for" a director's election exceeds the number of votes cast "against" the director's election, with abstentions and broker non-votes not counted as votes cast either "for" or "against" the director's election. A "contested election" is one in which the number of nominees exceeds the number of directors to be elected at the meeting.

If a nominee who is currently serving as a director is not re-elected, Delaware law provides that the director would continue to serve on the Board until the director's successor is duly elected and qualified or until the director's earlier resignation or removal. Under our by-laws, in order for any incumbent director to become a nominee for election by the stockholders as a director, that director must tender an irrevocable offer to resign from the Board of Directors, contingent upon acceptance of such offer of resignation by the Board of Directors, if the director fails to receive a majority of the votes cast in an election that is not a contested election. If an incumbent director fails to receive a majority of the votes cast in an election that is not a contested election, the Corporate Governance & Sustainability 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 & Sustainability 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 nominee has a familial relationship to any other director, nominee for director or executive officer. The independence of directors and nominees and other information related to the Board of Directors is described under the heading, "Corporate Governance – Independence" in this proxy statement. If any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the Board.

Selection of Director Nominees

The Corporate Governance & Sustainability Committee is responsible for identifying nominees for election to the Board. The Corporate Governance & Sustainability 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 & Sustainability 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 & Sustainability 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 & Sustainability Committee considers factors including, but not limited to, the following:

    Independence. Directors should neither have, nor appear to have, a conflict of interest that would impair the director's ability to represent the interests of all the Corporation's stakeholders and to fulfill the responsibilities of a director.

    Commitment. Directors should be able to contribute the time necessary to be actively involved in the Board and its decision making and should be able and willing to prepare for and attend Board and committee meetings.

    Diversity. Though the Board does not have a formal policy regarding the consideration of diversity in identifying nominees for director, directors should be selected so that the Board represents diverse experience at various policy making and executive levels in business, government, education and in industries that are relevant to the Corporation's business

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Proposal 1: Election of Directors

    operations. The Board considers the term "diversity" to include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to Board heterogeneity.

    Experience. Directors should be or have been in leadership positions in their field of endeavor and have a record of excellence in that field.

    Integrity. Directors should have a reputation of integrity and be of the highest ethical character.

    Judgment. Directors should have the ability to exercise sound business judgment on a large number of matters.

    Knowledge. Directors should have a firm understanding of business strategy, corporate governance, board operations and other relevant business matters.

    Skills. Directors should be selected so that the Board has an appropriate mix of skills in critical core areas, including, but not limited to: accounting, compensation, finance, government relations, legal, management, risk oversight and strategic planning.

These director qualification standards are evaluated by the Corporate Governance & Sustainability Committee each time a new candidate is considered for Board membership. The Corporate Governance & Sustainability 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 & Sustainability Committee reviews the qualifications of each director nominee, including currently serving Board members, and reports its findings to the Board. On February 25, 2020, the Corporate Governance & Sustainability Committee determined that each director nominee satisfied the director qualification standards and advised the Board that each of the director nominees listed under "Proposal 1: Election of Directors" was qualified to serve on the Board.

Stockholder Recommendations

The Corporate Governance & Sustainability Committee will consider director nominees recommended by stockholders. Notice of such recommendation should be sent in writing to the Chair of the Corporate Governance & Sustainability 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 & Sustainability 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 & Sustainability Committee to consider the recommended individual's qualifications. The Corporate Governance & Sustainability Committee will evaluate the qualifications of candidates recommended by stockholders using the same criteria as used for other Board candidates.

Under the collective bargaining agreement with the United Steelworkers (the "USW"), the USW has the ability to recommend up to two individuals to be considered for Board membership. The agreement recognizes that every director has a fiduciary duty to the Corporation and all of its stockholders, and that each individual recommended by the USW must meet the criteria described above.

Director Nominees

For purposes of the upcoming annual meeting, the Corporate Governance & Sustainability 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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Proposal 1: Election of Directors

The Board of Directors recommends a vote
"FOR" the election of each of the following 2020 Director Nominees for a one-year term:

GRAPHIC
Age: 64
Director Since: 2017

Committees:

Executive

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

High Level Financial Expertise

International

Steel, Manufacturing and Related Industry

 

David B. Burritt

Mr. Burritt has served as president and chief executive officer of United States Steel Corporation since May 2017. At that time, Mr. Burritt was also named to the Corporation's Board of Directors. He had been elected president and chief operating officer in February 2017 with executive responsibility for all aspects of the Corporation's day-to-day business in the United States and Central Europe. Mr. Burritt joined U. S. Steel in September 2013 to serve as executive vice president and chief financial officer with responsibility for all aspects of the Corporation's strategic and financial matters. In January 2015, he added executive leadership of U. S. Steel's North American Flat-rolled commercial entities and corporate support services. Prior to joining U. S. Steel, Mr. Burritt, served as chief financial officer at Caterpillar Inc. Mr. Burritt is a member of The Business Council, the National Safety Council, and the Allegheny Conference on Community Development.

Qualifications for Board membership:
As the Chief Executive Officer, Mr. Burritt is responsible for all of the business and corporate affairs of U. S. Steel. He provides broad insight with over four decades of experience in the understanding of complex strategic, financial and operational matters. 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 regular communication with employees, customers and stockholders.

Other Public Company Boards: Lockheed Martin Corporation


    

 

 

GRAPHIC
Age: 73
Director Since: 2015

Committees:

Compensation & Organization

Corporate Governance & Sustainability

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

International

Legal, Regulatory or Public Policy

 

Patricia Diaz Dennis

Ms. Dennis served as Senior Vice President and Assistant General Counsel of AT&T from 2004 to 2008, after serving 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. She has held three Senate-confirmed federal government appointments. President Ronald Reagan named her to the National Labor Relations Board in 1983 and appointed her 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 President George H. W. Bush appointed her Assistant Secretary of State for Human Rights and Humanitarian Affairs. Ms. Dennis previously served on the board of Massachusetts Mutual Life Insurance Company. She also is a trustee of the NHP Foundation and chair of the World Affairs Council of San Antonio Board of Trustees.

Qualifications 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, employment, legislative and administrative issues. Additionally, her National Labor Relations Board experience brings significant union relations insight and expertise to the Board. Ms. Dennis' prior experience on the board of directors of a large insurance firm also demonstrates her experience with 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, which strengthen the Board's collective knowledge, capabilities and experience.

Other Public Company Boards: Entravision Communications Corporation, Amalgamated Bank

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Proposal 1: Election of Directors

GRAPHIC
Age: 66
Director Since: 2010

Committees:

Compensation & Organization (Chair)

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

High Level Financial Expertise

Steel, Manufacturing and Related Industry

 

Dan O. Dinges

Mr. Dinges serves as Chairman, President and Chief Executive Officer of Cabot Oil & Gas Corporation, and has over 35 years of executive management experience in the oil and gas exploration and production business. 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, 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.

Qualifications 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., which the Corporation acquired in 2007. 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.

Other Public Company Boards: Cabot Oil & Gas Corporation


    

 

 

GRAPHIC
Age: 58
Director Since: 2011

Committees:

Compensation & Organization

Corporate Governance & Sustainability

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

High Level Financial Expertise

Innovation / Technology

 

John J. Engel

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.

Qualifications 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.

Other Public Company Boards: WESCO International, Inc.

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Proposal 1: Election of Directors

GRAPHIC
Age: 70
Director Since: 2019

Committees:

Audit

Compensation & Organization

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

High Level Financial Expertise

International

Steel, Manufacturing and Related Industry

 

John V. Faraci

Mr. Faraci served as Chairman and Chief Executive Officer of International Paper from 2003 to 2014. During his 40-year career at International Paper, Mr. Faraci served in a series of financial, planning and management positions, including President and Chief Executive Officer and Chief Financial Officer. Mr. Faraci serves on the board of the National Fish and Wildlife Foundation, on the Board of Trustees of Denison University, as a member of the Royal Bank of Canada Advisory Board, as a trustee of the American Enterprise Institute, and as a member of the Council on Foreign Relations.

Qualifications for Board membership:
Mr. Faraci's career at International Paper provided him with extensive executive experience managing and overseeing strategic, operational and financial matters for a large, complex enterprise. Mr. Faraci's service on the boards of directors of Fortune 100 companies also demonstrates his knowledge of complex financial and operational issues, all of which strengthen the Board's collective knowledge, capabilities and experience.

Other Public Company Boards: ConocoPhillips, PPG Industries, Inc., United Technologies Corporation


    

 

 

GRAPHIC
Age: 67
Director Since: 2012

Committees:

Audit (Chair)

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

High Level Financial Expertise

Innovation / Technology

 

Murry S. Gerber

Mr. Gerber served as Executive Chairman of EQT Corporation, an integrated energy production company from 2010 until May 2011, and as its Chairman and Chief Executive Officer from 2000 to 2010. He served as President of EQT Corporation from June 1998 through February 2007.

Qualifications 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.

Other Public Company Boards: Blackrock, Inc., Halliburton Company

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Proposal 1: Election of Directors

GRAPHIC
Age: 57
Director Since: 2016

Committees:

Corporate Governance & Sustainability (Chair)

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

International

High Level Financial Expertise

Innovation / Technology

 

Stephen J. Girsky

Mr. Girsky is Managing Partner of VectoIQ, an independent advisory firm based in New York, where he applies 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. Mr. Girsky is a director at 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.

Qualifications 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.

Other Public Company Boards: Brookfield Business Partners, VectoIQ Acquisition Corp.


    

 

 

GRAPHIC
Age: 62
Director Since:

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

Innovation / Technology

Legal, Regulatory or Public Policy

 

Jeh C. Johnson

Mr. Johnson has been a partner at the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP since January 2017. Previously, Mr. Johnson served as U.S. Secretary of Homeland Security from December 2013 to January 2017; as General Counsel of the U.S. Department of Defense from 2009 to 2012; as General Counsel of the U.S. Department of the Air Force from 1998 to 2001; and as an Assistant U.S. Attorney in the Southern District of New York from 1989 to 1991. Prior to and between his periods of public service, he was in private practice at Paul, Weiss, Rifkind, Wharton & Garrison LLP. Mr. Johnson previously served on the board of directors of PG&E Corporation from May 2017 to March 2018.

Qualifications for Board membership:
Mr. Johnson's extensive experience in legal and government roles contribute skills in the areas of risk management, cybersecurity oversight and public policy. His leadership of a large, complex agency and service on the board of directors of a large corporation bring significant expertise to the Board regarding organizational management and complex operational, financial and strategic matters. That experience, along with his long record of demonstrated executive leadership and integrity, provide valued insight and perspective to Board deliberations and oversight of the Corporation's operations.

Other Public Company Boards: Lockheed Martin Corporation

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Proposal 1: Election of Directors

GRAPHIC
Age: 58
Director Since: 2016

Committees:

Audit

Corporate Governance & Sustainability

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

International

High Level Financial Expertise

Innovation / Technology

 

Paul A. Mascarenas

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 is a Venture Partner with Fontinalis Partners. In 2015, he was awarded an Order of the British Empire (OBE) by Her Majesty, Queen Elizabeth II, for his services to the automotive industry.

Qualifications 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.

Other Public Company Boards: ON Semiconductor Corp., Spartan Motors, Borg Warner Inc.


    

 

 

GRAPHIC
Age: 62
Director Since: 2019

Committees:

Audit

Compensation & Organization

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

High Level Financial Expertise

Human Capital Talent Development

International

 

Michael H. McGarry

Mr. McGarry is the Chairman and Chief Executive Officer of PPG Industries, Inc. Mr. McGarry has been an employee of PPG for over 35 years and has served in executive level positions at PPG since 2004. Mr. McGarry progressed through a variety of management positions at PPG, including Market Development Manager, silica products; Operations Manager, silicas; Business Manager, TESLIN® sheet; Product Manager in the derivatives, chlorine, liquid and dry caustic soda businesses; and General Manager, fine chemicals. He was appointed Vice President, chlor-alkali and derivatives in 2004; then Vice President, coatings, Europe, and managing director, PPG Europe in 2006; and Senior Vice President of the Commodity Chemicals reporting segment in 2008. In 2012, he was elected Executive Vice President and then Chief Operating Officer in 2014. Mr. McGarry became President and Chief Operating Officer in March 2015 and joined PPG's Board of Directors in July 2015. He became President and Chief Executive Officer on September 1, 2015 and Chairman and Chief Executive Officer on September 1, 2016.

Qualifications for Board membership:
Mr. McGarry's role as a chief executive of a large, complex, manufacturing enterprise provide him with extensive experience in global manufacturing and logistics, operational issues, and business leadership. His leadership of a large international corporation also enables him to provide valuable insight to Board deliberations in the oversight of the Corporation's transformational strategy, operations and people, all of which strengthen the Board's collective knowledge capabilities and experience.

Other Public Company Boards: PPG Industries, Inc.

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Proposal 1: Election of Directors

GRAPHIC
Age: 61
Director Since: 2017

Committees:

Audit

Corporate Governance & Sustainability

Skills & Experience

Senior Leadership Experience

International

High Level Financial Expertise

Innovation / Technology

Legal, Regulatory or Public Policy

 

Eugene B. Sperling

Mr. Sperling currently heads Sperling Economic Strategies, which advises various companies, start-ups, philanthropies and foundations, and is a contributing editor for The Atlantic. Mr. Sperling served as Director of the National Economic Council (NEC) and Assistant to the President for Economic Policy in the White House under President Clinton from 1997 to 2001 and under President Obama from 2011 to 2014, the first individual to hold both positions under two presidents. As NEC Director, he coordinated economic policy development among the economic cabinet members. While serving in this role, he was influential in fiscal negotiations, passage of the payroll and low-income tax cuts, the Small Business Jobs Act and formation of the American Jobs Act. He spearheaded the Manufacturing Innovation Hubs initiative and the renewal of the Advanced Manufacturing Partnership. Mr. Sperling was co-chair of the first White House Manufacturing Council and helped launch the Select USA initiative.

Mr. Sperling also served as counselor to Treasury Secretary Timothy Geithner at the U.S. Department of the Treasury and as a member of the President's Auto Task Force. He was the founder and director, from 2002 to 2008, of the Center for Universal Education, which specializes in education for girls and boys in developing and conflict-impacted nations. Mr. Sperling currently serves on the board of directors of Ripple Labs.

Qualifications for Board membership:
Stemming from his vast experience in government, Mr. Sperling brings to the Board valuable experience in public policy, economic policy, government affairs, and governance. He also provides the Board with knowledge and insight regarding the economy, market and risk analysis, manufacturing and innovation, the automotive industry, and labor relations, which add valuable insight and perspective to Board deliberations.

Other Public Company Boards: None


    

 

 

GRAPHIC
Age: 70
Director Since: 2008

Committees:

Executive

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

High Level Financial Expertise

Human Capital Talent Development

Steel, Manufacturing and Related Industry

 

David S. Sutherland(Chairman of the Board)

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 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.

Qualifications 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.

Other Public Company Boards: GATX Corporation, Imperial Oil, Ltd.

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Proposal 1: Election of Directors

GRAPHIC
Age: 69
Director Since: 2007

Committees:

Audit

Corporate Governance & Sustainability

Skills & Experience

Senior Leadership Experience

Strategic and Operational Oversight

Human Capital Talent Development

Innovation / Technology

Legal, Regulatory or Public Policy

 

Patricia A. Tracey

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 PackardCo. 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 currently consults with Perspecta, Inc. She also serves on the board of trustees of Norwich University and the Board of Directors of Armed Forces Benefits Association.

Qualifications for Board membership:
Vice Admiral Tracey gained significant senior executive leadership experience over a 34-year career in the U.S. military, including a three star assignment as the equivalent of chief executive officer of a $5B global enterprise responsible for industrial operations in support of live warfighting training. She brings deep experience in government affairs, planning and executing large scale organization and workforce transformation strategies, occupational safety and environmental compliance, and governance. She brings insight regarding information technology and cybersecurity gained from overseeing implementation of advanced solutions for Department of Defense and Homeland Security agencies.

Other Public Company Boards: None

 

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Corporate Governance

CORPORATE GOVERNANCE

Corporate governance is a continuing focus at U. S. Steel, embraced by the Board of Directors, management, and all employees. The Corporation has a long and rich tradition relating to corporate governance and public company disclosure, 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:

    overseeing the management of our business and the assessment of our business risks;

    overseeing the processes for maintaining the integrity of our financial statements and other public disclosures, and compliance with laws and ethical principles;

    reviewing and approving our major financial objectives and strategic and operating plans;

    overseeing our human capital management and succession planning for the CEO and other key executives; and

    establishing an effective governance structure, including appropriate board composition and planning for board succession.

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, 2019, the Board held eight meetings and numerous interim conference calls. All of the directors attended in excess of 75% of the meetings of the Board and the committees on which they served. All but one of the incumbent directors attended the 2019 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

Corporate Governance At A Glance

    Leadership Structure    

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

   
     
    Board Composition    

Currently, the Board has fixed the number of directors at 13

The Board regularly assesses its performance through Board and committee self-evaluations

   
     
    Board Independence    

12 out of 13 of our nominees are independent

Our CEO is the only management director

   
     
    Board Committees    

We have four Board committees – Executive, Audit, Corporate Governance & Sustainability, and Compensation & Organization

With the exception of the Executive Committee (our Chairman and CEO serve on this committee), all other committees are composed entirely of independent directors

   
     
    Management
Succession Planning

 
 

The Board actively monitors succession planning and talent development and receives regular updates on employee engagement, inclusion and diversity, and retention matters

The Board regularly reviews senior management succession and development plans

   
     
    Director Stock Ownership    

Our directors are required to receive more than half of their annual retainer in shares of our common stock – and must hold these shares during their entire tenure on the Board

   
     
    Risk Oversight    

Our full Board is responsible for risk oversight, and has designated committees to have particular oversight of certain key risks

Our Board oversees management as management fulfills its responsibilities for the assessment and mitigation of risks and for taking appropriate risks

   
     
    Accountability to
Stockholders

 
 

We use majority voting in uncontested director elections

We have annual election of directors

We implemented a proxy access by-law provision in line with market standards, which enables certain of our stockholders to nominate directors and have their eligible nominees included in the proxy statement with our nominees

We actively reach out to our stockholders through our engagement program

Stockholders can contact our Board, our Chairman or management by regular mail

   

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. David S. Sutherland currently serves as the independent Chairman of the Board.

If the Chairman of the Board is not independent, the independent directors will elect from among themselves a Lead Director. The Chairman (or Lead Director) is elected annually by the Board. If the Chairman of the Board is independent, the Chairman's duties also include the duties of the Lead Director. The duties of the Lead Director are as follows:

    chair executive sessions of the non-employee directors;

    serve as a liaison between the Chief Executive Officer and the independent directors;

    approve Board meeting agendas and, in consultation with the Chief Executive Officer and the independent directors, approve Board meeting schedules to ensure there is sufficient time for discussion of all agenda items;

    approve the type of information to be provided to directors for Board meetings;

    be available for consultation and direct communication with the Corporation's stockholders;

    call meetings of the independent directors when necessary and appropriate; and

    perform other duties as the Board may from time to time designate.

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Corporate Governance

BOARD'S ROLE IN RISK OVERSIGHT

The Board of Directors is responsible for the oversight of the assessment and management of risks impacting the Corporation. The Board oversees the Corporation's enterprise-wide risk management approach. The Board relies on its standing committees to oversee specific risks related to that committee's functions.

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The Board, as a whole, considers risk assessment and risk management. 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. Although the Audit Committee has primary responsibility for overseeing risk management, each of our other Board committees also considers the risks within its specific areas of responsibility. 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 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:

the guidelines and policies that govern the process by which the assessment and management of the Corporation's exposure to risk are handled by senior management; and

the Corporation's major risk exposures and the steps management has taken to monitor and control such exposures.

The Corporation's Internal Audit group provides regular reports to the Audit Committee on the results of various internal audit projects and provides recommendations for the enhancement of operational functions in order to reduce certain risks.

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 on these matters.

The Corporation believes that its leadership structure, as described above, supports the Board's role in risk oversight.

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Corporate Governance

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, grow profitability and generate strong returns. The primary goal of our capital allocation strategy is to create long-term stockholder value driven by three priorities for cash:

    investing in new technologies and innovation to achieve our "best of both" strategy;

    reinvesting in our current assets to advance operational excellence to deliver high-quality products and service to our customers; and

    maintaining our balance sheet priorities that are supportive of the Corporation's strategic objectives.

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 Board and management have a robust, well-developed succession planning process that not only develops internal leadership candidates, but also considers external leadership candidates for top executive roles. The Board and the Compensation Committee are responsible for monitoring our management succession and leadership development plans. Our Corporate Governance Principles require all executive officers to retire at age 65. The Compensation Committee may, in its discretion, waive that requirement, and did waive it for Mr. Burritt and Ms. Breves. 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 OVERSIGHT OF HUMAN CAPITAL MANAGEMENT

Moving up the talent curve is a critical success factor to achieving to the Corporation's strategy. Because it believes that the Corporation will only be able to successfully execute on its strategic priorities with the full engagement of a talented workforce, the Board and its committees oversee human capital management. The Board receives periodic reports on the results of employee engagement or inclusion surveys, the collective bargaining process and relationship between management and the United Steelworkers, relevant workforce metrics, including related to inclusion and diversity, talent development, and pay equity analysis and hiring practices. The Board also believes that visits to facilities enable it to judge the Corporation's culture first-hand. Within the past year, directors have visited the Corporation's Mon Valley Works and Granite City Works facilities. These experiences enable the Board to judge whether the Corporation is adopting business practices that create the engaged and stable workforce needed to achieve its long-term strategy.

BOARD EVALUATION PROCESS

Each year, the Board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents continue to remain appropriate. 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 & Sustainability Committee, and the results of the evaluations are discussed by the full Board. Additionally, the Chairman of the Board conducts individual interviews with each director to discuss Board, committee and director performance and effectiveness. In 2018, the Board enhanced its typical evaluation process by engaging in a robust review of the effectiveness of the Board, conducted by an independent advisor. Each standing committee, other than the Executive Committee, annually reviews its own performance and reports the results and any recommendations to the Board.

BOARD REFRESHMENT

Our Board maintains a robust process in which the members focus on identifying, considering and evaluating potential board candidates. Our Corporate Governance & Sustainability 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

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Corporation and reflecting sufficient diversity to ensure its membership consists of individuals with a variety of backgrounds, skills, experience and attributes. Among other things, the members aim to strike a balance between the knowledge that comes from longer-term service on the Board with the fresh insights that can come from adding new members to the Board. The Board has been undergoing a deliberate refreshment effort over the past several years to add important skills, experience and diversity, to oversee our corporate strategy. In the last four years, five highly qualified independent directors have joined our Board. The following shows our board refreshment process:

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INDEPENDENCE

All non-employee director nominees 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: 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 2019. 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 2019 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 2019. 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 considered the fact that U. S. Steel purchased products from PPG Industries, Inc. ("PPG") in 2019. Mr. McGarry is the Chairman and Chief Executive Officer of PPG. The Board determined that Mr. McGarry did not have a direct or indirect interest in these transactions and that the transactions were undertaken in the ordinary course of business, and that the

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products purchased were less that 2% of PPG's annual gross revenues. Accordingly, the Board concluded that these transactions would not affect Mr. McGarry's 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 Committee has a relationship to the Corporation that is material to that director's ability to be independent from management in connection with the duties of a compensation committee member, and (ii) each member of the Compensation Committee therefore satisfies the independence requirements of NYSE listing standards.

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.

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 regularly hold executive sessions without management. 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 & Sustainability Committee.

Each of the principal committees has a written charter adopted by the Board, which is 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, routine or delegated 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 advisors, including any consultant, independent legal counsel or other advisor, 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 (as of March 10, 2020):

Director
  Audit
Committee

  Compensation &
Organization
Committee

  Corporate
Governance &
Sustainability
Committee

  Executive
Committee

David B. Burritt

              GRAPHIC

Patricia Diaz Dennis

      GRAPHIC   GRAPHIC    

Dan O. Dinges

      GRAPHIC        

John J. Engel

      GRAPHIC   GRAPHIC    

John V. Faraci

  GRAPHIC   GRAPHIC        

Murry S. Gerber

  GRAPHIC                  

Stephen J. Girsky

          GRAPHIC    

Jeh C. Johnson**

               

Paul A. Mascarenas

  GRAPHIC       GRAPHIC    

Michael H. McGarry

  GRAPHIC   GRAPHIC        

Eugene B. Sperling

  GRAPHIC       GRAPHIC    

David S. Sutherland*

              GRAPHIC

Patricia A. Tracey

  GRAPHIC       GRAPHIC    

TOTAL MEETINGS HELD IN 2019:

  7   7   5    

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*Chairman of the Board.

** If elected as a director, the Board intends to appoint Mr. Johnson to the Audit and Corporate Governance & Sustainability committees.

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Audit Committee

Pursuant to its charter, the Audit Committee's duties and responsibilities include:

    reviewing and discussing with management and the independent registered public accounting firm matters related to the annual audited financial statements, quarterly financial statements, earnings press releases and the accounting principles and policies applied;

    reviewing and discussing with management and the independent registered public accounting firm matters related to the Corporation's internal controls over financial reporting;

    reviewing the responsibilities, staffing and performance of the Corporation's internal audit function;

    reviewing issues that arise with respect to the Corporation's compliance with legal or regulatory requirements and corporate policies dealing with business conduct;

    being directly responsible for the appointment (subject to stockholder ratification), compensation, retention, and oversight of the work of the Corporation's independent registered public accounting firm, while possessing the sole authority to approve all audit engagement fees and terms as well as all non-audit engagements with such firm; and

    discussing policies with respect to risk assessment and risk management.

The 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 is an "audit committee financial expert." 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 V. Faraci, Murry S. Gerber, the committee's chairman, and Michael H. McGarry meet the SEC's definition of audit committee financial expert. John J. Engel, who served on the Audit Committee until March 10, 2020, also meets the SEC's definition of audit committee financial expert.

Compensation & Organization Committee

The primary responsibilities of the Compensation & Organization Committee include:

    determining and approving, with the Board, the CEO's compensation based on the evaluation of the CEO's performance;

    determining and approving, with input from the CEO, the compensation of the Corporation's executive officers;

    reviewing the Corporation's executive management succession plans annually with the Board;

    assessing whether the Corporation's compensation policies and practices are reasonably likely to create a risk that could have a material adverse effect on the Corporation; and

    considering the most recent stockholder advisory vote on executive compensation.

The Compensation Committee has retained Pay Governance, LLC as its executive compensation consultant. A representative of the consultant attended all in-person meetings of the Compensation Committee in 2019.

During 2019, Pay Governance performed the following specific services:

    provided presentations on executive compensation trends, and best practices and recent developments;

    advised on compensation program design;

    prepared competitive assessments by position for each element of compensation and for compensation in the aggregate for our executives; and

    reviewed the peer groups used for benchmarking compensation and measuring performance for purposes of the relative TSR Performance Awards.

The consultant provided no services to management during 2019. The Compensation Committee has assessed the independence of the consultant pursuant to the NYSE listing standards and SEC rules and concluded that no conflict of interest exists that would prevent the consultant from serving as an independent consultant to the Compensation Committee.

Committee agendas are established in consultation with management, the Compensation Committee chair and the compensation consultant. The Compensation Committee meets in executive session without management for a portion of each regular meeting.

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Corporate Governance & Sustainability Committee

The Corporate Governance & Sustainability Committee serves as the Corporation's governance and nominating committee. Pursuant to its charter, the duties and responsibilities of this committee include:

    Identifying, evaluating and recommending nominees for director;

    making recommendations to the Board concerning the appropriate size and composition of the Board and its committees;

    making recommendations to the Board concerning the compensation of non-employee directors;

    recommending to the Board a set of corporate governance principles applicable to the Corporation, reviewing such principles annually and recommending appropriate changes to the Board;

    reviewing matters and discussing risk relating to legislative, regulatory and public policy issues affecting the Corporation's businesses and operations;

    reviewing public policy issues likely to be of interest to various stakeholders of the Corporation, including employee health and safety, environmental, energy and trade matters;

    reviewing and approving codes of conduct applicable to the Corporation's employees and directors; and

    reviewing the Corporation's environmental stewardship and sustainability performance, and its practices for consistency with the values of good corporate citizenship.

The Corporate Governance & Sustainability 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.

COMMITMENT TO STOCKHOLDER ENGAGEMENT

The Board, as well as management, prioritizes constructive communication with our stockholders to learn about their views regarding the Corporation and our governance and compensation practices. Our CEO, CFO and Investor Relations team regularly communicate with our buy-side investors and the investment community generally regarding our business strategy and financial performance. Additionally, we have maintained ongoing dialogue with our largest stockholders regarding our corporate governance and executive compensation program since 2012. The feedback we receive from these discussions is carefully considered by the Board, the Corporate Governance & Sustainability Committee and the Compensation & Organization Committee. We believe the strong support we've received for our proposals, including director elections and say-on-pay, over the last few years demonstrates our ability to decisively take action to incorporate our stockholders' perspectives in our programs.

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In 2019, we contacted stockholders representing approximately 42% of our outstanding shares and held meetings with six investors. The topics covered included business strategy, sustainability, human capital management, the pay-for-performance alignment of our executive compensation program, and board composition and oversight. Our stockholders provided constructive feedback and were supportive of our current governance, sustainability and compensation practices.

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Sustainability

U. S. STEEL'S SUSTAINABILITY FRAMEWORK

U. S. Steel is an integrated steel producer of high-quality, value added steel products that serve as the building blocks of a sustainable future. With differentiated products and a goal of low impact manufacturing, we are doing our part to realize a low carbon economy. U. S. Steel is empowering its people to innovate new solutions that manufacture products with a low carbon footprint, all the while decreasing the impact on human health and the environment. Outside of the organization, U. S. Steel is engaging the community and working with local leaders to develop a better neighborhood for the communities where we operate. Our sustainability program is integrated into every part of our business and directly aligned to our "best of both" strategy and is overseen by our Corporate Governance & Sustainability Committee of the Board of Directors.

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Health and Safety

In 2019 we achieved industry leading and record-setting safety performance and have seen a 40% improvement in Days Away from Work rate since 2017

We have experienced zero work-related employee or contractor fatalities since 2017

We have built strong safety partnerships with the United Steelworkers

We employ medical and emergency response professionals at most of our operating facilities

We established a Management Safety Academy and conduct Annual Safety Awareness to ensure our workers are trained on best safety practices

We provide First Aid and CPR training for our employees

Our Employee Assistance Program is a free, confidential service available to employees and provides resources to help maintain emotional well-being

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Sustainability

Talent Management

Our CEO is a signatory to the CEO in Action Commitment to diversity and inclusion™

In 2019, we held the first unconscious bias training for employees at our Pittsburgh facilities

We provide employee resources groups to support our employees who are, or care about issues related to people who are, women, veterans, minorities, people with disabilities, or LGBTQ

We enhanced benefits for our employees, including expanded parental leave, adoption assistance, infertility assistance, dependent care flexible spending account match, domestic partner coverage, and gender reassignment procedure coverage

Our diversity council is comprised of our highest level executives to ensure that the importance of inclusion and diversity starts from the tone at the top

We provide various training academies to develop our employees in leadership, technical skills and customer service

The majority of our non-represented employees have a formal development plan

Corporate Governance

The Corporate Governance & Sustainability Committee of the Board of Directors oversees the Corporation's governance and sustainability strategy and regularly reports to the Board on our progress

Our Board is composed of a majority of independent directors, including our Chairman

We engage regularly with our stockholders

Our Code of Ethical Business Conduct, based on our S.T.E.E.L. Principles, forms the foundation for our business practices, and is certified annually by all directors and non-represented employees

Our Supplier Code of Conduct outlines the shared values we expect our business partners to exhibit, including human rights and working conditions

Community Engagement

We've partnered with the NFL's Pittsburgh Steelers to provide STEM education resources to local schools

Our Sons & Daughters Scholarship program provides college funding for children of our employees

We contribute financially and with employee service hours to the American Red Cross, local food banks, the Salvation Army, the Urban League, among other organizations

Protection of the Environment

In 2019 we announced our plan to achieve a 20% reduction in greenhouse gas (GHG) emissions intensity by 2030, compared to a 2018 baseline, that is directly aligned to our corporate strategy

We are a signatory to the 2018 worldsteel Sustainable Development Charter

We recycled approximately 3.7 million tons of scrap, approximately 4.5 million tons of blast furnace slag, and 0.6 million tons of steel slag, in 2019

We reused blast furnace and coke oven gas to avoid consuming natural gas and other fuels

Innovation

We are partnering with leading universities to explore carbon steelmaking technologies which emit less greenhouse gas

We're developing high-strength, highly formable sheet steels to provide our automotive customers with a cost-effective, lightweight material option to help meet the 2025 Corporate Average Fuel Economy (CAFE) standards

We are advancing steel alloy design and premium thread connections for our Tubular customers to support energy independence for the United States with ever more efficient oil and gas wells

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Director Compensation

DIRECTOR COMPENSATION

Our Corporate Governance Principles provide that each non-employee director shall be paid compensation as the Board may determine from time to time. Directors who are employees of U. S. Steel receive no compensation for their service on the Board. The objective of U. S. Steel's director compensation programs is to enable the Corporation to attract and retain as directors individuals of substantial accomplishment with demonstrated leadership capabilities. In order to align the interests of directors with the interests of stockholders, our non-employee directors participate in the Deferred Compensation Program for Non-Employee Directors and the Non-Employee Director Stock Program, each of which is described below.

2019 Director Compensation

For 2019, the Board set the annual compensation after following a robust benchmarking review process, described below. No meeting fees or committee membership fees are paid.

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Deferred Compensation Program

Under our Deferred Compensation Program for Non-Employee Directors, each non-employee director is required to defer a minimum of 55% of his or her retainer in the form of Common Stock Units and may elect to defer up to 100%. A Common Stock Unit is what is sometimes referred to as "phantom stock" because initially no stock is actually issued. Instead, we keep a book entry account for each director that shows how many Common Stock Units he or she has. When a director leaves the Board, he or she receives actual shares of common stock corresponding to the number of Common Stock Units in his or her account. The ongoing value of each Common Stock Unit equals the market price of the common stock. When dividends are paid on the common stock, we credit each account with equivalent amounts in additional Common Stock Units. If U. S. Steel were to undergo a change in control resulting in the removal of a non-employee director from the Board, that director would receive a cash payment equal to the value of his or her deferred stock account. The Board and management believe that such deferral, by continually building each director's equity interest in the Corporation, provides a meaningful continued interest in the Corporation that is tied to the stockholders' interest because the stock issued upon a director's departure from the Board reflects all changes in the market value of U. S. Steel common stock from the date of deferral.

Non-Employee Director Stock Program

Under our Non-Employee Director Stock Program, upon joining our Board, each non-employee director is eligible to receive a grant of up to 1,000 shares of common stock. In order to qualify, each director must first have purchased an equivalent number of shares in the open market during the six months following the first date of his or her service on the Board.

Compensation Review Process

The Corporate Governance & Sustainability Committee reviews director compensation on an annual basis.

Annually, Pay Governance, an independent compensation consultant, presents a benchmarking report on director compensation for the same comparator group of companies the Compensation & Organization Committee uses for determining compensation for our executives, as well as for a larger general comparator group of 151 companies in a similar revenue range as the Corporation. After reviewing the information presented by Pay Governance, as well as other public information on the topic, the committee evaluates the plan design and compensation levels to ensure they are consistent with market trends and makes recommendations of any appropriate changes to the Board.

For 2019, the committee recommended, and the Board approved, an increase in the annual director compensation retainer to $265,000, and set the additional fee for the Chairman of the Board at $100,000 (a reduction from 2018), in order to better align the compensation level with the median of both comparator groups. No increase was made to the additional amounts paid to committee chairs.

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Communications from Stockholders and Interested Parties

The following table sets forth the compensation of non-employee directors in 2019:

DIRECTOR COMPENSATION

 

Name

    Fees Earned
or Paid in
Cash(1)
($)
    Stock
Awards(2)
($)
    All Other
Compensation(3)
($)
    Total
($)
 

Patricia Diaz Dennis

    120,000     145,000     0     265,000  

Dan O. Dinges

    129,057     155,943     0     285,000  

John J. Engel

    120,000     145,000     0     265,000  

John V. Faraci

    80,000     96,667     11,870     188,537  

Murry S. Gerber

    129,057     155,943     0     285,000  

Stephen J. Girsky

    120,000     145,000     0     265,000  

Paul A. Mascarenas

    60,000     205,000     0     265,000  

Michael H. McGarry

    50,000     60,417     13,070     123,487  

Eugene B. Sperling

    120,000     145,000     0     265,000  

David S. Sutherland

    0     365,000     0     365,000  

Patricia A. Tracey

    129,057     155,943     0     285,000  
(1)
The amount shown represents the cash portion of the 2019 annual retainer paid to directors.

(2)
The amount shown represents the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC 718), as described in the Corporation's financial statements for the year ended December 31, 2019 included in the Corporation's annual report on Form 10-K for 2019. All of the 2019 stock awards represent Common Stock Units under the Deferred Compensation Program for Non-Employee Directors.

(3)
Represents 1,000 shares awarded to Mr. Faraci under the Non-Employee Director Stock Program and 1,000 shares awarded to Mr. McGarry under the Non-Employee Director Stock Program.

COMMUNICATIONS FROM STOCKHOLDERS AND INTERESTED PARTIES

Stockholders and interested parties may send communications through the Secretary of the Corporation to the: (1) Board, (2) Committee Chairs, (3) Chairman of the Board, or (4) outside directors as a group. The Secretary will collect, organize and forward to the directors all communications that are appropriate for consideration by the directors. Examples of communications that would not be considered appropriate for consideration by the directors include solicitations for products or services, employment matters, and matters not relevant to stockholders generally, to the functioning of the Board, or to the affairs of the Corporation. The Secretary of the Corporation may be contacted at: Corporate Secretary, United States Steel Corporation, 600 Grant Street, Suite 1500, Pittsburgh, PA 15219.

POLICY WITH RESPECT TO RELATED PERSON TRANSACTIONS

The Board of Directors of the Corporation has adopted a written policy that requires certain transactions with related persons to be approved or ratified by its Corporate Governance & Sustainability Committee. For purposes of this policy, related persons include: (i) any person who is, or at any time since the beginning of the Corporation's last fiscal year was, a director or executive officer of the Corporation or a nominee to become a director of the Corporation; (ii) any person who is the beneficial owner of more than 5% of any class of the Corporation's voting securities; and (iii) any immediate family member of any person described in (i) or (ii). The types of transactions that are subject to this policy are transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Corporation, or any of its subsidiaries, was, is or will be a participant and in which any related person had, has or will have a direct or indirect material interest and the aggregate amount involved will or may be expected to exceed $120,000. The standards applied by the Corporate Governance & Sustainability Committee when reviewing transactions with related persons include: (a) the benefits to the Corporation of the transaction; (b) the terms and conditions of the transaction and whether such terms and conditions are comparable to the terms available to an unrelated third party or to employees generally; and (c) the potential for the transaction to affect the independence or judgment of a director or executive officer of the Corporation. Under the policy, certain transactions are deemed to be automatically pre-approved and do not need to be brought to the Corporate Governance & Sustainability Committee for individual approval. The transactions that are automatically pre-approved include: (i) transactions involving compensation to directors and executive officers of the type that is required to be reported in the Corporation's proxy statement; (ii) indebtedness for ordinary business travel and expense payments; (iii) transactions with another company at which a related person's only relationship is as an employee (other than an executive officer), a director or beneficial owner of less than 10% of any class of equity securities of that company, provided that the amount involved does not exceed the greater of $1,000,000 or 2% of that company's consolidated gross annual revenues; (iv) transactions where the interest of the related person arises solely from the ownership of a class of equity securities of the Corporation, and all holders

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of that class of equity securities receive the same benefit on a pro rata basis; (v) transactions where the rates or charges involved are determined by competitive bid; (vi) transactions involving the rendering of services as a common or contract carrier or public utility at rates or charges fixed in conformity with law or governmental regulation; and (vii) transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services. There were no transactions that required approval of the Corporate Governance & Sustainability Committee under this policy during 2019.

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Proposal 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

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Pursuant to Section 14A of the Securities Exchange Act of 1934, we are seeking an advisory vote from our stockholders on the following resolution to approve the compensation of the named executive officers ("NEOs") listed in the compensation tables of this proxy statement:

      RESOLVED, that the stockholders of United States Steel Corporation (the "Corporation") approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in the Corporation's proxy statement for the 2020 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis, compensation tables and narrative discussions.

We intend to offer this non-binding advisory vote at each of our annual meetings. Although it is not binding, we and the Board welcome our stockholders' views on our NEOs' compensation and will carefully consider the outcome of this advisory vote consistent with the best interests of all stockholders.

Advisory Vote Discussion

At the 2019 Annual Meeting of Stockholders, approximately 95% of the votes cast were "For" our advisory vote on executive compensation. We value the feedback we receive from regular engagement with our stockholders, and are encouraged by the positive support we have received over the past several years for our compensation program and recognition of our responsiveness to stockholders.

The Board of Directors recommends a vote FOR this proposal based on the efforts of the Compensation & Organization Committee and the Board to design an executive compensation program that:

Aligns the interests of U. S. Steel executives with our stockholders;

Provides market-aligned pay opportunities that attract, reward and retain key talent needed to drive outstanding corporate performance and create long-term stockholder value; and

Reflects the input received from stockholders on our executive compensation program through our robust engagement program.

In considering this advisory vote, we encourage you to read the Compensation Discussion and Analysis, the compensation tables and other relevant information in this proxy statement for additional details on our executive compensation programs and the 2019 compensation paid to our named executive officers.

COMPENSATION & ORGANIZATION COMMITTEE REPORT

The Compensation & Organization Committee of the Board of Directors of the Corporation has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, the Compensation & Organization Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Corporation's Annual Report on Form 10-K for the year-ended December 31, 2019.

    Dan O. Dinges, Chairman   Stephen J. Girsky
    Patricia Diaz Dennis   Paul A. Mascarenas
    John V. Faraci   Michael H. McGarry

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Table of Contents

Compensation Discussion and Analysis

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis contains a discussion of the material elements of compensation awarded to, earned by, or paid to the Corporation's "Named Executive Officers" ("NEOs"), individuals who served as our principal executive officer, the principal financial officer, and the next three most highly compensated executive officers of U. S. Steel in 2019.

Named Executive Officers in 2019

  David B. Burritt     Christine S. Breves     Douglas R. Matthews
  President & Chief Executive Officer     Senior Vice President & Chief Financial Officer     Senior Vice President – Chief Commercial & Technology Officer, Tubular & Mining Solutions
                     
  Duane D. Holloway     James E. Bruno     Kevin P. Bradley*
  Senior Vice President, General Counsel, Chief Ethics & Compliance Officer and Corporate Secretary     Senior Vice President – European Solutions & President, USSK     Former Executive Vice President & Chief Financial Officer
*
Mr. Bradley resigned as Chief Financial Officer effective as of November 4, 2019, and served as Executive Vice President & Senior Advisor to the CEO until December 31, 2019. Ms. Breves previously served as Senior Vice President — Manufacturing Support & Chief Supply Chain Officer until November 4, 2019 when she was appointed to her current role as Chief Financial Officer.

Our Compensation Program is Designed Around Four Guiding Principles:
 
Compensation Principle
  Compensation Design
GRAPHIC   Strong Pay-for-Performance Approach  

Majority of target compensation opportunity is performance-based

Our compensation programs are focused on objective corporate performance measures and individual performance

GRAPHIC   Align Pay with Long-Term Interests of our Stockholders  

Equity comprises the largest portion of an executive's compensation, a substantial portion of which is performance-based

Executives are subject to rigorous stock ownership and holding requirements

GRAPHIC   Support our Strategic and Financial Goals  

Balance of compensation elements that focus on both short-term and long-term corporate performance and goals that align with our annual and long-term strategic objectives

GRAPHIC   Attract, Reward and Retain Executives  

Our long-term incentive grants include restricted stock units that may retain some value in a period of stock market decline

Executive compensation is targeted to be competitive with our peer group

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Compensation Discussion and Analysis

 

Executing our Strategy to Create Long-Term Stockholder Value

Our strategy is to create long-term stockholder value by pursuing a business model that is resilient to market volatility and is profitable through the business cycle. We have defined this approach as our "best of both" model, which combines the capability advantages of integrated mills with the flexibility and cost benefits of mini mills. We took significant steps in 2019 to execute on this strategic vision and transform our business model.

In 2019, we announced a series of cornerstone investments that form the foundation of our "best of both" strategy, including: announcing a $1.5 billion investment in our Mon Valley Works facility to build a world class endless casting and rolling line; completing the acquisition of a minority ownership interest in Big River Steel, North America's first LEED certified mini mill, with an option to purchase the remaining ownership interests within four years; restarting the construction of an electric arc furnace at our Fairfield Works facility, which will enable efficient self-production of rounds for our seamless tubular products; the investment of nearly $500 million in the hot strip mill at our Gary Works facility to position it as a competitively advantaged asset that delivers better customer value; and began investment in a new dynamo line for our European operations that will enable production of sophisticated silicon grades of non-grain oriented electrical steels to support increased demand in vehicles and generators.

These investments build on the important revitalization efforts that we began in 2017 and, once complete, will significantly improve our operating performance and transform our ability to be flexible, efficient and profitable even in the face of market headwinds. These investments establish a new foundation to drive future profitable growth and ultimately will center our business around three core market-leading, differentiated and technologically advanced North American Flat-rolled assets. Our future footprint will provide our customers with the sustainable state-of-the-art steel solutions they need to solve their most challenging problems. From light weighting our vehicles to protecting our sources of energy, we are truly transforming the capabilities we have to enhance how and what we sell to our customers.

GRAPHIC

Retaining Strong Leadership Team Through Strategic Transition is Imperative

The Board of Directors recognizes that the investments announced this year to pursue this strategic vision are the bold actions that the Corporation needs to become world competitive in any market. In order to achieve this, the Board believes it is imperative to have the right leadership team to see through successful execution of the strategy. The steel industry has faced many challenges and endured significant change over the past few years. Despite the volatility, we have remained focused on the things that we control. The financial results for 2019 represent a decline from the prior year, and correlate to the significant decline in global steel prices and market conditions that occurred during the year (illustrated on page 28). These results reinforce the need to continue the transformational strategy articulated this year and motivate our leadership team to move towards our future faster. We remain focused on creating enduring value for our stockholders and believe the Corporation is well positioned to continue the positive momentum we have been building.

The Compensation Committee has structured our executive compensation program to closely align with our long-term strategy and to link compensation to corporate performance, balancing the long-term needs of the Corporation with achieving near-term results for stockholders. We believe the pay outcomes for executives demonstrate a strong link between compensation and performance.

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Compensation Discussion and Analysis

2019 Performance at a Glance

The continued focus of our executive team and employees on our long-term strategic goals of transforming our business by investing in advanced technology, optimizing our balance sheet to support our strategy, enhancing operating efficiency and reliability, and ensuring we have a talented and diverse workforce to lead and execute our business plans, was evidenced by many achievements in 2019, and we strive for greater achievement in the year ahead.


    Record Setting Safety Performance     All-time best days away from work (DAFW) safety performance  
        o   OSHA DAFW rate of 0.10, which is seven times better than the industry average reported by the U.S. Bureau of Labor Statistics (BLS)  
        o   U. S. Steel's Tubular Operations and U. S. Steel Košice each completed the year with zero DAFW cases  
        Improved Total OSHA Recordable injury rate, which was nearly three times better than the BLS industry average of 2.7  
        Best contractor DAFW safety performance since 2009 (when measurement began)  
        Longest fatality-free streak since measurement began  

 

 

Executing Against our Strategic Priorities

 


 

Acquired 49.9% ownership stake in Big River Steel, the world's first LEED certified mini mill, for approximately $700 million

 

 
          Announced $1.5 billion investment to construct a new endless casting and rolling line at lowest cost mill to increase capability for our customers    
          Achieved project milestones for construction of electric arc furnace at our Tubular facility, expected to be completed in 2020    
          Announced new organizational structure focused on commercial, technological and manufacturing excellence to better support customers    
          Increased market share in high-margin strategic markets    
          Improved quality and delivery performance to customers    
          Successfully raised approximately $1.1 billion in incremental capital and ended the year with liquidity of approximately $2.3 billion, including $749 million of cash to support execution of our "best of both" strategy    

 

 

Delivering Long-Term Value to our Stockholders

 


 

Achieved the best cash conversion cycle time among our peers, demonstrating focus on cash efficiency

 

        Achieved adjusted EBITDA of $711 million in the face of an approximately 35% decline in steel prices over the course of the year and other market headwinds  
        Returned nearly $100 million to our stockholders through dividends and stock repurchases  

 

 

Demonstrating our Commitment to Environmental Stewardship

 


 

Announced a plan to reduce greenhouse gas emissions intensity by 20% by 2030, compared to a 2018 baseline, in a manner directly aligned with our corporate strategy

 

 

 

 

Investing in our People and our Community

 


 

Announced enhanced industry-leading inclusive benefits package

 

        Awarded a perfect "100" score by the Human Rights Campaign® Corporate Equality Index and named to Forbes 2000 World's Best Employers  
        Reinvigorated community engagement fund and employee resources groups  
        Implemented enhanced professional development throughout the organization  
           

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Compensation Discussion and Analysis


2019 Executive Compensation Program Overview

Our executive compensation program is designed to attract, reward and retain executives who make significant contributions through operational and financial achievements aligned with the goals and philosophy of our long-term strategy. The primary elements of our compensation program, base salary, annual incentive awards and long-term incentive awards, are described below. We also provide limited perquisite and standard retirement and benefit plans. The majority of our NEOs' pay is variable and based on achievement of performance goals.

Compensation
Element

  Overview

  Key Performance Measures and
Weightings

Annual        

Base Salary
GRAPHIC

 

Fixed cash baseline compensation that takes into account scope and complexity of role, individual qualifications and experiences, and internal value to the Corporation

 

Base salaries set at market competitive levels allow the Corporation to attract and retain highly qualified executives to lead and implement our strategy

Annual Incentive
Compensation Plan (AICP)

GRAPHIC

 

Performance-based annual cash incentive opportunity for achieving goals that are crucial to our strategic plan

Payout Range: 0%-230% of target for corporate performance and individual performance adjustments

 

  EBITDA (75%)
  Cash Conversion Cycle (25%)
  Individual Performance (-15% to 30%)
Long-Term Incentive Program (LTIP)        
GRAPHIC   Variable long-term equity based compensation to motivate and reward executives for achieving multi-year strategic priorities

Granted at the beginning of a three-year performance period

Payout Range: 0%-200% of target

Supports retention of highly qualified executives to lead and implement our strategy; aligned with stockholder interests as the value fluctuates with stock price performance

 


  Relative TSR (50%)
  Return on Capital Employed (50%)

  Stock price
  Vests ratably over three years

*
Illustrations are based on 2019 CEO target compensation

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Compensation Discussion and Analysis

Maintaining Pay-for-Performance through Industry Cycles

The Compensation Committee believes that in a challenging operating and unpredictable economic environment it is critical to align our compensation program with the goals of our strategic turnaround initiatives. 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 attract, reward and retain executives best qualified to guide the Corporation through its transformation.

The steel industry, and U. S. Steel in particular, are highly cyclical and susceptible to volatility in steel prices, which has a direct correlation to annual earnings. Therefore, in general, the Compensation Committee utilizes wider performance ranges to offset swings in the commodity steel prices. The charts below illustrate the fluctuation in pricing in the U.S. and Europe over the last three years, and the decline in rig counts since 2018, and the correlation to our corporate earnings.

GRAPHIC

Because external market conditions could have a dispositive impact on the Corporation's earnings, the Compensation Committee has enhanced the executive compensation program over the course of the last several years to reduce the volatility in the measures under the program to ensure executive compensation is tied to controllable actions. The enhancements described below have been discussed with our stockholders during our annual engagements, and stockholders have been supportive of the changes.

2017     Set ROCE performance goals in line with the business plan expectations

2018

 


 

Target goals for AICP set in line with the business plan, but minimum and maximum ranges were widened in recognition of the impact of external market factors

 

 


 

Eliminated use of stock options to reduce volatility in payouts

2019

 


 

Individual performance component of AICP is independent of the corporate goals, rather than a multiplier, to allow for rewarding exceptional individual contributions

 

 


 

Calculation of relative TSR includes annual and three-year TSR components to eliminate disproportionate impact of one year on the long-term performance

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Compensation Outcomes: Payouts Reflect Corporate Performance

The Compensation Committee considers a mix of cash and equity awards over both the short-term and long-term as a critical balance in reinforcing U. S. Steel's commitment to performance alignment. This strong pay-for-performance alignment is clearly reflected in amounts actually earned by our NEOs based on the achievement of metrics established by the Compensation Committee for the annual and long-term incentive plans.

The following table illustrates how our performance has affected the payout of our annual incentives and how the performance of our common stock affects the value of the long-term incentives that would be received by our CEO based on our closing stock price of $11.41 on December 31, 2019:

    Annual Incentive   Stock Options     Restricted Stock Units(2)     Performance Awards(3)  

Year

    % of Target Award Paid   Exercise
Price
  Intrinsic
Value(1)
    Value as a % of
Grant Value
    Award Payout as a %
of Target
 

2019

    84%         48%     0%  

2018

    187%         26%     0%  

2017

    0%   $39.265   $0     29%     73.5%  
(1)
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 31, 2019. If the exercise price exceeds the market price, the stock options have no intrinsic value. Stock options were not granted in 2018 or 2019.

(2)
The "Restricted Stock Units" column shows the market value on December 31, 2019, of the shares underlying the restricted stock units as a percentage of the market value on the grant date. The grant date fair value of the RSUs granted in 2017 was $39.265, in 2018 was $43.99 and in 2019 was $23.92. To the extent that the market value has declined, the value of the restricted stock units reflected in the Summary Compensation Table also declined.

(3)
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 performance. The 2017 performance period ended on December 31, 2019, and the actual results are reflected in the table. For the 2018 and 2019 performance awards, the information in the table is determined as if the performance periods ended on December 31, 2019.

Variable, at-risk compensation accounted for approximately 60% of our CEO's target compensation in 2019. Based on our strong pay-for-performance alignment, realizable compensation for our CEO over the last three years is 45% of target value granted during the period as reported in the Summary Compensation Table on page 45 of this proxy statement.


CEO Realizable Pay

GRAPHIC

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Investor Feedback and Recent "Say-on-Pay" Vote Inform Board's Decisions

In 2019, we continued our long-standing engagement efforts with our stockholders. Last year, we contacted stockholders representing approximately 42% of our stock and we held telephonic meetings with six investors. 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.

The Board, as well as management, prioritizes constructive communication with our investors to learn about their views of the Corporation and our governance, sustainability 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 Compensation Committee, and we believe the strong support of 94.1% to 96.5% for our say-on-pay proposal over the last few years is evidence of the careful attention to stockholder feedback, and our ability to decisively take action and incorporate their perspectives in our programs.

Based on our 2019 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, enhanced disclosure regarding the rationale behind certain compensation decisions, and reduced volatility of payouts in our program. In 2019, we changed the way individual performance is applied to the Annual Incentive Compensation Plan, in order to provide an incentive opportunity for superior individual contributions even when external market factors may have experienced a significant decline. Additionally, we revised the calculation for relative TSR performance described on page 31 to address volatility in long-term award payouts. These changes were discussed with our stockholders during our annual outreach and they were supportive.

Following our 2019 Annual Meeting of Stockholders, the Compensation Committee reviewed the results of the stockholder advisory vote on executive compensation (the "say on pay" vote) that was held at the meeting with respect to the 2018 compensation actions and decisions for Mr. Burritt and the other NEOs. Approximately 95% of the votes cast on the proposal were voted in support of the compensation of our NEOs.

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.

    GRAPHIC     WHAT WE DO           GRAPHIC     WHAT WE DON'T DO    
   

Consider results of say on pay votes when making compensation decisions

Regularly engage with our stockholders about our executive compensation program

Align pay and performance

Cap annual and long term incentive awards, including when TSR is negative

Utilize an independent compensation consultant

Require significant stock ownership of executive officers

Utilize a market based approach (competitive within our peer group) for determining NEO target pay levels

Require a "double trigger" for change in control severance

Provide for clawback of incentive awards if our financial statements are restated

Annually review risks associated with our compensation programs

         

Pay excise tax gross ups for change in control payments

Guarantee minimum payout of annual or long term performance awards

Reprice options

Allow directors or employees to engage in hedging transactions, short sales or pledging of our common stock

Allow dividends or dividend equivalents on unearned RSUs or performance shares

   

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Compensation Discussion and Analysis

Changes to the 2019 Compensation Program

The Compensation Committee made certain changes to the 2019 executive compensation program, described below, in order to better align executive compensation with strategy and tighten the link between pay and performance. These revisions were briefly described in our 2019 proxy statement.

GRAPHIC

GRAPHIC

Looking Ahead

The Compensation Committee did not make significant changes to the compensation program design for 2020. The 2020 ROCE performance awards were granted in cash.

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Compensation Discussion and Analysis

2019 Compensation Decisions and Outcomes Demonstrate Alignment with Performance

Compensation Committee Decision-Making Process

We have a robust and ongoing annual process to plan, review and determine executive compensation, which includes at least annual engagement with our stockholders. When evaluating the compensation reported in the Summary Compensation Table against company performance, it is helpful to keep in mind the timing each of the decisions are made by the Compensation Committee.

Base salaries and target grant values for the Annual Incentive Compensation Plan and Long-Term Incentive Program performance awards were determined in January and February 2019 and reflect corporate and individual performance in 2018 and potential to drive success in 2019
Annual Incentive Compensation Plan awards reported for 2019 were determined following 2019 year end and paid in March 2020 based on 2019 corporate and individual performance
Performance for 2017-2019 LTIP awards was certified following 2019 year end and vested, as applicable, in February 2020; Payouts for 2017-2019 cash-based performance awards are reported in this proxy statement

2019 Compensation Decisions

In making decisions regarding 2019 compensation, the Compensation Committee underwent a robust analysis and thoughtful process. In the beginning of the year, the Compensation Committee's independent consultant reassessed the roles and responsibilities for the Corporation's executive officers. That review resulted in a change to the median total target direct compensation for executive officers as compared to the executive compensation peer group. The Compensation Committee, in order to motivate and incentivize executives, particularly during a time of strategic transition when retention of executives is of utmost importance, normalized executive total target direct compensation by adjusting target amounts for base salary, AICP opportunity and LTIP grant values. In addition, in making target compensation decisions, the Compensation Committee took into consideration the Corporation's outstanding 2018 performance, continued development and execution of the Corporation's long-term strategy, and assumption of additional duties in connection with executive leadership changes and responsibilities of each of our NEOs. Actual AICP award decisions were made following the completion of 2019, and based on achievement of rigorous corporate and individual performance objectives.

GRAPHIC


2019 Compensation Decisions
2019 Annual Cash Incentive Award: $1,449,000 or 84% of target

Mr. Burritt's AICP award is based on achievement of below target performance for total corporate EBITDA and CCC goals, in addition to his individual performance.

  2019 Base Salary: $1,200,000

Increased from $1,000,000 in recognition of leadership of very successful 2018 performance; base salary remains below peer group median

2019 AICP Bonus Target: 150%

Slight increase from 2018 target of 140% to align with peer group median

2019 Target LTIP Award: $8,000,000

Increased from $6,100,000 in 2018 to provide greater percentage of total compensation in form of long-term awards and set total target direct compensation near peer group median

        

    

 

 

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Compensation Discussion and Analysis

GRAPHIC


2019 Compensation Decisions
2019 Annual Cash Incentive Award: $422,740 or 89% of target

Ms. Breves' AICP award is based on achievement of below target performance for total corporate EBITDA and CCC goals, in addition to her individual performance. Her AICP award was prorated for the time she served as Senior Vice President – Manufacturing Support & Chief Supply Chain Officer, during which she had an 80% AICP target, and the time she has served as Chief Financial Officer.

  2019 Base Salary: $650,000

Increased from $470,000 in 2018 in connection with elevation to CFO role, but remained slightly below peer group median

2019 AICP Bonus Target: 100%

Increased in connection with elevation to CFO role in line with peer group median

2019 Target LTIP Award: $1,250,000

Increased in line with peer group median and to provide a greater percentage of total compensation in the form of long-term awards

        


GRAPHIC


2019 Compensation Decisions
2019 Annual Cash Incentive Award: $376,365 or 66% of target

Mr. Matthews' AICP award is based on achievement of below target performance for total corporate and Flat-Rolled EBITDA goals, below threshold Tubular EBITDA goals and below target CCC goals, in addition to his individual performance.

  2019 Base Salary: $580,000

Increased from $541,000 in 2018 in line with peer group median

2019 AICP Bonus Target: 100%

Increased from 80% in 2018 in recognition of leadership over the Tubular segment, as well as Industrial, Service Center and Mining Solutions. Mr. Matthews' AICP award is calculated as if he has an 80% target based on CCC and total corporate and NAFR EBITDA goals, and a 20% target based on Tubular EBITDA goals.

2019 Target LTIP Award: $1,250,000

Increased from $1,115,000 in 2018 in line with peer group median and to provide a greater percentage of total compensation in form of long-term awards

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Compensation Discussion and Analysis

GRAPHIC


2019 Compensation Decisions
2019 Annual Cash Incentive Award: $384,720 or 84% of target

Mr. Holloway's AICP award is based on achievement of below target performance for total corporate EBITDA and CCC goals, in addition to his individual performance.

  2019 Base Salary: $580,000

Increased from $550,000 in 2018 in recognition of leadership of very successful 2018 performance and in line with peer group median

2019 AICP Bonus Target: 80%

Increased from 75% in 2018 to provide greater incentive opportunity for excellent performance

2019 Target LTIP Award: $1,250,000

No change from 2018


    

 

 


GRAPHIC


2019 Compensation Decisions
2019 Annual Cash Incentive Award: $267,000 or 60% of target

Mr. Bruno's AICP award is based on achievement of below target performance for total corporate EBITDA goals, below threshold USSE EBITDA goals and below target CCC goals, in addition to his individual performance.

  2019 Base Salary: $580,000

Increased from $485,000 in 2018 in line with peer group median

2019 AICP Bonus Target: 80%

Increased from 70% in 2018 in line with peer group median

2019 Target LTIP Award: $1,250,000

Increased from $675,000 in 2018 in line with peer group median and to provide a greater percentage of total compensation in form of long-term awards

        

Mr. Bradley's base salary, AICP bonus target and target LTIP award were unchanged from 2018, and in line with our peer group median. Upon his separation from the Corporation, Mr. Bradley became ineligible to receive any AICP award for 2019 pursuant to the terms of his separation agreement.

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Compensation Discussion and Analysis

Executive Compensation in Detail

Compensation Program Elements

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 Compensation 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.

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.

Annual Incentive Compensation Plan

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 annual incentive awards are paid in cash, but the Compensation Committee retains discretion to provide the award in cash, stock, or a combination of both. The AICP is designed to focus executives primarily on efficient cash management and profitability.

Actual amounts earned are based on the formula illustrated below, with predetermined performance goals based on the achievement of cash conversion cycle and earnings before interest, taxes, depreciation and amortization (EBITDA) performance measures. Final awards may be increased or decreased based on individual performance. The individual performance factor is based on a percentage of the executive's target award. The Compensation Committee determined that EBITDA and CCC were the appropriate measures to drive the transformation required to achieve our goal of sustainable profitability.

2019 AICP Incentive Formula

GRAPHIC

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 Compensation Committee after consideration of the executive's individual performance.

2019 Annual Incentive Payout

 
       

Executive

    Target Award as % of Base Salary(1)     Target Award(2)     Corporate Payout Rate(3)     Actual Amount Awarded(4)  

Burritt

  150%   $ 1,725,000   64%   $ 1,449,000  

Breves

    100%   $ 472,723     64%   $ 422,748  

Matthews

  100%   $ 570,250   56%   $ 376,365  

Holloway

    80%   $ 458,000     64%   $ 384,720  

Bruno

  80%   $ 445,000   40%   $ 267,000  

Bradley

    100%   $ 700,008     64%   $ 0  
(1)
"Base Salary" for purposes of determining the AICP award is the actual salary earned for 2019. The Target Award as % of base salary shown for Ms. Breves is the target award for her current role as Chief Financial Officer.

(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. Ms. Breves was promoted to the CFO position effective November 4, 2019, and the table above reflects the prorated target AICP award for each position held.

(3)
The "Corporate Payout Rate" is determined by the Corporation's actual performance measured against the 2019 performance metrics and before individual performance is considered. Differences in the payout rate among the executives are the result of variances in EBITDA weighting for the business segments, as described on page 36.

(4)
The "Actual Amount Awarded" is the amount awarded by the Compensation Committee after consideration of individual performance, detailed on pages 32-34. Mr. Bradley became ineligible to receive an AICP award for 2019 upon his separation from the Corporation pursuant to the terms of his separation agreement.

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Compensation Discussion and Analysis

AICP Performance Measures

Performance Measure
  How it Works
  Rationale/Description
EBITDA*   Determines 75% of corporate payout rate   Financial performance measure intended to focus the organization on operating at sustainable, profitable levels
Cash Conversion Cycle*   Determines 25% of corporate payout rate   Financial liquidity measure intended to focus the organization on the number of days that it takes to convert resource inputs into cash flows
Individual Performance   The Compensation Committee may modify an award by –15% to 30% of the target award based on individual performance   Based on an assessment of the executive's individual performance, including the contribution to overall corporate results and attainment of operational and strategic goals, and the priorities of achieving safety, environmental and financial results, as well as delivering on our critical success factors
*
See Appendix B for definitions and calculations of financial metrics.

Setting Corporate Performance Goals and Determining Results

The Compensation Committee strives to set challenging operational and financial performance targets that drive and motivate executives to achieve short- and long-term success. For 2019, the Compensation Committee set a minimum-maximum goal range to set goals that are rigorous, but achievable.

The target annual incentive award opportunity for our NEOs represents a percentage of base salary, which is set based on market data from our executive compensation peer group. Target annual incentive award levels are reviewed annually to ensure alignment with our compensation philosophy and business strategy.

The Compensation Committee set the target goals for AICP purposes in the first quarter of 2019, utilizing an approach that considers prior year's performance, expected 2019 financial performance and the annual operating plan, the impact of planned strategic activities, and fluctuations in global steel prices and other macroeconomic factors. In setting the 2019 goals, the Compensation Committee recognized that 2019 financial performance would be challenged to meet or exceed 2018 performance given the trend in global steel prices, and other macroeconomic factors, as illustrated on page 28. For 2019, the Compensation Committee determined that a sufficient degree of stretch existed in the target. The goals were considered rigorous when set.

In addition to determining corporate performance targets, the Compensation Committee approved EBITDA goals for each NEO. For the CEO, CFO and General Counsel, the EBITDA goal is based on the total corporate results, which generally measures the operational results of all business segments. For executives assigned to a specific segment, like Messrs. Matthews and Bruno, the EBITDA goal is 50% based on the EBITDA goal for that segment and 50% based on total corporate EBITDA. Mr. Matthews has responsibilities involving two of our reportable segments, and therefore, his AICP award is based on the EBITDA performance of both the Flat-rolled and Tubular segments, in addition to corporate EBITDA performance. 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.

The corporate 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.

2019 AICP Corporate Performance Targets And Results
($ are in Millions)

 
         

Performance Measure

    Minimum     Target     Maximum     Actual(1)     Payout Result(2)  

Cash Conversion Cycle

  40 days   32 days   24 days   37 days   69%  

EBITDA:

                               

Flat-Rolled

  $ 415   $ 830   $ 1,245   $ 652   79%  

Tubular

  $ 0   $ 70   $ 140   $ (21 )   0%  

Europe

  $ 115   $ 230   $ 345   $ 35   0%  

Total EBITDA

  $ 565   $ 1,200   $ 1,835   $ 721     62%  
(1)
The equity investee loss related to the Big River Steel acquisition was excluded from the adjusted EBITDA results used to determine AICP performance in accordance with the administrative procedures of the plan.

(2)
The payout result is 100% at target increasing to 200% of target for performance at the maximum level and decreasing to 50% of target for performance at the minimum threshold level.

36     |     United States Steel Corporation   |  2020 Proxy Statement     GRAPHIC


Table of Contents

Compensation Discussion and Analysis

Setting Individual Performance Goals and Determining Results

In determining the annual incentive awards, the Compensation Committee considers, among other things, the NEO's individual performance in delivering results for the established value creation drivers of safety, environmental and financial performance, as well as our critical success factors — moving up the talent curve, moving down the cost curve and winning in strategic markets. Each NEO has individual metrics tied to each of these goals that correspond with their particular area of responsibility. The CEO's individual performance objectives are reviewed by the Compensation 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 Compensation Committee uses its business judgment in reviewing each of these individual items and does not assign specific quantitative weighting to such items.

A description of each NEO's individual performance is included on pages 32-34.

Long-Term Incentive Compensation Program

Equity awards under the long-term incentive program (LTIP) are allocated among performance-based awards (60% of the LTIP award in 2019) and restricted stock units (RSUs) (40% of the LTIP award in 2019). The Compensation Committee believes that these long-term incentive vehicles best accomplish the objectives of aligning pay with performance and retaining executives.

Award Type / Performance Measure
  % of LTIP Award
  Description
  Vesting
Performance-Based Awards

Return on Capital Employed (ROCE)
  Comprises 30% of LTIP award   Measured over a three-year period, with greater weighting placed on the third year   Vests after three-year performance period if ROCE performance metrics are achieved
Performance-Based Awards

Relative TSR
  Comprises 30% of LTIP award   Measured over an annual and three-year period; requires above market performance compared to our peer group for target payout to be made   Vests after three-year performance period if annual and three-year TSR performance metrics are achieved
Time-Based RSUs   Comprises 40% of LTIP award   Supports retention and linked to stock price performance   Vests ratably over three years

On February 26, 2019, the Compensation Committee granted the long-term incentive awards set forth in the table below.

Long-Term Incentive Awards Granted in 2019

 
     

Executive

    Target
Equity-Based
Performance
Awards
    Restricted
Stock
Units
    Grant Date
Fair Value
of Equity
Awards
 

Burritt

  182,480   133,780   $ 8,000,006  

Breves

    28,520     20,900   $ 1,250,127  

Matthews

  28,520   20,900   $ 1,250,127  

Holloway

    28,520     20,900   $ 1,250,127  

Bruno

  28,520   20,900   $ 1,250,127  

Bradley

    47,900     35,120   $ 2,100,020  

Performance-Based Awards (60% of LTIP Award Value)

Performance awards provide an incentive for executives to earn shares 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 2019, the three-year performance period began on January 1, 2019, and will end on December 31, 2021 (the "2019 Performance Period"). The value of the performance awards granted for the 2019 Performance Period was divided equally between relative TSR performance awards and ROCE performance awards. The performance awards were granted in equity.

GRAPHIC     United States Steel Corporation   |  2020 Proxy Statement     |     37


Table of Contents

Compensation Discussion and Analysis

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 (see the "Performance Peer Group" on page 43), over the three-year performance period, as well as for each year within the performance period.

As noted in the table below, above market performance at the 55th percentile is required for target payout, and no payout is made for performance below the 30th percentile.

TSR Performance Award Goals

 
   

Level

  2019
Relative TSR Ranking
    Award Payout as a %
of Target(1)
 

  <30th percentile   0%  

Threshold

  30th percentile     50%  

Target

  55th percentile   100%  

Maximum

  ³80th percentile     200%  
(1)
Interpolation is used to determine actual awards between the threshold, target, and maximum levels. TSR performance is calculated over a three-year performance period as shown in Appendix B of this proxy statement.

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 are 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.

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.

2017 Performance Awards

The performance period for the performance awards granted in 2017 ended on December 31, 2019. The value of the 2017 performance awards was equally divided between relative TSR performance awards and ROCE performance awards. The 2017 ROCE performance awards were granted in cash. The 2017 TSR performance awards were granted in equity. Relative TSR performance was below the threshold goal, and ROCE performance achieved above the target performance goal, resulting in an overall payout of 73.5% of the target LTIP performance award. Mr. Holloway did not receive a grant of 2017 performance awards because he was not employed by the Corporation when the grant was made. Each of the relative TSR and ROCE goals, results and payouts are described below.

2017 TSR Performance Awards

The Corporation's relative annualized TSR compared to the selected peer group for the performance period was below the 30th percentile, and resulted in a payout at 0% of the target award. The payout for our NEOs is shown below.

2017 TSR Performance Award Payout

 
       

    Shares Granted
at Target
    Payout Rate     Shares vested as a
result of payout
    Fair Value of
Performance Awards
Upon vesting
 

Burritt

  52,190   0%   0   $ 0  

Breves

    2,510     0%     0   $ 0  

Matthews

  6,750   0%   0   $ 0  

Holloway

                 

Bruno

  3,030   0%