-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RT7IHsRnWKWRrBzHwXX2XhHnnMink7mpacB5DMk/QddWsXUE0iAhr7rrU5ZGN2pU KTNkylfy7Z4juenME+6haA== 0000912057-00-011112.txt : 20000314 0000912057-00-011112.hdr.sgml : 20000314 ACCESSION NUMBER: 0000912057-00-011112 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000425 FILED AS OF DATE: 20000313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USX CORP CENTRAL INDEX KEY: 0000101778 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 250996816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-05153 FILM NUMBER: 567121 BUSINESS ADDRESS: STREET 1: 600 GRANT ST CITY: PITTSBURGH STATE: PA ZIP: 15219-4776 BUSINESS PHONE: 4124331121 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES STEEL CORP/DE DATE OF NAME CHANGE: 19860714 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 USX Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X / No fee required / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ USX Corporation [LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 2000 Marathon Group Common Stock U.S. Steel Group Common Stock TUESDAY, APRIL 25, 2000 10:00 A.M., CENTRAL DAYLIGHT TIME Wynfrey Ballroom The Wynfrey Hotel at Riverchase Galleria 1000 Riverchase Galleria Birmingham, Alabama 35244 PLEASE VOTE PROMPTLY EITHER BY: - telephone, - the Internet, or - marking, signing and returning your proxy card. [LETTERHEAD] March 13, 2000 Dear USX Stockholder, We will hold our 2000 annual meeting of stockholders in the Wynfrey Ballroom of The Wynfrey Hotel at Riverchase Galleria, 1000 Riverchase Galleria, Birmingham, Alabama, on Tuesday, April 25, 2000 at 10:00 A.M., Central Daylight Time. We will elect directors and independent accountants at the meeting. The board of directors has nominated five of our 15 directors for re-election this year. They are all Class I directors, which means their terms will expire at the 2003 annual meeting. You can read about them, and about the other directors who will continue in office, on pages 12-17 of the proxy statement. All the nominees except one have been previously elected by the stockholders. We hope you will vote either by telephone or over the Internet or by marking, signing and returning your proxy card as soon as possible, whether or not you plan to attend the meeting. Sincerely, /s/ Thomas J. Usher Marathon Group - U. S. Steel Group TABLE OF CONTENTS Notice of Annual Meeting of Stockholders.............................. 4 Proxy Statement....................................................... 5 Questions and Answers............................................... 5 The Board of Directors.............................................. 7 Proposals of the Board PROPOSAL NO. 1 ELECTION OF DIRECTORS............................................. 11 Nominees for Director............................................. 12 Continuing Directors.............................................. 14 PROPOSAL NO. 2 ELECTION OF INDEPENDENT ACCOUNTANTS............................... 17 Security Ownership.................................................... 18 Executive Compensation and Other Information.......................... 20
3 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS on April 25, 2000 We will hold our 2000 annual meeting of stockholders in the Wynfrey Ballroom of The Wynfrey Hotel at Riverchase Galleria, 1000 Riverchase Galleria, Birmingham, Alabama 35244 on Tuesday, April 25, 2000 at 10:00A.M., Central Daylight Time, in order to: - elect five Class I directors, - elect independent accountants for 2000, and - transact any other business that properly comes before the meeting. You are entitled to vote at the meeting if you were an owner of record of either USX-Marathon Group or USX-U. S. Steel Group common stock at the close of business on February 25, 2000. If your ownership is through a broker or other intermediary, you will need to have proof of your stockholdings in order to be admitted to the meeting. A recent account statement, letter or proxy from your broker will suffice. By order of the Board of Directors, Dan D. Sandman Secretary Dated: March 13, 2000 USX Corporation 600 Grant Street 4 Pittsburgh, PA 15219-4776 PROXY STATEMENT WE HAVE SENT YOU THIS PROXY STATEMENT BECAUSE THE BOARD OF DIRECTORS IS ASKING YOU TO GIVE YOUR PROXY (THAT IS, THE AUTHORITY TO VOTE YOUR SHARES) TO OUR PROXY COMMITTEE SO THEY MAY VOTE YOUR SHARES ON YOUR BEHALF AT OUR ANNUAL MEETING OF STOCKHOLDERS. The members of the proxy committee are Thomas J. Usher, Paul J. Wilhelm and Robert M. Hernandez. They will vote your shares as you instruct. We will hold the meeting on April 25, 2000 in the Wynfrey Ballroom of The Wynfrey Hotel at Riverchase Galleria, 1000 Riverchase Galleria, Birmingham, Alabama. The proxy statement contains information about the matters being voted on and other information that may be helpful to you. We began the mailing of the proxy statement, the proxy card and the 1999 annual reports on or about March 13, 2000. QUESTIONS AND ANSWERS - ------------------------------------------------------------------------------- - - WHO MAY VOTE? You may vote if you were a holder of either USX-Marathon Group or USX- U.S. Steel Group common stock at the close of business on February 25, 2000. - - WHAT MAY I VOTE ON? You may vote on: - the election of five nominees to serve as Class I directors and - the election of PricewaterhouseCoopers LLP as our independent accountants. - - HOW DOES THE BOARD RECOMMEND I VOTE? The board recommends that you vote: - FOR each of the nominees for director and - FOR the election of PricewaterhouseCoopers LLP as independent accountants for 2000. - - HOW DO I VOTE? You may vote by telephone or over the Internet by following the instructions on the enclosed proxy card (or, if you own your shares through a broker or other intermediary, the enclosed voting instruction card). You may also vote by marking, signing and dating the enclosed proxy card or voting instruction card, and returning it in the prepaid envelope. The proxy committee will vote your shares in accordance with your directions. If you return a proxy card but do not mark the boxes showing how you wish to vote, the proxy committee will vote your shares FOR each proposal, but only if you have signed and dated the card. Unsigned proxy cards will not be voted at all. If you are a stockholder of record (that is, if you are registered on our books), you may also vote in person by attending the meeting. - - MAY I CHANGE MY VOTE? If you are a stockholder of record, you may change your vote or revoke your proxy at any time before your shares are voted at the meeting by: - voting again by telephone or over the Internet, - sending us a proxy card dated later than your last vote, - notifying the Secretary of USX in writing, or - voting at the meeting. - - WHAT IS THE VOTING RELATIONSHIP BETWEEN THE TWO CLASSES OF STOCK? Both classes of USX common stock _ USX-Marathon Group Common Stock and USX-U.S. Steel Group Common Stock _ will be voted together as a single class on all matters voted on at the meeting. Each share of Marathon stock will be entitled to one vote and each share of U.S. Steel stock will be entitled to 1.005 votes. We calculated the number of votes to which a share of U.S. Steel stock is entitled by using a formula described 5 in USX's Restated Certificate of Incorporation. It is based on the ratio of the market value of one share of U.S. Steel stock to one share of Marathon stock over the 20 business-day period ending on February 18, 2000. - - HOW MANY OUTSTANDING SHARES ARE THERE? At the close of business on February 25, 2000, which is the record date for the meeting, there were 311,767,687 shares of Marathon stock (representing 311,767,687 votes) and 88,398,085 shares of U.S. Steel stock (representing 88,840,075 votes) outstanding. - - HOW BIG A VOTE DO THE PROPOSALS NEED IN ORDER TO BE ADOPTED? Directors are elected by a plurality of the votes of the shares present in person at the meeting or represented by proxy and entitled to vote; that is, those receiving the most votes are elected, even with less than a majority. Independent accountants are elected by a majority of the votes of the shares present in person at the meeting or represented by proxy and entitled to vote. Abstentions are counted as votes present and entitled to vote and have the same effect as votes against a proposal. Broker non-votes are not counted as either votes for or votes against a proposal. Both abstentions and broker non-votes are counted in determining that a quorum is present for the meeting. - - WHAT ARE BROKER NON-VOTES? The New York Stock Exchange permits brokers to vote their customers' shares on routine matters when the brokers have not received voting instructions from their customers. The election of directors and the election of independent accountants are examples of routine matters on which brokers may vote in this way. Brokers may not vote their customers' shares on non-routine matters such as mergers and contested proposals unless they have received voting instructions from their customers. Non-voted shares on non-routine matters are broker non-votes. - - WHAT CONSTITUTES A QUORUM? Under our by-laws, a quorum is one-third of the voting power of the outstanding shares of stock entitled to vote. - - WILL MY VOTE BE CONFIDENTIAL? All voting records which identify stockholders are kept permanently confidential except as necessary to meet legal requirements and in other limited circumstances such as proxy contests. The vote tabulators, who are USX employees, and the inspector of election, who is independent, are required to execute confidentiality agreements. - - HOW WILL VOTING BE CONDUCTED ON OTHER MATTERS RAISED AT THE MEETING? If any matters are presented at the meeting other than the proposals on the proxy card, the proxy committee will vote on them using their best judgment. Your signed proxy card, or your telephone or Internet vote, gives them the authority to do this. Under our by-laws, notice of any matter to be presented by a stockholder for a vote at the meeting must have been received by our corporate secretary on or after December 24, 1999 and no later than January 23, 2000, and it must have been accompanied by certain information about the stockholder presenting it. We have not received notice of any matter to be presented other than those on the proxy card. - - WHEN MUST SHAREHOLDER PROPOSALS BE SUBMITTED FOR THE 2001 ANNUAL MEETING? Shareholder proposals submitted for inclusion in our 2001 proxy statement must be received in writing by our corporate secretary no later than 5:00 P.M. Eastern Time on November 13, 2000. Shareholder proposals submitted outside the process for inclusion in the proxy statement must be received from stockholders of record on or after December 28, 2000 and no later than January 27, 2001 and must be accompanied by certain information about the stockholders making the proposals, in accordance with our by-laws. 6 THE BOARD OF DIRECTORS Under our by-laws and the laws of Delaware, USX's state of incorporation, the business and affairs of USX are managed under the direction of the board of directors. The board met eight times in 1999. The directors spend considerable time preparing for board and committee meetings, and they attend as many meetings as possible. In 1999, their attendance averaged 93 percent. The board has five principal committees, all the members of which are non-employee directors. The table below shows the current committee memberships of each director and the number of meetings that each committee held in 1999.
ORGANIZATION AND CORPORATE BOARD COMMITTEE AUDIT COMPENSATION GOVERNANCE PUBLIC POLICY COMMITTEE ON MEMBERSHIPS DIRECTOR COMMITTEE COMMITTEE COMMITTEE COMMITTEE FINANCIAL POLICY ---------------------------------------------------------------------------------------------------------- Neil A. Armstrong X X X Jeanette G. Brown X X X* ---------------------------------------------------------------------------------------------------------- J. Gary Cooper X X X Charles A. Corry X X X ---------------------------------------------------------------------------------------------------------- Charles R. Lee X X X* Paul E. Lego X X X ---------------------------------------------------------------------------------------------------------- Ray Marshall X X X John F. McGillicuddy X X X ---------------------------------------------------------------------------------------------------------- Seth E. Schofield X* X X John W. Snow X* X X Douglas C. Yearley X X X* ---------------------------------------------------------------------------------------------------------- Number of Meetings in 1999 5 5 5 4 4 ----------------------------------------------------------------------------------------------------------
* Chairman - ------------------------------------------------------------------------------- AUDIT COMMITTEE The Audit Committee is, among other things, responsible for: - ensuring the integrity of our financial reports, - recommending to the board the independent accountants to be nominated for election by the stockholders, - reviewing the independence of the independent accountants, - reviewing the scope of the audit activities of the independent accountants and our internal auditors, - providing direction to the internal audit staff and the independent accountants, - approving the independent accountants' audit fee, - reviewing audit results, - reviewing and approving the annual financial statements, the annual reports to stockholders, and the Annual Report on Form 10-K filed with the Securities and Exchange Commission, - determining that appropriate controls are in place to ensure that we operate in accordance with our procedures and codes of conduct, - reviewing compliance with our business conduct policies, - reviewing significant accounting, auditing and Securities and Exchange Commission pronouncements, - reviewing: -- matters pertaining to potentially divergent interests, if any, between the holders of the two classes of common stock, 7 -- our policies and practices with respect to the two business groups, and -- the board's performance of its fiduciary duties to both classes of stockholders, and - reporting annually to the board on the adequacy of the committee's charter. - ------------------------------------------------------------------------------- COMPENSATION The Compensation Committee is responsible for: COMMITTEE - making recommendations to the board on all matters of policy and procedures relating to executive compensation, - approving the salaries of officers (other than the officer-directors, whose salaries are approved by the board), - administering the Annual Incentive Compensation Plan and the Senior Executive Officer Annual Incentive Compensation Plan, and - administering the plans under which long-term incentives are granted and approving grants of options, stock appreciation rights and restricted stock under those plans. The committee is also authorized to: - adopt and amend employee benefit plans, - review the activities of United States Steel and Carnegie Pension Fund as administrator of certain benefit plans, and - make recommendations to the board concerning policy matters relating to employee benefits. - ------------------------------------------------------------------------------- ORGANIZATION AND The Organization and Corporate Governance Committee: CORPORATE - makes recommendations to the board concerning the GOVERNANCE appropriate size and composition of the board, including COMMITTEE -- candidates for election as directors, -- the composition and functions of board committees, -- the compensation of non-employee directors, and -- all matters relating to the development and effective functioning of the board, - confers with management concerning plans for succession to executive management positions, - assesses and makes recommendations concerning overall corporate governance to the extent specific matters are not the assigned responsibility of other board committees, and - considers nominees recommended by stockholders for election as directors. In recommending candidates for election as directors, the committee, among other considerations, studies the composition of the board and tries to identify candidates with broad knowledge and experience in business and society in general. Recommendations of candidates by stockholders of record should be sent, together with the nominee's qualifications and consent to be considered as a nominee, to the Secretary of USX for presentation to the committee. 8 PUBLIC POLICY The Public Policy Committee reviews and makes recommendations COMMITTEE to the board concerning corporate policy related to: - community and governmental relations, - codes of conduct, - environmental, safety and health matters, - investor relations, - trade matters, and - other broad social, political and public issues. - ------------------------------------------------------------------------------- COMMITTEE ON The Committee on Financial Policy provides oversight with FINANCIAL POLICY respect to the appropriate capital structure and financial policies of USX. Its key responsibility in that role is to make recommendations to the board concerning dividends. The board has also delegated to the committee the authority to: - approve financings by USX (except financings which involve the issuance of common stock), including the recommendation of action to subsidiaries, partnerships and joint ventures, - authorize loans to outside entities, guarantees by USX of the credit of others, and other uses of USX credit, and - approve USX's funding policy for its pension and other post-employment benefit plans. In addition, the committee is responsible for reviewing the performance of United States Steel and Carnegie Pension Fund as investment manager and/or trustee of our employee benefit plans. It also receives reports and makes recommendations to the board on various financial matters. 9 COMPENSATION OF DIRECTORS Our by-laws require that each non-employee director be paid allowances and attendance fees as the board may from time to time determine. Directors who are employees of USX receive no compensation for their service on the board. We pay our non-employee directors as follows: Annual Retainer $60,000 Committee Membership Fee $ 5,000 ($6,000 for committee chairmen) Meeting Fee (for each board or committee meeting) $ 1,600 - -----------------------------------------------------------------------------------------
Under our Deferred Compensation Plan for Non-Employee Directors, directors may defer some or all of their annual retainers in the form of Common Stock Units or cash. Each of our directors has elected to defer at least half of his or her retainer in the form of Common Stock Units, and some have deferred their entire retainers in this way. All new directors are required to defer at least half of their retainers as Common Stock Units. 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. Then, when a director leaves the board, he or she must take actual shares of common stock corresponding to the number of Common Stock Units in his or her account. We believe this is an effective way to increase the directors' equity holdings in USX and thereby further align their interest with that of the stockholders. Every January, we credit each non-employee director's deferred stock account with both Marathon Common Stock Units and U. S. Steel Common Stock Units in the same ratio that the outstanding shares of each class of stock on a fully diluted basis had to each other on the last trading day of the previous year. "Fully diluted" means that we assume the exercise of all currently outstanding stock options and the conversion to common stock of all convertible securities if the exercise or conversion would result in lower earnings per share. The ongoing value of each Common Stock Unit equals the market price of the corresponding class of stock (Marathon or U. S. Steel). When dividends are paid on the common stock, we credit each account with equivalent amounts in additional Common Stock Units. Directors may also defer portions of their annual retainers in the form of cash, which may be invested in certain investment options. When a director leaves the board, he or she receives the deferred cash either in a lump sum or in installments over ten years. If USX 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 and deferred cash accounts. Under our Non-Employee Director Stock Plan, each non-employee director may receive a grant of up to 500 shares of each class of common stock. In order to qualify, a director must first purchase an equivalent number of shares in the open market during the 60 days following his or her initial election to the board. The shares granted under this plan may not be sold until the director leaves the board. Our retirement policy for directors requires non-employee directors to retire at the end of the month in which they turn 72, even if their terms have not expired. Employee directors must retire from the board when they retire as employees, except that the chief executive officer may remain on the board, at the board's request, through the month in which he or she turns 70. Our policy also provides that directors who undergo a significant change in their business or professional careers should volunteer to resign from the board. 10 PROPOSALS OF THE BOARD The board will present the following proposals at the meeting: PROPOSAL NO. 1 ELECTION OF DIRECTORS USX's Certificate of Incorporation divides the directors into three classes: Class I, Class II and Class III. Each class must consist, as nearly as possible, of one-third of the directors. Once elected, directors serve for a term of three years and until their successors are duly elected and qualified. At each annual meeting, directors who are elected to succeed directors whose terms have expired are identified as being of the same class as those they succeed. A director elected to fill a vacancy is elected to the same class as the director he or she succeeds, and a director elected to fill a newly created directorship holds office until the next election of the class to which he or she is elected. Our by-laws require the board to fix the number of directors, and the board has set the maximum number of directors at 16. The current five Class I directors are nominees for election this year for a three-year term that will expire at the 2003 annual meeting. All five of them except Mr. Cazalot (who was elected by the Board effective March 3, 2000), and all of the continuing Class II and Class III directors except Mr.Cooper (who was elected by the Board effective May 1, 1999), have previously been elected by the stockholders. Of the 15 current directors, four are officers of USX, one is a retired officer of USX, six have top executive experience with a wide variety of businesses, one was with the National Aeronautics and Space Administration and served as a university professor before entering business, one had a career as a distinguished chemist before becoming an educator, one has a distinguished career in education in addition to service as a member of the President's Cabinet, and one had a distinguished career in the military and the diplomatic corps before entering business. A brief statement about the background of each nominee and each continuing director is given on the following pages. If any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the board. Our by-laws describe the procedures that must be used in order for someone nominated by a stockholder of record to be eligible for election as a director. They require that notice be received by the Secretary at least 45 days, but not more than 75 days, before the first anniversary of the date on which we first mailed our proxy materials for the preceding year's annual meeting of stockholders. The notice must contain certain information about the nominee, including his or her age, address, occupation and share ownership, as well as the name, address and share ownership of the stockholder giving the notice. 11 NOMINEES FOR CLASS I DIRECTOR TERMS EXPIRE 2003 [PHOTO] NEIL A. ARMSTRONG DIRECTOR SINCE 1984 AGE 69 ------------------------------------------------------------ CHAIRMAN, AIL SYSTEMS INC. (DEFENSE ELECTRONICS COMPANY) Mr. Armstrong received a BS degree in aeronautical engineering from Purdue University and an MS degree in aerospace engineering from the University of Southern California. For 17 years he served with the National Aeronautics and Space Administration and its predecessor agency as engineer, test pilot, astronaut and administrator. From 1971 to 1979 he was professor of aerospace engineering at the University of Cincinnati. In 1982 he became Chairman of CTA, Inc. and retired from that position in 1992. He has served as Chairman of AIL Systems Inc. since June 1989. He is a director of Cinergy Corp., Milacron Inc., Cordant Technologies, Inc. and RTI International Metals, Inc. and is a member of the National Academy of Engineering. [PHOTO] CLARENCE P. CAZALOT, JR. DIRECTOR SINCE MARCH 3, 2000 AGE 49 ------------------------------------------------------------ VICE CHAIRMAN-USX CORPORATION AND PRESIDENT-MARATHON OIL COMPANY Mr. Cazalot graduated from Louisiana State University in 1972 with a BS degree in geology and joined Texaco Inc. that same year as a geophysicist. After holding a number of management positions, Mr. Cazalot was elected a Vice President of Texaco Inc. and President of Texaco's Latin America/West Africa Division in 1992. In 1994 he was named President of Texaco Exploration and Production Inc., and in 1997 he was named President of International Marketing and Manufacturing. Mr. Cazalot was named President-International Production and Chairman of London-based Texaco Ltd. in 1998. He was named Vice President of Texaco Inc. and President-Production Operations in 1999. Mr. Cazalot was elected Vice Chairman-USX Corporation and President-Marathon Oil Company effective March 3, 2000. [PHOTO] ROBERT M. HERNANDEZ DIRECTOR SINCE 1991 AGE 55 ------------------------------------------------------------ VICE CHAIRMAN & CHIEF FINANCIAL OFFICER, USX CORPORATION Mr. Hernandez graduated from the University of Pittsburgh with a Bachelor's degree in economics and mathematics and received an MBA from the Wharton Graduate School of Finance and Commerce at the University of Pennsylvania. He joined USX in 1968 and held various finance and accounting positions until 1980 when he was appointed Assistant Corporate Comptroller. He was elected Vice President and Treasurer in 1984 and Senior Vice President and Comptroller in 1987. In 1989, he was appointed President of the U.S. Diversified Group and in 1990 elected Senior Vice President-Finance & Treasurer. He was elected director and Executive Vice President-Accounting & Finance & Chief Financial Officer in 1991 and Vice Chairman & Chief Financial Officer in 1994. Mr. Hernandez is a director and Chairman of RTI International Metals, Inc.; a director of Transtar, Inc., and a director and Chairman of the Executive Committee of ACE Limited; a trustee of BlackRock Funds; a director of the Pennsylvania Chamber of Business and Industry; and a member of the Pennsylvania Business Roundtable. 12 [PHOTO] JOHN F. MCGILLICUDDY DIRECTOR SINCE 1984 AGE 69 ------------------------------------------------------------ RETIRED CHAIRMAN OF THE BOARD, CHEMICAL BANKING CORPORATION Mr. McGillicuddy graduated from Princeton University in 1952 and received an LLB degree from Harvard Law School in 1955. He joined Manufacturers Hanover Trust Company in 1958, became Vice President in 1962, Senior Vice President in 1966 and Executive Vice President and Assistant to the Chairman in 1969. In 1970 he was elected Vice Chairman and a director of Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company, and he became President of each in 1971. Mr. McGillicuddy was named Chairman and Chief Executive Officer of each company in 1979. Following the merger of Manufacturers Hanover Corporation and Chemical Banking Corporation on January 1, 1992, Mr. McGillicuddy became Chairman of the Board and Chief Executive Officer of the new Chemical Banking Corporation and retired in January 1994. He is a director of Southern Peru Copper Corporation, Young & Rubicam Inc. and UAL Corporation. He is Chairman of New York-Presbyterian Hospital, a member of The Business Council and a Trustee Emeritus of Princeton University. [PHOTO] JOHN W. SNOW DIRECTOR SINCE 1995 AGE 60 ------------------------------------------------------------ CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CSX CORPORATION (A MAJOR TRANSPORTATION COMPANY) Mr. Snow did undergraduate work at Kenyon College and the University of Toledo, received a Ph.D. in economics from the University of Virginia and earned a law degree from George Washington University Law School. Following an academic career as an economics and law professor and several high-level presidential appointments with the U.S. Department of Transportation and the National Highway Traffic Safety Administration, Mr. Snow joined CSX in 1977 as Vice President-Government Affairs for Chessie System Inc. After a number of other senior management assignments, he was elected President and Chief Operating Officer of CSX in 1988, President and Chief Executive Officer in 1989 and Chairman, President and Chief Executive Officer in 1991. Mr. Snow is a director of Circuit City Stores, Inc., GTE Corporation and Johnson & Johnson. He is also Chairman of the Board of the Association of American Railroads, a member of the boards of trustees of The Johns Hopkins University and of the University of Virginia Darden School Foundation; a member of the Policy Committee of the Business Roundtable and of the Executive Committee of The Business Council; and Chairman of the Ron Brown Award for Corporate Citizenship. 13 CONTINUING CLASS II DIRECTORS TERMS EXPIRE 2001 [PHOTO] J. GARY COOPER DIRECTOR SINCE 1999 AGE 63 ------------------------------------------------------------ CHAIRMAN AND CHIEF EXECUTIVE OFFICER, COMMONWEALTH NATIONAL BANK (COMMERCIAL BANK) Ambassador Cooper graduated from the University of Notre Dame with a BS degree in finance and attended Harvard University's Senior Managers in Government program. He was awarded an honorary doctor of law degree from Troy University. A retired major general in the U.S. Marine Corps, Ambassador Cooper was twice elected to the Alabama legislature, was commissioner of the Alabama Department of Human Resources and was appointed Assistant Secretary of the Air Force during the Bush administration. He was the United States Ambassador to Jamaica from 1994 to 1997. Ambassador Cooper is a director of GenCorp Inc. and Protective Life Corporation. [PHOTO] CHARLES R. LEE DIRECTOR SINCE 1991 AGE 60 ------------------------------------------------------------ CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, GTE CORPORATION (TELECOMMUNICATIONS COMPANY) Mr. Lee received a Bachelor's degree in metallurgical engineering from Cornell University and an MBA with distinction from the Harvard Graduate School of Business. He served in various financial and management positions before becoming Senior Vice President-Finance for Penn Central Corp. and then Columbia Pictures Industries Inc. In 1983 he joined GTE as Senior Vice President of Finance and in 1986 was named Senior Vice President of Finance and Planning. He was elected President, Chief Operating Officer and director in December 1988 and elected to his present position in May 1992. Mr. Lee is a director of The Procter & Gamble Company, United Technologies Corporation, the Stamford Hospital Foundation, and the New American Schools Development Corporation. He is a member of The Business Council, the Business Roundtable, The Conference Board and the New American Realities Committee of the National Planning Association. He is also a Trustee Emeritus and Presidential Councillor of Cornell University. [PHOTO] RAY MARSHALL DIRECTOR SINCE 1994 AGE 71 ------------------------------------------------------------ PROFESSOR, UNIVERSITY OF TEXAS Dr. Marshall graduated from Millsaps College in 1949 with a BA degree and received an MA in economics from the Louisiana State University in 1950 and a Ph.D. in economics from the University of California at Berkeley in 1954. From 1962 to 1967, Dr. Marshall was a professor of economics at the University of Texas at Austin. He was Chairman of the Department of Economics and held the chair of Alumni Professor of Economics at the University of Kentucky from 1967 to 1969. He returned to the University of Texas as Chairman of the Department of Economics and Director of the Center for the Study of Human Resources in 1969. In 1977 Dr. Marshall became the U.S. Secretary of Labor under the Carter Administration. Dr. Marshall currently holds the Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs at the University of Texas at Austin. 14 [PHOTO] THOMAS J. USHER DIRECTOR SINCE 1991 AGE 57 ------------------------------------------------------------ CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER, USX CORPORATION Mr. Usher graduated from the University of Pittsburgh with a BS degree in industrial engineering, an MS degree in operations research and a Ph.D. in systems engineering. He joined USX in 1965 and held various positions in industrial engineering. From 1975 through 1979, he held a number of management positions at USX's South and Gary Works. He was elected Executive Vice President-Heavy Products in 1986, President-U.S. Steel Group and director of USX in 1991, President & Chief Operating Officer of USX in 1994 and Chairman of the Board & Chief Executive Officer effective July 1, 1995. He is a director of PNC Bank, N.A., PPG Industries, Inc., Transtar, Inc., and the U.S.-Japan Business Council; Vice Chairman of the International Iron and Steel Institute; a member of the Policy Committee of the Business Roundtable; Director and Chairman of the U.S.-Korea Business Council; a director of the American Petroleum Institute; and a member of the Board of Trustees of the University of Pittsburgh and of the Board of the Extra Mile Education Foundation. [PHOTO] PAUL J. WILHELM DIRECTOR SINCE 1995 AGE 58 ------------------------------------------------------------ VICE CHAIRMAN-USX CORPORATION AND PRESIDENT-U. S. STEEL GROUP Mr. Wilhelm received a BS degree in mechanical engineering from Carnegie-Mellon University in 1964 and joined USX following graduation. After holding a number of management positions, Mr.Wilhelm in 1992 was elected Vice President-Technology & Management Services for the U.S. Steel Group. In 1993 he was named President of USS/Kobe Steel Company, a joint venture between subsidiaries of USX and Kobe Steel Ltd. Mr. Wilhelm was elected Vice President-Operations of the U.S. Steel Group in 1994, President-U.S. Steel Group the same year, and director of USX in 1995. He was named Vice Chairman-USX Corporation effective March 1, 2000. Mr. Wilhelm is a director of Union Carbide Corporation, a member of the Association of Iron and Steel Engineers, Vice Chairman of the American Iron and Steel Institute, Chairman of the Japan-America Society of Pennsylvania and a member of the Board of Trustees of Carnegie Mellon University. 15 CONTINUING CLASS III DIRECTORS TERMS EXPIRE 2002 [PHOTO] JEANETTE G. BROWN DIRECTOR SINCE 1993 AGE 71 ------------------------------------------------------------ RETIRED DIRECTOR OF CORPORATE RESEARCH, BP AMERICA Dr. Brown graduated from Ohio University in 1950 with a BS degree and received an MS degree from Western Reserve University in 1958. She holds eight D.Sc. (hon.) degrees. Dr. Brown completed the Executive Management School, University of California, Berkeley. From 1950 to 1988 she was employed by BP America (formerly The Standard Oil Company) in various research positions. She retired as Director of Corporate Research, Environmental and Analytical Sciences. She is a director of AGA Gas, Inc. Dr. Brown is a trustee of the Ohio University Foundation and was Distinguished Visiting Professor and Director, Research Enhancement there from 1989-1995. She was appointed to the Ohio Boards of Regents in 1995, and is Chair of the Board of Trustees of The Cleveland Scholarship Programs, Inc. and a trustee of the Cleveland Orchestra. She also serves on the White House Joint High Level Advisory Panel on US/Japan Science and Technology Agreements. [PHOTO] CHARLES A. CORRY DIRECTOR SINCE 1988 AGE 68 ------------------------------------------------------------ RETIRED CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER, USX CORPORATION Mr. Corry graduated from the University of Cincinnati in 1955 with a BA degree and received a JD degree from the University of Cincinnati Law School. After serving in the U.S. Air Force, he joined USX in 1959, holding various finance and accounting positions prior to being named Vice President-Corporate Planning in 1979. Mr. Corry was elected Senior Vice President and Comptroller in 1982 and President of the U. S. Diversified Group of USX in 1987. He was elected President of USX in 1988 and elected Chairman of the Board & Chief Executive Officer in 1989, the position he held until his retirement on June 30, 1995. He is a director of Mellon Financial Corp. and Omnova Solutions Inc., a member of the Federal Judicial Nominating Commission and a member of The Business Council. [PHOTO] PAUL E. LEGO DIRECTOR SINCE 1988 AGE 69 ------------------------------------------------------------ RETIRED CHAIRMAN, WESTINGHOUSE ELECTRIC CORPORATION Mr. Lego graduated from the University of Pittsburgh with BS and MS degrees in electrical engineering after service in the U.S. Army. He joined Westinghouse in 1956 at the East Pittsburgh plant and held a number of engineering and management positions prior to being named a Vice President in 1979, Executive Vice President in 1980 and Senior Executive Vice President, Corporate Resources in 1985. In 1988 Mr. Lego was elected a director and President and Chief Operating Officer of Westinghouse and, in 1990, Chairman and Chief Executive Officer. Mr. Lego retired in January 1993. He is Chairman of the Board of Commonwealth Industries, Inc. and a director of Dominion Resources Inc., Lincoln Electric Company and Orlimar Golf Company; a trustee of the University of Pittsburgh; and a member of The Business Council. 16 [PHOTO] SETH E. SCHOFIELD DIRECTOR SINCE 1994 AGE 60 ------------------------------------------------------------ RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER, USAIR GROUP Mr. Schofield graduated from the Harvard Business School Program for Management Development in 1975. He served in various corporate staff positions after joining USAir in 1957 and became Executive Vice President-Operations in 1981. Mr. Schofield served as President and Chief Operating Officer from 1990 until 1991. He was elected President and Chief Executive Officer in 1991 and became Chairman of the boards of USAir Group and USAir, Inc. in 1992. He retired in January 1996. Mr. Schofield is a director of Calgon Carbon Corp. [PHOTO] DOUGLAS C. YEARLEY DIRECTOR SINCE 1992 AGE 64 ------------------------------------------------------------ CHAIRMAN OF THE BOARD, PHELPS DODGE CORPORATION (A MAJOR INTERNATIONAL MINING AND MANUFACTURING CONCERN) Mr. Yearley graduated from Cornell University with a Bachelor's degree in metallurgical engineering and attended the Program for Management Development at Harvard Business School. He joined Phelps Dodge in 1960 as Director of Research. He held several key positions before being elected Executive Vice President and a director in 1987, Chief Executive Officer in 1989 and President in 1991. He is a director of Lockheed Martin Corporation, J. P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company, and Southern Peru Copper Corporation; a member of the Business Council and the Copper Development Association; and a director of the International Copper Association, the National Mining Association, the Phoenix Symphony and the Center for Compatible Economic Development. - -------------------------------------------------------------------------------- PROPOSAL NO. 2 ELECTION OF INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") has served as independent accountants of USX for many years. We believe that their knowledge of USX's business and its organization gained through this period of service is very valuable. In accordance with the established policy of the firm, partners and employees of PricewaterhouseCoopers assigned to the USX engagement are periodically rotated, thus giving USX the benefit of new thinking and approaches in the audit area. We expect representatives of PricewaterhouseCoopers to be present at the meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions. For the year 1999, PricewaterhouseCoopers performed professional services principally in connection with audits of the consolidated financial statements of USX and the financial statements of the Marathon Group and the U.S. Steel Group, certain subsidiaries and certain pension and other employee benefit plans. They also reviewed quarterly reports and other filings with the Securities and Exchange Commission and other agencies. 17 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table furnishes information concerning all persons known to USX to beneficially own five percent or more of any class of the voting stock of USX:
Name and Address Amount and Nature of Percent of Class of Beneficial Owner Beneficial Ownership Class - --------------------------------------------------------------------------------------------------------------- Marathon Stock FMR Corp., Edward C. Johnson 3d and 23,669,301 (1) 7.617 (1) Abigail P. Johnson 82 Devonshire Street Boston, MA 02109 Marathon Stock Capital Research and Management Company 16,300,000 (2) 5.3 (2) 333 South Hope Street 55th Floor Los Angeles, CA 90071 Marathon Stock Wellington Management Company, LLP 15,422,800 (3) 5.00 (3) 75 State Street Boston, MA 02109 Steel Stock Merrill Lynch & Co., Inc. 7,459,970 (4) 8.44 (4) (on behalf of Merrill Lynch Asset Management Group) World Financial Center, North Tower 250 Vesey Street New York, NY 10381 Steel Stock The Prudential Insurance Company 5,269,642 (5) 5.94 (5) of America 751 Broad Street Newark, NJ 07102 - -------------------------------------------------------------------------------
(1) Based on Schedule 13G dated February 14, 2000 which indicates that FMR Corp. had sole voting power over 4,390,089 shares, shared voting power over no shares, sole dispositive power over 23,669,301 shares and shared dispositive power over no shares. According to such Schedule 13G, Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 18,140,412 shares; Edward C. Johnson 3d, FMR Corp., through its control of Fidelity and the various investment companies to which Fidelity acts as investment adviser (the "Funds"), each has sole power to dispose of the 18,140,412 shares owned by the Funds; neither FMR Corp., nor Edward C. Johnson 3d has the sole power to vote or direct the voting of the shares held by the Funds; Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 3,753,247 shares; Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 3,753,247 shares and sole power to vote or to direct the voting of 2,898,147 shares and no power to vote or to direct the voting of 855,100 shares; Fidelity International Limited ("FIL"), once a majority-owned subsidiary of Fidelity but now operating as an independent entity, is the beneficial owner of 1,775,642 shares; and FIL has sole dispositive power over 1,775,642 shares owned by various international funds for which it acts as an investment advisor, sole power to vote or direct the voting of 1,491,942 such shares, and no power to vote or direct the voting of 283,700 such shares. FMR Corp. and FIL are of the view that they are not acting as a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934. (2) Based on Schedule 13G dated February 10, 2000 which indicates that Capital Research and Management Company had sole voting power over no shares, shared voting power over no shares, sole dispositive power over 16,300,000 shares and shared dispositive power over no shares. (3) Based on Schedule 13G dated February 9, 2000 which indicates that Wellington Management Company, LLP had sole voting power over no shares, shared voting power over 679,100 shares, sole dispositive power over no shares and shared dispositive power over 15,422,800 shares. (4) Based on Schedule 13G dated February 4, 2000 which indicates that Merrill Lynch & Co., Inc. had sole voting power over no shares, shared voting power over 7,459,970 shares, sole dispositive power over no shares and shared dispositive power over 7,459,970 shares. Merrill Lynch & Co., Inc. disclaims beneficial ownership of the shares shown above. (5) Based on Schedule 13G dated February 7, 2000 which indicates that The Prudential Insurance Company of America ("Prudential") had sole voting power over 383,073 shares, shared voting power over 4,531,660 shares, sole dispositive power over 383,073 shares and shared dispositive power over 4,562,282 shares. Prudential does not admit beneficial ownership of the shares shown above. Included in the total number of shares are 299,960 convertible preferred shares which are convertible into Steel Stock at a ratio of 1.0811 Steel Stock share for each preferred share. 18 SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the number of shares of each class of USX common stock beneficially owned as of January 31, 2000 (except as noted) by each director, by each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group. No director or executive officer beneficially owned, as of the applicable date, any equity securities of USX other than those shown.
Marathon Stock Steel Stock Name Shares Shares - --------------------------------------------------------------------------------------- Neil A. Armstrong (1) ................ 12,713 4,150 Victor G. Beghini (2)(3).............. 615,468 138,224 Jeanette G. Brown (1) ................ 6,463 2,823 Clarence P. Cazalot, Jr.(2)(3)........ 300,000 0 J. Gary Cooper (1).................... 2,461 1,376 Charles A. Corry (1)(2)(3)............ 62,926 80,932 Charles C. Gedeon (2)(3).............. 7,609 124,866 Carl P. Giardini (2)(3)............... 205,917 12,680 Robert M. Hernandez (2)(3)(4)......... 445,154 188,426 Charles R. Lee (1).................... 11,605 4,399 Paul E. Lego (1)...................... 9,801 3,134 Ray Marshall (1)...................... 9,223 3,636 John F. McGillicuddy (1).............. 12,008 3,850 Dan D. Sandman (2)(3)................. 131,993 88,676 Seth E. Schofield (1)................. 6,795 2,854 John W. Snow (1)...................... 3,926 1,932 Thomas J. Usher (2)(3)................ 704,538 501,225 Paul J. Wilhelm (2)(3)................ 96,869 240,680 Douglas C. Yearley (1)................ 7,117 3,067 All Directors and Executive Officers as a group.......................... 3,467,227 2,130,960 (38 persons) (1)(2)(3)(5) - --------------------------------------------------------------------------------------- (1) Includes Common Stock Units credited under the USX Corporation Deferred Compensation Plan for Non-Employee Directors Marathon Stock Steel Stock as follows: Common Stock Units Common Stock Units - --------------------------------------------------------------------------------------- Neil A. Armstrong..................... 11,214 3,850 Jeanette G. Brown..................... 5,389 1,736 J. Gary Cooper........................ 1,454 367 Charles A. Corry...................... 2,927 932 Charles R. Lee........................ 9,606 3,199 Paul E. Lego.......................... 8,227 2,817 Ray Marshall.......................... 8,137 2,540 John F. McGillicuddy.................. 10,009 3,450 Seth E. Schofield..................... 5,704 1,754 John W. Snow.......................... 2,927 933 Douglas C. Yearley.................... 6,118 2,067 - ---------------------------------------------------------------------------------------
(2) Includes shares held under the USX Savings Fund Plan, the Marathon Thrift Plan, the USX Dividend Reinvestment and Direct Stock Purchase Plans and the 1990 Stock Plan. (3) Includes shares which may be acquired upon exercise of outstanding options as follows (all options other than those granted on May 25, 1999 and on March 3, 2000 are currently exercisable): Mr. Usher: Marathon Stock 648,600, Steel Stock 466,400; Mr. Corry: Marathon Stock 60,000, Steel Stock 80,000; Mr.Beghini: Marathon Stock 481,250, Steel Stock 112,750; Mr. Cazalot: Marathon Stock 300,000 (granted March 3, 2000), Steel Stock none; Mr. Wilhelm: Marathon Stock 85,500, Steel Stock 219,750; Mr. Hernandez: Marathon Stock 400,450, Steel Stock 164,500; Mr.Sandman: Marathon Stock 105,400, Steel Stock 79,325; Mr. Giardini: Marathon Stock 133,420, Steel Stock 12,680; Mr. Gedeon: Marathon Stock none, Steel Stock 112,500; and all directors and executive officers as a group: Marathon Stock 2,821,010, Steel Stock 1,878,660. (4) As of January 31, 2000 United States Steel and Carnegie Pension Fund, trustee of the United States Steel Corporation Plan for Employee Pension Benefits and the United States Steel Corporation Plan for Non-Union Employee Pension Benefits, owned 587,680 shares of Marathon Stock. This stock was received in exchange for common stock of Texas Oil & Gas Corp. Mr. Hernandez is chairman and one of seven members of the Investment Committee of the trustee. The board of directors of the trustee has by formal resolution delegated sole power to vote and dispose of such stock to a subcommittee of the Investment Committee which is composed of members who are not officers or employees of USX. Mr. Hernandez disclaims beneficial ownership of such stock. (5) Total shares beneficially owned in each case constitute less than one percent of the outstanding shares of each class except that all directors and executive officers as a group, including Mr. Beghini and Mr. Giardini (who have retired), own 1.11 percent of the Marathon Stock and 2.41 percent of the Steel Stock. 19 EXECUTIVE COMPENSATION AND OTHER INFORMATION The following table sets forth certain information concerning the compensation awarded to, earned by or paid to (a) Mr. Usher, (b) the other four most highly compensated executive officers of USX who were serving as executive officers at the end of 1999, and (c) Mr. Beghini and Mr. Giardini, each of whom would have been among the other four most highly compensated executive officers if he had been serving as an executive officer at the end of 1999, for services rendered in all capacities during 1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE ======================================================================================================================== LONG-TERM ANNUAL COMPENSATION COMPENSATION(4) ---------------------------------------------- ------------------------- NAME SALARY AND OTHER RESTRICTED ALL AND BONUS ANNUAL STOCK OPTIONS/ OTHER PRINCIPAL SALARY BONUS TOTAL COMPENSATION AWARD(S) SARS COMPENSATION POSITION YEAR ($) ($) ($) ($) ($)(1) (#)(2) ($)(3) - ------------------------------------------------------------------------------------------------------------------------ T. J. Usher 1999 1,241,667 1,400,000 2,641,667 13,660 291,151 324,000 119,108 Chairman 1998 1,097,917 1,320,000 2,417,917 11,549 354,840 270,000 126,805 & Chief 1997 981,250 1,420,000 2,401,250 16,820 89,199 200,000 136,079 Executive Officer - ------------------------------------------------------------------------------------------------------------------------ V. G. Beghini 1999 687,500 1,000,000 1,687,500 3,724 0 0 104,364 Vice Chairman- 1998 775,000 900,000 1,675,000 0 0 120,000 123,543 Marathon Group 1997 723,333 1,050,000 1,773,333 0 0 90,000 116,084 and President- Marathon Oil Company (RETIRED OCTOBER 31, 1999) - ------------------------------------------------------------------------------------------------------------------------ P. J. Wilhelm 1999 604,167 600,000 1,204,167 7,496 119,490 120,000 49,329 Vice Chairman- 1998 535,833 600,000 1,135,833 8,426 217,817 100,000 49,593 USX Corporation 1997 407,500 611,000 1,018,500 7,874 30,599 75,000 47,698 and President- U. S. Steel Group - ------------------------------------------------------------------------------------------------------------------------ R. M. Hernandez 1999 573,750 600,000 1,173,750 7,535 94,153 120,000 55,435 Vice Chairman 1998 542,500 650,000 1,192,500 7,876 53,841 100,000 58,180 & Chief 1997 522,500 750,000 1,272,500 6,954 29,733 75,000 62,434 Financial Officer - ------------------------------------------------------------------------------------------------------------------------ D. D. Sandman 1999 425,000 425,000 850,000 4,251 75,323 60,000 47,852 General Counsel, 1998 397,917 450,000 847,917 4,852 66,079 56,000 46,196 Secretary and 1997 354,583 530,000 884,583 2,986 21,812 40,000 39,077 Senior Vice President- Human Resources & Public Affairs - ------------------------------------------------------------------------------------------------------------------------ C. P. Giardini 1999 314,167 280,000 594,167 5,927 61,688 0 48,182 Executive Vice 1998 357,000 350,000 707,000 1,463 30,600 32,500 56,720 President- 1997 335,500 450,000 785,500 1,463 17,625 25,000 54,065 Exploration & Production, Marathon Oil Company (RETIRED OCTOBER 31, 1999) - ------------------------------------------------------------------------------------------------------------------------ C. C. Gedeon 1999 336,000 230,000 566,000 1,677 31,041 35,000 28,725 Executive Vice 1998 322,667 330,000 652,667 1,841 22,369 32,500 31,278 President- 1997 305,000 400,000 705,000 1,841 12,800 25,000 35,018 Raw Materials & Diversified Businesses, U. S. Steel Group - ------------------------------------------------------------------------------------------------------------------------
(1) Grants of restricted stock under the USX 1990 Stock Plan. Grants are subject to conditions including continued employment and achievement of business performance standards. Dividends are paid on restricted stock. Shown below is the vesting schedule for restricted stock scheduled to vest less than three years from the date of grant, together with the number and value, as of December 31, 1999, of the aggregate holdings of restricted stock for each of the executive officers named in the Summary Compensation Table. Vesting shown assumes achievement of business performance at peer-group standard (as described in the Compensation Committee Report which begins on page 25). 20
UNVESTED RESTRICTED SHARES VESTING SCHEDULE AGGREGATE HOLDINGS --------------------------------------------- ------------------------------------------ VALUE AS OF CLASS OF MAY 2000 CLASS OF DECEMBER 31, 1999 DATE GRANTED STOCK (SHARES) STOCK SHARES ($) - ----------------------------------------------------------------------------------------------------------------- T. J. Usher May 26, 1998 Marathon 6,500 Marathon 13,162 328,227 Steel 3,570 Steel 7,088 229,253 --------------- May 25, 1999 Marathon 3,120 557,480 Steel 1,680 - ----------------------------------------------------------------------------------------------------------------- V. G. Beghini - - - - ----------------------------------------------------------------------------------------------------------------- P. J. Wilhelm May 26, 1998 Marathon 1,200 Marathon 2,205 54,987 Steel 2,535 Steel 5,895 190,667 --------------- May 25, 1999 Marathon 0 245,654 Steel 2,265 - ----------------------------------------------------------------------------------------------------------------- R. M. Hernandez May 26, 1998 Marathon 975 Marathon 4,387 109,401 Steel 555 Steel 2,363 76,428 --------------- May 25, 1999 Marathon 975 185,829 Steel 525 - ----------------------------------------------------------------------------------------------------------------- D. D. Sandman May 26, 1998 Marathon 1,222 Marathon 3,510 87,531 Steel 658 Steel 1,890 61,130 --------------- May 25, 1999 Marathon 780 148,661 Steel 420 - ----------------------------------------------------------------------------------------------------------------- C. P. Giardini - - - Marathon 4,050 100,997 - ----------------------------------------------------------------------------------------------------------------- C. C. Gedeon May 26, 1998 Steel 600 Steel 2,700 87,328 May 25, 1999 Steel 400 - -----------------------------------------------------------------------------------------------------------------
(2) All option shares listed were granted with tandem stock appreciation rights ("SARs"). (3) This column includes amounts contributed by USX under the USX Savings Fund Plan or the Marathon Thrift Plan and the related supplemental savings plans. Such amounts for 1999 are $62,083 for Mr. Usher, $99,597 for Mr. Beghini, $30,208 for Mr. Wilhelm, $28,687 for Mr. Hernandez, $21,250 for Mr. Sandman, $41,961 for Mr. Giardini and $15,120 for Mr. Gedeon. Also included are amounts attributable to split-dollar life insurance provided by USX. (Marathon Oil Company does not provide split-dollar life insurance.) For 1999, these amounts are $32,513 for Mr. Usher, $8,527 for Mr. Wilhelm, $ 17,244 for Mr. Hernandez, $18,599 for Mr. Sandman and $8,255 for Mr. Gedeon. Also included are amounts attributable to a mandatory tax compliance program. For 1999, these amounts were $2,000 for each of Messrs. Usher, Wilhelm, Hernandez, Sandman, Giardini and Gedeon. Also included are dividends paid on restricted stock. For 1999, these amounts were $22,512 for Mr. Usher, $4,767 for Mr. Beghini, $8,594 for Mr. Wilhelm, $7,504 for Mr. Hernandez, $6,003 for Mr. Sandman, $4,221 for Mr.Giardini and $3,350 for Mr. Gedeon. 21 (4) Restricted stock and stock options/SAR shares granted by class of stock are as follows:
RESTRICTED CLASS OF STOCK STOCK OPTION/ STOCK ($) SAR SHARES - -------------------------------------------------------------------------------------------- T. J. Usher 1999 Marathon 191,878 210,600 Steel 99,273 113,400 -------------------------------------------------------------- 1998 Marathon 221,000 175,500 Steel 133,840 94,500 -------------------------------------------------------------- 1997 Marathon 57,281 130,000 Steel 30,720 64,000 Delhi 1,198 6,000 - -------------------------------------------------------------------------------------------- V. G. Beghini 1999 Marathon 0 0 Steel 0 0 -------------------------------------------------------------- 1998 Marathon 0 78,000 Steel 0 42,000 -------------------------------------------------------------- 1997 Marathon 0 58,500 Steel 0 31,500 - -------------------------------------------------------------------------------------------- P. J. Wilhelm 1999 Marathon 24,675 24,000 Steel 94,815 96,000 -------------------------------------------------------------- 1998 Marathon 72,420 35,000 Steel 145,397 65,000 -------------------------------------------------------------- 1997 Marathon 9,400 24,000 Steel 20,800 48,750 Delhi 399 2,250 - -------------------------------------------------------------------------------------------- R. M. Hernandez 1999 Marathon 62,040 78,000 Steel 32,113 42,000 -------------------------------------------------------------- 1998 Marathon 33,150 65,000 Steel 20,691 35,000 -------------------------------------------------------------- 1997 Marathon 19,094 48,750 Steel 10,240 24,000 Delhi 399 2,250 - -------------------------------------------------------------------------------------------- D. D. Sandman 1999 Marathon 49,644 39,000 Steel 25,679 21,000 -------------------------------------------------------------- 1998 Marathon 41,548 36,400 Steel 24,531 19,600 -------------------------------------------------------------- 1997 Marathon 13,748 26,000 Steel 8,064 12,800 Delhi 0 1,200 - -------------------------------------------------------------------------------------------- C. P. Giardini 1999 Marathon 61,688 0 1998 Marathon 30,600 32,500 1997 Marathon 17,625 25,000 - -------------------------------------------------------------------------------------------- C. C. Gedeon 1999 Steel 31,041 35,000 1998 Steel 22,369 32,500 1997 Steel 12,800 25,000 - --------------------------------------------------------------------------------------------
22 1999 OPTION/SAR GRANTS The following table sets forth certain information concerning options and stock appreciation rights ("SARs") granted during 1999 to each executive officer named in the Summary Compensation Table under the USX 1990 Stock Plan:
% of Total Potential Realizable Value Options/ Exercise at Assumed Annual Rates of Number of SARs or Base Stock Price Appreciation Options/ Granted to Price per for Option Term ($)(4) Name or Class of SARs Employees Share Expiration -------------------------------------- Group Stock Granted(1) in 1999(3) ($) Date 0% 5% 10% - -------------------------------------------------------------------------------------------------------------------------------- T. J. Usher Marathon 210,600 (2) 21.0% 29.3750 May 25, 2009 0 3,890,582 9,859,492 Steel 113,400 (2) 17.3% 28.2188 May 25, 2009 0 2,012,476 5,099,995 V. G. Beghini Marathon 0 Steel 0 P. J. Wilhelm Marathon 24,000 (2) 2.4% 29.3750 May 25, 2009 0 443,371 1,123,589 Steel 96,000 (2) 14.6% 28.2188 May 25, 2009 0 1,703,683 4,317,456 R. M. Hernandez Marathon 78,000 (2) 7.8% 29.3750 May 25, 2009 0 1,440,956 3,651,664 Steel 42,000 (2) 6.4% 28.2188 May 25, 2009 0 745,361 1,888,887 D. D. Sandman Marathon 39,000 (2) 3.9% 29.3750 May 25, 2009 0 720,478 1,825,832 Steel 21,000 (2) 3.2% 28.2188 May 25, 2009 0 372,681 944,444 C. P. Giardini Marathon 0 C. C. Gedeon Steel 35,000 (2) 5.3% 28.2188 May 25, 2009 0 621,135 1,574,073 - -------------------------------------------------------------------------------------------------------------------------------- All Stockholders Marathon N/A N/A 29.3750 N/A 0 5,759,524,548 14,595,754,699 Steel N/A N/A 28.2188 N/A 0 1,568,767,711 3,975,554,591 - -------------------------------------------------------------------------------------------------------------------------------- All Optionees Marathon 1,005,000 100.0% 29.3750 May 25, 2009 0 18,566,169 47,050,281 Steel 656,400 100.0% 28.2188 May 25, 2009 0 11,648,934 29,520,605 - -------------------------------------------------------------------------------------------------------------------------------- All Optionees' Marathon N/A N/A 29.3750 N/A 0 0.32% 0.32% Gain as % of Steel N/A N/A 28.2188 N/A 0 0.74% 0.74% All Stockholders' Gain - --------------------------------------------------------------------------------------------------------------------------------
(1) All options listed are exercisable on May 25, 2000. (2) These options were granted with tandem SARs, which have the same date of exercisability as the underlying option. Upon the exercise of an SAR, an optionee receives an amount, in cash and/or shares, equal to the excess, for a specified number of shares, of (a) the fair market value of a share on the date the SAR is exercised (except that for any SAR exercised during the 10-business-day period beginning on the third business day following the release of USX's quarterly earnings, the Compensation Committee may, in its sole discretion, establish a uniform fair market value of a share for such period which shall not be more than the highest daily fair market value and shall not be less than the lowest daily fair market value during such 10-business-day period) over (b) the exercise or base price per share. (3) Indicates percentage of total options granted in the applicable class of stock. (4) The dollar amounts under these columns are the result of calculations at 0% and at the 5% and 10% rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of the price of the Marathon Stock or the Steel Stock. USX did not use an alternative formula for a grant date valuation, as USX is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatile factors. Amounts shown for All Stockholders represent the potential realizable value assuming appreciation at the rates indicated based on the exercise or base price per share and the expiration date applicable to grants made in 1999 and the number of outstanding shares as of December 31, 1999. 23 OPTION EXERCISES AND YEAR-END VALUES The following table sets forth certain information concerning options to purchase USX common stock and stock appreciation rights ("SARs") exercised by each executive officer named in the Summary Compensation Table during 1999 together with the total number of options and SARs outstanding at December 31, 1999 and the value of such options. AGGREGATED 1999 OPTION/SAR EXERCISES AND DECEMBER 31, 1999 OPTION/SAR VALUES
Total Value of Unexercised No. of Total Value No. of In-The-Money Shares Realized Unexercised Options/SARs at Underlying for All Options/SARs at December 31, 1999 Options/SARs Classes of December 31, for All Classes Name Exercised(1) Stock ($)(1) 1999(1) of Stock ($)(1) - ------------------------------------------------------------------------------- T. J. Usher 20,000 18,624 1,115,000 817,157 V. G. Beghini 0 0 594,000 1,461,502 P. J. Wilhelm 0 0 305,250 412,760 R. M. Hernandez 0 0 564,950 1,182,878 D. D. Sandman 5,000 4,656 184,725 98,370 C. P. Giardini 0 0 146,100 179,397 C. C. Gedeon 0 0 112,500 152,970 - -------------------------------------------------------------------------------
Note: All options listed above, except those granted on May 25, 1999, are currently exercisable. Except for 2,500 shares granted to Mr. Wilhelm, all options listed above were granted with SARs. (1) Figures by class of stock are as follows:
Total Value of No. of Unexercised Unexercised In-The-Money No. of Shares Options/SARs Options/SARs Underlying Value at at Class of Options/SARs Realized December 31, December 31, Stock Exercised ($) 1999 1999 - ------------------------------------------------------------------------------- T. J. Usher Marathon 20,000 18,624 648,600 285,250 Steel 0 0 466,400 531,907 V. G. Beghini Marathon 0 0 481,250 1,441,453 Steel 0 0 112,750 20,049 P. J. Wilhelm Marathon 0 0 85,500 0 Steel 0 0 219,750 412,760 R. M. Hernandez Marathon 0 0 400,450 983,406 Steel 0 0 164,500 199,472 D. D. Sandman Marathon 5,000 4,656 105,400 0 Steel 0 0 79,325 98,370 C. P. Giardini Marathon 0 0 133,420 175,803 Steel 0 0 12,680 3,594 C. C. Gedeon Marathon 0 0 0 0 Steel 0 0 112,500 152,970 - -------------------------------------------------------------------------------
24 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Our Committee sets policies and administers programs on executive compensation. When we believe that action should be taken on a specific compensation item, we either make a recommendation to the USX Board or a subsidiary company board or take action on our own, whichever is appropriate. We report to the USX Board actions which do not require board approval. The purpose of this report is to summarize the philosophy, specific program objectives and other relevant factors considered by the Committee in decision making with respect to the compensation of USX, Marathon Group and U. S. Steel Group executive officers, including the officers named in the Summary Compensation Table. Compensation programs for USX's executive officers are designed to attract, retain and motivate employees who will make significant contributions to the achievement of corporate goals and objectives. The principal elements of our executive officers' compensation are: - - Salary - - Short-term incentive (bonus) awards and - - Long-term incentive awards (stock options with stock appreciation rights and restricted stock). For each of the above elements of compensation, we exercise our discretion in the subjective consideration of the factors described below and within the limitations of the various plans. SALARY Salary administration at USX begins with the development, and periodic adjustment, of salary structures for executive officers employed at the corporate level and at each major business unit. Each executive officer's position is assigned a salary grade with an associated salary range. Our two major objectives in developing salary structures and assigning grades are to maintain: 1. external competitiveness - the midpoint of the salary range for each position is near the average midpoint for similar positions at comparable companies, and 2. internal equity - each position's grade in the unit's hierarchy of positions accurately reflects its relative "value". The data used in developing and adjusting salary structures are obtained from surveys coordinated by independent consultants, with each unit having its own sources of relevant data. We make decisions on salary increases and, occasionally - when business conditions dictate - salary decreases. When we determine salary increases, we give the highest weighting to performance; but we also consider other factors, such as experience and time in position. Once an executive officer's salary has passed the midpoint for the position, increases seldom exceed amounts necessary to maintain the salary near the midpoint, assuming performance merits such increases. Therefore, incentive opportunities provide the primary basis for significant increases in compensation. The salaries shown for the officers named in the Summary Compensation Table reflect the results of our salary reviews and related actions. 25 SHORT-TERM INCENTIVE AWARDS USX's short-term incentive (bonus) opportunities for executive officers are designed to provide awards near the average of those provided by similar companies for on-target performance. However, our incentive plans are designed to provide exceptional rewards for superior performance and lower rewards for below-average performance. We make bonus awards under the Senior Executive Officer Annual Incentive Compensation Plan, as well as under other plans developed for specific business units. The Senior Executive Officer Annual Incentive Compensation Plan was developed specifically to retain the corporation's tax deduction for awards made to the officers named in the Summary Compensation Table and was approved, as amended and restated, by the stockholders on April 28, 1998. SENIOR EXECUTIVE OFFICER ANNUAL INCENTIVE COMPENSATION PLAN This Plan provides for awards based on pre-established performance measures specifically related to the responsibilities of Plan participants. For each performance measure, we can award the applicable portion of the bonus only if performance reaches the minimum, or threshold, level for that measure. While performance for 1999 varied among USX's business units, performance levels were reached or exceeded for the following: - -------------------------------------------------------------------------------- For Marathon Group Income from operations, liquid hydrocarbon production, natural gas production, liquid hydrocarbon and natural gas reserve additions, refined product sales, refined product margins, worker safety and environmental emissions improvements - -------------------------------------------------------------------------------- For U. S. Steel Group Income from operations, steel shipments, worker safety and stock price performance - -------------------------------------------------------------------------------- For USX (Corporate) All the above plus workforce diversity - --------------------------------------------------------------------------------
Our Committee certified in writing prior to payment of awards for the year 1999 that the pre-established, applicable performance levels (measured for incentive compensation purposes) required under the Plan were satisfied. OTHER PLANS We also administer other bonus plans in which corporate and business unit executive officers participate. These plans were developed specifically for corporate, U. S. Steel Group and Marathon Group employees. Our Committee makes awards based on the degree of achievement of pre-established objectives, such as income, cash flow and return on capital employed, as measured for incentive compensation purposes, as well as individual objectives. In determining awards under these plans, we also give consideration to changes over the previous year's performance as well as the absolute levels of income and cash flow. When making awards to executive officers under these Plans, our Committee gives such weight to the various factors as we deem appropriate. Based on consideration of other factors, our Committee may reduce or eliminate a short-term incentive award that would otherwise be payable under the above-discussed plans. 26 LONG-TERM INCENTIVE AWARDS We consider long-term incentive awards to be of major importance in the mix of compensation elements because these awards provide the most direct link to the returns that you, as USX stockholders, receive. The stockholders approved the 1990 Stock Plan, as amended and restated, on April 28, 1998. We administer this plan, under which we may grant (1) stock options, with or without a restoration feature, (2) stock appreciation rights and/or (3) restricted stock. Our stock options and restricted stock meet the requirements for deductibility under the tax laws. STOCK OPTION GRANTS Our Committee makes stock option grants that we believe to be reasonable and in line with other compensation. The number of shares we grant generally reflects the employee's level of responsibility, and the class or classes of stock granted reflect the specific business unit(s) to which the employee's responsibilities relate. Following our normal annual grant practice, we granted stock options in May 1999. RESTRICTED STOCK GRANTS Since the inception of the 1990 Stock Plan, our Committee has established, for each recipient, an annual target level of restricted stock shares, based on the same factors as we consider in granting stock options. A major grant is made to cover five years, with the intention that one fifth of the shares will vest each year if performance is at the target level. We vest restricted stock at levels higher or lower than annual targets, depending on performance. We made our last major grant in 1995, to cover the five-year performance period ending with 1999, and we made interim grants only to permit vesting at the target level for the number of years remaining in the period. To emphasize the long-term nature of the awards, our vesting decisions are based on three-year average performance, which is compared with three-year peer-group performance for relevant businesses. Vesting of restricted stock shares is based on pre-established performance measures specifically related to the responsibilities of Plan participants. We can vest a portion of the annual target shares only if performance reaches the minimum, or threshold, level established for that period. In May 1999, we compared our three-year (1996-1998) average performance with that of competitors for the measures shown below. This comparison provides the primary basis for the determination of vesting levels for restricted stock. However, vesting levels may be reduced (or eliminated entirely) based on other factors considered relevant by the Committee. 27
UNIT PERFORMANCE MEASURE - ------------------------------------------------------------------------------- Marathon Group Earnings before interest, taxes and depreciation as a percent of total assets Oil and gas reserve replacement ratio Income per barrel of oil equivalent produced (upstream) Operating income per barrel of refinery throughput (downstream) Safety performance - ------------------------------------------------------------------------------- U. S. Steel Group Income from operations as a percent of capital employed Income from operations per ton shipped Operating cash flow as a percent of capital employed Safety performance - ------------------------------------------------------------------------------- USX Headquarters Weighted Composite (65% Marathon Group/35% U. S. Steel Group) - -------------------------------------------------------------------------------
Our Committee certified in writing prior to vesting of restricted stock shares in the year 1999 that the pre-established applicable performance levels required under the Plan were satisfied. The Committee periodically compares data on long-term incentive grants made at other companies with those made at USX. Our objective in making grants under the 1990 Stock Plan is to provide opportunities to receive above-average compensation (compared with that of similar companies) when performance is above the target level. Overall, executive compensation at USX is designed to provide total pay that is above average when both short- and long-term incentive goals are exceeded. -------------------- In addition to the compensation comparisons described above, our Committee annually compares the salary, bonus and long-term incentive payouts for the Chairman, the Chief Financial Officer, and the Presidents of the U. S. Steel and Marathon Groups with the same elements for similar positions at comparable companies. With respect to the compensation comparisons that we make, we believe that the companies with which USX competes for employees are not necessarily limited to the companies with which shareholder returns would logically be compared. The peer groups used in the performance graphs include the Standard & Poor's 500 Stock Index and those oil and steel companies deemed most comparable to the Corporation's businesses for measuring stock performance. The companies used for comparing compensation reflect similarities to USX and its operating groups in such factors as line of business (when relevant), size and complexity. Therefore, the compositions of the groups of companies used for compensation comparisons are not identical to those of the peer groups shown in the Shareholder Return Performance Presentation. Mr. Usher's 1999 compensation reflects the same elements and the same factors as those described above. His leadership and effectiveness in dealing with major corporate problems and opportunities are also considered in determining his salary increases. Taking into account these factors, as well as (1) the comparability of his salary with CEOs of other companies of similar size and complexity and (2) the position of his salary in the range for his position, the Committee approved a salary increase for Mr. Usher effective August 1, 1999. 28 The Committee made an award to Mr. Usher for 1999 under the Senior Executive Officer Annual Incentive Compensation Plan taking into consideration the overall performance of the Corporation and its business units, specifically the performance measures listed in the previous table. The Committee also considered Mr. Usher's contributions to improving the Corporation's business portfolio through key acquisitions and dispositions, ongoing cost reduction efforts, including voluntary early retirement programs, the timely renegotiation of a competitive labor agreement with the United Steelworkers of America and strong environmental and safety performances at both business units versus their peer groups. The Committee considered the additional stock option shares granted to Mr. Usher under the 1990 Stock Plan to be at a competitive level relative to other CEOs. On the basis of the performance shown in the above table, we also vested restricted stock for and made an additional grant of restricted stock to Mr. Usher. Seth E. Schofield Neil A. Armstrong Charles R. Lee John W. Snow Douglas C. Yearley - ------------------------------------------------------------------------------- SECTION 16(a) We are required to identify any officer or director who BENEFICIAL failed to file on a timely basis with the Securities and OWNERSHIP Exchange Commission a required report relating to ownership REPORTING and change in ownership of USX's equity securities. Three COMPLIANCE individuals were late in filing one form each. John T. Mills was late in filing his Form 5 for 1998 relating to two transactions. Jeanette G. Brown was late in filing her Form 5 for 1998 in connection with two transactions resulting from the automatic conversion of accrued vested benefits into Common Stock Units. J. Gary Cooper was late in filing a Form 4 relating to two transactions. 29 SHAREHOLDER RETURN PERFORMANCE PRESENTATION The line graphs below compare the yearly change in cumulative total stockholder return for each class of our common stock with the cumulative total return of the Standard & Poor's 500 Stock Index. The Marathon graph also shows a comparison with the Standard & Poor's Domestic Integrated Oil Index, and the U.S. Steel graph also shows a comparison with a Steel Index that is defined in a footnote to the graph. COMPARISON OF CUMULATIVE TOTAL RETURN ON $100 INVESTED IN MARATHON STOCK ON DECEMBER 31, 1994 VS. S&P 500 AND S&P DOMESTIC INTEGRATED OIL INDEX(1) [GRAPH] MARATHON STOCK S&P 500 S&P OIL INDEX 12/31/94 100 100 100 12/31/95 123 138 114 12/31/96 156 169 144 12/31/97 226 226 171 12/31/98 207 290 139 12/31/99 175 351 173
USX-Marathon Group Common Stock S&P 500 Index S&P Domestic Integrated Oil Index (1) Total return assumes reinvestment of dividends. 30 COMPARISON OF CUMULATIVE TOTAL RETURN ON $100 INVESTED IN STEEL STOCK ON DECEMBER 31, 1994 VS. S&P 500 AND STEEL INDEX(1) [GRAPH] STEEL STOCK S&P 500 STEEL INDEX 12/31/94 100 100 100 12/31/95 89 138 83 12/31/96 94 169 69 12/31/97 97 226 63 12/31/98 74 290 60 12/31/99 110 351 53
USX-U. S. Steel Group Common Stock S&P 500 Index Steel Index(2) (1) Total return assumes reinvestment of dividends. (2) The Steel Index consists of the common stocks of AK Steel Corporation, Bethlehem Steel Corporation, LTV Corporation and National Steel Corporation for the period December 31, 1994 through December 31, 1999, and Inland Steel Industries for the period December 31, 1994 through December 31, 1997. Inland Steel Industries sold its steelmaking subsidiary, Inland Steel Co., to Ispat International NV in 1998. The resulting company, Ispat Inland Inc., is not publicly traded. TRANSACTIONS In the regular course of its business since January 1, 1999, USX and its subsidiaries have had transactions with entities with which certain directors were affiliated. Such transactions were in the ordinary course of business and at competitive prices and terms. We do not consider any such director to have a material interest in any such transaction. We anticipate that similar transactions will occur in 2000. 31 PENSION BENEFITS The United States Steel Corporation Plan for Non-Union Employee Pension Benefits is comprised of two defined benefits. One is based on final earnings and the other on career earnings. Directors who have not been employees of USX do not receive any benefits under the plan. The following table shows the annual final earnings pension benefits for retirement at age 65 (or earlier under certain circumstances) for various levels of eligible earnings which would be payable to employees retiring with the years of service shown. The benefits are based on a formula of a specified percentage (dependent on years of service) of average annual eligible earnings in the five consecutive years of the ten years prior to retirement in which such earnings were highest. As of January 31, 2000, Mr. Usher had 34 credited years of service, Mr. Wilhelm 35, Mr. Hernandez 31, Mr. Sandman 7 and Mr. Gedeon 13. If Mr. Gedeon retires with at least 16 credited years of service, USX will pay him an amount equivalent to a final earnings and a supplemental pension calculated as though he had an additional 14 years of service. TABLE OF PENSION BENEFITS FINAL EARNINGS PENSION BENEFITS
Average Annual Eligible Earnings for Highest Five Consecutive Years in Ten-Year Period ANNUAL BENEFITS FOR YEARS OF SERVICE Preceding Retirement 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years - ------------------------------------------------------------------------------------ $ 100,000 $ 17,325 $ 23,100 $ 28,875 $ 34,650 $ 40,950 $ 47,250 $ 53,550 300,000 51,975 69,300 86,625 103,950 122,850 141,750 160,650 500,000 86,625 115,500 144,375 173,250 204,750 236,250 267,750 700,000 121,275 161,700 202,125 242,550 286,650 330,750 374,850 900,000 155,925 207,900 259,875 311,850 368,550 425,250 481,950 1,100,000 190,575 254,100 317,625 381,150 450,450 519,750 589,050 1,300,000 225,225 300,300 375,375 450,450 532,350 614,250 696,150
Annual career earnings pension benefits are equal to one percent of total career eligible earnings plus a 30 percent supplement. The estimated annual career earnings benefits payable at normal retirement age 65, assuming no increase in annual earnings, will be $246,725 for Mr. Usher, $107,163 for Mr. Wilhelm, $155,587 for Mr. Hernandez, $104,289 for Mr. Sandman and $68,370 for Mr. Gedeon. Earnings for the purpose of calculating both the final earnings and career earnings pensions are limited to base salary for services performed, allowance for absence covered by sick leave salary continuance and payment for absence while on regular vacation or holidays. These earnings are reported in the salary column of the Summary Compensation Table on page 20. They do not include any awards under the Annual Incentive Compensation Plan or the Senior Executive Officer Annual Incentive Compensation Plan. Benefits under both pension provisions are based on a straight life annuity form of benefit, which is not subject to reduction for Social Security benefits; but the final earnings pension is subject to offset for a pension provided outside the plan from a fund to which USX has contributed, and for payments made by USX pursuant to workers' compensation or similar laws when such payments are the result of a permanent disability. Benefits may be paid as an actuarially determined lump sum in lieu of monthly pensions under both the final earnings and career earnings provisions of the plan. In addition to the pension benefit described above, members of USX executive management, including all of the executive officers named in the Summary Compensation Table except Mr. Beghini and Mr. Giardini, are entitled, upon retirement after age 60, or before age 60 with USX's consent, to the benefits shown in the table below based on bonuses paid under the Annual Incentive Compensation Plan and the Senior Executive Officer Annual Incentive Compensation Plan. These bonuses are reported in the bonus column of the Summary Compensation Table on page 20. 32 SUPPLEMENTAL PENSION BENEFITS
Average Annual Bonus for Three Highest Years in Ten-Year Period Preceding ANNUAL BENEFITS FOR YEARS OF SERVICE Retirement 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years - ---------------------------------------------------------------------------------- $ 100,000 $ 23,100 $ 30,800 $ 38,500 $ 46,200 $ 53,900 $ 61,600 $ 69,300 300,000 69,300 92,400 115,500 138,600 161,700 184,800 207,900 500,000 115,500 154,000 192,500 231,000 269,500 308,000 346,500 700,000 161,700 215,600 269,500 323,400 377,300 431,200 485,100 900,000 207,900 277,200 346,500 415,800 485,100 554,400 623,700 1,100,000 254,100 338,800 423,500 508,200 592,900 677,600 762,300 1,300,000 300,000 400,400 500,500 600,600 700,700 800,800 900,900 1,500,000 346,500 462,200 577,500 693,000 808,500 924,000 1,039,500 - ----------------------------------------------------------------------------------
Marathon Oil Company provides retirement benefits based on final earnings. The following table shows the annual pension benefits for retirement at age 65 for various levels of eligible earnings which would be payable to employees retiring with the years of service shown. The table is based on a formula of a specified percentage (dependent on years of participation in the Marathon Oil Company Retirement Plan) of average annual eligible earnings in the three consecutive years of the ten prior to retirement in which such earnings were highest.
Final Average Earnings for Highest Three Consecutive Years in Ten-Year Period Preceding Annual Benefits for Years of Service Retirement 20 Years 25 Years 30 Years 35 Years 40 Years(1) 45 Years(1) - ------------------------------------------------------------------------------- $ 100,000 $ 27,414 $ 34,268 $ 41,122 $ 47,975 $ 51,402 $ 51,402 300,000 91,414 114,268 137,122 159,975 171,402 171,402 500,000 155,414 194,268 233,122 271,975 291,402 291,402 700,000 219,414 274,268 329,122 383,975 411,402 411,402 900,000 283,414 354,268 425,122 495,975 531,402 531,402 1,100,000 347,414 434,268 521,122 607,975 651,402 651,402 1,300,000 411,414 514,268 617,122 719,975 771,402 771,402 1,500,000 475,414 594,268 713,122 831,975 891,402 891,402 2,000,000 635,414 794,268 953,122 1,111,975 1,191,402 1,191,402 - -------------------------------------------------------------------------------
(1) Benefits reach their maximum at 37-1/2 years of participation. Covered earnings include pay for hours worked, pay for allowed hours, military leave allowance, commissions, 401(k) contributions to the Marathon Oil Company Thrift Plan and bonuses. These earnings are reported in the salary and bonus columns of the Summary Compensation Table on page 20. The benefits reflected above are based upon a straight life annuity form of benefit and include the applicable Social Security offset as defined by the Marathon plan. Mr. Beghini and Mr. Giardini retired on October 31, 1999 with 41 years and 42 years of credited participation, respectively. Mr. Sandman has 20 years of credited participation. In order to comply with the limitations prescribed by the Internal Revenue Code, pension benefits will be paid directly by USX or by Marathon when they exceed the amounts permitted by the Code to be paid from federal income tax qualified pension plans. 33 CHANGE IN CONTROL ARRANGEMENTS We believe that if a change in control of USX became possible our key officers should be encouraged to continue their dedication to their assigned duties. For that reason, we have entered into agreements with each of the current officers named in the Summary Compensation Table that provide that, if an officer's employment is terminated under certain circumstances following a change in control, the officer will be entitled to the following severance benefits: - - a cash payment of up to three times the sum of the officer's current salary plus the highest bonus in the three years before the date of termination, - - a cash payment in settlement of outstanding options, - - life, disability, accident and health insurance benefits for 24 months after termination, - - a cash payment equal to the actuarial equivalent of the difference between amounts receivable by the officer under our pension and welfare benefit plans and those which would be payable if (a) the officer had retired as of the termination date under conditions entitling a retiree under similar circumstances to the highest benefits available under those plans and (b) the officer had been absent due to layoff for a year before termination, - - a cash payment equal to the difference between amounts receivable under our savings or thrift plans and amounts which would have been received if the officer's savings had been fully vested, and - - a cash payment of the amount necessary to ensure that the payments listed above are not subject to net reduction due to the imposition of federal excise taxes. Each agreement is automatically extended each year unless we notify the officer that we do not wish it extended. In any event, however, each agreement continues for two years after a change in control. The severance benefits are payable if, any time after a change in control, the officer's employment is terminated for good reason or is terminated for other than cause or disability. The severance benefits are not payable if termination is due to the officer's death or disability or occurs after the officer reaches age 65. The definition of a change in control for purposes of these agreements is complex but is summarized as follows. It includes any change in control required to be reported in response to Item 6 (e) of Schedule 14A under the Securities Exchange Act of 1934 and provides that a change in control will have occurred if: - - any person not affiliated with USX acquires 20 percent or more of the voting power of our outstanding securities, - - the board no longer has a majority made up of (1) individuals who were directors on the date of the agreements and (2) new directors (other than directors who join the board in connection with an election contest) approved by two-thirds of the directors then in office who (a) were directors on the date of the agreements or (b) were themselves previously approved by the board in this manner, - - USX merges with another company and USX's stockholders end up with less than 50 percent of the voting power of the new entity, - - our stockholders approve a plan of complete liquidation of USX, or - - we sell all or substantially all of USX's assets. 34 SOLICITATION STATEMENT We will bear the cost of this solicitation of proxies. In addition to soliciting proxies by mail, our directors, officers and employees may solicit proxies by telephone, in person or by other means. They will not receive any extra compensation for this work. We will also make arrangements with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of each class of common stock, and we will reimburse them for reasonable out-of-pocket expenses that they incur in connection with forwarding the material. By order of the Board of Directors, Dan D. Sandman, Secretary March 13, 2000 35 USX Corporation 600 Grant Street Pittsburgh, PA 15219-4776 [LOGO] USX ATTENDANCE CARD CORPORATION 2000 ANNUAL MEETING OF STOCKHOLDERS You are cordially invited to attend the Annual Meeting of Stockholders on April 25, 2000. The Meeting will be held in the Wynfrey Ballroom at the Wynfrey Hotel at Riverchase Galleria, 1000 Riverchase Galleria, Birmingham, Alabama, 35244 at 10:00 A.M. Central Daylight Time. Attached is your 2000 Proxy Card. The use of an attendance card is for our mutual convenience and your right to attend without an attendance card, upon identification, is not affected. Dan D. Sandman SECRETARY FOR THE PERSONAL USE OF THE NAMED STOCKHOLDER(S) - NOT TRANSFERABLE. PLEASE PRESENT THIS CARD AT REGISTRATION DESK UPON ARRIVAL. YOU MAY VOTE BY TOLL-FREE TELEPHONE CALL OR ON THE INTERNET OR BY COMPLETING THE ATTACHED PROXY CARD AND RETURNING IT IN THE ACCOMPANYING ENVELOPE TO VOTE BY TELEPHONE OR INTERNET USE THE CONTROL NUMBER IN THE BOX BELOW YOUR CONTROL NUMBER BY TELEPHONE BY INTERNET ----------------------- TOLL-FREE 1-888-216-1303 www.directvote.com HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU CALL OR VISIT THE INTERNET SITE AND FOLLOW THE PROMPTS. VOTING IS AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. DO NOT RETURN THE PROXY CARD IF YOU HAVE VOTED BY TELEPHONE OR INTERNET. - ----------------------------------------------------------------------------- The undersigned hereby appoint(s) Thomas J. Usher, Robert M. Hernandez and Paul J. Wilhelm, or any of them, proxies to vote as herein stated on behalf of the undersigned at the Annual Meeting of Stockholders of USX Corporation on April 25, 2000 and any adjournment or postponement thereof and upon all other matters properly coming before the Meeting, including the proposals set forth in the proxy statement for such Meeting with respect to which the proxies are instructed to vote as follows: Proposals of the Board of Directors--The directors recommend a vote "FOR" Proposal No. 1--Election of directors--Nominees: (01)Neil R. Armstrong, (02)Robert M. Hernandez, (03)John F. McGillicuddy, (04)John W. Snow and (05)Clarence P. Cazalot, Jr. FOR all nominees WITHHOLD AUTHORITY (except as indicated) ---- to vote for ALL nominees ---- (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE OUT THAT NOMINEE'S NAME.) Proposal No. 2--Election of PricewaterhouseCoopers LLP as independent accountants FOR AGAINST ABSTAIN ----- ----- ----- - ----------------------------------------------------------------------------- Signature(s) ------------------------------------------------- - ------------------------------------------------------------- Dated 2000 ----------- Please sign exactly as your name appears hereon, including representative capacity where applicable. Joint owners should both sign. I Will Attend The Annual Meeting - ---- THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND REPRESENTS YOUR HOLDINGS OF USX-MARATHON GROUP COMMON STOCK AND/OR USX-U.S. STEEL GROUP COMMON STOCK. UNLESS OTHERWISE MARKED, PROXIES ARE TO VOTE FOR PROPOSALS 1 AND 2, AND IN THEIR DISCRETION UPON ALL OTHER MATTERS PROPERLY BROUGHT BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. -----END PRIVACY-ENHANCED MESSAGE-----