Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

U. S. Steel has outstanding stock-based compensation awards that were granted by the Compensation & Organization Committee of the Board of Directors (the Committee) under several stock-based employee compensation plans, which are more fully described in Note 12 of the United States Steel Corporation 2012 Annual Report on Form 10-K. An aggregate of 15,450,000 shares of U. S. Steel common stock may be issued under the plans. As of June 30, 2013, 1,662,363 shares are available for future grants.

U. S. Steel recognized pre-tax stock-based compensation cost in the amount of $9 million and $10 million in the three months ended June 30, 2013 and 2012, respectively, and $19 million in both the first six months of 2013 and 2012.

Recent grants of stock-based compensation consist of stock options, restricted stock units and performance awards. Historically, the Committee has granted traditional stock options with an exercise price equal to the stock price on the date of grant. For the May 2013 grant, premium-priced stock options with an exercise price of $25 per share were awarded to executives in lieu of traditional stock options. The following table is a general summary of the awards made under the Plan.

	May 2013 Grant			May 2012 Grant
Grant Details	Shares (a)	Fair Value (b)		Shares (a)	Fair Value (b)
Executive Stock Options	483,900	$	8.50	456,070	$	11.95
Non-executive Stock Options	970,640	$	9.70	993,310	$	11.95
Restricted Stock Units	863,170	$	18.64	867,600	$	22.31
Performance Awards (c)	265,340	$	21.26	286,470	$	25.36

^(a) The share amounts shown in this table do not reflect an adjustment for estimated forfeitures.

^(b) Per share amounts.

^(c) The number of Performance Awards shown represents the target value of the award.

As of June 30, 2013, total future compensation cost related to nonvested stock-based compensation arrangements was $53 million, and the weighted average period over which this cost is expected to be recognized is approximately 1.5 years.

Compensation expense for stock options is recorded over the vesting period based on the fair value on the date of grant, as calculated by U. S. Steel using the Black-Scholes model and the assumptions listed below. The stock options vest ratably over a three-year service period and have a term of ten years.

Black-Scholes Assumptions	May 2013 Executive Grant			May 2013 Non-Executive Grant			May 2012 Grant
Grant date price per share of option award	$	18.64		$	18.64		$	22.31
Exercise price per share of option award	$	25.00		$	18.64		$	22.31
Expected annual dividends per share, at grant date	$	0.20		$	0.20		$	0.20
Expected life in years	5.0			5.0			5.0
Expected volatility	67		%	67		%	68		%
Risk-free interest rate	1.049		%	1.049		%	0.8		%
Grant date fair value per share of unvested option awards as calculated from above	$	8.50		$	9.70		$	11.95

The expected annual dividends per share are based on the latest annualized dividend rate at the date of grant; the expected life in years is determined primarily from historical stock option exercise data; the expected volatility is based on the historical volatility of U. S. Steel stock; and the risk-free interest rate is based on the U.S. Treasury strip rate for the expected life of the option.

Restricted stock units generally vest ratably over three years. The fair value of the restricted stock units is the market price of the underlying common stock on the date of the grant.

Performance awards vest at the end of a three-year performance period as a function of U. S. Steel's total shareholder return compared to the total shareholder return of a group of peer companies over the three-year performance period. Performance awards can vest at between zero and 200 percent of the target award. The fair value of the performance awards is calculated using a Monte-Carlo simulation.