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                                  SCHEDULE 14A
                                 (RULE 14A-101)
                    INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 (AMENDMENT NO.  )

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                                 USG CORPORATION
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                (Name of Registrant as Specified in Its Charter)
                                 [COMPANY NAME]
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    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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                                  OVERVIEW OF
                       OMNIBUS MANAGEMENT INCENTIVE PLAN
                                      AND
            PROPOSED SHARE ALLOCATION FOR THE LONG TERM EQUITY PLAN

The Corporation's Omnibus Management Incentive Plan (the "Plan") is designed to
promote the linkage of pay to corporate performance and align the interests of
management with shareholders. The compensation philosophy underlying the Plan is
based on several principles:

1.   A significant portion of the total compensation opportunity is variable and
     dependant upon the Corporation's annual and long-term business and
     financial performance.

2.   Attainment of short-term objectives is driven through the use of annual
     incentive cash awards and attainment of long-term objectives is primarily
     driven through the long term equity program.

3.   The programs provide overall compensation opportunities that are at
     competitive levels with comparably sized industrial companies.

Management compensation is composed of three elements:

1.   Base salaries: Salary ranges are established for each managerial position,
     using external salary surveys. The ranges are established to ensure that
     salaries are competitive in relation to organizations and positions of
     similar size and scope.

2.   Annual Incentive Cash Awards: Approximately 290 offices and managers are
     eligible for annual incentive cash awards under the provisions of the
     Annual Management Incentive Plan. The awards are based upon the achievement
     of established and quantifiable operational/financial objectives designed
     to enhance the Corporation's overall performance. Program measurements for
     1999 were primarily based on attainment of an income or earnings goal and
     attainment of strategic focus targets. Strategic focus targets are
     performance milestones defined by the corporation's strategic plan, which
     is designed to drive shareholder value. Strategic focus targets have been
     established in areas such as manufacturing cost improvements, working
     capital management and productivity enhancements.

3.   Long Term Equity Program: Approximately 200 officers and managers currently
     participate in the Long Term Equity Program which provides for grants of
     stock options, performance based restricted stock, time vested restricted
     stock, stock appreciation rights, performance units and deferred stock. USG
     has instituted guidelines mandating USG stock ownership by all managers who
     participate in the Long Term Equity Program.
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Performance based restricted stock is subject to risk of forfeiture, based on
USG stock price performance measured over a three year period in relation to the
returns on the stocks that included in the Value Line Building Material Index.
USG management only earns the full award if USG stock returns are in the 70th
(100 being highest) percentile or better of the universe of stocks that comprise
the Value Line Building Material Index. At the 50th percentile, the award is
50%. Below the 50th percentile, there is no award.

Proposed Allocation of Shares for Long Term Equity Program

USG proposes to allocate 2.4 million shares to the Long Term Equity Program
component of the Omnibus Management Incentive Plan for use during the period
2001 -- 2003 (an average of 800,000 shares per year).

The proposed allocation is appropriate for an organization of USG's size.
Surveys by compensation consultants such as Towers Perrin and Pearl Meyers &
Partners, Inc. indicate the average annual allocation for large organizations is
about 2.0% of shares outstanding. The potential dilutive effect of the proposed
allocation is within guidelines established by Institutional Shareholder
Services and large institutions such as Fidelity.

Rationale for the Proposed Allocation

The program promotes the interests of the Corporation and its stockholders by
providing key employees with an opportunity to acquire a proprietary interest
in the Corporation and thereby develop a stronger incentive to put forth
maximum effort for the continued success and growth of the Corporation and its
subsidiaries.

In addition, the use of the long term equity programs as an integral element of
management compensation is common throughout industry. With extremely tight
labor markets, the importance of providing competitive total compensation
packages is crucial to USG's ability to build, attract, motivate and retain the
quality of management needed to continue to meet the organization's strategic
objectives.

In 1998, the Compensation and Organization Committee approved the addition of a
new group of participants, primarily consisting of line managers (such as plant
managers and sales managers) who are important to the achievement of key
strategic objectives such as lowering manufacturing cost and improving customer
satisfaction. These managers are also subject to the Corporation's stock
ownership guidelines.

The proposed allocation will allow the Corporation to effectively promote
broader management ownership by managers who make a significant impact on
corporate results and thus more closely link the interests of management with
shareholders.