false000116330200011633022021-12-302021-12-300001163302exch:XNYS2021-12-302021-12-300001163302exch:XCHI2021-12-302021-12-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of report (Date of earliest event reported): December 30,
2021
United States Steel Corporation
(Exact Name of Registrant as Specified in
Charter)
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Delaware
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1-16811 |
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25-1897152 |
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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600 Grant Street,
Pittsburgh, PA 15219-2800
(Address of Principal Executive Offices, and Zip Code)
(412) 433-1121
Registrant’s Telephone Number, Including Area Code
____________________________________________
(Former Name or Former Address, if Changed Since Last
Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see
General Instruction A.2. below):
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Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
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Pre-commencement communication pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communication pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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X
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New York Stock Exchange
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Common Stock
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X
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Chicago Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17
CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR §240.12b-2).
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
(e)
On December 30, 2021, the Compensation & Organization Committee
(the “Committee”) of the Board of Directors (the “Board”) of United
States Steel Corporation (the “Corporation”), approved the grant of
a special performance-based award (the “Special Award”) to David B.
Burritt, the Corporation’s Chief Executive Officer (“CEO”), aligned
with achieving results above and beyond the expected outcomes of
the Corporation’s announced strategic investments, and representing
significant sustained stockholder value creation in an accelerated
timeframe. The Special Award is being issued in addition to any
regular annual award issued by the Committee.
The Special Award has a grant date fair value of approximately $4.0
million and is comprised of two components: (i) an award of 85,034
performance-based restricted stock units (the “PSU Award”), which
vest on December 31, 2025 only if certain strategic performance
metrics are achieved (described below) and (ii) 171,000
performance-based stock options (the “PSO Award”) which vest if the
Corporation achieves stock price levels for a sustained period of
time representing an increase in market capitalization of
approximately $3-8.5 billion (described below), approximately a
150-250% increase compared to the Company’s market capitalization
on the date of grant. Each performance-based restricted stock unit
(“PSU”) represents the right to receive one share of the
Corporation’s common stock upon vesting at target levels and up to
two shares of the Corporation’s common stock for maximum
performance. Each performance-based stock option (“PSO”) represents
the right to acquire one share of the Corporation’s common stock
upon vesting, exercise of the option and payment of the exercise
price.
Building on the Momentum of the Best for All
SM
Strategy
The Committee determined to grant the Special Award at this time to
retain Mr. Burritt and incentivize him to continue his efforts in
leading the Corporation as its CEO as it continues to execute its
Best for All
strategy, and transition to the future building on the
accomplishments and momentum achieved in 2021. During this critical
business transformation against the backdrop of the challenges
posed by the continued pandemic, Mr. Burritt and his team must
maintain the operating discipline necessary to transition to a
steelmaking footprint with more consistent, higher quality earnings
and lower capital and carbon intensity, and continue to innovate
and commercialize their innovations to support the current and
future needs of the Corporation’s customers. The Committee believes
it is in the best interests of stockholders to fully support Mr.
Burritt’s engagement as he and his team continue to transform the
Corporation, and inspire acceleration of historic change for the
Corporation, and that making the Special Award achieves this
purpose.
Aligned with Stockholder Interests
The Best for All strategy is designed to completely transform the
way the Corporation does business from a technological, commercial,
and sustainability perspective to create long-term stockholder
value by pursuing a transformed business model that is resilient to
market volatility and is profitable through the business cycle. The
goals provided for in the Special Award and the four-year
performance period contemplate an ambition beyond day-to-day annual
and long-term management objectives and seek to reward Mr. Burritt
for the stretch effort and only if these additional bold goals are
achieved.
Factors Considered in Designing the Special Award
In determining the appropriateness of granting the Special Award,
the Committee received relevant information and benchmarking data
from Pay Governance, LLC, the Committee’s independent compensation
consultant. Utilizing this information and data, the Committee
considered the following factors in approving the Special
Award:
•The
value of special long-term transformation-focused incentive awards
provided in recent years to CEOs at similarly sized and
industry-related publicly traded companies;
•The
target grant value of Mr. Burritt’s annual award under the
Corporation’s long-term incentive program, which will continue to
comprise the vast majority of Mr. Burritt’s long-term
compensation;
•The
investment horizon for new finishing lines at Big River Steel and
the construction of the Corporation’s second mini mill
facility;
•The
significant value expected to be generated for stockholders if the
performance metrics are achieved; and
•The
desired outcomes of the Best for All strategy to position the
Corporation as an industry leader of differentiated steel
solutions.
Terms of the PSU Award
The PSU Award provides Mr. Burritt an opportunity to earn up to a
maximum of 170,068 shares based on the achievement of certain
pre-set performance criteria after the four-year performance
period, January 1, 2022 through December 31, 2025 (the “Performance
Period”).
The PSUs do not pay dividends or carry voting privileges prior to
vesting. Shares may be earned at the expiration of the Performance
Period, if the Corporation satisfies quantitative performance
criteria related to:
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Metric
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Rationale
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EBITDA Margin Expansion
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Emphasizes profitability as we continue to invest in new mini mill
steelmaking and finishing capabilities.
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Greenhouse Gas Emissions Intensity
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Motivates long-term management of key sustainability risks across
the enterprise.
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Asset Portfolio Optimization
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Supports capital redeployment and divestiture of non-strategic
assets and real estate to optimize access to capital needed to
finance initiatives tied to our transformation
strategy.
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Leverage Metrics/Credit Rating
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Enables strong business resiliency in all market
cycles.
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Corporate Relative Valuation
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Strengthens our market value and industry competitiveness as
measured by the multiple of the enterprise value to expected
EBITDA, a common corporate valuation metric in our
industry.
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Each performance metric represents 20% of the PSU Award and a
payout is achievable at threshold (50% of target), target (100% of
target) or maximum (200% of target) performance achievement. The
goals aligned to each performance metric represent significant
stretch and performance outside the ordinary course of operating
the day-to-day business.
In setting the performance metrics and targets, the Committee
believes that achievement of each metric, even at a threshold
level, requires significant effort and focus and will represent
significant long-term value creation for stockholders.
In the event of Mr. Burritt’s termination of service due to death
or becoming disabled, retirement or an involuntary separation
without cause, a pro-rata portion of the PSU Award will vest based
upon the number of complete months worked during the performance
period. Unless otherwise determined by the Committee, in the event
of a Termination with Consent (as defined in the Plan), Mr. Burritt
shall remain entitled to vest in the total number of shares
issuable under the PSU Award, subject to achievement of the
performance goals. The PSU Award is forfeitable in its entirety if
Mr. Burritt is terminated for cause. In the event of a Change in
Control (as defined in the Plan), the PSU Award will vest at
target.
Terms of the PSO Award
The Committee granted PSOs to Mr. Burritt to balance the
operational and financial objectives of the PSUs with a focused
incentive tied to creating sustained long-term stockholder value.
The PSOs do not become vested and exercisable until the
Corporation’s 20-trading day average closing stock price meets or
exceeds the following stock price hurdles during the seven-year
period beginning on the grant date, as follows:
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20-trading day Average Closing Stock Price Achievement During
7-Year Period Beginning on Grant Date
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% of PSOs Exercisable
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$35.00
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33.33%
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$45.00
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33.33%
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$55.00
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33.34%
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The stock price achievement hurdles reflect approximately 150%,
200% and 250% sustained market capitalization growth compared to
the Corporation’s market capitalization on the date of the Special
Award grant.
The PSOs also contain a holding period provision such that shares
received from the exercising of the options are not transferrable
for a one-year period following vesting of the option, and during
such time Mr. Burritt remains employed by the Corporation.
Any portion of the PSO Award that is not exercisable based on the
stock price goals by December 31, 2028, will be forfeited as of
such date.
The PSO Award achievement is measured at termination in the event
of Mr. Burritt’s termination of service as CEO due to retirement,
involuntary separation without cause, death, or disability, and any
unvested portion of the PSO Award is terminated as of such
termination date.
In the event of a termination with consent, the PSO Award may
remain outstanding through the remainder of the term, or as of any
earlier termination date determined by the Committee, subject to
vesting. The PSO Award is forfeitable in its entirety if Mr.
Burritt is terminated for cause. In the event of a Change in
Control (as defined in the Plan), the PSO Award achievement will be
determined not later than the date of the Change in Control, and
any unvested portion of the PSO Award shall terminate as of the
date of the Change in Control.
SVP Awards
Consistent with the Special Award rationale, the Committee also
granted performance-based restricted stock units to other members
of the Corporation’s executive leadership team (the “SVP Awards”),
including its named executive officers, to incentivize and engage
executives as they lead the execution of the Best for All strategy.
The SVP Awards granted to each member of the leadership team have a
grant date fair value of $2.0 million, and are payable in shares of
the Corporation’s common stock after the close of the Performance
Period to the extent the following strategic objectives are
achieved
with the performance with respect to each strategic objective
measured on a separate basis:
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Metric
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Rationale
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On Time and on Budget Completion of the Corporation’s second mini
mill
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Requires budget and operational discipline to support our
profitability goals.
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EBITDA Margin Expansion
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Emphasizes profitability as the Corporation continues to invest in
new mini mill steelmaking and finishing capabilities.
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Greenhouse Gas Emissions Intensity
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Motivates long-term management of key sustainability risks across
the enterprise.
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For each metric, a payout is achievable at threshold (50% of
target), target (100% of target) or maximum (200% of target) based
on performance achieved.
The Committee believes the Special Award and the SVP Awards clearly
establish a pay for performance compensation structure, rewarding
executives if the Corporation’s transformative and additional
strategic objectives are achieved. The SVP Awards are governed by
the terms of the Corporation’s 2016 Omnibus Incentive Compensation
Plan.
The summaries of the Special Award and the SVP Awards included in
this current report on Form 8-K are qualified in their entirety by
reference to the full text of the Performance Share Award Grant
Agreements and Performance Non-Qualified Stock Option Grant
Agreement, forms of which will be attached as exhibits to the
Corporation’s Annual Report on Form 10-K for the fiscal year ending
December 31, 2021 and are incorporated herein by
reference.
Item 9.01 Financial Statements and
Exhibits
(d) Exhibits:
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Exhibit No. |
Description |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL
document). |
Cautionary Language on Forward-Looking Statements
This report contains information that may constitute
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend the
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in those sections.
Generally, we have identified such forward-looking statements by
using the words “believe,” “expect,” “intend,” “estimate,”
“anticipate,” “project,” “target,” “forecast,” “aim,” “should,”
“will,” "may" and similar expressions or by using future dates in
connection with any discussion of events or developments that we
expect or anticipate will occur in the future. However, the absence
of these words or similar expressions does not mean that a
statement is not forward-looking. Forward-looking statements are
not historical facts, but instead represent only the Corporation’s
beliefs regarding future events, many of which, by their nature,
are inherently uncertain and outside of the Corporation’s control.
It is possible that the Corporation’s actual results and financial
condition may differ, possibly materially, from the anticipated
results and financial condition indicated in these forward-looking
statements. Management believes that these forward-looking
statements are reasonable as of the time made. However, caution
should be taken not to place undue reliance on any such
forward-looking statements because such statements speak only as of
the date when made. Our Corporation undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from our Corporation's historical experience and our present
expectations or projections. These risks and uncertainties include,
but are not limited to, the risks and uncertainties described in
this report and in “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2020 and those
described from time to time in our future reports filed with the
Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
UNITED STATES STEEL CORPORATION
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By |
/s/ Manpreet S. Grewal |
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Manpreet S. Grewal |
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Vice President, Controller & Chief Accounting
Officer |
Dated: December 30, 2021
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