ACCESSING THIS SITE SIGNIFIES YOUR AGREEMENT TO THE TERMS AND CONDITIONS OF USE. PLEASE READ THESE TERMS CAREFULLY BEFORE USING THIS SITE.
Cautionary Note to U.S. Investors - The information contained in this website is provided solely for convenience. The documents contained herein are historical in nature. Therefore, events following the date of publication or subsequently available information may have rendered obsolete the estimates, assertions or other information contained in these documents. All information is provided without warranty of any kind. Marathon Oil assumes no duty to update the information contained in any of the documents and further assumes no responsibility for the accuracy of the information. Marathon Oil further reserves the right to change the content of the site at any time without notice.
Any person who uses, or makes decisions upon, information contained in this website does so at their own risk and agrees to hold Marathon Oil Corporation and its subsidiaries and affiliates harmless. Marathon Oil Corporation and its employees and representatives further expressly disclaim all liability for any costs, expenses, damages or consequences of any type that may result from reliance on the information obtained from this website or any website linked hereto.
The United States Securities and Exchange Commission (the "SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved probable and possible reserves. From time to time, we may use certain terms on this website or the documents contained herein, such as net unrisked mean resource potential, net unrisked resource potential, net resource, 2P resource, 2P net resource, net 2P resource, gross unrisked potential resource, gross resources, gross discovered resources, gross resource potential, gross block resource potential, resources, resource potential, potential resource, and other similar terms or variations of the foregoing terms. The SEC guidelines strictly prohibit us from including these terms in filings with the SEC. U.S. Investors are urged to consider closely the disclosures in our Forms 10-K, 10-Qs and 8-Ks, Commission File No. 1-5153, available from us at Marathon Oil Corporation, Attn. Investor Relations, 5555 San Felipe Street, Houston, TX 77056-2723. Our Form 10-K and other filings with the SEC can also be electronically accessed from our website or the SEC's website at http://www.sec.gov/.
<PAGE> SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant / / 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: ------------------------------------------------------------------------
<PAGE> USX Corporation [LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS USX AND PROXY STATEMENT 2001 Marathon Group Common Stock U. S. Steel Group Common Stock TUESDAY, APRIL 24, 2001 10:00 A.M. EASTERN TIME Ballroom 4 The Greater Columbus Convention Center 400 North High Street Columbus, Ohio 43215 PLEASE VOTE PROMPTLY EITHER BY: - telephone, - the Internet, or - marking, signing and returning your proxy or voting instruction card.
<PAGE> [LOGO] USX USX Corporation THOMAS J. USHER 600 Grant Street Chairman, Board of Directors Pittsburgh, PA 15219-4776 & Chief Executive Officer March 12, 2001 Dear USX Stockholder, We will hold our 2001 annual meeting of stockholders in Ballroom 4 of The Greater Columbus Convention Center, 400 North High Street, Columbus, Ohio, on Tuesday, April 24, 2001 at 10:00 A.M. Eastern Time. We will elect directors and independent accountants at the meeting. The Board of Directors has nominated four of our 14 directors for re-election this year. They are all Class II directors, which means their terms will expire at the 2004 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, over the Internet or by marking, signing and returning your proxy or voting instruction card as soon as possible, whether or not you plan to attend the meeting. Sincerely, /s/ Thomas J. Usher Marathon Group o U. S. Steel Group
<PAGE> TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders.................................. 4 Proxy Statement........................................................... 5 Questions and Answers................................................... 5 The Board of Directors and its Committees............................... 7 Compensation of Directors............................................... 10 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 Audit Committee Report.................................................. 18 Information Regarding the Independence of the Independent Public Accountants...................................... 19 Security Ownership...................................................... 19 Executive Compensation.................................................. 21 Compensation Committee Report on Executive Compensation............................................. 26 Shareholder Return Performance Presentation........................... 31 Pension Benefits...................................................... 33 Change in Control Arrangements and Employment Contract................ 35 Appendix A - Audit Committee Charter...................................... 37 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ON APRIL 24, 2001 We will hold our 2001 annual meeting of stockholders in Ballroom 4 of The Greater Columbus Convention Center, 400 North High Street, Columbus, Ohio 43215 on Tuesday, April 24, 2001 at 10:00 A.M. Eastern Time, in order to: - elect four Class II directors, - elect independent accountants for 2001, 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 23, 2001. 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 or other intermediary will suffice. By order of the Board of Directors, Dan D. Sandman Secretary D
ated: March 12, 2001 USX Corporation 600 Grant Street Pittsburgh, PA 15219-4776 4
<PAGE> 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, Clarence P. Cazalot, Jr., Paul J. Wilhelm and Robert M. Hernandez. They will vote your shares as you instruct. We will hold the meeting on April 24, 2001 in Ballroom 4 of The Greater Columbus Convention Center, 400 North High Street, Columbus, Ohio. 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 2000 annual reports on or about March 12, 2001. 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 23, 2001. /_/ WHAT MAY I VOTE ON? You may vote on: - the election of four nominees to serve as Class II 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 2001. /_/ 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, on 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 .567 votes. We calculated the number of votes to which a share of U.S. Steel stock is entitled by using a formula described 5
<PAGE> 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 15, 2001. /_/ HOW MANY OUTSTANDING SHARES ARE THERE? At the close of business on February 23, 2001, which is the record date for the meeting, there were 308,582,855 shares of Marathon stock (representing 308,582,855 votes) and 88,800,321 shares of U.S. Steel stock (representing 50,349,782 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 if 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 28, 2000 and no later than January 27, 2001, 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 2002 ANNUAL MEETING? Shareholder proposals submitted for inclusion in our 2002 proxy statement must be received in writing by our Corporate Secretary no later than 5:00 P.M. Eastern Time on November 12, 2001. Shareholder proposals submitted outside the process for inclusion in the proxy statement must be received from stockholders of record on or after December 27, 2001 and no later than January 26, 2002 and must be accompanied by certain information about the stockholders making the proposals, in accordance with our by-laws. 6
<PAGE> THE BOARD OF DIRECTORS AND ITS COMMITTEES 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 ten times in 2000. The directors spend considerable time preparing for Board and committee meetings, and they attend as many meetings as possible. In 2000, their attendance averaged 97 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 2000. BOARD COMMITTEE MEMBERSHIPS
<TABLE> <CAPTION> ORGANIZATION AND CORPORATE AUDIT COMPENSATION GOVERNANCE PUBLIC POLICY COMMITTEE ON DIRECTOR COMMITTEE COMMITTEE COMMITTEE COMMITTEE FINANCIAL POLICY -------- --------- --------- --------- --------- ---------------- <S> <C> <C> <C> <C> <C> Neil A. Armstrong X X X J. Gary Cooper X X* X Charles A. Corry X X X Shirley Ann Jackson X X X Charles R. Lee X X X* Paul E. Lego 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 2000 5 6 5 4 5 * Chairman </TABLE>
-------------------------------------------------------------------------------- AUDIT COMMITTEE The Audit Committee has had a written charter adopted by the Board for thirty years. The current version, which was adopted by the Board in 1999, is attached as Appendix A to this proxy statement. The charter requires the committee to reassess and report to the Board on the adequacy of the charter on an annual basis, which the committee did in 2000. All the members of the Audit Committee are independent (as independence is defined in Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards, as may be modified or supplemented). 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' fees, - 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, 7
<PAGE> - 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, -- our policies and practices with respect to the two business groups, -- the Board's performance of its fiduciary duties to both classes of stockholders, -- on an annual basis, a report outlining the activities undertaken by the committee over the past year to meet the requirements of the committee's charter, and - assessing, and reporting annually to the Board on, the activities of the committee and on the adequacy of the committee's charter. --------------------------------------------------------------------------------
COMPENSATION COMMITTEE The Compensation Committee is composed solely of directors who satisfy all criteria for independence under applicable law and who, in the opinion of the Board, are free of any relationship that would interfere with their exercise of independent judgment as members of the committee. The committee is responsible for: - making recommendations to the Board and to the boards of subsidiaries 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, - administering the plans under which long-term incentives are granted and approving grants of options, stock appreciation rights, restricted stock and other incentives under those plans, - the timely certification as to the meeting of applicable performance levels under the foregoing plans, - approving the annual report on executive compensation for the proxy statement, and - such other duties and responsibilities as may be assigned to the committee by the Board or as designated in plans approved by the shareholders. The committee is also authorized to: - adopt and amend employee benefit plans, - review the activities of the 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 CORPORATE GOVERNANCE COMMITTEE The Organization and Corporate Governance Committee: - makes recommendations to the Board concerning the appropriate size and composition of the Board, including -- 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, 8
<PAGE> - 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. -------------------------------------------------------------------------------- PUBLIC POLICY COMMITTEE The Public Policy Committee concentrates on the following areas of emphasis: ownership of USX, stockholder attitudes toward USX, political-legislative developments affecting USX, and USX policies on major public issues. The committee reviews the following matters and reports to the Board such observations and information thereon as the committee deems appropriate: - matters bearing on the relationship between management and present or potential stockholders with emphasis on policy and major programs affecting ownership of USX, - communications to and from the investment community, particularly USX's stockholders, - legislative and regulatory issues affecting USX's businesses and operations, - public issues identified by USX as likely to generate expectations of USX by its constituencies, including stockholders, employees, customers, vendors, governments and the public, and USX's position regarding identified public issues including, but not limited to, employee health and safety, environmental, energy and trade matters, - USX efforts to affect identified public issues through research, analysis, lobbying efforts and participation in business and government programs, and - codes of conduct applicable to employees of USX and its principal operating units. -------------------------------------------------------------------------------- COMMITTEE ON FINANCIAL POLICY The Committee on Financial Policy provides oversight with 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 the 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
<PAGE> 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) $ 2,000 -------------------------------------------------------------------------------- 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
<PAGE> 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 19. The current four Class II directors are nominees for election this year for a three-year term that will expire at the 2004 annual meeting. All four of them except Ambassador Cooper (who was elected by the Board effective May 1, 1999), and all of the continuing Class I and Class III directors except Dr. Jackson (who was elected by the Board effective July 1, 2000), have previously been elected by the stockholders. Of the 14 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 distinguished career in the military and the diplomatic corps before entering business, and one has had a distinguished career in academia, business and government. 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
<PAGE> NOMINEES FOR CLASS II DIRECTOR Terms Expire 2004 [PHOTO] J. Gary Cooper Director since 1999 Age 64 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 George H. W. 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 61 Chairman of the Board and Co-CEO, Verizon Communications (communications 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 Corporation (which merged with Bell Atlantic Corporation to form Verizon Communications in 2000) 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 was elected Chairman of the Board and Chief Executive Officer of GTE in May 1992. He was elected to his present position with Verizon Communications on June 30, 2000. 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] Thomas J. Usher Director since 1991 Age 58 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 H. J. Heinz Co., PNC Financial Services Group, 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; Chairman and member of the Executive Committee of TheSteelAlliance and a member of the Board of Trustees of the University of Pittsburgh and of the Board of the Extra Mile Education Foundation. 12
<PAGE> [PHOTO] Paul J. Wilhelm Director since 1995 Age 59 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 in 2000. Mr. Wilhelm is a member of the Association of Iron and Steel Engineers, past Chairman of the American Iron and Steel Institute, Chairman of the Japan-America Society of Pennsylvania, a member of the Board of Trustees of Carnegie Mellon University, Chairman of the Board for the Greater Pittsburgh Council Boy Scouts of America, a member of the boards of the University of Pittsburgh Cancer Institute Council and of the Pittsburgh Regional Alliance, and a member of the University of Pittsburgh's board of visitors for the Katz School of Business and College of Business Administration. 13
<PAGE> CONTINUING CLASS III DIRECTORS Terms Expire 2002 [PHOTO] Charles A. Corry Director since 1988 Age 69 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] Shirley Ann Jackson Director since July 1, 2000 Age 54 President, Rensselaer Polytechnic Institute Dr. Jackson received a BS degree in physics in 1968, and a Ph.D. in theoretical elementary particle physics in 1973, from the Massachusetts Institute of Technology. She was a research associate at the Fermi National Accelerator Laboratory, a visiting scientist at the European Center for Nuclear Research and, from 1976 to 1991, a theoretical physicist at the former AT&T Bell Laboratories. She was a professor of theoretical physics at Rutgers University from 1991 to 1995. She was head of the U.S. Nuclear Regulatory Commission from 1995 to 1999. Dr. Jackson was named President of Rensselaer Polytechnic Institute in 1999. Dr. Jackson is a director of Federal Express Corporation, Newport News Shipbuilding, Sealed Air Corporation and UtiliCorp United, Inc. She is a member of the National Academy of Engineering, a Fellow of the American Academy of Arts and Sciences and a Fellow of the American Physical Society. She holds 14 honorary degrees, was awarded the New Jersey Governor's Award in Science in 1993, and was inducted into the National Women's Hall of Fame in 1998. Dr. Jackson is also a trustee of the Brookings Institution and is a Life Trustee of M.I.T. [PHOTO] Paul E. Lego Director since 1988 Age 70 Retired Chairman and CEO, 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 Holdings, Inc. and Orlimar Golf Company; an emeritus trustee of the University of Pittsburgh; and a member of The Business Council. 14
<PAGE> [PHOTO] Seth E. Schofield Director since 1994 Age 61 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. and an Advisory Board member of Desai Capital Management. [PHOTO] Douglas C. Yearley Director since 1992 Age 65 Chairman Emeritus, Phelps Dodge Corporation 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 retired in May, 2000. He is a director of Lockheed Martin Corporation, and a member of the Business Council, the Center for Compatible Economic Development and the National Council of the World Wildlife Fund. 15
<PAGE> CONTINUING CLASS I DIRECTORS Terms Expire 2003 [PHOTO] Neil A. Armstrong Director since 1984 Age 70 Chairman, EDO Corporation (electronic and electromechanical systems 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. He became Chairman of CTA, Inc. in 1982, Chairman of AIL Systems Inc. in 1989 and director and Chairman of the EDO Corporation in 2000. He is a director of RTI International Metals, Inc. and a member of the National Academy of Engineering. [PHOTO] Clarence P. Cazalot, Jr. Director since 2000 Age 50 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 President-Worldwide Production Operations of Texaco Inc. in 1999. Mr. Cazalot was elected Vice Chairman-USX Corporation and President-Marathon Oil Company effective March 3, 2000. He is a Director and Executive Committee member of the U.S.-Saudi Arabian Business Council and a member of the Policy and Executive committees of the American Petroleum Institute. [PHOTO] Robert M. Hernandez Director since 1991 Age 56 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. 16
<PAGE> [PHOTO] John F. McGillicuddy Director since 1984 Age 70 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 Empire HealthChoice, Inc., Southern Peru Copper Corporation and UAL Corporation. He is Chairman Emeritus 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 61 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., Verizon Communications, and Johnson & Johnson. He is on the Board of the Association of American Railroads, a member of the board of trustees of The Johns Hopkins University, and a member of the Business Roundtable and of The Business Council. He is serving a three-year term on the Federal Aviation Administration Management Advisory Council as Chairman of the Air Traffic Services Subcommittee. -------------------------------------------------------------------------------- P
ROPOSAL 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 2000, 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
<PAGE> AUDIT COMMITTEE REPORT Our committee has reviewed and discussed USX's audited financial statements for 2000 with USX's management. We have discussed with the independent auditors, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), the matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit Committees), as may be modified or supplemented. We have received the written disclosures and the letter from PricewaterhouseCoopers required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), as may be modified or supplemented, and we have discussed with PricewaterhouseCoopers its independence. Based on the review and discussions referred to above, we recommended to the Board that the consolidated audited financial statements for USX, the audited financial statements for the USX-Marathon Group, and the audited financial statements for the USX-U. S. Steel Group be included in USX's Annual Report on Form 10-K for 2000 for filing with the Securities and Exchange Commission. John W. Snow, Chairman J. Gary Cooper Shirley Ann Jackson Paul E. Lego John F. McGillicuddy Douglas C. Yearley 18
<PAGE> INFORMATION REGARDING THE INDEPENDENCE OF THE INDEPENDENT PUBLIC ACCOUNTANTS AUDIT FEES Aggregate fees billed to USX for professional services rendered for PricewaterhouseCoopers' audit of USX's annual financial statements for 2000 and for its reviews of USX's financial statements included in USX's Forms 10-Q for 2000 were $3,665,460. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES Aggregate fees billed to USX for professional services rendered by PricewaterhouseCoopers for 2000 as described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X were $2,549,414. ALL OTHER FEES Aggregate fees billed to USX for services rendered for 2000 by PricewaterhouseCoopers, other than the services described in the previous two paragraphs, were $2,352,831. COMPATIBILITY OF PRICEWATERHOUSECOOPERS' SERVICES WITH ITS INDEPENDENCE The Audit Committee has considered whether PricewaterhouseCoopers' provision of the services covered under the headings "Financial Information Systems Design and Implementation Fees" and "All Other Fees" above is compatible with maintaining PricewaterhouseCoopers' independence, and the committee has determined that it is. -------------------------------------------------------------------------------
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 Percent Class of of of Beneficial Owner Beneficial Ownership Class ---------------- -------------------- ----- <S> <C> <C> <C> Marathon Stock Wellington Management Company, LLP 15,562,200 (1) 5.05 (1) 75 State Street Boston, MA 02109 </TABLE>
---------- (1) Based on Schedule 13G dated February 14, 2001 which indicates that Wellington Management Company, LLP had sole voting power over no shares, shared voting power over 762,600 shares, sole dispositive power over no shares and shared dispositive power over 15,562,200 shares. 19
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, 2001 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 January 31, 2001, any equity securities of USX other than those shown.
Marathon Stock U. S. Steel Stock Name Shares Shares ---- ------ ------ <S> <C> <C> Neil A. Armstrong (1) ..................................... 13,925 4,723 Clarence P. Cazalot, Jr.(2)(3) ............................ 440,000 35,000 J. Gary Cooper (1)(2) ..................................... 3,367 1,791 Charles A. Corry (1)(2)(3) ................................ 63,864 81,350 Robert M. Hernandez (2)(3)(4) ............................. 581,492 262,940 Shirley Ann Jackson (1)(2) ................................ 2,771 1,746 Charles R. Lee (1) ........................................ 13,606 5,307 Paul E. Lego (1)(2) ....................................... 10,933 3,659 John F. McGillicuddy (1) .................................. 13,180 4,402 Dan D. Sandman (2)(3) ..................................... 211,900 134,696 Seth E. Schofield (1)(2) .................................. 8,686 3,717 John W. Snow (1) .......................................... 6,918 2,971 Thomas J. Usher (2)(3) .................................... 1,073,976 709,406 Paul J. Wilhelm (2)(3) .................................... 137,940 418,523 Douglas C. Yearley (1) .................................... 8,161 3,545 All Directors and Executive Officers as a group ........... 5,467,849 3,949,801 (36 persons) (1)(2)(3)(5) </TABLE>
(1) Includes Common Stock Units credited under the USX Corporation Deferred Compensation Plan for Non-Employee Directors as follows:
<TABLE> <CAPTION> Marathon Stock U. S. Steel Stock Common Stock Units Common Stock Units ------------------ ------------------ <S> <C> <C> Neil A. Armstrong .................................. 12,425 4,424 J. Gary Cooper ..................................... 2,344 756 Charles A. Corry ................................... 3,865 1,351 Shirley Ann Jackson ................................ 1,763 732 Charles R. Lee ..................................... 11,606 4,107 Paul E. Lego ....................................... 9,340 3,336 John F. McGillicuddy ............................... 11,180 4,003 Seth E. Schofield .................................. 7,576 2,585 John W. Snow ....................................... 5,918 1,972 Douglas C. Yearley ................................. 7,161 2,546 </TABLE>
(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 March 3, May 30, September 25 and December 20, 2000 are currently exercisable): Mr. Usher: Marathon Stock 892,600, U.S. Steel Stock 606,400; Mr. Corry: Marathon Stock 60,000, U.S. Steel Stock 80,000; Mr. Cazalot: Marathon Stock 380,000, U.S. Steel Stock 20,000; Mr. Wilhelm: Marathon Stock 113,000, U.S. Steel Stock 339,750; Mr. Hernandez: Marathon Stock 497,950, U.S. Steel Stock 217,000; Mr.Sandman: Marathon Stock 153,400, U.S. Steel Stock 107,325; and all directors and executive officers as a group: Marathon Stock 2,877,130, U.S. Steel Stock 2,276,025. (4) As of January 31, 2001 the 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 own 1.77 percent of the Marathon Stock and 4.45 percent of the U.S. Steel Stock. 20
EXECUTIVE COMPENSATION The following table sets forth certain information concerning the compensation awarded to, earned by or paid to Mr. Usher and to the other four most highly compensated executive officers of USX who were serving as executive officers at the end of 2000 for services rendered in all capacities during 2000, 1999 and 1998: SUMMARY COMPENSATION TABLE
<TABLE> <CAPTION> 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) --------- ---- ------ ----- ----- ------------ -------- ---- ------------ <S> <C> <C> <C> <C> <C> <C> <C> <C> T. J. Usher 2000 1,325,000 2,500,000 3,825,000 7,729 4,925,000 400,000 112,406 Chairman 1999 1,241,667 1,400,000 2,641,667 13,660 291,151 324,000 119,108 & Chief 1998 1,097,917 1,320,000 2,417,917 11,549 354,840 270,000 126,805 Executive Officer C. P. Cazalot, Jr. 2000 495,652 1,500,000 1,995,652 0 1,875,000 400,000 28,239 Vice Chairman- USX Corporation and President- Marathon Oil Company (effective March 3, 2000) P. J. Wilhelm 2000 655,833 800,000 1,455,833 7,343 1,762,500 150,000 49,862 Vice Chairman- 1999 604,167 600,000 1,204,167 7,496 119,490 120,000 49,329 USX Corporation 1998 535,833 600,000 1,135,833 8,426 217,817 100,000 49,593 and President- U. S. Steel Group R. M. Hernandez 2000 600,000 1,000,000 1,600,000 9,250 1,477,500 150,000 56,512 Vice Chairman 1999 573,750 600,000 1,173,750 7,535 94,153 120,000 55,435 & Chief 1998 542,500 650,000 1,192,500 7,876 53,841 100,000 58,180 Financial Officer D. D. Sandman 2000 459,167 650,000 1,109,167 4,597 923,438 80,000 47,693 General Counsel, 1999 425,000 425,000 850,000 4,251 75,323 60,000 47,852 Secretary and 1998 397,917 450,000 847,917 4,852 66,079 56,000 46,196 Senior Vice President- Human Resources & Public Affairs </TABLE>
----------- (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, 2000, 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 26). 21
<TABLE> <CAPTION> Unvested Restricted Shares Vesting Schedule for Restricted Stock Aggregate Holdings ------------------------------------------------------------- -------------------------------------- Value as of Class of May 2001 May 2002 May 2003 Class of December 31, 2000 Date Granted Stock (Shares) (Shares) (Shares) Stock Shares ($) ------------ -------- -------- -------- -------- -------- ------ ----------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> T. J. Usher May 30, 2000 Marathon 26,000 26,000 26,000 Marathon 130,000 3,684,694 U.S. Steel 14,000 14,000 14,000 U.S. Steel 70,000 1,255,625 ---------- 4,940,319 C. P. Cazalot, Jr. May 30, 2000 Marathon 12,000 12,000 12,000 Marathon 60,000 1,700,628 U.S. Steel 3,000 3,000 3,000 U.S. Steel 15,000 269,063 ---------- 1,969,691 P. J. Wilhelm May 30, 2000 Marathon 3,000 3,000 3,000 Marathon 15,000 425,157 U.S. Steel 12,000 12,000 12,000 U.S. Steel 60,000 1,076,250 ---------- 1,501,407 R. M. Hernandez May 30, 2000 Marathon 7,800 7,800 7,800 Marathon 39,000 1,105,408 U.S. Steel 4,200 4,200 4,200 U.S. Steel 21,000 376,688 ---------- 1,482,096 D. D. Sandman May 30, 2000 Marathon 4,875 4,875 4,875 Marathon 24,375 690,880 U.S. Steel 2,625 2,625 2,625 U.S. Steel 13,125 235,430 ---------- 926,310 </TABLE>
(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 2000 are $79,500 for Mr. Usher, $28,239 for Mr. Cazalot, $39,350 for Mr. Wilhelm, $36,000 for Mr. Hernandez and $27,550 for Mr. Sandman. Also included are amounts attributable to split-dollar life insurance provided by USX. (Marathon Oil Company does not provide split-dollar life insurance.) For 2000, these amounts are $30,906 for Mr. Usher, $8,512 for Mr. Wilhelm, $18,512 for Mr. Hernandez and $18,143 for Mr. Sandman. Also included are amounts attributable to a mandatory tax compliance program. For 2000, these amounts were $2,000 for each of Messrs. Usher, Wilhelm, Hernandez and Sandman. For 1998 and 1999, this column also included dividends paid on restricted stock, which have never been, and are not now, at above-market or preferential rates. 22
<PAGE> (4) Restricted stock and stock options/SAR shares granted by class of stock are as follows:
<TABLE> <CAPTION> Restricted Class of Stock Stock Option/ Stock ($) SAR Shares -------- ----- ------------- <S> <C> <C> <C> <C> T. J. Usher 2000 Marathon 3,315,000 260,000 U.S. Steel 1,610,000 140,000 1999 Marathon 191,878 210,600 U.S. Steel 99,273 113,400 1998 Marathon 221,000 175,500 U.S. Steel 133,840 94,500 C. P. Cazalot, Jr. 2000 Marathon 1,530,000 380,000 U.S. Steel 345,000 20,000 P. J. Wilhelm 2000 Marathon 382,500 30,000 U.S. Steel 1,380,000 120,000 1999 Marathon 24,675 24,000 U.S. Steel 94,815 96,000 1998 Marathon 72,420 35,000 U.S. Steel 145,397 65,000 R. M. Hernandez 2000 Marathon 994,500 97,500 U.S. Steel 483,000 52,500 1999 Marathon 62,040 78,000 U.S. Steel 32,113 42,000 1998 Marathon 33,150 65,000 U.S. Steel 20,691 35,000 D. D. Sandman 2000 Marathon 621,563 52,000 U.S. Steel 301,875 28,000 1999 Marathon 49,644 39,000 U.S. Steel 25,679 21,000 1998 Marathon 41,548 36,400 U.S. Steel 24,531 19,600 </TABLE>
<PAGE> 2000 OPTION/SAR GRANTS The following table sets forth certain information concerning options and stock appreciation rights ("SARs") granted during 2000 to each executive officer named in the Summary Compensation Table under the USX 1990 Stock Plan:
<TABLE> <CAPTION> Individual Grants --------------------------------------------- Number of % of Total Potential Realizable Value Securities Options/ Exercise at Assumed Annual Rates of Underlying SARs or Base Stock Price Appreciation Options/ Granted to Price per for Option Term ($)(4) Class of SARs Employees Share Expiration ------------------------------------ Name or Group Stock Granted(1) in 2000(3) ($) Date 0% 5% 10% ------------- ----- ---------- ---------- --- ---- -- -- --- <S> <C> <C> <C> <C> <C> <C> <C> <C> T. J. Usher Marathon 260,000(2) 14.4% 25.5000 May 30, 2010 0 4,169,568 10,566,504 U.S. Steel 140,000(2) 15.3% 23.0000 May 30, 2010 0 2,025,044 5,131,854 C. P. Cazalot, Jr. Marathon 300,000(2) 16.7% 23.4063 March 3, 2010 0 4,416,030 11,191,080 Marathon 80,000(2) 4.4% 25.5000 May 30, 2010 0 1,282,944 3,251,232 U.S. Steel 20,000(2) 2.2% 23.0000 May 30, 2010 0 289,292 733,122 P. J. Wilhelm Marathon 30,000(2) 1.7% 25.5000 May 30, 2010 0 481,104 1,219,212 U.S. Steel 120,000(2) 13.1% 23.0000 May 30, 2010 0 1,735,752 4,398,732 R. M. Hernandez Marathon 97,500(2) 5.4% 25.5000 May 30, 2010 0 1,563,588 3,962,439 U.S. Steel 52,500(2) 5.7% 23.0000 May 30, 2010 0 759,392 1,924,445 D. D. Sandman Marathon 52,000(2) 2.9% 25.5000 May 30, 2010 0 833,914 2,113,301 U.S. Steel 28,000(2) 3.1% 23.0000 May 30, 2010 0 405,009 1,026,371 All Stockholders Marathon N/A N/A 25.5000 N/A 0 4,943,604,423 12,528,064,275 U.S. Steel N/A N/A 23.0000 N/A 0 1,283,979,481 3,253,852,872 All Optionees Marathon 300,000 16.7% 23.4063 March 3, 2010 0 4,416,030 11,191,080 Marathon 1,439,880 80.0% 25.5000 May 30, 2010 0 23,091,068 58,517,299 Marathon 30,000 1.7% 26.4375 Sept. 25, 2010 0 498,792 1,264,038 Marathon 30,000 1.7% 26.4688 Dec. 20, 2010 0 499,383 1,265,535 U.S. Steel 915,470 100.0% 23.0000 May 30, 2010 0 13,241,907 33,557,560 All Optionees' Marathon N/A N/A 23.4063 N/A 0 0.09% 0.09% Gain as % of Marathon N/A N/A 25.5000 N/A 0 0.47% 0.47% All Stockholders' Marathon N/A N/A 26.4375 N/A 0 0.01% 0.01% Gain Marathon N/A N/A 26.4688 N/A 0 0.01% 0.01% U. S. Steel N/A N/A 23.0000 N/A 0 1.03% 1.03% </TABLE>
---------- (1) The option granted to Mr. Cazalot on March 3 is one-third exercisable on the third, fourth and fifth anniversaries of the grant date. Options granted to optionees other than those named in the Summary Compensation Table on September 25 and December 20 are each one-third exercisable on the first, second and third anniversaries of the grant date. All other options listed are exercisable on May 30, 2001. (2) These options were granted with tandem SARs, which have the same exercise date as the underlying options. 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 U.S. 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 2000 and the number of outstanding shares as of December 31, 2000. 24
<PAGE> 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 2000 together with the total number of options and SARs outstanding at December 31, 2000 and the value of such options. AGGREGATED 2000 OPTION/SAR EXERCISES AND DECEMBER 31, 2000 OPTION/SAR VALUES
<TABLE> <CAPTION> No. of Total Value Securities of Unexercised No. of Total Value Underlying In-The-Money Shares Realized Unexercised Options/SARs at Underlying for Both Options/SARs at December 31, 2000 Options/SARs Classes of December 31, for Both Classes Name Exercised(1) Stock ($)(1) 2000(1) of Stock ($)(1) ---- ------------ ------------ ------- --------------- <S> <C> <C> <C> <C> T. J. Usher 0 - 1,499,000 1,421,472 C. P. Cazalot, Jr. 0 - 400,000 1,708,754 P. J. Wilhelm 0 - 452,750 85,314 R. M. Hernandez 0 - 714,950 1,968,422 D. D. Sandman 0 - 260,725 147,878 </TABLE>
Note: All options listed above, except those granted on May 30, 2000 and those granted on March 3, 2000 to Mr. Cazalot, are currently exercisable. All options listed above were granted with SARs. (1) Figures by class of stock are as follows:
<TABLE> <CAPTION> No. of Securities Total Value of Underlying Unexercised Unexercised In-The-Money No. of Shares Options/SARs Options/SARs Underlying Value at at Class of Option/SARs Realized December 31, December 31, Stock Exercised ($) 2000 2000 ($) ----- --------- --- ---- -------- <S> <C> <C> <C> <C> <C> T. J. Usher Marathon 0 0 892,600 1,421,472 U.S. Steel 0 0 606,400 0 C. P. Cazalot, Jr. Marathon 0 0 380,000 1,708,754 U.S. Steel 0 0 20,000 0 P. J. Wilhelm Marathon 0 0 113,000 85,314 U.S. Steel 0 0 339,750 0 R. M. Hernandez Marathon 0 0 497,950 1,968,422 U.S. Steel 0 0 217,000 0 D. D. Sandman Marathon 0 0 153,400 147,878 U.S. Steel 0 0 107,325 0 </TABLE>
OMPENSATION 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. 26
<PAGE> 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 USX'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 2000 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, 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 environmental emissions improvements For USX (Corporate) All the above plus workforce diversity Our committee certified in writing prior to payment of awards for the year 2000 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 performance comparisons with the current business plan, with previous years and with peer groups on the basis of such financial measures as income, cash flow and return on capital employed, as measured for incentive compensation purposes, as well as individual objectives. In addition, non-financial measures, such as safety performance (compared with the prior year's industry average) and environmental and diversity performance are also considered. In determining awards under these plans, we also give consideration to 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. 27
<PAGE> 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 2000. 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 third major grant in 2000, to cover the five-year performance period ending with 2004, and we will make 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 2000, we compared our three-year (1997-1999) 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. 28
<PAGE> 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 2000 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 Group and of Marathon Oil Company 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 USX'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 on pages 31 and 32. Mr. Usher's 2000 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 CEO's 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 October 1, 2000. 29
<PAGE> The committee made an award to Mr. Usher for 2000 under the Senior Executive Officer Annual Incentive Compensation Plan taking into consideration the overall performance of USX and its business units, specifically the performance measures listed in the previous table. The committee also considered Mr. Usher's contributions to improving USX's business portfolio through key acquisitions and dispositions, including the purchase of U.S. Steel Kosice and the exchange of Sakhalin assets; the establishment of important business alliances; the skill demonstrated in the transition to a new leadership team and strategic direction at Marathon; ongoing cost reduction efforts through organizational restructuring and voluntary early retirement programs, 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 CEO's. 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, Chairman Neil A. Armstrong Charles R. Lee John W. Snow Douglas C. Yearley 30
<PAGE> 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, 1995 VS. S&P 500 and S&P Domestic Integrated Oil Index(1) [GRAPHIC OMITTED] PLOT POINTS FOR 2001 PROXY CHARTS
<TABLE> <CAPTION> USX - MRO S&P 500 S&P OIL INDEX --------- ------- ------------- <S> <C> <C> <C> 12/31/95 100 100 100 12/31/96 126 123 126 12/31/97 183 164 150 12/31/98 168 211 122 12/31/99 142 255 152 12/31/00 165 232 177 </TABLE>
(1) Total return assumes reinvestment of dividends. 31
<PAGE> COMPARISON OF CUMULATIVE TOTAL RETURN ON $100 INVESTED IN U. S. STEEL STOCK ON DECEMBER 31, 1995 VS. S&P 500 and Steel Index(1) [GRAPHIC OMITTED] PLOT POINTS FOR 2001 PROXY CHARTS
<TABLE> <CAPTION> USX - USS S&P 500 STEEL INDEX (2) --------- ------- -------------- <S> <C> <C> <C> 12/31/95 100 100 100 12/31/96 105 123 83 12/31/97 108 164 75 12/31/98 83 211 72 12/31/99 123 255 63 12/31/00 71 232 22 </TABLE>
(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, 1995 through December 31, 2000, and Inland Steel Industries for the period December 31, 1995 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, 2000, 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 2001. 32
<PAGE> 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 or its subsidiaries 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, 2001, Mr.Usher had 35 credited years of service, Mr. Wilhelm 36, Mr. Hernandez 32 and Mr.Sandman 8.
<TABLE> <CAPTION> Table of Pension Benefits Final Earnings Pension Benefits Average Annual Eligible Earnings for Highest Five Consecutive Years in Ten-Year Period Proceeding Retirement Annual Benefits for Years of Service 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years -------- -------- -------- -------- -------- -------- -------- <S> <C> <C> <C> <C> <C> <C> <C> $ 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 1,500,000 259,875 346,500 433,125 519,750 614,250 708,750 803,250 </TABLE>
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 $255,825 for Mr. Usher, $114,952 for Mr. Wilhelm, $158,430 for Mr. Hernandez and $110,319 for Mr.Sandman. 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 21. 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. Cazalot, 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 21. 33
<PAGE> SUPPLEMENTAL PENSION BENEFITS
<TABLE> <CAPTION> 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 ------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> <C> <C> <C> $ 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 1,700,000 392,700 523,600 654,500 785,400 916,300 1,047,200 1,178,100 1,900,000 438,900 585,200 731,500 877,800 1,024,100 1,170,400 1,316,700 ============================================================================================================ </TABLE>
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.
<TABLE> <CAPTION> FINAL AVERAGE EARNINGS FOR HIGHEST THREE CONSECUTIVE 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 --------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> $ 100,000 $ 20,314 $ 27,085 $ 33,856 $ 40,627 $ 47,398 $ 50,784 300,000 68,314 91,085 113,856 136,627 159,398 170,784 500,000 116,314 155,085 193,856 232,627 271,398 290,784 700,000 164,314 219,085 273,856 328,627 383,398 410,784 900,000 212,314 283,085 353,856 424,627 495,398 530,784 1,100,000 260,314 347,085 433,856 520,627 607,398 650,784 1,300,000 308,314 411,085 513,856 616,627 719,398 770,784 1,500,000 356,314 475,085 593,856 712,627 831,398 890,784 2,000,000 476,314 635,085 793,856 952,627 1,111,398 1,190,784 --------------------------------------------------------------------------------------- </TABLE>
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 21. 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. Sandman has 20 years of credited participation. On April 1, 2001, Mr. Cazalot will be credited with one year of 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. 34
<PAGE> CHANGE IN CONTROL ARRANGEMENTS AND EMPLOYMENT CONTRACT 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. USX has entered into an employment contract with Mr. Cazalot. The terms and conditions of the contract provide for Mr. Cazalot to receive an annual salary of $600,000; a minimum bonus award for the year 2000 of $800,000; a retention bonus of $200,000 on the first, second, third, fourth and fifth anniversaries of his employment date (which was March 3, 2000); a stock option grant for 300,000 shares of USX-Marathon Group Common Stock with an option price to be determined in accordance 35
<PAGE> with the USX Corporation 1990 Stock Plan and exercisable as follows: 100,000 shares three years from the date of grant (which was March 3, 2000), 100,000 shares four years from the date of grant, and 100,000 shares five years from the date of grant; a stock option grant on May 30, 2000, 80 percent in USX-Marathon Group Common Stock and 20 percent in USX-U. S. Steel Group Common Stock, with the same vesting period as options granted to other executive management employees (currently one year); a restricted stock grant of 75,000 shares on May 30, 2000, 80 percent in USX-Marathon Group Common Stock and 20 percent in USX-U. S. Steel Group Common Stock, with an annual target vesting rate of 15,000 shares; eligibility for all of Marathon Oil Company's existing and future employee benefit programs applicable to executive officers; a comprehensive physical examination at USX expense each calendar year in accordance with Marathon Oil Company's policy covering physical examinations for its executive officers; tax preparation and financial planning advice under terms and conditions comparable to those applicable to USX executive management; a change-in-control agreement such as those described above; coverage for his family and himself under Marathon Oil Company's medical care plan immediately upon his employment; reimbursement of the cost of membership fees and dues for one country club; and five weeks of paid vacation per year or the number of weeks to which he would be entitled under Marathon Oil Company's vacation plan, whichever is longer. ------------------------------------------------------------------------------- STATEMENT REGARDING THE DELIVERY OF A SINGLE SET OF PROXY MATERIALS TO HOUSEHOLDS WITH MULTIPLE USX SHAREHOLDERS If you have consented to the delivery of only one set of proxy materials to multiple USX shareholders who share your address, then only one proxy statement is being delivered to your household unless we have received contrary instructions from one or more of the shareholders sharing your address. We will deliver promptly upon oral or written request a separate copy of the proxy statement to any shareholder at your address. If you wish to receive a separate copy of the proxy statement, you may call us toll-free at 1-866-433-4801 or write to us at USX Shareholder Services, Room 611, 600 Grant Street, Pittsburgh, PA 15219-4776. Shareholders sharing an address who now receive multiple copies of the proxy statement may request delivery of a single copy by calling us at the above number or writing to us at the above address. ------------------------------------------------------------------------------- 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 12, 2001 36
<PAGE> APPENDIX A AUDIT COMMITTEE CHARTER The responsibilities of the Audit Committee shall be those outlined in this charter. The committee shall reassess and report to the Board of Directors on the adequacy of this charter on an annual basis. The Audit Committee shall be comprised of not less than three nor more than ten members, all of whom are independent and qualified under standards established by the New York Stock Exchange. One of the important duties of the Audit Committee is the relationship of the Corporation with its independent accountant. The independent accountant is ultimately accountable to the Board of Directors and the Audit Committee as representatives of the shareholders. As shareholder representatives, the Audit Committee and the Board of Directors have the ultimate authority and responsibility to select, evaluate, assess the independence of and, where appropriate, replace the independent accountants. The Audit Committee shall have oversight responsibility for ensuring the integrity of the financial reports of the Corporation; shall determine that the Corporation's administrative, operational and internal accounting controls have been periodically reviewed and examined to determine if the Corporation is operating in accordance with its prescribed procedures and codes of conduct; shall also provide direction to the internal audit staff and the independent accountants; shall review matters pertaining to conflicts or apparent conflicts of interest between the holders of Marathon Stock and the holders of U. S. Steel Stock, the policies and practices of the Corporation with respect to the Marathon Group and the U.S. Steel Group, and the discharge by the Board of Directors of its fiduciary duties to the common stockholders in the context of the two separate classes of stock; and shall report to the Board of Directors on the activities of the Committee. In carrying out its oversight responsibilities, the Audit Committee shall: 1. Recommend annually to the Board of Directors the firm of independent
accountants selected to be nominated for election by the stockholders to audit the accounts of the Corporation. 2. Review the fees proposed for the coming year and approve the final fees and expenses of the independent accountants for audit services and non-audit services performed by the independent accountants for the past year. Approve in advance all non-audit services to be performed by the independent accountants for which the total fee is expected to exceed $500,000. 3. Annually review the independence letter issued by the independent accountants under Independence Standards Board Standard No. 1, actively engage in a dialogue with the independent accountants with respect to any relationships disclosed in that letter, and report to the Board of Directors any appropriate action necessary to maintain their continuing independence. 4. Review annually the scope of audit activities of both the independent accountants and the internal audit staff. 5. Periodically receive and review reports from the independent accountants, the internal audit staff and management with respect to the status and results of their activities. 37
<PAGE> 6. Review significant accounting, auditing and Securities and Exchange Commission pronouncements. 7. Review and approve the annual financial statements, the Annual Reports to stockholders and the Form 10-K Annual Report giving special consideration in such review to any material changes in accounting policy. 8. Receive and review reports from management concerning compliance with Corporate policies dealing with business conduct. 9. Receive and review the audit plans and audit reports of the Corporation's benefit plans as contained in the Annual Report of the United States Steel and Carnegie Pension Fund. 10. Annually review the business expense reporting of the officers of the Corporation. 11. As required, periodically review the policies and practices of the Corporation with respect to the Marathon Group and the U. S. Steel Group, including receiving and reviewing reports from management with respect to compliance with such policies and practices. 12. As required, meet and discuss with the Chairman of the Board of Directors and the General Counsel, or their designees, matters relating to the discharge by the Board of Directors of its fiduciary duties to the common stockholders in the context of the Marathon Stock and the U. S. Steel Stock. 13. Annually review a report outlining the activities undertaken by the committee over the past year to meet the requirements of this charter. 38
<PAGE> USX Corporation 600 Grant Street Pittsburgh, PA 15219-4776 USX [LOGO]
<PAGE> [USX LOGO] ATTENDANCE CARD 2001 ANNUAL MEETING OF STOCKHOLDERS You are cordially invited to attend the Annual Meeting of Stockholders on April 24, 2001. The Meeting will be held in Ballroom 4 of The Greater Columbus Convention Center, 400 North High Street, Columbus, Ohio, 43215 at 10:00 A.M. Eastern Time. Use of this attendance card is for our mutual convenience. Your right to attend the meeting without this attendance card is not affected, upon presentation of identification. Attached below is your 2001 Proxy Card. Dan D. Sandman Secretary For the personal use of the named stockholder(s) - not transferable. Please present this card upon arrival. ------------------------------------------------------------------------------- YOU MAY VOTE A) BY COMPLETING THE PROXY CARD ATTACHED BELOW AND RETURNING IT IN THE ENCLOSED ENVELOPE, OR B) BY TOLL-FREE TELEPHONE CALL, OR C) ON THE INTERNET ------------------------------------------------------------------------------- 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 https://www.proxyvotenow.com/usx Have your control number available when you call or visit the Internet site and follow the prompts. If voting on the Internet, be certain to enter the complete address as shown above. 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, Clarence P. Cazalot, Jr., Paul J. Wilhelm and Robert M. Hernandez, 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 24, 2001 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"
<TABLE> <S> <C> Proposal No. 1--Election of directors--Nominees: (01)J. Gary Cooper, FOR all nominees  WITHHOLD AUTHORITY  (02)Charles R. Lee, (03)Thomas J. Usher and (04)Paul J. Wilhelm (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  </TABLE>
------------------------------------------------------------------------------- SIGNATURE(S) ---------------------------- ----------------------------------------- DATED 2001 ----------- Please sign exactly as your name appears hereon, including representative capacity where applicable. If more than one named owner, all owners should sign. 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.