EXHIBIT 10(e)
USX CORPORATION
EXECUTIVE MANAGEMENT SUPPLEMENTAL PENSION PROGRAM
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AS AMENDED, JANUARY 1, 1999
1. PURPOSE
The purpose of this program is to provide a pension benefit for
Executive Management and certain other key managers with respect to compensation
paid under the incentive compensation plans maintained by USX Corporation
(hereinafter "the Corporation"), its subsidiaries, and its joint ventures.
2. ELIGIBILITY
An employee of the Corporation, a Subsidiary Company, or a joint
venture is a Member of the USX Executive Management Supplemental Pension Program
("Program") if he is (a) a member of the Executive Management Group as
established from time to time by the USX Board of Directors, (b) a key manager
designated by name as a "Member" under this Program by the Compensation
Committee of the USX Board of Directors or (c) a former employee of the U. S.
Steel Group or USX Corporation who becomes a member of the Executive Management
Group of Marathon Oil Company as established from time to time by its Board of
Directors.
A Member will be eligible to receive the supplemental pension provided
under this Program (the "Supplemental Pension") if he retires or otherwise
terminates employment after completing fifteen years of continuous service,
excluding any Member who terminates employment (other than by reason of death)
prior to attainment of age 60 without the consent of the Corporation.
The surviving spouse of any Member will be eligible to receive the
supplemental surviving spouse benefit provided under this Program (the
"Supplemental Surviving Spouse Benefit") if the Member has accrued at least 15
years of continuous service and dies (i) prior to retirement, or (ii) after
retirement under conditions of eligibility for an immediate pension pursuant to
the provisions of the Plan, excluding any Member who retires without the consent
of the Corporation prior to age 60 pursuant to the 30-year sole option
provisions.
Notwithstanding anything to the contrary contained herein, no benefits
will be payable under this Program to any Member who retires under a voluntary
early retirement program authorized by the Board of Directors on October 27,
1998.
3. AMOUNT OF BENEFIT
a. SUPPLEMENTAL PENSION
The Supplemental Pension provided under this Program shall be a monthly
amount paid for the life of the Member equal to the product of: (i) the Member's
Average Earnings, multiplied by (ii) a percentage which shall be equal to the
sum of 1.54% for each year of continuous service and each year of allowed
service.
Except as otherwise provided in this Program, the terms "continuous
service," "allowed service," "Surviving Spouse" and "Subsidiary Company" as used
herein mean continuous service, allowed service, surviving spouse, and
subsidiary company as determined under (or, in the case of "subsidiary company",
as defined in) the United States Steel 1994 Salaried Pension Rules adopted under
the Plan. However, the term "continuous service" for the purpose of determining
the amount of the Supplemental Pension and Supplemental Surviving Spouse Benefit
under this Program shall exclude the Member's continuous service that (i) is
creditable under a pension plan adopted by the Corporation, a Subsidiary
Company, or a joint venture, if the pension plan includes bonus payments as
creditable earnings for pension purposes, (ii) occurs following the date the
Member was designated by the USX Compensation Committee as no longer covered by
this Program for future accruals.
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EXHIBIT 10(e) (CONTD.)
Average Earnings as used herein shall be equal to the total bonuses
paid or credited to the Member pursuant to the USX Corporation Annual Incentive
Compensation Plan (and/or under similar incentive plans or under profit sharing
plans, if the employing entity has a profit sharing plan rather than an
incentive plan) with respect to the three calendar years for which total bonus
payments or deferrals (or such other payments) were the highest out of the last
ten consecutive calendar years immediately prior to the calendar year in which
retirement or death occurs (or, if earlier, the date the Member was designated
by the USX Compensation Committee as no longer covered by the Program for future
accruals) divided by thirty-six. Bonus payments or deferrals (or such other
payments) will be considered as having been made for the calendar year in which
the applicable services were performed rather than for the calendar year in
which the bonus payment was actually received. Notwithstanding anything to the
contrary contained herein, no benefits payable with respect to a key manager
shall be based on any bonus paid to him prior to the date of his designation for
coverage under this Program; furthermore, no benefits payable with respect to a
Member shall be based on any bonus paid to such Member after the date he was
designated by the USX Compensation Committee as no longer covered by this
Program.
The Average Earnings used in the determination of benefits under this
Program as of retirement will be recalculated using any bonus payable for the
calendar year in which retirement occurs if such bonus produces Average Earnings
greater than that determined at retirement.
b. SUPPLEMENTAL SURVIVING SPOUSE BENEFIT
The Surviving Spouse of a Member shall be eligible for a monthly
Supplemental Surviving Spouse Benefit under this Program equal to (i) in the
case of a Member who dies after retirement, 50% of the Supplemental Pension that
was being paid to the Member or (ii) in the case of a Member who dies while
still employed by the Corporation, the actuarial equivalent (to adjust to the
life expectancy of the spouse utilizing the 1971 Group Annuity Mortality Tables
unisexed on a 9 to 1 female-male ratio for the spouse and the PBGC interest rate
in effect the first of the month following the date of the Member's death) of
100% of the monthly Supplemental Pension that would have been payable to the
Member had the Member retired with Company consent as of the date of his death.
In the event that a Member who has completed fifteen years of continuous service
dies while still employed by the Corporation and does not leave a Surviving
Spouse, an amount equal to the lump sum distribution which he would have
received under this Program had he retired with Company consent as of the date
of his death shall be payable to his estate.
4. FORM OF BENEFIT
Except as a Member elects prior to the earlier of retirement or death
to receive on a monthly basis either (a) both the benefits payable to him and
the benefits payable to his surviving spouse, or (b) the benefits payable to him
(but not the benefits payable to his surviving spouse), he shall receive a lump
sum distribution of both the monthly Supplemental Pension and monthly
Supplemental Surviving Spouse Benefit payable. The lump sum distribution shall
be equal to the present value of the amounts payable to the Member and the
Member's spouse based on the joint life expectancy of said individuals, using
mortality tables adopted by the Corporation and the interest rate established
under the Pension Benefit Guaranty Corporation regulations to determine the
present value of immediate annuities in the event of plan termination.
In the event of the Member's death prior to retirement or in the event
that the Member has elected to receive his monthly benefits in the form of an
annuity but has not made the same election on behalf of his spouse with respect
to surviving spouse benefits, the Supplemental Surviving Spouse Benefit shall be
paid in a lump sum distribution using the above described mortality tables and
interest rate with the life expectancy based upon the life expectancy of the
Member's spouse. Any lump sum distribution shall be payable within 90 days
following retirement, or death, and shall represent full and final settlement of
all benefits provided hereunder.
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EXHIBIT 10(e) (CONTD.)
5. SPLIT DOLLAR EXCHANGE OPTION (EFFECTIVE JULY 1, 1999)
a. Upon attainment of age 59, each Member who will have completed 15 years
of continuous service prior to age 60 will be given a one time opportunity to
elect, effective upon attainment of age 60, to exchange all or a specified
portion of his unvested accrued benefit under this Program for split dollar life
insurance coverage. (A Member who becomes a Member after attainment of age 60
will be given such opportunity immediately prior to becoming a Member and a
Member who will complete 15 years of continuous service after attainment of age
60 will be given such opportunity upon completion of 14 years of continuous
service.) Any Member interested in exploring this opportunity must elect to do
so within 30 days of the date he is sent notice of such opportunity.
b. Each Member who elects to explore such opportunity will be given
information about (1) the estimated lump sum value of his accrued benefit under
the Program as of the date split dollar coverage would become effective (using
the PBGC interest rate in effect at the time the estimate is given) and (2) the
estimated cost of each $100,000 of split dollar life insurance that he may
purchase from a participating insurance underwriter. No insurance underwriter
will be permitted to participate unless it has at least a rating of AA- as
evaluated by Moody's. The underwriters initially participating in this special
program will include Metropolitan, Manufacturer's Life of Canada, Pacific Life
and Denver Life. Each Member must elect to make or not make an exchange for
split dollar life insurance within 60 days of being sent this information. Any
Member electing to make an exchange for such split dollar life insurance either
on his own behalf or on behalf of a trust (which will become the policy owner)
must complete the enrollment process that includes a physical examination for
all persons to be insured under the policy, a formal application for insurance
and contractual materials. The enrollment package will be sent by the new
business department of the National Benefits Group, Inc., an affiliate of Marsh
& McLennan Inc. Split dollar coverage will become effective as of the later of
(a) the date that the Member attains age 60, (b) the date that the Member
becomes a Member under the Program, (c) the date that the Member completes 15
years of continuous service, or (d) the date that the insurance underwriters
issue a split dollar insurance policy ("policy"). The amount of the Member's
accrued lump sum benefit under this Program will be reduced as of the date that
split dollar life insurance coverage becomes effective. The value of such
accrued lump sum benefit will be calculated using the PBGC interest rate
applicable to retirements which occur in the month prior to the month in which
this split dollar policy becomes effective. The amount of reduction will be
determined by the underwriter and will consist of the present value of the
Company's cost to provide the split dollar policy. Such present value will be
calculated utilizing the same interest rate used to calculate the Member's
accrued lump sum benefit. The Company's cost will be the most favorable quote
obtainable at the time of procurement from the participating underwriters. Any
remaining accrued lump sum benefit will be converted back to a reduced number of
years and months of service for future benefit calculation.
c. Any split dollar policy received by the Member shall be payable upon the
Member's death, or, in the case of a joint life policy, upon the later of the
Member's death or his co-insured's death if this dual coverage feature is
elected. The proceeds of the policy will be payable to the beneficiary of
record. Normally, such amount is payable in a lump sum but arrangements can be
made for payment in installments.
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EXHIBIT 10(e) (CONTD.)
d. The face amount of the split dollar policy will be payable upon the death
of the last insured under the policy if the earnings actually credited by the
underwriter on the cash value of the policy equal or exceed the anticipated
earnings rate for the policy. The anticipated credited earnings rate is
established at the time that the policy is issued and represents the earnings
rate which the insurance carrier anticipates will be earned by the policy and
which, if earned, will preclude any lapse in the policy. However, if the
earnings resulting from the actual credited rates do not equal or exceed the
earnings which would be produced by the anticipated credited rate, then the
policy may lapse before the death of the last insured unless the policy owner
agrees with the insurance carrier to reduce the amount of split dollar insurance
or unless the policy owner makes special contributions to the policy. The Policy
Service Department of the National Benefits Group, Inc. will advise the policy
owner in the event that the actual earnings credited to the policy fall below
the earnings which would have been produced by the anticipated credited rate and
will assist the policy owner in making arrangements to reduce the amount of the
policy or to make contributions thereto if the policy owner so elects. The
policy owner will have the right at any time after the policy has been in effect
for fifteen years to surrender the policy and receive the cash balance (minus
any surrender charge).
e. There will be imputed income with respect to this split dollar life
insurance because the Company will be paying a premium equal to the term cost of
such insurance. Term insurance premiums and imputed income shall terminate the
earlier of (a) the end of the fifteenth year in which the policy is in force or
(b) the death of the last insured under the policy.
f. The Corporation shall be solely responsible for paying the annual split
dollar premiums (and term insurance premiums) required by the insurance carrier.
The total amount of premiums paid by the Corporation will be repaid to it by the
insurance underwriter on the earlier of (a) the end of the fifteenth year in
which the policy is in force or (b) the death of the last insured under the
policy. Repayment of the premiums to the Corporation upon the death of the last
insured (or upon the end of the fifteen year period following the date of issue
if later) shall not reduce the face amount of the policy which is payable to the
beneficiary because the policy has been designed so that the Corporation will be
able to recover the premiums it had paid without adversely impacting the
beneficiary. The policyholder will be required to sign an agreement authorizing
the insurance underwriter to repay the Corporation, at the appropriate time, the
premiums which it has paid.
g. The policyholder may request a change in ownership and/or beneficiary of
the split dollar life insurance policy at any time. If the beneficiary
predeceases the Member and a new beneficiary is not named, the split dollar life
insurance policy will be payable in accordance with a preferred beneficiary
schedule.
h. The policy's beneficiary will be provided the necessary forms for
claiming the split dollar life insurance proceeds if the beneficiary contacts
(a) National Benefits Group, Inc. or (b) the United States Steel and Carnegie
Pension Fund.
6. GENERAL PROVISIONS
a. ADMINISTRATION
The Vice President-Administration, United States Steel and Carnegie
Pension Fund, is responsible for the administration of this Program. The
administrator shall decide all questions arising out of and relating to the
administration of this Program. The decision of the administrator shall be final
and conclusive as to all questions of interpretations and application of the
Program.
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EXHIBIT 10(e) (CONTD.)
b. AMENDMENT OR TERMINATION OF PROGRAM
The Corporation reserves the right to make any changes in this Program
or to terminate this Program as to any or all groups of employees covered under
this Program, but in no event shall such amendment or termination adversely
affect the benefits accrued hereunder prior to the effective date of such
amendment or termination. Any amendment to this Program which changes this
Program (including any amendment which increases, reduces or alters the benefits
of this Program) or any action which terminates this Program to any or all
groups shall be made by a resolution of the USX Corporation Board of Directors
(or any authorized committee of such Board) adopted in accordance with the
bylaws of USX Corporation and the corporation law of the state of Delaware.
c. NO GUARANTEE OF EMPLOYMENT
Neither the creation of this Program nor anything contained herein
shall be construed as giving an individual hereunder any right to remain in the
employ of the Corporation.
d. NONALIENATION
No benefits payable under this Program shall be subject in any way to
alienation, sale, transfer, assignment, pledge, attachment, garnishment,
execution, or encumbrance of any kind by operation of law or otherwise. However,
this section shall not apply to portions of benefits applied to satisfy (i)
obligations for the withholding of taxes, or (ii) obligations under a qualified
domestic relations order.
e. NO REQUIREMENT TO FUND
Benefits provided by this Program shall be paid out of general assets
of the Corporation. No provisions in this Program, either directly or
indirectly, shall be construed to require the Corporation to reserve, or
otherwise set aside, funds for the payment of benefits hereunder.
f. CONTROLLING LAW
To the extent not preempted by the laws of the United States of
America, the laws of the Commonwealth of Pennsylvania shall be the controlling
state law in all matters relating to this Program.
g. SEVERABILITY
If any provisions of this Program shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts
of this Program, but this Program shall be construed and enforced as if said
illegal or invalid provision had never been included herein.
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