<Page>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
- --------------------------------------------------------------------------------
(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):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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.:
------------------------------------------------------------------------
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(4) Date Filed:
------------------------------------------------------------------------
<Page>
[LOGO] UNITED STATES STEEL CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
2002
TUESDAY, APRIL 30, 2002
10:00 A.M. EASTERN TIME
Grand Ballroom
Omni William Penn Hotel
530 William Penn Place
Pittsburgh, Pennsylvania 15219
PLEASE VOTE PROMPTLY EITHER BY:
- - telephone,
- - the Internet, or
- - marking, signing and returning your proxy or voting instruction card.
<Page>
[LOGO]
<Table>
United States Steel Corporation THOMAS J. USHER
600 Grant Street Chairman of the Board,
Pittsburgh, PA 15219-2800 Chief Executive Officer and President
</Table>
March 11, 2002
Dear U. S. Steel Stockholder,
We will hold the first annual meeting of stockholders of United States Steel
Corporation in the Grand Ballroom of the Omni William Penn Hotel, 530 William
Penn Place, Pittsburgh, Pennsylvania, on Tuesday, April 30, 2002 at 10:00 A.M.
Eastern Time.
We will elect directors and independent accountants at the meeting. The Board of
Directors has nominated five of our 13 directors for election this year. They
are all Class I directors, which means their terms will expire at the 2005
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.
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
<Page>
TABLE OF CONTENTS
<Table>
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 of Directors
and Executive Officers.....................................20
Executive Compensation.....................................21
Compensation & Organization Committee
Report on Executive Compensation.........................26
Shareholder Return Performance Presentation..............31
Pension Benefits.........................................32
Change in Control Arrangements
and Employment Contracts.................................34
Appendix A - Audit Committee Charter.......................37
</Table>
3
<Page>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on April 30, 2002
We will hold our 2002 annual meeting of stockholders in the
Grand Ballroom of the Omni William Penn Hotel, 530 William
Penn Place, Pittsburgh, Pennsylvania 15219 on Tuesday,
April 30, 2002 at 10:00 A.M. Eastern Time, in order to:
o elect five Class I directors,
o elect independent accountants for 2002, and
o 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 United States Steel Corporation common
stock at the close of business on March 1, 2002. 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
Dated: March 11, 2002
United States Steel Corporation
4 600 Grant Street
Pittsburgh, PA 15219-2800
<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, Roy G. Dorrance, Dan D. Sandman and John P. Surma. They will vote your
shares as you instruct.
We will hold the meeting on April 30, 2002 in the Grand Ballroom of the Omni
William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania. 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 2001 annual
report on or about March 11, 2002.
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
/ / WHO MAY VOTE?
You may vote if you were a holder of United States Steel Corporation ("U. S.
Steel" or the "Corporation") common stock at the close of business on March 1,
2002.
/ / WHAT MAY I VOTE ON?
You may vote on:
o the election of five nominees to serve as Class I directors and
o the election of PricewaterhouseCoopers LLP as our independent
accountants.
/ / HOW DOES THE BOARD RECOMMEND I VOTE?
The Board recommends that you vote:
o FOR each of the nominees for director and
o FOR the election of PricewaterhouseCoopers LLP as independent accountants
for 2002.
/ / 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:
o voting again by telephone or over the Internet,
o sending us a proxy card dated later than your last vote,
o notifying the Secretary of U. S. Steel in writing, or
o voting at the meeting.
5
<Page>
/ / HOW MANY OUTSTANDING SHARES ARE THERE?
At the close of business on March 1, 2002, which is the record date for the
meeting, there were 89,630,347 shares of U. S. Steel common stock (each share
representing one vote and collectively representing 89,630,347 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 and those represented by proxy and entitled to vote; that
is, those receiving the most votes are elected, even if they receive less than
a majority of the votes present. Independent accountants are elected by a
majority of the votes of the shares present in person at the meeting and those
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
called 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 U. S. Steel
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 27, 2001 and no later than January 26, 2002, 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 2003 ANNUAL MEETING?
Shareholder proposals submitted for inclusion in our 2003 proxy statement must
be received in writing by our Corporate Secretary no later than 5:00 P.M.
Eastern Time on November 11, 2002. Shareholder proposals submitted outside the
process for inclusion in the proxy statement must be received from stockholders
of record on or after December 26, 2002 and no later than January 25, 2003 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, U. S. Steel's state
of incorporation, the business and affairs of U. S. Steel are
managed under the direction of the Board of Directors. U. S.
Steel was spun off from USX Corporation ("USX") on December 31,
2001. Accordingly, 2002 will be the first year for which
attendance figures for U. S. Steel Board and committee meetings
will be available. Nine of the 13 U. S. Steel directors served on
the USX Board, which met 11 times in 2001. Their attendance at
meetings of the USX Board and its committees averaged 99.5
percent. The directors spend considerable time preparing for
Board and committee meetings, and they attend as many meetings as
possible. The Board has four principal committees, all the
members of which are non-employee directors. The USX Board had
five principal committees. The table below shows the current
committee memberships of each director and the number of meetings
that each corresponding committee of the USX Board held in 2001.
BOARD COMMITTEE
MEMBERSHIPS
<Table>
<Caption>
CORPORATE
COMPENSATION GOVERNANCE COMMITTEE
AUDIT & ORGANIZATION & PUBLIC POLICY ON
DIRECTOR COMMITTEE COMMITTEE COMMITTEE FINANCIAL POLICY
------------------------------------------------------------------------------------------------------------------
J. Gary Cooper X X * X
Robert J. Darnall 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 6 6 (1) 4 (2) 4
in 2001 of Corresponding
USX Committee
------------------------------------------------------------------------------------------------------------------
</Table>
* Chairman
(1) Meetings of USX Compensation Committee
(2) Meetings of USX Organization & Corporate Governance Committee
The USX Public Policy Committee met three times in 2001.
- --------------------------------------------------------------------------------
AUDIT The Audit Committee has a written charter adopted by the Board. It
COMMITTEE 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. 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:
o ensuring the integrity of our financial reports,
o recommending to the Board the independent accountants to be
nominated for election by the stockholders,
o reviewing the independence of the independent accountants,
o reviewing the scope of the audit activities of the independent
accountants and our internal auditors,
o providing direction to the internal audit staff and the
independent accountants,
o approving the independent accountants' fees,
o reviewing audit results,
7
<Page>
o reviewing and approving the annual financial statements, the
annual report to stockholders, and the Annual Report on Form
10-K filed with the Securities and Exchange Commission,
o determining whether appropriate controls are in place to
ensure that we operate in accordance with our procedures and
codes of conduct,
o reviewing compliance with our business conduct policies,
o reviewing significant accounting, auditing and Securities and
Exchange Commission pronouncements,
o reviewing, 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
o assessing, and reporting annually to the Board on, the
activities of the committee and on the adequacy of the
committee's charter.
- --------------------------------------------------------------------------------
COMPENSATION & The Compensation & Organization Committee is composed solely of
ORGANIZATION directors who satisfy all criteria for independence under
COMMITTEE 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:
o making recommendations to the Board and to the boards of
subsidiaries on all matters of policy and procedures relating
to executive compensation,
o approving the salaries of officers (other than the
officer-directors, whose salaries are approved by the Board),
o administering the Annual Incentive Compensation Plan and the
Senior Executive Officer Annual Incentive Compensation Plan,
o 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,
o the timely certification as to the meeting of applicable
performance levels under the foregoing plans,
o approving the annual report on executive compensation for the
proxy statement,
o such other duties and responsibilities as may be assigned to
the committee by the Board or as designated in plans approved
by the shareholders,
o making 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,
o conferring with management concerning plans for succession to
executive management positions, and
o considering 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
U. S. Steel for presentation to the committee.
8
<Page>
The committee is also authorized to:
o adopt and amend employee benefit plans,
o review the activities of the United States
Steel and Carnegie Pension Fund as
administrator of certain benefit plans, and
o make recommendations to the Board concerning
policy matters relating to employee benefits.
================================================================================
CORPORATE GOVERNANCE The Corporate Governance & Public Policy Committee
& PUBLIC POLICY concentrates on the following areas of emphasis:
COMMITTEE ownership of U. S. Steel, stockholder attitudes
toward U. S. Steel, political-legislative
developments affecting U. S. Steel, and U. S. Steel
policies on major public issues and corporate
governance matters.
The committee assesses and makes recommendations
concerning overall corporate governance to the
extent specific matters are not the assigned
responsibility of other Board committees.
The committee also reviews the following matters
and reports to the Board such observations and
information thereon as the committee deems
appropriate:
o matters bearing on the relationship between
management and present or potential stockholders
with emphasis on policy and major programs
affecting ownership of U. S. Steel,
o communications to and from the investment
community, particularly U. S. Steel's
stockholders,
o legislative and regulatory issues affecting U. S.
Steel's businesses and operations,
o public issues identified by U. S. Steel as likely
to generate expectations of U. S. Steel by its
constituencies, including stockholders,
employees, customers, vendors, governments and
the public, and U. S. Steel's position regarding
identified public issues including, but not
limited to, employee health and safety,
environmental, energy and trade matters,
o U. S. Steel efforts to affect identified public
issues through research, analysis, lobbying
efforts and participation in business and
government programs, and
o codes of conduct applicable to employees of U. S.
Steel and its principal operating units.
================================================================================
COMMITTEE ON The Committee on Financial Policy provides
FINANCIAL POLICY oversight with respect to the appropriate capital
structure and financial policies of U. S. Steel. It
has the responsibility to make recommendations to
the Board concerning dividends. The Board has also
delegated to the committee the authority to:
o review and report to the Board concerning U. S.
Steel's compliance with financial covenants and
other terms of loans and other agreements,
o approve financings by U. S. Steel (except
financings which involve the issuance of common
stock), including the recommendation of action to
subsidiaries, partnerships and joint ventures,
o authorize loans to outside entities, guarantees
by U. S. Steel of the credit of others, and other
uses of U. S. Steel credit, and
o approve U. S. Steel'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 provide 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 U. S. Steel
receive no compensation for their service on the
Board. We pay our non-employee directors as
follows:
<Table>
ANNUAL RETAINER $60,000
COMMITTEE MEMBERSHIP FEE $5,000 ($6,000 FOR COMMITTEE CHAIRMEN)
MEETING FEE (FOR EACH BOARD OR COMMITTEE MEETING) $ 2,000
</Table>
===================================================
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. Each of our directors is
required 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. 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 U. S.
Steel and thereby further align their interest
with that of the stockholders.
We credit each non-employee director's deferred
stock account with Common Stock Units every
January. The ongoing value of each Common Stock
Unit equals the market price of the common stock.
When dividends are paid on the common stock, we
credit each account with equivalent amounts in
additional Common Stock Units.
If U. S. Steel 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 account.
Under our Non-Employee Director Stock Plan, each
non-employee director may receive a grant of up
to 1,000 shares 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.
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
U. S. Steel'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.
The current five Class I directors are nominees
for election this year for a three-year term that
will expire at the 2005 annual meeting. Four of
them (Messrs. Usher, Snow and Yearley and Dr.
Jackson) were members of the USX Board. Of the 13
current directors, four are officers of U. S.
Steel, seven have top executive experience with a
wide variety of businesses, 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 I DIRECTOR
Terms Expire 2005
<Table>
[GRAPHIC] SHIRLEY ANN JACKSON DIRECTOR SINCE DECEMBER 31, 2001 AGE 55
------------------------------------------------------------------------------
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 Chairman 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
Marathon Oil Corporation (formerly USX), Federal Express Corporation, AT&T,
Medtronic, Inc. and Public Service Enterprise Group. 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.
[GRAPHIC] DAN D. SANDMAN DIRECTOR SINCE DECEMBER 31, 2001 AGE 53
------------------------------------------------------------------------------
VICE CHAIRMAN AND CHIEF LEGAL & ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND
SECRETARY, UNITED STATES STEEL CORPORATION
Mr. Sandman graduated from Ohio State University with a BA in 1970 and a law
degree in 1973. He began working for Marathon Oil Company in 1973 and served
in a series of positions in the marketing, antitrust and oil & gas law areas
in Findlay, Ohio, Houston, Texas and London, England. In 1981 he was named
senior marketing counsel, and he was promoted to general attorney, refining
& marketing in 1983. Mr. Sandman was named general attorney, U.S.
exploration & production law in February 1986 and elected general counsel
and secretary of Marathon Oil Company later that year. He was elected
secretary and assistant general counsel of USX Corporation in December 1992
and general counsel and secretary in February 1993. In 1997 he was elected
senior vice president-human resources and in 1998 he assumed responsibility
for public affairs. Mr. Sandman was elected Vice Chairman and Chief Legal &
Administrative Officer, General Counsel and Secretary of U. S. Steel
effective December 31, 2001. Mr. Sandman is a director of Roppe Corporation
of Fostoria, Ohio.
[GRAPHIC] JOHN W. SNOW DIRECTOR SINCE DECEMBER 31, 2001 AGE 62
------------------------------------------------------------------------------
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. 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 and
was a director of USX. 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.
12
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[GRAPHIC] THOMAS J. USHER DIRECTOR SINCE DECEMBER 31, 2001 AGE 59
------------------------------------------------------------------------------
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT, UNITED STATES
STEEL 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 U. S. Steel in 1965 and held various
positions in industrial engineering. From 1975 through 1979, he held a
number of management positions at U. S. Steel'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 of USX
effective July 1, 1995. He is Chairman of the Board of Directors of Marathon
Oil Corporation (formerly USX) and a director of H. J. Heinz Co., PNC
Financial Services Group, and PPG Industries, Inc. He is Vice Chairman of
the International Iron and Steel Institute; 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.
[GRAPHIC] DOUGLAS C. YEARLEY DIRECTOR SINCE DECEMBER 31, 2001 AGE 66
------------------------------------------------------------------------------
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 in
project development. He held several key positions before being elected
Executive Vice President and a director in 1987, Chairman and Chief
Executive Officer in 1989 and President in 1991. He retired in May, 2000. He
is a director of Marathon Oil Corporation (formerly USX) and Lockheed Martin
Corporation. He was a director of J.P. Morgan & Co. Incorporated and Morgan
Guaranty Trust Company of New York from 1993 to 2000, and Southern Peru
Copper Corporation from 1991 to 2000. He is chairman of the International
Council on Mining and Metals, director of the Compatible Ventures Group of
The Nature Conservancy; member of the National Council of the World Wildlife
Fund; and graduate member of The Business Council.
13
<Page>
CONTINUING CLASS II DIRECTORS
Terms Expire 2003
[GRAPHIC] J. GARY COOPER DIRECTOR SINCE DECEMBER 31, 2001 AGE 65
------------------------------------------------------------------------------
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 and was a director
of USX.
[GRAPHIC] PAUL E. LEGO DIRECTOR SINCE DECEMBER 31, 2001 AGE 71
------------------------------------------------------------------------------
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 Lincoln
Electric Holdings, Inc. and Orlimar Golf Company, and he was a director of
USX. Mr. Lego is an emeritus trustee of the University of Pittsburgh and a
member of The Business Council.
[GRAPHIC] SETH E. SCHOFIELD DIRECTOR SINCE DECEMBER 31, 2001 AGE 62
------------------------------------------------------------------------------
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 Marathon Oil Corporation (formerly USX), Calgon Carbon Corp., and
Candlewood Hotel Company, Inc. He is also an Advisory Board member of Desai
Capital Management.
14
<Page>
[GRAPHIC] JOHN P. SURMA DIRECTOR SINCE DECEMBER 31, 2001 AGE 47
------------------------------------------------------------------------------
VICE CHAIRMAN & CHIEF FINANCIAL OFFICER, UNITED STATES STEEL CORPORATION
Mr. Surma received a BS degree in accounting from Pennsylvania State
University in 1976 and joined Price Waterhouse LLP at that time. He was
admitted to the partnership in 1987. He joined Marathon Oil Company in
February, 1997 as Senior Vice President, Finance and Accounting. He was named
Senior Vice President, Finance & Administration in January 1998; President of
Speedway SuperAmerica LLC in September 1998, and Senior Vice President,
Supply & Transportation in January 2000. Effective January 1, 2001 he became
President of Marathon Ashland Petroleum LLC, and in September 2001 Mr. Surma
was elected Assistant to the Chairman of USX Corporation. He became Vice
Chairman & Chief Financial Officer of U. S. Steel effective December 31,
2001. Mr. Surma is a director of Calgon Carbon Corporation. He is also a
director of the Pennsylvania Chamber of Business & Industry and the
Pennsylvania Business Roundtable, and a member of the American Institute of
Certified Public Accountants.
</Table>
15
<Page>
CONTINUING CLASS III DIRECTORS
Terms Expire 2004
<Table>
<Caption>
[GRAPHIC] ROBERT J. DARNALL DIRECTOR SINCE DECEMBER 31, 2001 AGE 63
------------------------------------------------------------------------------
RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER, INLAND STEEL INDUSTRIES
Mr. Darnall graduated from DePauw University with a BA degree in mathematics,
from Columbia University with a BS degree in civil engineering and from the
University of Chicago with an MBA. He began his career with Inland Steel
Industries in 1962. He was elected Executive Vice President in 1982 and at
that time joined Inland's Board of Directors. In 1986 Mr. Darnall became
President and Chief Operating Officer. In 1992 he became Chairman, President
and Chief Executive Officer. He retired as Chairman and Chief Executive
Officer in 1998 and immediately joined Ispat International N.V., which
acquired Inland Steel Company in 1998, as head of their North American
operations. Mr. Darnall left Ispat in 2000 and soon thereafter became
Chairman and Interim CEO of Prime Advantage Corporation, a procurement
services startup. He left Prime Advantage in January 2002. Mr. Darnall
is a director of Cummins, Inc., Household International, Inc., Pactiv Corp.
and Sunoco, Inc. He is Chairman of the Federal Reserve Bank of Chicago.
He is also former Chairman of the American Iron and Steel Institute and a
Director of the International Iron and Steel Institute, and he serves on
the Board of Trustees of the Museum of Science and Industry and Rush
Presbyterian St. Luke's Medical Center in Chicago.
[GRAPHIC] ROY G. DORRANCE DIRECTOR SINCE DECEMBER 31, 2001 AGE 56
------------------------------------------------------------------------------
VICE CHAIRMAN & CHIEF OPERATING OFFICER, UNITED STATES STEEL CORPORATION
Mr. Dorrance graduated from the Massachusetts Institute of Technology with
a BS degree in management and received a masters degree from Carnegie Mellon
University in industrial administration. Mr. Dorrance began his career with
United States Steel in 1968 in the Mon Valley operation. He served on
financial, international and resource development staffs before being
appointed vice president-commercial for U.S. Steel Mining Company in 1982.
Mr. Dorrance was named manager of plate products in 1985, appointed vice
president of U.S. Steel International, Inc. in 1989 and elected president
of USX Engineers and Consultants in 1992. Mr. Dorrance was named vice
president-purchasing and technology in 1994 and appointed vice president-
operations in 1995, executive vice president-sheet products in 1997 and
executive vice president responsible for new business development in January
2001. He was elected Vice Chairman & Chief Operating Officer of U.S. Steel
effective December 31, 2001. Mr. Dorrance is a member of the Association
of Iron & Steel Engineers.
[GRAPHIC] CHARLES R. LEE DIRECTOR SINCE DECEMBER 31, 2001 AGE 62
------------------------------------------------------------------------------
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 Marathon Oil Corporation (formerly USX), 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.
16
<Page>
[GRAPHIC] JOHN F. MCGILLICUDDY DIRECTOR SINCE DECEMBER 31, 2001 AGE 71
------------------------------------------------------------------------------
RETIRED CHAIRMAN OF THE BOARD & CEO, 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. and Southern Peru Copper Corporation
and was a director of USX. He is Chairman Emeritus of New York-Presbyterian
Hospital and a Trustee Emeritus of Princeton University.
=============================================================================================================
PROPOSAL NO. 2 ELECTION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP (PwC) served as independent accountants of USX for
many years. We believe that their knowledge of U. S. Steel'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
PwC assigned to the U. S. Steel engagement will be periodically rotated, thus
giving U. S. Steel the benefit of new thinking and approaches in the audit
area. We expect representatives of PwC 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 2001, PwC performed professional services for USX in connection
with audits of the consolidated financial statements of USX and the financial
statements of the USX-Marathon Group and the USX-U. S. Steel Group, certain
subsidiaries and certain pension and other employee benefit plans. PwC has
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 U. S. Steel's audited financial
statements for 2001 with U. S. Steel's management. We have discussed with
the independent auditors, PricewaterhouseCoopers LLP (PwC), the matters
required to be discussed by Statements on Auditing Standards No. 61, as
amended by Statements No. 89 and No. 90 (Communication with Audit Committees),
as may be modified or supplemented. We have received the written disclosures
and the letter from PwC required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as may be modified or
supplemented, and we have discussed with PwC its independence. Based on the
review and discussions referred to above, we recommended to the Board that
the audited financial statements for U. S. Steel be included in U. S. Steel's
Annual Report on Form 10-K for 2001 for filing with the Securities and
Exchange Commission.
John W. Snow, Chairman
J. Gary Cooper
Robert J. Darnall
Shirley Ann Jackson
Paul E. Lego
John F. McGillicuddy
Seth E. Schofield
Douglas C. Yearley
18
<Page>
INFORMATION REGARDING THE INDEPENDENCE OF THE
INDEPENDENT PUBLIC ACCOUNTANTS
AUDIT FEES
Aggregate fees for professional services rendered for PwC's audit of U.S.
Steel's annual financial statements for 2001 and for its reviews of the
USX-U. S. Steel Group's financial statements included in USX's Forms 10-Q
for 2001 were $1,616,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Aggregate fees for professional services rendered by PwC for 2001 related to
the USX-U. S. Steel Group as described in Paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X were zero.
ALL OTHER FEES
Aggregate fees for services related to the USX-U. S. Steel Group rendered for
2001 by PwC, other than the services described in the previous two paragraphs,
were $1,834,000. These fees were primarily for audit-related services provided
in conjunction with the filings with the Securities and Exchange Commission for
the Separation, debt offerings and exchange offerings; and audits of the
financial statements of employee benefit plans.
COMPATIBILITY OF PRICEWATERHOUSECOOPERS' SERVICES
WITH ITS INDEPENDENCE
The Audit Committee has considered whether PwC's provision of the services
covered under the headings "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" above is compatible with maintaining
PwC's independence, and the committee has determined that it is.
19
</Table>
<Page>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of U. S. Steel common stock
beneficially owned as of January 31, 2002 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, 2002, any equity securities of U. S. Steel other than
those shown.
<Table>
<Caption>
NAME SHARES
- -------------------------------------------------------------------
J. Gary Cooper (1)(2)................................. 3,487
Robert J. Darnall (1)................................. 4,656
Roy G. Dorrance (2)(3)................................ 243,940
Albert E. Ferrara, Jr. (2)(3)......................... 43,382
Robert M. Hernandez (2)(3)............................ 315,172
Shirley Ann Jackson (1)(2)............................ 3,441
Charles R. Lee (1).................................... 8,748
Paul E. Lego (1)(2)................................... 5,423
John F. McGillicuddy (1).............................. 6,184
Dan D. Sandman (2)(3)................................. 166,378
Seth E. Schofield (1)(2).............................. 5,474
John W. Snow (1)...................................... 4,689
John P. Surma (2)..................................... 97
Thomas J. Usher (2)(3)................................ 879,887
Douglas C. Yearley (1)................................ 5,282
All Directors and Executive Officers as a group....... 2,578,408
(23 persons) (1)(2)(3)(4)
- -------------------------------------------------------------------
</Table>
(1) Includes Common Stock Units credited under the United States Steel
Corporation Deferred Compensation Plan for Non-Employee Directors as
follows:
<Table>
<Caption>
NAME COMMON STOCK UNITS
-------------------------------------------------------------------
J. Gary Cooper.................................. 2,435
Robert J. Darnall............................... 1,656
Shirley Ann Jackson............................. 2,411
Charles R. Lee.................................. 7,548
Paul E. Lego.................................... 5,096
John F. McGillicuddy............................ 5,784
Seth E. Schofield............................... 4,322
John W. Snow.................................... 3,689
Douglas C. Yearley.............................. 4,282
-------------------------------------------------------------------
</Table>
(2) Includes shares held under the U. S. Steel Savings Fund Plan, the U. S.
Steel Dividend Reinvestment and Stock Purchase Plan, the Marathon Thrift
Plan and the 2002 Stock Plan.
(3) Includes shares which may be acquired upon exercise of outstanding options
as follows (all options other than those granted on May 29, 2001 are
currently exercisable): Mr. Usher: 781,400; Mr. Hernandez: 282,625; Mr.
Sandman: 142,325; Mr. Ferrara: 35,615; Mr. Dorrance: 212,800; and all
directors and executive officers as a group: 2,223,435.
(4) Total shares beneficially owned in each case constitute less than one
percent of the outstanding shares except that all directors and executive
officers as a group own 2.9 percent of the common stock.
20
<Page>
EXECUTIVE COMPENSATION
2002 is United States Steel Corporation's first year of operation. Accordingly,
the following table sets forth certain information concerning the compensation
awarded to, earned by or paid by USX to Mr. Usher and to the other four most
highly compensated current executive officers of U. S. Steel who were serving as
executive officers at the end of 2001 for services rendered to USX or its
subsidiaries in all capacities during 2001, 2000 and 1999:
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)
- -----------------------------------------------------------------------------------------------------------------------
T. J. USHER 2001 1,400,000 3,000,000 4,400,000 12,252 2,844,737 500,000 109,115
Chairman of the 2000 1,325,000 2,500,000 3,825,000 7,729 4,925,000 400,000 112,406
Board, Chief 1999 1,241,667 1,400,000 2,641,667 13,660 291,151 324,000 119,108
Executive Officer
and President
- -----------------------------------------------------------------------------------------------------------------------
R. M. HERNANDEZ 2001 625,000 1,000,000 1,625,000 9,121 50,576 187,500 55,318
Assistant to the 2000 600,000 1,000,000 1,600,000 9,250 1,477,500 150,000 56,512
Chairman 1999 573,750 600,000 1,173,750 7,535 94,153 120,000 55,435
- -----------------------------------------------------------------------------------------------------------------------
J. P. SURMA 2001 416,667 1,000,000 1,416,667 11,572 357,720 94,200 92,592
Vice Chairman & 2000 350,000 650,000 1,000,000 1,781 0 43,850 42,750
Chief Financial 1999 315,000 350,000 665,000 1,750 0 28,900 23,974
Officer
- -----------------------------------------------------------------------------------------------------------------------
D. D. SANDMAN 2001 481,667 700,000 1,181,667 10,206 31,607 100,000 47,694
Vice Chairman and 2000 459,167 650,000 1,109,167 4,597 923,438 80,000 47,693
Chief Legal & 1999 425,000 425,000 850,000 4,251 75,323 60,000 47,852
Administrative Officer,
General Counsel and
Secretary
- -----------------------------------------------------------------------------------------------------------------------
A. E. FERRARA, JR. 2001 238,333 500,000 738,333 1,613 9,279 31,250 25,609
Senior Vice President 2000 220,000 320,000 540,000 1,566 270,875 25,000 23,812
and Treasurer 1999 200,000 180,000 380,000 1,566 29,115 20,000 21,799
- -----------------------------------------------------------------------------------------------------------------------
</Table>
(1) Grants of restricted stock under the USX 1990 Stock Plan. The amount shown
for Mr. Usher for 2001 includes 90,000 Marathon shares granted under the
August 8, 2001 Completion and Retention Agreement discussed in the
Compensation & Organization Committee Report, which begins on page 26, and
under the heading "Change in Control Arrangements and Employment
Contracts" beginning on page 34. 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, 2001, 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 & Organization Committee Report).
21
<Page>
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------------
UNVESTED RESTRICTED SHARES
VESTING SCHEDULE FOR RESTRICTED STOCK AGGREGATE HOLDINGS
--------------------------------------------------------------------- --------------------------------
MAY AUGUST MAY MAY VALUE AS OF
2002 2002 2003 2004 DECEMBER 31,
NAME DATE GRANTED STOCK (SHARES) (SHARES) (SHARES) (SHARES) STOCK SHARES 2001($)
- ----------------------------------------------------------------------------------------------------------------------------------
T. J. Usher May 30, 2000 U.S. Steel 14,000 14,000 U.S. Steel 56,000 1,016,680
May 30, 2000 Marathon 26,000 26,000 Marathon 194,000 5,814,180
August 8, 2001 Marathon 30,000 30,000 30,000
- ----------------------------------------------------------------------------------------------------------------------------------
R. M. Hernandez May 30, 2000 U.S. Steel 4,200 4,200 U.S. Steel 16,800 305,004
May 30, 2000 Marathon 7,800 7,800 Marathon 31,200 935,064
- ----------------------------------------------------------------------------------------------------------------------------------
J. P. Surma May 29, 2001 Marathon 2,750 2,750 2,750 Marathon 11,000 329,670
- ----------------------------------------------------------------------------------------------------------------------------------
D. D. Sandman May 30, 2000 U.S. Steel 2,625 2,625 U.S. Steel 10,500 190,628
May 30, 2000 Marathon 4,875 4,875 Marathon 19,500 584,415
- ----------------------------------------------------------------------------------------------------------------------------------
A. E. Ferrara, Jr. May 30, 2000 U.S. Steel 770 770 U.S. Steel 3,080 55,917
May 30, 2000 Marathon 1,430 1,430 Marathon 5,720 171,428
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
(2) All option shares listed except those granted to Mr. Surma 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 2001 were $84,000 for Mr. Usher, $37,500 for Mr.
Hernandez, $64,875 for Mr. Surma, $28,900 for Mr. Sandman and $14,300 for
Mr. Ferrara. Also included are amounts attributable to split-dollar life
insurance provided by USX. For 2001, these amounts were $22,365 for
Mr. Usher, $15,068 for Mr. Hernandez, $24,967 for Mr. Surma, $16,044 for
Mr. Sandman and $8,559 for Mr. Ferrara. Also included are amounts
attributable to a mandatory tax compliance program. For 2001, these
amounts were $2,750 for each of Messrs. Usher, Hernandez, Surma, Sandman
and Ferrara. For 1999 this column also includes dividends paid on
restricted stock, which have never been, and are not now, at above-market
or preferential rates.
22
<Page>
(4) Restricted stock and stock options/SAR shares granted by stock are as
follows:
<Table>
<Caption>
RESTRICTED
STOCK STOCK OPTION/
NAME STOCK ($) SAR SHARES
- ----------------------------------------------------------------------------------
T. J. Usher 2001 U. S. Steel 41,759 175,000
Marathon 2,802,978 325,000
-----------------------------------------------------
2000 U. S. Steel 1,610,000 140,000
Marathon 3,315,000 260,000
-----------------------------------------------------
1999 U. S. Steel 99,273 113,400
Marathon 191,878 210,600
- ----------------------------------------------------------------------------------
R. M. Hernandez 2001 U. S. Steel 12,528 65,625
Marathon 38,048 121,875
-----------------------------------------------------
2000 U. S. Steel 483,000 52,500
Marathon 994,500 97,500
-----------------------------------------------------
1999 U. S. Steel 32,113 42,000
Marathon 62,040 78,000
- ----------------------------------------------------------------------------------
J. P. Surma 2001 Marathon 357,720 50,000
Ashland 0 44,200
-----------------------------------------------------
2000 Marathon 0 30,000
Ashland 0 13,850
-----------------------------------------------------
1999 Marathon 0 20,000
Ashland 0 8,900
- ----------------------------------------------------------------------------------
D. D. Sandman 2001 U. S. Steel 7,835 35,000
Marathon 23,772 65,000
-----------------------------------------------------
2000 U. S. Steel 301,875 28,000
Marathon 621,563 52,000
-----------------------------------------------------
1999 U. S. Steel 25,679 21,000
Marathon 49,644 39,000
- ----------------------------------------------------------------------------------
A. E. Ferrara, Jr. 2001 U. S. Steel 2,287 10,940
Marathon 6,992 20,310
-----------------------------------------------------
2000 U. S. Steel 88,550 8,750
Marathon 182,325 16,250
-----------------------------------------------------
1999 U. S. Steel 9,933 7,000
Marathon 19,182 13,000
- ----------------------------------------------------------------------------------
</Table>
23
<Page>
2001 OPTION/SAR GRANTS
The following table sets forth certain information concerning options and stock
appreciation rights ("SARs") granted during 2001 to each executive officer named
in the Summary Compensation Table:
<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 ($)(4)
SARS EMPLOYEES SHARE EXPIRATION ----------------------------------
NAME OR GROUP STOCK GRANTED(1) IN 2001(3) ($) DATE 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
T. J. Usher U. S. Steel 175,000(2) 16.1% 19.8850 May 29, 2011 0 2,188,480 5,546,030
Marathon 325,000(2) 19.8% 32.5200 May 29, 2011 0 6,646,803 16,844,263
R. M. Hernandez U. S. Steel 65,625(2) 6.0% 19.8850 May 29, 2011 0 820,680 2,079,761
Marathon 121,875(2) 7.4% 32.5200 May 29, 2011 0 2,492,551 6,316,598
J. P. Surma Marathon 50,000 3.0% 32.5200 May 29, 2011 0 1,022,585 2,591,425
Ashland(5) 44,200 4.4% 36.3800 October 20, 2011 0 1,011,261 2,562,734
D. D. Sandman U. S. Steel 35,000(2) 3.2% 19.8850 May 29, 2011 0 437,696 1,109,206
Marathon 65,000(2) 4.0% 32.5200 May 29, 2011 0 1,329,361 3,368,853
A. E. Ferrara, Jr. U. S. Steel 10,940(2) 1.0% 19.8850 May 29, 2011 0 136,811 346,706
Marathon 20,310(2) 1.2% 32.5200 May 29, 2011 0 415,374 1,052,637
- ------------------------------------------------------------------------------------------------------------------------------------
All Stockholders U. S. Steel N/A N/A 19.8850 N/A 0 1,115,471,257 2,826,819,097
Marathon N/A N/A 32.5200 N/A 0 6,384,324,932 16,179,094,391
Ashland N/A N/A 36.3800 N/A 0 1,582,435,407 4,010,203,060
- ------------------------------------------------------------------------------------------------------------------------------------
All Optionees U. S. Steel 1,089,555 100.0% 19.8850 May 29, 2011 0 13,625,539 34,529,741
Marathon 1,642,395 100.0% 32.5200 May 29, 2011 0 33,589,770 85,122,869
Ashland 1,000,850 100.0% 36.3800 October 20, 2011 0 22,898,647 58,029,683
- ------------------------------------------------------------------------------------------------------------------------------------
All Optionees' U. S. Steel N/A N/A 19.8850 N/A 0 1.2% 1.2%
Gain as % of Marathon N/A N/A 32.5200 N/A 0 0.5% 0.5%
All Stockholders' Ashland N/A N/A 36.3800 N/A 0 1.4% 1.4%
Gain
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) All options with an expiration date of May 29, 2011 are exercisable on May
29, 2002. With respect to 24,200 of the Ashland shares granted to Mr. Surma,
12,100 shares are exercisable on September 20, 2002, 6,050 shares on
September 20, 2003 and 6,050 shares on September 20, 2004. The remaining
20,000 shares are exercisable in accordance with the vesting procedure
applicable to Marathon restricted stock, as described on page 21.
(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 U. S. Steel's or Marathon's quarterly earnings, either
corporation's Compensation & Organization 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 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, the U. S. Steel stock or the
Ashland stock. We have not used an alternative formula for a grant date
valuation, as we are 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, the expiration date applicable to the
grants and the number of outstanding shares as of December 31, 2001.
(5) Granted in connection with service as President of Marathon Ashland
Petroleum LLC which was 62 percent owned by Marathon Oil Company and 38
percent owned by Ashland Inc.
24
<Page>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information concerning
options to purchase U. S. Steel, Marathon and Ashland Inc.
("Ashland") common stock and stock appreciation rights ("SARs")
exercised by each executive officer named in the Summary
Compensation Table during 2001 together with the total number of
options and SARs outstanding at December 31, 2001 and the value
of such options.
<Table>
<Caption>
AGGREGATED 2001 OPTION/SAR EXERCISES
AND DECEMBER 31, 2001 OPTION/SAR VALUES
NO. OF
SECURITIES TOTAL VALUE
NO. OF UNDERLYING OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
UNDERLYING TOTAL VALUE OPTIONS/SARS AT OPTIONS/SARS AT
OPTIONS/SARS REALIZED DECEMBER 31, DECEMBER 31, 2001
NAME EXERCISED(1) ($)(1) 2001(1) ($)(1)
----------------------------------------------------------------------------------------------------------------
T. J. Usher 116,500 1,113,856 1,882,500 1,364,857
R. M. Hernandez 57,200 574,935 845,250 2,085,821
J. P. Surma 0 0 239,950 868,932
D. D. Sandman 0 0 360,725 271,115
A. E. Ferrara, Jr. 0 0 97,750 130,827
----------------------------------------------------------------------------------------------------------------
Note: All options listed above except 9,150 Ashland shares granted to Mr. Surma and all those granted in 2001
are currently exercisable.
All options listed above were granted with SARs except for the Ashland shares and 100,000 of the Marathon
shares shown for Mr. Surma.
</Table>
(1) Figures by 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
OPTIONS/SARS REALIZED DECEMBER 31, DECEMBER 31,
NAME STOCK EXERCISED ($) 2001 2001 ($)
----------------------------------------------------------------------------------------------------------------
T. J. Usher U. S. Steel 0 0 781,400 0
Marathon 116,500 1,113,856 1,101,100 1,364,857
R. M. Hernandez U. S. Steel 0 0 282,625 0
Marathon 57,200 574,935 562,625 2,085,821
J. P. Surma Marathon 0 0 170,000 175,750
Ashland 0 0 69,950 693,182
D. D. Sandman U. S. Steel 0 0 142,325 0
Marathon 0 0 218,400 271,115
A. E. Ferrara, Jr. U. S. Steel 0 0 35,615 0
Marathon 0 0 62,135 130,827
----------------------------------------------------------------------------------------------------------------
</Table>
25
<Page>
COMPENSATION & ORGANIZATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation & Organization Committee (the "Committee") of
United States Steel Corporation ("USSC") was established on
January 2, 2002 following the separation of the steel and energy
businesses of USX Corporation (the "Separation"). The Committee
sets policies and administers programs on executive compensation.
When action should be taken on a specific compensation item, we
either make a recommendation to the USSC Board or a subsidiary
company board or take action on our own, whichever is
appropriate. This Committee reports to the USSC Board actions
that do not require board approval. The purpose of this report is
to summarize the philosophy, specific program objectives and
other relevant factors to be considered by the Committee in
decision making with respect to the compensation of USSC
executive officers, including the officers named in the Summary
Compensation Table. Prior to the Separation, decisions respecting
the compensation of these officers were made by the Compensation
Committee of USX Corporation (the "USX Committee").
Compensation programs for USSC'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:
o Salary
o Short-term incentive (bonus) awards and
o Long-term incentive awards (stock options with stock
appreciation rights and restricted stock).
For each of the above elements of compensation, the Committee
will exercise its discretion in the subjective consideration of
the factors described below and within the limitations of the
various plans.
SALARY
Salary administration at USSC 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. The 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 some units having their own sources of relevant data.
The Committee will make decisions on salary increases and,
occasionally - when business conditions dictate - salary
decreases. When we determine salary increases, the highest
weighting will be given to performance; but other factors will
also be considered, such as experience and time in position. Once
an executive officer's salary has passed the midpoint for the
position, increases will seldom exceed amounts necessary to
maintain the salary near the midpoint, assuming performance
merits such
26
<Page>
increases. Therefore, incentive opportunities will 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 salary reviews and related actions
taken by the USX Committee.
SHORT-TERM INCENTIVE AWARDS
USSC'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. The Committee intends to make bonus awards under the
Annual Incentive Compensation Plan, as well as under the Senior
Executive Officer Annual Incentive Compensation Plan, the latter
of which was developed specifically to retain the Corporation's
tax deduction for awards made to the officers named in the
Summary Compensation Table and was approved by the stockholders
of USX and of the U. S. Steel Group on October 25, 2001.
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, the
applicable portion of the bonus will only be awarded if
performance reaches the minimum, or threshold, level for that
measure. While performance for 2001 varied among USX's business
units, performance levels were reached or exceeded for the
following:
------------------------------------------------------------------
For U. S. Steel Group Steel shipments, worker safety,
environmental emissions improvements
and common stock performance
------------------------------------------------------------------
For Marathon Group Income from operations, liquid
hydrocarbon production, natural gas
production, refined product sales,
refined product margins and worker
safety
------------------------------------------------------------------
For USX (Corporate) All the above plus workforce diversity
------------------------------------------------------------------
(Performance measures for each of USX's former business units are
shown because of their relevance to the awards for Mr. Usher, as
discussed below, and the other former USX executive officers
whose compensation data are shown in the Summary Compensation
Table.)
The USX Committee certified in writing prior to payment of awards
for the year 2001 that the pre-established, applicable
performance levels (measured for incentive compensation purposes)
required under the USX Corporation Senior Executive Officer
Annual Incentive Compensation Plan were satisfied.
OTHER PLANS
The Committee will also administer other bonus plans in which
corporate and business unit executive officers participate. These
plans were developed specifically for USSC employees. Our
Committee will make 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
27
<Page>
average) and environmental and diversity performance will be
considered. In determining awards under these plans,
consideration will also be given to the absolute levels of income
and cash flow. When making awards to executive officers under
these plans, the Committee will give such weight to the various
factors as it deems appropriate.
Based on consideration of other factors, the Committee may reduce
or eliminate a short-term incentive award that would otherwise be
payable under the above-discussed plans.
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards are of major importance in the mix of
compensation elements because these awards provide the most
direct link to the returns that you, as USSC stockholders,
receive. The USX and the U. S. Steel Group stockholders approved
the 2002 Stock Plan on October 25, 2001. 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
The Committee will make stock option grants that we believe to be
reasonable and in line with other compensation. The number of
shares granted will generally reflect an employee's level of
responsibility. Following normal annual grant practices, the USX
Committee granted stock options in May 2001.
RESTRICTED STOCK GRANTS
The USX Committee established, for each recipient, an annual
target level of restricted stock shares based on the same factors
as those considered 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 intend to continue the USX Committee practice and will
vest restricted stock at levels higher or lower than annual
targets, depending on performance.
A major grant was made in 2000 by the USX Committee, to cover the
five-year performance period ending with 2004. 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, vesting decisions have been and
will continue to be 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 2001, the three-year (1998-2000) average performance of
the USX business units was compared by the USX Committee with
that of competitors for the measures shown below. This comparison
has provided 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>
<Table>
<Caption>
UNIT PERFORMANCE MEASURE
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
USX Headquarters Weighted Composite (65% Marathon Group/35% U. S. Steel
Group)
- --------------------------------------------------------------------------------
</Table>
(Performance measures for each of USX's former business units are shown because
of their relevance to the vesting levels for Mr. Usher, as discussed below, and
the other former USX executive officers whose compensation data are shown in the
Summary Compensation Table.)
The USX Committee certified in writing prior to vesting of restricted stock
shares in the year 2001 that the pre-established applicable performance levels
required under the USX Corporation 1990 Stock Plan were satisfied.
The Committee will periodically compare data on long-term incentive grants made
at other companies with those made at USSC. Our objective in making grants under
the 2002 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 USSC 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, the Committee will
annually compare the salary, bonus and long-term incentive payouts for the CEO
and USSC's other top officers 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 USSC 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 companies deemed most comparable to USSC's businesses for
measuring stock performance. The companies used for comparing compensation
reflect similarities to USSC 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.
Mr. Usher's 2001 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 will also be considered in determining his
future salary increases, as will (1) the comparability of his salary with CEOs
of other companies of similar size and complexity and (2) the position of his
salary in the range for his position.
29
<Page>
The USX Committee made an award to Mr. Usher for
2001 under the USX Corporation 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 USX Committee also considered Mr.
Usher's significant contributions to the
successful separation of the companies.
The USX Committee considered the additional stock
option shares granted to Mr. Usher under the USX
Corporation 1990 Stock Plan to be at a
competitive level relative to other CEOs. On the
basis of the performance shown in the above
table, the USX Committee also vested restricted
stock for and made an additional grant of
restricted stock to Mr. Usher.
On August 8, 2001, the USX Committee approved a
Completion and Retention Agreement with Mr. Usher
to facilitate the Separation and to make
available to both companies Mr. Usher's unique
experience and talents. The Agreement provided
for (1) certain compensation to be provided by
USX Corporation prior to the Separation, (2)
certain other compensation to be provided by USSC
after the Separation and (3) certain other
compensation to be provided by Marathon Oil
Corporation after the Separation. The elements
included under each of these categories are
described below.
1. COMPENSATION PROVIDED BY USX CORPORATION
BEFORE THE SEPARATION.
Effective the date of the agreement, 90,000
shares of USX-Marathon Group restricted stock
were granted under the USX Corporation 1990
Stock Plan. Vesting is scheduled to be made
over three years, with 30,000 shares scheduled
to vest on the anniversary of the grant and
30,000 shares each scheduled to vest in May
2003 and May 2004. The first vesting will be
based on USX performance; the second and third
vestings will be based on Marathon
performance. The grant value is included in
the amount shown under "Restricted Stock
Award(s)" on page 21.
2. COMPENSATION TO BE PROVIDED BY USSC AFTER THE
SEPARATION.
When Mr. Usher became USSC's Chairman, Chief
Executive Officer and President on December
31, 2001, a salary reduction from that which
he received from USX was effected to reflect a
salary level in line with that for chairmen
and CEOs of companies comparable to USSC. Also
included in the Agreement was a retention
bonus of $3,000,000 payable on the third
anniversary of the effective time of the
Separation if at that time (1) the fair value
of USSC assets exceeds its liabilities, (2)
the fair saleable value of USSC assets exceeds
its probable liabilities and (3) USSC is able
to pay and discharge its debts and other
liabilities as they become due. In addition,
if conditions (1) through (3) are satisfied,
the Committee will determine the percentage of
the $3,000,000 to be awarded based on the
performance-related vesting criteria
applicable to restricted stock under the USSC
2002 Stock Plan.
3. COMPENSATION TO BE PROVIDED BY MARATHON OIL
CORPORATION AFTER THE SEPARATION.
On the first business day following the
effective time of the Separation, a $6,000,000
restructuring completion bonus was paid by
Marathon. In addition, grants of Marathon Oil
Corporation phantom stock appreciation rights
were made - 150,000 shares on the last trading
day before the effective time of the
Separation and 350,000 shares on the first
trading day after the Separation. These rights
vested on the effective date of the grants.
Seth E. Schofield, Chairman
Robert J. Darnall
Charles R. Lee
John W. Snow
Douglas C. Yearley
30
<Page>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The line graph below compares the yearly change
in cumulative total stockholder return for our
common stock with the cumulative total return of
the Standard & Poor's 500 Stock Index and a Steel
Index that is defined in a footnote to the graph.
COMPARISON OF CUMULATIVE TOTAL RETURN ON $100
INVESTED IN U. S. STEEL STOCK ON DECEMBER 31, 1996
VS.
S&P 500 AND STEEL INDEX(1)
USS S&P 500 Steel Index (2) Close Pr.
----- -------- --------------- -----------
12/31/1996 100 100 100 $31.375
12/31/1997 103 133 91 $31.250
12/31/1998 78 171 87 $23.000
12/31/1999 117 208 76 $33.000
12/31/2000 67 189 27 $18.000
12/31/2001 70 166 30 $18.110
(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, 1996
through December 31, 2001, and Inland Steel
Industries for the period December 31, 1996
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. LTV Corporation is in
bankruptcy and is no longer traded on the New
York Stock Exchange but is publicly traded in
over-the-counter trading. Bethlehem Steel
Corporation is also in bankruptcy but is still
traded on the New York Stock Exchange.
================================================================================
TRANSACTIONS In the regular course of its business since
January 1, 2001, U. S. Steel and its predecessors
(the USX-U. S. Steel Group and United States
Steel LLC) and 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 2002.
31
<Page>
PENSION BENEFITS
The United States Steel Corporation Plan for
Non-Union Employee Pension Benefits ("Steel
Pension Plan") 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 U. S. Steel 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 earnings in the five
consecutive years of the ten years prior to
retirement in which earnings are highest. Years
of service include service accrued as an employee
of Marathon Oil Company, its subsidiaries and
joint ventures ("Marathon"). As of December 31,
2001, Messrs. Usher, Hernandez, Surma, Sandman,
and Ferrara had 36, 33, 4, 28, and 29 years of
service, respectively.
<Table>
<Caption>
AVERAGE ANNUAL TABLE OF PENSION BENEFITS
ELIGIBLE EARNINGS FINAL EARNINGS PENSION BENEFITS
FOR HIGHEST FIVE
CONSECUTIVE YEARS ANNUAL BENEFITS FOR YEARS OF SERVICE
IN TEN-YEAR PERIOD ------------------------------------------------------------------------------
PRECEDING RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS
----------------------------------------------------------------------------------------------------
$ 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>
The annual career earnings pension is equal to
one percent of total career earnings plus a 30
percent supplement. Total career earnings include
salary earned as an employee of Marathon, but
exclude awards under any bonus programs. The
estimated annual career earnings benefit payable
at normal retirement age 65, assuming no increase
in annual earnings, will be $233,400 for Mr.
Usher, $158,430 for Mr. Hernandez, $121,298 for
Mr. Surma, $132,383 for Mr. Sandman, and $70,214
for Mr. Ferrara. Earnings for the purpose of
calculating both the final earnings and career
earnings pensions are limited to base salary as
reflected in the Summary Compensation Table.
Pensions payable under the Steel Pension Plan to
participants with Marathon service include
service and earnings that are also used in the
calculation of benefits payable under the
Marathon Pension Plans; therefore, the Steel
Pension Plan benefits for such participants are
reduced by their Marathon Pension Plan benefits.
Because Messrs. Surma, Sandman and Ferrara have
earned benefits under the Marathon Pension Plans,
their Steel pension benefits will be reduced, at
age 65, by estimated annual Marathon pensions
(assuming no increase in annual earnings) of
$6,577, $29,381, and $4,782, respectively.
However the pension payable under the Steel
Pension Plan cannot be reduced below the amount
calculated with only Steel service and earnings.
In addition to the pension benefits described
above, Messrs. Usher, Hernandez, Surma, Sandman,
and Ferrara participate in the United States
Steel Corporation Executive Management
Supplemental Pension Program and are entitled,
upon retirement after age 60, or before age 60
with U. S. Steel's consent, to the benefits shown
in the table below. The benefits are based on a
formula of a specific percentage, determined by
years of U. S. Steel service, of the average of
the three highest annual bonuses paid under the
applicable incentive compensation plans in the
ten years prior to retirement.
32
<Page>
The three most recent bonuses are reported in the
Summary Compensation Table. The following table
shows the annual executive management
supplemental pension for retirement at age 65 (or
earlier under certain circumstances) for various
levels of average annual bonus which would be
payable to participants retiring with the years
of service shown.
<Table>
<Caption>
SUPPLEMENTAL PENSION BENEFITS
AVERAGE ANNUAL BONUS
FOR THREE HIGHEST YEARS ANNUAL BENEFITS FOR YEARS OF SERVICE
IN TEN-YEAR PERIOD ------------------------------------------------------------------------------
PRECEDING RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS
-------------------------------------------------------------------------------------------------------
$ 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
2,100,000 485,100 646,800 808,500 970,200 1,131,900 1,293,600 1,455,300
2,300,000 531,300 708,400 885,500 1,062,600 1,239,700 1,416,800 1,593,900
2,500,000 577,500 770,000 962,500 1,155,000 1,347,500 1,540,000 1,732,500
-------------------------------------------------------------------------------------------------------
</Table>
U. S. Steel has entered into a retention
agreement with Mr. Usher which provides that if
he elects to receive his non-qualified pension as
a lump sum distribution, the lump sum
distribution will be calculated using the
interest rates and mortality tables in effect for
retirement on December 31, 2001, instead of the
rates and mortality tables in effect at his
retirement, which could result in a greater or
lesser amount.
USX entered into an agreement with Mr. Surma that
provides additional years of service for pension
calculation as well as vesting and benefit
eligibility purposes. In consideration for
agreeing to serve as Vice Chairman of U. S.
Steel, 15 years will be added to the service Mr.
Surma actually accrues under the Steel Pension
Plan for the purpose of determining his benefit
eligibility and vesting. For the purpose of
calculating his final earnings and executive
supplemental pensions, a portion of the 15 years
will be added to the service Mr. Surma actually
accrues under such programs. The portion to be
included will be determined, as of Mr. Surma's
retirement, based on the ratio of his service
accrued under the Steel Pension Plan to his
service accrued under both the Steel and Marathon
Pension Plans. Mr. Surma may elect to receive the
pensions calculated on this additional service in
the form of (1) a single lump sum distribution,
(2) installment payments or (3) split dollar life
insurance. Marathon Oil Corporation has an
equivalent agreement with Mr. Surma.
U. S. Steel has entered into a retention agreement
with Mr. Sandman which provides enhanced pension
benefits in return for his continued employment.
If Mr. Sandman continues his employment through
2006, the Corporation will provide a pension
equal to the difference between (1) his Steel
Pension Plan benefits calculated with his actual
service and age at retirement each increased by
three years, a $4,800 annual social security
supplement payable to the earlier of death or age
62, a lump sum distribution of these pension
benefits calculated with the more favorable of
the interest and mortality factors applicable to
December 31, 2001 retirements or such factors
applicable to his actual retirement date, and (2)
his Steel Pension Plan benefits at his
retirement. In addition he will have the
Corporation's consent to retire with respect to
the United States Steel Corporation Executive
Management Supplemental Pension Program.
33
<Page>
CHANGE IN CONTROL ARRANGEMENTS
AND EMPLOYMENT CONTRACTS
We believe that if a change in control of U. S.
Steel became possible our officers should be
encouraged to continue their dedication to their
assigned duties. For that reason, we have entered
into agreements with each of our officers 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:
o a lump sum payment of up to three times salary
plus bonus;
o life and health insurance benefits for up to
three years;
o three years of additional credit towards
eligibility for retiree medical and life
insurance;
o a lump sum payment equal to the difference
between amounts payable under the U. S. Steel
pension plans and the amounts that would be
payable if the officer worked three additional
years;
o a lump sum payment of any unvested amounts
under U. S. Steel's savings and thrift plans;
and
o additional payments sufficient to compensate
for certain federal excise taxes.
Also, in the event of a change in control, any
stock options, stock appreciation rights, or
restricted stock granted to the officer would
become fully vested.
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:
o any person not affiliated with U. S. Steel
acquires 20 percent or more of the voting power
of our outstanding securities,
o 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,
o U. S. Steel merges with another company and U. S.
Steel's stockholders end up with less than 50
percent of the voting power of the new parent
entity,
o our stockholders approve a plan of complete
liquidation of U. S. Steel, or
o we sell all or substantially all of U. S.
Steel's assets.
34
<Page>
In connection with the separation of USX's steel
and energy businesses (the "Separation") USX
entered into a Completion and Retention Agreement
with Thomas J. Usher, its then Chairman & Chief
Executive Officer. To facilitate the Separation
and to maintain continuity in both businesses,
the board of directors asked Mr. Usher to serve
as the Chairman of the Board, Chief Executive
Officer and President of U. S. Steel, the
Chairman of the board of directors of Marathon
Oil Corporation ("Marathon") and the Chairman of
the board of managers of Marathon Ashland
Petroleum LLC ("MAP"). In deciding to ask Mr.
Usher to serve in these three roles, the board of
directors determined that Mr. Usher's unique
experience and talents would bring value to both
groups of stockholders. For a description of the
benefits provided to Mr. Usher by Marathon under
the agreement, see Marathon's 2002 proxy
statement and the discussion on page 30 of this
proxy statement under the heading "Compensation
to be provided by Marathon Oil Corporation after
the Separation." Mr. Usher has over 35 years of
experience in the steel industry, and with the
death last year of Paul Wilhelm, the former
President of the USX-U. S. Steel Group, the USX
board of directors believed that the stockholders
would be best served if Mr. Usher became the full
time Chief Executive Officer of U. S. Steel.
Under the Completion and Retention Agreement Mr.
Usher will receive, or has received, from USX or
from U. S. Steel:
o A salary from USX of $1,400,000 for 2001 and,
after the Separation, a salary of $1,100,000
annually from U. S. Steel for 2002-2004,
subject to adjustment by the board of directors
and the Compensation & Organization Committee
of U. S. Steel. This $300,000 reduction
reflects the lower levels of salaries in the
steel and metal industries as compared to the
energy industry.
o A grant of 90,000 restricted shares of
USX-Marathon Group Common Stock on August 8,
2001 with 30,000 shares vesting on August 8,
2002 based on USX performance, and 30,000
shares vesting in each of May 2003 and May 2004
based on Marathon performance.
o A retention bonus, of up to $3,000,000, that is
subject to a number of performance measures, to
be paid by U. S. Steel on the third anniversary
of the Separation.
If Mr. Usher elects to receive his non-qualified
pension as a lump sum, the lump sum will be
calculated using the interest rates and mortality
tables in effect for retirements on December 31,
2001, instead of the rates and mortality tables
in effect at Mr. Usher's retirement, which could
result in a greater or lesser pension.
The Completion and Retention Agreement was
negotiated on behalf of USX by the Compensation
Committee of the USX board of directors which was
composed solely of non-employee directors and is
intended to provide an incentive to Mr. Usher to
serve in his three roles. Among the factors
considered by the USX Compensation Committee were
the unique background Mr. Usher brings to each
role, his past performance in guiding both the
steel and energy businesses, compensation levels
and practices at other steel and energy companies
as well as other companies of similar size and
complexity as USX, Marathon and U. S. Steel and
the fact that as a non-employee director Mr.
Usher will not be eligible to receive
compensation (salary, bonuses, options or other
stock based compensation) from Marathon or MAP
even though it is expected that he will make
major contributions to the future success of
Marathon and MAP in his roles as chairman of the
governing bodies of each.
35
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USX also entered into agreements with Mr. Surma
and Mr. Sandman in consideration for their
agreeing to serve as vice chairmen of U. S.
Steel. The agreement with Mr. Surma calls for U. S.
Steel, Marathon, MAP and Speedway SuperAmerica LLC
("SSA") to provide certain non-qualified benefit
supplements in addition to the pension and savings
benefits and non-qualified deferred compensation to
which he is otherwise entitled. Unless he elects
otherwise, such supplements will be paid by U. S.
Steel and Marathon in a lump sum distribution
within 90 days of the date of his termination of
employment from all four companies -- U. S. Steel,
Marathon, MAP and SSA. Mr. Surma's pension benefit
supplements are described on page 33 under the
heading "Supplemental Pension Benefits." In
addition to the pension enhancements, 15 years will
be added to his actual U. S. Steel service solely
for the purpose of determining vesting and
eligibility for company contributions under the
USSC Supplemental Thrift Program.
The agreement with Mr. Sandman calls for U. S.
Steel to provide enhanced pension benefits to Mr.
Sandman if he remains employed by U. S. Steel at
least through 2006. These benefits are described
on page 33 under the heading "Supplemental
Pension Benefits."
================================================================================
STATEMENT REGARDING THE DELIVERY OF A SINGLE SET
OF PROXY MATERIALS TO HOUSEHOLDS WITH MULTIPLE
U. S. STEEL SHAREHOLDERS
If you have consented to the delivery of only one
set of proxy materials to multiple U. S. Steel
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 U. S. Steel
Shareholder Services, Room 611, 600 Grant Street,
Pittsburgh, PA 15219-2800. 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 our 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 11, 2002
36
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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 composed 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 accountants. The independent
accountants are 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; 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.
6. Review significant accounting, auditing and
Securities and Exchange Commission
pronouncements.
37
<Page>
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.
10. Annually review the business expense reporting
of the officers of the Corporation.
11. Annually review a report outlining the
activities undertaken by the committee over the
past year to meet the requirements of this
charter.
38
<Page>
[LOGO] United States Steel Corporation
600 Grant Street
Pittsburgh, PA 15219-2800
<Page>
<Table>
UNITED STATES STEEL CORPORATION 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
2002 ANNUAL MEETING OF STOCKHOLDERS C) ON THE INTERNET
ATTENDANCE CARD TO VOTE BY TELEPHONE OR INTERNET USE THE CONTROL
NUMBER IN THE BOX BELOW.
YOUR CONTROL NUMBER
You are invited to attend the Annual Meeting of --------------
Stockholders on April 30, 2002. The Meeting will be held
in the Grand Ballroom of the Omni William Penn Hotel, 530 --------------
William Penn Place, Pittsburgh, PA 15219 at 10:00 AM
Eastern Time. Use of this attendance card is for our BY TELEPHONE BY INTERNET
mutual convenience and your right to attend the meeting TOLL-FREE 1-888-216-1303 HTTPS://WWW.PROXYVOTENOW.COM/USS
without this attendance card is not affected upon
presentation of identification.
HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU CALL OR VISIT
Attached below is your 2002 Proxy Card. THE INTERNET SITE AND FOLLOW THE PROMPTS.
Dan D. Sandman VOTING IS AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Secretary
DO NOT RETURN THE PROXY CARD IF YOU HAVE VOTED
FOR THE PERSONAL USE OF THE NAMED STOCKHOLDER(S) - NOT BY TELEPHONE OR INTERNET.
TRANSFERABLE. PLEASE PRESENT THIS CARD AT REGISTRATION
DESK UPON ARRIVAL.
The undersigned hereby appoint(s) Thomas J. Usher, Roy G. Dorrance, Dan D. Sandman and John P. Surma, Jr., or any of them, proxies
to vote as herein directed on behalf of the undersigned at the Annual Meeting of Stockholders of United States Steel Corporation
on April 30, 2002 and at any meeting resulting from an 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"
Proposal No. 1--Election of directors--Nominees: (01)Shirley A. Jackson, FOR all nominees --- / / WITHHOLD AUTHORITY --- / /
(02)Dan D. Sandman, (3)John W. Snow, (04)Thomas J. Usher (except as indicated) to vote for ALL nominees
and (05)Douglas C. Yearley
(To withhold authority to vote for any individual nominee strike out that nominees's name.)
Proposal No. 2--Election of PricewaterhouseCoopers LLP as independent accounts FOR --- / / AGAINST --- / / ABSTAIN --- / /
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE(S) _____________________________
__________________________________________
DATED __________________ 2002
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON, INCLUDING
REPRESENTATIVE CAPACITY WHERE APPLICABLE. JOINT OWNERS SHOULD
BOTH SIGN.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND REPRESENTS
YOUR HOLDINGS OF UNITED STATES STEEL CORPORATION COMMON STOCK.
UNLESS OTHERWISE MARKED, THE PROXIES WILL VOTE FOR PROPOSALS 1
AND 2.
</Table>