Exhibit 10(e)
UNITED STATES STEEL CORPORATION EXECUTIVE
MANAGEMENT SUPPLEMENTAL PENSION PROGRAM
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Amended Effective January 1, 2002
1. Purpose
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The purpose of this program is to provide a pension benefit for Executive
Management and certain other key managers with respect to compensation paid
under the incentive compensation plans maintained by United States Steel
Corporation (hereinafter "the Corporation"), its subsidiaries, and its joint
ventures.
2. Eligibility
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An employee of the Corporation, a Subsidiary Company, or a joint venture is a
Member of the United States Steel Corporation Executive Management Supplemental
Pension Program ("Program") if he is:
(a) a member of the Executive Management Group as established from time to
time by the United States Steel Corporation Board of Directors, or
(b) a key manager designated by name as a "Member" under this Program by
the Compensation and Organization Committee of the United States Steel
Corporation Board of Directors (the "Committee").
Subject to the age 60 consent requirement outlined below, a Member will be
eligible to receive the supplemental pension provided under this Program (the
"Supplemental Pension") if he retires or otherwise terminates employment after
completing fifteen years of continuous service. Benefits will not be payable
under this Program with respect to a Member who terminates employment prior to
age 60 unless the Corporation consents to the termination of employment;
provided, however, that such consent is not required for terminations on account
of: (a) death, or (b) involuntary termination, other than for cause.
Subject to the age 60 consent requirement outlined below, the surviving spouse
of any Member will be eligible to receive the supplemental surviving spouse
benefit provided under this Program (the "Supplemental Surviving Spouse
Benefit") if the Member (a) has accrued at least 15 years of continuous service,
and (b) either (i) dies prior to retirement, or (ii) dies after retirement under
conditions of eligibility for a pension pursuant to the provisions of the United
States Steel Corporation Plan for Non-Union Employee Pension Benefits (Revision
of 1998) (the "Plan"). The Supplemental Surviving Spouse Benefit will not be
payable with respect to a Member who terminates employment prior to age 60
unless the Corporation consents to the termination of employment; provided,
however, that such consent is not required for terminations on account of: (a)
death, or (b) involuntary termination, other than for cause.
Notwithstanding anything to the contrary contained herein, participants who
elect to retire under (1) the Voluntary Early Retirement Program - 2001, or (2)
the 2001 Voluntary Early Retirement Program - Fairless Works, shall be treated
as having Corporation consent to retire even if they have not attained age 60.
3. Amount of Benefit
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a. Supplemental Pension
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The Supplemental Pension provided under this Program shall be a
monthly amount paid for the life of the Member equal to the product
of: (i) the Member's Average Earnings,
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multiplied by (ii) a percentage which shall be equal to the sum of
1.54% for each year of continuous service and each year of allowed
service.
Except as otherwise provided in this Program, the terms "continuous
service," "allowed service," "surviving spouse" and "Subsidiary
Company" as used herein mean continuous service, allowed service,
surviving spouse, and subsidiary company as determined under (or, in
the case of "subsidiary company", as defined in) the United States
Steel 1994 Salaried Pension Rules adopted under the Plan. However, the
term "continuous service" for the purpose of determining the amount of
the Supplemental Pension and Supplemental Surviving Spouse Benefit
under this Program shall exclude the Member's continuous service that
(i) is creditable under a pension plan adopted by the Corporation, a
Subsidiary Company, or a joint venture, if the pension plan includes
bonus payments as creditable earnings for pension purposes, or (ii)
occurs following the date the Member was designated by the Committee
as no longer covered by this Program for future accruals.
Average Earnings as used herein shall be equal to the total bonuses
paid or credited to the Member pursuant to the United States Steel
Corporation Annual Incentive Compensation Plan (and/or under similar
incentive plans or under profit sharing plans, if the employing entity
has a profit sharing plan rather than an incentive plan) with respect
to the three calendar years for which total bonus payments or
deferrals (or such other payments) were the highest out of the last
ten consecutive calendar years immediately prior to the calendar year
in which retirement or death occurs (or, if earlier, the date the
Member was designated by the Committee as no longer covered by the
Program for future accruals) divided by thirty-six. Bonus payments or
deferrals (or such other payments) will be considered as having been
made for the calendar year in which the applicable services were
performed rather than for the calendar year in which the bonus payment
was actually received. Notwithstanding anything to the contrary
contained herein, no benefits payable with respect to a Member shall
be based on any bonus paid to such Member after the date he was
designated by the Committee as no longer covered by this Program.
The Average Earnings used in the determination of benefits under this
Program as of retirement will be recalculated using any bonus payable
for the calendar year in which retirement occurs if such bonus
produces Average Earnings greater than that determined at retirement.
As of December 31, 2001, (the "Effective Date"), the determination of
Average Earnings used herein also shall take into consideration
bonuses paid or credited to the Member after the Effective Date by
Marathon Oil Corporation, Marathon Oil Company, Marathon Ashland
Petroleum LLC, and Speedway SuperAmerica LLC, and their subsidiaries
and successors.
b. Supplemental Surviving Spouse Benefit
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The Surviving Spouse of a Member shall be eligible for a monthly
Supplemental Surviving Spouse Benefit under this Program equal to (i)
in the case of a Member who dies after retirement, 50% of the
Supplemental Pension that was being paid to the Member, or (ii) in the
case of a Member who dies while still employed by the Corporation, the
actuarial equivalent (to adjust to the life expectancy of the spouse
utilizing the 1971 Group Annuity Mortality Tables unisexed on a 9 to 1
female-male ratio for the spouse and the PBGC interest rate in effect
the first of the month following the date of the Member's death) of
100% of the monthly Supplemental Pension that would have been payable
to the Member had the Member retired with Corporation consent as of
the date of his death. In the event that a Member who has completed
fifteen years of continuous service dies while still employed by the
Corporation and does not leave a Surviving Spouse, an amount equal to
the lump sum distribution which he would have received under this
Program had he retired with Corporation consent as of the date of his
death shall be payable to his estate.
4. Form of Benefit
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a. Normal Form - Lump Sum Distribution
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The Member shall receive a lump sum distribution of both the benefits
payable to him and the benefits payable to his surviving spouse, if
any, unless the Member elects prior to the earlier of retirement or
death to:
(i) receive on a monthly basis both the benefits payable to him and
the benefits payable to his surviving spouse, or
(ii) receive on a monthly basis the benefits payable to him (but not
the benefits payable to his surviving spouse).
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If the Member (i) dies prior to retirement, or (ii) made the election
in paragraph 4.a.(ii) above, the Supplemental Surviving Spouse
Benefit, if any, shall be paid in a lump sum distribution. Such lump
sum distribution will be determined based upon the life expectancy of
the Member's surviving spouse.
Unless a valid election has been made in accordance with paragraph
4.b. below, any lump sum distribution shall be payable within 90 days
following retirement, or death, and shall represent full and final
settlement of all benefits provided under the Program. Any lump sum
distribution under this Program shall be calculated in the same manner
as it would have been calculated had it been made under the United
States Steel Corporation Plan for Non-Union Employee Pension Benefits
(Revision of 1998). If a Member elects a lump sum and retires, but
dies prior to receiving such lump sum, the lump sum will be paid to
the Member's surviving spouse or to the Member's estate if there is no
surviving spouse.
b. Deferral of Lump Sum Distribution
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A Member who makes a valid election to receive a lump sum distribution
in accordance with paragraph 4.a. above may elect, prior to retirement
and in writing to the administrator of the Program, to receive such
lump sum distribution either:
(i) in full on February 1 of the year following the year in which the
Member retires, or
(ii) in three annual installments with the first annual installment
payable within 90 days following the Member's date of retirement
and the succeeding installments payable on the next two
anniversaries of the first payment date.
Interest would accrue and be payable on the balance due at the rate
used under the Program to determine the actuarially equivalent lump
sum value of the Member's benefit under the Program.
If the Member makes a valid deferral election in accordance with the
preceding paragraph and dies prior to retirement, the deferral
election will apply to the lump sum distribution of the Supplemental
Surviving Spouse Benefit, if any.
Subject to a 2% penalty, the Member may elect to accelerate the
payment of all remaining installments to a date prior to the scheduled
date. If such an election is made, the accelerated payment would be
reduced by an amount equal to 2% of the amounts accelerated (including
interest). Such an election for acceleration of any balance due will
be valid only if it is filed in writing with the administrator at
least 20 days prior to the date payment is requested.
5. Split Dollar Exchange Option
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a. Upon attainment of age 59 each Member who will have completed l5 years
of continuous service prior to age 60 will be given a one time
opportunity to elect, effective upon attainment of age 60, to exchange
all or a specified portion of his unvested accrued benefit under this
Program for split dollar life insurance coverage. (In addition, (i) a
Member who becomes a Member after attainment of age 60 will be given
such opportunity immediately prior to becoming a Member, and (ii) a
Member who will complete 15 years of continuous service after
attainment of age 60 will be given such opportunity upon completion of
14 years of continuous service.) Any Member interested in exploring
this opportunity must elect to do so within 30 days of the date he is
sent notice of such opportunity.
b. Each Member who elects to explore such opportunity will be given
information about:
(i) the estimated lump sum value of his accrued benefit under the
Program as of the date split dollar coverage would become
effective (using the PBGC interest rate in effect at the time the
estimate is given), and
(ii) the estimated cost of each $100,000 of split dollar life
insurance that he may purchase from a participating insurance
underwriter.
No insurance underwriter will be permitted to participate unless it
has at least a rating of AA- as evaluated by Moody's. The underwriters
initially participating in this special program will include
Metropolitan, Manufacturer's Life of Canada, Pacific Life and Denver
Life. Each Member must elect to make or not make an exchange for split
dollar life insurance within 60 days of being sent this information.
Any
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Member electing to make an exchange for such split dollar life
insurance either on his own behalf or on behalf of a trust (which will
become the policy owner) must complete the enrollment process that
includes a physical examination for all persons to be insured under
the policy, a formal application for insurance, and contractual
materials. The enrollment package will be sent by the new business
department of the National Benefits Group, Inc., an affiliate of Marsh
& McLennan Inc. Split dollar coverage will become effective as of the
later of: (i) the date that the Member attains age 60, (ii) the date
that the Member becomes a Member under the Program, (iii) the date
that the Member completes 15 years of continuous service, or (iv) the
date that the insurance underwriters issue a split dollar insurance
policy ("policy").
The amount of the Member's accrued lump sum benefit under this Program
will be reduced as of the date that split dollar life insurance
coverage becomes effective. The value of such accrued lump sum benefit
will be calculated using the PBGC interest rate applicable to
retirements which occur in the month prior to the month in which this
split dollar policy becomes effective. The amount of reduction will be
determined by the underwriter and will consist of the present value of
the Corporation's cost to provide the split dollar policy. Such
present value will be calculated utilizing the same interest rate used
to calculate the Member's accrued lump sum benefit. The Corporation's
cost will be the most favorable quote obtainable at the time of
procurement from the participating underwriters. Any remaining accrued
lump sum benefit will be converted back to a reduced number of years
and months of service for future benefit calculation.
c. Any split dollar policy received by the Member shall be payable upon
the Member's death, or, in the case of a joint life policy, upon the
later of the Member's death or his co- insured's death if this dual
coverage feature is elected. The proceeds of the policy will be
payable to the beneficiary of record. Such amount will be paid in a
lump sum but the Member may make arrangements for payment in
installments.
d. The face amount of the split dollar policy will be payable upon the
death of the last insured under the policy if the earnings actually
credited by the underwriter on the cash value of the policy equal or
exceed the anticipated earnings rate for the policy. The anticipated
credited earnings rate is established at the time that the policy is
issued and represents the earnings rate which the insurance carrier
anticipates will be earned by the policy and which, if earned, will
preclude any lapse in the policy. However, if the earnings resulting
from the actual credited rates do not equal or exceed the earnings
which would be produced by the anticipated credited rate, then the
policy may lapse before the death of the last insured unless the
policy owner agrees with the insurance carrier to reduce the amount of
split dollar insurance or unless the policy owner makes special
contributions to the policy. The Policy Service Department of the
National Benefits Group, Inc. will advise the policy owner in the
event that the actual earnings credited to the policy fall below the
earnings which would have been produced by the anticipated credited
rate and will assist the policy owner in making arrangements to reduce
the amount of the policy or to make contributions thereto if the
policy owner so elects. The policy owner will have the right at any
time after the policy has been in effect for fifteen years to
surrender the policy and receive the cash balance (minus any surrender
charge).
e. There will be imputed income with respect to this split dollar life
insurance because the Corporation will be paying a premium equal to
the term cost of such insurance. Term insurance premiums and imputed
income shall terminate the earlier of: (i) the end of the fifteenth
year in which the policy is in force, or (ii) the death of the last
insured under the policy.
f. The Corporation shall be solely responsible for paying the annual
split dollar premiums (and term insurance premiums) required by the
insurance carrier. The total amount of premiums paid by the
Corporation will be repaid to it by the insurance underwriter on the
earlier of (i) the end of the fifteenth year in which the policy is in
force, or (ii) the death of the last insured under the policy.
Repayment of the premiums to the Corporation upon the death of the
last insured (or upon the end of the fifteen year period following the
date of issue, if later) shall not reduce the face amount of the
policy which is payable to the beneficiary. The policy has been
designed so that the Corporation will be able to recover the premiums
it
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had paid without adversely impacting the beneficiary. The policyholder
will be required to sign an agreement authorizing the insurance
underwriter to repay the Corporation, at the appropriate time, the
premiums which it has paid.
g. The policyholder may request a change in ownership and/or beneficiary
of the split dollar life insurance policy at any time. If the
beneficiary predeceases the Member and a new beneficiary is not named,
the split dollar life insurance policy will be payable in accordance
with a preferred beneficiary schedule.
h. The policy's beneficiary will be provided the necessary forms for
claiming the split dollar life insurance proceeds if the beneficiary
contacts: (i) National Benefits Group, Inc., or (ii) the United States
Steel and Carnegie Pension Fund.
6. General Provisions
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a. Administration
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The Vice President-Administration, United States Steel and Carnegie
Pension Fund, is responsible for the administration of this Program.
The administrator shall decide all questions arising out of and
relating to the administration of this Program. The decision of the
administrator shall be final and conclusive as to all questions of
interpretations and application of the Program.
b. Amendment or Termination of Program
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The Corporation reserves the right to make any changes in this Program
or to terminate this Program as to any or all groups of employees
covered under this Program, but in no event shall such amendment or
termination adversely affect the benefits accrued hereunder prior to
the effective date of such amendment or termination. Any amendment to
this Program which changes this Program (including any amendment which
increases, reduces or alters the benefits of this Program) or any
action which terminates this Program to any or all groups shall be
made by a resolution of the Corporation's Board of Directors (or any
authorized committee of such Board) adopted in accordance with the
bylaws of the Corporation and the corporation law of the state of
Delaware.
c. No Guarantee of Employment
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Neither the creation of this Program nor anything contained herein
shall be construed as giving an individual hereunder any right to
remain in the employ of the Corporation.
d. Nonalienation
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No benefits payable under this Program shall be subject in any way to
alienation, sale, transfer, assignment, pledge, attachment,
garnishment, execution, or encumbrance of any kind by operation of law
or otherwise. However, this section shall not apply to portions of
benefits applied to satisfy (i) obligations for the withholding of
taxes, or (ii) obligations under a qualified domestic relations order.
e. No Requirement to Fund
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Except to the extent provided otherwise in this paragraph, benefits
provided by this Program shall be paid out of general assets of the
Corporation. No provisions in this Program, either directly or
indirectly, shall be construed to require the Corporation to reserve,
or otherwise set aside, funds for the payment of benefits hereunder.
As of the Effective Date, United States Steel Corporation (and its
subsidiaries and successors) and Marathon Oil Corporation (and its
subsidiaries and successors) have assumed liability for a Specified
Percentage of the Corporate Part, if any, of each Member's accrued
benefit under the Program. The term "Corporate Part" is defined to
mean the pro rata portion (based upon continuous service taken into
consideration for benefit accrual purposes under the Program) of a
Member's total accrued benefit under the Program as of the Effective
Date (as adjusted, if applicable, for increases in compensation in
periods after the Effective Date) which is attributable to continuous
service performed for the USX Headquarters unit of USX Corporation on
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or after May 1, 1991 and prior to the Effective Date. The Specified
Percentage is thirty-five percent (35%) for United States Steel
Corporation and sixty-five percent (65%) for Marathon Oil Corporation.
f. Controlling Law
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To the extent not preempted by the laws of the United States of
America, the laws of the Commonwealth of Pennsylvania shall be the
controlling state law in all matters relating to this Program.
g. Severability
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If any provisions of this Program shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the
remaining parts of this Program, but this Program shall be construed
and enforced as if said illegal or invalid provision had never been
included herein.
h. Exclusive Provisions of Program
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The provisions contained herein constitute the complete and exclusive
statement of the terms of this Program. There are no written or oral
representations, promises, statements or commitments, other than those
expressly set forth herein, with respect to benefits provided by this
Program. All reliance by any individual concerning the subject matter
of this Program shall be solely upon the provisions set forth in this
document.
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