Exhibit 10(i)
August 8, 2001
Mr. Thomas J. Usher
600 Grant Street
Suite 6100
Pittsburgh, PA 15219-4776
Dear Tom,
In connection with the separation of the businesses, of the U.S. Steel Group and
Marathon Group pursuant to the Agreement and Plan of Reorganization approved by
the Board of Directors on July 31, 2001 (Separation) and your agreement to serve
as Chairman, Chief Executive Officer and President of United States Steel
Corporation (USSC), Chairman of the Board of Directors of Marathon Oil
Corporation (Marathon) and Chairman of the Board of Managers of Marathon Ashland
Petroleum LLC (MAP), I am authorized to extend to you, on behalf of the
Compensation Committee of USX Corporation (USX), this Completion and Retention
Agreement (Agreement), effective as of the date stated above.
The terms and conditions of our Agreement are as follows.
1. If the Separation occurs, you will receive a salary from USSC of $1,100,000
for each of years 2000 through 2004, subject to adjustment by the Board of
Directors of USSC, or a committee thereof.
2. Subject to the completion of the Separation, you will receive:
(a) a restructuring completion bonus of $6,000,000 payable by Marathon on
the first business day after the effective time of the Separation; and
(b) a retention bonus payable by USSC on the third anniversary of the
effective time of the Separation. This retention bonus is capped at
$3,000,000 and is further subject to the following performance
measures and limitations authorized in (i) and (ii) below.
(i) On the third anniversary of the effective time of the Separation,
(A) the fair value of the aggregate assets of USSC exceeds its
total liabilities, (B) the fair saleable value of the aggregate
assets of USSC exceed its probable liabilities, and (C) USSC is
able to pay and discharge its debts and other liabilities as they
become due. The satisfaction of the forEgoing performance
measures shall be determined solely by the Board of Directors of
USSC, or the Compensation Committee thereof.
(ii) In the event the conditions under 2(b)(i) are satisfied, the
retention bonus of $3,000,000 shall be further subject to the
performance-related vesting criteria applicable to restricted
stock under the USSC 2002 Stock Plan (Plan). Based on a
three-year rolling average of comparator-company performances and
the performance criteria established in Appendix A to the Plan,
the Compensation Committee shall determine the percentage (not to
exceed 100%) to be applied to the $3,000,000 retention bonus.
3. Subject to completion of the Separation in addition to the normal director
fees paid to non-employee directors, you will receive a $25,000 annual fee
from Marathon for serving as Chairman of the Board of Marathon and Chairman
of the MAP Board of Managers.
4. A grant of 90,000 restricted shares of USX-Marathon Group Common Stock with
(a) 30,000 shares subject to vesting on the first anniversary hereof based
on the 2001 performance of USX under the USX Stock Plan as determined by
the Compensation Committee on May 2, 2002, (b) 30,000 shares subject to
vesting in May 2003 based on the 2002 performance of Marathon under the
Marathon Stock Plan as determined by the Marathon Compensation Committee in
May 2003, and (c) 30,000 shares subject to vesting in May 2004 based on the
2003 performance of Marathon under the Marathon Stock Plan as determined by
the Marathon Compensation Committee in May 2004.
5. Subject to the completion of the Separation, a grant of phantom stock
appreciation rights for 500,000 shares of Marathon common stock. The
exercise price of 150,000 shares will be based on the average of the high
and low market price of USX-Marathon Group Stock Common Stock on the last
trading day before the effective time of the Separation, and the exercise
price of 350,000 shares will be based on the average of the high and low
market price of Marathon common stock on the first trading day after the
effective time of the Separation. The effective date of each grant will be
same date as the determination of the exercise price. These stock
appreciation rights will vest on the effective date of the grant and will
expire on the earlier of ten years from the effective date of grant, nine
years following retirement or three years following death while employed.
These rights will be paid in cash upon exercise.
6. Subject to completion of the Separation, if you elect to receive your
non-qualified pension plan as a lump sum distribution, the applicable
interest rate and mortality table in effect for retirements on December 31,
2001 will be used to calculate the amount of such pension instead of the
applicable interest rate and mortality table in effect at the time of your
retirement, which could be greater or less than such rate.
7. Other provisions. The following provisions are further subject to the
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completion of the Separation.
(a) In the event of any merger, consolidation or other business
combination involving USSC which has not been approved by the Board of
Directors of USSC, all benefits payable hereunder shall immediately
become due and payable.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Your
rights hereunder are not assignable. We may assign our rights or a
portion thereof to USSC or to any successor to USSC in a transaction
approved by the Board of Directors of USSC.
(c) Except as otherwise provided herein, in the event of your death prior
to the satisfaction of any benefit payable hereunder, any such benefit
that remains unsatisfied at such date shall immediately become due and
payable, including the vesting of any restricted stock or stock
appreciation rights.
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(d) In the event that you voluntarily leave the employment of USSC on or
before December 31, 2004, the benefits payable under paragraphs 1 and
3 hereof shall be pro-rated based on the elapsed.
(e) You agree that you will dedicate your full attention and efforts to
the management and direction of both Marathon and USSC and that you
will be diligent in acting in the best interests of these
organizations.
(f) We reserve the right to terminate this Agreement for good cause.
Except for your salary set forth in paragraph 1 hereof, it is further understood
that the foregoing benefits are not benefit bearing under any tax-qualified or
non tax-qualified plan of USX, Marathon, USSC or MAP.
Because of your extensive experience and personal qualities, you can make a
unique and valuable contribution to the future of Marathon and USSC. If the
terms and conditions herein are acceptable, please sign below.
Sincerely,
USX CORPORATION
By: /s/ Seth E.Schofield
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Seth E.Schofield
On Behalf of the
Compensation Committee
Of USX Corporation,
predecessor to Marathon
Oil Corporation
Agreed to and Accepted this 8th day of August, 2001.
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/s/ Thomas J. Usher
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Thomas J. Usher
UNITED STATES STEEL LLC, predecessor
to United States Steel Corporation
Agreed to and Acknowledged
By: /s/ E.F. Guna
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Name:E.F. Guna
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Title: Vice President
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Date: August 8, 2001
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