<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
USX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO of USX]
USX Corporation
Notice of Annual Meeting of Stockholders
and Proxy Statement
1999
Marathon Group Common Stock
U. S. Steel Group Common Stock
Tuesday, April 27, 1999
10:00 A.M., Central Daylight Time
Consort Ballroom
The Westin Oaks Hotel
5011 Westheimer Road
Houston, Texas 77056
Please mark, sign and return your proxy card promptly.
<PAGE>
[LOGO of USX]
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
Thomas J. Usher
Chairman, Board of Directors
& Chief Executive Officer
March 8, 1999
Dear USX Stockholder,
We will hold our 1999 annual meeting of stockholders in the Consort Ballroom of
The Westin Oaks Hotel, 5011 Westheimer Road, Houston, Texas, on Tuesday, April
27, 1999 at 10:00 A.M., Central Daylight Time.
We will elect directors and independent accountants at the meeting.
The board of directors has nominated five of our 15 directors for re-election
this year. They are all Class III directors, which means their terms will expire
at the 2002 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.
The stockholders have previously elected all 15 directors.
We hope you will mark, sign and return your proxy card as soon as
possible, whether or not you plan to attend the meeting.
Sincerely,
/s/ Thomas J. Usher
Marathon Group . U. S. Steel Group
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Notice of Annual Meeting of Stockholders........ 4
Proxy Statement................................. 5
Questions and Answers......................... 5
The Board of Directors........................ 7
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
Security Ownership.............................. 18
Executive Compensation and Other Information.... 20
</TABLE>
3
<PAGE>
Notice of Annual Meeting of Stockholders
on April 27, 1999
We will hold our 1999 annual meeting of stockholders in the Consort Ballroom of
The Westin Oaks Hotel, 5011 Westheimer Road, Houston, Texas, 77056 on Tuesday,
April 27, 1999 at 10:00 A.M., Central Daylight Time, in order to:
. elect five Class III directors,
. elect independent accountants for 1999, and
. transact any other business that properly comes before the meeting.
You are entitled to vote at the meeting if you were an owner of record of either
USX-Marathon Group or USX-U. S. Steel Group common stock at the close of
business on February 26, 1999. 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 will suffice.
By order of the Board of Directors,
Dan D. Sandman
Secretary
Dated, March 8, 1999
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
4
<PAGE>
Proxy Statement
We have sent you this proxy statement because the board of directors is asking
you to give your proxy (that is, the authority to vote your shares) to our proxy
committee so they may vote your shares on your behalf at our annual meeting of
stockholders. The members of the proxy committee are our four officer-directors:
Thomas J. Usher, Victor G. Beghini, Paul J. Wilhelm and Robert M. Hernandez.
They will vote your shares as you instruct on your proxy card.
We will hold the meeting on April 27, 1999 in the Consort Ballroom of The Westin
Oaks Hotel, 5011 Westheimer Road, Houston, Texas. 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 1998 annual
reports on or about March 8, 1999.
Questions and Answers
- --------------------------------------------------------------------------------
[ ] Who may vote?
You may vote if you were a holder of either USX-Marathon Group or USX-U. S.
Steel Group common stock at the close of business on February 26, 1999.
[ ] What may I vote on?
You may vote on:
. the election of five nominees to serve as Class III directors and
. the election of PricewaterhouseCoopers LLP as our independent accountants.
[ ] How does the board recommend I vote?
The board recommends that you vote:
. FOR each of the nominees for director and
. FOR the election of PricewaterhouseCoopers LLP as independent accountants for
1999.
[ ] How do I vote?
Indicate how you would like to vote by marking the enclosed proxy card (or, if
you own your shares through a broker or other intermediary, the enclosed voting
instruction card). Then, sign and date the card and return it in the prepaid
envelope. The proxy committee will vote your shares in accordance with your
directions. If you 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:
. sending us a proxy card dated later than your last one,
. notifying the Secretary of USX in writing, or
. voting at the meeting.
[ ] What is the voting relationship between the two classes of stock?
Both classes of USX common stock--USX-Marathon Group Common Stock and USX-U. S.
Steel Group Common Stock--will be voted together as a single class on all
matters voted on at the meeting. Each share of Marathon stock will be entitled
to one vote and each share of U. S. Steel stock will be entitled to 1.144 votes.
We calculated the number of votes to which a share of U. S. Steel stock is
entitled by using a formula described in USX's Restated Certificate
5
<PAGE>
of Incorporation. It is based on the ratio of the market value of one share of
U. S. Steel stock to one share of Marathon stock over the 20 business-day period
ending on February 19, 1999.
[ ] How many outstanding shares are there?
At the close of business on February 26, 1999, which is the record date for the
meeting, there were 308,495,569 shares of Marathon stock (representing
308,495,569 votes) and 88,336,271 shares of U. S. Steel stock (representing
101,056,694 votes) outstanding.
[ ] How big a vote do the proposals need in order to be adopted?
Directors are elected by a plurality of the votes of the shares present in
person at the meeting or represented by proxy and entitled to vote; that is,
those receiving the most votes are elected, even with less than a majority.
Independent accountants are elected by a majority of the votes of the shares
present in person at the meeting or represented by proxy and entitled to vote.
Abstentions are counted as votes present and entitled to vote and have the same
effect as votes against a proposal. Broker non-votes are not counted as either
votes for or votes against a proposal. Both abstentions and broker non-votes are
counted in determining that a quorum is present for the meeting.
[ ] What are broker non-votes?
The New York Stock Exchange permits brokers to vote their customers' shares on
routine matters when the brokers have not received voting instructions from
their customers. The election of directors and the election of independent
accountants are examples of routine matters on which brokers may vote in this
way. Brokers may not vote their customers' shares on non-routine matters such as
mergers and contested proposals unless they have received voting instructions
from their customers. Non-voted shares on non-routine matters are broker non-
votes.
[ ] What constitutes a quorum?
Under our by-laws, a quorum is one-third of the voting power of the outstanding
shares of stock entitled to vote.
[ ] Will my vote be confidential?
Yes. All executed proxy cards and ballots which identify stockholders are kept
permanently confidential except as necessary to meet legal requirements and in
other limited circumstances such as proxy contests. The vote tabulators, who are
USX employees, and the inspector of election, who is independent, are required
to execute confidentiality agreements.
[ ] How will voting be conducted on other matters raised at the meeting?
If any matters are presented at the meeting other than the proposals on the
proxy card, the proxy committee will vote on them using their best judgment.
Your signed proxy card 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 at least 60 days, but not
more than 90 days, before the meeting, 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 2000 annual meeting?
The deadline for submitting shareholder proposals for inclusion in our 2000
proxy statement is November 9, 1999. Shareholder proposals submitted outside the
process for inclusion in the proxy statement must be received from stockholders
of record on or after December 24, 1999 and no later than January 23, 2000 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
Under our by-laws and the laws of Delaware, USX's state of incorporation, the
business and affairs of USX are managed under the direction of the board of
directors. The board met eight times in 1998. The directors spend considerable
time preparing for board and committee meetings, and they attend as many
meetings as possible. In 1998, their attendance averaged 97 percent. The board
has five principal committees, all the members of which are non-employee
directors. The table below shows the committee memberships of each director and
the number of meetings that each committee held in 1998.
Board Committee
Memberships
<TABLE>
<CAPTION>
Organization
and Corporate
Audit Compensation Governance Public Policy Committee on
Director Committee Committee Committee Committee Financial Policy
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neil A. Armstrong X* X X
Jeanette G. Brown X X X
- ------------------------------------------------------------------------------------------------------------------------
Charles A. Corry X X X
Charles R. Lee X X X*
- ------------------------------------------------------------------------------------------------------------------------
Paul E. Lego X X X*
Ray Marshall X X X
- ------------------------------------------------------------------------------------------------------------------------
John F. McGillicuddy X X* X
John M. Richman X X X
- ------------------------------------------------------------------------------------------------------------------------
Seth E. Schofield X X X
John W. Snow X X X
Douglas C. Yearley X X* X
- ------------------------------------------------------------------------------------------------------------------------
Number of Meetings
in 1998 6 5 3 4 4
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Chairman
- --------------------------------------------------------------------------------
Audit Committee
The Audit Committee is responsible for:
. ensuring the integrity of our financial reports,
. determining that appropriate controls are in place to ensure that we operate
in accordance with our procedures and codes of conduct,
. providing direction to the internal audit staff and the independent
accountants,
. recommending to the board the independent accountants to be nominated for
election by the stockholders,
. reviewing the independence of the independent accountants,
. approving the scope of the annual audit activities of the independent
accountants and our internal auditors,
. approving the independent accountants' audit fee,
. reviewing audit results,
. reviewing and approving the Annual Report on Form 10-K filed with the
Securities and Exchange Commission, and
. reviewing:
-- matters pertaining to potentially divergent interests, if any, between the
two classes of common stock,
-- our policies and practices with respect to the two business groups,
-- the allocation of charges and credits between the two business groups, and
-- the board's performance of its fiduciary duties to both classes of
stockholders.
7
<PAGE>
Compensation
Committee
The Compensation Committee is responsible for:
. making recommendations to the board on all matters of policy and procedures
relating to executive compensation,
. approving the salaries of officers (other than the officer-directors, whose
salaries are approved by the board),
. administering the Annual Incentive Compensation Plan and the Senior Executive
Officer Annual Incentive Compensation Plan, and
. administering the plans under which long-term incentives are granted and
approving grants of options, stock appreciation rights and restricted stock
under those plans.
The committee is also authorized to:
. adopt and amend employee benefit plans,
. review the activities of United States Steel and Carnegie Pension Fund as
administrator of certain benefit plans, and
. make recommendations to the board concerning policy matters relating to
employee benefits.
- --------------------------------------------------------------------------------
Organization and
Corporate Governance
Committee
The Organization and Corporate Governance Committee:
. makes recommendations to the board concerning the appropriate size and
composition of the board, including
-- candidates for election as directors,
-- the composition and functions of board committees,
-- the compensation of non-employee directors, and
-- all matters relating to the development and effective functioning of the
board,
. confers with management concerning plans for succession to executive
management positions,
. assesses and makes recommendations concerning overall corporate governance to
the extent specific matters are not the assigned responsibility of other
board committees, and
. considers nominees recommended by stockholders for election as directors.
In recommending candidates for election as directors, the committee, among other
considerations, studies the composition of the board and tries to identify
candidates with broad knowledge and experience in business and society in
general. Recommendations of candidates by stockholders of record should be sent,
together with the nominee's qualifications and consent to be considered as a
nominee, to the Secretary of USX for presentation to the committee.
8
<PAGE>
Public Policy
Committee
The Public Policy Committee reviews and makes recommendations to the board
concerning corporate policy related to:
. community and governmental relations,
. codes of conduct,
. environmental, safety and health matters,
. investor relations,
. trade matters, and
. other broad social, political and public issues.
- --------------------------------------------------------------------------------
Committee on
Financial Policy
The Committee on Financial Policy provides oversight with respect to the
appropriate capital structure and financial policies of USX. Its key
responsibility in that role is to make recommendations to the board concerning
dividends. The board has also delegated to the committee the authority to:
. approve financings by USX (except financings which involve the issuance of
common stock), including the recommendation of action to subsidiaries,
partnerships and joint ventures,
. authorize loans to outside entities, guarantees by USX of the credit of
others, and other uses of USX credit, and
. approve USX's funding policy for its pension and other post-employment
benefit plans.
In addition, the committee is responsible for reviewing the performance of
United States Steel and Carnegie Pension Fund as investment manager and/or
trustee of our employee benefit plans. It also receives reports and makes
recommendations to the board on various financial matters.
9
<PAGE>
Compensation of Directors
Our by-laws require that each non-employee director be paid allowances and
attendance fees as the board may from time to time determine. Directors who are
employees of USX receive no compensation for their service on the board. We pay
our non-employee directors as follows:
<TABLE>
<S> <C>
Annual Retainer $60,000
Committee Membership Fee $ 5,000 ($6,000 for committee chairman)
Meeting Fee (for each board or committee meeting) $ 1,600
- ------------------------------------------------------------------------------------------
</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 or
cash. Each of our directors has elected to defer at least half of his or her
retainer in the form of Common Stock Units, and some have deferred their entire
retainers in this way. All new directors will be required to defer at least half
of their retainers as Common Stock Units. A Common Stock Unit is what is
sometimes referred to as "phantom stock" because initially no stock is actually
issued. Instead, we keep a book entry account for each director that shows how
many Common Stock Units he or she has. Then, when a director leaves the board,
he or she must take actual shares of common stock corresponding to the number of
Common Stock Units in his or her account. We believe this is an effective way to
increase the directors' equity holdings in USX and thereby further align their
interest with that of the stockholders.
Every January, we credit each non-employee director's deferred stock account
with both Marathon Common Stock Units and U. S. Steel Common Stock Units in the
same ratio that the outstanding shares of each class of stock on a fully diluted
basis had to each other on the last trading day of the previous year. "Fully
diluted" means that we assume the exercise of all currently outstanding stock
options and the conversion to common stock of all convertible securities if the
exercise or conversion would result in lower earnings per share. The ongoing
value of each Common Stock Unit equals the market price of the corresponding
class of stock (Marathon or U. S. Steel). When dividends are paid on the common
stock, we credit each account with equivalent amounts in additional Common Stock
Units.
Directors may also defer portions of their annual retainers in the form of cash,
which may be invested in certain investment options. When a director leaves the
board, he or she receives the deferred cash either in a lump sum or in
installments over ten years.
If USX were to undergo a change in control resulting in the removal of a non-
employee director from the board, that director would receive a cash payment
equal to the value of his or her deferred stock and deferred cash accounts.
Under our Non-Employee Director Stock Plan, each non-employee director may
receive a grant of up to 500 shares of each class of common stock. In order to
qualify, a director must first purchase an equivalent number of shares in the
open market during the 60 days following his or her initial election to the
board. The shares granted under this plan may not be sold until the director
leaves the board.
Our retirement policy for directors requires non-employee directors to retire at
the end of the month in which they turn 72, even if their terms have not
expired. Employee directors must retire from the board when they retire as
employees, except that the chief executive officer may remain on the board, at
the board's request, through the month in which he or she turns 70. Our policy
also provides that directors who undergo a significant change in their business
or professional careers should volunteer to resign from the board.
10
<PAGE>
Proposals of the Board
The board will present the following proposals at the meeting:
Proposal No. 1
Election of Directors
USX's Certificate of Incorporation divides the directors into three classes:
Class I, Class II and Class III. Each class must consist, as nearly as possible,
of one-third of the directors. Once elected, directors serve for a term of three
years and until their successors are duly elected and qualified. At each annual
meeting, directors who are elected to succeed directors whose terms have expired
are identified as being of the same class as those they succeed. A director
elected to fill a vacancy is elected to the same class as the director he or she
succeeds, and a director elected to fill a newly created directorship holds
office until the next election of the class to which he or she is elected.
Our by-laws require the board to fix the number of directors, and the board has
set the maximum number of directors at 16. The current five Class III directors
are nominees for election this year for a three-year term that will expire at
the 2002 annual meeting. All five of them, and all ten of the continuing Class I
and Class II directors, have previously been elected by the stockholders. Of the
15 current directors, four are officers of USX, one is a retired officer of USX,
seven have top executive experience with a wide variety of businesses, one was
with the National Aeronautics and Space Administration and served as a
university professor before entering business, one had a career as a
distinguished chemist before becoming an educator, and one has a distinguished
career in education in addition to service as a member of the President's
Cabinet. 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 III Director
Terms Expire 2002
[PHOTO APPEARS HERE]
Jeanette G. Brown Director since 1993 Age 70
- --------------------------------------------------------------------------------
Retired Director of Corporate Research, BP America
Dr. Brown graduated from Ohio University in 1950 with a BS degree and received
an MS degree from Western Reserve University in 1958. She holds eight D.Sc.
(hon.) degrees. Dr. Brown completed the Executive Management School, University
of California, Berkeley. From 1950 to 1988 she was employed by BP America
(formerly The Standard Oil Company) in various research positions. She retired
as Director of Corporate Research, Environmental and Analytical Sciences. She is
a director of AGA Gas, Inc. and The BF Goodrich Company. Dr. Brown is a trustee
of the Ohio University Foundation and was Distinguished Visiting Professor and
Director, Research Enhancement there from 1989-1995. She was appointed to the
Ohio Boards of Regents in 1995, and is Chair of the Board of Trustees of The
Cleveland Scholarship Programs, Inc. and a trustee of the Cleveland Orchestra.
She also serves on the White House Joint High Level Advisory Panel on US/Japan
Science and Technology Agreements.
[PHOTO APPEARS HERE]
Charles A. Corry Director since 1988 Age 67
- --------------------------------------------------------------------------------
Retired Chairman of the Board & Chief Executive Officer, USX Corporation
Mr. Corry graduated from the University of Cincinnati in 1955 with a BA degree
and received a JD degree from the University of Cincinnati Law School. After
serving in the U.S. Air Force, he joined USX in 1959, holding various finance
and accounting positions prior to being named Vice President-Corporate Planning
in 1979. Mr. Corry was elected Senior Vice President and Comptroller in 1982 and
President of the U. S. Diversified Group of USX in 1987. He was elected
President of USX in 1988 and elected Chairman of the Board & Chief Executive
Officer in 1989, the position he held until his retirement on June 30, 1995. Mr.
Corry serves as Chairman of the Executive Committee of the Board. He is a
director of GenCorp, Inc. and Mellon Bank Corporation, a member of the Federal
Judicial Nominating Commission and a member of The Business Council.
[PHOTO APPEARS HERE]
Paul E. Lego Director since 1988 Age 68
- --------------------------------------------------------------------------------
Retired Chairman, 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 Consolidated Natural Gas
Company, Lincoln Electric Company, Orlimar Golf Company and PNC Bank Realty
Holding Company; a trustee of the University of Pittsburgh; and a member of The
Business Council.
12
<PAGE>
[PHOTO APPEARS HERE]
Seth E. Schofield Director since 1994 Age 59
- --------------------------------------------------------------------------------
Retired Chairman and Chief Executive Officer, USAir Group
Mr. Schofield graduated from the Harvard Business School Program for Management
Development in 1975. He served in various corporate staff positions after
joining USAir in 1957 and became Executive Vice President-Operations in 1981.
Mr. Schofield served as President and Chief Operating Officer from 1990 until
1991. He was elected President and Chief Executive Officer in 1991 and became
Chairman of the boards of USAir Group and USAir, Inc. in 1992. He retired in
January 1996. Mr. Schofield is a director of Calgon Carbon Corp.
[PHOTO APPEARS HERE]
Douglas C. Yearley Director since 1992 Age 63
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer, Phelps Dodge Corporation
(a major international mining and manufacturing concern)
Mr. Yearley graduated from Cornell University with a Bachelor's degree in
metallurgical engineering and attended the Program for Management Development at
Harvard Business School. He joined Phelps Dodge in 1960 as Director of Research.
He held several key positions before being elected Executive Vice President and
a director in 1987. Mr. Yearley was elected Chairman and Chief Executive Officer
in 1989 and President in 1991. He is a director of Lockheed Martin Corporation,
J. P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company, and Southern
Peru Copper Corporation; a member of The Business Roundtable; director of the
International Copper Association; Chairman of the National Mining Association
Board; director of the Copper Development Association; member of The Business
Council and director of the Phoenix Symphony Orchestra.
13
<PAGE>
Continuing Class I Directors
Terms Expire 2000
[PHOTO APPEARS HERE]
Neil A. Armstrong Director since 1984 Age: 68
- --------------------------------------------------------------------------------
Chairman, AIL Systems Inc. (defense electronics company)
Mr. Armstrong received a BS degree in aeronautical engineering from Purdue
University and an MS degree in aerospace engineering from the University of
Southern California. For 17 years he served with the National Aeronautics and
Space Administration and its predecessor agency as engineer, test pilot,
astronaut and administrator. From 1971 to 1979 he was professor of aerospace
engineering at the University of Cincinnati. In 1982 he became Chairman of CTA,
Inc. and retired from that position in 1992. He has served as Chairman of AIL
Systems Inc. since June 1989. He is a director of Cinergy Corp., Milacron Inc.,
Cordant Corporation and RTI International Metals, Inc. and is a member of the
National Academy of Engineering.
[PHOTO APPEARS HERE]
Robert M. Hernandez Director since 1991 Age 54
- --------------------------------------------------------------------------------
Vice Chairman & Chief Financial Officer, USX Corporation
Mr. Hernandez graduated from the University of Pittsburgh with a Bachelor's
degree in economics and mathematics and received an MBA from the Wharton
Graduate School of Finance and Commerce at the University of Pennsylvania. He
joined USX in 1968 and held various finance and accounting positions until 1980
when he was appointed Assistant Corporate Comptroller. He was elected Vice
President and Treasurer in 1984 and Senior Vice President and Comptroller in
1987. In 1989, he was appointed President of the U. S. Diversified Group and in
1990 elected Senior Vice President-Finance & Treasurer. He was elected director
and Executive Vice President-Accounting & Finance & Chief Financial Officer in
1991 and Vice Chairman & Chief Financial Officer in 1994. Mr. Hernandez is a
director and Chairman of RTI International Metals, Inc.; a director of Marinette
Marine Corporation and Transtar, Inc., and a director and Chairman of the
Executive Committee of ACE Limited; a trustee of BlackRock Funds; a member of
the boards of trustees of the Allegheny University Hospitals--West and of
Allegheny General Hospital; a director of the Pennsylvania Chamber of Business
and Industry; and a member of the Pennsylvania Business Roundtable.
[PHOTO APPEARS HERE]
John F. McGillicuddy Director since 1984 Age 68
- --------------------------------------------------------------------------------
Retired Chairman of the Board, Chemical Banking Corporation
Mr. McGillicuddy graduated from Princeton University in 1952 and received an LLB
degree from Harvard Law School in 1955. He joined Manufacturers Hanover Trust
Company in 1958, became Vice President in 1962, Senior Vice President in 1966
and Executive Vice President and Assistant to the Chairman in 1969. In 1970 he
was elected Vice Chairman and a director of Manufacturers Hanover Corporation
and Manufacturers Hanover Trust Company and 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 Southern Peru Copper Corporation,
Young & Rubicam Inc. and UAL Corporation. He is a member of The Business Council
and a trustee emeritus of Princeton University.
14
<PAGE>
[PHOTO APPEARS HERE]
John M. Richman Director since 1985 Age: 71
- --------------------------------------------------------------------------------
Counsel for Wachtell, Lipton, Rosen & Katz (law firm)
Mr. Richman is a graduate of Yale University and Harvard Law School. He joined
the Kraft, Inc. law department in 1954 and became General Counsel of the
Sealtest Foods Division in 1963. He was named General Counsel of the corporation
in 1970, Senior Vice President in 1973 and was elected Deputy Chairman and a
director in 1979. In 1979 he became Chairman and Chief Executive Officer. In
1980 he was elected Chairman of Dart & Kraft, Inc. which was renamed Kraft, Inc.
in 1986. In 1988, following the merger of Kraft, Inc. and Philip Morris
Companies Inc., he was elected a director and Vice Chairman of the Board of
Philip Morris Companies Inc. He ceased being a Vice Chairman of the Board in
1989 and a director in 1994. Mr. Richman became Acting Chairman & Chief
Executive Officer of R. R. Donnelley & Sons Company in 1996 and retired from
that position in 1997. He is a director of Stream International, Inc., Archstone
Communities Trust and the Evanston Hospital Corporation; a trustee of
Northwestern University, the Johnson Foundation and the Chicago Symphony
Orchestra; and a member of The Business Council.
[PHOTO APPEARS HERE]
John W. Snow Director since 1995 Age 59
- --------------------------------------------------------------------------------
Chairman, President and Chief Executive Officer, CSX Corporation
(a major transportation company)
Mr. Snow did undergraduate work at Kenyon College and the University of Toledo,
received a Ph.D. in economics from the University of Virginia and earned a law
degree from George Washington University Law School. Following an academic
career as an economics and law professor and several high-level presidential
appointments with the U.S. Department of Transportation and the National Highway
Traffic Safety Administration, Mr. Snow joined CSX in 1977 as Vice President-
Government Affairs for Chessie System Inc. After a number of other senior
management assignments, he was elected President and Chief Operating Officer of
CSX in 1988, President and Chief Executive Officer in 1989 and Chairman,
President and Chief Executive Officer in 1991. Mr. Snow is a director of Circuit
City Stores, Inc., GTE Corporation and Johnson & Johnson. He is also a member of
the board of the Association of American Railroads, a member of the boards of
trustees of The Johns Hopkins University and of the University of Virginia
Darden School Foundation; and a member of the Policy Committee of the Business
Roundtable, of the Executive Committee of The Business Council and of the U.S.-
Japan Business Council.
15
<PAGE>
Continuing Class II Directors
Terms Expire 2001
[PHOTO APPEARS HERE]
Victor G. Beghini Director since 1990 Age 64
- --------------------------------------------------------------------------------
Vice Chairman-Marathon Group, USX Corporation
Mr. Beghini graduated from Pennsylvania State University with a BS degree in
petroleum engineering. He joined Marathon in 1956 and served in various
positions throughout the United States until being elected Vice President,
Supply & Transportation in early 1978 and a director of Marathon later that
year. He was elected President of Marathon Petroleum Company in January 1984,
Senior Vice President, Domestic Exploration and Production for Marathon Oil
Company in 1985 and Senior Vice President, Worldwide Production in 1986. Mr.
Beghini was elected President of Marathon Oil Company in 1987. He was elected
Vice Chairman-Energy and a director of USX in June 1990 and Vice Chairman-
Marathon Group in May 1991. He is a director of Baker Atlas Inc., Pitt-Des
Moines, Inc. and the American Petroleum Institute; and a member of the National
Petroleum Council.
[PHOTO APPEARS HERE]
Charles R. Lee Director since 1991 Age 59
- --------------------------------------------------------------------------------
Chairman of the Board and Chief Executive Officer, GTE Corporation
(telecommunications 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 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
elected to his present position in May 1992. Mr. Lee is a director of The
Procter & Gamble Company, the Stamford Hospital Foundation, the New American
Schools Development Corporation and United Technologies 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 member of the Harvard Business School's Board of Directors of the
Associates and a trustee of Cornell University.
[PHOTO APPEARS HERE]
Ray Marshall Director since 1994 Age 70
- --------------------------------------------------------------------------------
Professor, University of Texas
Dr. Marshall graduated from Millsaps College in 1949 with a BA degree and
received an MA in economics from the Louisiana State University in 1950 and a
Ph.D. in economics from the University of California at Berkeley in 1954. From
1962 to 1967, Dr. Marshall was a professor of economics at the University of
Texas at Austin. He was Chairman of the Department of Economics and held the
chair of Alumni Professor of Economics at the University of Kentucky from 1967
to 1969. He returned to the University of Texas as Chairman of the Department of
Economics and Director of the Center for the Study of Human Resources in 1969.
In 1977 Dr. Marshall became the U.S. Secretary of Labor under the Carter
Administration. Dr. Marshall currently holds the Audre and Bernard Rapoport
Centennial Chair in Economics and Public Affairs at the University of Texas at
Austin.
16
<PAGE>
[PHOTO APPEARS HERE]
Thomas J. Usher Director since 1991 Age: 56
- --------------------------------------------------------------------------------
Chairman of the Board & Chief Executive Officer, USX Corporation
Mr. Usher graduated from the University of Pittsburgh with a BS degree in
industrial engineering, an MS degree in operations research and a Ph.D. in
systems engineering. He joined USX in 1965 and held various positions in
industrial engineering. From 1975 through 1979, he held a number of management
positions at USX's South and Gary Works. He was elected Executive Vice
President-Heavy Products in 1986, President-U. S. Steel Group and director of
USX in 1991, President & Chief Operating Officer of USX in 1994 and Chairman of
the Board & Chief Executive Officer effective July 1, 1995. He is a director of
PNC Bank, N.A., PPG Industries, Inc., Transtar, Inc., and the U.S.-Japan
Business Council; Chairman of the International Iron and Steel Institute; a
member of the Policy Committee of the Business Roundtable; Director and Chairman
of the U.S.-Korea Business Council; and a member of the Board of Trustees of the
University of Pittsburgh and of the Board of the Extra Mile Education
Foundation.
[PHOTO APPEARS HERE]
Paul J. Wilhelm Director since 1995 Age 57
- --------------------------------------------------------------------------------
President-U. S. Steel Group, USX Corporation
Mr. Wilhelm received a BS degree in mechanical engineering from Carnegie-Mellon
University in 1964 and joined USX following graduation. After holding a number
of management positions, Mr. Wilhelm in 1992 was elected Vice President-
Technology & Management Services for the U. S. Steel Group. In 1993 he was named
President of USS/Kobe Steel Company, a joint venture between subsidiaries of USX
and Kobe Steel Ltd. Mr. Wilhelm was elected Vice President-Operations of the U.
S. Steel Group in 1994, President-U. S. Steel Group the same year, and director
of USX in 1995. He is a director of Union Carbide Corporation, a member of the
Association of Iron and Steel Engineers, Chairman of the American Iron and Steel
Institute, Chairman of the Japan-America Society of Pennsylvania and a member of
the Board of Trustees of Carnegie Mellon University.
- --------------------------------------------------------------------------------
Proposal No. 2
Election Of Independent Accountants
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") has served as independent
accountants of USX for many years. We believe that their knowledge of USX's
business and its organization gained through this period of service is very
valuable. In accordance with the established policy of the firm, partners and
employees of PricewaterhouseCoopers assigned to the USX engagement are
periodically rotated, thus giving USX the benefit of new thinking and approaches
in the audit area. We expect representatives of PricewaterhouseCoopers to be
present at the meeting with an opportunity to make a statement if they desire to
do so and to be available to respond to appropriate questions.
For the year 1998, PricewaterhouseCoopers performed professional services
principally in connection with audits of the consolidated financial statements
of USX and the financial statements of the Marathon Group and the U. S. Steel
Group, certain subsidiaries and certain pension and other employee benefit
plans. They also reviewed quarterly reports and other filings with the
Securities and Exchange Commission and other agencies.
17
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table furnishes information concerning all persons known to USX to
beneficially own 5% or more of any class of the voting stock of USX:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
Class of Beneficial Owner Beneficial Ownership Class
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Marathon Stock Wellington Management Company, LLP 34,604,244/(1)/ 11.25/(1)/
75 State Street
Boston, MA 02109
Marathon Stock FMR Corp., Edward C. Johnson 3d and
Abigail P. Johnson 30,989,563/(2)/ 10.074/(2)/
82 Devonshire Street
Boston, MA 02109
Steel Stock Princeton Services, Inc. 8,958,288/(3)/ 10.1/(3)/
800 Scudders Mill Road
Plainsboro, NJ 08536
Includes:
Merrill Lynch Asset Management, L.P. 5,958,288/(3)/ 6.7/(3)/
800 Scudders Mill Road
Plainsboro, NJ 08536
Steel Stock The Prudential Insurance
Company of America 6,019,456/(4)/ 6.91/(4)/
751 Broad Street
Newark, NJ 07102
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on Schedule 13G dated December 31, 1998 which indicates that
Wellington Management Company LLP had sole voting power over no shares,
shared voting power over 7,989,094 shares, sole dispositive power over no
shares and shared dispositive power over 34,604,244 shares.
(2) Based on Schedule 13G dated February 1, 1999 which indicates that FMR Corp.
had sole voting power over 6,350,813 shares, shared voting power over no
shares, sole dispositive power over 30,989,563 shares and shared dispositive
power over no shares. According to such Schedule 13G, Fidelity Management &
Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., is
the beneficial owner of 23,251,250 shares; Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity and the various investment companies to
which Fidelity acts as investment adviser (the "Funds"), each has sole power
to dispose of the 23,251,250 shares owned by the Funds; neither FMR Corp.,
nor Edward C. Johnson 3d has the sole power to vote or direct the voting of
the shares held by the Funds; Fidelity Management Trust Company, a wholly-
owned subsidiary of FMR Corp., is the beneficial owner of 5,542,121 shares;
Edward C. Johnson 3d and FMR Corp. through its control of Fidelity
Management Trust Company, each has sole dispositive power over 5,542,121
shares and sole power to vote or to direct the voting of 4,375,621 shares
and no power to vote or to direct the voting of 1,166,500 shares; Fidelity
International Limited ("FIL"), once a majority-owned subsidiary of Fidelity
but now operating as an independent entity, is the beneficial owner of
2,196,192 shares; and FIL has sole dispositive power over 2,196,192 shares
owned by various international funds for which it acts as an investment
advisor, sole power to vote or direct the voting of 1,975,192 such shares,
and no power to vote or direct the voting of 221,000 such shares. FMR Corp.
and FIL are of the view that they are not acting as a "group" for purposes
of Section 13(d) of the Securities Exchange Act of 1934.
(3) Based on Schedule 13G dated January 8, 1999 which indicates that Princeton
Services, Inc. had sole voting power over no shares, shared voting power
over 8,958,288 shares, sole dispositive power over no shares and shared
dispositive power over 8,958,288 shares; and that Merrill Lynch Asset
Management, L.P. had sole voting power over no shares, shared voting power
over 5,958,288 shares, sole dispositive power over no shares and shared
dispositive power over 5,958,288 shares.
(4) Based on Schedule 13G dated January 28, 1999 which indicates that The
Prudential Insurance Company of America had sole voting power over 492,773
shares, shared voting power over 4,988,860 shares, sole dispositive power
over 492,773 shares and shared dispositive power over 5,271,760 shares.
Included in the total number of shares are 235,800 convertible preferred
shares which are convertible into Steel Stock at a ratio of 1.0811 Steel
Stock share for each preferred share.
18
<PAGE>
Security Ownership of Directors
and Executive Officers
The following table sets forth the number of shares of each class of USX common
stock beneficially owned as of January 31, 1999 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, 1999, any equity securities of USX other than those
shown.
<TABLE>
<CAPTION>
Marathon Stock Steel Stock
Name Shares Shares
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Neil A. Armstrong/(1)/.......................................... 11,459 3,814
Victor G. Beghini/(2)(3)/....................................... 601,330 138,105
Jeanette G. Brown/(1)/.......................................... 5,367 2,544
Charles A. Corry/(1)(2)(3)/..................................... 61,921 80,704
Robert M. Hernandez/(2)(3)(4)/.................................. 367,034 145,948
Charles R. Lee/(1)/............................................. 9,482 3,892
Paul E. Lego/(1)/............................................... 8,619 2,832
Ray Marshall/(1)/............................................... 4,911 2,482
John F. McGillicuddy/(1)/....................................... 10,790 3,529
John M. Richman/(1)/............................................ 12,006 4,030
Dan D. Sandman/(2)(3)/.......................................... 97,343 67,143
Seth E. Schofield/(1)/.......................................... 3,473 1,923
John W. Snow/(1)/............................................... 2,921 1,704
Thomas J. Usher/(2)(3)/......................................... 511,544 386,285
Paul J. Wilhelm/(2)(3)/......................................... 75,495 142,617
Douglas C. Yearley/(1)/......................................... 6,016 2,796
All Directors and Executive Officers as a group................. 2,758,462 1,630,461
(37 persons)/(1)(2)(3)(5)/
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes Common Stock Units credited under the USX Corporation Deferred
Compensation Plan for Non-Employee Directors as follows:
<TABLE>
<CAPTION>
Marathon Stock Steel Stock
Common Stock Units Common Stock Units
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Neil A. Armstrong................................... 9,959 3,514
Jeanette G. Brown................................... 4,310 1,478
Charles A. Corry.................................... 1,921 704
Charles R. Lee...................................... 7,482 2,693
Paul E. Lego........................................ 7,063 2,519
Ray Marshall........................................ 3,843 1,408
John F. McGillicuddy................................ 8,790 3,129
John M. Richman..................................... 10,307 3,690
Seth E. Schofield................................... 2,400 845
John W. Snow........................................ 1,921 704
Douglas C. Yearley.................................. 5,017 1,797
- -------------------------------------------------------------------------------------------------
</TABLE>
(2) Includes shares held under the USX Savings Fund Plan, the Marathon Thrift
Plan, the USX Dividend Reinvestment and Stock Purchase Plans, the 1986 Stock
Option Incentive Plan and the 1990 Stock Plan.
(3) Includes shares which may be acquired upon exercise of outstanding options
as follows: Mr. Usher: Marathon Stock 458,000, Steel Stock 353,000; Mr.
Corry: Marathon Stock 60,000, Steel Stock 80,000; Mr. Beghini: Marathon
Stock 481,250, Steel Stock 112,750; Mr. Wilhelm: Marathon Stock 64,000,
Steel Stock 123,750; Mr. Hernandez: Marathon Stock 322,450, Steel Stock
122,500; Mr. Sandman: Marathon Stock 71,400, Steel Stock 58,325; and all
directors and executive officers as a group: Marathon Stock 2,146,610, Steel
Stock 1,381,760.
(4) As of January 31, 1999 United States Steel and Carnegie Pension Fund,
trustee of the United States Steel Corporation Plan for Employee Pension
Benefits and the United States Steel Corporation Plan for Non-Union Employee
Pension Benefits, owned 587,680 shares of Marathon Stock. This stock was
received in exchange for common stock of Texas Oil & Gas Corp. Mr. Hernandez
is chairman and one of seven members of the Investment Committee of the
trustee. The board of directors of the trustee has by formal resolution
delegated sole power to vote and dispose of such stock to a subcommittee of
the Investment Committee which is composed of members who are not officers
or employees of USX. Mr. Hernandez disclaims beneficial ownership of such
stock.
(5) Total shares beneficially owned in each case constitute less than one
percent of the outstanding shares of each class.
19
<PAGE>
Executive Compensation and Other Information
The following table sets forth certain information concerning the compensation
awarded to, earned by or paid to the chief executive officer and the other four
most highly compensated executive officers of USX for services rendered in all
capacities during 1998, 1997 and 1996:
Summary Compensation Table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation/(4)/
------------------------------------------------ ----------------------
Name Salary and Other Restricted All
and Bonus Annual Stock Options/ Other
Principal Salary Bonus Total Compensation Award(s) SARs Compensation
Position Year ($) ($) ($) ($) ($)/(1)/ (#)/(2)/ ($)/(3)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. J. Usher 1998 1,097,917 1,320,000 2,417,917 11,549 354,840 270,000 126,805
Chairman 1997 981,250 1,420,000 2,401,250 16,820 89,199 200,000 136,079
& Chief 1996 833,333 1,200,000 2,033,333 21,178 57,879 160,000 77,956
Executive Officer
- --------------------------------------------------------------------------------------------------------------------------
V. G. Beghini 1998 775,000 900,000 1,675,000 0 0 120,000 123,543
Vice Chairman- 1997 723,333 1,050,000 1,773,333 0 0 90,000 116,084
Marathon Group 1996 692,500 850,000 1,542,500 0 20,578 80,000 41,475
and President-
Marathon Oil
Company
- --------------------------------------------------------------------------------------------------------------------------
P. J. Wilhelm 1998 535,833 600,000 1,135,833 8,426 217,817 100,000 49,593
President- 1997 407,500 611,000 1,018,500 7,874 30,599 75,000 47,698
U. S. Steel Group 1996 358,333 537,000 895,333 2,457 28,590 65,000 30,977
- --------------------------------------------------------------------------------------------------------------------------
R. M. Hernandez 1998 542,500 650,000 1,192,500 7,876 53,841 100,000 58,180
Vice Chairman 1997 522,500 750,000 1,272,500 6,954 29,733 75,000 62,434
& Chief 1996 495,000 650,000 1,145,000 5,568 19,297 65,000 49,213
Financial Officer
- --------------------------------------------------------------------------------------------------------------------------
D. D. Sandman 1998 397,917 450,000 847,917 4,852 66,079 56,000 46,196
General Counsel, 1997 354,583 530,000 884,583 2,986 21,812 40,000 39,077
Secretary and 1996 323,083 450,000 773,083 1,606 33,700 35,000 27,392
Senior Vice
President-Human
Resources &
Public Affairs
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Grants of restricted stock under the USX 1990 Stock Plan. Grants are subject
to conditions including continued employment and achievement of business
performance standards. Dividends are paid on restricted stock. Shown below
is the vesting schedule for restricted stock scheduled to vest less than
three years from the date of grant, together with the number and value, as
of December 31, 1998, of the aggregate holdings of restricted stock for each
of the executive officers named in the Summary Compensation Table. Vesting
shown assumes achievement of business performance at peer-group standard (as
described in the Compensation Committee Report on page 25).
20
<PAGE>
<TABLE>
<CAPTION>
Unvested Restricted Shares
Vesting Schedule Aggregate Holdings
----------------------------------------------------- -----------------------------------------------
Value as of
Class of May 1999 May 2000 Class of December 31, 1998
Date Granted Stock (Shares) (Shares) Stock Shares ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. J. Usher May 26, 1998 Marathon -- 6,500 Marathon 19,500 575,860
Steel -- 3,590 Steel 10,500 241,500
----------------
817,360
- ----------------------------------------------------------------------------------------------------------------------------------
V. G. Beghini -- -- -- -- Marathon 6,916 204,238
-- -- -- -- Steel 3,724 85,652
----------------
289,890
- ----------------------------------------------------------------------------------------------------------------------------------
P. J. Wilhelm May 27, 1997 Marathon 320 -- Marathon 3,500 103,360
Steel 650 -- Steel 6,500 149,500
----------------
May 26, 1998 Marathon 380 1,750 252,860
Steel 650 3,250
- ----------------------------------------------------------------------------------------------------------------------------------
R. M. Hernandez May 26, 1998 Marathon -- 975 Marathon 6,500 191,953
Steel -- 555 Steel 3,500 80,500
----------------
272,453
- ----------------------------------------------------------------------------------------------------------------------------------
D. D. Sandman May 26, 1998 Marathon -- 1,222 Marathon 5,200 153,563
Steel -- 658 Steel 2,800 64,400
----------------
217,963
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) All option shares listed were granted with tandem stock appreciation rights
("SARs").
(3) This column includes amounts contributed by USX under the USX Savings Fund
Plan or the Marathon Thrift Plan and the related supplemental savings plans.
Such amounts for 1998 are $54,896, $109,350, $26,792, $27,125 and $19,896
for Messrs. Usher, Beghini, Wilhelm, Hernandez and Sandman, respectively.
Also included are amounts attributable to split-dollar life insurance
provided by USX. (Marathon Oil Company does not provide split-dollar life
insurance.) For 1998, these amounts are $36,354, $9,014, $17,870, and
$15,878 for Messrs. Usher, Wilhelm, Hernandez and Sandman, respectively.
Also included are amounts attributable to a mandatory tax compliance
program. For 1998 these amounts were $2,000 for Messrs. Usher, Wilhelm,
Hernandez and Sandman. Also included are dividends paid on restricted stock.
For 1998, these amounts were $33,555, $14,193, $11,787, $11,185 and $8,422
for Messrs. Usher, Beghini, Wilhelm, Hernandez and Sandman, respectively.
21
<PAGE>
(4) Restricted stock and stock options/SAR shares granted by class of stock are
as follows:
<TABLE>
<CAPTION>
Restricted
Class of Stock Stock Option/
Stock ($) SAR Shares
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
T. J. Usher 1998 Marathon 221,000 175,500
Steel 133,840 94,500
--------------------------------------------------------
1997 Marathon 57,281 130,000
Steel 30,720 64,000
Delhi 1,198 6,000
--------------------------------------------------------
1996 Marathon 32,712 104,000
Steel 25,167 52,000
Delhi 0 4,000
- ----------------------------------------------------------------------------------
V. G. Beghini 1998 Marathon 0 78,000
Steel 0 42,000
--------------------------------------------------------
1997 Marathon 0 58,500
Steel 0 31,500
--------------------------------------------------------
1996 Marathon 11,635 65,000
Steel 8,943 13,000
Delhi 0 2,000
- ----------------------------------------------------------------------------------
P. J. Wilhelm 1998 Marathon 72,420 35,000
Steel 145,397 65,000
--------------------------------------------------------
1997 Marathon 9,400 24,000
Steel 20,800 48,750
Delhi 399 2,250
--------------------------------------------------------
1996 Marathon 7,831 10,000
Steel 20,759 53,000
Delhi 0 2,000
- ----------------------------------------------------------------------------------
R. M. Hernandez 1998 Marathon 33,150 65,000
Steel 20,691 35,000
--------------------------------------------------------
1997 Marathon 19,094 48,750
Steel 10,240 24,000
Delhi 399 2,250
--------------------------------------------------------
1996 Marathon 10,897 43,000
Steel 8,400 20,000
Delhi 0 2,000
- ----------------------------------------------------------------------------------
D. D. Sandman 1998 Marathon 41,548 36,400
Steel 24,531 19,600
--------------------------------------------------------
1997 Marathon 13,748 26,000
Steel 8,064 12,800
Delhi 0 1,200
--------------------------------------------------------
1996 Marathon 19,041 23,000
Steel 14,659 10,000
Delhi 0 2,000
- ----------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
1998 Option/SAR Grants
The following table sets forth certain information concerning options and stock
appreciation rights ("SARs") granted during 1998 to each executive officer named
in the Summary Compensation Table under the USX 1990 Stock Plan:
<TABLE>
<CAPTION>
% of Total
Options/ Exercise Potential Realizable Value at
Number of SARs or Base Assumed Annual Rates of Stock Price
Options/ Granted to Price per Appreciation for Option Term ($)/(4)/
Class of SARs Employees Share Expiration --------------------------------------
Name or Group Stock Granted/(1)/ in 1998/(3)/ ($) Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. J. Usher Marathon 175,500/(2)/ 17.8% 34.0000 May 26, 2008 0 3,752,611 9,509,854
Steel 94,500/(2)/ 15.5% 37.2813 May 26, 2008 0 2,215,647 5,614,888
V. G. Beghini Marathon 78,000/(2)/ 7.9% 34.0000 May 26, 2008 0 1,667,827 4,226,602
Steel 42,000/(2)/ 6.9% 37.2813 May 26, 2008 0 984,732 2,495,506
P. J. Wilhelm Marathon 35,000/(2)/ 3.5% 34.0000 May 26, 2008 0 748,384 1,896,552
Steel 65,000/(2)/ 10.6% 37.2813 May 26, 2008 0 1,523,990 3,862,092
R. M. Hernandez Marathon 65,000/(2)/ 6.6% 34.0000 May 26, 2008 0 1,389,856 3,522,168
Steel 35,000/(2)/ 5.7% 37.2813 May 26, 2008 0 820,610 2,079,588
D. D. Sandman Marathon 36,400/(2)/ 3.7% 34.0000 May 26, 2008 0 778,319 1,972,414
Steel 19,600/(2)/ 3.2% 37.2813 May 26, 2008 0 459,542 1,164,569
- ------------------------------------------------------------------------------------------------------------------------------------
All Stockholders Marathon N/A N/A 34.0000 N/A 0 6,595,590,194 16,714,520,584
Steel N/A N/A 37.2813 N/A 0 2,071,136,149 5,248,668,529
- ------------------------------------------------------------------------------------------------------------------------------------
All Optionees Marathon 987,535 100.0% 34.0000 May 26, 2008 0 21,115,868 53,511,757
Steel 611,515 100.0% 37.2813 May 26, 2008 0 14,337,581 36,334,264
- ------------------------------------------------------------------------------------------------------------------------------------
All Optionees' Marathon N/A N/A 34.0000 N/A 0 0.32% 0.32%
Gain as % of Steel N/A N/A 37.2813 N/A 0 0.69% 0.69%
All Stockholders'
Gain
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options listed are exercisable on and after May 26, 1999.
(2) These options were granted with tandem SARs, which have the same date of
exercisability as the underlying options. Upon the exercise of an SAR, an
optionee receives an amount, in cash and/or shares, equal to the excess, for
a specified number of shares, of (a) the fair market value of a share on the
date the SAR is exercised (except that for any SAR exercised during the 10-
business-day period beginning on the third business day following the
release of USX's quarterly earnings, the Compensation Committee may, in its
sole discretion, establish a uniform fair market value of a share for such
period which shall not be more than the highest daily fair market value and
shall not be less than the lowest daily fair market value during such 10-
business-day period) over (b) the exercise or base price per share.
(3) Indicates percentage of total options granted in the applicable class of
stock.
(4) The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future appreciation, if
any, of the price of the Marathon Stock or the Steel Stock. We did not use
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 and the
expiration date applicable to grants made in 1998 and the number of
outstanding shares as of December 31, 1998.
23
<PAGE>
Option Exercises and Year-End Values
The following table sets forth certain information concerning options to
purchase USX common stock and stock appreciation rights ("SARs") exercised by
each executive officer named in the Summary Compensation Table during 1998
together with the total number of options and SARs outstanding at December 31,
1998 and the value of such options. The figures for options and SARs exercised
include amounts realized from the redemption by USX of the USX-Delhi Group
Common Stock on January 26, 1998.
Aggregated 1998 Option/SAR Exercises
and December 31, 1998 Option/SAR Values
<TABLE>
<CAPTION>
Total Value
of Unexercised
In-The-Money
No. of Total Value No. of Options/SARs at
Shares Realized Unexercised December 31, 1998
Underlying for All Options/SARs at for
Options/SARs Classes of December 31, All Classes
Name Exercised /(1)/ Stock ($)/(1)/ 1998/(1)/ of Stock ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
T. J. Usher 19,000 112,650 811,000 847,998
V. G. Beghini 75,000 499,806 594,000 2,878,451
P. J. Wilhelm 61,050 458,122 187,750 4,884
R. M. Hernandez 14,250 69,222 444,950 1,946,602
D. D. Sandman 9,200 50,045 129,725 5,877
- ----------------------------------------------------------------------------------------------
</TABLE>
Note: All outstanding options listed above, except those granted in 1998, are
currently exercisable. Except for 5,000 shares granted to Mr. Wilhelm,
all outstanding options listed above were granted with SARs.
(1) Figures by class of stock are as follows:
<TABLE>
<CAPTION>
No. of
Unexercised
No. of Shares Options/SARs
Underlying Value at
Class of Options/SARs Realized December 31,
Stock Exercised ($) 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
T. J. Usher Marathon 0 0 458,000
Steel 0 0 353,000
Delhi 19,000 112,650 0
V. G. Beghini Marathon 65,000 452,743 481,250
Steel 0 0 112,750
Delhi 10,000 47,063 0
P. J. Wilhelm Marathon 2,800 27,329 64,000
Steel 53,000 392,534 123,750
Delhi 5,250 38,259 0
R. M. Hernandez Marathon 0 0 322,450
Steel 0 0 122,500
Delhi 14,250 69,222 0
D. D. Sandman Marathon 0 0 71,400
Steel 0 0 58,325
Delhi 9,200 50,045 0
- -----------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Compensation Committee Report
on Executive Compensation
Our Committee sets policies and administers programs on executive compensation.
When we believe that action should be taken on a specific compensation item, we
either make a recommendation to the USX Board or a subsidiary company board or
take action on our own, whichever is appropriate. We report to the USX Board
actions which do not require board approval. The purpose of this report is to
summarize the philosophy, specific program objectives and other relevant factors
considered by the Committee in decision making with respect to the compensation
of USX, Marathon Group and U. S. Steel Group executive officers, including the
officers named in the Summary Compensation Table.
Compensation programs for USX's executive officers are designed to attract,
retain and motivate employees who will make significant contributions to the
achievement of corporate goals and objectives. The principal elements of our
executive officers' compensation are:
. Salary
. Short-term incentive (bonus) awards and
. Long-term incentive awards (stock options with stock appreciation rights and
restricted stock).
For each of the above elements of compensation, we exercise our discretion in
the subjective consideration of the factors described below and within the
limitations of the various plans.
Salary
Salary administration at USX begins with the development, and periodic
adjustment, of salary structures for executive officers employed at the
corporate level and at each major business unit. Each executive officer's
position is assigned a salary grade with an associated salary range. Our two
major objectives in developing salary structures and assigning grades are to
maintain:
1. external competitiveness--the midpoint of the salary range for each position
is near the average midpoint for similar positions at comparable companies
and
2. internal equity--each position's grade in the unit's hierarchy of positions
accurately reflects its relative "value".
The data used in developing and adjusting salary structures are obtained from
surveys coordinated by independent consultants, with each unit having its own
sources of relevant data.
We make decisions on salary increases and, occasionally--when business
conditions dictate--salary decreases. When we determine salary increases, we
give the highest weighting to performance; but we also consider other factors,
such as experience and time in position, in making our decisions. Once an
executive officer's salary has passed the midpoint for the position, increases
seldom exceed amounts necessary to maintain the salary near the midpoint,
assuming performance merits such increases. Therefore, incentive opportunities
provide the primary basis for significant increases in compensation. The
salaries shown for the officers named in the Summary Compensation Table reflect
the results of our salary reviews and related actions.
25
<PAGE>
Short-Term Incentive Awards
USX's short-term incentive (bonus) opportunities for executive officers are
designed to provide awards near the average of those provided by similar
companies for on-target performance. However, our incentive plans are designed
to provide exceptional rewards for superior performance and lower rewards for
below-average performance. We make bonus awards under the Senior Executive
Officer Annual Incentive Compensation Plan, as well as under other plans
developed for specific business units. The Senior Executive Officer Annual
Incentive Compensation Plan was developed specifically to retain the
corporation's tax deduction for awards made to the officers named in the Summary
Compensation Table and was approved, as amended and restated, by the
stockholders on April 28, 1998.
Senior Executive Officer Annual Incentive Compensation Plan
This Plan provides for awards based on pre-established performance measures
specifically related to the responsibilities of Plan participants. For each
performance measure, we can award the applicable portion of the bonus only if
performance reaches the minimum, or threshold, level for that measure. While
performance for 1998 varied among USX's business units, performance levels were
reached or exceeded for the following:
- --------------------------------------------------------------------------------
For Marathon Group Income from operations, liquid hydrocarbon production,
natural gas production, liquid hydrocarbon and natural
gas reserve additions, refined product sales, refined
products margins and environmental emissions
improvements
- --------------------------------------------------------------------------------
For U. S. Steel Group Income from operations and steel shipments
- --------------------------------------------------------------------------------
For USX (Corporate) All the above plus workforce diversity
- --------------------------------------------------------------------------------
Our Committee certified in writing prior to payment of awards for the year 1998
that the pre-established, applicable performance levels (measured for incentive
compensation purposes) required under the Plan were satisfied.
Other Plans
We also administer other bonus plans in which corporate and business unit
executive officers participate. These plans were developed specifically for
corporate, U. S. Steel Group and Marathon Group employees. Our Committee makes
awards based on the degree of achievement of pre-established objectives,
including profit, cash flow and EVA/(1)/ (economic value added), as measured for
incentive compensation purposes, as well as individual objectives. In
determining awards under these plans, we also give consideration to changes over
the previous year's performance as well as the absolute levels of income and
cash flow. When making awards to executive officers under these Plans, our
Committee gives such weight to the various factors as we deem appropriate.
Based on consideration of other factors, our Committee may reduce or eliminate a
short-term incentive award that would otherwise be payable under the above-
discussed plans.
____________
(1) EVA/*/ is a registered trademark of Stern Stewart & Co
26
<PAGE>
Long-Term Incentive Awards
We consider long-term incentive awards to be of major importance in the mix of
compensation elements because these awards provide the most direct link to the
returns that you, as USX stockholders, receive. The stockholders approved the
1990 Stock Plan, as amended and restated, on April 28, 1998. We administer this
plan, under which we may grant (1) stock options, with or without a restoration
feature, (2) stock appreciation rights and/or (3) restricted stock. Our stock
options and (beginning with vesting in May 1999 for 1998 performance) restricted
stock meet the requirements for deductibility under the tax laws.
Stock Option Grants
Our Committee makes stock option grants that we believe to be reasonable and in
line with other compensation. The number of shares we grant generally reflects
the employee's level of responsibility, and the class or classes of stock
granted reflect the specific business unit(s) to which the employee's
responsibilities relate. Following our normal annual grant practice, we granted
stock options in May 1998.
Restricted Stock Grants
Since the inception of the 1990 Stock Plan, our Committee has established, for
each recipient, an annual target level of restricted stock shares, based on the
same factors as we consider in granting stock options. A major grant is made to
cover five years, with the intention that one fifth of the shares will vest each
year if performance is at the target level. We vest restricted stock at levels
higher or lower than annual targets, depending on performance.
We made our last major grant in 1995, to cover the five-year performance period
ending with 1999, and we made interim grants only to permit vesting at the
target level for the number of years remaining in the period. To emphasize the
long-term nature of the awards, our vesting decisions are based on three-year
average performance, which is compared with three-year peer-group performance
for relevant businesses.
In May 1998, we compared our three-year (1995-1997) average performance with
that of competitors for the measures shown below. This comparison provides the
primary basis for the determination of vesting levels for restricted stock.
However, vesting levels may be reduced (or eliminated entirely) based on other
factors considered relevant by the Committee.
27
<PAGE>
Unit Performance Measure
- --------------------------------------------------------------------------------
Marathon Group Earnings before interest, taxes and depreciation as a
percent of total assets
Oil and gas reserve replacement ratio
Income per barrel of oil equivalent produced (upstream)
Operating income per barrel of refinery throughput
(downstream)
Safety performance
- --------------------------------------------------------------------------------
U. S. Steel Group Income from operations as a percent of capital employed
Income from operations per ton shipped
Operating cash flow as a percent of capital employed
Safety performance
- --------------------------------------------------------------------------------
USX Headquarters Weighted Composite (65% Marathon/35% U. S. Steel Group)
- --------------------------------------------------------------------------------
The Committee periodically compares data on long-term incentive grants made at
other companies with those made at USX. Our objective in making grants under the
1990 Stock Plan is to provide opportunities to receive above-average
compensation (compared with that of similar companies) when performance is above
the target level.
Overall, executive compensation at USX is designed to provide total pay that is
above average when both short- and long-term incentive goals are exceeded.
----------
In addition to the compensation comparisons described above, our Committee
annually compares the salary, bonus and long-term incentive payouts for the
Chairman, the Chief Financial Officer, and the Presidents of the U. S. Steel and
Marathon Groups with the same elements for similar positions at comparable
companies.
With respect to the compensation comparisons that we make, we believe that the
companies with which USX competes for employees are not necessarily limited to
the companies with which shareholder returns would logically be compared. The
peer groups used in the performance graphs include the Standard & Poor's 500
Stock Index and those oil and steel companies deemed most comparable to the
Corporation's businesses for measuring stock performance. The companies used for
comparing compensation reflect similarities to USX and its operating groups in
such factors as line of business (when relevant), size and complexity.
Therefore, the compositions of the groups of companies used for compensation
comparisons are not identical to those of the peer groups shown in the
Shareholder Return Performance presentation.
Mr. Usher's 1998 compensation reflects the same elements and the same factors as
those described above. His leadership and effectiveness in dealing with major
corporate problems and opportunities are also considered in determining his
salary increases. Taking into account these factors, as well as (1) the
comparability of his salary with CEOs of other companies of similar size and
complexity and (2) the position of his salary in the range for his position, the
Committee approved a salary increase for Mr. Usher effective August 1, 1998.
28
<PAGE>
The Committee made an award to Mr. Usher for 1998 under the Senior Executive
Officer Annual Incentive Compensation Plan taking into account the strategic
direction in which he led the Corporation, including the formation of Marathon
Ashland Petroleum LLC and the acquisition of Tarragon Oil and Gas Limited. His
award also recognized his timely response to emerging business conditions, such
as record imports of low-priced foreign steel and low worldwide crude oil
prices.
The Committee considered the additional stock option shares granted to Mr. Usher
under the 1990 Stock Plan to be at a competitive level relative to other CEOs.
On the basis of the performance shown in the above table, we also vested
restricted stock for and made an additional grant of restricted stock to Mr.
Usher.
John F. McGillicuddy
Charles R. Lee
Paul E. Lego
Seth E. Schofield
29
<PAGE>
Shareholder Return Performance Presentation
The line graphs below compare the yearly change in cumulative total stockholder
return for each class of our common stock with the cumulative total return of
the Standard & Poor's 500 Stock Index. The Marathon graph also shows a
comparison with the Standard & Poor's Domestic Integrated Oil Index, and the
U. S. Steel graph also shows a comparison with a Steel Index that is defined in
a footnote to the graph.
Comparison of Cumulative Total Return
on $100 Invested in Marathon Stock on December 31, 1993
vs.
S&P 500 and S&P Domestic Integrated Oil Index/(1)/
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG USX-MARATHON, S&P 500 INDEX AND S&P OIL INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) USX-MARATHON S&P 500 S&P OIL
- --------------------- ------------ ------- -------
<S> <C> <C> <C>
Measurement PT -
12/31/93 $100 $100 $100
FYE 12/31/94 $103 $101 $105
FYE 12/31/95 $127 $139 $119
FYE 12/31/96 $161 $171 $151
FYE 12/31/97 $233 $229 $180
FYE 12/31/98 $214 $294 $146
</TABLE>
(1) Total return assumes reinvestment of dividends.
30
<PAGE>
Comparison of Cumulative Total Return
on $100 Invested in Steel Stock on December 31, 1993
vs.
S&P 500 and Steel Index/(1)/
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG USX-USS, S&P 500 INDEX AND STEEL INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) USX-USS S&P 500 STEEL
- --------------------- ------- ------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/93 $100 $100 $100
FYE 12/31/94 $ 84 $101 $ 99
FYE 12/31/95 $ 75 $139 $ 82
FYE 12/31/96 $ 79 $171 $ 68
FYE 12/31/97 $ 81 $229 $ 62
FYE 12/31/98 $ 62 $294 $ 60
</TABLE>
(1) Total return assumes reinvestment of dividends.
(2) The Steel Index consists of the common stocks of Bethlehem Steel
Corporation, LTV Corporation and National Steel Corporation for the period
December 31, 1993 through December 31, 1998, AK Steel Corporation for the
period December 31, 1994 through December 31, 1998, and Inland Steel
Industries for the period December 31, 1993 through December 31, 1997.
Inland Steel Industries sold its steelmaking subsidiary, Inland Steel Co.,
to Ispat International NV in 1998. The resulting company, Ispat Inland Inc.,
is not publicly traded.
- --------------------------------------------------------------------------------
Transactions
In the regular course of its business since January 1, 1998, USX and its
subsidiaries have had transactions with corporations of which certain non-
employee directors are executive officers. 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 1999.
31
<PAGE>
Pension Benefits
The United States Steel Corporation Plan for Non-Union Employee Pension Benefits
is comprised of two defined benefits. One is based on final earnings and the
other on career earnings. Directors who have not been employees of USX do not
receive any benefits under the plan. The following table shows the annual final
earnings pension benefits for retirement at age 65 (or earlier under certain
circumstances) for various levels of eligible earnings which would be payable to
employees retiring with the years of service shown. The benefits are based on a
formula of a specified percentage (dependent on years of service) of average
annual eligible earnings in the five consecutive years of the ten years prior to
retirement in which such earnings were highest. As of January 31, 1999, Mr.
Usher had 33 credited years of service, Mr. Wilhelm 34, Mr. Hernandez 30 and Mr.
Sandman 6.
Table of Pension Benefits
Final Earnings Pension Benefits
<TABLE>
<CAPTION>
Average Annual
Eligible Earnings
for Highest Five
Consecutive Years
in Ten-Year Period
Preceding Retirement Annual Benefits for Years of Service
20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 23,100 $ 28,875 $ 34,650 $ 40,950 $ 47,250 $ 53,550
300,000 69,300 86,625 103,950 122,850 141,750 160,650
500,000 115,500 144,375 173,250 204,750 236,250 267,750
700,000 161,700 202,125 242,550 286,650 330,750 374,850
900,000 207,900 259,875 311,850 368,550 425,250 481,950
1,100,000 254,100 317,625 381,150 450,450 519,750 589,050
1,300,000 300,300 375,375 450,450 532,350 614,250 696,150
</TABLE>
Annual career earnings pension benefits are equal to 1% of total career eligible
earnings plus a 30 percent supplement. The estimated annual career earnings
benefits payable at normal retirement age 65, assuming no increase in annual
earnings, will be $236,109 for Mr. Usher, $99,807 for Mr. Wilhelm, $151,037 for
Mr. Hernandez and $98,733 for Mr. Sandman. Earnings for the purpose of
calculating both the final earnings and career earnings pensions are limited to
base salary for services performed, allowance for absence covered by sick leave
salary continuance and payment for absence while on regular vacation or
holidays. These earnings are reported in the salary column of the Summary
Compensation Table on page 20. They do not include any awards under the Annual
Incentive Compensation Plan or the Senior Executive Officer Annual Incentive
Compensation Plan. Benefits under both pension provisions are based on a
straight life annuity form of benefit, which is not subject to reduction for
Social Security benefits; but the final earnings pension is subject to offset
for a pension provided outside the plan from a fund to which USX has
contributed, and for payments made by USX pursuant to workers' compensation or
similar laws when such payments are the result of a permanent disability.
Benefits may be paid as an actuarially determined lump sum in lieu of monthly
pensions under both the final earnings and career earnings provisions of the
plan.
In addition to the pension benefit described above, members of USX executive
management, including all of the executive officers named in the Summary
Compensation Table except Mr. Beghini, are entitled, upon retirement after age
60, or before age 60 with USX's consent, to the benefits shown in the table
below based on bonuses paid under the Annual Incentive Compensation Plan and the
Senior Executive Officer Annual Incentive Compensation Plan. These bonuses are
reported in the bonus column of the Summary Compensation Table on page 20.
32
<PAGE>
Supplemental Pension Benefits
<TABLE>
<CAPTION>
Average Annual
Bonus for Three
Highest Years
in Ten-Year Period
Preceding
Retirement Annual Benefits for Years of Service
20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 30,800 $ 38,500 $ 46,200 $ 53,900 $ 61,600 $ 69,300
300,000 92,400 115,500 138,600 161,700 184,800 207,900
500,000 154,000 192,500 231,000 269,500 308,000 346,500
700,000 215,600 269,500 323,400 377,300 431,200 485,100
900,000 277,200 346,500 415,800 485,100 554,400 623,700
1,100,000 338,800 423,500 508,200 592,900 677,600 762,300
1,300,000 400,400 500,500 600,600 700,700 800,800 900,900
- -------------------------------------------------------------------------------------------------
</TABLE>
The Marathon Oil Company Retirement Plan provides benefits based on final
earnings. The following table shows the annual pension benefits for retirement
at age 65 for various levels of eligible earnings which would be payable to
employees retiring with the years of service shown. The table is based on a
formula of a specified percentage (dependent on years of participation in the
plan) of average annual eligible earnings in the three consecutive years of the
ten prior to retirement in which such earnings were highest.
<TABLE>
<CAPTION>
Final Average
Earnings for Highest
Three Consecutive
Years in Ten-Year
Period Preceding
Retirement Annual Benefits for Years of Service
15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 20,705 $ 27,606 $ 34,508 $ 41,410 $ 48,311 $ 51,762
300,000 68,705 91,606 114,508 137,410 160,311 171,762
500,000 116,705 155,606 194,508 233,410 272,311 291,762
700,000 164,705 219,606 274,508 329,410 384,311 411,762
900,000 212,705 283,606 354,508 425,410 496,311 531,762
1,100,000 260,705 347,606 434,508 521,410 608,311 651,762
1,300,000 308,705 411,606 514,508 617,410 720,311 771,762
1,500,000 356,705 475,606 594,508 713,410 832,311 891,762
2,000,000 476,705 635,606 794,508 953,410 1,112,311 1,191,762
</TABLE>
Earnings covered by the Marathon plan include pay for hours worked, pay for
allowed hours, military leave allowance, commissions, 401(k) contributions to
the Marathon Oil Company Thrift Plan and bonuses. These earnings are reported in
the salary and bonus columns of the Summary Compensation Table on page 20. The
benefits reflected above are based upon a straight life annuity form of benefit
and include the applicable Social Security offset as defined by the Marathon
plan. As of January 31, 1999, Mr. Beghini had 41 years of credited
participation. Mr. Sandman has 20 years of credited participation.
In order to comply with the limitations prescribed by the Internal Revenue Code,
pension benefits will be paid directly by USX or by Marathon when they exceed
the amounts permitted by the Code to be paid from federal income tax qualified
pension plans.
33
<PAGE>
Change in Control Arrangements
We believe that if a change in control of USX became possible our key officers
should be encouraged to continue their dedication to their assigned duties. For
that reason, we have entered into agreements with each of the officers named in
the Summary Compensation Table that provide that, if an officer's employment is
terminated under certain circumstances following a change in control, the
officer will be entitled to the following severance benefits:
. a cash payment of up to three times the sum of the officer's current salary
plus the highest bonus in the three years before the date of termination,
. a cash payment in settlement of outstanding options,
. life, disability, accident and health insurance benefits for 24 months after
termination,
. a cash payment equal to the actuarial equivalent of the difference between
amounts receivable by the officer under our pension and welfare benefit plans
and those which would be payable if (a) the officer had retired as of the
termination date under conditions entitling a retiree under similar
circumstances to the highest benefits available under those plans and (b) the
officer had been absent due to layoff for a year before termination,
. a cash payment equal to the difference between amounts receivable under our
savings or thrift plans and amounts which would have been received if the
officer's savings had been fully vested, and
. a cash payment of the amount necessary to insure that the payments listed
above are not subject to net reduction due to the imposition of federal
excise taxes.
Each agreement is automatically extended each year unless we notify the officer
that we do not wish it extended. In any event, however, each agreement continues
for two years after a change in control. The severance benefits are payable if,
any time after a change in control, the officer's employment is terminated for
good reason or is terminated for other than cause or disability. The severance
benefits are not payable if termination is due to the officer's death or
disability or occurs after the officer reaches age 65.
The definition of a change in control for purposes of these agreements is
complex but is summarized as follows. It includes any change in control required
to be reported in response to Item 6(e) of Schedule 14A under the Securities
Exchange Act of 1934 and provides that a change in control will have occurred
if:
. any person not affiliated with USX acquires 20 percent or more of the voting
power of our outstanding securities,
. the board no longer has a majority made up of (1) individuals who were
directors on the date of the agreements and (2) new directors (other than
directors who join the board in connection with an election contest) approved
by two-thirds of the directors then in office who (a) were directors on the
date of the agreements or (b) were themselves previously approved by the
board in this manner,
. USX merges with another company and USX's stockholders end up with less than
50 percent of the voting power of the new entity,
. our stockholders approve a plan of complete liquidation of USX, or
. we sell all or substantially all of USX's assets.
34
<PAGE>
Solicitation Statement
We will bear the cost of this solicitation of proxies. In addition to soliciting
proxies by mail, our directors, officers and employees may solicit proxies by
telephone, in person or by other means. They will not receive any extra
compensation for this work. We will also make arrangements with brokerage firms
and other custodians, nominees and fiduciaries to forward proxy solicitation
material to the beneficial owners of each class of common stock, and we will
reimburse them for reasonable out-of-pocket expenses that they incur in
connection with forwarding the material.
By order of the Board of Directors,
Dan D. Sandman,
Secretary
March 8, 1999
35
<PAGE>
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
[LOGO of USX]
<PAGE>
LOGO USX USX Corporation
600 Grant Street, Pittsburgh, PA 15219-4776
You are cordially invited to attend
the Annual Meeting of Stockholders
on April 27, 1999.
The Meeting will be held in the
Consort Ballroom of The Westin Oaks,
5011 Westheimer, Houston, Texas at
10:00 A.M. Central Daylight Time.
Attached are your 1999 Proxy Card and an
attendance card. The use of an attendance
card, of course, is for our mutual
convenience and your right to attend
without an attendance card, upon
identification, is not affected.
Dan D. Sandman
Secretary
PLEASE SIGN, DATE AND RETURN THE ATTACHED 1999 PROXY CARD
IN THE ACCOMPANYING ENVELOPE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
LOGO USX CORPORATION
ATTENDANCE CARD
1999 ANNUAL MEETING OF STOCKHOLDERS
Please present this card at registration
desk upon arrival
TIME: PLACE:
10:00 A.M. Consort Ballroom
Central Daylight Time The Westin Oaks Hotel
Tuesday, April 27, 1999 5011 Westheimer Road
Houston, Texas
For the personal use of the stockholder(s)
named on the attached Proxy Card
--not transferable--
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby appoint(s) Thomas J. Usher, Victor G. Beghini, Robert M.
Hernandez and Paul J. Wilhelm, or any of them, proxies to vote as herein stated
on behalf of the undersigned at the Annual Meeting of Stockholders of USX
Corporation on April 27, 1999 and any adjournment or postponement thereof and
upon all other matters properly coming before the Meeting, including the
proposals set forth in the proxy statement for such Meeting with respect to
which the proxies are instructed to vote as follows:
Proposals of the Board of Directors -- The directors recommend a vote "FOR"
Proposal No. 1--Election of directors--Nominees: Jeanette G. Brown,
Charles A. Corry, Paul E. Lego, Seth E. Schofield and
Douglas C. Yearley
FOR all nominees ------ [_] WITHHOLD AUTHORITY ------ [_]
(except as indicated) to vote for ALL nominees
(To withhold authority to vote for any individual nominee strike out that
nominee's name.)
Proposal No. 2--Election of PricewaterhouseCoopers LLP as independent
accountants
FOR ------ [_] AGAINST ------ [_] ABSTAIN ------ [_]
________________________________________________________________________________
Signature(s)_________________________________
_____________________________________________
Dated ______________ 1999
Please sign exactly as your name appears
hereon, including representative capacity
where applicable. Joint owners should both
sign.
[_] I Will Attend The Annual Meeting
This proxy is solicited by the Board of
Directors and represents your holdings of
USX-Marathon Group Common Stock and/or USX-
U.S. Steel Group Common Stock. Unless
otherwise marked, proxies are to vote FOR
Proposals 1 and 2, and in their discretion
upon all other matters properly brought
before the Meeting and any adjournment or
postponement thereof.
