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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cleveland Cliffs Inc | NYSE:CLF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.43 | 2.49% | 17.71 | 17.66 | 17.305 | 17.44 | 6,880,940 | 01:00:00 |
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Preliminary Proxy Statement
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(3) Filing Party: ____________
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(4) Date Filed: ____________
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Sincerely,
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Lourenco Goncalves
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Chairman, President and Chief Executive Officer
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Cleveland-Cliffs Inc.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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1.
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To elect nine directors to act until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified;
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2.
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To approve, on an advisory basis, our named executive officers' compensation;
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3.
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To ratify the appointment of Deloitte & Touche LLP as Cliffs' independent registered public accounting firm to serve for the
2018
fiscal year; and
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4.
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To transact such other business, if any, as may properly come before the
2018
Annual Meeting or any adjournment thereof.
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YOUR VOTE IS IMPORTANT.
YOU MAY VOTE BY MAILING THE ENCLOSED PROXY CARD, BY TELEPHONE, BY INTERNET,
OR BY BALLOT IN PERSON AT THE 2018 ANNUAL MEETING.
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The proxy statement and Cliffs’ 2017 Annual Report for the 2017 fiscal year are available at
www.proxyvote.com.
These materials also are available on Cliffs’ Investor Relations website at
www.clevelandcliffs.com/investors
under “Financial Information." If your shares are not registered in your own name, please follow the voting instructions from your bank, broker, trustee, nominee or other shareholder of record to vote your shares and, if you would like to attend the 2018 Annual Meeting, please bring evidence of your share ownership with you. You should be able to obtain evidence of your share ownership from the bank, broker, trustee, nominee or other shareholder of record that holds the shares on your behalf.
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PROXY STATEMENT TABLE OF CONTENTS
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PROXY SUMMARY
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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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MEETING INFORMATION
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CORPORATE GOVERNANCE
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Board Leadership Structure
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Board’s Role in Risk Oversight
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Board Meetings and Committees
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Identification and Evaluation of Director Candidates
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Communications With Directors
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Code of Business Conduct and Ethics
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Independence and Related Party Transactions
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DIRECTOR COMPENSATION
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Director Compensation for 2017
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PROPOSAL 1 – ELECTION OF DIRECTORS
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Information Concerning Director Nominees
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
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EQUITY COMPENSATION PLAN INFORMATION
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COMPENSATION DISCUSSION AND ANALYSIS
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Executive Summary
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2017 Business Results
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Executive Compensation Philosophy and Core Principles
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Oversight of Executive Compensation
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Components of Executive Compensation
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Retirement and Deferred Compensation Benefits
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Supplementary Compensation Policies
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COMPENSATION COMMITTEE REPORT
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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COMPENSATION-RELATED RISK ASSESSMENT
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EXECUTIVE COMPENSATION
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Executive Compensation Tables
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Potential Payments Upon Termination or Change in Control
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CEO Pay Ratio
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PROPOSAL 2 – APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICERS' COMPENSATION
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AUDIT COMMITTEE REPORT
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PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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INFORMATION ABOUT SHAREHOLDER PROPOSALS AND COMPANY DOCUMENTS
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OTHER INFORMATION
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ANNEX – USE OF NON-GAAP FINANCIAL MEASURES
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PROXY SUMMARY
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2018 ANNUAL MEETING OF SHAREHOLDERS
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(page
4
)
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Date and Time:
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Tuesday, April 24, 2018, at 11:30 a.m. EDT
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Place:
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North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114
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Record Date:
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February 23, 2018
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Voting:
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Shareholders of record are entitled to vote by completing and returning the enclosed proxy card by mail; telephone at
1-800-579-1639
; by Internet at
www.proxyvote.com
; or attending the 2018 Annual Meeting of Shareholders (the "2018 Annual Meeting") in person (beneficial holders must obtain a legal proxy from their broker, banker, trustee, nominee or other shareholder of record granting the right to vote).
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Mailing:
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This proxy statement, the accompanying proxy card and our 2017 Annual Report will be mailed on or about March 12,
2018 to certain shareholders of record as of the Record Date.
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DIRECTOR NOMINEES RECOMMENDED BY THE CLIFFS BOARD OF DIRECTORS
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(page
13
)
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||||||
Name
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Age
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Director Since
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Experience/ Qualification
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Independent
(Yes / No)
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Committee Memberships (1)
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Other Current Directorships
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John T. Baldwin
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61
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2014
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Former Chairman of Audit Committee & CFO
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Yes
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•
Audit*
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Robert P. Fisher, Jr.
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63
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2014
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Former Managing Director
President & CEO
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Yes
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•
Audit
•
Compensation*
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Lourenco Goncalves
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60
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2014
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Chairman, President and CEO
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No
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•
Strategy*
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American Iron and Steel Institute
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Susan M. Green
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58
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2007
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Former Deputy General Counsel, United States Congress Office of Compliance
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Yes
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•
Governance
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Joseph A. Rutkowski, Jr.
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63
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2014
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Principal & Former Executive Vice President
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Yes
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•
Compensation
•
Strategy
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Cenergy Holdings SA
Insteel Industries, Inc.
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Eric M. Rychel
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44
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2016
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Executive Vice President, Chief Financial Officer and Treasurer
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Yes
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•
Audit
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Michael D. Siegal
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65
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2014
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Chairman & CEO
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Yes
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•
Audit
•
Governance
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Olympic Steel, Inc.
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Gabriel Stoliar
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63
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2014
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Managing Partner
Chairman
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Yes
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•
Compensation
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Governance
•
Strategy
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Tupy S.A.
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Douglas C. Taylor
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53
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2014
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Former Managing Partner
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Yes
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•
Governance*
•
Compensation
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* Denotes committee chair
(1) Full committee names are: Audit – Audit Committee; Compensation – Compensation and Organization Committee; Governance – Governance and Nominating Committee; Strategy – Strategy Committee.
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EXECUTIVE COMPENSATION PHILOSOPHY AND CORE PRINCIPLES
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(page
21
)
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Our guiding compensation principles, as established by the Compensation and Organization Committee for 2017, were as follows:
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Align short-term and long-term incentives with results delivered to shareholders;
•
Design an incentive plan that focuses on performance objectives tied to our business plan (including profitability-related and cost control objectives), relative performance objectives tied to market conditions (including relative total shareholder return measured by share price appreciation plus dividends, if any), and performance against other key objectives tied to our business strategy (including safety, debt reduction and overall spending decrease);
•
Provide competitive fixed compensation elements over the short-term (base salary) and long-term (equity and retirement benefits) to encourage long-term retention of our key executives; and
•
Continue to structure programs as in prior years to align with corporate governance best practices (such as not providing "gross-ups" related to change in control payments, using "double-trigger" vesting in connection with a change in control for equity awards, using Share Ownership Guidelines and maintaining a clawback policy related to incentive compensation for our executive officers).
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2017 EXECUTIVE COMPENSATION SUMMARY
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(page
39
)
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The numbers in the following table showing the 2017 compensation of our named executive officers (the "NEOs") were determined in the same manner as the numbers in the corresponding columns in the 2017 Summary Compensation Table (the "SCT") (provided later in this proxy statement); however, they do not include information regarding changes in pension value and non-qualified deferred compensation earnings and information regarding all other compensation, each as required to be presented in the 2017 SCT under the rules of the U.S. Securities and Exchange Commission (the "SEC"). As such, this table should not be viewed as a substitute for the 2017 SCT:
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Name
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Principal Position (as of December 31, 2017)
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Salary
($)
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Bonus
($)
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Stock
Awards
($)
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Option Awards ($)
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Non-Equity
Incentive Plan
Compensation
($)
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Total
($)
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Lourenco Goncalves
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Chairman, President and Chief Executive Officer
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1,300,000
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4,650,000
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11,858,417
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—
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4,565,940
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22,374,357
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Timothy K. Flanagan
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Executive Vice President, Chief Financial Officer & Treasurer
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400,000
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318,000
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760,951
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—
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540,829
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2,019,780
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Terry G. Fedor
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Executive Vice President,
United States Iron Ore
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414,000
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673,350
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787,575
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—
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588,939
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2,463,864
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Clifford T. Smith
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Executive Vice President, Business Development
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414,000
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673,350
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787,575
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—
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588,939
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2,463,864
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P. Kelly Tompkins
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Former Executive Vice President & Chief Operating Officer
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565,000
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899,500
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1,535,479
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—
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1,093,682
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4,093,661
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SUMMARY COMPENSATION TABLE VS. REALIZED PAY FOR THE CEO
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(page
39
)
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It is important to note that the grant date fair value of the stock and option awards (both time-based and performance-based vesting) as set forth in our 2017 SCT is for accounting and SEC disclosure purposes and is not realized pay for the indicated year. The table in this section shows the pay Mr. Goncalves actually realized in fiscal year 2017 in contrast to the reported pay presented in the 2017 SCT. The difference between reported pay in the SCT and realized pay reinforces the concept that a significant portion of Mr. Goncalves' compensation is at risk of forfeiture and dependent upon the performance of Cliffs. The graph found in this section illustrates the difference between the three-year average SCT compensation and realized pay of Mr. Goncalves as of December 31, 2017.
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SHAREHOLDER ENGAGEMENT
|
(page
23
)
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SAY-ON-PAY IMPLICATIONS
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(page
51
)
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As a result of the decline in support for our Say-on-Pay vote in recent years, we engaged in a robust process to solicit feedback to better understand our shareholders' concerns. During 2017, we reached out to our top 25 shareholders representing approximately 44% of our outstanding shares to discuss compensation matters. We have met with many investors and continue to meet with them in the first quarter of 2018. See the section entitled "2017 Say-on-Pay Vote and Shareholder Engagement" in the Compensation Discussion and Analysis section for more detail of what we heard and how we responded.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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(page
53
)
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As a matter of good corporate governance, we are asking our shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2018.
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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
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•
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FOR ALL of the nine individuals nominated by the Board for election as directors;
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•
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FOR the approval, on an advisory basis, of Cliffs' NEOs' compensation; and
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•
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FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the
2018
fiscal year.
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•
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By mail
. If you received a paper copy of the proxy card by mail, after reading the proxy materials, you may mark, sign and date your proxy card and return it in the prepaid and addressed envelope provided.
|
•
|
By telephone
. After reading the proxy materials and with your proxy card in front of you, you may call the toll-free number appearing on the proxy card, using a touch-tone telephone. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.
|
•
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Over the Internet
. After reading the proxy materials and with your proxy card in front of you, you may use a computer to access the website
www.proxyvote.com
. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.
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MEETING INFORMATION
|
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CORPORATE GOVERNANCE
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AUDIT COMMITTEE
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Members: 4
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Independent: 4
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Audit Committee Financial Experts: 3
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2017 Meetings: 7
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Responsibilities:
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▪
Reviews with our management, the internal auditors and the independent registered public accounting firm, the adequacy and effectiveness of our system of internal control over financial reporting
▪
Reviews significant accounting matters
▪
Reviews quarterly unaudited financial information prior to public release
▪
Approves the audited financial statements prior to public distribution
▪
Approves our assertions related to internal controls prior to public distribution
▪
Reviews any significant changes in our accounting principles or financial reporting practices
▪
Has the authority and responsibility to evaluate our independent registered public accounting firm; discusses with the independent registered public accounting firm their independence and considers the compatibility of non-audit services with such independence
▪
Annually selects and retains our independent registered public accounting firm to examine our financial statements and reviews, approves and retains the services performed by our independent registered public accounting firm
▪
Approves management’s appointment, termination or replacement of the head of Internal Audit
▪
Conducts a legal compliance review at least annually
|
||
Chair:
John T. Baldwin
|
Members:
Robert P. Fisher, Jr., Eric M. Rychel, and Michael D. Siegal
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COMPENSATION AND ORGANIZATION COMMITTEE
|
Members: 4
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Independent: 4
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2017 Meetings: 7
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||
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Responsibilities:
|
|
•
Oversees development and implementation of Cliffs' compensation policies and programs for executive officers
•
Ensures that criteria for awards under incentive plans relate to Cliffs' strategic plan and operating performance objectives and approves equity-based awards
•
Reviews and evaluates CEO and executive officer performance and approves compensation (with the CEO's compensation being subject to ratification by the independent members of the Board)
•
Assists with management development and succession planning
•
Reviews employment and severance plans and oversees regulatory compliance of compensation matters and related party transactions
•
Obtains the advice of outside experts with regard to compensation matters
•
May, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee
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||
Chair:
Robert P. Fisher, Jr.
|
Members:
Joseph A. Rutkowski, Jr., Gabriel Stoliar and Douglas C. Taylor
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GOVERNANCE AND NOMINATING COMMITTEE
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Members: 4
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Independent: 4
|
||
2017 Meetings: 5
|
||
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Responsibilities:
|
|
▪
Oversees annual review of our Corporate Governance Guidelines and our Guidelines for Selection of Nonemployee Directors and periodic review of external developments in corporate governance matters generally
▪
Periodically reviews and makes recommendations regarding the CEO's authorized levels for corporate expenditures
▪
Establish and maintains, with the Audit Committee, procedures for review of related party transactions
▪
Monitors the Board governance process and provides counsel to the CEO on Board governance and other matters
▪
Acts as the Board’s Nominating Committee and Proxy Committee in the election of directors
▪
Annually reviews and administers our director compensation plans and benefits, and makes recommendations to the Board with respect to compensation plans and equity-based plans for directors
▪
Other responsibilities include oversight of annual evaluation of the Board and CEO and monitoring risks associated with Board organization, membership, structure and succession planning
|
||
Chair:
Douglas C. Taylor
|
Members:
Susan M. Green, Michael D. Siegal and Gabriel Stoliar
|
DIRECTOR COMPENSATION
|
|
Board Form of Cash Compensation
|
2017 ($)
|
Annual Retainer
|
120,000
|
Lead Director Annual Retainer
|
48,000
|
Audit Committee Chair Annual Retainer
|
24,000
|
Compensation Committee Chair Annual Retainer
|
15,000
|
Governance Committee Chair Annual Retainer
|
12,000
|
Name
|
Fees Earned or Paid in Cash ($)(1)
|
Stock Awards ($)(2)
|
All Other Compensation ($)
|
Total ($)
|
J. T. Baldwin
|
132,000
|
100,000
|
—
|
232,000
|
R.P. Fisher, Jr.
|
123,750
|
100,000
|
—
|
223,750
|
S. M. Green
|
110,000
|
100,000
|
—
|
210,000
|
J.A. Rutkowski, Jr.
|
110,000
|
100,000
|
—
|
210,000
|
E.M. Rychel
|
110,000
|
100,000
|
—
|
210,000
|
J. S. Sawyer (3)
|
50,000
|
—
|
—
|
50,000
|
M. D. Siegal
|
110,000
|
100,000
|
—
|
210,000
|
G. Stoliar
|
110,000
|
100,000
|
—
|
210,000
|
D. C. Taylor
|
165,000
|
100,000
|
—
|
265,000
|
(1)
|
The amounts listed in this column reflect the aggregate cash dollar value of all earnings in
2017
for annual retainer fees and chair retainers.
|
(2)
|
The amounts reported in this column reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718 for the nonemployee directors’ restricted share awards granted during
2017
, which awards are further described above, and whether or not deferred by the director. The grant date fair value of the nonemployee directors’ restricted share award of
13,831
shares on
April 25, 2017
was $
7.23
per share ($100,000). Messrs. Rychel and Siegal elected to defer all or a portion of their restricted share award under the Directors' Plan. As of December 31,
2017
, the aggregate number of restricted shares subject to forfeiture held by each nonemployee director was as follows: Mr. Baldwin -
50,385
; Mr. Fisher -
50,385
; Ms. Green -
50,385
; Mr. Rutkowski -
50,385
; Mr. Rychel -
6,845
; Mr. Siegal -
28,650
; Mr. Stoliar -
50,385
; and Mr. Taylor -
50,385
. As of December 31,
2017
, the aggregate number of unvested deferred share units allocated to the deferred share accounts of Messrs. Rychel and Siegal under the Directors' Plan were
13,831
and
21,735
, respectively.
|
(3)
|
Mr. Sawyer served as a director until April 25, 2017.
|
|
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|
PROPOSAL 1
|
|
ELECTION OF DIRECTORS
|
|
þ
|
THE BOARD RECOMMENDS A VOTE
FOR
EACH OF THE NOMINEES LISTED ON THE FOLLOWING PAGES.
|
JOHN T. BALDWIN
|
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|
|
|
Former Director and Chairman of the Audit Committee of Metals USA Holdings Corp., a provider of a wide range of products and services in the heavy carbon steel, flat-rolled steel, specialty metals, and building products markets, from January 2006 to April 2013; Senior Vice President and Chief Financial Officer of Graphic Packaging Corporation, 2003 to 2005.
|
|
Qualifications:
Mr. Baldwin has experience as a former Audit Committee Chairman and retired Chief Financial Officer with over twenty-five years of increasing financial responsibility. Mr. Baldwin holds a Bachelor of Science degree from the University of Houston and J.D. from the University of Texas School of Law. Mr. Baldwin has worked abroad for several years and has a broad range of experience structuring and negotiating complicated financial and M&A transactions.
|
Director Since:
2014
|
|
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Other Current Public Directorships:
None
|
Age:
61
|
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Former Directorships:
|
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Metals USA Holdings Corp. (2006 - 2013)
|
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The Genlyte Group Incorporated (2003 - 2008)
|
ROBERT P. FISHER, JR.
|
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|
||
|
President and Chief Executive Officer of George F. Fisher, Inc., a private investment company that manages a portfolio of public and private investments, since 2002. Mr. Fisher served in various positions with Goldman, Sachs & Co., a global investment banking firm, from 1982 until 2001, eventually serving as Managing Director and head of its Canadian Corporate Finance and Canadian Investment Banking units for eight years and then as head of Goldman Sachs Investment Banking Mining Group.
|
|
Qualifications:
During Mr. Fisher's tenure at Goldman, Sachs & Co., he worked extensively with many of the leading North American metals and mining companies, and also served as the head of Goldman's Investment Banking Mining Group. Mr. Fisher has vast experience in the investment and finance industries which included advising the boards of numerous public companies. Mr. Fisher has served on the Audit Committee, the Nominating and Corporate Governance Committee and as chair of the Human Resources Committee of CML Healthcare, Inc. Mr. Fisher holds a Bachelor of Arts degree from Dartmouth College and a Master of Arts degree in Law and Diplomacy from Tufts University.
|
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Director Since:
2014
|
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Other Current Public Directorships:
None
|
|
Age:
63
|
|
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Former Directorships:
|
|
|
|
|
CML Healthcare, Inc. (2010 - 2013)
|
LOURENCO GONCALVES
|
|
|
||
|
Chairman of the Board, President and Chief Executive Officer of the Company since August 2014; Chairman, President and Chief Executive Officer of Metals USA Holdings Corp., an American manufacturer and processor of steel and other metals from May 2006 through April 2013; President, Chief Executive Officer and a director of Metals USA Inc. from February 2003 through April 2006. Prior to Metals USA, Mr. Goncalves served as President and Chief Executive Officer of California Steel Industries, Inc. from March 1998 to February 2003.
|
|
Qualifications:
Mr. Goncalves brings more than 30 years of experience in the metals and mining industries, as well as extensive board experience, in the United States and abroad. Mr. Goncalves earned a Bachelor's degree in Metallurgical Engineering from the Military Institute of Engineering in Rio de Janeiro, Brazil and a Masters of Science degree in Metallurgical Engineering from the Federal University of Minas Gerais in Belo Horizonte, Brazil. Mr. Goncalves was most recently recognized as a Distinguished Member and Fellow by the Association for Iron & Steel Technology.
|
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Director Since:
2014
|
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Other Current Public Directorships:
|
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Age:
60
|
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American Iron and Steel Institute (2014)
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Former Directorships:
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Ascometal SAS (2011 - 2014)
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Metals USA Holdings Corp. (2006 - 2013)
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Metals USA Inc. (2003 - 2006)
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SUSAN M. GREEN
|
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Served as Deputy General Counsel, U.S. Congress Office of Compliance, which enforces the labor and employment laws for the Legislative Branch, from November 2007 through September 2013. Prior to that position, Ms. Green held several appointments in the U.S. Department of Labor during the Administration of President Bill Clinton (1999-2001), and served as Chief Labor Counsel for then-Senator Edward M. Kennedy (1996-1999).
|
|
Qualifications:
Ms. Green was originally proposed as a nominee for the Board by the USW pursuant to the terms of our 2004 labor agreement. Ms. Green has served as both a labor organizer and as an attorney representing organized labor. Ms. Green brings her diverse experiences as labor attorney and an alternative point of view to our Board. Ms. Green received her J.D. from Yale Law School and an A.B. from Harvard College.
|
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Director Since:
2007
|
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|
Other Current Public Directorships:
None
|
|
Age:
59
|
|
|
Former Directorships:
|
|
|
|
|
Cleveland-Cliffs Inc.
|
JOSEPH A. RUTKOWSKI, JR.
|
|
|
||
|
Principal of Winyah Advisors LLC, a management consulting firm, since 2010; former Executive Vice President of Nucor Corporation (“Nucor”), the largest steel producer in the United States, from 1998 to 2010; various previous capacities at Nucor that included: Manager of Melting and Casting at the Nucor steel division from 1991 to 1992; General Manager from 1992 to 1998; Vice President from 1993 to 1998.
|
|
Qualifications:
Mr. Rutkowski has over 30 years of experience in the steel industry, including 12 years of service as executive vice president of Nucor. Mr. Rutkowski holds a Bachelor's of Science in Mechanics and Materials Science from Johns Hopkins University.
|
|
Director Since:
2014
|
|
|
Other Current Public Directorships:
|
|
Age:
63
|
|
|
Insteel Industries, Inc. (2015)
Cenergy Holdings SA (2016)
|
|
|
|
|
Former Directorships:
None
|
ERIC M. RYCHEL
|
|
|
||
|
Executive Vice President, Chief Financial Officer and Treasurer of Aleris Corporation, a global leader in the manufacture and sale of aluminum rolled products; Senior Vice President and Chief Financial Officer of Aleris Corporation from April 2014 - December 2014; Vice President and Treasurer of Aleris Corporation from 2012 - 2014; Managing Director, Industrials Group at Barclays Capital, Inc. from 2010 - 2012.
|
|
Qualifications:
As Aleris' Chief Financial Officer since 2014, Mr. Rychel leads all of Aleris' capital structure and key initiatives in finance. He provides leadership for the global finance, investor relations and IT functions, and also chairs Aleris' risk and benefits committees. Mr. Rychel received his Bachelor of Science in Economics degree from Wharton School of the University of Pennsylvania.
|
|
Director Since:
2016
|
|
|
Other Current Public Directorships:
None
|
|
Age:
44
|
|
|
Former Directorships:
None
|
MICHAEL D. SIEGAL
|
|
|
||
|
Chairman and Chief Executive Officer of Olympic Steel, Inc., a publicly traded company since 1994, focused on the value-added processing of flat rolled and tubing metal products, since 1984.
|
|
Qualifications:
Under Mr. Siegal’s leadership, Olympic Steel, Inc. experienced consistent growth and has been transformed from a family-owned steel distributor to a publicly-traded fully-integrated, value added processor and supply chain manager serving the outsourcing needs of America’s largest manufacturers. Olympic Steel, Inc. has grown from $35 million to more than $1 billion in revenues. Mr. Siegal received his Bachelor of Science degree from Miami University.
|
|
Director Since:
2014
|
|
|
Other Current Public Directorships:
|
|
Age:
65
|
|
|
Olympic Steel, Inc. (1994)
|
|
|
|
|
Former Directorships:
None
|
GABRIEL STOLIAR
|
|
|
||
|
Managing Partner of Studio Investimentos, an asset management firm focused on Brazilian equities, since 2009; Chairman of the board of directors of Tupy S.A., a foundry and casting companies, since 2009; board of directors of Knijnik Engenharia Integrada, an engineering company, from 2013 to 2018; board of directors of LogZ Logistica Brasil S.A., a ports logistic company, since 2011; Chief Financial Officer and Head of Investor Relations and subsequently as Executive Director of Planning and Business Development at Vale S.A., a Brazilian multinational diversified metals and mining company, from 1997 to 2008.
|
|
Qualifications:
Mr. Stoliar brings to the Board his vast experience in and relating to the metals and mining industries along with his extensive experience serving on various boards of directors. Mr. Stoliar holds a Bachelor’s of Science in Industrial Engineering from the Universidade Federal do Rio de Janeiro, a post graduate degree in Production Engineering with focus in Industrial Projects and Transportation from the Universidade Federal do Rio de Janeiro and an Executive MBA from PDG-SDE/RJ.
|
|
Director Since:
2014
|
|
|
Other Current Public Directorships:
|
|
Age:
63
|
|
|
Tupy S.A. (2009)
|
|
|
|
|
Former Directorships:
None
|
DOUGLAS C. TAYLOR
|
|
|
||
|
Lead Director of the Board since August 2014. Former Managing Partner of Casablanca Capital LP, a hedge fund, from 2010-2016; Managing Director at Lazard Freres, a leading financial advisory and asset management firm, from 2002 to 2010; Chief Financial Officer and director at Sapphire Industrials Corp., from 2008 to 2010.
|
|
Qualifications:
Mr. Taylor's extensive financial and strategic advisory investment experience, including advising public companies, is invaluable to Cliffs. Mr. Taylor holds a Bachelor of Arts degree in Economics from McGill University and a Master of Arts degree in International Affairs from Columbia University School of International and Public Affairs.
|
|
Director Since:
2014
|
|
|
Other Current Public Directorships:
None
|
|
Age:
53
|
|
|
Former Public Directorships:
|
|
|
|
|
Sapphire Industrials Corp. (2008 - 2010)
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
|
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
|
|
EQUITY COMPENSATION PLAN INFORMATION
|
|
Plan Category
|
Number of Securities to be
Issued Upon Exercise of Outstanding Options,
Warrants and Rights (a)
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
|
|||||
Equity Compensation Plans Approved by Security Holders
|
8,772,891
|
|
(1)
|
$10.25
|
(2)
|
27,218,652
|
|
(3)
|
Equity Compensation Plans Not Approved by Security Holders
|
—
|
|
|
__
|
|
—
|
|
|
Total
|
8,772,891
|
|
|
|
|
27,218,652
|
|
|
(1)
|
Includes the following securities to be issued upon exercise or vesting of:
|
•
|
1,801,260 performance share awards from the A&R 2012 ICE Plan, 1,097,066 performance share awards from the 2015 Equity Plan and 498,212 performance share awards from the A&R 2015 Equity Plan, which assumes a maximum payout of 200% upon meeting certain performance targets (as a result, this aggregate reported number may overstate actual dilution);
|
•
|
4,403,112 restricted stock units for employees under both employee plans and 373,371 under the Directors' Plan;
|
•
|
599,870 stock options for which all are vested and exercisable as of December 31, 2017; and
|
•
|
0 shares from the ESPP.
|
(2)
|
Restricted stock units and performance-based awards are not taken into account in the weighted-average exercise price as such awards have no exercise price.
|
(3)
|
Includes the following securities:
|
•
|
16,606,386 common shares remaining available under the A&R 2015 Equity Plan that may be issued in respect of stock options, SARs, restricted shares, restricted stock units, deferred shares, performance shares, performance units, retention units and dividends or dividend equivalents;
|
•
|
612,266
common shares remaining available under the Directors’ Plan that may be issued in respect of restricted shares, restricted stock units, deferred shares and other awards that may be denominated or payable in, valued by or reference to or based on common shares or factors that may influence the value of the common shares; and
|
•
|
10,000,000 common shares authorized for purchase under the ESPP.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
Name
|
Title
|
Year Hired / Promoted
|
Lourenco Goncalves
|
Chairman, President and Chief Executive Officer (the "CEO")
|
2014
|
Timothy K. Flanagan
|
Executive Vice President, Chief Financial Officer (the "CFO") & Treasurer (served in this capacity for fiscal year 2017; effective January 1, 2018, serves as our Executive Vice President, Chief Financial Officer)
|
2017
|
Terry G. Fedor
|
Executive Vice President, United States Iron Ore
|
2014
|
Clifford T. Smith
|
Executive Vice President, Business Development
|
2015
|
P. Kelly Tompkins
|
Former Executive Vice President & Chief Operating Officer (the "COO"), through December 31, 2017, at which time he retired from Cliffs
|
2017
|
•
|
Support the execution of our business strategy and long-term financial objectives;
|
•
|
Attract, motivate and retain highly talented executives who will promote the short- and long-term growth of the Company;
|
•
|
Create shareholder value and returns to align the long-term interests of our NEOs with those of our shareholders; and
|
•
|
Reward executives for contributions at a level reflecting the Company's performance as well as their individual performance.
|
•
|
Align short-term and long-term incentives with results delivered to shareholders;
|
•
|
Design an incentive plan that focuses on performance objectives tied to our business plan (including profitability-related and cost control objectives), relative performance objectives tied to market conditions (including relative total shareholder return ("TSR"), measured by share price appreciation plus dividends, if any) and performance against other key objectives tied to our business strategy (including safety, reduce debt, and decrease overall spending);
|
•
|
Provide competitive fixed compensation elements over the short-term (base salary) and long-term (equity and retirement benefits) to encourage long-term retention of our key executives; and
|
•
|
Continue to structure programs as in prior years to align with corporate governance best practices (such as not providing "gross-ups" related to change in control payments, using "double-trigger" vesting in connection with a change in control for equity awards, using Share Ownership Guidelines and maintaining a clawback policy related to incentive compensation for our executive officers).
|
•
|
Annual Incentive Program: We selected Adjusted EBITDA and safety as the performance metrics for the Executive Management Performance Incentive Plan (the "EMPI Plan") for 2017. In addition:
|
◦
|
We incorporated strategic initiatives, such as refinancing our capital structure, completing a direct-reduced iron ("DRI") and HBI "bankable" feasibility study, successfully commercializing Mustang pellets, protecting and enhancing our U.S. Iron Ore business, retaining our key talent, and other initiatives the Compensation Committee deemed significant to advance the Company;
|
◦
|
We included a minimum Adjusted EBITDA condition in our EMPI Plan for 2017, which means that no bonuses would be payable under our EMPI Plan if our Adjusted EBITDA was less than $100 million; and
|
◦
|
The Compensation Committee was permitted (solely by exercising negative discretion) to set the final EMPI Plan payout based on its evaluation of an individual's performance for 2017; provided, however, that any such adjustment does not result in a final EMPI Plan payout in excess of the maximum potential EMPI award.
|
•
|
Long-Term Incentive Program: We granted long-term performance cash and performance shares that are tied to our relative TSR performance against the SPDR S&P Metals and Mining Exchange Traded Fund over a three-year performance period. We chose relative TSR as the sole metric for our performance cash and share plan. In addition, we granted service-based restricted stock units that vest at the end of a three-year period.
|
•
|
CEO Retention Grant: The Compensation Committee approved a special retention grant (t
he design was 50% performance shares and 50% restricted stock units)
to the CEO in June 2017. The objective of this award was to provide the CEO with meaningful financial incentive to drive the Company performance and remain with Cliffs through the next few years. The retention grant is discussed later in this CD&A.
|
WHAT WE DO...
|
|
ü
|
Provide a considerable proportion of NEO compensation in the form of performance-based compensation
|
ü
|
Use double-trigger vesting in connection with a change in control with respect to our long-term equity awards
|
ü
|
Maintain an incentive compensation clawback policy
|
ü
|
Include caps on individual payouts in incentive plans
|
ü
|
Conduct an annual Say-on-Pay advisory vote
|
ü
|
Set significant share ownership guidelines for our NEOs and Directors
|
ü
|
Retain an independent compensation consultant to advise the Compensation Committee
|
ü
|
Conduct annual compensation-related risk reviews
|
ü
|
Maintain an insider trading policy that also prohibits any officer or Director from pledging Cliffs securities
|
WHAT WE DON'T DO...
|
|
û
|
No tax "gross-ups" on change in control payments related to excise taxes and cash paid in lieu of health and welfare benefits
|
û
|
No
service credits related to the supplemental retirement plan benefit for all future hires
|
û
|
No hedging in, pledging of, or short selling of, our common shares
|
û
|
No repricing or backdating of stock options
|
WHAT WE HEARD...
|
|
HOW WE RESPONDED...
|
|
|
|
Shareholders appreciated the outreach and improvements we’ve made to the CD&A.
|
|
We will continue to ask for input and improve the CD&A.
|
|
|
|
Shareholders wanted more information on how and why annual incentive targets were established with an emphasis on our strategic initiatives. In addition, they wanted more clarity about the weighting of the various metrics.
|
|
We have expanded our discussion of the annual incentive including showing the weighting of the three key metrics: Adjusted EBITDA, safety and strategic measures. We also added more detail to the discussion of our business results in order to provide context for the Compensation Committee’s decisions.
|
|
|
|
Shareholders wanted more information on one-time grants with more explanation of why such grants are required.
|
|
We have expanded our discussion of one-time grants including the retention grant provided to our CEO. One-time grants are not the Compensation Committee’s preferred method of compensation.
|
|
|
|
Some shareholders inquired about sustainability metrics including health and environmental.
|
|
As a mining company, sustainability metrics are core to our business. Our Board reviews annual progress on these metrics but has chosen not to include this metric in our incentive program design.
|
•
|
Oversee development and implementation of Cliffs’ compensation policies and programs for executive officers;
|
•
|
Ensure that the criteria for awards under the EMPI Plan and the
A&R 2015 Equity Plan
(or its successors) are appropriately related to Cliffs’ strategic plan and operating performance objectives; and
|
•
|
Make recommendations to the Board with respect to the approval, adoption and amendment of all cash- and equity-based incentive compensation plans in which any executive officer of Cliffs participates.
|
•
|
At least annually, evaluate the performance of the executive officers and determine and approve such executive officers’ compensation levels, except for the CEO/President;
|
•
|
Approve the compensation level of the CEO/President, subject to ratification by the independent members of the Board;
|
•
|
Determine and measure achievement of corporate and individual goals and objectives for the executive officers under our incentive compensation plans; and
|
•
|
Approve equity-based awards granted to employees.
|
•
|
Review and recommend to the Board candidates for election as executive officers, and review and approve offers of employment with such officers;
|
•
|
Review and approve severance or retention plans and any severance or other termination payments proposed to be made to executive officers; and
|
•
|
Assist the Board with respect to management development and succession planning.
|
•
|
Proposed performance measures and levels for our annual and long-term incentive programs after reviewing our operational forecasts, key economic indicators affecting our businesses, historical performance, recent trends and our strategic plans;
|
•
|
Proposed performance measures that they believed to be most important and meaningful to the achievement of our strategic goals; and
|
•
|
Proposed what they believed to be the appropriate weighting for each factor in the calculation of overall incentive awards and threshold, target and maximum payout levels appropriate for each of the performance measures we chose.
|
•
|
Commenting on the competitiveness of our executive compensation programs;
|
•
|
Providing information about market trends in executive pay practices;
|
•
|
Advising on compensation program design and structure;
|
•
|
Identifying a mining industry and general industry comparator group to use to assess the appropriateness and competitiveness of our executive compensation programs;
|
•
|
Reviewing the relationship between executive compensation and Company performance; and
|
•
|
Assisting in the preparation of our proxy statement.
|
•
|
The executive compensation consultant provides no other services to the Company (it provides only executive and director compensation advisory services to the Compensation Committee and Governance Committee, respectively);
|
•
|
The executive compensation consultant maintains a conflicts policy to prevent a conflict of interest or other independence issues;
|
•
|
None of the individuals on the executive compensation consultant's team assigned to the engagement has any business or personal relationship with members of the Compensation Committee outside of the engagement;
|
•
|
Neither the individuals on the executive compensation consultant's team assigned to the engagement, nor to our knowledge the executive compensation firm, has any business or personal relationship with any of our executive officers outside of the engagement;
|
•
|
None of the individuals on the executive compensation consultant's team assigned to the engagement maintains any direct individual position in our shares;
|
•
|
The executive compensation consultant has regular discussions with only the members of the Compensation Committee (or select members of the Compensation Committee) present and when it interacts with management, it is at the Compensation Committee chair’s request and/or with the chair’s knowledge and approval;
|
•
|
None of the individuals on the executive compensation consultant's team assigned to the engagement has provided any gifts, benefits, or donations to us, nor have they received any gifts, benefits, or donations from us; and
|
•
|
The executive compensation consultant is bound by strict confidentiality and information sharing protocols.
|
Company Name
|
Applicable FYE
|
Revenues
($MMs)
|
Market Cap.
($MMs)
|
Industry
|
Agnico Eagle Mines Limited
|
12/31/2016
|
2,138
|
9,356
|
Gold
|
AK Steel Holding Corporation
|
12/31/2016
|
5,883
|
3,196
|
Steel
|
Allegheny Technologies Incorporated
|
12/31/2016
|
3,135
|
1,735
|
Steel
|
Carpenter Technology Corporation
|
6/30/2017
|
1,798
|
1,750
|
Steel
|
CF Industries Holdings, Inc.
|
12/31/2016
|
3,685
|
7,338
|
Fertilizers and Agricultural Chemicals
|
Commercial Metals Company
|
8/31/2017
|
4,570
|
2,187
|
Steel
|
Compass Minerals International, Inc.
|
12/31/2016
|
1,138
|
2,647
|
Diversified Metals and Mining
|
Ferro Corporation
|
12/31/2016
|
1,145
|
1,195
|
Specialty Chemicals
|
FMC Corporation
|
12/31/2016
|
3,282
|
7,570
|
Fertilizers and Agricultural Chemicals
|
Goldcorp Inc.
|
12/31/2016
|
3,510
|
11,618
|
Gold
|
Kinross Gold Corporation
|
12/31/2016
|
3,472
|
3,884
|
Gold
|
Schnitzer Steel Industries, Inc.
|
8/31/2017
|
1,688
|
708
|
Steel
|
Scotts Miracle-Gro Company
|
9/30/2017
|
2,642
|
5,686
|
Fertilizers and Agricultural Chemicals
|
Tronox Limited
|
12/31/2016
|
2,093
|
1,202
|
Commodity Chemicals
|
U.S. Concrete, Inc.
|
12/31/2016
|
1,168
|
1,001
|
Construction Materials
|
Vulcan Materials Company
|
12/31/2016
|
3,593
|
16,559
|
Construction Materials
|
Worthington Industries
|
5/31/2017
|
3,014
|
2,673
|
Steel
|
|
|
|
|
|
25
th
Percentile
|
|
1,798
|
1,735
|
|
Median
|
|
3,014
|
2,673
|
|
75
th
Percentile
|
|
3,510
|
7,338
|
|
|
|
|
|
|
Cleveland-Cliffs Inc.
|
12/31/2017
|
2,330
|
2,144
|
Steel
|
|
|
|
|
|
Long-Term Incentive Compensation
|
||
|
|
Base Salary
|
Annual Incentive
|
|
Performance
Cash
|
Performance Shares
|
Restricted Stock Units
|
|
|
|
|
|
|
|
|
Primary Objective
|
|
Attraction and retention
|
Motivate the achievement of short-term strategic and financial objectives
|
|
Attraction and retention as well as promotion of long-term strategic and financial objectives
|
||
|
|
|
|
|
|
|
|
Who Receives
|
|
All NEOs
|
|
All NEOs
|
|||
|
|
|
|
|
|
||
Timing
|
|
Reviewed annually
|
Granted annually and paid in February of the following year
|
|
Annually
|
||
|
|
|
|
|
|
|
|
Form of Delivery
|
|
Cash
|
|
Cash
|
Equity
|
||
|
|
|
|
|
|
|
|
Performance Type
|
|
Short-term emphasis
|
|
Long-term emphasis
|
|||
|
|
|
|
|
|
||
Performance Period
|
|
Ongoing
|
1 year
|
|
3 years
|
||
|
|
|
|
|
|
|
|
How Payout Is Determined
|
|
Compensation Committee judgment, with CEO input
|
Formulaic and Compensation Committee judgment
|
|
Formulaic, approved by Compensation Committee
|
Continued employment with Cliffs
|
|
|
|
|
|
|
|
|
|
Performance Measures
|
|
N/A
|
Company and individual performance factors
|
|
Relative Total Shareholder Return
|
N/A
|
•
|
Range, scope and complexity of the NEO's role;
|
•
|
Comparability with the external (market median) and internal marketplace (roles of similar responsibilities, experience and organizational impact);
|
•
|
Individual performance;
|
•
|
Tenure and experience; and
|
•
|
Retention considerations.
|
Base Salary ($)
|
X
|
Target Award Level (%)
|
X
|
2017 Funding (%)
|
=
|
EMPI Award ($)
|
|
EMPI Plan Payout ($)
|
|
Goncalves
|
4,194,060
|
|
Flanagan
|
516,192
|
|
Fedor
|
534,259
|
|
Smith
|
534,259
|
|
Tompkins
|
1,093,682
|
|
•
|
Ensure the NEOs’ financial interests are aligned with our shareholders’ interests;
|
•
|
Motivate decision making that improves financial performance over the long-term;
|
•
|
Recognize and reward superior financial performance of our Company;
|
•
|
Provide a retention element to our compensation program; and
|
•
|
Promote compliance with the Share Ownership Guidelines for executives.
|
|
|
Performance Level
|
|||
Performance Factor
|
Weight
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Relative TSR
|
100%
|
Below 25
th
Percentile
|
25
th
Percentile
|
50
th
Percentile
|
75
th
Percentile
|
Payout
|
|
—%
|
50%
|
100%
|
200%
|
AK Steel Holding Corporation
|
Freeport-McMoRan, Inc.
|
Royal Gold, Inc.
|
Alcoa Corporation
|
Haynes International, Inc.
|
Schnitzer Steel Industries Inc.
|
Allegheny Technologies Inc.
|
Hecla Mining Company
|
Steel Dynamics, Inc.
|
Carpenter Technology Corporation
|
Kaiser Aluminum Corporation
|
Stillwater Mining Company
|
Century Aluminum Company
|
Materion Corporation
|
SunCoke Energy Inc.
|
Coeur Mining, Inc.
|
McEwen Mining Inc.
|
TimkenSteel Corporation
|
Commercial Metals Company
|
Newmont Mining Corporation
|
United States Steel Corporation
|
Compass Minerals International, Inc.
|
Nucor Corporation
|
Worthington Industries, Inc.
|
CONSOL Energy Inc.
|
Reliance Steel & Aluminum Co.
|
|
|
Target %
|
|
Total Grant Value ($)
|
Target Performance Cash Incentive Awards ($)
|
Target Performance Share Awards (#)
|
Restricted Stock Units (#)
|
|
Goncalves
|
400
|
%
|
5,975,082
|
1,768,000
|
|
180,252
|
180,252
|
Flanagan
|
175
|
%
|
804,345
|
238,000
|
|
24,265
|
24,265
|
Fedor
|
175
|
%
|
832,491
|
246,330
|
|
25,114
|
25,114
|
Smith
|
175
|
%
|
832,491
|
246,330
|
|
25,114
|
25,114
|
Tompkins
|
250
|
%
|
1,623,046
|
480,250
|
|
48,963
|
48,963
|
|
Total Award Value ($)
|
Target Performance Shares (#)
|
Restricted Stock Units (#)
|
Goncalves
|
5,184,379
|
249,106
|
531,674
|
|
|
Performance Level
|
|||
Performance Factor
|
Weight
|
Below Threshold
|
Threshold
|
Target
|
Maximum
|
Relative TSR
|
50%
|
Below 25
th
Percentile
|
25
th
Percentile
|
50
th
Percentile
|
75
th
Percentile
|
2016 Annual Adjusted EBITDA (USD $ in millions)
|
50%
|
Below 75.0
|
75.0
|
125.0
|
175.0
|
2017 Annual Adjusted EBITDA (USD $ in millions)
|
Below 350.0
|
350.0
|
500.0
|
650.0
|
|
2018 Annual Adjusted EBITDA (USD $ in millions)
|
Below 400.0
|
400.0
|
500.0
|
600.0
|
|
Payout
|
|
—%
|
50%
|
100%
|
200%
|
|
Total Award Value ($)
|
Cash Award ($)
|
Restricted Stock Units (#)
|
Restricted Stock Units ($)
|
Goncalves
|
7,223,240
|
4,650,000
|
633,803
|
2,573,240
|
Flanagan
|
499,843
|
318,000
|
44,789
|
181,843
|
Fedor
|
1,075,635
|
673,350
|
99,085
|
402,285
|
Smith
|
1,075,635
|
673,350
|
99,085
|
402,285
|
Tompkins
|
1,436,906
|
899,500
|
132,366
|
537,406
|
Compensation Component
|
Performance Period
|
2017 Amounts Shown in Summary Compensation Table ($)
|
2017 Realized Amounts ($)
|
Performance Results
|
Base Salary
|
2017
|
1,300,000
|
1,300,000
|
The CEO's base salary was increased in 2017 by $100,000.
|
Short-term Incentive
|
2017
|
4,194,060
|
4,194,060
|
Represents a payout of 161.31% of target, reflecting the Company's 2017 performance against the Adjusted EBITDA, safety, and strategic initiatives.
|
Long-term Incentive Performance Cash
|
2017
|
371,880
|
371,880
|
Represents the 2016-2018 performance cash incentive award earned by achieving the Adjusted EBITDA metric, which is evaluated and set annually each February, payout of 103.3% of target, reflecting the Company's 2017 Adjusted EBITDA metric.
|
Long-term Incentive Performance Shares
|
2017-2019
|
3,549,162
|
—
|
180,252 target performance shares granted on February 21, 2017 multiplied by the grant fair value of $19.69 per share, in accordance with FASB ASC 718.
|
Long-term Incentive Restricted Stock Units
|
2017-2019
|
2,103,541
|
—
|
180,252 restricted stock units granted on February 21, 2017 multiplied by the closing price on the date of grant of $11.67 per share.
|
CEO Special Retention Award Performance Shares
|
2017-2019
|
2,675,399
|
—
|
249,106 target performance shares granted on June 26, 2017 multiplied by the grant fair value of $10.74 per share, in accordance with FASB ASC 718.
|
CEO Special Retention Award Restricted Stock Units
|
2017-2019
|
3,530,315
|
—
|
531,674 restricted stock units granted on June 26, 2017 multiplied by the closing price of $6.64 per share.
|
Special Retention Award
|
2015
|
4,650,000
|
4,650,000
|
Represents the 2015 cash retention grant.
|
Special Retention Award
|
2015
|
—
|
4,214,790
|
633,803 restricted stock units vested on December 15, 2017 multiplied by the closing price on the date of grant of $6.65 per share.
|
Long-term Incentive Performance Shares
|
2015-2017
|
—
|
1,015,990
|
187,137 target performance shares were granted and 140,914 shares were earned based on actual performance of 75.3%. 46,223 target shares were forfeited for not meeting the performance metric. Shares valued based on closing price on December 29, 2017 of $7.21.
|
Long-term Incentive Restricted Stock Units
|
2015-2017
|
—
|
449,745
|
62,378 restricted stock units vested on December 29, 2017 multiplied by the closing price of $7.21 per share.
|
Change in Pension Value and NQDC Compensation
|
2017
|
650,202
|
650,202
|
Amount as set in "Change in Pension Value and Nonqualified Deferred Compensation Earnings."
|
Other Compensation
|
2017
|
536,946
|
536,946
|
Amounts as set forth in "All Other Compensation."
|
|
|
23,561,505
|
17,383,613
|
|
|
Multiple of Base Pay
|
CEO
|
6x
|
Executive / Senior Vice President
|
3x
|
Vice President
|
1.5x
|
•
|
stock owned directly; and
|
•
|
unvested restricted stock or restricted stock units.
|
•
|
Depending on position, two or three times annual base salary and target annual incentive as severance upon termination within 24 months following the change in control, a payment for two or three years of continued SERP benefits, up to $10,000 in outplacement services, up to $10,000 per year for tax and financial planning services for two or three years and, under certain circumstances, continuation of welfare benefits for two or three years, depending on position; and
|
•
|
Non-competition, confidentiality and non-solicitation restrictions on NEOs who receive severance payments following the change in control.
|
•
|
Annual incentive awards paid under our annual cash incentive compensation program;
|
•
|
Equity-based awards under our long-term incentive equity program; and
|
•
|
Any other incentive-based compensation paid or granted pursuant to an incentive plan.
|
COMPENSATION COMMITTEE REPORT
|
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
|
COMPENSATION-RELATED RISK ASSESSMENT
|
|
EXECUTIVE COMPENSATION
|
|
Name and Principal Position(a)
|
Year (b)
|
Salary ($)
(1)(2) (c)
|
|
Bonus ($) (1) (3) (d)
|
|
Stock Awards ($) (4) (e)
|
|
Option Awards
($)(f)
|
|
Non-Equity Incentive Plan Compensation
($) (1)(5) (g)
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (6) (h)
|
|
All Other Compensation
($) (7) (i)
|
|
Total ($) (j)
|
|
Lourenco Goncalves
Chairman, President and CEO
|
2017
|
1,300,000
|
|
4,650,000
|
|
11,858,417
|
|
—
|
|
4,565,940
|
|
650,202
|
|
536,946
|
|
23,561,505
|
|
2016
|
1,200,000
|
|
—
|
|
2,184,134
|
|
—
|
|
5,520,000
|
|
314,528
|
|
317,819
|
|
9,536,481
|
|
|
2015
|
1,200,000
|
|
—
|
|
6,177,499
|
|
1,440,947
|
|
2,073,600
|
|
133,502
|
|
88,260
|
|
11,113,808
|
|
|
Timothy K. Flanagan
EVP, CFO & Treasurer
|
2017
|
400,000
|
|
318,000
|
|
760,951
|
|
—
|
|
540,829
|
|
144,000
|
|
30,553
|
|
2,194,333
|
|
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2015
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Terry G. Fedor
EVP, United States Iron Ore
|
2017
|
414,000
|
|
673,350
|
|
787,575
|
|
—
|
|
588,939
|
|
139,800
|
|
24,258
|
|
2,627,922
|
|
2016
|
402,000
|
|
—
|
|
321,148
|
|
—
|
|
749,068
|
|
121,300
|
|
27,558
|
|
1,621,074
|
|
|
2015
|
402,000
|
|
—
|
|
930,587
|
|
211,211
|
|
277,862
|
|
42,800
|
|
23,474
|
|
1,887,934
|
|
|
Clifford T. Smith
EVP, Business Development
|
2017
|
414,000
|
|
673,350
|
|
787,575
|
|
—
|
|
588,939
|
|
157,800
|
|
36,888
|
|
2,658,552
|
|
2016
|
402,000
|
|
—
|
|
321,148
|
|
—
|
|
749,068
|
|
155,500
|
|
37,867
|
|
1,665,583
|
|
|
2015
|
402,000
|
|
—
|
|
930,587
|
|
211,211
|
|
277,862
|
|
35,000
|
|
35,327
|
|
1,891,987
|
|
|
P. Kelly Tompkins
Former EVP & COO
|
2017
|
565,000
|
|
899,500
|
|
1,535,479
|
|
—
|
|
1,093,682
|
|
111,967
|
|
110,381
|
|
4,316,009
|
|
2016
|
537,000
|
|
—
|
|
428,990
|
|
—
|
|
1,000,618
|
|
172,838
|
|
34,741
|
|
2,174,187
|
|
|
2015
|
537,000
|
|
—
|
|
1,243,092
|
|
282,128
|
|
371,174
|
|
72,987
|
|
35,155
|
|
2,541,536
|
|
|
(1) 2017 amounts in columns (c), (d) and (g) reflect the salary, bonus and non-equity incentive plan compensation for each NEO, respectively, before pre-tax reductions for contributions to the 401(k) Savings Plan, the 2012 NQDC Plan and certain other benefit plans.
|
|||||||||||||||||
(2) The 2017 salary of the NEOs includes their base salary before the employees’ contributions to the 401(k) Savings Plan. The following table summarizes salary contributions for the 401(k) Savings Plan for NEOs in 2017:
|
(3)
|
The 2017 amounts in columns (d) reflect the 2015 Retention Cash Award granted on September 10, 2015, earned on February 15, 2017. These awards are discussed in further detail in “Compensation Discussion and Analysis - Analysis of 2017 Compensation Decisions," under the sub-heading “2015 Cash and Restricted Stock Unit Grants".
|
(4)
|
The 2017 amounts in column (e) reflect the aggregate grant date fair value, computed in accordance with FASB ASC 718, for performance share awards and restricted stock units granted during 2017. For performance shares granted during 2017, the amounts reported are based on the probable outcome as of the grant date. For additional information, refer to Item 8, Note1 in our Annual Report on Form 10-K for the year ended December 31, 2017. These types of awards are discussed in further detail in “Compensation Discussion and Analysis–Analysis of 2017 Compensation Decisions", under the sub-headings “2017–2019 Performance Cash Incentive Awards, Performance Share Awards, and Restricted Stock Unit Grants” and “CEO Special Retention Award”.
|
(5)
|
The 2017 amounts in column (g) reflect the incentive awards earned in 2017 under the EMPI Plan and Long-Term Incentive Program, which are discussed in further detail in “Compensation Discussion and Analysis–Analysis of 2017 Compensation" under the sub-headings “Annual Incentive Program” and "Long–Term Incentive Program." The 2017 Adjusted EBITDA metric was met and, therefore, the earned amounts are reported for 2017 in the Non-Equity Incentive Plan Compensation column of the
|
(6)
|
The 2017 amounts in column (h) reflect the actuarial increase in the present value of the NEO’s benefits under the Pension Plan and the SERP, both of which are discussed in “Compensation Discussion and Analysis–Retirement and Deferred Compensation Benefits” under the sub-heading “Defined Benefit Pension Plan,” determined using interest rate and mortality assumptions consistent with those used in our financial statements and may include amounts in which the NEO is not fully vested. The present value of accumulated pension benefits for the NEOs generally increased from December 31, 2016, to December 31, 2017. This is primarily the result of the one additional year of benefit accruals earned under the qualified and nonqualified pension plans. This column also includes amounts for above-market interest for the NEOs’ balances in the 2012 NQDC Plan.
|
|
Present Value of Pension Accruals ($)
|
|
Above-Market Interest
on Deferred Compensation ($)
|
|
Total ($)
|
|
Goncalves
|
650,000
|
|
202
|
|
650,202
|
|
Flanagan
|
144,000
|
|
—
|
|
144,000
|
|
Fedor
|
139,800
|
|
—
|
|
139,800
|
|
Smith
|
157,800
|
|
—
|
|
157,800
|
|
Tompkins
|
111,800
|
|
167
|
|
111,967
|
|
(7)
|
The 2017 amounts in column (i) reflect the combined value of the NEOs' perquisites or the benefits attributable to our paid parking, fitness reimbursement program, executive physical, financial services, dividends paid or accrued on equity holdings, matching contributions made on behalf of the executives under the 401(k) Savings Plan and the 2012 NQDC Plan and commuter expenses.
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)
(1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (#)
(2)
|
All Other Stock Awards: Number of Shares of Stock or Units (#) (j)
|
|
Grant Date Fair Value of Stock and Option Awards ($) (k)
|
|
||||||||||
Name (a)
|
Award Type (b)
|
Grant Date (c)
|
Threshold ($) (d)
|
Target ($) (e)
|
Maximum ($) (f)
|
|
Threshold (#) (g)
|
Target (#) (h)
|
Maximum (#) (i)
|
||||||||||
Goncalves
|
Annual Incentive Program
|
1/9/2017
|
1,300,000
|
|
2,600,000
|
|
5,200,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
LTI Program - 2017 Adjusted EBITDA
(3)
|
2/21/2017
|
180,000
|
|
360,000
|
|
720,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - TSR
|
2/21/2017
|
884,000
|
|
1,768,000
|
|
3,536,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - Performance Shares
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
90,126
|
|
180,252
|
|
360,504
|
|
—
|
|
3,549,162
|
|
|
LTI Program - RSU
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
180,252
|
|
2,103,541
|
|
|
LTI Program - Retention
|
6/26/2017
|
—
|
|
—
|
|
—
|
|
|
124,553
|
|
249,106
|
|
498,212
|
|
531,674
|
|
6,205,714
|
|
|
Flanagan
|
Annual Incentive Program
|
1/9/2017
|
160,000
|
|
320,000
|
|
640,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
LTI Program - 2017 Adjusted EBITDA
(3)
|
2/21/2017
|
11,925
|
|
23,850
|
|
47,700
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - TSR
|
2/21/2017
|
119,000
|
|
238,000
|
|
476,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - Performance Shares
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
12,133
|
|
24,265
|
|
48,530
|
|
—
|
|
477,778
|
|
|
LTI Program - RSU
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
24,265
|
|
283,173
|
|
|
Fedor
|
Annual Incentive Program
|
1/9/2017
|
165,600
|
|
331,200
|
|
662,400
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
LTI Program - 2017 Adjusted EBITDA
(3)
|
2/21/2017
|
26,467
|
|
52,933
|
|
105,866
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - TSR
|
2/21/2017
|
123,165
|
|
246,330
|
|
492,660
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - Performance Shares
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
12,557
|
|
25,114
|
|
50,228
|
|
—
|
|
494,495
|
|
|
LTI Program - RSU
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
25,114
|
|
293,080
|
|
|
Smith
|
Annual Incentive Program
|
1/9/2017
|
165,600
|
|
331,200
|
|
662,400
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
LTI Program - 2017 Adjusted EBITDA
(3)
|
2/21/2017
|
26,467
|
|
52,933
|
|
105,866
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - TSR
|
2/21/2017
|
123,165
|
|
246,330
|
|
492,660
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - Performance Shares
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
12,557
|
|
25,114
|
|
50,228
|
|
—
|
|
494,495
|
|
|
LTI Program - RSU
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
25,114
|
|
293,080
|
|
|
Tompkins
|
Annual Incentive Program
|
1/9/2017
|
339,000
|
|
678,000
|
|
1,356,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
LTI Program - 2017 Adjusted EBITDA
(3)
|
2/21/2017
|
35,354
|
|
70,708
|
|
141,416
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - TSR
|
2/21/2017
|
240,125
|
|
480,250
|
|
960,500
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
LTI Program - Performance Shares
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
24,482
|
|
48,963
|
|
97,926
|
|
—
|
|
964,081
|
|
|
LTI Program - RSU
|
2/21/2017
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
48,963
|
|
571,398
|
|
|
(1) Represents the Company's Annual Incentive Program and Long-Term Incentive Program. The amounts in column (d) reflect the threshold payout level which is 50% of the target amount shown in column (e); and the amounts shown in column (f) represent 200% of such target amounts.
|
|||||||||||||||||||
(2) Represents the Company's Long-Term Incentive Program. The amounts in column (g) reflect the threshold payout level of the 2017–2019 performance shares, which is 50% of the target amount shown in column (h); and the amounts shown in column (i) represent 200% of such target amounts.
|
|||||||||||||||||||
(3) Represents the 2016–2018 performance cash incentive award earned by achieving the Adjusted EBITDA metric, which is evaluated and set annually each February; if the metric for each year during the three-year performance period is achieved, a portion of the award for that year is considered earned but is paid in cash at the end of the three-year period.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||||||||
Name (a)
|
Award Type (b)
|
Number of Securities Underlying Unexercised Options (#) Exercisable (c)
|
Number of Securities Underlying Unexercised Options (#) Unexercisable (d)
|
|
Option Exercise Price ($) (e)
|
|
Option Expiration Date (f)
|
|
|
Number of Shares or Units of Stock That Have Not Vested (#) (g)
|
Market Value of Shares or Units of Stock That Have Not Vested ($) (h)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(i)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
|
|
|||||
Goncalves
|
2017 Retention Award
|
—
|
|
—
|
|
—
|
|
—
|
|
|
531,674
|
|
(1)
|
3,833,370
|
|
249,106
|
|
(2)
|
1,796,054
|
|
2017 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
180,252
|
|
(3)
|
1,299,617
|
|
90,126
|
|
(4)
|
649,808
|
|
|
2016 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1,206,704
|
|
(5)
|
8,700,336
|
|
—
|
|
|
—
|
|
|
2015 LTI Program
|
187,136
|
(6)
|
—
|
|
7.70
|
|
1/12/2025
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
2014 New Hire
|
250,000
|
(7)
|
—
|
|
13.83
|
|
11/17/2021
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Flanagan
|
2017 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
24,265
|
|
(3)
|
174,951
|
|
12,133
|
|
(4)
|
87,479
|
|
2016 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
79,944
|
|
(5)
|
576,396
|
|
—
|
|
|
—
|
|
|
2015 Retention Award
|
—
|
|
—
|
|
—
|
|
—
|
|
|
20,000
|
|
(8)
|
144,200
|
|
—
|
|
|
—
|
|
|
Fedor
|
2017 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
25,114
|
|
(3)
|
181,072
|
|
12,557
|
|
(4)
|
90,536
|
|
2016 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
177,430
|
|
(5)
|
1,279,270
|
|
—
|
|
|
—
|
|
|
2015 LTI Program
|
27,430
|
(6)
|
—
|
|
7.70
|
|
1/12/2025
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Smith
|
2017 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
25,114
|
|
(3)
|
181,072
|
|
12,557
|
|
(4)
|
90,536
|
|
2016 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
177,430
|
|
(5)
|
1,279,270
|
|
—
|
|
|
—
|
|
|
2015 LTI Program
|
27,430
|
(6)
|
—
|
|
7.70
|
|
1/12/2025
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Tompkins (9)
|
2017 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
16,319
|
|
(3)
|
117,660
|
|
8,160
|
|
(4)
|
58,834
|
|
2016 LTI Program
|
—
|
|
—
|
|
—
|
|
—
|
|
|
158,015
|
|
(5)
|
1,139,288
|
|
—
|
|
|
—
|
|
|
2015 LTI Program
|
36,640
|
(6)
|
—
|
|
7.70
|
|
12/31/2018
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(1)
Represents a retention grant of restricted stock to Mr. Goncalves on June 26, 2017. The restricted stock units generally vest in full on December 31, 2019, subject to continued employment.
(2)
Represents a retention grant of performance shares to Mr. Goncalves on June 26, 2017. These shares are shown based on achievement of target performance and will generally vest on December 31, 2019, subject to the achievement of specified performance metrics and continued employment through December 31, 2019.
(3)
Represents a grant of restricted stock units granted on February 21, 2017. The restricted stock units generally vest in full on December 31, 2019, subject to continued employment.
(4)
Represents performance shares for the 2017 – 2019 performance period granted on February 21, 2017. These shares are shown based on achievement of threshold performance and will generally vest on December 31, 2019, subject to the achievement of specified performance metrics and continued employment through December 31, 2019.
(5)
Represents a grant of restricted stock units granted on February 23, 2016. The restricted stock units generally vest in full on December 31, 2018, subject to continued employment.
(6)
Represents stock options granted on January 12, 2015. The stock options vested in full on December 31, 2017.
(7)
Represents stock options granted to Mr. Goncalves on November 17, 2014 pursuant to his employment offer. One-third of the stock options vested on each of December 31, 2015 (first vesting date), December 31, 2016 (second vesting date), and December 31, 2017 (third vesting date).
(8)
Represents a retention grant of restricted stock units to Mr. Flanagan on May 26, 2015. The restricted stock units generally vest in full on May 26, 2018, subject to continued employment.
(9)
Mr. Tompkins' equity awards (except his stock options, which vested in full on December 31, 2017) were prorated and the 2015 stock option award expires December 31, 2018 due to his retirement on December 31, 2017.
|
|
Stock Awards
|
|||||
Name (a)
|
Award Type (b)
|
Number of Shares Acquired on Vesting (#) (c)
|
Value Realized on Vesting ($) (d)
|
|
||
Goncalves
|
2015 LTI Program - Performance Shares
|
140,914
|
|
(1)
|
1,015,990
|
|
2015 LTI Program - RSU
|
62,378
|
|
(2)
|
449,745
|
|
|
2015 Special Retention Program
|
633,803
|
|
(3)
|
4,214,790
|
|
|
Flanagan
|
2015 LTI Program - Performance Shares
|
14,006
|
|
(1)
|
100,983
|
|
2015 LTI Program - RSU
|
6,199
|
|
(2)
|
44,695
|
|
|
2015 Special Retention Program
|
44,789
|
|
(3)
|
297,847
|
|
|
Fedor
|
2015 LTI Program - Performance Shares
|
20,655
|
|
(1)
|
148,923
|
|
2015 LTI Program - RSU
|
9,143
|
|
(2)
|
65,921
|
|
|
2015 Special Retention Program
|
99,085
|
|
(3)
|
658,915
|
|
|
Smith
|
2015 LTI Program - Performance Shares
|
20,655
|
|
(1)
|
148,923
|
|
2015 LTI Program - RSU
|
9,143
|
|
(2)
|
65,921
|
|
|
2015 Special Retention Program
|
99,085
|
|
(3)
|
658,915
|
|
|
Tompkins
|
2015 LTI Program - Performance Shares
|
27,590
|
|
(1)
|
198,924
|
|
2015 LTI Program - RSU
|
12,213
|
|
(2)
|
88,056
|
|
|
2015 Special Retention Program
|
132,366
|
|
(3)
|
880,234
|
|
|
(1) Represents an award of performance shares granted during 2015 for the 2015 – 2017 performance period. The performance shares vested in full on December 31, 2017 (the value realized was determined based on the closing price of our common shares on December 29, 2017 of $7.21). The performance shares paid out at 75.3% of the award based on the performance criteria.
|
||||||
(2) Represents an award of restricted stock units granted during 2015 for the 2015 – 2017 period. The final one-third of the restricted stock units vested on December 31, 2017 (the value realized was determined based on the closing price of our common shares on December 29, 2017 of $7.21).
|
||||||
(3) Represents a retention award of restricted stock units granted in September 2015. The restricted stock units vested in full on December 15, 2017 (the value realized was determined based on the closing price of our common shares on December 15, 2017 of $6.65).
|
Name (a)
|
Plan Name (b)
|
Number of Years Credited Service (#) (c)
|
Present Value of Accumulated Benefit ($) (d)
|
Payments During Last Fiscal Year ($) (e)
|
Goncalves
|
Salaried Pension Plan
|
3.4
|
105,000
|
—
|
SERP
|
3.4
|
992,900
|
—
|
|
Flanagan
|
Salaried Pension Plan
|
9.7
|
311,700
|
—
|
SERP
|
9.7
|
175,800
|
—
|
|
Fedor
|
Salaried Pension Plan
|
6.9
|
208,100
|
—
|
SERP
|
6.9
|
259,000
|
—
|
|
Smith
|
Salaried Pension Plan
|
13.7
|
423,500
|
—
|
SERP
|
13.7
|
355,300
|
—
|
|
Tompkins
(1)
|
Salaried Pension Plan
|
7.6
|
226,900
|
—
|
SERP
|
21.3
|
541,900
|
—
|
|
(1)
For purposes of calculating the supplemental retirement benefit, the Compensation Committee approved a hire date of 1996 for Mr. Tompkins. Effective April 2012, Cliffs determined that it would no longer offer service credits for incoming executives.
|
(6)
|
A portion of
Mr. Tompkins' 2017 p
erformance cash
award was forfeited due to his retirement on December 31, 2017.
|
•
|
Salary through the date of termination;
|
•
|
Unused vacation pay;
|
•
|
Accrued and vested benefits under the Pension Plan, SERP, 401(k) Savings Plan and 2012 NQDC Plan, if applicable; and
|
•
|
Undistributed but earned performance shares, performance cash and vested restricted stock units and stock options for completed performance periods.
|
•
|
Severance payments;
|
•
|
Continued health insurance benefits;
|
•
|
Outplacement services;
|
•
|
Pursuant to the terms of our 2015 Equity Plan and A&R 2015 Equity Plan, a pro rata portion, subject to the Compensation Committee’s discretion, in which it can increase or decrease the proration, from time to time, of his performance shares, performance cash, restricted stock units and stock options. Such prorated performance shares, performance cash and restricted stock units will be paid when such shares and units would otherwise be paid and prorated stock options have a exercisable period of one-year from date of termination; and
|
•
|
Financial services.
|
•
|
A pro rata portion of the annual incentive award under the EMPI Plan for the year in which he retires unless otherwise determined by the Compensation Committee;
|
•
|
Any unpaid annual incentive award under the EMPI Plan for the year prior to the year of retirement; and
|
•
|
A pro rata portion, subject to the Compensation Committee’s discretion, in which it can increase or decrease the proration, from time to time, of his performance shares, performance cash, restricted stock units and stock options. Such performance share awards, performance cash awards, restricted stock units and stock options will be paid when such performance shares, performance cash and restricted stock units would otherwise be paid and stock options have a exercisable period of one-year from date of retirement.
|
•
|
Any one person, or more than one person acting as a group, acquires ownership of Cliffs common shares possessing 35% or more of the total voting power of Cliffs common shares or the then-outstanding shares (subject to certain exceptions);
|
•
|
A majority of members of the Cliffs Board is replaced by directors whose appointment or election is not endorsed by a majority of the Cliffs Board prior to the date of the appointment or election;
|
•
|
Cliffs closes a reorganization, merger, consolidation or significant sale of assets resulting in a substantial change in its ownership or leadership; or
|
•
|
Approval by Cliffs’ shareholders of a complete liquidation or dissolution of Cliffs.
|
•
|
Owners of Cliffs common shares immediately prior to the business transaction own more than 50% of the entity resulting from the business transaction in substantially the same proportions as their pre-business transaction ownership of Cliffs common shares;
|
•
|
No one person, or more than one person acting as a group (subject to certain exceptions), owns 35% or more of the combined voting power of the entity resulting from the business transaction or the outstanding common shares of such resulting entity; and
|
•
|
At least a majority of the members of the Board of the entity resulting from the business transaction were members of the incumbent Board of Cliffs when the business transaction agreement was signed or approved by the Cliffs' Board. For purposes of this exception, the incumbent Board of Cliffs generally means those directors who were serving as of August 11, 2008 or April 7, 2015 (as applicable)(or a prior date in the case of certain pre-2007 equity awards) or whose appointment or election was endorsed by a majority of the incumbent members prior to the date of such appointment or election.
|
•
|
A lump sum payment in an amount equal to three times (in the case of Mr. Goncalves) or two times (in the case of Messrs. Flanagan, Fedor and Smith) the sum of: (1) base salary (at the highest rate in effect during the five-year period prior to the termination date) and (2) annual incentive pay at the target level for the year of separation, year prior to the change in control or year of the change in control, whichever is greater.
|
•
|
COBRA continuation coverage for a period of 36 months (in the case of Mr. Goncalves) or 24 months (in the case of Messrs. Flanagan, Fedor and Smith) following the termination date, for health, life insurance and disability benefits.
|
•
|
A lump sum payment in an amount equal to the sum of the additional future pension benefits that the NEO would have been entitled to receive for a period of 36 months (in the case of Mr. Goncalves) or 24 months (in the case of Messrs. Flanagan, Fedor and Smith) following the termination date under the SERP.
|
•
|
Incentive pay at target levels for the year in which the termination date occurs.
|
•
|
Outplacement services in an amount up to 15% of the NEO’s base salary (in the case of Mr. Goncalves) or $10,000 (in the case of Messrs. Flanagan, Fedor and Smith).
|
•
|
The NEO will be provided perquisites of financial planning, outplacement, and healthcare coverage for a period of 36 months (in the case of Mr. Goncalves) or 24 months (in the case of Messrs. Flanagan, Fedor and Smith), comparable to the perquisites he was receiving before the termination of his employment or the change in control, whichever is greater.
|
•
|
a material diminution in the NEO’s base pay;
|
•
|
a material diminution in the NEO’s authority, duties or responsibilities;
|
•
|
a material change (in excess of 50 miles) in the geographic location at which the NEO must perform services;
|
•
|
a material reduction in the NEO’s incentive pay opportunity; or
|
•
|
breach of employment agreement, if any, under which the NEO provides services.
|
•
|
Under the A&R 2012 ICE Plan
–
full vesting, subject to the Compensation Committee’s discretion, from time to time, of his performance shares (calculated at target), performance-based restricted stock units, restricted stock units and stock options; and
|
•
|
2015 Equity Plan and A&R 2015 Equity Plan
–
prorated vesting, subject to the Compensation Committee’s discretion, from time to time, of his performance cash and shares (calculated at target), performance-based restricted stock units, restricted stock units and stock options.
|
Lourenco Goncalves
|
|
|
|
|
|
|
|
|||||||
Benefit
|
Death ($)
|
|
Disability ($)
|
|
Retirement ($)
|
|
Voluntary
Termination ($)
|
|
Involuntary
(Without Cause) Termination ($)
|
|
Change in Control Without Termination ($)
|
|
Termination Without Cause after Change in Control ($)
|
|
Cash Severance
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,700,000
|
|
Non-Equity Incentive Plan Compensation
|
2,004,985
|
|
2,004,985
|
|
—
|
|
—
|
|
2,004,985
|
|
—
|
|
6,909,600
|
|
Equity
|
6,665,813
|
|
6,665,813
|
|
—
|
|
—
|
|
6,665,813
|
|
—
|
|
11,299,570
|
|
Retirement Benefits
|
989,996
|
|
989,996
|
|
—
|
|
1,097,959
|
|
1,097,959
|
|
—
|
|
2,245,098
|
|
Non-Qualified Deferred Compensation
|
52,092
|
|
52,092
|
|
—
|
|
52,092
|
|
52,092
|
|
52,092
|
|
52,092
|
|
Other (Health & Welfare, Outplacement, Perquisites)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
338,182
|
|
TOTAL
|
9,712,886
|
|
9,712,886
|
|
—
|
|
1,150,051
|
|
9,820,849
|
|
52,092
|
|
32,544,542
|
|
Timothy K. Flanagan
|
|
|
|
|
|
|
|
|||||||
Benefit
|
Death ($)
|
|
Disability ($)
|
|
Retirement ($)
|
|
Voluntary
Termination ($)
|
|
Involuntary
(Without Cause) Termination ($)
|
|
Change in Control Without Termination ($)
|
|
Termination Without Cause after Change in Control ($)
|
|
Cash Severance
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,440,000
|
|
Non-Equity Incentive Plan Compensation
|
173,120
|
|
173,120
|
|
—
|
|
—
|
|
173,120
|
|
—
|
|
726,381
|
|
Equity
|
500,787
|
|
500,787
|
|
—
|
|
—
|
|
500,787
|
|
—
|
|
1,070,498
|
|
Retirement Benefits
|
281,516
|
|
281,516
|
|
—
|
|
487,461
|
|
487,461
|
|
—
|
|
679,189
|
|
Non-Qualified Deferred Compensation
|
31,266
|
|
31,266
|
|
—
|
|
31,266
|
|
31,266
|
|
31,266
|
|
31,266
|
|
Other (Health & Welfare, Outplacement, Perquisites)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69,302
|
|
TOTAL
|
986,689
|
|
986,689
|
|
—
|
|
518,727
|
|
1,192,634
|
|
31,266
|
|
4,016,636
|
|
Terry G. Fedor
|
|
|
|
|
|
|
|
|||||||
Benefit
|
Death ($)
|
|
Disability ($)
|
|
Retirement ($)
|
|
Voluntary
Termination ($)
|
|
Involuntary
(Without Cause) Termination ($)
|
|
Change in Control Without Termination ($)
|
|
Termination Without Cause after Change in Control ($)
|
|
Cash Severance
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,490,400
|
|
Non-Equity Incentive Plan Compensation
|
290,265
|
|
290,265
|
|
—
|
|
—
|
|
290,265
|
|
—
|
|
951,242
|
|
Equity
|
973,447
|
|
973,447
|
|
—
|
|
—
|
|
973,447
|
|
—
|
|
1,641,414
|
|
Retirement Benefits
|
361,201
|
|
361,201
|
|
—
|
|
467,144
|
|
467,144
|
|
—
|
|
632,831
|
|
Non-Qualified Deferred Compensation
|
25,216
|
|
25,216
|
|
—
|
|
25,216
|
|
25,216
|
|
25,216
|
|
25,216
|
|
Other (Health & Welfare, Outplacement, Perquisites)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69,756
|
|
TOTAL
|
1,650,129
|
|
1,650,129
|
|
—
|
|
492,360
|
|
1,756,072
|
|
25,216
|
|
4,810,859
|
|
Clifford T. Smith
|
|
|
|
|
|
|
|
|||||||
Benefit
|
Death ($)
|
|
Disability ($)
|
|
Retirement ($)
|
|
Voluntary
Termination ($)
|
|
Involuntary
(Without Cause) Termination ($)
|
|
Change in Control Without Termination ($)
|
|
Termination Without Cause after Change in Control ($)
|
|
Cash Severance
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,490,400
|
|
Non-Equity Incentive Plan Compensation
|
290,265
|
|
290,265
|
|
831,446
|
|
—
|
|
290,265
|
|
—
|
|
951,242
|
|
Equity
|
973,447
|
|
973,447
|
|
973,447
|
|
—
|
|
973,447
|
|
—
|
|
1,641,414
|
|
Retirement Benefits
|
675,964
|
|
675,964
|
|
—
|
|
778,768
|
|
778,768
|
|
—
|
|
950,041
|
|
Non-Qualified Deferred Compensation
|
26,288
|
|
26,288
|
|
26,288
|
|
26,288
|
|
26,288
|
|
26,288
|
|
26,288
|
|
Other (Health & Welfare, Outplacement, Perquisites)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69,756
|
|
TOTAL
|
1,965,964
|
|
1,965,964
|
|
1,831,181
|
|
805,056
|
|
2,068,768
|
|
26,288
|
|
5,129,141
|
|
|
|
|
|
PROPOSAL 2
|
|
APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICERS' COMPENSATION
|
|
Annual Meeting Year
|
|
Shareholder Support
on Say-on-Pay Vote
|
2013
|
|
66%
|
2014
|
|
56%
|
2015
|
|
91%
|
2016
|
|
57%
|
2017
|
|
57%
|
þ
|
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
PROPOSAL 2 TO APPROVE, ON AN ADVISORY BASIS, OUR NAMED EXECUTIVE OFFICERS' COMPENSATION.
|
AUDIT COMMITTEE REPORT
|
|
|
|
|
|
PROPOSAL 3
|
|
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
þ
|
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
PROPOSAL 3 FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
|
INFORMATION ABOUT SHAREHOLDER PROPOSALS AND COMPANY DOCUMENTS
|
|
OTHER INFORMATION
|
|
|
|
|
ANNEX
|
|
USE OF NON-GAAP FINANCIAL MEASURES
|
1 Year Cleveland Cliffs Chart |
1 Month Cleveland Cliffs Chart |
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