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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 | |
---|---|---|---|---|---|---|---|---|
-1.24 | -6.87% | 16.82 | 18.00 | 16.85 | 17.88 | 14,326,760 | 00:59:51 |
x | Filed by the Registrant | o | Filed by a Party other than the Registrant |
Check the appropriate box: | |||||
o | Preliminary Proxy Statement | ||||
o | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
x | Definitive Proxy Statement | ||||
o | Definitive Additional Materials | ||||
o | Soliciting Material Pursuant to §240.14a-12 |
Payment of Filing Fee (Check all boxes that apply): | |||||
x | No fee required. | ||||
o | Fee paid previously with preliminary materials | ||||
o | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
LETTER TO OUR SHAREHOLDERS | ||
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | ||
YOUR VOTE IS IMPORTANT. YOU MAY VOTE BY INTERNET, BY TELEPHONE, BY MAILING THE ENCLOSED PROXY CARD, OR BY VOTING ONLINE DURING THE 2022 ANNUAL MEETING. | ||||||||
The proxy statement and Cliffs’ 2021 Annual Report for the 2021 fiscal year are available at www.proxyvote.com. These materials also are available on Cliffs’ website at www.clevelandcliffs.com under "Investors." If your shares are not registered in your own name, please follow the voting instructions from your bank, broker, nominee or other shareholder of record to vote your shares. |
PROXY STATEMENT TABLE OF CONTENTS | ||
PROXY STATEMENT SUMMARY | |||||
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING | |||||
MEETING INFORMATION | |||||
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY | |||||
CORPORATE GOVERNANCE | |||||
Board Leadership Structure | |||||
Board’s Role in Risk Oversight | |||||
Board Meetings and Committees | |||||
Identification and Evaluation of Director Candidates | |||||
Communications With Directors | |||||
Code of Business Conduct and Ethics | |||||
Independence and Related Party Transactions | |||||
DIRECTOR COMPENSATION | |||||
Director Compensation for 2021 | |||||
PROPOSAL 1 – ELECTION OF DIRECTORS | |||||
Information Concerning Director Nominees | |||||
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY | |||||
EQUITY COMPENSATION PLAN INFORMATION | |||||
COMPENSATION DISCUSSION AND ANALYSIS | |||||
Executive Summary | |||||
Executive Compensation Philosophy and Core Principles | |||||
Development and Oversight of Executive Compensation | |||||
Analysis of 2021 Compensation Decisions | |||||
Retirement and Deferred Compensation Benefits | |||||
Supplementary Compensation Policies | |||||
COMPENSATION COMMITTEE REPORT | |||||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | |||||
COMPENSATION-RELATED RISK ASSESSMENT | |||||
EXECUTIVE COMPENSATION | |||||
Executive Compensation Tables and Narratives | |||||
Potential Payments Upon Termination or Change in Control | |||||
CEO Pay Ratio | |||||
PROPOSAL 2 – APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICERS' COMPENSATION | |||||
AUDIT COMMITTEE REPORT | |||||
PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |||||
INFORMATION ABOUT SHAREHOLDER PROPOSALS AND COMPANY DOCUMENTS | |||||
OTHER INFORMATION | |||||
ANNEX A | A-1 |
PROXY STATEMENT SUMMARY | ||
2022 ANNUAL MEETING OF SHAREHOLDERS | (PAGE 6) | |||||||
DATE AND TIME: | Wednesday, April 27, 2022, at 11:30 a.m. EDT | |||||||
PLACE: | Online at www.virtualshareholdermeeting.com/CLF2022 | |||||||
RECORD DATE: | February 28, 2022 | |||||||
VOTING: | Shareholders of record are entitled to vote by Internet at www.proxyvote.com; by telephone at 1-800-690-6903; by completing and returning the enclosed proxy card by mail; or by voting online during the 2022 Annual Meeting of Shareholders (the "2022 Annual Meeting") at www.virtualshareholdermeeting.com/CLF2022 (beneficial holders must obtain a legal proxy from their broker, banker, nominee or other shareholder of record granting the right to vote). | |||||||
PROXY MATERIALS: | This proxy statement, the accompanying proxy card and our 2021 Annual Report will be made available on or about March 14, 2022 to shareholders of record as of February 28, 2022 (the "Record Date"). |
ATTENDANCE AND PARTICIPATION AT THE 2022 ANNUAL MEETING | |||||
Our virtual 2022 Annual Meeting will be conducted on the Internet via live audio webcast. Shareholders will be able to participate online and submit questions in advance of the 2022 Annual Meeting by visiting www.virtualshareholdermeeting.com/CLF2022, beginning at 11:00 a.m. EDT on April 27, 2022. Shareholders will be able to vote their shares electronically during the 2022 Annual Meeting. To participate in the 2022 Annual Meeting, you will need the 16-digit control number included on your proxy card or your voting instruction form. The 2022 Annual Meeting will begin promptly at 11:30 a.m. EDT. We encourage you to access the 2022 Annual Meeting prior to the start time. Online access will begin at 11:00 a.m. EDT. Guests may listen to a live audio webcast of the virtual 2022 Annual Meeting by visiting www.virtualshareholdermeeting.com/CLF2022, but guests are not entitled to participate. The virtual 2022 Annual Meeting platform is fully supported across browsers (Microsoft Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure they have a strong Internet connection wherever they intend to participate in the 2022 Annual Meeting. Participants should also allow plenty of time to log in and ensure that they can hear streaming audio prior to the start of the 2022 Annual Meeting. To ensure your shares are properly represented, please vote your proxy promptly even if you plan to join the 2022 Annual Meeting. QUESTIONS Lourenco Goncalves, our Chairman, President and Chief Executive Officer, will be available to answer questions submitted by shareholders at the conclusion of the 2022 Annual Meeting. Shareholders may submit questions for the 2022 Annual Meeting after logging in, beginning at 11:00 a.m. EDT on April 27, 2022. If you wish to submit a question, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/CLF2022, typing your question into the “Ask a Question” field, and clicking “Submit.” Please submit any questions before the start time of the 2022 Annual Meeting. During the meeting, we will answer as many shareholder-submitted questions as time permits. Additional information regarding the ability of shareholders to ask questions during the 2022 Annual Meeting, related rules of conduct and other materials for the 2022 Annual Meeting will be available at www.virtualshareholdermeeting.com/CLF2022. TECHNICAL DIFFICULTIES Technical support, including related technical support phone numbers, will be available on the virtual meeting platform at www.virtualshareholdermeeting.com/CLF2022 beginning at 11:00 a.m. EDT on April 27, 2022 through the conclusion of the 2022 Annual Meeting. |
2022 Proxy Statement | 1 |
VOTING MATTERS | BOARD VOTE RECOMMENDATION | PAGE REFERENCE (for more detail) | |||||||||
Proposal 1 | Election of Directors | FOR ALL Director Nominees | |||||||||
Proposal 2 | Approval, on an Advisory Basis, of Our Named Executive Officers' Compensation ("Say-on-Pay") | FOR | |||||||||
Proposal 3 | Ratification of Independent Registered Public Accounting Firm | FOR |
DIRECTOR NOMINEES RECOMMENDED BY THE BOARD | (PAGE 20) | ||||||||||||||||
NAME | AGE | DIRECTOR SINCE | POSITION | COMMITTEE MEMBERSHIPS (1) | |||||||||||||
Lourenco Goncalves | 64 | 2014 | Chairman of the Board, Chief Executive Officer and President | Strategy and Sustainability* | |||||||||||||
Douglas C. Taylor | 57 | 2014 | Lead Director | Compensation* Strategy and Sustainability | |||||||||||||
John T. Baldwin | 65 | 2014 | Director | Audit* Compensation | |||||||||||||
Robert P. Fisher, Jr. | 67 | 2014 | Director | Audit Governance | |||||||||||||
William K. Gerber | 68 | 2020 | Director | Audit | |||||||||||||
Susan M. Green | 62 | 2007 | Director | Governance | |||||||||||||
Ralph S. Michael, III | 67 | 2020 | Director | Compensation Governance* | |||||||||||||
Janet L. Miller | 68 | 2019 | Director | Governance | |||||||||||||
Gabriel Stoliar | 67 | 2014 | Director | Strategy and Sustainability | |||||||||||||
Arlene M. Yocum | 64 | 2020 | Director | Audit Strategy and Sustainability | |||||||||||||
* Denotes committee chair (1)Full committee names are: Audit – Audit Committee; Compensation – Compensation and Organization Committee; Governance – Governance and Nominating Committee; and Strategy and Sustainability – Strategy and Sustainability Committee. |
SHAREHOLDER ENGAGEMENT (summary) | (PAGE 29) | ||||
We maintain open and proactive communications with the investment community. During 2021 and early 2022, we reached out to our top 25 shareholders, representing approximately 45% of our outstanding common shares (approximately 73% of the votes cast at our 2021 annual meeting), to solicit their perspectives on our compensation program, company strategy and performance, corporate governance, sustainability and other topics. These discussions included our independent Lead Director when requested by major shareholders. The feedback received from our shareholder outreach efforts is shared with and considered by our Board of Directors ("Board"), and our engagement activities have generated valuable input that helps inform our decisions and strategy, when appropriate. See the section entitled "Shareholder Engagement" in the Compensation Discussion and Analysis ("CD&A") section for more details as to what we heard from our shareholders and how we responded to their feedback. |
2022 Proxy Statement | 2 |
EXECUTIVE COMPENSATION PHILOSOPHY AND CORE PRINCIPLES | (PAGE 34) | ||||
Our guiding executive compensation principles, as established by the Compensation Committee for 2021, were as follows: 1.Align short-term and long-term incentives with results delivered to shareholders; 2.Be transparent, ensure that executives and shareholders understand our executive compensation programs, including the objectives, mechanics, and compensation levels and opportunities provided; 3.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); 4.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 5.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). |
2021 EXECUTIVE COMPENSATION SUMMARY | (PAGE 53) | ||||
The numbers in the following table showing the 2021 compensation of our named executive officers (the "NEOs") were determined in the same manner as the numbers in the corresponding columns in the 2021 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 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 SCT. |
NAME | PRINCIPAL POSITION (AS OF 12/31/2021) | SALARY ($) | BONUS ($) | STOCK AWARDS ($) | OPTION AWARDS ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) | TOTAL ($) | ||||||||||||||||
Lourenco Goncalves | Chairman, President and Chief Executive Officer | 1,938,000 | 3,876,000 | 7,060,185 | — | 10,760,320 | 23,634,505 | ||||||||||||||||
Celso L. Goncalves Jr. | Executive Vice President, Chief Financial Officer | 404,667 | 550,000 | 453,563 | — | 862,493 | 2,270,723 | ||||||||||||||||
Keith A. Koci | Executive Vice President, President, Cleveland-Cliffs Services | 590,667 | 780,000 | 1,021,860 | — | 1,645,636 | 4,038,163 | ||||||||||||||||
Clifford T. Smith | Executive Vice President, President, Cleveland-Cliffs Steel | 765,000 | 918,000 | 1,741,806 | — | 2,521,100 | 5,945,906 | ||||||||||||||||
Terry G. Fedor | Executive Vice President, Operations, East | 600,000 | 600,000 | 1,092,923 | — | 1,602,410 | 3,895,333 | ||||||||||||||||
Maurice D. Harapiak | Executive Vice President, Human Resources & Chief Administration Officer | 561,000 | 561,000 | 1,021,860 | — | 1,532,210 | 3,676,070 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | (PAGE 66) | ||||
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 2022. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | |||||
This proxy statement contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than historical matters. Forward-looking statements are subject to risks and uncertainties relating to Cliffs’ operations and business environment that are difficult to predict and may be beyond our control. Such risks and uncertainties may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Part I., Item 1A., "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2021, and those described from time to time in our future reports filed with the SEC. Except to the extent required by law, Cliffs does not undertake to update the forward-looking statements included in this proxy statement to reflect the impact of circumstances or events that may arise after the date the forward-looking statements were made. |
2022 Proxy Statement | 3 |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING | ||
2022 Proxy Statement | 4 |
2022 Proxy Statement | 5 |
MEETING INFORMATION | ||
2022 Proxy Statement | 6 |
ENVIRONMENTAL, SOCIAL, GOVERNANCE AND SUSTAINABILITY | ||
2022 Proxy Statement | 7 |
2022 Proxy Statement | 8 |
2022 Proxy Statement | 9 |
2022 Proxy Statement | 10 |
ESG Highlights | ||||||||||||||||||||||||||
Reduce GHG emissions by 25% by 2030 from 2017 levels | 70% Union membership | B score for CDP Climate Change | ||||||||||||||||||||||||
Target 2M MWh of purchased renewable energy annually | Cleveland-Cliffs' Core Values are at the heart of everything we do. | |||||||||||||||||||||||||
100% of our steel contains recycled steel scrap | $6.5 million donated to communities by Cleveland-Cliffs and our charitable foundation | |||||||||||||||||||||||||
CORPORATE GOVERNANCE | ||
2022 Proxy Statement | 11 |
2022 Proxy Statement | 12 |
COMPENSATION COMMITTEE | ||||||||
MEMBERS: 3 | INDEPENDENT: 3 | 2021 MEETINGS: 8 | ||||||
RESPONSIBILITIES: | ||||||||
▪Oversees development and implementation of Cliffs' compensation policies and programs for officers ▪Develops criteria for awards under incentive plans that appropriately relate to Cliffs' strategic plan and operating performance objectives, and approves equity-based awards ▪Reviews and evaluates CEO and other executive officer performance and approves compensation (with the CEO's compensation being subject to ratification by the independent members of the Board) ▪Recommends to the Board the election of officers ▪Assists with management development and succession planning ▪Reviews and approves employment and severance arrangements with officers and oversees regulatory compliance regarding compensation matters and related party transactions ▪Reviews and recommends the CD&A and the Compensation Committee report for inclusion in appropriate Cliffs securities filings ▪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 and may delegate certain equity award grant authority to officers of Cliffs, subject to applicable law For more information about the role of executives and outside advisers in our executive compensation process, see the CD&A section of this proxy statement. | ||||||||
CHAIR: Douglas C. Taylor | MEMBERS: John T. Baldwin and Ralph S. Michael, III |
2022 Proxy Statement | 13 |
GOVERNANCE COMMITTEE | ||||||||
MEMBERS: 4 | INDEPENDENT: 4 | 2021 MEETINGS: 6 | ||||||
RESPONSIBILITIES: | ||||||||
▪Oversees annual review of our Corporate Governance Guidelines and periodically reviews external developments in corporate governance matters generally ▪Periodically reviews and makes recommendations regarding our officers' authorized levels for corporate expenditures ▪Establishes and maintains, with the Audit Committee, procedures for review of related party transactions that relate to Board members ▪Reviews the qualifications of incumbent directors and proposed Board candidates, and recommends to the Board as director-nominees those candidates possessing the experience, skills and qualifications consistent with Board-approved criteria, our Corporate Governance Guidelines and other criteria deemed important by the Governance Committee ▪Monitors the Board governance process and provides counsel to the CEO on Board governance and other matters ▪Recommends changes in membership and responsibility of Board committees and reviews and makes recommendations regarding any resignations tendered by directors ▪Reviews and administers our director compensation plans and benefits, and makes recommendations to the Board with respect to compensation plans, equity-based plans and share ownership guidelines 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: Ralph S. Michael, III | MEMBERS: Robert P. Fisher, Jr., Susan M. Green and Janet L. Miller |
STRATEGY AND SUSTAINABILITY COMMITTEE | ||||||||
MEMBERS: 4 | INDEPENDENT: 3 | 2021 MEETINGS: 5 | ||||||
RESPONSIBILITIES: | ||||||||
▪Oversees Cliffs’ strategic plan and annual management objectives ▪Acts in an advisory capacity with respect to Cliffs' sustainability strategies, its commitment to environmental stewardship, its focus on health and safety of employees and other stakeholders, and its corporate social responsibility initiatives ▪Monitors risks relevant to Cliffs' strategy, including operational, safety, environmental, social and governance risks, including climate-related risks and opportunities ▪Provides advice and assistance with developing our current and future strategy ▪Provides follow up oversight with respect to the comparison of actual results with estimates for major projects and post-acquisition integration efforts ▪Assesses Cliffs’ overall capital structure and its capital allocation priorities ▪Assists management in determining the resources necessary to implement Cliffs’ strategic and financial plans ▪Considers the merits and risks of potential acquisitions, joint ventures, emerging growth opportunities and strategic alliances ▪Reviews and approves any sustainability reports that may be published by Cliffs from time to time | ||||||||
CHAIR: Lourenco Goncalves | MEMBERS: Gabriel Stoliar, Douglas C. Taylor and Arlene M. Yocum |
2022 Proxy Statement | 14 |
2022 Proxy Statement | 15 |
2022 Proxy Statement | 16 |
DIRECTOR COMPENSATION | ||
BOARD FORM OF CASH COMPENSATION | 2021 ($) | ||||
Annual Retainer | 140,000 | ||||
Lead Director Annual Retainer | 75,000 | ||||
Audit Committee Chair Annual Retainer | 24,000 | ||||
Compensation Committee Chair Annual Retainer | 15,000 | ||||
Governance Committee Chair Annual Retainer | 12,000 |
2022 Proxy Statement | 17 |
NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(2) | ALL OTHER COMPENSATION ($)(3) | TOTAL ($) | ||||||||||
J.T. Baldwin | 159,000 | 119,991 | — | 278,991 | ||||||||||
R.P. Fisher, Jr. | 135,000 | 119,991 | — | 254,991 | ||||||||||
W.K. Gerber | 135,000 | 119,991 | 1,125 | 256,116 | ||||||||||
S.M. Green | 135,000 | 119,991 | — | 254,991 | ||||||||||
M.A. Harlan (4) | 65,000 | 119,991 | — | 184,991 | ||||||||||
R.S. Michael, III | 147,000 | 119,991 | — | 266,991 | ||||||||||
J.L. Miller | 135,000 | 119,991 | — | 254,991 | ||||||||||
E.M. Rychel (5) | 135,000 | 119,991 | — | 254,991 | ||||||||||
G. Stoliar | 135,000 | 119,991 | — | 254,991 | ||||||||||
D.C. Taylor | 218,250 | 119,991 | — | 338,241 | ||||||||||
A.M. Yocum | 135,000 | 119,991 | — | 254,991 | ||||||||||
(1)The amounts reported in this column reflect the aggregate cash dollar value of all earnings in 2021 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 2021, 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 6,539 shares on April 28, 2021 was $18.35 per share (approximately $120,000). Messrs. Baldwin and Rychel elected to defer all of their 2021 restricted share awards under the Directors' Plan. As of December 31, 2021, the aggregate number of restricted shares subject to forfeiture held by each nonemployee director was as follows: Mr. Fisher - 6,539; Mr. Gerber - 6,539; Ms. Green - 6,539; Mr. Michael - 6,539; Ms. Miller - 6,539; Mr. Stoliar - 6,539; Mr. Taylor - 6,539; and Ms. Yocum - 6,539. As of December 31, 2021, the aggregate number of deferred share units allocated to the deferred share accounts of Messrs. Baldwin and Rychel under the Directors' Plan were 44,945.954 and 74,090.971, respectively. (3)The amounts in this column reflect matching contributions made to charitable organizations from the Foundation on behalf of the Director. (4)Ms. Harlan resigned as a director effective May 28, 2021. In connection with Ms. Harlan's resignation, she received an accelerated payout of a prorated portion of her 2021 restricted share award in the amount of 545 shares. (5)Mr. Rychel resigned as a director effective December 8, 2021. In connection with Mr. Rychel's resignation, he received an accelerated vesting of a prorated portion of his 2021 deferred share award in the amount of 4,905 shares. |
2022 Proxy Statement | 18 |
PROPOSAL 1 | ELECTION OF DIRECTORS | |||||||
Director Nominee Highlights (including our CEO) | ||||||||||||||||||||||||||
Average tenure of 6.1 years | Three Women (30%) | 90% Independent | ||||||||||||||||||||||||
Average age of Directors is 65 | Highly qualified Directors with a diversity of skills and experiences that aligns with our long-term strategy | |||||||||||||||||||||||||
30% Ethnically Diverse | Four New Directors joined the Board in the last three years | |||||||||||||||||||||||||
þ | THE BOARD RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED ON THE FOLLOWING PAGES. |
2022 Proxy Statement | 19 |
LOURENCO GONCALVES Age: 64 Director since 2014 Other Current Directorships: American Iron and Steel Institute (since 2014) Former Public Directorships: Ascometal SAS (2011 - 2014) Metals USA Holdings Corp. (2006 - 2013) Metals USA Inc. (2003 - 2006) | Specific qualifications, experience, skills and expertise: ▪More than 40 years of experience in the metals and mining industries ▪Extensive board experience in the United States and abroad | |||||||||||||
Chairman of the Board, Chief Executive Officer and President 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. 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 is a Distinguished Member and Fellow of the Association for Iron & Steel Technology (AIST). In 2021, Mr. Goncalves was awarded the "Steelmaker of the Year" award by the AIST and the "CEO/Chairperson of the Year" Global Metals Award by S&P Global Platts. |
2022 Proxy Statement | 20 |
ROBERT P. FISHER, JR. Age: 67 Director since 2014 Other Current Public Directorships: None Former Public Directorships: CML Healthcare, Inc. (2010 - 2013) | Specific qualifications, experience, skills and expertise: ▪Vast experience in the investment and finance industries, which included advising the boards of numerous public companies ▪Formerly served on the Audit Committee, the Nominating and Corporate Governance Committee, and as chair of the Human Resources Committee of CML Healthcare, Inc. | |||||||||||||
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. 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 holds a Bachelor of Arts degree from Dartmouth College and a Master of Arts degree in Law and Diplomacy from Tufts University. |
2022 Proxy Statement | 21 |
RALPH S. MICHAEL, III Age: 67 Director since 2020 Other Current Public Directorships: Arlington Asset Investment Corporation (since 2006) Former Public Directorships: AK Steel Holding Corporation (2007 - 2020) Key Energy Services Inc. (2003 - 2016) FBR & Co. (2006 - 2013) | Specific qualifications, experience, skills and expertise: ▪Provides valuable insights on a variety of board oversight matters, including complex banking and financial issues ▪Experience and knowledge from service on other public company boards, including capital markets and finance matters as a former director for FBR & Co. and energy-related issues as a former member of the board and former Lead Director of Key Energy Services, Inc. ▪Steel-related experience as a former member of the Board and former non-executive Chairman of AK Steel Holding Corporation | |||||||||||||
Chairman, Fifth Third Bank, Greater Cincinnati Region, since 2018. Executive Vice President of Fifth Third Bank since 2010. President and Chief Operating Officer of the Ohio Casualty Insurance Company from 2005 until its sale in 2007; Executive Vice President and Manager of West Commercial Banking for U.S. Bank, National Association, and Executive Vice President and Manager of Private Asset Management for U.S. Bank, from 2004 to 2005; President of U.S. Bank Oregon from 2003 to 2005; Executive Vice President and Group Executive of PNC Financial Services Group, with responsibility for PNC Advisors, PNC Capital Markets and PNC Leasing, from 2001 to 2002; Executive Vice President and Chief Executive Officer of PNC Corporate Banking from 1996 to 2001. Mr. Michael received his Bachelor of Arts degree in Economics from Stanford University and his Master of Business Administration degree from the University of California at Los Angeles (UCLA) Graduate School of Management. |
2022 Proxy Statement | 22 |
GABRIEL STOLIAR Age: 67 Director since 2014 Other Current Public Directorships: Tupy S.A. (since 2009) Former Public Directorships: None | Specific qualifications, experience, skills and expertise: ▪Vast experience in and relating to the metals and mining industries ▪Extensive experience serving on various boards of directors | |||||||||||||
Partner of Studio Investimentos, an asset management firm focused on Brazilian equities, since 2009; member of the board of directors of Tupy S.A., a foundry and casting company, since 2009; board of directors of LogZ Logistica Brasil S.A., a ports logistic company, from 2011 to 2018; Chief Financial Officer and Head of Investor Relations and subsequently Executive Director of Planning and Business Development at Vale S.A., a Brazilian multinational diversified metals and mining company, from 1997 to 2008. Mr. Stoliar holds a Bachelor of Science degree in Production Engineering from the Universidade Federal do Rio de Janeiro, a post-graduate degree in Production Engineering with a focus in Industrial Projects and Transportation from the Universidade Federal do Rio de Janeiro and an Executive MBA from PDG-SDE/RJ. |
2022 Proxy Statement | 23 |
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY | ||||||||
2022 Proxy Statement | 24 |
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 | 7,622,959 | (1) | $12.75 | (2) | 28,730,308 | (3) | ||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | — | __ | — | |||||||||||||||||
Total | 7,622,959 | 28,730,308 |
2022 Proxy Statement | 25 |
COMPENSATION DISCUSSION AND ANALYSIS | ||
OUR NEOs FOR 2021: | |||||
Lourenco Goncalves | Chairman, President and CEO | ||||
Celso L. Goncalves Jr. | Executive Vice President, CFO | ||||
Keith A. Koci | Executive Vice President & President, Cleveland-Cliffs Services | ||||
Clifford T. Smith | Executive Vice President & President, Cleveland-Cliffs Steel | ||||
Terry G. Fedor | Executive Vice President, Operations, East | ||||
Maurice D. Harapiak | Executive Vice President, Human Resources & Chief Administration Officer |
CD&A TABLE OF CONTENTS | |||||
Executive Summary | |||||
Executive Compensation Philosophy and Core Principles | |||||
Development and Oversight of Executive Compensation | |||||
Analysis of 2021 Compensation Decisions | |||||
Retirement and Deferred Compensation Benefits | |||||
Supplementary Compensation Policies | |||||
Executive Compensation Tables and Narratives |
2022 Proxy Statement | 26 |
2022 Proxy Statement | 27 |
2022 Proxy Statement | 28 |
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WHAT WE HEARD... | HOW WE RESPONDED... | ||||||||||
Shareholders questioned the special discretionary award in 2021 and whether the underlying achievements were already incorporated into the strategic initiatives included in the annual compensation plan. | ü | The Compensation Committee acknowledges that special discretionary awards are tools that should be used only in extraordinary circumstances. We engaged with our shareholders and noted the extraordinary circumstances during the past two years, as explained below and on page 45. In response to shareholder concerns, the Compensation Committee made a commitment to not make special discretionary awards to executive officers except in extraordinary circumstances where the compensation objectives cannot be addressed through our annual compensation program. The Compensation Committee concluded that, for 2020, extraordinary circumstances existed where, in less than a one-year period, our management team led our transformation from effectively a regional iron ore miner into the largest flat-rolled steel producer in North America. We went from approximately 2,000 employees to approximately 26,000 employees, and we went from annual revenues of approximately $2 billion to approximately $20 billion. This was accomplished through the acquisitions of AK Steel and AM USA, both of which were completed during 2020. The strategic plan was set out early in 2020 and was in place before the AM USA acquisition was a possibility. The management team not only successfully navigated through the pandemic but also completely transformed our business during this challenging period. The Compensation Committee fully recognized both the bold vision and successful execution of the unprecedented industry consolidation and determined it appropriate and in shareholders' long-term interests to reward management for their efforts. | |||||||||
Shareholders questioned the magnitude of the special discretionary award payment in 2021. | ü | The financial metric of the annual incentive for 2020 did not pay out due to COVID-19. The Compensation Committee determined it appropriate and in shareholders' long-term interests to reward management for the successful actions taken by the Company, specifically their efforts to complete the AK Steel and AM USA acquisitions. The Compensation Committee believed the results merited special recognition. We believe the appropriateness of the special discretionary payment has been proven by Cliffs' TSR outperformance. | |||||||||
Shareholders questioned the magnitude of total CEO compensation relative to peers. | ü | We have a uniquely talented CEO that has not only led a complete turnaround of a company that may have been headed for bankruptcy, but has also led our transformation from a regional iron ore miner to the largest flat-rolled steel producer in North America, set up to thrive in the evolving domestic steel market. In 2021, the Company had its best financial year in its 174-year history, as it achieved record financial performance across all relevant metrics. Our share performance under our CEO's leadership has also dramatically outperformed our peer group, and as such we believe the level of compensation is more than justified to retain such a qualified leader. | |||||||||
Shareholders asked us to provide further commentary on how strategic goals are set and the evaluation process, as well as quantitative metrics. | ü | We enhanced our disclosure significantly on the goal setting and evaluation process. In order to ensure the long-term health of our business, we need to make sure our executive team is incentivized by more than just short-term measurable indicators. We do use quantitative statistics, like synergy figures and project costs, from time to time as part of this evaluation process. | |||||||||
Shareholders asked us to further explain how the Compensation Committee chooses metrics and determines the weightings for those metrics. | ü | We explained how the Compensation Committee chooses metrics and determines the weightings for those metrics listed below beginning on page 41 of this proxy statement. Specifically, we provided context around how the Compensation Committee designs the chosen metrics to align with shareholder interests and enhance shareholder value. For example, share performance is often driven by Adjusted EBITDA performance. For the past several years, analyst consensus estimates for future year Adjusted EBITDA are often aligned with the short-term targets set by our Compensation Committee. In theory, if the Company outperforms this goal, the shares should outperform as well. |
2022 Proxy Statement | 31 |
2022 Proxy Statement | 32 |
BASE SALARY | ANNUAL INCENTIVE | LONG-TERM 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 and paid annually | Granted annually | |||||||||||||||||
Form of Delivery | Cash | Cash | Shares | |||||||||||||||||
Performance Type | Short-term emphasis | Long-term emphasis | ||||||||||||||||||
Performance Period | Ongoing | 1 year | 3 years | N/A | ||||||||||||||||
How Payout Is Determined | Compensation Committee judgment, with CEO input on NEOs base salary | Formulaic and Compensation Committee judgment | Formulaic, approved by Compensation Committee | Continued employment with Cliffs | ||||||||||||||||
Performance Measures | N/A | Company and individual performance factors | Relative TSR | N/A |
2022 Proxy Statement | 33 |
2021 AT–RISK COMPENSATION | ||||||||||||||
WHY WE PAY THIS ELEMENT | KEY CHARACTERISTICS | |||||||||||||
ANNUAL INCENTIVE PROGRAM: CASH | ü | Motivate and reward executives for performance on key strategic, operational and financial measures during the year. | ü | Earned annual cash incentive based on achieving Adjusted EBITDA, safety and strategic initiatives. | ||||||||||
PERFORMANCE CASH AND SHARES | ü ü ü | Motivate and reward executives for performance on key long-term performance metric. Align the interests of executives with long-term shareholder value. Retain executives. | ü | The cash and shares are earned based on achieving relative TSR, as compared to comparator companies' returns in the metals and mining industry. | ||||||||||
RESTRICTED STOCK UNITS | ü ü | Align the interests of executives with long-term shareholder value. Retain executives. | ü | Earned based on continued employment over a period of approximately three years. |
2022 Proxy Statement | 34 |
2022 Proxy Statement | 35 |
WHAT WE DO... | |||||
ü | Set incentive award metrics that are objective and tie to Company performance | ||||
ü | Provide a considerable proportion of NEO compensation in the form of performance-based compensation | ||||
ü | Include caps on individual payouts in incentive plans | ||||
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 | Set significant share ownership guidelines for our NEOs | ||||
ü | Regularly engage with shareholders to discuss governance and executive compensation | ||||
ü | Conduct an annual Say-on-Pay advisory vote | ||||
ü | Conduct annual compensation-related risk reviews | ||||
ü | Maintain an insider trading policy that prohibits any officer from hedging or pledging Company securities | ||||
ü | Retain an independent executive compensation consultant to advise the Compensation Committee, which is composed entirely of independent directors | ||||
WHAT WE DON'T DO... | |||||
X | No highly leveraged incentive plans that encourage excessive risk taking | ||||
X | No employment agreements for executive officers | ||||
X | No repricing or backdating of stock options | ||||
X | No tax "gross-ups" on change in control payments related to excise taxes and cash paid in lieu of health and welfare benefits | ||||
X | No service credits for prior employment related to the Supplemental Executive Retirement Plan (the "SERP") benefit for all future hires |
2022 Proxy Statement | 36 |
PROCESS STEP / ANALYSIS | RESPONSIBILITY | PURPOSE | CONDUCTED | |||||||||||||||||
REVIEW OF ANNUAL AND LONG-TERM INCENTIVE PROGRAMS | ▪Compensation Committee ▪Executive Management | Aligning incentive compensation with business plans | December – February | |||||||||||||||||
INDIVIDUAL PERFORMANCE ASSESSMENTS | ▪Board of Directors ▪Compensation Committee ▪Executive Management | Evaluating individual performance of CEO and executive management | December – February | |||||||||||||||||
COMPANY ACHIEVEMENT OF PERFORMANCE GOALS | ▪Compensation Committee ▪Executive Management | Determining award payments based on Company performance in completed performance periods | January – February | |||||||||||||||||
ASSESSMENT OF COMPENSATION RISK PROGRAMS | ▪Compensation Committee ▪Executive Management | Determining if risks related to the Company’s incentive compensation plans are appropriately mitigated such that there is no reasonable likelihood of a material adverse impact on the Company | October | |||||||||||||||||
COMPENSATION COMPARATOR GROUP REVIEW | ▪Compensation Committee ▪Executive Management | To be used as an input to design short- and long-term pay programs and determine base salary ranges to assess the competitiveness of total direct compensation awarded to executives | October | |||||||||||||||||
YEAR-TO-DATE PERFORMANCE REVIEW OF ANNUAL AND LONG-TERM INCENTIVE PLANS | ▪Compensation Committee ▪Executive Management | Evaluating the performance of the incentive programs that were established in February | Ongoing | |||||||||||||||||
SHAREHOLDER OUTREACH | ▪Compensation Committee ▪Executive Management | Obtaining shareholder feedback on concerns and questions relating to compensation program design and performance | Ongoing | |||||||||||||||||
SHARE OWNERSHIP REQUIREMENTS | ▪Compensation Committee | To ensure that executive management has a meaningful direct ownership stake in Cliffs and that the interest of executives are aligned with shareholders | Ongoing |
2022 Proxy Statement | 37 |
2022 Proxy Statement | 38 |
Agnico Eagle Mines Limited | Commercial Metals Company | Goldcorp, Inc. | Tronox Limited | ||||||||
Allegheny Technologies Incorporated | Compass Minerals International, Inc. | Kinross Gold Corporation | U.S. Concrete, Inc. | ||||||||
Carpenter Technology Corporation | Ferro Corporation | Schnitzer Steel Industries, Inc. | Vulcan Materials Company | ||||||||
CF Industries Holdings, Inc. | FMC Corporation | Scotts Miracle-Gro Company | Worthington Industries |
2022 Proxy Statement | 39 |
Alcoa Corporation | Johnson Controls International | Reliance Steel & Aluminum Co. | ||||||
Cummins Inc. | LyondellBasell Industries N.V. | Stanley Black & Decker, Inc. | ||||||
DuPont de Nemours, Inc. | Nucor Corporation | Steel Dynamics, Inc. | ||||||
Freeport-McMoRan Inc. | PACCAR Inc. | Trane Technologies | ||||||
Illinois Tool Works Inc. | Parker-Hannifin Corporation | United States Steel Corporation | ||||||
International Paper Company | PPG Industries, Inc. | WestRock Company |
2021 BASE SALARIES | |||||||||||||||||
2020 ($) | INCREASE (%) | JANUARY 1, 2021 ($) | INCREASE (%) | SEPTEMBER 1, 2021 ($) | |||||||||||||
Goncalves | 1,900,000 | 2.0 | 1,938,000 | — | 1,938,000 | ||||||||||||
C. Goncalves | 325,000 | 2.2 | 332,000 | 65.7 | 550,000 | ||||||||||||
Koci | 500,000 | 12.2 | 561,000 | 15.9 | 650,000 | ||||||||||||
Smith | 750,000 | 2.0 | 765,000 | — | 765,000 | ||||||||||||
Fedor | 550,000 | 9.1 | 600,000 | — | 600,000 | ||||||||||||
Harapiak | 550,000 | 2.0 | 561,000 | — | 561,000 |
2022 Proxy Statement | 40 |
Base Salary ($) | X | Target Award Level (%) | X | 2021 Funding (%) | = | EMPI Award ($) |
2022 Proxy Statement | 41 |
2022 Proxy Statement | 42 |
Establish Cleveland-Cliffs Safety Program and Culture within newly acquired Assets | ||||||||
üü | Goal: Establish the legacy Cleveland-Cliffs safety systems, programs and culture within the newly acquired assets. Importance of Initiative: The Compensation Committee wants to ensure that management is focused on the well-being of our employees and contractors. In order to do so, an initiative was set to establish the legacy Cleveland-Cliffs safety program and culture within the newly acquired assets, including both the legacy AK Steel and AM USA facilities. The impressive track record of our safety performance is a result of the safety systems, programs and culture that has been in place at the legacy Cleveland-Cliffs operations. Result: By the end of 2021, the newly acquired assets and facilities adopted the systems, programs and culture set forth by Cleveland-Cliffs by leveraging legacy safety systems and programs and implementing them through an extensive safety transformation program. | |||||||
Extend / Increase Hibbing Taconite Ore Reserve Base | ||||||||
üü | Goal: To perform a thorough study of the iron ore reserves at Hibbing Taconite and develop a strategic plan to ensure the Company has the iron ore reserves necessary for the long-term success of the business. Importance of Initiative: Given the expected remaining mine life at Hibbing Taconite, the Compensation Committee set an initiative for management to perform a thorough study of the iron ore reserves at Hibbing Taconite and develop a strategic plan to ensure the Company has the iron ore reserves necessary for the long-term success of the business. Result: Our management team conducted a study throughout the year and presented findings to the Board. It was determined that the Company has a strategy in place that will ensure the Company will have the necessary iron ore reserves for the long-term success of the business. Moreover, the Company chose not to invest significant additional capital in the Hibbing Taconite mine at this time, but rather purchased the FPT scrap business to increase the critical raw materials available to the Company’s steel operations. | |||||||
IT System Integration to Support Consolidated Business | ||||||||
üü | Goal: To integrate the newly acquired assets onto Cleveland-Cliffs' IT network. Importance of Initiative: Following the completion of the AM USA transaction, the Compensation Committee set a target to integrate IT systems to support the consolidated business. It is critical to have universal IT capabilities across the consolidated business to operate efficiently and to maintain safety and reporting systems. Result: The IT integration was a monumental task that was completed during 2021 and included migrating approximately 1,400 servers during operational downtimes and moving more than 15,000 devices over to the Company’s network. | |||||||
2022 Proxy Statement | 43 |
Develop Merchant Pig Iron Business Plan | ||||||||
üü | Goal: Conduct a formal study on potentially entering the merchant pig iron business. Importance of Initiative: As new EAF capacity is set to come online over the next five years, which is expected to result in increased demand for raw materials used in EAFs, including pig iron, the Compensation Committee wanted management to conduct a formal study on potentially entering the merchant pig iron business. Result: The management team conducted a thorough study and presented the options to the Board. It was determined that it would put the Company at a competitive disadvantage to enter the merchant pig iron business at this time. As an alternative to merchant pig iron, management developed a strategy to enter the scrap business through the acquisition of FPT, which was completed in November 2021. The FPT acquisition provides the Company flexibility to both use scrap internally and sell scrap externally. | |||||||
Any Initiatives the Compensation Committee deems significant to advancing the Company | ||||||||
üü | Goal: Maintain strategic focus and take advantage of opportunities in the market while navigating through the COVID-19 pandemic. Importance of Initiative: Management, in consultation with the Compensation Committee where appropriate, should be empowered and incented to generate and execute on additional strategic initiatives that are identified during the course of the year and that are critical to the long-term development of the business, even if the opportunity first arises only after the Compensation Committee has already established the Company's other strategic initiatives for purposes of the annual EMPI program. Result: As discussed above, the management team identified, negotiated and successfully completed the acquisition of FPT during 2021. FPT is among the largest processors and distributors of prime ferrous scrap in the United States, representing approximately 15% of the domestic merchant prime scrap market. This transaction represents an important strategic accomplishment for the Company because, among other things, we consume a significant amount of scrap as a raw material in our steelmaking facilities and anticipate entering into value-added and environmentally-friendly steel recycling partnerships with our customers. In addition, the Company reached nameplate capacity at our state-of-the-art direct reduction plant in Toledo, Ohio. This facility produces high-quality HBI and is the first of its kind in the Great Lakes region. The Company has been able to use the majority of our HBI internally, which allows the Company to improve costs and productivity while reducing our coke rates and lowering our carbon emissions. Management also effectively returned $1.3 billion in capital to shareholders via the repurchase of all of the outstanding shares of Series B Participating Redeemable Preferred Stock that were issued in connection with the AM USA acquisition, reducing the Company's diluted share count by approximately 10%. |
2022 Proxy Statement | 44 |
BASE SALARY ($)(1) | TARGET AWARD LEVEL (%)(1) | TARGET AWARD LEVEL ($) | 2021 EMPI FUNDING (%) | EMPI PLAN PAYOUT ($) | |||||||||||||
Goncalves | 1,938,000 | 200 | 3,876,000 | 180 | 6,976,800 | ||||||||||||
C. Goncalves (2) | 550,000 | 100 | 381,696 | 180 | 687,053 | ||||||||||||
Koci (3) | 650,000 | 120 | 633,270 | 180 | 1,139,886 | ||||||||||||
Smith | 765,000 | 120 | 918,000 | 180 | 1,652,400 | ||||||||||||
Fedor | 600,000 | 100 | 600,000 | 180 | 1,080,000 | ||||||||||||
Harapiak | 561,000 | 100 | 561,000 | 180 | 1,009,800 | ||||||||||||
(1)2021 base salary and target award level percent as of December 31, 2021. (2)Mr. C. Goncalves' target award level dollar was prorated due to his promotion: January 1, 2021 to August 31, 2021 ($332,000 x 90% x 67% = $200,196); and September 1, 2021 to December 31, 2021 ($550,000 x 100% x 33% = $181,500). His final payout also reflected this promotion proration. (3)Mr. Koci's target award level dollar was prorated due to his promotion: January 1, 2021 to August 31, 2021 ($561,000 x 100% x 67% = $375,870); and September 1, 2021 to December 31, 2021 ($650,000 x 120% x 33% = $257,400). His final payout also reflected this promotion proration. |
2022 Proxy Statement | 45 |
ACHIEVEMENT AWARD ($) | |||||
Goncalves | 3,876,000 | ||||
C. Goncalves | 550,000 | ||||
Koci | 780,000 | ||||
Smith | 918,000 | ||||
Fedor | 600,000 | ||||
Harapiak | 561,000 |
2022 Proxy Statement | 46 |
PERFORMANCE LEVEL | |||||||||||||||||
PERFORMANCE FACTOR | WEIGHT | BELOW THRESHOLD | THRESHOLD | TARGET | MAXIMUM | ||||||||||||
Relative TSR | 100% | Below 25th Percentile | 25th Percentile | 50th Percentile | 75th Percentile | ||||||||||||
Payout | —% | 50% | 100% | 200% |
Alcoa Corporation | Kaiser Aluminum Corporation | |||||||
Allegheny Technologies Inc. | Materion Corporation | |||||||
Arch Resources Inc. | Newmont Corporation | |||||||
Arconic Corp. | Nucor Corporation | |||||||
Carpenter Technology Corporation | Reliance Steel & Aluminum Co. | |||||||
Century Aluminum Corp. | Royal Gold, Inc. | |||||||
Coeur Mining, Inc. | Schnitzer Steel Industries, Inc. | |||||||
Commercial Metals Company | Steel Dynamics, Inc. | |||||||
Compass Minerals International, Inc. | United States Steel Corporation | |||||||
Freeport-McMoRan Inc. | Warrior Met Coal Inc. | |||||||
Hecla Mining Company | Worthington Industries, Inc. | |||||||
2022 Proxy Statement | 47 |
TARGET (%) | TOTAL GRANT VALUE ($) | TARGET PERFORMANCE CASH INCENTIVE AWARDS ($) | TARGET PERFORMANCE SHARE AWARDS (#) | RESTRICTED STOCK UNITS (#) | |||||||||||||
Goncalves | 400 | 8,300,658 | 2,635,680 | 168,300 | 168,300 | ||||||||||||
C. Goncalves | 150 | 533,252 | 169,320 | 10,812 | 10,812 | ||||||||||||
Koci | 200 | 1,201,404 | 381,480 | 24,359 | 24,359 | ||||||||||||
Smith | 250 | 2,047,847 | 650,250 | 41,521 | 41,521 | ||||||||||||
Fedor | 200 | 1,284,944 | 408,000 | 26,053 | 26,053 | ||||||||||||
Harapiak | 200 | 1,201,404 | 381,480 | 24,359 | 24,359 |
2022 Proxy Statement | 48 |
MULTIPLE OF BASE PAY | |||||
CEO | 6x | ||||
Executive / Senior Vice President | 3x | ||||
Vice President | 1.5x |
2022 Proxy Statement | 49 |
2022 Proxy Statement | 50 |
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COMPENSATION COMMITTEE REPORT | ||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||
COMPENSATION-RELATED RISK ASSESSMENT | ||
2022 Proxy Statement | 52 |
EXECUTIVE COMPENSATION | ||
NAME AND PRINCIPAL POSITION (a) | YEAR (b) | SALARY ($) (1)(2) (c) | BONUS ($) (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 | 2021 | 1,938,000 | 3,876,000 | 7,060,185 | — | 10,760,320 | 420,893 | 439,333 | 24,494,731 | ||||||||||||||||||||
2020 | 1,810,016 | 3,800,000 | 4,127,534 | — | 7,472,000 | 684,898 | 616,957 | 18,511,405 | |||||||||||||||||||||
2019 | 1,391,000 | — | 5,891,147 | — | 7,367,984 | 1,160,027 | 255,931 | 16,066,089 | |||||||||||||||||||||
Celso L. Goncalves Jr. EVP, CFO | 2021 | 404,667 | 550,000 | 453,563 | — | 862,493 | 42,900 | 46,229 | 2,359,852 | ||||||||||||||||||||
2020 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
2019 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Keith A. Koci EVP & President, Cleveland-Cliffs Services | 2021 | 590,667 | 780,000 | 1,021,860 | — | 1,645,636 | 119,700 | 34,976 | 4,192,839 | ||||||||||||||||||||
2020 | 489,006 | 500,000 | 543,095 | — | 500,000 | 165,500 | 28,110 | 2,225,711 | |||||||||||||||||||||
2019 | 378,413 | — | 787,478 | — | 611,517 | — | 224,843 | 2,002,251 | |||||||||||||||||||||
Clifford T. Smith EVP & President, Cleveland-Cliffs Steel | 2021 | 765,000 | 918,000 | 1,741,806 | — | 2,521,100 | 85,700 | 84,870 | 6,116,476 | ||||||||||||||||||||
2020 | 706,218 | 900,000 | 1,018,304 | — | 1,406,940 | 234,200 | 65,180 | 4,330,842 | |||||||||||||||||||||
2019 | 511,000 | — | 1,352,622 | — | 1,392,921 | 419,300 | 38,881 | 3,714,724 | |||||||||||||||||||||
Terry G. Fedor EVP, Operations, East | 2021 | 600,000 | 600,000 | 1,092,923 | — | 1,602,410 | 24,700 | 114,191 | 4,034,224 | ||||||||||||||||||||
2020 | 531,699 | 550,000 | 597,410 | — | 1,056,940 | 220,600 | 208,629 | 3,165,278 | |||||||||||||||||||||
2019 | 439,000 | — | 813,422 | — | 1,110,020 | 354,600 | 32,737 | 2,749,779 | |||||||||||||||||||||
Maurice D. Harapiak EVP, HR & Chief Administration Officer | 2021 | 561,000 | 561,000 | 1,021,860 | — | 1,532,210 | 63,871 | 77,899 | 3,817,840 | ||||||||||||||||||||
2020 | 531,699 | 550,000 | 597,410 | — | 1,056,940 | 163,269 | 59,305 | 2,958,623 | |||||||||||||||||||||
2019 | 439,000 | — | 813,422 | — | 1,096,592 | 249,282 | 39,489 | 2,637,785 | |||||||||||||||||||||
(1)2021 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 2021 salary for each of the NEOs includes his base salary before the employee's contributions to the 401(k) Savings Plan. The following table summarizes salary contributions for the 401(k) Savings Plan for NEOs in 2021: |
401(k) CONTRIBUTION ($) | CATCH-UP CONTRIBUTION ($) | TOTAL ($) | |||||||||
Goncalves | 19,500 | 6,500 | 26,000 | ||||||||
C. Goncalves | 19,500 | — | 19,500 | ||||||||
Koci | 19,500 | 6,500 | 26,000 | ||||||||
Smith | 41,175 | 6,500 | 47,675 | ||||||||
Fedor | 46,400 | 6,500 | 52,900 | ||||||||
Harapiak | 19,500 | 6,500 | 26,000 |
2022 Proxy Statement | 53 |
PRESENT VALUE OF PENSION ACCRUALS ($) | ABOVE-MARKET INTEREST ON DEFERRED COMPENSATION ($) | TOTAL ($) | |||||||||
Goncalves | 420,600 | 293 | 420,893 | ||||||||
C. Goncalves | 42,900 | — | 42,900 | ||||||||
Koci | 119,700 | — | 119,700 | ||||||||
Smith | 85,700 | — | 85,700 | ||||||||
Fedor | 24,700 | — | 24,700 | ||||||||
Harapiak | 63,800 | 71 | 63,871 |
2022 Proxy Statement | 54 |
GRANT DATE (c) | 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) | Threshold (d) | Target (e) | Maximum (f) | Threshold (g) | Target (h) | Maximum (i) | ||||||||||||||||||||||||||||
Goncalves | Annual Incentive Program | 1/28/2021 | 1,938,000 | 3,876,000 | 7,752,000 | — | — | — | — | — | |||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 1,317,840 | 2,635,680 | 5,271,360 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 84,150 | 168,300 | 336,600 | — | 4,227,696 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 168,300 | 2,832,489 | ||||||||||||||||||||||||||
C. Goncalves (3) | Annual Incentive Program | 1/28/2021 | 100,098 | 200,196 | 400,392 | — | — | — | — | — | |||||||||||||||||||||||||
Annual Incentive Program | 9/1/2021 | 90,750 | 181,500 | 363,000 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 84,660 | 169,320 | 338,640 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 5,406 | 10,812 | 21,624 | — | 271,597 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 10,812 | 181,966 | ||||||||||||||||||||||||||
Koci (4) | Annual Incentive Program | 1/28/2021 | 187,935 | 375,870 | 751,740 | — | — | — | — | — | |||||||||||||||||||||||||
Annual Incentive Program | 9/1/2021 | 128,700 | 257,400 | 514,800 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 190,740 | 381,480 | 762,960 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 12,180 | 24,359 | 48,718 | — | 611,898 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 24,359 | 409,962 | ||||||||||||||||||||||||||
Smith | Annual Incentive Program | 1/28/2021 | 459,000 | 918,000 | 1,836,000 | — | — | — | — | — | |||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 325,125 | 650,250 | 1,300,500 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 20,761 | 41,521 | 83,042 | — | 1,043,008 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 41,521 | 698,798 | ||||||||||||||||||||||||||
Fedor | Annual Incentive Program | 1/28/2021 | 300,000 | 600,000 | 1,200,000 | — | — | — | — | — | |||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 204,000 | 408,000 | 816,000 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 13,027 | 26,053 | 52,106 | — | 654,451 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 26,053 | 438,472 | ||||||||||||||||||||||||||
Harapiak | Annual Incentive Program | 1/28/2021 | 280,500 | 561,000 | 1,122,000 | — | — | — | — | — | |||||||||||||||||||||||||
LTI Program - Performance Cash | 2/23/2021 | 190,740 | 381,480 | 762,960 | — | — | — | — | — | ||||||||||||||||||||||||||
LTI Program - Performance Shares | 2/23/2021 | — | — | — | 12,180 | 24,359 | 48,718 | — | 611,898 | ||||||||||||||||||||||||||
LTI Program - RSU | 2/23/2021 | — | — | — | — | — | — | 24,359 | 409,962 | ||||||||||||||||||||||||||
(1)Reflects the Company's EMPI Plan and an LTI Program component for 2021. 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)Reflects the performance shares component of the Company's LTI Program. The amounts in column (g) reflect the threshold payout level of the 2021 – 2023 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)Mr. C. Goncalves' EMPI Plan target award level dollar amounts were prorated due to his promotion. (4)Mr. Koci's EMPI Plan target award level dollar amounts were prorated due to his promotion. | |||||||||||||||||||||||||||||||||||
2022 Proxy Statement | 55 |
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 | 2021 LTI Program | — | — | — | — | 168,300 | (1) | 3,663,891 | 336,600 | (2) | 7,327,782 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 349,791 | (3) | 7,614,950 | 699,582 | (4) | 15,229,900 | |||||||||||||||||||||||||||||||
2015 LTI Program | 187,136 | — | 7.70 | 1/12/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
C. Goncalves | 2021 LTI Program | — | — | — | — | 10,812 | (1) | 235,377 | 21,624 | (2) | 470,754 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 22,437 | (3) | 488,453 | 44,874 | (4) | 976,907 | |||||||||||||||||||||||||||||||
Koci | 2021 LTI Program | — | — | — | — | 24,359 | (1) | 530,295 | 48,718 | (2) | 1,060,591 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 46,025 | (3) | 1,001,964 | 92,050 | (4) | 2,003,929 | |||||||||||||||||||||||||||||||
Smith | 2021 LTI Program | — | — | — | — | 41,521 | (1) | 903,912 | 83,042 | (2) | 1,807,824 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 86,297 | (3) | 1,878,686 | 172,594 | (4) | 3,757,371 | |||||||||||||||||||||||||||||||
2015 LTI Program | 27,430 | — | 7.70 | 1/12/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
Fedor | 2021 LTI Program | — | — | — | — | 26,053 | (1) | 567,174 | 52,106 | (2) | 1,134,348 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 50,628 | (3) | 1,102,172 | 101,256 | (4) | 2,204,343 | |||||||||||||||||||||||||||||||
2015 LTI Program | 27,430 | — | 7.70 | 1/12/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
Harapiak | 2021 LTI Program | — | — | — | — | 24,359 | (1) | 530,295 | 48,718 | (2) | 1,060,591 | ||||||||||||||||||||||||||||||
2020 LTI Program | — | — | — | — | 50,628 | (3) | 1,102,172 | 101,256 | (4) | 2,204,343 | |||||||||||||||||||||||||||||||
(1)Represents restricted stock units granted on February 23, 2021. The restricted stock units vest in full on December 31, 2023, subject to continued employment. (2)Represents performance shares for the 2021 – 2023 performance period granted on February 23, 2021. These shares are shown based on achievement of 200% performance and will vest on December 31, 2023, subject to the achievement of specified performance metrics and continued employment through December 31, 2023. (3)Represents restricted stock units granted on March 13, 2020. The restricted stock units vest in full on December 31, 2022, subject to continued employment. (4)Represents performance shares for the 2020 – 2022 performance period granted on March 13, 2020. These shares are shown based on achievement of 200% performance and will vest on December 31, 2022, subject to the achievement of specified performance metrics and continued employment through December 31, 2022. |
2022 Proxy Statement | 56 |
OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||
NAME (a) | AWARD TYPE (b) | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) (c) | VALUE REALIZED ON EXERCISE ($) (d) | NUMBER OF SHARES ACQUIRED ON VESTING (#) (e) | VALUE REALIZED ON VESTING ($) (f) | ||||||||||||||||||
Goncalves | 2019 LTI Program - Performance Shares | — | — | 398,724 | (1) | 8,680,221 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 199,362 | (2) | 4,340,111 | ||||||||||||||||||
2014 New Hire Grant | 250,000 | (3) | 2,290,000 | — | — | ||||||||||||||||||
C. Goncalves | 2019 LTI Program - Performance Shares | — | — | 18,488 | (1) | 402,484 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 9,244 | (2) | 201,242 | ||||||||||||||||||
Koci | 2019 LTI Program - Performance Shares | — | — | 53,298 | (1) | 1,160,297 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 26,649 | (2) | 580,149 | ||||||||||||||||||
Smith | 2019 LTI Program - Performance Shares | — | — | 91,548 | (1) | 1,993,000 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 45,774 | (2) | 996,500 | ||||||||||||||||||
Fedor | 2019 LTI Program - Performance Shares | — | — | 55,054 | (1) | 1,198,526 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 27,527 | (2) | 599,263 | ||||||||||||||||||
Harapiak | 2019 LTI Program - Performance Shares | — | — | 55,054 | (1) | 1,198,526 | |||||||||||||||||
2019 LTI Program - RSU | — | — | 27,527 | (2) | 599,263 | ||||||||||||||||||
2015 LTI Program - Stock Options | 25,384 | (4) | 318,823 | — | — | ||||||||||||||||||
(1)Represents an award of performance shares granted during 2019 for the 2019 - 2021 performance period. The performance shares vested in full on December 31, 2021. The value realized was determined based on the closing price of our common shares on December 31, 2021 of $21.77. The performance shares paid out at 200.0% of the award based on the performance criteria. (2)Represents an award of restricted stock units granted during 2019 for the 2019 - 2021 period. The restricted stock units vested in full on December 31, 2021. The value realized was determined based on the closing price of our common shares on December 31, 2021 of $21.77. (3)Represents an option award exercise on August 20, 2021. The value realized was determined by the exercise value ($22.99) minus the grant price ($13.83). (4)Represents an option award exercise on December 10, 2021. The value realized was determined by the exercise value ($20.26) minus the grant price ($7.70). |
2022 Proxy Statement | 57 |
NAME (a) | PLAN NAME (b) | NUMBER OF YEARS CREDITED SERVICE (#) (c) | PRESENT VALUE OF ACCUMULATED BENEFIT ($) (d) | PAYMENTS DURING LAST FISCAL YEAR ($) (e) | |||||||||||||
Goncalves | Pension Plan | 7.4 | 210,400 | — | |||||||||||||
SERP | 7.4 | 3,491,300 | — | ||||||||||||||
C. Goncalves | Pension Plan | 5.3 | 175,800 | — | |||||||||||||
SERP | 5.3 | 188,000 | — | ||||||||||||||
Koci | Pension Plan | 2.9 | 80,300 | — | |||||||||||||
SERP | 2.9 | 204,900 | — | ||||||||||||||
Smith | Pension Plan | 17.7 | 561,500 | — | |||||||||||||
SERP | 17.7 | 950,500 | — | ||||||||||||||
Fedor | Pension Plan | 10.9 | 345,200 | — | |||||||||||||
SERP | 10.9 | 730,400 | — | ||||||||||||||
Harapiak | Pension Plan | 7.6 | 219,100 | — | |||||||||||||
SERP | 7.6 | 545,100 | — |
2022 Proxy Statement | 58 |
2022 Proxy Statement | 59 |
2022 Proxy Statement | 60 |
LOURENCO GONCALVES | |||||||||||||||||||||||
BENEFIT | DEATH ($) | DISABILITY ($) | RETIREMENT ($) | VOLUNTARY TERMINATION ($) | INVOLUNTARY (WITHOUT CAUSE) TERMINATION ($) | CHANGE IN CONTROL WITHOUT TERMINATION ($) | TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 17,442,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 4,763,200 | 4,763,200 | 11,740,000 | 4,763,200 | 4,763,200 | — | 12,997,500 | ||||||||||||||||
Equity | 18,283,100 | 18,283,100 | 18,283,100 | 18,283,100 | 18,283,100 | — | 32,004,600 | ||||||||||||||||
Retirement Benefits | 3,586,700 | 3,586,700 | — | 3,701,700 | 3,701,700 | — | 5,286,000 | ||||||||||||||||
Non-Qualified Deferred Compensation | 143,000 | 143,000 | 143,000 | 143,000 | 143,000 | 143,000 | 143,000 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 474,800 | ||||||||||||||||
TOTAL | 26,776,000 | 26,776,000 | 30,166,100 | 26,891,000 | 26,891,000 | 143,000 | 68,347,900 |
CELSO L. GONCALVES JR. | |||||||||||||||||||||||
BENEFIT | DEATH ($) | DISABILITY ($) | RETIREMENT ($) | VOLUNTARY TERMINATION ($) | INVOLUNTARY (WITHOUT CAUSE) TERMINATION ($) | CHANGE IN CONTROL WITHOUT TERMINATION ($) | TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 2,090,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 305,700 | 305,700 | — | — | 305,700 | — | 1,080,500 | ||||||||||||||||
Equity | 1,173,100 | 1,173,100 | — | — | 1,173,100 | — | 2,053,800 | ||||||||||||||||
Retirement Benefits | 170,400 | 170,400 | — | 363,800 | 363,800 | — | 631,700 | ||||||||||||||||
Non-Qualified Deferred Compensation | 6,200 | 6,200 | — | 6,200 | 6,200 | 6,200 | 6,200 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 74,300 | ||||||||||||||||
TOTAL | 1,655,400 | 1,655,400 | — | 370,000 | 1,848,800 | 6,200 | 5,936,500 |
KEITH A. KOCI | |||||||||||||||||||||||
BENEFIT | DEATH ($) | DISABILITY ($) | RETIREMENT ($) | VOLUNTARY TERMINATION ($) | INVOLUNTARY (WITHOUT CAUSE) TERMINATION ($) | CHANGE IN CONTROL WITHOUT TERMINATION ($) | TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 2,600,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 644,100 | 644,100 | — | — | 644,100 | — | 1,902,200 | ||||||||||||||||
Equity | 2,445,800 | 2,445,800 | — | — | 2,445,800 | — | 4,331,600 | ||||||||||||||||
Retirement Benefits | 226,800 | 226,800 | — | 285,200 | 285,200 | — | 534,500 | ||||||||||||||||
Non-Qualified Deferred Compensation | 229,300 | 229,300 | — | 229,300 | 229,300 | 229,300 | 229,300 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 77,500 | ||||||||||||||||
TOTAL | 3,546,000 | 3,546,000 | — | 514,500 | 3,604,400 | 229,300 | 9,675,100 |
2022 Proxy Statement | 61 |
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 ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 3,366,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 1,175,100 | 1,175,100 | 2,827,500 | 1,175,100 | 1,175,100 | — | 3,168,400 | ||||||||||||||||
Equity | 4,510,600 | 4,510,600 | 4,510,600 | 4,510,600 | 4,510,600 | — | 7,895,800 | ||||||||||||||||
Retirement Benefits | 1,395,600 | 1,395,600 | 1,512,000 | 1,512,000 | 1,512,000 | — | 1,856,800 | ||||||||||||||||
Non-Qualified Deferred Compensation | 114,400 | 114,400 | 114,400 | 114,400 | 114,400 | 114,400 | 114,400 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 81,300 | ||||||||||||||||
TOTAL | 7,195,700 | 7,195,700 | 8,964,500 | 7,312,100 | 7,312,100 | 114,400 | 16,482,700 |
TERRY G. FEDOR | |||||||||||||||||||||||
BENEFIT | DEATH ($) | DISABILITY ($) | RETIREMENT ($) | VOLUNTARY TERMINATION ($) | INVOLUNTARY (WITHOUT CAUSE) TERMINATION ($) | CHANGE IN CONTROL WITHOUT TERMINATION ($) | TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 2,400,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 702,700 | 702,700 | 1,782,700 | 702,700 | 702,700 | — | 1,960,000 | ||||||||||||||||
Equity | 2,677,000 | 2,677,000 | 2,677,000 | 2,677,000 | 2,677,000 | — | 4,724,500 | ||||||||||||||||
Retirement Benefits | 853,600 | 853,600 | — | 1,075,600 | 1,075,600 | — | 1,330,700 | ||||||||||||||||
Non-Qualified Deferred Compensation | 77,900 | 77,900 | 77,900 | 77,900 | 77,900 | 77,900 | 77,900 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 75,900 | ||||||||||||||||
TOTAL | 4,311,200 | 4,311,200 | 4,537,600 | 4,533,200 | 4,533,200 | 77,900 | 10,569,000 |
MAURICE D. HARAPIAK | |||||||||||||||||||||||
BENEFIT | DEATH ($) | DISABILITY ($) | RETIREMENT ($) | VOLUNTARY TERMINATION ($) | INVOLUNTARY (WITHOUT CAUSE) TERMINATION ($) | CHANGE IN CONTROL WITHOUT TERMINATION ($) | TERMINATION WITHOUT CAUSE AFTER CHANGE IN CONTROL ($) | ||||||||||||||||
Cash Severance | — | — | — | — | — | — | 3,366,000 | ||||||||||||||||
Non-Equity Incentive Plan Compensation | 689,400 | 689,400 | 1,699,200 | 689,400 | 689,400 | — | 1,881,200 | ||||||||||||||||
Equity | 2,646,300 | 2,646,300 | 2,646,300 | 2,646,300 | 2,646,300 | — | 4,632,300 | ||||||||||||||||
Retirement Benefits | 673,200 | 673,200 | — | 764,200 | 764,200 | — | 1,081,500 | ||||||||||||||||
Non-Qualified Deferred Compensation | 55,600 | 55,600 | 55,600 | 55,600 | 55,600 | 55,600 | 55,600 | ||||||||||||||||
Other (Health & Welfare, Outplacement, Perquisites) | — | — | — | — | — | — | 105,700 | ||||||||||||||||
TOTAL | 4,064,500 | 4,064,500 | 4,401,100 | 4,155,500 | 4,155,500 | 55,600 | 11,122,300 |
2022 Proxy Statement | 62 |
CEO PAY RATIO | |||||
Median Employee Annual Total Compensation | $ | 125,396 | |||
CEO Annual Total Compensation | $ | 24,494,731 | |||
CEO to Median Employee Pay Ratio | 195:1 |
2022 Proxy Statement | 63 |
PROPOSAL 2 | APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICERS' COMPENSATION | |||||||
þ | THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2 TO APPROVE, ON AN ADVISORY BASIS, OUR NEOS' COMPENSATION. |
2022 Proxy Statement | 64 |
AUDIT COMMITTEE REPORT | ||
2022 Proxy Statement | 65 |
PROPOSAL 3 | RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |||||||
2021 | 2020 | |||||||
Audit Fees (1) | $ | 7,800.0 | $ | 6,937.5 | ||||
Audit-Related Fees (2) | 680.0 | 956.0 | ||||||
Tax Fees (3) | 774.1 | 1,256.0 | ||||||
All Other Fees | 4.1 | 2.1 | ||||||
TOTAL | $ | 9,258.2 | $ | 9,151.6 | ||||
(1)Audit fees consist of fees billed, or to be billed, for professional services rendered for the audit of our annual consolidated financial statements and internal control over financial reporting as of and for the years ended December 31, 2021 and 2020; and reviews of our interim financial statements included in quarterly reports and services normally provided by our independent registered public accounting firm in connection with statutory filings. (2)Audit-related fees consist of fees billed, or to be billed, related to agreed-upon procedures and services normally provided by our independent registered public accounting firm in connection with regulatory filings. (3)Tax fees consist of fees billed, or to be billed, related to tax consulting services. |
þ | THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3 TO RATIFY THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022. |
2022 Proxy Statement | 66 |
INFORMATION ABOUT SHAREHOLDER PROPOSALS AND COMPANY DOCUMENTS | ||
OTHER INFORMATION | ||
2022 Proxy Statement | 67 |
ANNEX A | USE OF NON-GAAP FINANCIAL MEASURES | |||||||
(In Millions) | |||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 3,033 | $ | (81) | $ | 293 | $ | 1,128 | $ | 363 | $ | 199 | $ | (748) | |||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||||||||
Interest expense, net | (337) | (238) | (101) | (121) | (132) | (201) | (231) | ||||||||||||||||||||||||||||||||||
Income tax benefit (expense) | (773) | 111 | (18) | 460 | 252 | 12 | (163) | ||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | (897) | (308) | (85) | (89) | (87) | (115) | (134) | ||||||||||||||||||||||||||||||||||
Total EBITDA | $ | 5,040 | $ | 354 | $ | 497 | $ | 878 | $ | 330 | $ | 503 | $ | (220) | |||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||||||||
EBITDA from noncontrolling interests | $ | 75 | $ | 56 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||
Gain (loss) on extinguishment/restructuring of debt | (88) | 130 | (18) | (7) | (166) | 166 | 393 | ||||||||||||||||||||||||||||||||||
Severance and contractor termination costs | (15) | (38) | (2) | — | — | — | (11) | ||||||||||||||||||||||||||||||||||
Acquisition-related costs excluding severance costs | (5) | (52) | (7) | — | — | — | — | ||||||||||||||||||||||||||||||||||
Acquisition-related loss on equity method investment | (31) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Amortization of inventory step-up | (161) | (96) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Impact of discontinued operations | 3 | 1 | (1) | 121 | 22 | (20) | (892) | ||||||||||||||||||||||||||||||||||
Foreign exchange remeasurement | — | — | — | (1) | 14 | (17) | 16 | ||||||||||||||||||||||||||||||||||
Supplies inventory adjustment | — | — | — | — | — | — | (16) | ||||||||||||||||||||||||||||||||||
Impairment of other long-lived assets | — | — | — | (1) | — | — | (3) | ||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 5,262 | $ | 353 | $ | 525 | $ | 766 | $ | 460 | $ | 374 | $ | 293 |
2022 Proxy Statement | A-1 |
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