USX CORPORATION
PROXY STATEMENT AND PROSPECTUS 600 Grant Street
Pittsburgh, PA 15219-4776 (412) 433-1121
______________________
Annual Meeting of Stockholders to be Held at 1:30 P.M. on Monday, May 6, 1991
______________________
This Proxy Statement and Prospectus (hereinafter "Proxy Statement") is being furnished to the stockholders
of USX Corporation, a Delaware corporation ("USX", the "Corporation" or the "Company''), in connection
with the solicitation of proxies by the Board of Directors of USX (''Board'') from holders of outstanding
shares of Common Stock, par value $1.00 per share, of USX (''Common Stock"), for use at the Annual
Meeting of Stockholders of USX to be held at 1:30 P.M. on Monday, May 6, 1991, and at any adjournment or
postponement thereof ("Meeting"). A Glossary showing the pages on which certain terms used in this Proxy
Statement are defined is attached as Annex 1.
In addition to the election of directors and independent accountants and certain stockholder proposals set
forth in the Notice of Annual Meeting, holders of Common Stock will be asked at the Meeting to vote upon a
proposal to change the capitalization of the Corporation (the "Steel Stock Proposal"). Under the Steel Stock
Proposal, the existing Common Stock would be changed into USX-Marathon Group Common Stock, par
value $1.00 per share ("Marathon Stock''), and a second class of common stock, designated as USX-U.S.
Steel Group Common Stock, par value $1.00 per share (''Steel Stock"). would be authorized. Dividends will
be payable when, as and if declared by the Board on the Marathon Stock out of all funds of the Corporation
legally available therefor and on the Steel Stock out of the lesser of all funds of the Corporation legally
available therefor and the Available Dividend Amount (as defined). Subject to certain conditions, the
Marathon Stock and the Steel Stock may be exchanged or redeemed at the Corporation's option or upon the
occurrence of certain events as described herein. The voting power of each share of common stock will
fluctuate, with each share of Marathon Stock having one vote and each share of Steel Stock having a variable
vote based upon the relative Market Values of one share of Marathon Stock and one share of Steel Stock, and
their rights upon liquidation of the Corporation will be based on their relative market capitalizations. T hese
features, as well as other special considerations, are discussed under "Special Considerations''.
The Marathon Stock and the Steel Stock are designed to provide stockholders with separate securities
reflecting the Corporation's energy business ("Marathon Group'') and its steel and diversified businesses
("U.S. Steel Group"), respectively, without diminishing the benefits of remaining a single corporation or
restricting future restructuring options. The Marathon Stock and the Steel Stock are intended to reflect the
separate performances of each business and give stockholders an opportunity to separately evaluate and invest
in each. Subject to the legal restrictions on the payment of dividends described above, the Board intends to
declare and pay dividends on the Marathon Stock and the Steel Stock based primarily on the long-term
earnings and cash flow capabilities of the Marathon Group and the U.S. Steel Group, respectively, as well as
on the dividend policies of publicly traded energy and steel companies. The Corporation will separately report
the financial results of the Marathon Group and the U.S. Steel Group. However, the redesignation of the
Common Stock as Marathon Stock and the distribution of the Steel Stock will not result in any transfer of
assets and liabilities of the Corporation or any of its subsidiaries.
The Board has adopted a resolution declaring a distribution of one-fifth of a share of Steel Stock on each
share of outstanding Common Stock to holders of record at the close of business on the date on which the
Certificate of Amendment is filed in Delaware (the "Effective Date"), which date is expected to be May 6,
1991, subject to approval by holders of the Common Stock of the Steel Stock Proposal.
The Corporation has historically paid dividends on its Common Stock, most recently at the annual rate of
$1.40 per share, payable $0.35 quarterly. If the Steel Stock Proposal is adopted, the Board currently intends to
pay dividends on the Marathon Stock and the Steel Stock at initial annual rates of $1.40 per share and $1.00
per share, respectively, payable quarterly, commencing in September 1991, which, giving effect to the
distribution of one-fifth of a share of Steel Stock on each share of Common Stock, would be equivalent to an
annual dividend of $1.60 per share of Common Stock.
The Board has unanimously approved the Steel Stock Proposal and recommend$ that the stockholders
vote FOR the Proposal.
There has been no prior market for Steel Stock. The New York Stock Exchange ("NYSE") has approved the
amendment of the Corporation's current listing agreement providing for the redesignation of Common Stock
as Marathon Stock and the listing of the Steel Stock, subject to official notice of issuance. USX has also
applied for listing of such shares on the Midwest Stock Exchange (the "MSE") and the Pacific Stock
Exchange, Inc. (the 'PSE").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
USX CORPORATION
600 Grant Street
Pittsburgh, PA 15219-4776Notice of Annual Meeting of Stockholders on May 6, 1991
The annual meeting of stockholders of USX Corporation will be held in the Grand Ballroom of The Westin
Oaks Hotel, 5011 Westheimer Road at the Galleria, Houston, Texas on Monday, the 6th of May, 1991
at 1:30 P.M., Central Daylight Saving Time , for the following purposes:
To elect five Class I directors and one Class 11 director.
To elect independent accountants for 1991.
To consider the Steel Stock Proposal which, if approved, would constitute adoption of (a) certain
amendments to the Restated Certificate of Incorporation of the Corporation increasing the number of shares
of authorized common stock from 500 million to 750 million, consisting of 550 million shares of USX-
Marathon Group Common Stock, par value $1.00 per share, and 200 million shares of USX-U.S. Steel Group
Common Stock, par value $1.00 per share; changing each outstanding share of Common Stock into one share
of Marathon Stock; and establishing the powers and rights of the Marathon Stock and the Steel Stock, and the
qualifications, limitations or restrictions thereof; and (b) certain related amendments to the Corporati on's
stock option and stock plans.
To consider and act upon eight proposals of certain stockholders, if such proposals are brought before the
meeting, relating to reporting on former governmental officials employed by the Corporation, payment of
compensation upon the merger or acquisition of the Corporation, directors' stock ownership, opting out of the
Delaware ''AntiTakeover'' law, the Corporation's Stockholder Rights Plan, purchases from South Africa, the
annual election of directors and confidential voting. These proposals are set forth on pages 35 through 43 of
the proxy statement dated April 10, 1991.
To transact such other business as may properly come before the meeting.
Common stockholders of record on the books of the Corporation at the close of business on March 15, 1991
will be entitled to vote at the meeting.
By order of the Board of Directors,RICHARD M. HAYS,
Secretary
Dated, April 10, 1991
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY
CARD PROMPTLY, WHETHER OR NOT YOU INTEND TO BE AT THE MEETING.
SUMMARY OF STEEL STOCK PROPOSAL
The following summary is qualified in its entirety by the detailed information and financial statements
appearing elsewhere in this Proxy Statement. Capitalized terms used in this summary have the respective
meanings ascribed to them elsewhere in this Proxy Statement. See Annex I-Glossary of Certain Terms.
STEEL STOCK PROPOSAL
EXISTING USX-MARATHON GROUP USX-U.S. STEEL GROUP
COMMON STOCK COMMON STOCK COMMON STOCK
Business: Energy business. Steel and diversified businesses.
Distribution: In addition to the new Steel Stock For each share of Common Stock,
distributed, stockholders will stockholders will also receive one
continue to own their existing fifth of a Share of Steel Stock.
Common Stock, which will be
changed into Marathon Stock.
Number of Shares 254,459,870 254.459,870 50,891,974 (based on the number of
Outstanding shares of Common Stock outstanding
as of March 15, as of March 15, 1991)
1991
Voting Rights: One vote per share. Except as otherwise described Except as otherwise described herein, the Marathon Stock will herein, the Steel Stock will vote as a
vote as a single class with the single class with the Marathon
Steel Stock. The Marathon Stock. Each share of Steel Stock
Stock will have one vote per will have a variable number of votes
share. based upon the relative Market Values of one
share of Steel Stock and one share of
Marathon Stock, and may have more
than, less than or exactly one vote
per share.
Dividends: in 1990, the Corpo- The Corporation expects to pay an The Corporation expects to pay an ration paid total initial dividend On the Marathon initial dividend on the Steel Stock at
dividends on the Stock at an annual rate of $1.40 an annual rate of $1.00 per
share, Common Stock of per share. Thereafter, dividends on which, giving effect to the one-
fifth
$1 .40 per share. the Marathon Stock will be paid at distribution ratio, is equivalent to the discretion of the Board of $ .20 per existing share of Common
Directors based primarily upon the Stock. Thereafter, dividends on the
long-term earnings and cash Steel Stock will be
flow capabilities of the Marathon paid at the discretion of the Board of
group, as well as on the dividend Directors based primarily upon the
policies of publicly traded energy long-term earnings and cash flow companies. Dividends will be capabilities of the U.S. Steel Group,
payable out of all funds of the as well as on the dividend
Corporation legally policies of publicly traded steel
available therefor. companies. Dividends will
be payable out of the lesser of (i) all
funds of the Corporation legally
available therefor and (ii) the
Available Dividend Amount.
Exchanges and None. The Corporation may exchange the The Corporation may exchange the
Redemption: Marathon Stock for shares of a Steel Stock for shares of a wholly wholly owned subsidiary that holds owned subsidiary that holds all the
all the assets and liabilities of the assets and liabilities of the U.S. Steel
Marathon Group. Group.If the Corporation sells all or substan-
tially all of the properties and assets of
the U.S. Steel Group. the Corporation
must either: (i) pay a special dividend to
holders of Steel Stock equal to the Net
Proceeds or (ii) redeem shares of Steel
Stock having an aggregate Market Value
closest to the value of the Net Proceeds
for an amount equal to the Net Proceeds,
or (iii) exchange each share of Steel
Stock for a number of shares of Marathon
Stock equal to 110% of the ratio of the
Market Values of one share of Steel
Stock to one share of Marathon Stock.
Liquidation: In the event of the In the event of the liquidation of the In the event of the liquidation of the liquidation of the Corporation, holders of Marathon Stock Corporation, holders of Steel Stock
Corporation, hold- will share the funds, if any, remaining will share the funds, if any.
ers of Common for distribution to common stockholders remaining for distribution to
Stock will receive with holders of Steel Stock based upon common stockholders with holders
the funds. if any, the relative market capitalizations of the of Marathon Stock based upon the
remaining for distri- Marathon Stock and the Steel Stock. relative market capitalizations of the
bution to common Stock. Steel Stock and the Marathon
stockholders.
Listing: NYSE under the NYSE under the symbol "MRO". NYSE under the symbol .. X. symbol"X".
PROXY STATEMENT SUMMARY
The following is a summary of certain information contained elsewhere in this Proxy Statement. Reference is
made to, and this Summary is qualified in its entirety by, the more detailed information contained, or
incorporated by reference, in this Proxy Statement and the Annexes hereto. Unless otherwise defined herein,
capitalized terms used in this Summary have the respective meanings ascribed to them elsewhere in this
Proxy Statement. See Annex I-Glossary of Certain Terms. Stockholders are urged to read this Proxy
Statement and the Annexes hereto in their entirety.
ANNUAL MEETING
Date, Time and
Place of Meeting The Annual Meeting of Stockholders will be held on Monday, May 6, 1991, at 1:30 p.m. (CDT) in the Grand Ballroom of The Westin Oaks Hotel, 5011 Westheimer Road
at the Galleria, Houston, Texas.
Proposals to be
Considered
at the Meeting The following proposals of the Board will be considered at the Meeting: (1 ) Election of Directors
(2) Election of Independent Accountants
(3) The Steel Stock ProposalThe following proposals by certain stockholders will also be considered at the
Meeting:
(4) Reporting on Former Governmental Officials Employed by the Corporation
(5) Payment of Compensation upon the Merger or Acquisition of the Corporation
(6) Directors' Stock Ownership
(7) Opting Out of the Delaware ''Anti-Takeover" Law
(8) Corporation's Stockholder Rights Plan
(9) Purchases from South Africa
(10) Annual Election of Directors
(11 ) Confidential Voting
Meeting Record
Date March 15, 1991
Voting Each holder of Common Stock is entitled to one vote for each share held of record at the close of business on March 15, 1991. Directors shall be elected by a plurality of
votes of the shares present in person or represented by proxy at the Meeting and
entitled to vote. The affirmative vote of the holders of a majority of the outstanding
shares entitled to vote is required for approval of each of the Steel Stock Proposal and
Proposal 7. All other proposals must receive the affirmative vote of the holders of a
majority of shares present in person or represented by proxy and entitled to vote at the
Meeting. As of the record date for the Meeting, the Icahn Group held approximately
13.3% of the outstanding Common Stock. The Icahn Group has agreed to vote its
shares for the Steel Stock Proposal and, with respect to all other matters, in accordance
with the Board's recommendation or in the same proportion as the votes cast by the
other stockholders of the Corporation. No other stockholder held more than 5% of the
outstanding shares of the Common Stock as of the record date. At the close of business
on February 15, 1991, all officers Of the Corporation held less than 1% of the
outstanding Common Stock. See ''Other Information -Security Ownership of Certain
Beneficial Owners".
THE STEEL STOCK PROPOSAL
General The common stockholders of the Corporation are being asked to vote in favor of
the Steel Stock Proposal which, if approved, would constitute adoption of
(a) certain amendments to the Restated Certificate of Incorporation of the
Corporation (the ''Certificate of Incorporation") increasing the number of
shares of authorized common stock from 500 million to 750 million, consisting of
550 million shares of Marathon Stock and 200 million shares of Steel Stock:
changing each outstanding share of Common Stock into one share of Marathon
Stock; and establishing the powers and rights of the Marathon Stock and the
Steel Stock, and the qualifications, limitations or restrictions thereof; and
(b) certain related amendments to the Corporation's stock option and stock
plans.
The Board has adopted a resolution declaring a distribution of one-fifth of a
share of Steel Stock on each share of outstanding Common Stock to holders of
record at the close of business on the Effective Date, subject to approval by the
holders of the Common Stock of the Steel Stock Proposal.
IF THE STEEL STOCK PROPOSAL IS NOT ADOPTED BY THE STOCK
HOLDERS, THE COMMON STOCK WILL NOT BE CHANGED INTO MARATHON
STOCK, THE STEEL STOCK WILL NOT BE CREATED, NO AMENDMENTS TOTHE CERTIFICATE OF INCORPORATION WILL BE MADE, THE STOCK
OPTION AND STOCK PLANS WILL NOT BE AMENDED AND THE DIVIDEND
POLICY CONTEMPLATED BY THE PROPOSAL WILL NOT BE
IMPLEMENTED.
Fractional shares of Steel Stock will not be issued upon the distribution. If the
number of shares of Steel Stock to be issued to any holder of Common Stock
includes a fraction of a whole share, the Corporation will pay an amount in cash
for such fractional shares.
Special
Considerations The Certificate of Amendment contains a number of terms applicable to the Marathon Stock and the Steel Stock, including fluctuating voting and liquidation
rights based upon relative market values of the stocks, requirements for
dividends on, or redemption or exchange for Marathon Stock of, the Steel Stock
in the event of a Disposition of all or substantially all of the properties and assets
of the U.S. Steel Group and a limitation on the payment of dividends on the Steel
Stock to the Available Dividend Amount. The Steel Stock Proposal may give rise
to occasions when the interests of the holders of Marathon Stock and the
holders of Steel Stock may diverge or appear to diverge. Although the Marathon
Stock and the Steel Stock will reflect the operations of the Marathon Group and
the U.S. Steel Group, respectively, holders of Marathon Stock and Steel Stock
will be stockholders of the Corporation, which will continue to be responsible for
all of its liabilities. Since there has been no prior market for the Marathon Stock
and the Steel Stock, there can be no assurance that the combined market values
of the Marathon Stock and Steel Stock held by a stockholder as a result of the
distribution of the Steel Stock will equal or exceed the market value of the
Common Stock held by such stockholder immediately before such distribution.
See ''The Steel Stock Proposal- Special Considerations".
Reasons for the Steel
Stock Proposal The Steel Stock Proposal is intended to provide stockholders with separate securities reflecting the Corporation's two major businesses without diminishing
the benefits of remaining a single corporation or restricting the Corporation's
future restructuring options, including separating the businesses. The Marathon
Stock and the Steel Stock are designed to reflect the separate performance of
the Corporation's energy business and steel and diversified businesses, respectively,
and give stockholders an opportunity to separately evaluate and invest in
each. Stockholders would have the ability to retain or sell either or both
securities depending on personal preference.
Recommendation
of the Board THE BOARD HAS UNANIMOUSLY APPROVED THE STEEL STOCK PROPOSAL
AND BELIEVES THAT ITS ADOPTION IS IN THE BEST INTERESTS OF THE
CORPORATION AND ALL ITS STOCKHOLDERS. ACCORDINGLY, THE
BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
ADOPTION OF THE PROPOSAL.
Dividend Policy The Corporation has historically paid dividends on its Common Stock, mostrecently at the annual rate of $1.40 per share, payable $0.35 quarterly. If the
Steel Stock Proposal is adopted, the Board currently intends to pay dividends on
the Marathon Stock and the Steel Stock at initial annual rates of $1.40 per share
and $1.00 per share, respectively, payable quarterly, which, giving effect to the
distribution of one-fifth of a share of Steel Stock on each share of Common
Stock, would be equivalent to an annual dividend of $1.60 per share of Common
Stock. While the Board does not currently intend to change these dividend
rates, it reserves the right to do so at any time and from time to time.
The Board intends to declare and pay dividends on the Marathon Stock and the
Steel Stock based primarily upon the long-term earnings and cash flow capabili
ties of the Marathon Group and the U.S. Steel Group, respectively, as well as on
the dividend policies of publicly traded energy and steel companies. For informa
tion concerning restrictions on the funds out of which dividends on the Marathon
Stock and Steel Stock may be paid, see "The Steel Stock Proposal- Dividend
Policy" and --Description of Marathon Stock and Steel Stock-Dividends".
Description of
Marathon Stock and
Steel Stock Dividends. Dividends on the Marathon Stock will be subject to the same limitations as are dividends on the existing Common Stock, which are limited to legally available
funds as defined under Delaware law and subject to the prior payment of dividends on
outstanding Preferred Stock. Dividends on the Steel Stock, in addition to the
limitations set forth above, will be further limited to an amount not in excess of the
Available Dividend Amount. The "Available Dividend Amount'', on any date, means
either (a) the greater of:(i) an amount equal to (x) $2.244 billion, increased or decreased, as
appropriate, to reflect:
(A) Steel Net Income from the close of business on December 31, 1990 to such date,
(B) any dividends or other distributions declared or paid with respect to, or repurchases or issuances of, shares of Common Stock after December
31, 1990 and prior to the Effective Date attributed to the U.S. Steel Group,
(C) any dividends or other distributions declared or paid with respect to, or repurchases or issuances of, any shares of Steel Stock or any shares of
Preferred Stock attributed to the U.S. Steel Group, and
(D) any other adjustments to stockholders' equity of the U.S. Steel Group made in accordance with generally accepted accounting principles, less
(y) the sum of the aggregate par value of all outstanding Steel Stock and
the aggregate stated capital of all outstanding Preferred Stock attributed
to the U.S. Steel Group, and
(ii) the excess of the fair market value of the net assets of the U.S. Steel Group
over the sum of the aggregate par value of all outstanding Steel Stock and the
aggregate stated capital of all outstanding Preferred Stock attributed to the U.S. Steel
Group, in the case of each of clause (i) or (ii), increased by an amount equal to any
effects of the recognition of the transition obligation upon the adoption of Statement of
Financial Accounting Standards ("SFAS'') No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and any cumulative effects of the
adoption of SFAS No. 96, "Accounting for Income Taxes" in the year of adoption; or
(b) in case there shall be no such amount, an amount equal to Steel Net Income (if
positive) for the fiscal year in which the dividend is declared and/or the preceding
fiscal year.
"Steel Net Income" means the net income or loss of the U.S. Steel Group determined in
accordance with generally accepted accounting principles, including income and
expenses of the Corporation attributed to the U.S. Steel Group on a substantially
consistent basis, including, without limitation, corporate administrative costs, net
interest and other financial costs and income taxes. For information concerning
policies governing the attribution of corporate activities to the U.S. Steel Group which
will be followed by the Corporation in determining Steel Net Income and potential
adjustments to the Available Dividend Amount in connection with SFAS No. 106 and
SFAS No. 96, see "The Steel Stock Proposal-Accounting Matters and Policies" and --
Description of Marathon Stock and Steel Stock-Dividends". See also "Recent
Developments" below.
The Board, subject to the limitations with respect to each of the Marathon Stock and
the Steel Stock set forth above, may, in its sole discretion, declare and pay dividends
exclusively on the Marathon Stock, exclusively on the Steel Stock or on such classes in
equal or unequal amounts, notwithstanding the respective amount of funds available
for dividends on each class, the respective voting and liquidation rights of each class,
the amount of prior dividends declared on each class or any other factor. See "The
Steel Stock Proposal- Dividend Policy".
Exchange and Redemption. The Certificate of Incorporation currently does not provide
for either mandatory or optional exchange or redemption of the Common Stock. The
Steel Stock Proposal will permit exchanges or redemption of the Marathon Stock and
the Steel Stock upon the terms described below, subject to certain conditions.
If the Corporation has transferred all of the assets and liabilities of the Marathon Group
to a wholly owned subsidiary of the Corporation, all outstanding shares of Marathon
Stock may be exchanged, at the sole discretion of the Board, for all outstanding shares
of common stock of such subsidiary.
Similarly, if the Corporation has transferred all of the assets and liabilities of the U.S.
Steel Group to a wholly owned subsidiary of the Corporation, all outstanding shares of
Steel Stock may be exchanged, at the sole discretion of the Board, for all outstanding
shares of common stock of such subsidiary.
Upon the Disposition of all or substantially all of the properties and assets of the U.S.
Steel Group to any person (other than to the holders of all outstanding shares of Steel
Stock or to a person in which the Corporation, directly or indirectly, owns at least a
majority equity interest), the Corporation is required, subject to certain exceptions and
conditions, to either:
(i) pay a special dividend in cash and/or in securities or other property received as proceeds of such Disposition to the holders of Steel Stock equal to the Net
Proceeds of such Disposition; or
(ii) redeem the number of whole shares of outstanding Steel Stock that has an aggregate average Market Value, during a specified period following the public
announcement of the Net Proceeds of such Disposition, closest to the value of
such Net Proceeds, for cash and/or securities or other property received as
proceeds of such Disposition in an amount equal to such Net Proceeds; or
(iii) exchange each share of Steel Stock for shares of Marathon Stock equal to
1100% of the average daily ratio of the Market Value of one share of Steel
Stock to the Market Value of one share of Marathon Stock calculated during
such specified period.
The Board may, at any time after any dividend or redemption pursuant to clause (i) or
(ii) above, exchange each outstanding share of Steel Stock for a number of shares of
Marathon Stock equal to I 100% of a weighted average ratio of the Market Value of
one share of Steel Stock to the Market Value of one share of Marathon Stock during
specified periods prior to the public announcement of such exchange.
''Net Proceeds'' means an amount, if any, equal to the gross proceeds of any
Disposition after payment of, or reasonable provision for, certain taxes, transaction
costs and liabilities of, or attributable to, the U.S. Steel Group. See "The
Steel Stock Proposal- Description of Marathon Stock and Steel Stock-Exchange and
Redemption".
Voting. The Certificate of Incorporation currently provides that holders of Common
Stock have one vote per share on all matters submitted to stockholders. The Steel Stock
Proposal provides that holders of Marathon Stock and Steel Stock will vote together as
a single class on all matters as to which all common stockholders are entitled to vote.
On all such matters, each share of Marathon Stock will have one vote, and each share
of Steel Stock will have a number of votes based on the relative Market Values of one
share of Steel Stock and one share of Marathon Stock calculated during a specified
period prior to the record date.
The approval of holders of at least 66%0/6 of the outstanding Marathon Stock or Steel
Stock, as the case may be, shall be necessary for the use of proceeds from the sale of
any of the properties and assets of the Marathon Group or the U.S. Steel Group,
respectively, (i) in any business of the U.S. Steel Group or the Marathon Group,
respectively, or (ii) for the payment of any dividend or distribution on Steel Stock or
Marathon Stock, respectively, subject to certain exceptions. For a description of certain
other class voting rights, see ''The Steel Stock Proposal- Description of Marathon
Stock and Steel Stock-Voting''.
Liquidation. The Certificate of Incorporation currently provides that, in the event of a
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, after the holders of the Preferred Stock receive the full preferential
amounts to which they are entitled, holders of Common Stock will receive the funds
remaining for distribution to the common stockholders. Under the Steel Stock
Proposal, the holders of Marathon Stock and Steel Stock will be entitled to share such
funds in proportion to the relative market capitalizations of each such class.
NYSE Listing The NYSE has approved amendment of the Corporation's current listing agreement providing for the redesignation of Common Stock as Marathon Stock and
for its listing under the symbol MAO and the listing of the Steel Stock under the
symbol X, subject to official notice of issuance. For further information, see ''The
Steel Stock Proposal-Stock Exchange Listings".
Appraisal Rights Under the General Corporation Law of Delaware, holders of Common Stock do not have appraisal rights in connection with the Steel Stock Proposal.
Tax Consideration The Corporation has been advised by tax counsel that no gain or loss will berecognized by the stockholders or the Corporation in connection with the
change of Common Stock into Marathon Stock or the distribution of the Steel
Stock; however, there are no court decisions bearing directly on the Steel Stock
Proposal and the Internal Revenue Service announced in 1987 that it was
studying the federal income tax consequences of transactions similar to the
Steel Stock Proposal. See "The Steel Stock Proposal-Certain Federal Income
Tax Considerations".
Principal Office The principal office of the Corporation is located at 600 Grant Street, Pittsburgh, PA 15219-4776 (telephone (412) 433-1121).
Sale of Steel Stock Odd Lots To facilitate the sale of shares of Steel Stock by holders of less than 100 shares
thereof, the Corporation is considering establishing a mechanism whereby such
holders desiring to sell their Steel Stock within a limited period of time after the
Distribution Date will be able to do so at minimum expense.
If the Corporation establishes such a mechanism, additional information with
respect to the sale of odd lots will accompany the certificates for Steel Stock
mailed to stockholders.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the NYSE, MSE, PSE, London and Montreal Stock Exchanges. The
following table sets forth the range of high and low sales prices of the Common Stock on the NYSE
Composite Tape ("Composite Tape''), and the quarterly cash dividends declared and paid per share of
Common Stock, during the periods indicated.
Cash
High LOW Dividend
1989 First Quarter $331/2 $287/8 $.35
Second Quarter 381/4 32 .35
Third Quarter 371/4 325/8 .35
Fourth Quarter 391/2 311/2 .35
1990
First Quarter 373/8 323/9 .35
Second Quarter 371/2 315/8 .35
Third Quarter 3533/8 301/8 .35
Fourth Quarter 333/8 295/8 .35
1991
First Quarter 32 263/4 .35
On April 5, 1991, the reported last sales price of the Common Stock on the Composite Tape was $313/4 per
share. On January 30, 1991, the day before the public announcement of the Steel Stock Proposal, the last
reported sales price of the Common Stock on the Composite Tape was $287/8.
RECENT DEVELOPMENTS
A new three-year labor agreement with the United Steelworkers of America, which expires February 1, 1994,
was ratified by rank and file members on March 13, 1991. See the U.S. Steel Group "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in Annex VII.
The uncertainty created by the lack of an early labor agreement and the adverse economic clima te have had
an unfavorable impact on steel orders. As a result of these factors, management expects a substantial first
quarter 1991 operating loss in the U.S. Steel Group, excluding the previously announced restructuring actions
mentioned below. The duration of the current recession cannot be predicted. See the U.S. Steel Group
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Annex VII.
On March 26, 1991, the Corporation announced certain restructuring actions for its steel and energy
businesses. The total amount of restructuring charges for these actions will be approximately $325 million
and $25 million before tax for the U.S. Steel Group and Marathon Group, respectively, and will be reflected
in first quarter 1991 financial results. See the Marathon Group and U.S. Steel Group "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in Annexes V and VII,
respectively.
On February 27, 1991, the Federal District Court in Philadelphia denied substantially all post-trial motions
and entered orders against the Bessemer and Lake Erie Railroad Company (the "B&LE") aggregating $601.8
million plus interest from July 18, 1989 in certain antitrust cases. The B&LE was a wholly owned subsidiary
of the Corporation during the period of time damages were found in the case. The B&LE is vigorously
pursuing its rights of appeal and, based upon evidence submitted at the trial and matters of law, expects that
the damage verdicts will be totally eliminated or significantly reduced. See the U.S. Steel Group "Descripti on
of Business-Legal Proceedings'' in Annex VI.
GENERAL
The enclosed proxy is for the use of common stockholders of record at the close of business on March 15,
1991. The proxy is a means by which stockholders may authorize the voting of their shares at the Meeting.
Shares cannot be voted at the Meeting unless the owner of record is present to vote or is represented by a
proxy. Shares represented by proxies received will be voted as specified by the stockholder. Except as
otherwise specified in the proxy, shares will be voted for the election of the nominees for director named
herein, for the election of Price Waterhouse as independent accountants for 1991, for the Steel Stock Proposal
and against the eight proposals which are expected to be presented by certain stockholders. Any person who
has signed and returned a proxy may revoke it at any time before it is exercised by submitting a subsequently
executed proxy, by giving notice of revocation to the Secretary of the Corporation or by voting in person at
the Meeting.
The Board has adopted a policy on confidential voting with respect to proxies. The policy, which will be
applicable to voting in connection with the Meeting, provides that stockholders will be provided privacy in
voting. Accordingly, all voted proxy cards and ballots which identify stockholders are held permanently
confidential, except (i) as necessary to meet any applicable legal requirements, (ii) in limit ed circumstances,
such as contested proxy solicitations, and (iii) to allow inspectors of election to tabulate and certify the vote.
The tabulators, who are currently employees of the Corporation, and the inspectors of election, who are
employees of The Corporation Trust Company, are required to execute appropriate confidentiality
agreements.
The Board knows of no business that will be presented for consideration at the Meeting other than the matters
described in this Proxy Statement. If any other matters are presented, proxies will be voted in accordance
with the best judgment of the proxy holders.
As of the close of business on March 15, 1991, there were outstanding 254,459,870 shares of Common Stock,
each of which is entitled to one vote at the Meeting. Shares of preferred stock are not entitled to vote at the
Meeting. This Proxy Statement was first mailed to the stockholders of USX on or about April 10, 1991.
THE BOARD OF DIRECTORS
The business of the Corporation is under the general direction of the Board as provided by the By-Laws of
the Corporation and the laws of Delaware, the state of incorporation. There are five principal committees of
the Board: the Audit, Compensation, Organization and Public Policy Committees and the Committee on
Financial Policy.
The Audit Committee has oversight responsibility for insuring the integrity of the financial reports of the
Corporation, determining that the administrative, operational and internal accounting controls are reviewe d
periodically to assure that the Corporation is operating in accordance with prescribed procedures and codes of
conduct and providing direction to the internal audit staff and the independent accountants. In carrying out its
responsibilities, the Audit Committee makes recommendations to the Board regarding the independent
accountants to be nominated for election by the stockholders and reviews the independence of such
accountants, approves the scope of the annual audit activities of the independent accountants and the
Corporation's internal auditors, approves the audit fee payable to the independent accountants and reviews
audit results. In addition, the Audit Committee reviews and approves the annual USX consolidated, Marathon
Group and U.S. Steel Group financial statements, Annual Reports to Stockholders and Form 10-K Annual
Report to the Commission. Messrs. Armstrong, Garrett, Geier, Lego, Richman and Roderick are members of
the Audit Committee, and Mr. Garrett is Chairman.
The Compensation Committee is responsible for making recommendations to the Board on all matters of
policy and procedures relating to compensation of executive management, for approving the salaries of
officers (other than the officer-directors, whose salaries are approved by the Board) and for administration of
the Annual Incentive Compensation Plan. The Committee also approves grants of options, stock appreciation
rights and restricted stock under, and administers, the Corporation's 1990 Stock Plan. The Committee is
authorized to adopt and amend, on behalf of the Corporation, employee benefit plans, to review the activities
of the United States Steel and Carnegie Pension Fund as administrator of certain such plans and to make
recommendations to the Board concerning policy matters relating to employee benefits. Its members are
Messrs. Armstrong, Filer, Jones, Lego, McGillicuddy and Richman, with Mr. Richman being Chairman.
The Organization Committee makes recommendations to the Board concerning the number of directors and
candidates for election as directors, the membership of committees of the Board and general executive
management Organization matters. The Organization Committee, in recommending candidates for ele ction as
directors, among other considerations, studies from time to time the composition of the Board and endeavors
to locate candidates for Board membership whose backgrounds indicate that they have broad knowledge and
experience in business and society in general. The Organization Committee also considers nominees
recommended by stockholders for election as directors. Such recommendations, together with the nominee's
qualifications and consent to be considered as a nominee, should be sent to the Secretary of the Corporation
for presentation to the Organization Committee. Messrs. Filer, Garrett, Geier, Jones, Roderick and Shepherd
are members of the Organization Committee, and Mr. Filer is Chairman.
The Public Policy Committee reviews and makes recommendations to the Board concerning corporate policy
in connection with community and governmental relations, codes of conduct, environmental and equal
opportunity matters, charitable, cultural and educational contributions and other broad social, political and
public issues. Messrs. Armstrong, Garrett, Geier, Jones, McGillicuddy and Shepherd are members of the
Public Policy Committee, and Mr. Shepherd is Chairman.
The Committee on Financial Policy makes recommendations to the Board concerning dividends and matt ers
of financial import, receives reports on various financial matters and has authority to approve certain
borrowings by the Corporation. It also reviews the activities of the United States Steel and Carnegie Pension
Fund as trustee of certain employee benefit plans of the Corporation. Its members are Messrs. Filer, Lego,
McGillicuddy, Richman, Roderick, Shepherd and Thomas, with Mr. Thomas as Chairman.
The Board met 12 times in 1990. The Audit Committee met four times in 1990, the Compensation Committee
six times, the Organization Committee four times, the Public Policy Committee three times a nd the
Committee on Financial Policy six times. The directors spend considerable time in preparing for meeti ngs of
the Board and the committees on which they serve. They also attend as many of the meetings as is possible.
During 1990, attendance of the directors averaged 97%, with Messrs. Corry, Beghini, Filer, Garrett, Geier,
Jones and Thomas attending 100% of such meetings, Messrs. Armstrong, McGillicuddy, Roderick and
Shepherd 96%, Mr. Lego 92%, Mr. Graham 91%, and Mr. Richman 89%.
The retirement policy for members of the Board provides that each non-employee director may continue to
serve until the end of the month in which age 70 is attained and that each officer-director may continue to
serve until retirement as an employee, except that the Chief Executive Officer may continue to serve aft er
such retirement if the Board requests that he do so, provided that under no circumstances shall the Chief
Executive Officer serve after the month in which he attains age 70. The policy requires retirement
notwithstanding that the director's term expires at a later date.
Directors who are officers or employees of the Corporation or of its subsidiaries receive no fees or remunera-
tion, as such, for service as a member of the Board or any Board committee. The By-Laws of the Corporation
provide that each director of the Corporation who is not such an officer or employee shall receive such
allowances and attendance fees as the Board may from time to time determine. The Board has de termined
that non-employee directors shall each receive annual retainers of $24,000, each Chairman of a Board
committee an additional $5,000 and other members of a Board committee an additional $4,000 each, plus a
fee of $1,200 for each Board or committee meeting attended. The USX Corporation Non-Employee Director
Retirement Benefit Program provides a total benefit to directors (other than employee -d i rectors or former
employee -directors) equal to the annual retainer in effect as of the date of retirement times the number of ful l
years' service as a member of the Board to directors who complete five years of service and who (11 ) retire
pursuant to the retirement policy, or (2) retire for health or other reasons beyond their control, or (3) die prior
to retirement. In the event of the death of a director, any unpaid amount will be paid to the surviving spouse
of the director, or the director's estate if there is no surviving spouse. Benefits under the Plan may be paid in
quarterly installments or, at the election of the director prior to retirement, in a lump sum equal to the present
value of the total benefit payable. Payments due the surviving spouse or estate of a deceased director shall be
paid in a lump sum equal to the present value of the unpaid benefit owing at the time of the director's death.
On October 30, 1990 the Board adopted the USX Corporation Non-Employee Director Stock Plan. The Plan
provides that the Corporation will supplement the fees paid to each non-employee director with a grant of
common shares of the Corporation equal to that number of shares purchased in the open market by the
director up to a maximum of 500 shares. In order to qualify for such grants, directors serving on November 1,
1990 must have purchased shares during the period November 1, 1990 through February 13, 1991, and future
nonemployee directors during the 60 days following the date of their initial election to the Board. Messrs.
Armstrong, Filer, Garrett, Geier, Jones, Lego, McGillicuddy, Richman, Roderick, Shepherd and Wilson each
purchased 500 shares pursuant to the Plan and received a matching grant of 500 shares from the Corporation.PROPOSALS OF THE BOARD
The following proposals are expected to be presented to the Meeting by the Board. Proposal No. I -Election
of Directors-in order to be elected, nominees for director must receive a plurality of the votes of the shares
present in person or represented by proxy at the Meeting and entitled to vote on the election of directors.
Proposal No. 2-Election of Independent Accountants-must receive the affirmative vote of the holders of a
majority of shares present in person or represented by proxy and entitled to vote at the Meeting. The
affirmative vote of the holders of a majority of the outstanding shares entitled to vote, whether or not present
in person or represented by proxy at the Meeting, is required for approval of Proposal No. 3-The Steel Stock
Proposal.
PROPOSAL NO. 1-ELECTION OF DIRECTORS
The Certificate of incorporation provides that the directors shall be divided into three classes: Class 1, Cla ss
11 and Class III, each class to consist, as nearly as may be possible, of one-third of the whole number of the
Board. At each annual meeting the directors elected to succeed those whose terms expire shall be identi fied as
being of the same class as those directors they succeed and shall be elected for a term to expire at the third
annual meeting of stockholders after their election, and until their successors are duly elected and qualifi ed. A
director elected to fill a vacancy is elected to the same class as the director he succeeds and a di rector elected
to fill a newly created directorship holds office until the next election of the class to which such director is
elected.
The Board has set the number of directors at fifteen, effective May 6, 1991, pursuant to the provisions of the
By-Laws. The current five Class I directors are nominees for election this year for a three-year term expiring
at the 1994 annual meeting. Mr. Charles R. Lee is a nominee for election as a Class 11 director for a one-year
term expiring at the annual meeting in 1992. All of the nominees and all of the continuing Class 11 and Class
III directors have previously been elected by the stockholders except for Mr. Beghini who was elected by the
directors effective June 1, 1990 and Mr. Lee. Of the fourteen present directors, four are current officers of the
Corporation, one is a retired officer, seven have top executive experience with a wide variety of businesses,
one was with the National Aeronautics and Space Administration and served as a university professor before
entering business and one is a retired Air Force General. A brief statement of the background of each
nominee and each continuing Class If and Class III director and his beneficial ownership of Corporation
stock as of February 15, 1991 is given on the following pages. If any nominee shall be unable to serve,
proxies may be voted for another person designated by the Board. The Corporation has no reason to believe
that any nominee will be unable to serve.
To be eligible for election as directors, persons nominated other than by the Board must be nominated in
accordance with the procedures set forth in the By-Laws which require that notice be received by the
Secretary at least 60 days, but not more than 90 days, prior to the date of the Meeting containing certain
information regarding the person or persons to be nominated and the stockholder giving such notice.
PROPOSAL NO. 2-ELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse has served as independent accountants of the Corporation for many years. It is believed that
the knowledge of the Corporation's business and its organization gained through this period of service is very
valuable. In accordance with the established policy of the firm, partners and employees of the firm who work
on the USX account are periodically rotated, thus giving USX the benefit of new thinking and approaches in
the audit area. Representatives of Price Waterhouse are expected to be present at the Meeting with an
opportunity to make a statement if they desire to do so and to be available to respond to appropriate
questions.
For the year 1990, Price Waterhouse performed professional services in connection with audit examinations
of the consolidated financial statements of the Corporation, the financial statements of the Marathon Group
and the U.S. Steel Group, and the financial statements of certain pension and other employee benefit plans;
review of quarterly reports; and review of filings with the Commission and other agencies.
PROPOSAL NO. 3-THE STEEL STOCK PROPOSAL
General The holders of Common Stock are being asked to consider the Steel Stock Proposal which, if approved,
would constitute adoption of (a) certain amendments to the Certificate of Incorporation of the Corporation
increasing the number of shares of authorized common stock of the Corporation from 500 million to 750
million, consisting of 550 million shares of Marathon Stock and 200 million shares of Steel Stock; changing
each outstanding share of Common Stock into one share of Marathon Stock; and establishing the powers and
rights of the Marathon Stock and the Steel Stock, and the qualifications, limitations or restrictions thereof;
and (b) certain related amendments to the Corporation's stock option and stock plans.
Subject to approval of the Steel Stock Proposal by stockholders, the Board of Directors has authorized the
distribution of Steel Stock to holders of record of existing Common Stock at the close of business on the
Effective Date on the basis of one-fifth of a share of Steel Stock for each share of outstanding Common
Stock. Such ratio was determined by the Corporation in consultation with Lehman Brothers, the Corporation's
financial advisor in connection with the Steel Stock Proposal, and is based upon the number of outstanding
shares of Steel Stock compared to the number of outstanding shares of common stock of other steel
companies and the desired trading range of the Steel Stock.
IF THE STEEL STOCK PROPOSAL IS NOT ADOPTED BY THE STOCKHOLDERS, THE COMMON
STOCK WILL NOT BE CHANGED INTO MARATHON STOCK, THE STEEL STOCK WILL NOT BE
CREATED, NO AMENDMENTS TO THE CERTIFICATE OF INCORPORATION WILL BE MADE,
THE STOCK OPTION AND STOCK PLANS WILL NOT BE AMENDED AND THE DIVIDEND
POLICY CONTEMPLATED BY THE STEEL STOCK PROPOSAL WILL NOT BE IMPLEMENTED.
The failure of the stockholders to approve the Steel Stock Proposal will not, in and of itself, cause the Board
of Directors to change its current practice with respect to the payment of dividends on the Common Stock.
If the Steel Stock Proposal is approved by stockholders, the Corporation anticipates that the Certificate of
Amendment to the Certificate of Incorporation ("Certificate of Amendment") will become effective on the
Effective Date, and certificates representing Steel Stock will be mailed promptly thereafter. At any time prior
to filing the Certificate of Amendment with the State of Delaware, including after adoption by the
stockholders of the Corporation, the Board may abandon the Steel Stock Proposal in whole, but not in part,
without further action by the stockholders.Fractional shares of Steel Stock will not be issued in the distribution. If more than one share of Common
Stock is held by the same holder of record, the Corporation will aggregate the number of shares of Steel
Stock issuable to such holder upon such distribution (including any fractions of shares). If the number of
shares of Steel Stock remaining to be issued to any holder of record of Common Stock is a fraction of a
whole share, the Corporation will pay the cash value of such fractional share, based upon the average of the
high and low sales prices of the Steel Stock during the first three trading days for which a market exists with
respect to the Steel Stock. Shareholders who own their stock beneficially through brokers or other nominees
listed as holders of record will have their fractional shares handled according to the practices of such broker
or nominee which may result in such shareholders receiving a price which is higher or lower than the price
paid by the Corporation to holders of record. If the necessary trading of the Steel Stock does not occur within
20 trading days after the Effective Date, the Board will determine the fair value of a share of Steel Stock and
the amount to be paid in lieu of fractional shares.
Authorized but unissued shares of Marathon Stock and Steel Stock will be available for issuance from time to
time by the Board for any proper corporate purpose, which could include raising capital, payment of
dividends, providing compensation or benefits to employees or acquiring companies or businesses. The
issuance of such additional shares of Marathon Stock or Steel Stock would not be subject to approval by the
stockholders of the Corporation unless deemed advisable by the Board or required by applicable laws,
regulations or stock exchange listing requirements.
Special Considerations
Terms of the Marathon Stock and the Steel Stock
The Certificate of Amendment contains a number of terms applicable to the Marathon Stock and the Ste el
Stock including the following:
Voting Rights. On all matters where the holders of the Marathon Stock and the Steel Stock vote together as a
single class, the Marathon Stock will have one vote per share while a share of Steel Stock will have a
fluctuating vote based on the relative market price of a share of Steel Stock and a share of Marathon Stock
during a period immediately before a particular record date. Because of fluctuations in the relative ma rket
prices of the two classes of common stock, the voting power of a particular stockholder may be increased or
decreased from that held at the time the stockholder acquired the stock or from that held at the time of the
previous vote. The fluctuating voting powers of the Marathon Stock and the Steel Stock may influence an
acquiror interested in acquiring and maintaining control of the Corporation to acquire equivalent holdings in
both classes of common stock.
In addition, the Certificate of Amendment provides that neither the increase or the decrease of the authoriz ed
amount of Marathon Stock or the Steel Stock shall require a separate vote of either class. Thus it is possible
that the holders of a majority of either class of Stock could constitute a majority of the voting power of both
classes and approve the increase or decrease of the authorized amount of the other class of stock without the
approval of the holders of such other class of stock.
Dividends. Dividends on the Steel Stock will be limited to the lesser of legally available funds of the
Corporation under Delaware law and the Available Dividend Amount. Dividend payments on the Steel Stock
may be precluded because of the failure to pay dividends on Preferred Stock of the Corporation or the
unavailability of legally available funds under Delaware law, even though the Available Dividend Amount
test may be met. In addition, there can be no assurance that there will be an Available Dividend Amount.
Dividends on Marathon Stock may also be precluded because of failure to pay dividends on Preferred Stock
of the Corporation or the unavailability of legally available funds of the Corporation.Exchange and Redemption. The terms of the Steel Stock provide that in the event of a Disposition of all or
substantially all of the properties and assets of the U.S. Steel Group, the Corporation must, within 60 days,
either pay a dividend or redeem Steel Stock with the Net Proceeds from the Disposition or exchange each
outstanding share of Steel Stock for a number of shares of Marathon Stock equal to 1101/6 of the ratio of the
Market Values of one share of Steel Stock to one share of Marathon Stock. With regard to the action to be
taken by the Board following a Disposition, the interests of the holders of the Marathon Stock and the holders
of the Steel Stock may diverge. See ''Fiduciary Duties of the Board'' below.
Liquidation. In the event of the liquidation of the Corporation, the holders of the Marathon Stock and Steel
Stock will share the funds, if any, of the Corporation remaining for distribution to its common stockholders
based on the relative market capitalization of the two classes. See "Description of Marathon Stock and Steel
Stock'' below.
Separation of Businesses
If the Steel Stock Proposal is approved, the Corporation will provide to holders of Marathon Stock and Steel
Stock separate financial statements, Management's Discussions and Analyses, descriptions of business and
other relevant information for the Marathon Group and the U.S. Steel Group, respectively. Notwithstanding
the attribution of corporate assets and liabilities between the Marathon Group and the U.S. Steel Group for
the purpose of preparing their respective financial statements, the change in the capital structure of the
Corporation contemplated by the Steel Stock Proposal will not result in any transfer of assets or liabilities of
the Corporation or any of its subsidiaries. Holders of Marathon Stock and Steel Stock will be stockholders of
the Corporation, which will continue to be responsible for all of its liabilities. The Corporation will continue
to prepare consolidated financial statements and also provide such consolidated financial statements to t he
holders of Marathon Stock and Steel Stock. See "Accounting Matters and Policies'', the Marathon Group's
financial statements and notes thereto and "Management's Discussion and Analysis" in Annex V, the U.S.
Steel Group's financial statements and notes thereto and ''Management's Discussion and Analysis" in Annex
VII and the USX consolidated financial statements and notes thereto and ''Management's Discussion and
Analysis" in Annex VIII.
Market Values
Since there has been no prior market for the Marathon Stock and the Steel Stock, there can be no assurance
that the combined market values of the Marathon Stock and the Steel Stock held by a stockholder as a result
of the distribution of the Steel Stock will equal or exceed the market value of the Common Stock held by
such stockholder immediately before such distribution.
Fiduciary Duties of the Board
Under Delaware law, the Board must act with due care and in the best interest of all the stockholders,
including the holders of the Marathon Stock and the holders of the Steel Stock. The Steel Stock Proposal may
give rise to occasions when the interests of the holders of Marathon Stock and the holders of Steel Stock may
diverge or appear to diverge; Examples include the optional exchange of the Steel Stock for Marathon Stock
at the ten percent premium discussed elsewhere in this Proxy Statement and the commitment of capital
between the Marathon Group and the U.S. Steel Group. Because the Board owes an equal duty to all common
stockholders regardless of class, the Board is the appropriate body to deal with these matters. In order to
assist the Board in this regard, the Corporation has or intends to take certain actions. These actions incl ude
the following: The formulation of policies to serve as guidelines for the resolution of matters involving a
conflict or a potential conflict, including the policies discussed in this Proxy Statement dealing with the
payment of dividends, limiting capital investment in the U.S. Steel Group over the long term to its internall y
generated cash flow, and allocation of corporate expenses and other matters. Other intended actions include
the provision of advice to the Board concerning the applicable law relating to the discharge of its fiduciary
duties to the common stockholders in the context of the separate classes and the delegation to a committee of
the Board, composed of non-employee directors, of the responsibility to review matters which relate to this
subject and report to the Board.
Management Policies
The Corporation intends to limit capital expenditures of the U.S. Steel Group over the long-term to an amount
equal to the internally generated cash flow of the U.S. Steel Group, including funds generated by sales of
assets of the U.S. Steel Group. See "Certain Management Policies" below.
Reasons for the Steel Stock Proposal The Steel Stock Proposal is intended to provide stockholders with separate securities reflecting the Corpora-
tion's two major businesses without diminishing the benefits of remaining a single corporation or restricting
the Corporation's future restructuring options. In remaining a single corporation, the Corporation expects to
enjoy lower borrowing and operating costs than would two separate entities, while preserving the
Corporation's ability to engage in restructuring options at such time as these options may become desirable.
Such options may include the sale or other disposition of all or part of either or both of the Corporation's two
major businesses. The Marathon Stock and the Steel Stock are designed to reflect the separate performance of
the Corporation's energy business and its steel and diversified businesses, respectively, and give stockholders
an opportunity to separately evaluate and invest in each. Stockholders would have the ability to retain or sell
either or both securities depending on personal preference.
Recommendation of the Board
THE BOARD HAS UNANIMOUSLY APPROVED THE STEEL STOCK PROPOSAL AND BELIEVES
THAT ITS ADOPTION IS IN THE BEST INTERESTS OF THE CORPORATION AND ALL ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE
IN FAVOR OF THE ADOPTION OF THE PROPOSAL.
Dividend Policy
The Corporation has historically paid dividends on its Common Stock, most recently at the annual rate of
$1.40 per share, payable $0.35 quarterly. If the Steel Stock Proposal is adopted, the Board currently intends
to pay dividends on the Marathon Stock and the Steel Stock at initial annual rates of $1.40 per share and
$1.00 per share, respectively, payable quarterly, which, giving effect to the distribution of one-fifth of a share
of Steel Stock on each share of Common Stock, would be equivalent to an annual dividend of $1.60 per share
of Common Stock. While the Board does not currently intend to change these dividend rates, it reserves the
right to do so at any time and from time to time.
The Board intends to declare and pay dividends on the Marathon Stock and the Steel Stock based on the
respective financial condition and results of operations of the Marathon Group and the U.S. Steel Group. In
making its dividend decisions, the Board will rely on the financial statements of the Marathon Group and the
U.S. Steel Group, respectively. See Annexes V and VII for the historical financial statements of the Marathon
Group and U.S. Steel Group. In determining its dividend policy with respect to the Marathon Stock and the
Steel Stock, the Board will consider, among other things, the respective long-term earnings and cash flow
capabilities of the Marathon Group and the U.S. Steel Group, as well as the dividend policies of publicly
traded energy and steel companies. For information concerning restrictions on the funds out of which
dividends on the Marathon Stock and Steel Stock may be paid, see "Description of Marathon Stock and Steel
Stock- Dividends".
Description of Marathon Stock and Steel Stock
THE FOLLOWING DESCRIPTIONS ARE QUALIFIED BY REFERENCE TO ANNEX 11 TO THIS
PROXY STATEMENT, WHICH CONTAINS THE FULL TEXT OF THE CERTIFICATE OF
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION.
Authorized Capital Stock
The Certificate of Incorporation currently provides that the Corporation is authorized to issue 540 million
shares of capital stock, of which 40 million shall be shares of preferred stock, without par value ("Preferred
Stock"), and 500 million shall be shares of Common Stock. If the Steel Stock Proposal is adopted, the
Certificate of Incorporation will be amended to authorize the issuance of 790 million shares of capital stock,
of which 40 million shall be shares of Preferred Stock and 750 million shall be shares of common stock,
consisting of 550 million shares of Marathon Stock and 200 million shares of Steel Stock. For additional
information concerning the Preferred Stock, see "Preferred Stock" below.
Dividends
Dividends on the Marathon Stock will be subject to the same limitations as dividends on the existing
Common Stock, which are limited to legally available funds (as defined under Delaware law) and subject to
the prior payment of dividends on outstanding Preferred Stock.
In addition
