'Corporate greed': U.S. Steel CEO's bonus irks Minnesota lawmakers
DULUTH, Minn. - The president of U.S. Steel got a big bonus for 2014 for cutting costs and leading the steel giant to its most profitable year since 2008, but the extra money has some Minnesota lawmakers rankled as the company lays off hundreds o...
DULUTH, Minn. - The president of U.S. Steel got a big bonus for 2014 for cutting costs and leading the steel giant to its most profitable year since 2008, but the extra money has some Minnesota lawmakers rankled as the company lays off hundreds of Iron Range steelworkers
Mario Longhi earned $13.2 million last year up from $5.6 million in 2013, according to a document filed Friday with the federal Securities and Exchange Commission. Longhi's base salary was $1.2 million with an added $7.5 million in stock awards and more than $4 million in "non-equity incentive plan compensation."
The Pittsburgh-based company owns and operates both the Minntac taconite iron ore mine and processing plant in Mountain Iron and Keetac mine and plant in Keewatin, and is Minnesota's largest producer of taconite iron ore. It's also a minority owner in Hibbing Taconite.
The company has more than 1,000 employees combined at the two Minnesota operations -- but just last week announced it was indefinitely idling Keetac starting May 13 because of a glut of iron ore, and lack of demand and low prices for U.S.-made steel, mostly due to imported steel that's made with foreign ore.
The CEO's huge bonus did not go unnoticed by Minnesota officials dealing with Keetac's more-than-400 upcoming layoffs. The Iron Range cuts come on top of layoffs U.S. Steel made earlier this year at plants in Alabama, Texas, Ohio, Indiana and Illinois -- now totaling some 2,000 of the company's 23,000 employees in North America.
State Rep. Carly Melin, DFL-Hibbing, called Longhi's big bonus "a textbook example of corporate greed in America."
"I am appalled. Families on the Iron Range who earn a living at U.S. Steel's Keewatin Taconite are preparing for an uncertain future. Thousands of workers nationwide have lost their jobs through layoffs at U.S. Steel. Now, we have learned that the CEO was given a substantial raise, more than doubling his annual income," Melin said. "The CEO should be embarrassed and offer to return his raise to the workers who have lost jobs under his watch."
The company explained the big bonus in the proxy statement filed Friday. In January the company said 2014 was its best year in the past six, with net income of $102 million.
"Under Mr. Longhi's leadership, the corporation's Carnegie Way business transformation efforts significantly exceeded the business plan, financial, strategic and operational goals ... in 2014," the company's proxy said. "His seamless and effective transition of the management structure and commercial entities resulted in significant improvements in financial and operational performance."
U.S. Steel spokeswoman Courtney Boone said Tuesday that the company's Carnegie Way initiative delivered $575 million in benefits to the company in 2014. Boone noted that "2014 was a year of very strong financial performance for the company -- (the) best annual performance since 2008, a year when North American hot-rolled coil prices were significantly higher." Most of U.S. Steel executives' compensation is performance-based, Boone said.
Boone said Longhi's base salary is at the midpoint for his position "based upon peer group information and other relevant market data," and also that his stock grant "is the market median of the chief executive officers in U. S. Steel's peer group." Boone said company directors determined that Longhi's 2014 performance "far exceeded expectations" and increased his non-equity incentive plan compensation to just more than $4 million, up from $477,400 in 2013.
State Rep. Tom Anzelc, DFL-Balsam Township, said he's carrying two bills at the Capitol that would try to save money for Minnesota's taconite iron ore companies, including U.S. Steel. One, aimed at reducing energy costs for the companies, faces an uphill battle.
"We're trying to do what we can to help them out in this serious global situation, but then they come out with this news? This kind of greed certainly doesn't make (passing the bills) any easier," Anzelc said. "The arrogance of this company, of this CEO, is unbelievable."
John Rebrovich, assistant to the director for the United Steelworkers of America District 11, said the union has asked U.S. Steel for an explanation.
"We have a clause in our contract that calls for shared sacrifice. If the Steelworkers have to take layoffs or cuts then management is supposed to share in that pain," Rebrovich said. "We know this is last year's compensation. But the timing here is terrible. It makes it seem like U.S. Steel is not holding up their part of the contract. We'd like them to respond to that."
With the deluge of cheap foreign steel entering the U.S. market and a vast oversupply of iron ore globally, Minnesota officials have been warning that hard times could be ahead for Minnesota mining communities. In addition to Keetac, Mesabi Nugget in Hoyt Lakes has idled production, apparently without layoffs, and Magnetation is closing its Plant 1, putting up to 49 people out of work.
Longhi was named executive vice president in 2012; president in June 2013 and president and chief executive officer in September 2013. A native of Brazil, he previously worked for Alcoa and Gerdau Ameristeel Corp.
The proxy statement was released Friday, as required in advance of the company's annual meeting set for April 28 in Pittsburgh.