April 29--U.S. Steel Corp. shareholders on Tuesday approved a plan requiring its entire board of directors to stand for re-election annually, following a prolonged slump in its earnings and stock price.
The company, which has not turned a profit in five years, has had a staggered board for 113 years, in which a third of its members come up for election annually for three-year terms. The new plan will begin in 2017.
Critics say such boards are less accountable to shareholders because directors become too cozy with each other and may put the interests of management first. Board members who stand for election annually are under pressure to increase the company's value or risk being ousted after a year.
Shareholders approved the amendment to company rules, with 52 percent of its outstanding common stock voted in favor of the change. The Downtown-based steelmaker held its annual meeting at U.S. Steel Tower. There was no discussion on the issue at the meeting, which was attended by about 50 shareholders and executives.
CEO Mario Longhi said the steelmaker is pursuing its Carnegie Way initiative to improve results, but gave no new details. So far, the company has announced annual cost reductions of $175 million.
"We are transforming our business with The Carnegie Way" Longhi said. Weather related problems and unfairly traded steel are two challenges U.S. Steel faces, and he said the company will provide an update when it reports first-quarter results later Tuesday. It lost $1.67 billion in 2013.
Shares traded at $26.22, up 49 cents, or 1.9 percent in afternoon trading. The stock is down 11.1 percent this year.
The U.S. Steel board twice had opposed a move to annual election of directors when shareholders recommended putting it to a non-binding vote. It decided to put the plan to a vote this year after hearing broad support from shareholders and institutional investors. Of S&P 500 companies, 70 percent now have annual elections for every board member, up 20 percentage points from 2009, according to ISS Governance QuickScore Data.
Directors elected this year will be the last to get three-year terms, allowing the new system and one-year terms to be fully implemented on the board by 2017.
At the meeting, shareholders elected four directors to serve until 2017: Richard A. Gephardt, Murry S. Gerber, Glenda G. McNeal and Patricia A. Tracey. The company currently has 13 directors.
Shareholders also heard a request from the National Center for Public Policy Research that U.S. Steel consider adopting a policy that guarantees employees their jobs will not be affected by outside, legal, personal political activities.
"Earlier this month, the CEO of Mozilla was forced out of his job because he contributed to a 2008 referendum effort defining marriage in California as between one man and one woman," said Justin Danhof, representing shareholder David Ridenour, president of the center. "The idea that a well-qualified individual could be fired for participating in a civic decision-making about marriage laws sent a shock wave across the country, especially in religious communities.
Danhof asked U.S. Steel to consider a code of conduct like Cola-Cola Co.'s, which says, "Your job will not be affected by your personal views or your choice in political contributions."
U.S. Steel's Suzanne Rich Folsom, general counsel, said the company is conducting a policy review, and it would take Danhof's comments under advisement.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
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