(Bloomberg) -- Two prominent Democratic senators are criticizing United States Steel Corp. Chief Executive Officer David Burritt over his potential $72 million “golden parachute” if the sale to a Japanese company goes through — while President Joe Biden’s decision on the takeover hangs in the air.
Senator Elizabeth Warren of Massachusetts and Senator Sherrod Brown of Ohio, whose race for reelection is one of the closest in the chamber this year, wrote to Burritt Wednesday regarding financial incentives offered to him and other US Steel executives if Nippon Steel Corp. acquires the company in a $14.1 billion deal.
The executives would be eligible for the incentives if they’re terminated following a takeover, according to a March filing with the US Securities and Exchange Commission.
Warren and Brown said they’re concerned about “the extent to which these incentives are driving the transaction despite its risks,” suggesting this may be swaying Burritt to accept a bid from Nippon Steel over a domestic buyer, according to the letter sent to the CEO, a copy of which was seen by Bloomberg.
Such payments “demonstrate a repulsive conflict of interest in which US Steel executives can enrich themselves at the expense of US Steel workers,” the senators wrote.
Earlier: Nippon Steel Still Talking to Union as It Works on US Steel Deal
US Steel acknowledged receipt of the letter, while saying that a payout is triggered by any sale. “We plan to respond to correct its many inaccuracies and mischaracterizations, and to provide factual information on how this multi-billion dollar investment from one of our strongest allies strengthens domestic steel-making and secures thousands of union jobs for many years to come,” the company said in a statement.
Shares of the Pittsburgh-based steelmaker are trading at roughly two-thirds Nippon Steel’s $55-a-share offer price, signaling bets by investors that the deal is unlikely to proceed.
Biden, along with Vice President Kamala Harris and her opponent, Donald Trump, oppose the sale, while others, like Pennsylvania’s Democratic governor, Josh Shapiro, have been more muted, avoiding explicitly taking one side.
Warren and Brown’s letter is a sign of the continued opposition to the takeover among the progressive wing of the party, and its effect on the Ohio Senate contest, as well as the presidential race in Pennsylvania.
They asked Burritt to respond to a series of questions, including whether he’s still due to receive the compensation outlined in the filing — which includes $13 million in cash and nearly $54 million in stock — and whether he’d accept it. They’re also asking if he’d have received the same payout under an alternate offer.
US Steel’s statement says he would receive a payout under any purchase, though it’s not clear whether the total amount would be the same.
The company addressed the issue in a memo to employees this week. It said any purchase would trigger payout plans that have no impact on what US Steel would otherwise invest. “The buyer, in this case Nippon Steel, ultimately makes these compensations payments, not US Steel,” the company wrote. Nippon Steel “just needs USW International leadership to come to the table” to negotiate, it added, referring to the United Steelworkers union.
The senators’ letter stresses that US Steel need not be in a rush to sell, saying the company was “not in distress” when it first received a bid.
US Steel has argued that Nippon Steel’s offer far exceeds the alternatives — its offer price narrowly beat that of Ohio-based Cleveland-Cliffs Inc., which has since said it would be interested only at a lower price than it previously offered.
Burritt warned last month that US Steel facilities could close if the proposed acquisition collapses, and threatened to move the headquarters of fabled American company out of Pittsburgh, the heart of the American steel industry and home to the USW. Warren and Brown asked whether the CEO would commit to selling any shuttered union plants to companies willing to operate and maintain them.
Biden has said US Steel should remain domestically owned, but has so far stopped short of killing the deal. He said last week he hasn’t changed his mind. A deadline for a national security review was extended by as much as 90 days last month, likely pushing a decision past the November presidential election.
Harris has echoed Biden’s position, but hasn’t explicitly pledged to kill the takeover. Trump, the Republican nominee, has repeatedly said he would block the deal if elected.
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