2018 Guide to Effective Proxies

2.17.6 CEO to median employee pay ratio | 387 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES CEO PAY RATIO CALCULATION In August 2015, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd–Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). Our PEO is Mr. Newport, our CEO. The stated purpose of the newly required disclosure is to provide a measure of the equitability of pay within the organization. We believe our compensation philosophy and process yield an equitable result and the Management Development and Compensation Committee monitors the relationship between the pay of our executive officers and the pay of our non-executive employees. We identified the median employee by examining the 2017 Form W-2 compensation for all employees, excluding Mr. Newport as CEO, who were employed by us on October 31, 2017 (whether employed on a full-time, part-time, or seasonal basis), other than employees of recently acquired Precision Partners and our limited number of non-US based employees. 4 We adjusted compensation for employees who started during the year by assuming they started on January 1, 2017, and excluded employees on leave. We did not make any other assumptions, adjustments, or estimates with respect to compensation. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our NEOs as set forth in the 2017 Summary Compensation Table on page 81. Our CEO’s 2017 total compensation was $13,940,093 (which includes $7,746,598 of Change in Pension Value, which is not a component of compensation awarded annually but rather is a mathematical calculation of the actuarial change in value of the CEO’s retirement benefit for which he received no cash benefit in 2017). Our 2017 median employee’s compensation was $92,949, resulting in a ratio of 150:1. Utilizing an alternative measurement, our CEO’s 2017 total compensation, when (i) excluding his aforementioned Change in Pension Value and (ii) including the average cost of a family healthcare plan at AK Steel, which is the same plan available to Mr. Newport, the median employee and all of our other employees, was $6,206,011. As so adjusted, Mr. Newport’s 2017 total compensation was $6,206,011, and the median employee’s 2017 total compensation was $105,465. This alternative measurement, which is provided solely for additional context and is not intended to replace the aforementioned required pay ratio disclosure, results in a pay ratio of 59:1. Our calculation of the pay ratio may be different than the pay ratio of other public companies as a result of different methodologies used to determine the pay ratios. As a result, we would discourage the use of the ratios reported above as a basis for any comparison between companies. 4 The jurisdictions from which employees are being excluded due to the de minimis exemption (and the number of employees so excluded in each country) are Mexico (2), Spain (4), United Kingdom (4), France (8), Italy (11), Germany (11), and Netherlands (39). The total number of U.S. and non-U.S. employees is approximately 8,120 and 80, respectively, not counting Precision Partners. Precision Partners has approximately 1,000 employees in the U.S. and Canada. 80 2018 Proxy Statement AK STEEL HOLDING CORPORATION