SXC SunCoke Energy Inc

PROPOSAL 1 — ELECTION OF DIRECTORS

Board of Directors

Our Board annually recommends the slate of director-nominees for election by stockholders at the annual meeting and is responsible for filling vacancies on the Board at any time during the year. The Governance Committee has a process to identify and review qualified candidates to stand for election, and the full Board reviews and has final approval of all potential director nominees being recommended to the stockholders for election. Our Board currently consists of eight members: Arthur F. Anton, Alvin Bledsoe, Martha Z. Carnes, Ralph M. Della Ratta, Jr., Susan R. Landahl, Michael W. Lewis, Michael G. Rippey and James E. Sweetnam. As previously announced, Messrs. Bledsoe and Sweetnam are retiring from the Board and will not stand for re-election at the 2021 Annual Meeting.

Our Board currently is divided into three classes, each serving staggered three-year terms. Directors for each class are elected at the annual meeting of stockholders held in the year in which the term for their class expires. There are two nominees for election this year. These nominees are Ralph M. Della Ratta, Jr. and Susan R. Landahl, and the Board has nominated each of them for a new three-year term that will expire at the annual meeting in 2024, or until their respective successors are elected and qualified.

Detailed information on these nominees is provided on pages 12 through 15, including a discussion of each nominee’s specific experience, qualifications and attributes or skills that led our Board to conclude that such person should serve as a director of SunCoke Energy. Each of these nominees is a current director, and each has consented to be named in this Proxy Statement and to serve if elected. If any nominee is unable to serve as a director at the time of the 2021 Annual Meeting, your proxy may be voted for the election of another nominee proposed by the Board, or the Board may reduce the number of directors to be elected at the 2021 Annual Meeting. At this time, the Board knows no reason why any of these nominees would not be able to serve as a director if elected.

RECOMMENDATION

The Board of Directors unanimously recommends that you vote “FOR” the election of the Company’s two nominees for director: Ralph M. Della Ratta, Jr. and Susan R. Landahl.

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Director Nominee Skills, Experience, and Background

The following pages contain information regarding the specific experience, attributes and skills that qualify the nominees and the directors whose terms of office will continue after the 2021 Annual Meeting to serve as a director of SunCoke Energy, Inc. The following is a summary of some of the skills, experience, and background that our directors bring to the Board:

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Board Composition

Our directors come from a variety of backgrounds and bring a diverse set of skills and experiences to the boardroom. In conjunction with our Board’s refreshment process, the Board regularly reviews the skills, experience, and background of our directors to better align with the Company’s strategic vision, and business and operations. The Board has taken a thoughtful and deliberate approach to board composition to ensure that our directors have backgrounds that collectively add significant value to the strategic decisions made by the Company and enable them to provide oversight of management to ensure accountability to our stockholders. The following charts highlight the balance in age and the diversity in tenure, gender and ethnicity of the nominees and the directors whose terms of office will continue after our 2021 Annual Meeting:

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Director Succession and Board Refreshment

The Governance Committee oversees and plans for director succession and refreshment of the Board to ensure a mix of skills, experience, tenure, and diversity that promote and support SunCoke Energy’s long-term strategy. In doing so, the Governance Committee takes into consideration the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director candidate qualifications. The Governance Committee considers director-nominees from various sources and chooses nominees with the primary goal of ensuring that the Board collectively serves the interests of our stockholders.

The Governance Committee annually reviews the qualifications and experience of current directors and identifies specific competencies required in director-nominees. Director nominees should have a proven record of professional success and leadership and demonstrate the highest personal and professional ethics, integrity and values. The Board also considers diversity of age, ethnicity and gender. Directors also are expected to devote sufficient time and effort to their duties as members of the Board.

Governance Committee Process for Director Nominations

The Governance Committee evaluates potential director candidates and makes recommendations to the Board. Candidates may be identified by current directors, by a search firm or by stockholders. The Governance Committee may engage the services of a third-party consultant to assist in identifying and screening potential candidates. The Governance Committee’s evaluation of a candidate generally includes inquiries as to the candidate’s reputation and background, examination of the candidate’s experience and skills in relation to the Board’s requirements at the time, consideration of the candidate’s independence as measured by the Board’s independence standards and any other considerations that the Governance Committee deems appropriate. Candidates should have a proven record of professional success and leadership and demonstrate the highest personal and professional ethics, integrity and values. Age, ethnic and gender diversity also are considered. At least annually, the Governance Committee reviews the criteria for the nomination of director candidates and approves changes to the criteria, as appropriate. Following its evaluation process, the Governance Committee recommends candidates to the full Board. The Board makes the final determination regarding a candidate based on its consideration of the Governance Committee’s recommendation. Candidates recommended by our stockholders will be evaluated on the same basis as candidates recommended by current directors, search firms, or third-party consultants.

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Certain Information Regarding Directors

On the following pages is information regarding the specific experience, qualifications, attributes and skills that qualify the nominees and directors below to serve on the SunCoke Energy Board of Directors. The principal occupation and business experience of each director, and the reasons the Board believes each of the two nominees, Ralph M. Della Ratta, Jr. and Susan R. Landahl, should be elected to serve on the Board, are described below.

Class III

Nominees Up for Election at the 2021 Annual Meeting

		Ralph M. Della Ratta, Jr.   Age:  67   Committee Membership:  Audit   Compensation (Chair)

Mr. Della Ratta was appointed as a director of SunCoke Energy, Inc., effective December 3, 2020. From 2004 to 2017, he was Founder, Senior Managing Director and Chief Executive Officer of Western Reserve Partners LLC, a Cleveland, Ohio based investment banking merger and acquisition advisory firm. The firm was acquired in 2017 by Citizens Financial Group [NYSE: CFG], a large commercial banking institution. Since the acquisition, Mr. Della Ratta has served as Co-Head of Merger and Acquisition Advisory Services for Citizens Financial Group, Inc., leading a team focused on delivering M&A services and related financial analysis to middle-market customers. From 2004 to 2020, Mr. Della Ratta served on the Board of Olympic Steel, Inc. [NASDAQ: ZEUS] (a leading U.S. metals service center), where he was Lead Independent Director, a member of the Audit and Compliance Committee and, at different times, served as Chair of the Compensation Committee and Chair of the Nominating Committee. Mr. Della Ratta is involved in numerous non-profit and civic organizations, including: The Duke University Alumni Association and Annual Fund, Kent State University Board of Trustees (past Chair), The Ohio Venture Capital Authority, The Rock and Roll Hall of Fame, and United Cerebral Palsy Telethon (Chair).

Mr. Della Ratta brings valuable business and extensive financial experience to the Board, particularly with regard to capital raising, commercial banking, mergers and acquisitions, strategic financial analysis and capital markets transactions. In addition, Mr. Della Ratta also has knowledge of manufacturing and distribution in the steel and metals services industry.

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		Susan R. Landahl   Age:  60   Committee Membership:  Compensation   Governance (Chair)

Ms. Landahl was appointed as a director of SunCoke Energy, Inc., effective September 1, 2017. From June 2015 until her retirement in January 2021, Ms. Landahl served as Senior Vice President, Organizational Effectiveness and Integrated Performance Assessment of Exelon Generation Company, LLC, a major generator and marketer of electricity and a subsidiary of Exelon Corporation, one of the nation’s largest power generators, with operations in 48 states. Since joining Exelon in 1999, Ms. Landahl has held a number of senior leadership positions, including Senior Vice President, Operations Integration & Business Development from August 2012 to January 2014, and Chief Operating Officer & Senior Vice President, Exelon Nuclear from June 2010 to August 2012. In this latter position, she oversaw 10 nuclear facilities with 17 nuclear reactors in Illinois, New Jersey and Pennsylvania, and was responsible for 5,000 employees and annual budgets in excess of $1.5 billion. Exelon’s nuclear fleet has since grown to 14 nuclear facilities, including 23 reactors in five states. As Vice President, Industry Leadership at the Institute for Nuclear Power Operations from January 2014 to June 2015, Ms. Landahl led development of INPO 15-005, now the industry standard for leadership development and organizational effectiveness for the entire U.S. nuclear fleet and much of the world.

Ms. Landahl is a knowledgeable and experienced industry leader with strong operational skills and a proven track record for successfully managing large, complex projects and major project turnarounds. She has a keen and strategic understanding of the energy industry, and possesses senior-level business development, planning and managerial experience.

Class I

Continuing Directors — Current Term Expires in 2022

		Arthur F. Anton (Chairman)   Age:  63   Committee Membership:  Compensation   Governance

Mr. Anton was appointed as a director of SunCoke Energy, Inc., effective March 16, 2020, and was appointed as non-executive Chairman of the Board effective January 1, 2021. During the course of his career, Mr. Anton has served in various senior roles at The Swagelok Company (a large fluid systems technology company) most recently as Chairman of the board from September 2017 to December 2019, and as Chief Executive Officer from 2004 to 2017. Prior to that, he served as Swagelok’s President and Chief Executive Officer from 2004 to 2017, as its President and Chief Operating Officer from 2001 to 2004, as its Executive Vice President from 2000 to 2001, and as its Chief Financial Officer from 1998 to 2000. Prior to joining Swagelok in 1998, Mr. Anton was a Partner

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of Ernst & Young LLP (a professional accounting and consulting services firm), where he consulted with companies in manufacturing, energy, service, and other industries. Mr. Anton currently serves as a director on the boards of the following companies: Olympic Steel [NASDAQ: ZEUS] (a leading U.S. metals service center), where he is the Lead Independent Director and a member of both the Audit and Compliance Committee, and the Compensation Committee; The Sherwin-Williams Company [NYSE: SHW] (a major paint coatings manufacturer), where he serves as Chair of the Audit Committee; and Diebold Nixdorf, Incorporated [NYSE: DBD] (a leading manufacturer of automated teller, calculating, and accounting machinery), where he serves as Chair of the Finance Committee and is a member of the Audit Committee. Mr. Anton also serves as Chairman of University Hospitals Health System in the Cleveland, Ohio area.

Mr. Anton is an experienced corporate executive with strong operational, financial and leadership expertise, along with significant experience in the steel industry. He brings substantial domestic and international manufacturing and distribution experience and strategic planning expertise to our Board. In addition, as a former partner of Ernst & Young LLP and the former Chief Financial Officer of Swagelok, Mr. Anton has financial expertise and extensive financial experience. He also possesses health, environment and safety oversight experience by virtue of his oversight experience as Chief Executive Officer and Chief operating Officer at Swagelok.

		Michael W. Lewis   Age:  71   Committee Membership:  Audit   Governance

Mr. Lewis was appointed as a director of SunCoke Energy, Inc., effective December 3, 2020. During the course of his career, Mr. Lewis has risen through progressively responsible senior leadership positions at BMO Harris Bank, N.A. (a large U.S. banking institution and subsidiary of Bank of Montreal, the Canadian multinational investment bank and financial services company) and, from 1998 until his retirement in 2013, Mr. Lewis was Executive Vice President, and Chicago metro regional president. His responsibilities have included strategic integration and management of business segments across the regional network of BMO Harris branches, as well as growing the bank’s commercial and retail business, community development and consumer loans and services. Mr. Lewis is an active member of Chicago’s business and civic communities and has served on several boards, including the Chicago Regional Transportation Authority, the Urban Partnership Bank (a full-service community development bank), and Chicago United (a corporate membership and advocacy organization promoting economic opportunities by advancing multiracial leadership in corporate governance, executive level management, and business diversity). Mr. Lewis also serves on the Foundation Board of Western Michigan University and has served as past Chairman of the Western Michigan University Business School Advisory Council.

Mr. Lewis is an experienced banking executive who has spent over 40 years in the financial services industry with business line responsibility. He provides significant senior management-level strategic planning, business development and managerial expertise to the Board.

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Class II

Continuing Directors — Current Term Expires in 2023

		Martha Z. Carnes   Age:  60   Committee Membership:  Audit (Chair)

Ms. Carnes was appointed as a director of SunCoke Energy, Inc., effective December 5, 2019. From 1982 until her retirement from the firm in June 2016, Ms. Carnes served in various senior roles at PricewaterhouseCoopers, or PwC (an international accounting firm), including as: (i) Assurance Partner serving large, publicly traded companies in the energy industry; (ii) Managing Partner of PwC’s Houston, Texas office; and (iii) PwC’s Energy and Mining leader for the United States, where she led the firm’s energy and mining assurance, tax and advisory practices. Ms. Carnes currently serves as a director on the Supervisory Board of Core Laboratories N.V. [NYSE: CLB], a Netherlands company (one of the world’s largest providers of reservoir description and production enhancement services to the oil and gas industry), where she is the Lead Independent Director and Chairman of the Audit Committee. She is also a director of Matrix Service Company [NASDAQ: MTRX] (a provider of design, engineering, construction, repair and maintenance services to industrial and energy clients in North America), where she Chairs the Audit Committee and serves on the Compensation, and Nominating and Corporate Governance committees. She is also a Member Representative for Ohio Valley Midstream, LLC, a member-managed limited liability company engaged in natural gas and natural gas liquids gathering and processing. From September 1, 2017 through June 2019, Ms. Carnes served as a director of SunCoke Energy Partners GP LLC, the general partner of SunCoke Energy, L.P., our former master limited partnership.

Ms. Carnes is an experienced finance and public accounting executive, having spent her entire 34-year career with PwC. By virtue of her experience, Ms. Carnes possesses strategic planning, managerial and leadership expertise, having led the design and execution of market and sector strategies, business development, compensation, professional development, succession planning, and client satisfaction initiatives for clients in the mining, utilities and energy industries. In addition, Ms. Carnes brings vast experience with capital markets and financing activities, having served as lead audit partner on some of the largest merger and acquisition transactions completed in the energy sector.

		Michael G. Rippey   Age:  63   President and Chief Executive Officer

Mr. Rippey was appointed as Chief Executive Officer, President and a director of SunCoke Energy, Inc., effective December 1, 2017. At that time, he also was appointed as Chairman, Chief

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Executive Officer and President of SunCoke Energy Partners GP LLC, the general partner of SunCoke Energy Partners, L.P., our sponsored master limited partnership. Prior to joining SunCoke, Mr. Rippey served as Senior Advisor to Nippon Steel & Sumitomo Metal Corporation (a leading global steelmaker) since 2015. From 2014 to 2015, he was Chairman of the Board of ArcelorMittal USA (a major domestic steel manufacturer), and from August 2006 through October 2014, he was ArcelorMittal USA’s President and Chief Executive Officer. Prior to that, he successfully rose through progressively responsible financial, commercial and administrative leadership roles at ArcelorMittal USA and its predecessor companies: (i) from 2005 to 2006, he was Executive Vice President, Sales and Marketing at Mittal Steel USA; (ii) from 2000 to 2005, he was Executive Vice President and Chief Financial Officer at lspat Inland Inc.; and (iii) from 1998 to 2000, he served as Vice President, Finance and Chief Financial Officer of Ispat Inland Inc. He began his career with Inland Steel Company (a predecessor to ArcelorMittal USA) in 1984. Mr. Rippey currently serves on the Board of Directors of Olympic Steel, Inc. [NASDAQ: ZEUS], (a leading U.S. metals service center), where he is a member of the Nominating Committee and serves as Chair of the Audit and Compliance Committee. In addition to ArcelorMittal USA, Mr. Rippey’s previous board service includes the National Association of Manufacturers and the American Iron & Steel Institute, where he was a past Chairman of the Board.

As a veteran industry executive, who has overseen operations of some of the largest and most capital intense assets in the world, Mr. Rippey is an accomplished and financially astute leader with a wealth of finance, sales, operations and management experience in the metals industry. He has dealt successfully with dynamic and challenging business environments and, as a past executive officer and Chairman of ArcelorMittal USA, he has an intimate knowledge and understanding of the challenges and opportunities facing SunCoke as it continues to serve the steel industry.

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

Our Board is composed of a majority of independent directors and our Audit, Compensation and Governance Committees are each composed entirely of independent directors. The following table shows the membership of our Committees as of March 25, 2021:

Meeting Attendance

The Board held 13 meetings in fiscal year 2020. Each director who served in fiscal year 2020 attended over 75% of the aggregate of: (i) the total number of meetings of the Board during the periods that he or she served in fiscal year 2020 and (ii) the total number of meetings of the Committees on which he or she served during the periods that he or she served in fiscal year 2020.

Audit Committee

All members of the Audit Committee are “independent” as defined in the listing standards of the New York Stock Exchange, or NYSE, and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Audit Committee is composed of Ms. Carnes, Mr. Della Ratta and Mr. Lewis, and is chaired by Ms. Carnes. The Board has determined that members of the Audit Committee are independent directors for purposes of serving on an audit committee under applicable SEC and NYSE requirements, and each is financially literate and has accounting or related financial management expertise as required by the applicable rules of the NYSE. The Board also has determined that each of Ms. Carnes and Messrs. Della Ratta and Lewis qualify as an “audit committee financial expert” as defined by the applicable rules of the SEC.

The Audit Committee assists the Board in (1) the appointment, evaluation and compensation of the Company’s independent auditor, (2) the review and monitoring of the Company’s financial statements and disclosures, (3) pre-approval of audit services, internal control-related services and permitted non-audit services, (4) oversight and monitoring of the Company’s internal audit function and independent auditors, (5) monitoring compliance by the Company with legal and regulatory requirements, including the Company’s Code of Business Conduct and Ethics; and (6) oversight of the Company’s information technology use and protection including, but not limited to enterprise cybersecurity and privacy.

The Board has adopted a written charter for the Audit Committee, which is available on our corporate website at www.SunCoke.com. The Audit Committee met eight times in fiscal year 2020.

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Compensation Committee

The Compensation Committee is composed of Mr. Anton, Mr. Della Ratta and Ms. Landahl, and is chaired by Mr. Della Ratta. The Compensation Committee is responsible for the approval, evaluation and oversight of all compensation plans, policies and programs for the executive officers and certain other employees of SunCoke Energy and its subsidiaries. The Compensation Committee also has sole authority over the appointment, evaluation and compensation of any independent compensation consultant it uses in the evaluation of executive officer compensation.

The Board has adopted a written charter for the Compensation Committee, which is available on our corporate website at www.SunCoke.com. The Compensation Committee met four times in fiscal year 2020.

Governance Committee

The Governance Committee is composed of Mr. Anton, Mr. Lewis and Ms. Landahl, and is chaired by Ms. Landahl. The Governance Committee (1) assists the Board in identifying individuals qualified to become Board members, (2) recommends to the Board director nominees to be considered by stockholders, (3) recommends Corporate Governance Guidelines to the Board, (4) leads the Board in its annual review of Board performance, (5) recommends to the Board nominees for each Board committee, (6) reviews the form and amount of director compensation and makes recommendations to the Board regarding the Company’s director compensation program, and (7) provides oversight of the Company’s on-going environmental, health, sustainability and corporate social responsibility policies, initiatives, objectives and practices.

The Board has adopted a written charter for the Governance Committee, which is available on our corporate website at www.SunCoke.com. The Governance Committee met six times in fiscal year 2020.

CORPORATE GOVERNANCE

Corporate governance at SunCoke Energy is designed to promote the long-term interests of our stockholders, strengthen Board and management accountability, foster responsible decision-making and engender public trust. We have adopted leading governance practices that establish strong independent leadership in our boardroom and provide our stockholders with meaningful rights.

We believe that strong corporate governance practices that provide meaningful rights to our stockholders and ensure Board and management accountability are essential to our long-term success. The following are key governance provisions that highlight SunCoke Energy’s commitment to transparency and accountability:

Director Independence

The Board, upon the recommendation of the Governance Committee, has determined that each of our non-management directors who serves as a director is “independent” under the applicable rules of the NYSE and the SEC and is free of any direct or indirect material relationship with SunCoke Energy or its management.

Board Leadership Structure

Our Board currently separates the roles of Chairman and Chief Executive Officer. The current leadership structure of the Board includes our independent non-executive Chairman (Mr. Anton), and our President and Chief Executive Officer (Mr. Rippey). Our Governance Committee and Board

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believes that the current Board leadership structure, with separate roles for the Chairman and the Chief Executive Officer is in the best interests of SunCoke Energy and its stockholders at the present time. In our view, a number of factors support the current leadership structure chosen by the Board, including, among others:

Our Governance Committee annually assesses these roles and the board leadership structure to ensure that the interests of SunCoke Energy and its stockholders are best served. Our By-laws allow the Chief Executive Officer to be designated as Chairman of the Board. If the individual elected as Chairman of the Board is also the Chief Executive Officer, or if the Chairman of the Board is otherwise not independent, then the Chair of our Governance Committee will act in the role of Lead Director. The duties of such a Lead Director are described in our Corporate Governance Guidelines, and include: (1) the authority to chair those meetings of the Board of Directors at which the Chairman is not present; and (2) the authority to preside at executive sessions of the independent directors. A Lead Director also may provide advice and counsel, as needed, to the Chairman, and/or the Chief Executive Officer, on strategic issues and on Board of Directors and Committee matters generally. If appointed, a Lead Director also would lead the Board and Committee self-evaluation process, as well as the annual evaluation of the Chief Executive Officer by the independent directors. Except for our Chief Executive Officer, Mr. Rippey, our Board of Directors is composed entirely of independent directors. The Audit, Compensation and Governance Committees are composed solely of independent directors.

Risk Oversight

Our Board has an active role, both as a whole and also at the committee level, in overseeing management of the Company’s risks, including financial risks, cybersecurity risks, credit and liquidity risks, legal and regulatory risks and operational risks. The Board is responsible for general oversight of risks and regularly reviews information from management who is responsible for the day-to-day processes and operations to manage risks.

In accordance with NYSE requirements, the Audit Committee charter provides that the Audit Committee is responsible for reviewing and discussing SunCoke Energy’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. On a regular basis, our officers who are responsible for

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monitoring and managing SunCoke Energy’s risks, including our President and Chief Executive Officer, our Senior Vice President and Chief Financial Officer and our Senior Vice President, Chief Legal Officer and Chief Human Relations Officer, make reports to the Audit Committee. The Audit Committee, in turn, reports to the full Board of Directors. While the Audit Committee has primary responsibility for overseeing risk management, our entire Board is actively involved in overseeing risk management by engaging in periodic discussions with our officers as it may deem appropriate. In addition, each of our Committees considers the risks within its areas of responsibility. For example, the Audit Committee focuses on risks inherent in our accounting, financial reporting and internal controls, and the Compensation Committee considers the risks that may be implicated by our executive compensation program. The Compensation Committee’s assessment of risk related to compensation practices is discussed in more detail in the Compensation Discussion and Analysis section of this Proxy Statement. We believe that the leadership structure of our Board supports its effective oversight of our risk management.

Cybersecurity and Information Security Risk Oversight

Our Board recognizes the importance of maintaining the trust and confidence of our customers, suppliers, vendors, contractors and employees, and devotes significant time and attention to oversight of cybersecurity and information security risk. In particular, our Audit Committee receives regular reporting on cybersecurity and information security risks. The Board and the Audit Committee receive presentations throughout the year on cybersecurity and information security topics. In 2021, we updated our Audit Committee charter to make explicit the Committee’s responsibility for reviewing cybersecurity matters and information security risks as well as the steps taken by management to identify, assess and mitigate such risks. At least twice each year, the Audit Committee and the Board discuss cybersecurity and information management risks with the Company’s Chief Information Officer.

Management has continued to take significant steps to enhance our data security infrastructure and defenses. These enhancements include new and improved technical controls and procedures, additional use of outside third party experts and independent cybersecurity advisors, and periodic review of the Company’s cyber insurance policies to ensure appropriate coverage.

Sustainability Matters

Our Board recognizes the importance of sustainability and is actively engaged in overseeing the Company’s sustainability practices and works alongside management to ensure focus on these matters. As part of this ongoing focus, in 2020, the Board amended the charter of our Governance Committee to provide broad oversight of the Company’s policies, initiatives, objectives and practices regarding environmental matters, climate change, health and corporate social responsibility. The Governance Committee receives updates from management and considers stakeholder concerns regarding current and emerging sustainability matters that may affect the business, operations, performance, or public image of the Company, and reviews such matters with the Board and management, as appropriate. We continue to incorporate sustainability into our businesses’ core strategy, reflecting our belief that sustainability is essential to long-term growth. We also believe in transparency, and report on our sustainability efforts in an annual Sustainability Report which discusses our programs and policies designed to promote ethical business practices, good corporate governance, and the well-being and health of our environment, employees, and the communities in which we live and work.

Executive Sessions of the Board

Our Board holds regular executive sessions in which the independent directors meet without any members of management present. The purpose of these executive sessions is to promote open and

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candid discussion among the independent directors. In accordance with applicable NYSE rules, our non-executive Chairman presides over the executive sessions of the independent directors. The independent directors met in executive sessions separate from management five times during fiscal 2020.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines that address the following matters, among others: (1) composition of the Board and director qualifications; (2) operations of the Board; (3) responsibilities of the Board; and (4) Committee structure and responsibilities. These Corporate Governance Guidelines are posted on our corporate website at www.SunCoke.com.

Insider Trading Policy Restrictions on Hedging & Pledging

SunCoke Energy’s Insider Trading Policy applies to our employees, executives, including our named executive officers (“NEOs”), and the members of our Board. The Insider Trading Policy prohibits trading in SunCoke Energy securities except during specifically designated windows, and also prohibits certain types of trading activities whether or not they technically involve insider trading. SunCoke Energy considers it inappropriate for any director, officer or other employee to enter into speculative hedging or monetization transactions involving SunCoke Energy securities. In general, such transactions are designed to offset or reduce the risk of price fluctuations in the underlying security and, as such, sever the ultimate alignment with our stockholders’ interests. Under our Insider Trading Policy, no employee, officer, or director of SunCoke Energy may, either directly or indirectly through a third party, enter into short sales or purchase, sell or exercise any puts, calls or similar instruments pertaining to securities of the SunCoke Companies (other than options exercised in accordance with the terms of an option plan sponsored by the SunCoke Companies) or engage in hedging activities of any kind (e.g., covered calls, collars, equity swaps, prepaid variable forwards, and exchange funds) pertaining to any SunCoke Energy securities, in each case because of the potential conflict of interest or the perceptions created, and the resulting possible impact on the market. Additionally, no employee (including any officer) or director of SunCoke Energy may pledge any SunCoke Energy securities as collateral for any loan or deposit, or hold any such securities in a margin account, since a foreclosure sale or margin sale could occur at a time when the pledgor is aware of material non-public information, or otherwise not permitted to trade in SunCoke Energy securities.

Review of Related Person Transactions

The Board has adopted a written policy that applies to interested transactions with related parties. For purposes of the policy, interested transactions include transactions, arrangements or relationships involving amounts greater than $100,000 in the aggregate in which the Company is a participant and a related person has a direct or indirect interest. Related persons are deemed to include executive officers, directors, director-nominees, owners of more than five percent of our common stock or an immediate family member of the preceding group. The policy provides that the Governance Committee is responsible for the review and approval of all such related person transactions.

The Governance Committee reviews the material facts of all interested transactions that require its approval and either approves or disapproves of the entry into the interested transaction, subject to certain exceptions described below. The policy prohibits any director from participating in any discussion or approval of an interested transaction for which such director is a related person, except that such director is required to provide all material information concerning the interested transaction to the Governance Committee. As part of its review and approval of a related person transaction, the Governance Committee considers, among other things, whether the transaction is made on terms no less favorable than terms that would be generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

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Our related person transactions policy also provides that certain interested transactions will have standing pre-approval from the Governance Committee. These include: (1) employment of executive officers if the compensation is disclosed in the proxy statement or approved by the Board or the Compensation Committee; (2) employment of an immediate family member of a director, director nominee or executive officer with compensation that does not exceed $120,000; (3) director compensation that is disclosed in the proxy statement; (4) transactions with companies where the business is less than the larger of $1 million or two percent of the other company’s total revenues; (5) certain charitable contributions; (6) transactions where all stockholders receive proportional benefits; (7) transactions involving competitive bids; (8) regulated transactions; (9) certain banking services; and (10) certain transactions available to all employees or third parties generally.

Director Attendance Policy

Directors are expected to attend the Board meetings and meetings of Committees on which they serve, as well as our annual meeting of stockholders.

Indemnification Agreements

Our directors are asked to enter into individual Indemnification Agreements with SunCoke Energy when joining the Board. The Indemnification Agreement is the same for each director and provides contractual indemnification in addition to the indemnification provided in our Certificate of Incorporation and the By-laws. The Indemnification Agreement provides each director with indemnification to the fullest extent permitted by law. Subject to certain limitations and exceptions, the Indemnification Agreement provides, among other things, that we will indemnify each director against expenses, liabilities, losses, judgments, fines and amounts paid in settlement incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the director is or was our director or by reason of the fact that the director is or was serving at our request as a director, officer, manager, trustee, fiduciary, employee or agent of another entity, with certain stated exceptions. In addition, under the Indemnification Agreement, we are obligated to advance payment to each director for all expenses reasonably incurred by such director with respect to the events or occurrences specified above, provided that the director must repay the advanced expenses to the extent that it is ultimately determined that the director is not entitled to indemnification under the terms of the Indemnification Agreement.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, including our Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, Vice President and Controller and other senior financial officers. The Code of Business Conduct and Ethics is posted on our corporate website at www.SunCoke.com.

Oversight of Management Succession

The Company has adopted a management succession policy pursuant to which the Board of Directors regularly reviews the Company’s succession plan for the CEO and other senior executives. This process is designed to prepare the Company for both planned succession events as well as unplanned succession events, such as those arising from unexpected illness or death or other sudden departure, to ensure the stability and accountability of the Company during periods of transition. The Board of Directors’ periodic review of the Company’s succession plan includes an evaluation of potential candidates for the CEO position and other senior executive positions, including an assessment of whether each candidate possesses the skills, experience, education, and other attributes that the Board of Directors believes to be required for such positions in light of the

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Company’s business, operations, strategy and culture. The Company’s management succession policy also provides process guidelines in the event of an emergency management succession event.

Board of Directors and Committee Evaluations

Our Board recognizes that a robust and constructive Board and committee evaluation process is an essential component of board effectiveness. As such, our Board and each of our committees conduct an annual evaluation, which includes a qualitative assessment by each director of the performance of the Board and the committee or committees on which the director sits. The Governance Committee oversees the evaluation process.

The results of these annual self-evaluations have led to changes aimed at improving the Board’s effectiveness, including the appropriate distribution of oversight responsibilities across the various committees of the Board, the conduct of executive sessions, and considerations of the type and content of information included in meeting materials.

Communications with the Board

Stockholders and other interested persons may communicate any concerns they may have regarding SunCoke Energy to the attention of the Board or to any specific member of the Board, including the Chairman, by writing to the following address:

SunCoke Energy, Inc.

c/o Corporate Secretary

1011 Warrenville Road, Suite 600

Lisle, Illinois 60532

Communications directed to the independent directors as a group should be sent to the attention of the Chairman, c/o the Corporate Secretary, at the address indicated above. Any stockholder or other interested person who has a particular concern regarding accounting, internal accounting controls or other audit matters that he or she wishes to bring to the attention of the Audit Committee of the Board may communicate those concerns to the Audit Committee or its Chair, c/o the Corporate Secretary, using the address indicated above.

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customer is unable to take the coke, require payment for the coke at the same price. Because of the contractual obligations of our take-or-pay coke contracts with our steel customers, the economic fallout from the COVID-19 impact would not have otherwise impacted our financial results. Our steel customers, however, were severely affected by lack of demand and excess inventories, resulting in requests for SunCoke to reduce 2020 take-or-pay requirements. We assessed contract renewal timeframes with our continual focus on long-term stability and customer relationships, then negotiated 2020 coke purchase relief in exchange for contract extensions. This purchase relief reduced our 2020 Adjusted EBITDA, but resulted in much more stable future earning streams, which were recognized by the Board and as being in the best interest of our shareholders. The contracts with ArcelorMittal USA for our Jewell Coke and Haverhill Coke plants, which were to end on December 31, 2020, were renewed with modified annual tonnage for five years. The Haverhill contract with AK Steel, which was to end on December 31, 2021, was extended with the same annual tonnage for 18 months, to June 30, 2023.¹

The short-term relief granted to our customers for the contract extensions and corresponding material 2020 financial impact was communicated to our shareholders on August 4, 2020 when we revised our guidance range down from earlier in the year. The reduction in guidance was less than the impact of the purchase relief, as management was able to offset some of the negative impact by focusing on significant operational cost discipline and Company-wide savings initiatives, resulting in a significantly higher guidance range than what we could have otherwise achieved. Through strong operating performance, cost discipline and savings initiatives, we ended the year with $205.9M in Adjusted EBITDA, which was higher than our August 3, 2020 revised guidance of $190M - $200M, though lower than our original guidance of $235M - $245M. Similarly, Operating Cash Flow results were $157.8M, which far exceeded our revised guidance of $116M - $136M, though lower than our original guidance of $170M - $185M.

Prior to reaching agreements in Q3 2020 to extend the contracts and provide 2020 coke purchase relief, we were on track to meet our original guidance, delivering Adjusted EBITDA of $62.1M in Q1. Our coke plants increased production by 63,000 tons in Q1 2020 compared to Q1 2019, as the rebuilt Indiana Harbor coke ovens continued to perform well. Further, Adjusted EBITDA was $59M in Q2 2020, with our coke operations up $4.2M versus Q2 2019. For the first half of 2020, despite having started to turn down production, we were performing just above our prorated original guidance point estimate of $240M.

We acknowledged the great benefit of the contract extensions, including an additional two-year extension with AK Steel for our Haverhill plant (from June 30, 2023 to June 30, 2025), reached later in the year. At the same time, we were resolved to mitigate the material financial impact in 2020. Through disciplined cost control and a Company-wide cost savings initiatives, we were able to significantly reduce that impact, as evidenced by our Adjusted EBITDA results of $205.9M.

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Operational focus to safely produce high-quality coke is the foundation of our business, and the ability of our teams to pivot from maximum production to a large turndown without issue demonstrates the soundness of that foundation. In addition, our teams pursued development of foundry coke, which diversifies our customer base and allows entry into a new market. Our teams were able to perform this work while simultaneously producing blast furnace coke—further evidence of our operating capabilities. This excellent domestic coke performance will now continue for 5 more years with predictable earnings at our AMUSA Jewell, and Haverhill plants and 3.5 more years at our AK Steel Haverhill plant due to the contract extensions.

Finding operational efficiencies and adopting rigorous cost control were the focus for our Logistics segment in 2020. Convent Marine Terminal (CMT), faced with the Q1 2020 bankruptcy of its take-or-pay customer Foresight Energy, concentrated on entering into a new coal handling agreement with Javelin while also scrutinizing any potential cost savings. When lower volumes also impacted our other terminals, they responded with extensive operational efficiency plans to considerably lower costs. Overall, the Logistics segment’s 2020 Adjusted EBITDA was $17.3M, down $25.3M from the prior year due to the CMT customer bankruptcy and lower volumes at the other terminals.

Pursuing a balanced capital allocation strategy continued to be important. Notwithstanding the financial impact of providing coke purchase relief in 2020 in exchange for contract extensions, we were still able to meet our capital allocation goals, including reducing net debt by approximately $61M and continuing to pay a $0.24/share dividend.

The health and safety of our employees and contractors has always been our first priority, and the COVID-19 pandemic necessitated new work practices and guidelines that we were well positioned to implement due to our safety culture. In response to the pandemic, we established an internal task force of experts, initiated enhanced health and safety measures across our facilities, which operated nonstop, and enacted a work from home program for all qualifying personnel. Each of our sites implemented screening procedures consistent with U.S. Centers for Disease Control and Prevention (CDC) recommendations such as screening questionnaires and temperature checks for employees, contractors or other service providers. Additionally, to ensure employee safety, we adopted protocols consistent with CDC, state and local guidance including mask wearing, social distancing, contact tracing, as well as quarantine requirements. We also implemented a paid-leave policy to ensure that COVID-19 positive employees and employees exposed to a COVID-19 positive individual opted to stay home. At the same time that we were adjusting to COVID-19 protocols, we continued to focus on preventing incidents. While zero incidents will always be our goal, we are very satisfied with our 2020 safety performance, which, despite COVID-19, is slightly better than our 2019 results.

Our excellent safety record is best understood in comparison to industry-wide safety performance. Our Total Recordable Incident Rate (“TRIR”) an industry standard metric of safety was 0.81 for 2020. According to most recent data from the Bureau of Labor Statistics, the overall TRIR for Petroleum and Coal Products Manufacturing was 1.3 for 2019. For comparison, it was 2.4 for the Iron and Steel Mills sector. Our year-over-year safety performance is consistently below industry-wide rates, demonstrating our strong commitment to safety, and we set our safety target, for the purposes of our annual incentive plan, better than industry benchmarks.

Environmental performance has always been central to our operations, and the Company continues to utilize actual, measurable environmental performance as a compensation metric. Despite substantial operational adjustments due to the coke production turndown, our 2020 performance was exceptional, significantly exceeding target and better than our results in both 2019 and 2018.

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Historical Performance

As demonstrated by the chart below, we have met or exceeded our guidance for the last 5 years:

Chart Commentary:

Financial & Operational-

While we have consistently met or beat our guidance each of the last 5 years, our share price experiences significant volatility caused primarily by steel industry outlook factors, including steel imports, steel prices and the outlook and viability of our customers. In fact, despite generally consistent financial performance year after year, our share price is highly correlated with that of our customers such that steel industry outlook can create a disconnect between the Company’s operating results and share price.

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Safety

At SunCoke, our focus is on continuous safety improvement and while we did not achieve our target this past year, we improved our safety performance from 2019 and continue to strive for zero accidents in the workplace and a safe working environment at all times.

Environmental

We achieved our best environmental performance of the last three years against objective metrics, despite the coke production turndown challenges.

For a reconciliation of Adjusted EBITDA, a non-GAAP measure, to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

CEO 3-Year Target vs. Realizable Pay

We have delivered strong financial and operating performance, though our stock price faces significant volatility. We have a strong pay and performance orientation and we deliver a significant amount of compensation in the form of equity to further align our executives with shareholders. As demonstrated by the chart below, our CEO’s realizable pay, which considers the change in stock price and actual payouts, is 70% of his target compensation.

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Shareholder Engagement

The Company values feedback from all of its shareholders and regularly engages with them both at conferences and one-on-one. We believe this approach to engaging proactively and openly with the Company’s shareholders drives increased accountability, improved decision-making, and ultimately creates long-term value. During 2020, we engaged with 43 investors, including approximately 98 phone or in-person meetings. In addition, the Company’s President and Chief Executive Officer and Chief Financial Officer regularly engage in dialogue with the Company’s shareholders through the Company’s quarterly earnings call.

The Company received no recommendations on executive compensation from shareholders in 2020. In addition, our “Say on Pay” vote in 2019 received 98.3% support from shareholders.

The Company’s Board and the Compensation Committee reviewed the results of this vote and concluded that this level of approval reflects strong shareholder support of our compensation strategy and programs. In light of this approval, the structure of our pay programs has remained materially consistent throughout 2019 and into 2020.

SECTION 2 -- OUR COMPENSATION PHILOSOPHY

The principles of our compensation strategy are tied to paying for performance and increasing shareholders’ value over the long-term, as outlined below:

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SECTION 3 -- ROLE OF MANAGEMENT, COMPENSATION CONSULTANTS AND MARKET DATA

Role of Management

Each year, the Board of Directors establishes measurable performance goals and objectives for the CEO and the Company, and reviews and evaluates the CEO’s performance considering these goals and objectives. The CEO, in turn, reviews the performance of our NEOs, other than himself, and makes recommendations to the Compensation Committee with respect to their compensation, including salary, annual cash incentive opportunities and grants of long-term incentive awards.

After considering the data on market-based compensation provided by the Company’s independent compensation consultant, the Compensation Committee annually reviews and assesses the compensation levels and incentive payouts for our NEOs. The Compensation Committee also considers other factors, including, but not limited to, the Company’s results of operations, relative shareholder return, other applicable metrics used to measure the performance of the Company and its business units, and the value of similar compensation and incentive awards to NEOs at comparable companies.

Based upon this review, the Compensation Committee then presents its recommendations for approval to the full Board and, after considering the Compensation Committee’s recommendations, the Board then makes a determination regarding the appropriate levels of compensation and incentive grants for the NEOS, including the CEO. The CEO attends Compensation Committee meetings, but is not present for, and does not participate in, discussions concerning the CEO’s own compensation.

Compensation Consultant

Under its charter, the Compensation Committee has the sole authority to retain and terminate any compensation consultant used in the evaluation of executive compensation, and to approve the retention terms of the consultant, including fees. The Compensation Committee has retained Compensation Advisory Partners, (“CAP”), an independent compensation consulting firm, to provide advice on executive compensation matters. Pursuant to the NYSE listing standards, the Compensation Committee regularly reviews the consultant’s independence relative to key factors, including: (i) whether the consultant provides any other services to the Company; (ii) the amount of fees paid relative to the total revenue of the firm; (iii) policies in place to prevent conflicts of interest; (iv) any personal or business relationships with members of the Compensation Committee; (v) ownership of SunCoke stock and (vi) any personal or business relationships with executive officers. Based on its assessment, the Compensation Committee concluded that CAP is independent and that no conflicts of interest exist.

CAP provides advice on emerging trends, data on market-based compensation and competitive pay levels, and regulatory developments as they relate to executive compensation. CAP’s services included evaluating our NEO total compensation competitive positioning, developing our compensation peer group, assisting in our annual and long-term incentive plan design, assessing potential risks in our incentive plans, and assisting in the preparation of this CD&A. CAP performs no other work for us.

Market Data

We operate in a unique sector of the industry, with no public companies that are direct competitors. The market data that the Compensation Committee considers when making executive compensation decisions is based in part on information from national surveys conducted by Willis Towers Watson, Mercer and Equilar. During 2020, the survey data was a blend of general industry survey data for companies with revenues of between $1 billion and $3 billion for Willis Towers Watson and Mercer, and $1 billion to $5 billion for Equilar (General Industry survey data).

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To supplement the survey data when making compensation decisions, management recommended, and the Compensation Committee has approved, a peer group of 16 companies (the “Peer Group”). Unlike many companies, the nature of SunCoke’s long-term take-or-pay coke contracts, which pass through commodity and certain operating costs to customers, makes revenue less meaningful.

As a result, the Company uses EBITDA as the primary financial metric in selecting companies from comparable industries. Selected companies generally fall within the range of one-third to three times SunCoke’s EBITDA; however, the Compensation Committee also considers other financial metrics, including market capitalization, enterprise value and revenue, as appropriate, in making the final determination of peer companies. Market capitalization and enterprise value are used as reference measures when considering peers but these measures are very volatile, specifically in our industry. The approved compensation peer group included the following companies:

Source for peer data: S&P Capital IQ Database

Note: Companies are sorted in descending order based on EBITDA. AK Steel was acquired in 2020 and their information for 2020 is not available.

Note: Companies in the foregoing table are sorted in descending order based on EBITDA. Based on 2018—2020 Adjusted EBITDA, SunCoke was positioned at the 42nd percentile of the peer group.

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SECTION 4 -- ELEMENTS OF EXECUTIVE COMPENSATION

Our 2020 compensation program emphasized performance-based compensation that promoted the achievement of short- and long-term business objectives that were aligned with our business strategy and rewarded performance when those objectives were met. The basic elements of our compensation program are as follows:

Base Salary: Base salary is intended to provide a certain level of fixed cash pay that compensates an executive for job performance and reflects the scope and level of responsibilities for each role. Competitive salary helps to recruit and retain executives.

Annual Cash Incentives: Annual cash incentives are paid after the end of each year based on the level of attainment of performance goals. This component promotes achievement of our annual business objectives. The use of four metrics, which include financial (Adjusted EBITDA and Operating Cash Flow), safety, and environmental measures, provides a holistic view of performance, which balances financial and operational performance while limiting reliance on any one metric, which could encourage excessive risk-taking.

Long-Term Incentives: Long-Term Incentive (LTI) awards are designed to promote business strategies that deliver strong operational results year-over-year. As such, these awards provide strong alignment with shareholder interests and, absent the Company stock being highly correlated with our customers and steel industry outlook, should be reflected by an increase in stock price. These awards also promote executive retention. Generally, when equity is awarded, restricted share units vest ratably over three years. In addition, both the performance share units and long-term performance cash vest on the third anniversary of the date of grant, if certain performance goals are met.

SECTION 5 -- PAY MIX, OPPORTUNITY AND LEVERAGE

The total direct compensation opportunity for each NEO in 2020 was based on the NEO’s annual base salary, annual target cash incentive award opportunity and annual target long-term incentive award opportunity. In making its decisions, the Compensation Committee considered both the Peer Group and General Industry survey data for each NEO’s position. The Compensation Committee retained the flexibility to adjust compensation levels based upon other factors such as individual experience and performance.

Our philosophy is to drive a performance-oriented culture. To this end, performance-based compensation makes up a meaningful portion of each NEO’s compensation as demonstrated in the chart below. We consider the compensation we pay through annual cash incentives under the Annual Incentive Plan, or AIP, and Long Term Incentives, or LTI grants, to be performance-based.

These percentages are based on each current NEO’s salary and annual and long-term incentive targets for 2020.

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Base Salary

Base salary is the only fixed portion of total direct compensation for our NEOs. We focus on setting base salaries that are market-based, though actual positioning may vary based on factors such as individual performance, responsibilities associated with the position, experience in the position and more broadly, internal equity and the competitive market at the time of recruitment.

The Compensation Committee considers adjustments to the base salaries of executive officers on an annual basis. For 2020, the Compensation Committee approved a market-based increase of 10.8% for Mr. Rippey’s base salary to align his compensation closer to the peer group median. This increase along with increases for Ms. West, Mr. Hardesty and Mr. Quanci were approved in February 2020. Ms. Gates’ was not eligible for an annual base increase due to her promotion in November 2019.

Annual Cash Incentive Awards

Overview: The NEOs participated in the SunCoke Annual Incentive Plan, or AIP, which is a performance-based annual cash incentive plan designed to promote the achievement of our annual business objectives by providing competitive incentive opportunities to employees who can significantly impact our performance. The payout under the AIP for each NEO is based on a combination of financial and operating goals, as well as individual performance. An executive’s annual incentive payment, if any, may not exceed 200% of his or her target incentive opportunity. Attaining an award payout of 200% would require reaching the maximum payout (150%) for financial and operating goals and displaying extraordinary individual results.

Target Incentive Opportunity: Each executive has a target incentive opportunity that is expressed as a percentage of annual salary. The 2020 target incentives for our NEOs at year-end were as shown in the table below.

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For 2020, the AIP used the following corporate performance goals and weighting, which are unchanged from 2019:

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The following sets forth the quantitative performance goals for 2020 and the approved performance result as a percentage of target. The threshold, or 25% achievement, is typically set at a level that represents minimum acceptable performance by the Company in the context of the business conditions and other challenges facing the Company. The target, or 100% achievement, is set at a level that represents performance that is demanding but attainable. The maximum, 150% achievement, is set at a level that represents extraordinary performance. The 100% achievement factor for financial metrics is set at the level of the Board-approved operating plan. The threshold (25%) and maximum (150%) achievement factors represent 80% and 105% of the target level performance, and a curve is utilized to establish payout levels between the threshold and maximum. The safety metric is based on annual performance relative to an internal target set each year, which is based on available internal performance and external benchmarks. The environmental metric is based on annual permit compliance, including air emissions and deviations, as well as other factors important to the Company’s environmental results.

The Company’s payout curve is designed to incentivize employees to find every opportunity, no matter how small, to increase Adjusted EBITDA, without sacrificing safety or environmental performance. Because the Company’s Adjusted EBITDA is generated primarily from take-or-pay coke contracts set at contract maximums with our customers, the opportunity for significant upside is limited. SunCoke typically sets guidance within a $10 - $15 million range, so increases of even $2 million of Adjusted EBITDA should be encouraged and recognized. In addition to the operating performance payout maximum of 150%, an employee’s individual performance is a factor in the ultimate payout, with the total AIP having a cap of 200%. Attaining an award payout of 200% would require reaching the maximum payout for financial and operating goals of 150% and displaying extraordinary individual results.

In approving the final payout of the 2020 Annual Incentive, the Compensation Committee used Adjusted EBITDA as the primary metric (70% weighting). Adjusted EBITDA considers the impact of impairments, coal rationalization costs, changes to our contingent consideration liability related to our acquisition of CMT, the expiration of certain acquired contractual obligations and, for 2020, the change in contract terms due to early negotiations for contract extensions with our customers.

Because the change in the contracts occurred mid-year after our original guidance was set, we issued revised guidance to investors in our second quarter Earnings call. The Committee considered (i) the original guidance, (ii) the revised guidance, and (iii) performance for the first half of the year measured against the pro-rated original guidance, coupled with performance for the second half of the year measured against the pro-rated revised guidance. The Adjusted EBITDA based on the 1H / 2H evaluation could have resulted in a payout of more than 135% of target. However, recognizing the economic environment and the fact that the benefit of the contract extensions will be mostly realized in 2021 and beyond, the Committee exercised the negative discretion permitted under the AIP and capped the overall payout at 80% of target for SVPs and the CEO.

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The decision to provide our steel customers with 2020 coke purchase relief in exchange for contract extensions is the epitome of an unbudgeted initiative that will benefit the Company in future periods and is in the best interest of shareholders. Rather than require full 2020 performance on our take-or-pay contracts, we assessed our contract renewal timeframes and the long-term interests of shareholders, then negotiated 2020 relief in exchange for contract extensions at our AMUSA Jewell and Haverhill plants and AK Steel Haverhill plant. The 2020 impact of these negotiations was a material reduction in Adjusted EBITDA, but we resolved to offset this impact by achieving significant Company-wide savings. We committed ourselves to finding these savings when we announced the contract extensions and set the revised guidance of $190M—$200M in our Q2 Earnings. Had we insisted on full performance, we estimate that we would have exceeded our original guidance point estimate of $240M for a payout above 100%.

To assess the 2020 Annual Incentive Payout, the Committee divided the year into two halves:

In reviewing EBITDA performance for 2020, the Compensation Committee also excluded the negative impact of an increase in Black Lung reserves from legacy operations of $7.4M above budgeted results, which was offset by $2.2M in reduced Asset Retirement Obligations liability. This is consistent with the treatment of Black Lung reserve changes in prior years.

Combining the 1H 2020 (original guidance) and 2H 2020 (revised guidance) would yield a payout of more than 135%. The Committee recognized the Company’s performance through the (a) the contract extensions, (b) strong, cost-disciplined operating performance throughout the COVID-19 pandemic, (c) safety and environmental performance, and (d) the achievement of significant Company-wide savings in 2020. At the same time, being cognizant of the economic climate, the Committee used negative discretion and approved a final payout of 80% for SVPs and the CEO (with no upward or downward individual adjustment). Mr. Rippey recommended and the Committee agreed to a payout of 100% of target for Mr. Quanci, in recognition of his substantial efforts to optimize our operational performance.

The total bonus amounts paid to each NEO for 2020 were:

For our 2021 AIP targets, we will follow our typical process and establish goals based on our rigorous business plan and guidance to shareholders. We are not receiving a benefit in our business plan from the contract extensions. Instead, the plan reflects the expected earnings and cash flow based on the terms of the contracts, identical to prior years.

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Long-Term Incentives

Long-Term Performance Enhancement Plan (LTPEP)

Equity awards under the LTPEP are designed to align the executives’ compensation with the interests of shareholders by creating a direct linkage between the executives’ rewards and shareholders’ gains, provide management with the ability to increase equity ownership in SunCoke Energy, provide competitive compensation opportunities that can be realized through attainment of performance goals and provide an incentive to attract and retain executives. There are two elements to our program:

Performance Share Units: Performance share units, or PSUs, represent rights to receive shares of Company common stock, with vesting conditioned upon the attainment of performance goals established by the Compensation Committee for the applicable performance period, as well as the participant’s continued employment with SunCoke.

Restricted Share Units: Restricted share units, or RSUs, represent rights to receive shares of Company common stock, with vesting conditioned upon continued employment with the Company through the end of the applicable restriction period. RSU awards generally vest ratably over three years on each anniversary of the grant date.

Long-Term Cash Incentive Plan (LTIP)

Long-Term performance cash awards under the LTIP are designed to align the executives’ compensation with the interests of shareholders by providing competitive compensation opportunities that can be realized through attainment of performance goals and provide an incentive to attract and retain executives. Awards are granted with vesting conditional upon the attainment of performance goals established by the Compensation Committee for the applicable performance period, three years, as well as the participant’s continued employment with SunCoke.

Each year, the Compensation Committee evaluates the appropriate compensation mix and reviews the Peer Group and General Industry survey data regarding the typical mix of short and long-term incentive awards. Based upon the NEO’s long-term incentive target and position, and factoring in Peer Group practices as well as our compensation philosophy, the Compensation Committee determines the appropriate mix of equity vehicles for each executive as well as the target long-term incentive compensation as a percentage of base salary. As with 2019, our 2020 long-term incentive awards included performance share units and restricted share units.

The Compensation Committee determines the performance metrics for the long-term awards based on the financial measures most relevant to the Company’s performance and generation of long-term value for shareholders. SunCoke’s core business, the production of metallurgical coke, is a capital-intensive business with take-or-pay contracts with integrated steel producers. Our revenue is largely determined by coal prices, where we are generally not at risk based on the structure of our take-or-pay coke contracts. Therefore, the Compensation Committee determined that the two most important drivers of long-term performance are cumulative Adjusted EBITDA and pre-tax Return on Invested Capital (ROIC), and therefore both are included as metrics in the PSUs and long-term performance cash awards. A Total Shareholder Return, or TSR modifier, is also used to partially adjust the performance share unit award value to reflect shareholder return, regardless of the underlying generation of three- year Adjusted EBITDA or three- year average pre-tax ROIC.

Our long-term incentive awards are subject to other terms and conditions set forth in the applicable award agreements. In February 2020, the Compensation Committee made equity awards to

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the NEOs, with the allocation 40% RSUs, 30% PSUs and 30% Long Term Performance Cash. In 2020, NEOs received long-term incentive awards, based on performance, tenure and market, with an aggregate target value as follows:

Our long-term goals on EBITDA and ROIC are determined based on our contracts and capital investment. As we otherwise continue to grow and diversify our business, our cumulative EBITDA goal decreased for our 2020 cycle due to the bankruptcies of our CMT coal customers. We set goals that are aggressive and require continuous improvement in operations, including new business at CMT.

The award contains a modifier that can increase or decrease the award with a multiplier of +/- 25% based on the Company’s TSR performance over the three-year performance period. The Company’s TSR is ranked relative to the TSR of each company that is part of the NASDAQ Iron & Steel Index over the same period on a non-weighted basis. Performance between threshold, target or maximum levels will be determined by straight-line interpolation. The payout is capped at 250% (inclusive of up to a 50% TSR modifier) of the target units. The Compensation Committee determines the level of achievement of the goals after the end of the performance period.

The goals for the long-term cash award are the same as the PSU awards with the exception of the relative TSR modifier, which is not used for these awards.

2018-2020 PSU Award

The three-year performance period for PSUs awarded for 2018 ended on December 31, 2020. Mr. Rippey, Ms. West, Ms. Gates and Mr. Hardesty received a payout. The payout for the PSUs was based on 50% three- year cumulative Adjusted EBITDA, and 50% based on achievement of three-year average pre-tax ROIC for the Coke and Logistics businesses plus unallocated corporate income. In addition, the award contains a modifier that can increase or decrease the award with a multiplier of +/- 25% based on the Company’s TSR performance over the three-year performance period. The Company’s TSR is ranked relative to the TSR of each company that is part of the NASDAQ Iron & Steel Index over the same period on a non-weighted basis. If SunCoke achieved maximum

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performance levels on all metrics and the modifier, the payout would be capped at 250% of the target. Based upon performance as shown in the following table, the NEOs received 70.6% of the target PSU grant and accumulated dividends.

In approving the final payout of the 2018 PSU Award, the Compensation Committee approved adjustments to Adjusted EBITDA and pre-tax ROIC that were consistent with our general principles of how to treat unusual, unplanned items as they occur. Details on the adjustments follow:

Adjusted EBITDA for 2019 was adjusted $30.8 million due to the unplanned fourth quarter coal export customer bankruptcy filing, while Adjusted EBITDA for 2020 was adjusted $53.1 million due to a second coal export customer bankruptcy.

In calculating the pre-tax ROIC, $30.8 million of Coal Logistics revenue was added back into the consolidated adjusted operating income for 2019 and $53.1 million for 2020, while lower depreciation and amortization costs due to the resulting asset impairment of that bankrupt coal export customer were excluded in the amounts of $2.8 million for 2019 and $11.2 million for 2020. Invested capital was also adjusted so as to remove the impact of asset impairment of that bankrupt coal export customer.

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SECTION 6 -- OTHER COMPENSATION INFORMATION

Perquisites

We do not provide our NEOs with perquisites or other personal benefits such as vehicles, club memberships, financial planning assistance or tax preparation. The Company may reimburse relocation costs for newly retained or relocated NEOs or provide a partial commuting allowance.

Stock Ownership Guidelines

Under our stock ownership guidelines, our executives are required to maintain direct ownership in our common stock in the following amounts:

A newly hired executive has five years to meet the ownership requirements. If an executive’s ownership requirement increases due to a promotion, the executive has five years to meet the increased level. NEOs are required to hold 100% of any newly vested shares (other than shares sold to pay taxes) until they meet 100% of the share ownership guidelines. Other executives must hold at least 50% of any newly vested shares (other than shares sold to pay taxes) until they meet 100% of the share ownership guidelines. Time-based restricted share units and shares held directly or indirectly, including shares acquired on exercise of stock options and shares held under our retirement plans, count toward these guidelines. Outstanding stock options (vested and unvested) as well as unearned performance-based restricted share units do not count toward these guidelines. As of December 31, 2020, all of our executives either have met in full or are on track to meet their ownership requirements at the end of their guideline period.

Hedging and Pledging Policies

Our Insider Trading Policy prohibits short sales of Company stock, as well as the purchase, sale, or exercise of any puts, calls, or other options (other than options granted pursuant to any incentive compensation plan of the Company) on Company stock, or “hedging.” Our Insider Trading Policy also prohibits employees, officers and directors of the Company from pledging Company stock as collateral for any loan or depositing any Company stock in a margin account.

Recoupment Policy

Our recoupment, or “claw back,” policy allows for recoupment of incentive compensation, with a three-year look-back. Under this policy, if the Company restates its financial statements, or if an officer of the Company violates a Company policy or confidentiality covenant, or engages in conduct detrimental to the Company’s business or reputation, the Compensation Committee has the discretion to cancel outstanding awards of, or opportunities to receive, cash or equity incentive compensation and to recoup incentive compensation already paid or awarded to an officer during the three-year period preceding the date the restatement obligation was determined or the date of the officer’s misconduct.

Retirement Benefits

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The 401(k) Plan and the Savings Restoration Plan are the only Company-sponsored retirement income vehicles for NEOs. Our NEOs have no defined benefit pension or other post-retirement benefits.

Severance and Change in Control Benefits

Our NEOs participate in the SunCoke Energy Executive Involuntary Severance Plan and the SunCoke Energy Special Executive Severance Plan. The purpose of these plans is to recognize an executive’s service to SunCoke Energy and provide a market competitive level of protection and assistance if an executive is involuntarily terminated. The Special Executive Severance Plan is also designed to reinforce and encourage the continued attention and dedication of senior executives of SunCoke Energy in the event of a possible major transaction. These plans are described in detail in the “Potential Payments upon Termination or Change in Control” section of this proxy statement.

Other SunCoke Energy Benefits

Our NEOs participate in the same basic benefits package and on the same terms as other eligible SunCoke Energy employees. The benefits package includes the savings program described above, as well as medical and dental benefits, disability benefits, insurance (life and travel), death benefits and vacations and holidays.

Assessment of Risk Related to Compensation Practices

In February 2020, our Compensation Committee, in consultation with CAP, considered whether our compensation policies and practices for our employees, including the NEOs, were reasonably likely to have a material adverse effect on SunCoke Energy. In concluding that this was not the case, the Compensation Committee determined that our executive compensation program was consistent with SunCoke Energy’s risk management strategies. In the case of employees below the Senior Vice President level, salary is generally a significant portion of their compensation. In the case of the NEOs, annual cash incentive compensation awards were based on four different corporate metrics (which limited excessive reliance on any one metric), target goals were set at appropriate levels and payments were capped at 200% of an individual target. Long-term incentive awards, which consist of restricted share units and performance share units, contain multi-year vesting periods, thus promoting employee retention and aligning management’s interest with those of our shareholders. Our stock ownership requirements help further align the interests of executives with those of shareholders.

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Accounting and Tax Considerations

While the tax impact of any compensation arrangement is one factor to be considered, such impact is evaluated in light of the Company’s overall compensation philosophy and objectives. The Company believes that maintaining the discretion to evaluate the performance of executive officers is an important part of the Company’s responsibilities and benefits public shareholders, and therefore, the Company may award compensation to the Named Executive Officers that is not fully deductible if it is determined that such compensation is consistent with the Company’s compensation philosophy and benefits shareholders.

Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments, and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is the Company’s intention to design and administer its compensation and benefits plans and arrangements for all employees and other service providers, including the executive officers, so that they are either exempt from, or satisfy the requirements of, section 409A of the Code.

Any equity awards granted to our employees, including executive officers, pursuant to the LTPEP are reflected in the Company’s consolidated financial statements, based upon the applicable accounting guidance, at fair market value on the grant date in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification, Topic 718, “Compensation --Stock Compensation.”

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CEO Pay Ratio

As provided for by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC requires companies to disclose the ratio of the median employee’s total annual compensation relative to total annual compensation of the CEO. As disclosed in the “Summary Compensation Table”, the 2020 total annual compensation for our CEO was $4,013,702. We estimate that the 2020 total annual compensation for the median employee out of all our employees, excluding our CEO, that would be reportable in the Summary Compensation Table, was $82,161. The resulting ratio of our CEO’s total annual compensation to that of the median employee, excluding our CEO, for 2020 is approximately 49 to 1.

The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s total annual compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

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