Edgar Filing: CLIFFS NATURAL RESOURCES INC.

CLF 2015 DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment __)



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CLIFFS NATURAL RESOURCES INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)



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April 7, 2015

Dear Fellow Shareholder,

This past year has been a defining period for Cliffs. The majority of our shareholders cast their votes for change at the July 2014 annual meeting and thus brought to an end a flawed corporate strategy that cost Cliffs’ shareholders a lot of capital with little to no returns. Since I took office in August of 2014, with the full support of a newly elected Board and a management team with a renewed sense of accountability, we have been working hard. Our focus has been to strengthen the overall financial profile of the company through measured actions to reduce debt, decrease overall spending and exit non-performing operations. In short, our strategy is clear and our priorities are aligned with the interests of our shareholders.

I can assure you that the entire management team will continue to take all necessary actions to get Cliffs on a consistently profitable path. We are executing a plan that will fortify the foundation of our U.S. Iron Ore business, while streamlining our portfolio of assets and allocating our capital in a much more disciplined manner. By refocusing on the same core strengths that have made Cliffs so resilient for over 160 years, we enter 2015 as a stronger company committed to being the major supplier of valued-added iron ore pellets to the North American steel industry.

We have the discipline to get our plan completely implemented. As stewards of the company and its assets, we are fully committed to acting in the best interests of all Cliffs’ shareholders. The accomplishments achieved during 2014 will drive us toward being a nimbler and more profitable company, well positioned to deliver strong results in 2015 and beyond.

Thank you very much for your great support.

Sincerely,

Lourenco Goncalves

Chairman, President & Chief Executive Officer



	NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held on May 19, 2015

11:30 a.m. EDT

North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114

To the Shareholders of Cliffs Natural Resources Inc.:

The 2015 Annual Meeting of Shareholders of Cliffs Natural Resources Inc., or Cliffs, will be held at North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114 at 11:30 a.m., EDT, on Tuesday, May 19, 2015 for the following purposes:


1.	To elect nine directors to act until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified;


2.	To approve, on an advisory basis, our named executive officers' compensation;


3.	To approve Cliffs' 2015 Equity and Incentive Compensation Plan;


4.	To approve Cliffs' 2015 Employee Stock Purchase Plan;


5.	To ratify the appointment of Deloitte & Touche LLP as Cliffs' independent registered public accounting firm to serve for the 2015 fiscal year; and


6.	To transact such other business, if any, as may properly come before the 2015 Annual Meeting or any adjournment thereof.

In order to vote on the matters brought before the 2015 Annual Meeting, you may complete and mail the proxy card, vote by telephone or vote on the Internet, as explained on the proxy card. Holders of record of Cliffs' common shares or of our depositary shares, each of which represents 1/40^th of a share of our 7.00% Series A mandatory convertible preferred stock, Class A at the close of business on March 23, 2015 are entitled to notice of, and to vote at, the 2015 Annual Meeting or any adjournments thereof.

By Order of the Board of Directors

James D. Graham

Executive Vice President, Chief Legal Officer & Secretary

April 7, 2015

Cleveland, Ohio

YOUR VOTE IS IMPORTANT. YOU CAN VOTE BY TELEPHONE, BY INTERNET,
BY MAILING THE ENCLOSED PROXY CARD OR BY BALLOT IN PERSON AT THE 2015 ANNUAL MEETING.
The proxy statement and Cliffs’ 2014 Annual Report for the 2014 fiscal year are available at www.proxyvote.com
These materials also are available on Cliffs’ Investor Relations website at http://ir.cliffsnaturalresources.com under “Financial Information,” then “Proxy Materials.” If your shares are not registered in your own name, please follow the voting instructions from your bank, broker, trustee, nominee or other shareholder of record to vote your shares and, if you would like to attend the 2015 Annual Meeting, please bring evidence of your share ownership with you. You should be able to obtain evidence of your share ownership from the bank, broker, trustee, nominee or other shareholder of record that holds the shares on your behalf.



	PROXY STATEMENT TABLE OF CONTENTS



PROXY SUMMARY	1
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING	3
MEETING INFORMATION	4
CORPORATE GOVERNANCE	6
Board Leadership Structure	6
Board’s Role in Risk Oversight	6
Board Meetings and Committees	7
Identification and Evaluation of Director Candidates	9
Communications With Directors	9
Business Ethics Policy	9
Independence and Related Party Transactions	10
DIRECTOR COMPENSATION	11
Director Compensation for 2014	12
PROPOSAL 1 - ELECTION OF DIRECTORS	13
Information Concerning Director Nominees	14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	17
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY	18
COMPENSATION DISCUSSION AND ANALYSIS	20
Executive Summary	20
2014 Leadership Transitions	21
Results of the 2014 Say-On-Pay Vote	22
Executive Compensation Philosophy and Core Principles	24
Oversight of Executive Compensation	25
Analysis of 2014 Compensation Decisions	28
Retirement and Deferred Compensation Benefits	34
Supplementary Compensation Policies	35



COMPENSATION COMMITTEE REPORT	38
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	38
COMPENSATION-RELATED RISK ASSESSMENT	38
EXECUTIVE COMPENSATION	39
Executive Compensation Tables	39
Potential Payments Upon Termination or Change in Control	47
PROPOSAL 2 - APPROVE, ON AN ADVISORY BASIS, OUR NAMED EXECUTIVE OFFICERS' COMPENSATION	53
PROPOSAL 3 - APPROVE THE CLIFFS' 2015 EQUITY AND INCENTIVE COMPENSATION PLAN	54
PROPOSAL 4 - APPROVE THE CLIFFS' 2015 EMPLOYEE STOCK PURCHASE PLAN	67
EQUITY COMPENSATION PLAN INFORMATION	72
AUDIT COMMITTEE REPORT	73
PROPOSAL 5 - RATIFICATION OF INDEPENDENT REGISTERED ACCOUNTING FIRM	74
INFORMATION ABOUT SHAREHOLDER PROPOSALS AND COMPANY DOCUMENTS	75
OTHER INFORMATION	75
ANNEXES
ANNEX A - Cliffs Natural Resources Inc. 2015 Equity and Incentive Compensation Plan	A-1
ANNEX B - Cliffs Natural Resources Inc. 2015 Employee Stock Purchase Plan	B-1
ANNEX C - Use of Non-GAAP Financial Measures	C-1



	PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information.



2015 ANNUAL MEETING OF SHAREHOLDERS (page 4)
Date and Time:	Tuesday, May 19, 2015 at 11:30 a.m. EDT
Place:	North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114
Record Date:	March 23, 2015
Voting:	Shareholders of record are entitled to vote by Internet at www.proxyvote.com; telephone at 1-800-690-6903; completing and returning the enclosed proxy card by mail; or attending the 2015 Annual Meeting of Shareholders (the "2015 Annual Meeting") in person (beneficial holders must obtain a legal proxy from their broker, banker, trustee, nominee or other shareholder of record granting the right to vote).
Mailing:	This proxy statement, the accompanying proxy card and our 2014 Annual Report will be mailed on or about April 7, 2015 to our shareholders of record as of the Record Date.



VOTING MATTERS (page 4)	Board Vote Recommendation	Page Reference (for more detail)
Election of Directors	FOR each Director Nominee	13
Approval of, on an Advisory Basis, our Named Executive Officers' Compensation	FOR	53
Approval of Cliffs' 2015 Equity and Incentive Compensation Plan	FOR	54
Approval of Cliffs' 2015 Employee Stock Purchase Plan	FOR	67
Ratification of Independent Registered Public Accounting Firm	FOR	74

SAY-ON-PAY IMPLICATIONS (page 22)

At our 2014 Annual Meeting of Shareholders, only 56.1% of our voting shareholders voted in favor of our annual advisory vote on our Named Executive Officers' compensation, commonly referred to as “Say-on-Pay”. These results reflected the concern our shareholders had with our programs prior to the replacement of a majority of our directors in August 2014. Actions taken to address these concerns are outlined in the Compensation Discussion and Analysis section of this proxy statement.



DIRECTOR NOMINEES RECOMMENDED BY THE CLIFFS BOARD OF DIRECTORS (page 14)
Name	Age	Director Since	Experience/ Qualification	Independent (Yes / No)	Committee Memberships (1)	Other Current Public Directorships
John T. Baldwin	58	2014	Former Chairman of Audit Committee & CFO	Yes	• Audit*
Robert P. Fisher, Jr.	60	2014	President & CEO	Yes	• Audit • Compensation*
Lourenco Goncalves	57	2014	Chairman, President & CEO	No	• Strategy*	American Iron and Steel Institute
Susan M. Green	55	2007	Deputy General Counsel, U.S. Congressional Office of Compliance	Yes	• Governance
Joseph A. Rutkowski, Jr.	60	2014	Principal & Former Executive Vice President	Yes	• Compensation • Strategy
James S. Sawyer	58	2014	Former CFO	Yes	• Audit
Michael D. Siegal	62	2014	Chairman & CEO	Yes	• Governance	Olympic Steel, Inc.
Gabriel Stoliar	61	2014	Managing Partner & Chairman	Yes	• Governance • Strategy	Tupy S.A.
Douglas C. Taylor	50	2014	Managing Partner	Yes	• Governance* • Compensation
* denotes committee chair (1) Full committee names are: Audit - Audit Committee; Compensation - Compensation and Organization Committee; Governance - Governance and Nominating Committee; Strategy - Strategy Committee.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 1

EXECUTIVE COMPENSATION PHILOSOPHY AND CORE PRINCIPLES (page 24)

Our guiding compensation principles for 2014, as established by the Compensation and Organization Committee that existed prior to August 7, 2014, were as follows:


•	Align short-term and long-term incentives with results delivered to shareholders;

•

Design a simple and transparent incentive plan that focuses on absolute performance objectives tied to our business plan (including profitability-related and cost control objectives), relative performance objectives tied to market conditions (including relative total shareholder return, measured by share price appreciation plus dividends, if any), and performance against other key objectives tied to our business strategy (including safety, protection of our core assets and Selling, General & Administrative cost control);


•	Provide competitive fixed compensation elements over the short-term (base salary) and long-term (equity and retirement benefits) to encourage long-term retention of our key executives; and


•	Structure programs to align with corporate governance best practices (for example, elimination of gross-ups related to change in control payments, conversion to double-trigger change in control equity vesting for future equity awards, use of share ownership guidelines and adoption of a clawback policy related to incentive compensation for our executive officers).

2014 EXECUTIVE COMPENSATION SUMMARY (page 39)

The numbers in the following table showing the 2014 compensation of our named executive officers were determined in the same manner as the numbers in the corresponding columns in the 2014 Summary Compensation Table (provided later in this proxy statement); however, they do not include information regarding changes in pension value and non-qualified deferred compensation earnings and information regarding all other compensation, each as required to be presented in the 2014 Summary Compensation Table under the rules of the U.S. Securities and Exchange Commission (the "SEC"). As such, this table should not be viewed as a substitute for the 2014 Summary Compensation Table:



Name	Principal Position (as of December 31, 2014)	Salary ($)		Bonus ($)	Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)	Total (3) ($)
Lourenco Goncalves	Chairman, President & CEO	482,308	(1)	1,200,000	4,244,000	(2)	3,457,500	(2)	—	9,383,808
Terrance M. Paradie	Executive Vice President, Chief Financial Officer & Treasurer	488,750		—	1,374,077		—		404,000	2,266,827
P. Kelly Tompkins	Executive Vice President, Business Development	513,750		—	838,310		—		499,000	1,851,060
Clifford T. Smith	Executive Vice President, Seaborne Iron Ore	385,000		—	1,061,179		—		312,000	1,758,179
David L. Webb	Executive Vice President, Global Coal	387,500		—	1,061,179		—		312,000	1,760,679
Gary B. Halverson	Former President & CEO	572,436		—	3,281,507		—		—	3,853,943
James F. Kirsch	Former Executive Chairman	520,660		744,000	1,627,090		—		—	2,891,750
(1) Mr. Goncalves' salary was prorated to his hire date of August 7, 2014.
(2) Mr. Goncalves' performance-based restricted share units and stock option awards, which are the largest component of his compensation, are wholly dependent on our future share price. These awards only have value if our share price increases.
(3) The amounts for Messrs. Halverson and Kirsch reflect their actual length of service during 2014; however, this table does not include severance-related payments.

AUDITORS (page 74)

As a matter of good corporate governance, we are asking our shareholders to ratify the selection of Deloitte & Touche LLP as our independent auditor for 2015.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 2



	QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

1. What proposals are to be presented at the 2015 Annual Meeting?

The purpose of the 2015 Annual Meeting is to: (1) elect nine directors; (2) approve, on an advisory basis, Cliffs’ named executive officers' compensation; (3) approve Cliffs' 2015 Equity and Incentive Compensation Plan; (4) approve Cliffs' 2015 Employee Stock Purchase Plan; (5) ratify the appointment of Deloitte & Touche LLP as Cliffs’ independent registered public accounting firm to serve for the 2015 fiscal year; and (6) conduct such other business as may properly come before the 2015 Annual Meeting.


2.	What is the difference between a “shareholder of record” and a “beneficial owner"?

These terms describe the manner in which your shares are held. If your shares are registered directly in your name through Wells Fargo Shareowner Services, our transfer agent, you are a “shareholder of record” or registered holder. If your shares are held through a bank, broker, nominee or other shareholder of record, you are considered the “beneficial owner” of those shares.

3. How does the Cliffs Board recommend that I vote?

The Cliffs Board of Directors (the "Board") unanimously recommends that you vote:


•	FOR ALL of the nine individuals nominated by the Cliffs Board for election as directors;


•	FOR the approval, on an advisory basis, of Cliffs' named executive officers' compensation;


•	FOR the approval of Cliffs' 2015 Equity and Incentive Compensation Plan;


•	FOR the approval of Cliffs' 2015 Employee Stock Purchase Plan; and


•	FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2015 fiscal year.

4. Who is entitled to vote at the 2015 Annual Meeting?

The Record Date for the 2015 Annual Meeting is March 23, 2015. On that date, we had outstanding 153,279,552 common shares, $0.125 par value, and 731,223 shares of our 7.00% Series A mandatory convertible preferred stock, Class A, no par value (the "mandatory convertible preferred stock"), which are represented by 29,248,925 depositary shares (each of which represents 1/40^th of a share of our mandatory convertible preferred stock). All common shareholders and mandatory convertible preferred stock shareholders are entitled to vote. In this proxy statement, we refer to our common shares and our mandatory convertible preferred stock, collectively, as our "shares" and the holders of such shares as our "shareholders."

5. How do I vote?

You may vote using any of the following methods:

Shareholders of Record. If your shares are registered in your name, you may vote in person or by proxy. If you decide to vote by proxy, you may do so over the Internet, by telephone or by mail.


•	Over the Internet. After reading the proxy materials and with your proxy card in front of you, you may use a computer to access the website www.proxyvote.com. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.


•	By telephone. After reading the proxy materials and with your proxy card in front of you, you may call the toll-free number appearing on the proxy card, using a touch-tone telephone. You will be prompted to enter your control number from your proxy card. This number will identify you as a shareholder of record. Follow the simple instructions that will be given to you to record your vote.


•	By mail. If you received a paper copy of the proxy card by mail, after reading the proxy materials, you may mark, sign and date your proxy card and return it in the prepaid and addressed envelope provided.

The Internet and telephone voting procedures have been set up for your convenience and have been designed to authenticate your identity, allow you to submit voting instructions and confirm that those instructions have been recorded properly.

Shares Held by Bank or Broker. If your shares are held by a bank, broker, depositary, trustee or some other nominee, that entity will provide separate voting instructions. All nominee share interests may view the proxy materials using the link www.proxyvote.com.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 3

QUESTIONS & ANSWERS

If your shares are held in the name of a brokerage firm, your shares may be voted even if you do not provide the brokerage firm with voting instructions. Brokerage firms have the authority under applicable rules to vote shares for which their customers do not provide voting instructions on certain “routine” matters. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is referred to as a “broker non-vote.” The ratification of Deloitte & Touche LLP as our registered independent public accounting firm is the only routine matter for which the brokerage firm that holds your shares may vote your shares without your instructions.

6. What can I do if I change my mind after I vote?

You may revoke your proxy at any time before the vote by (i) executing and submitting a revised proxy bearing a later date; (ii) providing a written revocation to the Secretary of Cliffs; or (iii) voting in person at the 2015 Annual Meeting. If you do not hold your shares directly, you should follow the instructions provided by your broker, bank or nominee to revoke your previously voted proxy.

7. What vote is required to approve each proposal?

With respect to Proposal 1, the nominees receiving a plurality vote of the shares will be elected. However, under our majority voting policy (adopted by the Board) in an uncontested election, any director-nominee that is elected by a plurality vote but fails to receive a majority of votes cast (which excludes abstentions and broker non-votes) is expected to tender his or her resignation, which resignation will be considered by the Governance and Nominating Committee and our Board.

With respect to Proposal 2, the approval, on an advisory basis, of our named executive officers' compensation requires the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2015 Annual Meeting and entitled to vote on the proposal.

With respect to Proposal 3, approval of Cliffs' 2015 Equity and Incentive Compensation Plan will pass with the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2015 Annual Meeting and entitled to vote on the proposal, provided that a majority of votes cast on this proposal are cast in favor of the proposal.

With respect to Proposal 4, approval of Cliffs' 2015 Employee Stock Purchase Plan will pass with the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2015 Annual Meeting and entitled to vote on the proposal.

With respect to Proposal 5, the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the 2015 fiscal year will pass with the affirmative vote of a majority of the shares present, in person or represented by proxy, at the 2015 Annual Meeting and entitled to vote on the proposal.



	MEETING INFORMATION

The accompanying proxy is solicited by the Board of Directors of Cliffs Natural Resources Inc. ("Cliffs" or the "Company"), for use at the Annual Meeting of Shareholders to be held on May 19, 2015, (the "2015 Annual Meeting"), and any adjournments or postponements thereof. This proxy statement, the accompanying proxy card and our 2014 Annual Report will be mailed on or about April 7, 2015 to our shareholders of record as of the Record Date.

PROXY MATERIALS

Notice of Internet Availability of Proxy Materials

In accordance with rules adopted by the SEC, we are using the Internet as our primary means of furnishing proxy materials to our shareholders. Accordingly, most shareholders will not receive paper copies of our proxy materials.

We will instead send our shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials and voting electronically over the Internet or by telephone, also known as Notice and Access. The notice also provides information on how shareholders may request paper copies of our proxy materials. We believe electronic delivery of our proxy materials will help us reduce the environmental impact and costs of printing and distributing paper copies and improve the speed and efficiency by which our shareholders can access these materials.

On or about April 7, 2015, the Company will mail to each shareholder (other than those shareholders who previously had requested paper delivery of proxy materials) a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review the proxy materials, including the Company’s 2015 Proxy Statement and the 2014 Annual Report on Form 10-K filed with the SEC, on the Internet and how to access a proxy card to vote on the Internet or by telephone.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 4

MEETING INFORMATION

The close of business on March 23, 2015 has been fixed as the record date of the 2015 Annual Meeting, and only shareholders of record at that time will be entitled to vote.

The Notice of Internet Availability will contain a 12-digit control number that recipients will need to access the proxy materials, to request paper or email copies of the proxy materials, and to vote their shares via the Internet or by telephone.

Householding

We are permitted to send a single set of proxy materials to shareholders who share the same last name and address. This procedure is called “householding” and is designed to reduce our printing and postage costs. If you are the beneficial owner, but not the record holder, of Cliffs shares, your broker, bank or other nominee may only deliver one set of proxy materials and, as applicable, any other proxy materials that are delivered until such time as you or other shareholders sharing an address notify your nominee that you want to receive separate copies. A shareholder who wishes to receive a separate copy of the proxy statement and annual report, either now or in the future, should submit this request by writing to our Secretary at Cliffs Natural Resources Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114, or calling our Investor Relations department at (800) 214-0739, and they will be delivered promptly. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all shareowners at the shared address in the future.

Proxy Solicitation

Cliffs will bear the cost of solicitation of proxies. We have engaged Okapi Partners LLC to assist in the solicitation of proxies for fees and disbursements not expected to exceed $13,000 in the aggregate. In addition, employees and representatives of the Company may solicit proxies, and we will request that banks and brokers or other similar agents or fiduciaries transmit the proxy materials to beneficial owners for their voting instructions and we will reimburse them for their expenses in so doing.

Voting Rights

Shareholders of record on the Record Date are entitled to vote at the 2015 Annual Meeting. On the Record Date, there were outstanding 153,279,552 common shares and 731,223 shares of our mandatory convertible preferred stock, which are represented by 29,248,925 depositary shares (each of which represents 1/40^th of a share of our mandatory convertible preferred stock), entitled to vote at the 2015 Annual Meeting. The common shares and mandatory convertible preferred stock will vote together as a single class. A majority of the common shares and shares of mandatory convertible preferred stock entitled to vote must be represented at the 2015 Annual Meeting, in person or by proxy, to constitute a quorum and to transact business. Each outstanding share is entitled to one vote in connection with each item to be acted upon at the 2015 Annual Meeting. You may submit a proxy by electronic transmission through the Internet, by telephone or by mail, as explained on your proxy card.

Because each depositary share represents a 1/40^th interest in a share of the mandatory convertible preferred stock, holders of depositary shares are entitled to the equivalent of 1/40^th of a vote of a share of our mandatory convertible preferred stock per depositary share. Wells Fargo Bank, N.A. acts as the bank depositary with respect to the depositary shares. The bank depositary will provide the notice of the 2015 Annual Meeting to the record holders of the depositary shares. Each record holder of depositary shares on the Record Date may instruct the bank depositary as to how to vote the amount of our mandatory convertible preferred stock represented by such holder’s depositary shares in accordance with these instructions. The bank depositary will endeavor, insofar as practicable, to vote the amount of our mandatory convertible preferred stock represented by such depositary shares in accordance with these instructions. The bank depositary will abstain from voting shares of our mandatory convertible preferred stock to the extent it does not receive specific instructions from the holders of depositary shares.

Voting of Proxies

The common shares and shares of mandatory convertible preferred stock represented by properly authorized proxies will be voted as specified. It is intended that the shares represented by proxies on which no specification has been made will be voted: FOR ALL of the nine nominees for director named herein or such substitute nominees as the Board may designate; FOR the approval, on an advisory basis, of our named executive officers' compensation; FOR Cliffs' 2015 Equity and Incentive Compensation Plan; FOR Cliffs' 2015 Employee Stock Purchase Plan; FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting firm to serve for the 2015 fiscal year; and, at the discretion of the persons named as proxies, on all other matters that may properly come before the 2015 Annual Meeting.

Cumulative Voting for Election of Directors

If notice in writing shall be given by any shareholder to the President, an Executive Vice President or the Secretary of the Company, not less than 48 hours before the time fixed for the holding of the 2015 Annual Meeting, that such shareholder desires that the voting for the election of directors shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the 2015 Annual Meeting by the Chairman or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 5

MEETING INFORMATION

voting power as he or she possesses at such election. Under cumulative voting, a shareholder may cast for any one nominee as many votes as shall equal the number of directors to be elected, multiplied by the number of his or her shares. All such votes may be cast for a single nominee or may be distributed among any two or more nominees as he or she may desire. If cumulative voting is invoked, and unless contrary instructions are given by a shareholder who signs a proxy, all votes represented by such proxy will be cast in such manner and in accordance with the discretion of the person acting as proxy as will result in the election of as many of Cliffs’ Board’s nominees as is possible.

Counting Votes

The results of shareholder voting will be tabulated by the inspector of elections appointed for the 2015 Annual Meeting. We intend to treat properly authorized proxies as “present” for purposes of determining whether a quorum has been achieved at the 2015 Annual Meeting.

Abstentions and broker non-votes will have no effect with respect to the election of directors. Abstentions will have the effect of votes against, and broker non-votes will have no effect, with respect to the advisory vote regarding the compensation of our named executive officers and with respect to the proposals to approve Cliffs' 2015 Equity and Incentive Compensation Plan and Cliffs' 2015 Employee Stock Purchase Plan. Abstentions will have the effect of votes against with respect to the ratification of Deloitte & Touche LLP as our independent registered public accounting firm.



	CORPORATE GOVERNANCE

BOARD LEADERSHIP STRUCTURE

The Company's leadership structure changed over the past year. From July 2013 to July 2014 the roles of the Chairman and Chief Executive Officer, or CEO, were separated and filled by two separate people. The Board believed this governance framework was appropriate at the time due to the transition of our CEO and other executive management departures during 2014. As a result of the July 2014 proxy contest and the vote of our shareholders, a majority of the directors on the Cliffs Board were replaced. The reconstituted Board appointed Lourenco Goncalves as our Chairman, President and CEO, and the roles were once again combined.

Pursuant to our Corporate Governance Guidelines, when the positions of Chairman and CEO are held by one individual or if the Chairman is a Cliffs’ executive, then the Governance and Nominating Committee recommends to the Board a Lead Director. Douglas C. Taylor currently serves as our Lead Director. The Board believes that this leadership structure is the optimal structure to guide our Company and re-focus strategy to achieve our business goals and represents our shareholders' interests.

Under this leadership structure, Mr. Goncalves, as Chairman, is responsible for overseeing and facilitating communications between our management and the Board, for setting the meeting schedules and agendas, and leading Board discussions during Board meetings. In his combined role, Mr. Goncalves has the benefit of Cliffs’ personnel to help with extensive meeting preparation, responsibility for the process of recordkeeping of all Board deliberations, and the benefit of direct daily contact with management and the internal audit department. The Chairman works closely with the Lead Director in setting meeting agendas and in ensuring that essential information is communicated effectively to the Board.

The Lead Director’s responsibilities include: chairing executive session meetings of the independent directors; leading the Board’s processes for evaluating the CEO; presiding at all meetings of the Board at which the Chairman is not present; serving as a liaison between the Chairman and the independent directors; and meeting separately at least annually with each director.

This leadership structure provides our Chairman with the readily available resources to manage the affairs of the Board while allowing our Lead Director to provide effective and timely advice and guidance. Our governance process is based on our Corporate Governance Guidelines, which are available on our website at http://www.cliffsnaturalresources.com.

In accordance with the New York Stock Exchange’s (the "NYSE"), corporate governance listing standards, our non-management directors meet at regularly scheduled executive sessions without management present.

BOARD'S ROLE IN RISK OVERSIGHT

The Board as a whole oversees our enterprise risk management, or ERM, process. The Board executes its risk oversight role in a variety of manners. The full Board regularly discusses the key strategic risks facing Cliffs, and the Board has an annual meeting devoted to strategic planning, including discussion of Cliffs’ principal strategic risks.

In addition, the Board delegates oversight responsibility for certain areas of risk to its committees. Generally, each committee oversees risks that are associated with the purpose of and responsibilities delegated to that committee. For example, the Audit Committee oversees risks

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 6

CORPORATE GOVERNANCE

related to accounting and financial reporting. In addition, pursuant to its charter, the Audit Committee periodically reviews our ERM process. The Strategy Committee addresses risk exposures related to the strategic plan, including financial, economic, reputational and hazard risks. The Compensation Committee monitors risks related to development and succession planning for executive officers, and compensation and related policies and programs for executive and non-executive officers and management. The Governance and Nominating Committee handles risks with respect to board organization, membership and structure, director succession planning and corporate governance matters. As appropriate, the respective committees’ Chairpersons provide reports to the full Board.

Through the ERM process, management is responsible for the day-to-day management of Cliffs’ risks. The ERM process includes the involvement of management in the identification, assessment, mitigation and monitoring of a wide array of potential risks from strategic to operational to compliance related risks throughout the Company. Executive management regularly reports to the Board or relevant committees regarding Cliffs’ key risks and the actions being taken to manage these risks.

The Company believes that its leadership structure supports the risk oversight function of the Board. Except for the Strategy Committee, independent directors chair our committees, which are each involved with risk oversight, and all directors actively participate in the Board’s risk oversight function.

BOARD MEETINGS AND COMMITTEES

Our directors discharge their responsibilities in a variety of ways, including reviewing reports to directors, visiting our facilities, corresponding with the Chairman, President and CEO, and conducting telephone conferences with the Chairman, President and CEO and directors regarding matters of interest and concern to Cliffs. In addition, directors have regular access to senior management of Cliffs. All committees regularly report their activities, actions and recommendations to the Cliffs Board.

During 2014, our Board held 12 in person meetings and 20 telephonic meetings. Each director attended, either in person or by telephone conference, at least 92% of the Board and committee meetings held while serving as a director or committee member in 2014. Pursuant to Board policy, all serving directors are expected to attend all Board and committee meetings, as well as our annual meetings of shareholders. All of our directors who were standing for re-election and were incumbent directors at the time of the 2014 Annual Meeting attended the meeting.

The Board of Directors currently has four standing committees: an Audit Committee, a Compensation and Organization Committee (the "Compensation Committee"), a Governance and Nominating Committee and a Strategy Committee. Audit Committee, Compensation Committee and Governance and Nominating Committee each have a charter which can be found on our website at http://ir.cliffsnaturalresources.com under “Corporate Governance” then “Committees”. A biographical overview of the members of our committees can be found beginning on page 14.

Board Committees



AUDIT COMMITTEE	Members: 3
	Independent: 3
	Audit Committee Financial Experts: 2
	2014 Meetings: 10
	Responsibilities:
	▪ Reviews with our management, the internal auditors and the independent registered public accounting firm, the adequacy and effectiveness of our system of internal control over financial reporting ▪ Reviews significant accounting matters ▪ Reviews quarterly unaudited financial information prior to public release ▪ Approves the audited financial statements prior to public distribution ▪ Approves our assertions related to internal controls prior to public distribution ▪ Reviews any significant changes in our accounting principles or financial reporting practices; reviews, approves and retains the services performed by our independent registered public accounting firm ▪ Has the authority and responsibility to evaluate our independent registered public accounting firm; discusses with the independent registered public accounting firm their independence and considers the compatibility of non-audit services with such independence ▪ Annually selects and retains our independent registered public accounting firm to examine our financial statements ▪ Approves management’s appointment, termination or replacement of the Director - Internal Audit ▪ Conducts a legal compliance review at least annually
Chairman: John T. Baldwin	Members: Robert P. Fisher, Jr. and James S. Sawyer

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 7

CORPORATE GOVERNANCE



GOVERNANCE & NOMINATING COMMITTEE	Members: 4
	Independent: 4
	2014 Meetings: 4
	Responsibilities:
	▪ Involved in determining director compensation and reviews and administers our director compensation plans ▪ Monitors the Board governance process and provides counsel to the CEO on Board governance and other matters ▪ Recommends changes in membership and responsibility of Board committees ▪ Acts as the Board’s Nominating Committee and Proxy Committee in the election of directors ▪ Reviews and administers our director compensation plans, and makes recommendations to the Board with respect to compensation plans and equity-based plans for directors ▪ Annually reviews director compensation in relation to comparable companies and other relevant factors
Chairman: Douglas C. Taylor	Members: Susan M. Green, Michael D. Siegal and Gabriel Stoliar



COMPENSATION & ORGANIZATION COMMITTEE	Members: 3
	Independent: 3
	2014 Meetings: 9
	Responsibilities:
	▪ Recommends to the Cliffs Board the election and compensation of officers ▪ Administers our executive compensation plans for officers ▪ Reviews management development ▪ Evaluates the performance of the CEO and the other executive officers ▪ Obtains the advice of outside experts with regard to compensation matters ▪ May, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee
Chairman: Robert P. Fisher, Jr.	Members: Joseph A. Rutkowski, Jr. and Douglas C. Taylor



STRATEGY COMMITTEE	Members: 3
	Independent: 2
	2014 Meetings: 2
	Responsibilities:
	▪ Oversees Cliffs’ strategic plan, annual management objectives and operations and to oversee and monitor risks relevant to its strategy ▪ Provides advice and assistance with developing our current and future strategy ▪ Provides follow up oversight with respect to the comparison of actual results with estimates for major projects and post-deal integration ▪ Ensures that Cliffs has appropriate strategies for managing exposures to economic and hazard risks ▪ Assesses Cliffs’ overall capital structure and its capital allocation priorities ▪ Assists management in determining the resources necessary to implement Cliffs’ strategic and financial plans; monitors the progress and implementation of Cliffs' strategy
Chairman: Lourenco Goncalves	Members: Joseph A. Rutkowski, Jr. and Gabriel Stoliar

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CORPORATE GOVERNANCE

IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES

Shareholder Nominees

The policy of the Governance and Nominating Committee is to consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Identifying and Evaluating Nominees for Directors.” In evaluating nominations, the Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and capability on the Cliffs Board and to address the membership criteria set forth below under “Board Diversity and Director Qualifications.” Any shareholder nominations proposed for consideration by the Governance and Nominating Committee should include: (i) complete information as to the identity and qualifications of the proposed nominee, including name, address, present and prior business and/or professional affiliations, education and experience, and particular fields of expertise; (ii) an indication of the nominee’s consent to serve as a director if elected; and (iii) the reasons why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a director. Shareholder nominations should be addressed to Cliffs Natural Resources Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114-2315, Attention: Secretary. Our Regulations provide that at any meeting of shareholders at which directors are to be elected, only persons nominated as candidates will be eligible for election.

Board Diversity and Director Qualifications

Although there is no specific board diversity policy in place presently, the Governance and Nominating Committee does consider such factors as it deems appropriate and consistent with our Corporate Governance Guidelines, the charter of the Governance and Nominating Committee and other criteria established by the Cliffs Board, which includes diversity. The Governance and Nominating Committee’s goal in selecting directors for nomination to the Cliffs Board generally is to seek to create a well-balanced team that combines diverse experience, skill and intellect of seasoned directors in order to enable us to pursue our strategic objectives. The Governance and Nominating Committee has not reduced the qualifications for service on the Cliffs Board to a checklist of specific standards or minimum qualifications, skills or qualities. Rather, the Governance and Nominating Committee seeks, consistent with the vacancies existing on the Cliffs Board at any particular time and the interplay of a particular candidate’s experience with the experience of other directors, to select individuals whose business experience, knowledge, skills, diversity and integrity would be considered a desirable addition to our Board and any committees thereof. In addition, the Governance and Nominating Committee annually conducts a review of incumbent directors in order to determine whether a director should be nominated for re-election to the Cliffs Board.

Identifying and Evaluating Nominees for Directors

The Governance and Nominating Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Governance and Nominating Committee regularly reviews the appropriate size of the Cliffs Board and whether any vacancies on the Cliffs Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Governance and Nominating Committee considers various potential candidates for director. Applicable considerations include: whether the current composition of the Cliffs Board is consistent with the criteria described in our Corporate Governance Guidelines; whether the candidate submitted possesses the qualifications that generally are the basis for selection of candidates to the Cliffs Board; and whether the candidate would be considered independent under the rules of the NYSE and our standards with respect to director independence. Candidates may come to the attention of the Governance and Nominating Committee through current Board members, professional search firms, shareholders or other persons. As described above, the Governance and Nominating Committee considers properly submitted nominations for candidates for the Cliffs Board. Following verification of the recommending shareholder’s status, recommendations are considered by the Governance and Nominating Committee at its next regularly scheduled meeting. Final approval of any candidate is determined by the full the Cliffs Board.

COMMUNICATIONS WITH DIRECTORS

Shareholders and interested parties may communicate with the Lead Director, our non-management directors as a group or the Cliffs Board by writing to the Lead Director at Cliffs Natural Resources Inc., 200 Public Square, Suite 3300, Cleveland, Ohio 44114-2315. As set forth in the Corporate Governance Guidelines, the Lead Director will report to the full Board any communications that are directed at all members of the Cliffs Board. The Secretary routinely filters communications that are solicitations or complaints, unrelated to Cliffs or Cliffs' business or determined to pose a possible security risk to the addressee.

BUSINESS ETHICS POLICY

We have adopted a Code of Business Conduct and Ethics, or Ethics Code, which applies to all of our directors, officers and employees. The Ethics Code is available on our website at http://cliffsnaturalresources.com in the Corporate Governance section under "Investors." We intend to post amendments to or waivers from our Ethics Code (to the extent applicable to our principal executive officer, principal financial officer or principal accounting officer) on our website. Reference to our website and the contents thereof do not constitute incorporation by reference of the information contained on our website, and such information is not part of this proxy statement.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 9

CORPORATE GOVERNANCE

INDEPENDENCE AND RELATED PARTY TRANSACTIONS

Our Board has determined that each of the current directors standing for re-election, other than Mr. Goncalves, and all of the current members of the Audit, Governance and Nominating, and Compensation Committees, have no material relationship with us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) and is independent within the NYSE director independence standards. Earlier in 2014, the Board had also determined that Messrs. Eldridge, Gaumond, Gluski, Johnson, Riederer and Sullivan and Mses. Cunningham, Green and Henry, who served as directors during 2014, also had met these independence standards. The Board also determined that during the time that Mr. Kirsch served as our interim executive Chairman during 2014 he did not meet these independence standards. Mr. Goncalves is our Chairman, President & CEO, and, as such, is not considered independent.

Since January 1, 2014, there have been no transactions or currently proposed transactions, in which Cliffs was or is to be a participant and the amount exceeds $120,000, and in which any related person had or will have a direct or material interest. We recognize that transactions between us and any of our directors or executive officers can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our shareholders.

We have a written Related Party Transactions Policy, pursuant to which we only will enter into related party transactions if our CEO and Chief Legal Officer determine that the transaction is comparable to those that could be obtained in arm’s length dealings with an unrelated third party. If the transaction is approved by our CEO and Chief Legal Officer, then the transaction also must be approved by the disinterested members of our Audit Committee. For purposes of our policy, we define a related person as any person who is a director, executive officer, nominee for director or an immediate family member of a director, an executive officer or a nominee for director. We define a related party transaction as a transaction, agreement or relationship in which Cliffs was, is or will be a participant, the amount of the transaction exceeds $120,000, and a related person has or will have a direct or indirect material interest. However, compensation paid by Cliffs for service as a director or executive officer of the Company is not deemed to be a related party transaction, even if the aggregate amount involved exceeds $120,000. Under our policy, any related party transactions are reviewed by the Audit Committee at each quarterly committee meeting.

We have entered into indemnification agreements with each current member of the Board. The form and execution of the indemnification agreements were approved by our shareholders at the Annual Meeting convened on April 29, 1987. The indemnification agreements essentially provide that, to the extent permitted by Ohio law, we will indemnify the indemnitee against all expenses, costs, liabilities and losses (including attorneys’ fees, judgments, fines or settlements) incurred or suffered by the indemnitee in connection with any suit in which the indemnitee is a party or otherwise involved as a result of his or her service as a member of the Board. In connection with the indemnification agreements, we have a trust agreement with KeyBank National Association pursuant to which the parties to the indemnification agreements may be reimbursed with respect to enforcing their respective rights under the indemnification agreements.

In 2004, we reached an agreement with the United Steelworkers, or USW pursuant to which the USW may designate a member to the Board provided that the individual is acceptable to the Chairman, is recommended by the Board Affairs Committee (now known as the Governance and Nominating Committee), and is then approved by the full Board to be considered a director nominee. In 2007, Susan Green was first proposed by the USW, elected to the Board by Cliffs’ shareholders in July 2007, and re-elected in each of the years 2008 through 2013. As a result of the proxy contest in 2014, Ms. Green was not re-elected but was asked to re-join the Board and was subsequently appointed on October 15, 2014.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 10



	DIRECTOR COMPENSATION

The directors who are not Cliffs’ employees receive a combination of cash and equity compensation. The table below sets forth the cash compensation fee schedules for the nonemployee directors in 2014 and what currently is in effect for 2015. In addition, customary expenses for attending Board and committee meetings are reimbursed. Employee directors receive no additional compensation for their service as directors.



Board Form of Cash Compensation	2015 ($)	2014 ($)
Annual Retainer	100,000	100,000
Chairman (non-executive) of the Board Annual Retainer	N/A	500,000
Lead Director Annual Retainer	40,000	40,000
Audit Committee Chair Annual Retainer	20,000	20,000
Compensation and Organization Committee Chair Annual Retainer	12,500	12,500
Annual Retainers for Chairs of Governance and Nominating Committee and the former Strategy and Sustainability Committee	10,000	10,000

Equity Grants

During 2014 the directors’ annual equity grants were made under the Nonemployee Directors’ Compensation Plan (as Amended and Restated as of December 31, 2008) (the "2008 Plan") and under the 2014 Nonemployee Directors' Compensation Plan (the "Directors’ Plan"). Any directors who joined the Board after the 2014 Annual Meeting received a prorated award of restricted shares pursuant to the Directors’ Plan. Directors receive dividends on their annual equity grants and may elect that all cash dividends with respect to restricted shares be deferred and reinvested in additional common shares. Those additional common shares are subject to the same restrictions as the underlying award. Cash dividends not subject to a deferral election will be paid to the director without restriction.

Share Ownership Guidelines

We have established Director Share Ownership Guidelines and assess each director’s compliance with the guidelines in December of each year. The Director Share Ownership Guidelines require each director to hold or acquire common shares having a market value of at least $250,000 within five years of becoming a director. As of December 31, 2014, Mr. Taylor was the only director who was in compliance with the guidelines, but we note that all directors with the exception of Ms. Green are within the applicable timeframe to reach compliance.

Deferrals

The Directors’ Plan gives nonemployee directors the opportunity to defer all or a portion of their awards that are denominated or payable solely in shares. Deferred share accounts earn dividend equivalents at the end of each quarter based on any cash dividends we pay during the quarter, which dividend equivalents are credited to the accounts in the form of additional deferred shares. The amounts in the director’s deferral account together with any deferred dividends, will be paid to the director in the form elected after such director’s termination of service, death, or a change in control of Cliffs.

Cliffs has a trust agreement with KeyBank National Association relating to the Directors’ Plan in order to fund and pay our deferred compensation obligations under the Directors' Plan.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 11

DIRECTOR COMPENSATION FOR 2014

The following table, supported by the accompanying footnotes and the narrative above, sets forth for fiscal year 2014 all compensation earned by the individuals who served as our nonemployee directors at any time during 2014.



Name		Fees Earned or Paid in Cash ($) (1)	Stock Awards ($) (2)	All Other Compensation ($) (3)	Total ($)
J. T. Baldwin		34,946	77,315	610	112,871
S. M. Cunningham	(4)	100,000	—	1,784	101,784
B. J. Eldridge	(4)	107,500	—	1,486	108,986
R.P. Fisher, Jr.		44,939	85,000	671	130,610
M. E. Gaumond	(5)	100,000	—	1,326	101,326
A. R. Gluski	(6)	100,000	—	1,784	101,784
S. M. Green		121,196	68,699	2,326	192,221
J. K. Henry	(7)	145,000	—	1,784	146,784
S. M. Johnson	(8)	100,000	—	732	100,732
J. F. Kirsch	(9)	—	—	—	—	(10)
R. K. Riederer	(11)	107,500	—	—	107,500
J.A. Rutkowski, Jr.		39,946	85,000	671	125,617
J. S. Sawyer		39,946	85,000	671	125,617
M. D. Siegal		28,533	75,452	596	104,581
G. Stoliar		39,946	85,000	671	125,617
T. W. Sullivan	(12)	109,375	—	1,416	110,791
D. C. Taylor		60,027	85,000	671	145,698


(1)	The amounts listed in this column reflect the aggregate cash dollar value of all earnings in 2014 for annual retainer fees and chairman retainers.

(2)

The amounts reported in this column reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (or FASB) Accounting Standards Codification (or ASC) Topic 718 for the nonemployee directors’ annual equity awards of restricted shares granted during 2014, which awards are further described above, and whether or not deferred by the director. Due to limited share availability under the 2008 Plan our directors received the 2014 equity grants in two tranches in 2014. The grant date fair value of the nonemployee directors’ annual equity award on October 16, 2014 was $9.50 per share ($42,500) and on December 2, 2014 was $8.16 per share ($42,500). As of December 31, 2014, the aggregate number of restricted shares subject to forfeiture held by each nonemployee director was as follows: Mr. Baldwin - 8,806; Mr. Fisher - 9,682; Ms. Green - 7,825; Mr. Rutkowski - 9,682; Mr. Sawyer - 9,682; Mr. Siegal - 8,594; Mr. Stoliar - 9,682; and Mr. Taylor - 9,682.


(3)	These amounts reflect dividends earned in 2014 on restricted share awards.


(4)	Ms. Cunningham and Mr. Eldridge each served as a director until August 7, 2014.


(5)	Mr. Gaumond served as a director until September 12, 2014.


(6)	Mr. Gluski served as a director until August 7, 2014.


(7)	Ms. Henry served as a director until October 15, 2014.


(8)	Mr. Johnson served as a director until August 7, 2014.


(9)	Mr. Kirsch served as a director until August 7, 2014.


(10)	Please see a description of Mr. Kirsch's compensation located in the 2014 Summary Compensation Table on page 39.


(11)	Mr. Riederer served as a director until September 4, 2014.


(12)	Mr. Sullivan served as a director until August 11, 2014.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 12



	PROPOSAL 1		ELECTION OF DIRECTORS

The Board has nominated John T. Baldwin, Robert P. Fisher, Jr., Lourenco Goncalves, Susan M. Green, Joseph A. Rutkowski, Jr., James S. Sawyer, Gabriel Stoliar, Michael D. Siegal and Douglas C. Taylor to serve until the next Annual Meeting of Shareholders or until their successors shall be elected. All of the nominees are independent under the NYSE corporate governance rules, except for Mr. Goncalves. All of the nominees were elected by the shareholders at the Annual Meeting of Shareholders held on July 29, 2014, except for John T. Baldwin, Michael D. Siegal and Susan M. Green, who were recommended by our executive officers and nominated by the Governance and Nominating Committee and were appointed as directors by unanimous action of the Cliffs Board effective September 8, 2014, September 16, 2014 and October 15, 2014, respectively.

Each of the director nominees has consented to his or her name being submitted by Cliffs as a nominee for election as a member of the Cliffs Board. Each such nominee has further consented to serve as a member of the Cliffs Board if elected. Should any nominee decline or be unable to accept such nomination to serve as a director, an event that we currently do not anticipate, the persons named as proxies reserve the right, in their discretion, to vote for a lesser number of nominees or for substitute nominees designated by the directors, to the extent consistent with our Regulations.

The members and nominees for the Cliffs Board have diversified professional experience in general management, steel manufacturing and processing, mining, metallurgical engineering, operations, finance, investment banking, labor, law and other fields. There is no family relationship among any of our nominees and executive officers. The average age of the nominees currently serving on the Cliffs Board is 58, ranging from ages 50 to 62. The average years of service of the nominees currently serving on the Cliffs Board is 1.4 years, ranging from less than 1 year to over 7 years of service.

In the election of directors, the nominees receiving a plurality vote of the shares will be elected. However, under our current majority voting policy, any director-nominee that is elected in an uncontested election but fails to receive a majority of votes cast (which excludes abstentions and broker non-votes) is expected to tender his or her resignation, which resignation will be considered by the Governance and Nominating Committee and our Board.

Under Ohio law, shareholders have the right to exercise cumulative voting in the election of directors as described under “Cumulative Voting” on page 5. If cumulative voting rights are in effect for the election of directors, which we currently do not anticipate to be the case, you may allocate among the director nominees, as you see fit, the total number of votes equal to the number of director positions to be filled multiplied by the number of shares you hold.

The Board recommends a vote FOR each of the nominees listed on the following pages.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 13

PROPOSAL 1 ELECTION OF DIRECTORS

INFORMATION CONCERNING DIRECTOR NOMINEES



JOHN T. BALDWIN
	Former director and chairman of the Audit Committee of Metals USA, a provider of a wide range of products and services in the heavy carbon steel, flat-rolled steel, specialty metals, and building products markets, from January 2006 to April 2013; senior vice president and chief financial officer of Graphic Packaging Corporation, 2003 to 2005.	Qualifications: Mr. Baldwin's experience as a former Audit Committee Chairman and retired Chief Financial Officer with over twenty-five years of increasing financial responsibility. Mr. Baldwin holds a Bachelor of Science degree from the University of Houston and J.D. from the University of Texas School of Law. Mr. Baldwin has worked abroad for several years and has a broad range of experience structuring and negotiating complicated financial and M&A transactions.
Director Since: 2014		Other Current Public Directorships: None
Age: 58		Former Directorships:
		Metals USA Holdings Corp. (2006 - 2013)
		The Genlyte Group Incorporated (2003 - 2008)



ROBERT P. FISHER, JR.
	President and chief executive officer of George F. Fisher, Inc., a private investment company that manages a portfolio of public and private investments, since 2002. Mr. Fisher served in various positions with Goldman, Sachs & Co., an American multinational investment banking firm, from 1982 until 2001, eventually serving as Managing Director and had of its Canadian Corporate Finance and Canadian Investment Banking units for eight years.	Qualifications: During Mr. Fisher's tenure at Goldman, Sachs & Co., he worked extensively with many of the leading North American metals and minings companies, and also served as the head of Goldman's Investment Banking Mining Group. Mr. Fisher has vast experience in the investment and finance industries which included advising the boards of numerous public companies. Mr. Fisher holds a Bachelor of Arts degree from Dartmouth College and a Master of Arts degree in Law and Diplomacy from Tufts University.

Director Since: 2014		Other Current Public Directorships: None
Age: 60		Former Directorships:
		CML Healthcare, Inc. (2010 - 2013)



C. LOURENCO GONCALVES
	Chairman of the Board, President and Chief Executive Officer of the Company since August 2014; chairman, president and chief executive officer of Metals USA Holdings Corp., an American manufacturer and processor of steel and other metals from May 2006 through April 2013; president, chief executive officer and a director of Metals USA Inc. from February 2003 through April 2006. Prior to Metals USA, Mr. Goncalves served as president and chief executive officer of California Steel Industries, Inc. from March 1998 to February 2003.	Qualifications: Mr. Goncalves brings more than 30 years of experience in the metals and mining industries, as well as extensive board experience, in the United States and abroad. Mr. Goncalves earned a Masters of Science degree in Metallurgical Engineering from the Federal University of Minas Gerais in Belo Horizonte, Brazil and a Bachelor's degree in Metallurgical Engineering from the Military Institute of Engineering in Rio de Janeiro, Brazil

Director Since: 2014		Other Current Public Directorships:
Age: 57		American Iron and Steel Institute (2014)
		Former Directorships:
		Ascometal SAS (2011 - 2014)
		Metals USA Holdings Corp. (2006 - 2013)
		Metals USA Inc. (2003 - 2006)

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 14

PROPOSAL 1 ELECTION OF DIRECTORS



SUSAN M. GREEN
	Former deputy general counsel, U.S. Congressional Office of Compliance from November 2007 through September 2013; held various positions in the Legislative and Executive branches of federal government, including six years as deputy general counsel of the Office of Compliance, which enforces the labor and employment laws for the Legislative Branch, and her prior position as chief labor counsel for then-Senator Edward M. Kennedy, as well as several positions in the U.S. Department of Labor during the Administration of President Bill Clinton.	Qualifications: Ms. Green was originally proposed as a nominee for the Board by the USW pursuant to the terms of our 2004 labor agreement. Ms. Green has served as both a labor organizer and as an attorney representing organized labor. Ms. Green brings her diverse experiences as labor attorney and an alternative point of view to our Board. Ms. Green received her J.D. from Yale Law School and an A.B. from Harvard College.

Director Since: 2007		Other Current Public Directorships: None
Age: 55		Former Directorships:
		Cliffs Natural Resources Inc.



JOSEPH A. RUTKOWSKI, JR.
	Principal of Winyah Advisors LLC, a management consulting firm, since 2010; former executive vice president of Nucor Corporation (“Nucor”), the largest steel producer in the United States, from 1998 to 2010; various previous capacities at Nucor that included: manager of melting and casting at the Nucor steel division from 1991 to 1992; general manager from 1992 to 1998; vice president from 1993 to 1998.	Qualifications: Mr. Rutkowski has over 30 years of experience in the steel industry, including 12 years of service as executive vice president of Nucor. Mr. Rutkowski holds a Bachelor's of Science in Mechanics and Materials Science from Johns Hopkins University.

Director Since: 2014		Other Current Public Directorships: None
Age: 60		Former Directorships: None



JAMES S. SAWYER
	Former chief financial officer of Praxair Inc., the largest industrial gases company in North and South America, from 2000 to 2013; executive vice president of Praxair Inc., from November 2006 to December 2013.	Qualifications: Mr. Sawyer was listed as one of the 25 best Chief Financial Officers of 2012 by the Wall Street Journal; he was also named Senior Financial Officer of the year by Chemical Week magazine in 2003 and received the Institutional Investor Chief Financial Officer of the Year award in 2004. Mr. Sawyer holds an undergraduate degree from Wesleyan University and a master’s degree from the Sloan School of Management at the Massachusetts Institute of Technology.

Director Since: 2014		Other Current Public Directorships: None
Age: 58		Former Directorships: None

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 15

PROPOSAL 1 ELECTION OF DIRECTORS



MICHAEL D. SIEGAL
	Chairman and chief executive officer of Olympic Steel, Inc., a company focused on the value-added processing of flat-rolled metals, since 1984.	Qualifications: Under Mr. Siegal’s leadership, Olympic Steel Inc. experienced consistent growth and has been transformed from a family-owned steel distributor to a publicly traded fully integrated, value added processor and supply chain manager serving the outsourcing needs of America’s largest manufacturers. Olympic Steel, Inc. has grown from $35 million to more than $1 billion in revenues. Mr. Siegal received his Bachelor of Science degree from Miami University.

Director Since: 2014		Other Current Public Directorships:
Age: 62		Olympic Steel, Inc. (1984)
		Former Directorships: None



GABRIEL STOLIAR
	Managing partner of Studio Investimentos, an asset management firm focused on Brazilian equities, since 2009; chairman of the board of directors of Tupy S.A., a foundry and casting companies, since 2009; board of directors of Knijnik Engenharia Integrada, an engineering company, since 2013; board of directors of LogZ Logistica Brasil S.A., a ports logistic company, since 2011; chief financial officer and head of investor relations and subsequently as Executive Director of Planning and Business Development at Vale S.A., a Brazilian multinational diversified metals and mining company, from 1997 to 2008.	Qualifications: Mr. Stoliar brings to the Board his vast experience in and relating to the metals and mining industries along with his extensive experience serving on various boards of directors. Mr. Stoliar holds a Bachelor’s of Science in Industrial Engineering from the Universdade Federal do Rio de Janeiro, a post graduate degree in Production Engineering with focus in Industrial Projects and Transportation from the Universdade Federal do Rio de Janeiro and an Executive MBA from PDG-SDE/RJ.

Director Since: 2014		Other Current Public Directorships:
Age: 61		Tupy S.A. (2009)
		Former Directorships:
		Knijnik Engenharia Integrada (2013 - 2014)
		LogZ Logistica Brasil S.A. (2011 - 2014)



DOUGLAS C. TAYLOR
	Lead Director of the Board since August, 2014. Managing Partner of Casablanca Capital LP, a hedge fund, since 2010; managing director at Lazard Freres, a leading financial advisory and asset management firm, from 2002 to 2010; chief financial officer and director at Sapphire Industrials Corp., from 2008 to 2010.	Qualifications: Mr. Taylor's extensive financial and strategic advisory investment experience, including advising public companies, is invaluable to Cliffs. Mr. Taylor holds a Bachelor of Arts degree in Economics from McGill University and a Master of Arts degree in International Affairs from Columbia University School of International and Public Affairs.

Director Since: 2014		Other Current Public Directorships: None
Age: 50		Former Public Directorships:
		Sapphire Industrials Corp. (2008 - 2010)

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 16



	SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, or Exchange Act, requires our directors and officers and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Directors, officers and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Forms 3, 4 and 5 they file.

Based solely on our review of the copies of such forms we have received, and written representations by such persons, we believe that, except as otherwise noted below, all of our directors, officers and greater than 10% shareholders complied with all filing requirements applicable to them with respect to transactions in our equity securities during the fiscal year ended December 31, 2014: (1) on February 19, 2014, one Form 4 for Terry Fedor reporting one transaction related to the surrender of shares in payment of tax liability was filed late due to administrative error; (2) on August 12, 2014, one Form 4 for each of Terry Fedor, Timothy Flanagan, James Graham and David Webb, each reporting three transactions related to the vesting of performance shares and restricted shares, was filed late due to administrative error; (3) on August 13, 2014, one Form 4 for each of William Boor, Terry Paradie, Clifford Smith and Kelly Tompkins, each reporting three transactions related to the vesting of performance shares and restricted shares, was filed late due to administrative error; (4) on August 21, 2014, one Form 3 for James Sawyer reporting an initial statement of beneficial ownership was filed late due to an administrative oversight; (5) on November 13, 2014, one Form 4 for each of Terrance Paradie, Clifford Smith and Kelly Tompkins, reporting three transactions, three transactions and four transactions, respectively, related to the vesting of shares in a non-qualified deferred compensation plan, was filed late due to administrative error; and (6) on December 19, 2014, one Form 4 for Lourenco Goncalves reporting one transaction related to the grant of performance-based restricted share units was filed late due to administrative error.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 17



	OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

The following table sets forth the amount and percent of common shares that, as of March 23, 2015 (except as otherwise indicated), are deemed under the rules of the SEC to be “beneficially owned” by each director named in this proxy statement, by our CEOs, CFO and the other named executive officers as identified in the 2014 Summary Compensation Table below by such persons, individually and collectively by the directors named in this proxy statement and the other executive officers as a group, and by any person or “group” (as the term is used in the Exchange Act) known to us as of that date to be a “beneficial owner” of more than five percent or more of the outstanding common shares. None of the the shares owned by our directors, director nominees or executive officers are pledged as security.



Name of Beneficial Owner	Amount and Nature of “Beneficial Ownership”(1)
	Beneficial Ownership	Investment Power			Voting Power			Percent of Class(2)
	Beneficial Ownership	Sole	Shared		Sole	Shared		Percent of Class(2)
Directors
John T. Baldwin	21,606	21,606	—		21,606	—		—
Robert P. Fisher, Jr.	15,682	15,682	—		15,682	—		—
Susan M. Green	19,505	19,505	—		19,505	—		—
Joseph A. Rutkowski, Jr.	25,682	25,682	—		25,682	—		—
James S. Sawyer	9,682	9,682	—		9,682			—
Michael D. Siegal (3)	20,053	20,053	—		20,053	—		—
Gabriel Stoliar	31,943	31,943	—		31,943	—		—
Douglas C. Taylor	7,923,402	16,882	7,906,520	(4)	—	7,906,520	(4)	5.17
Named Executive Officers
Lourenco Goncalves	177,000	177,000	—		177,000	—		—
Terrance M. Paradie	26,033	26,033	—		26,033	—		—
P. Kelly Tompkins	32,909	32,909	—		32,909	—		—
Clifford T. Smith	35,291	35,291	—		35,291	—		—
David L. Webb	11,601	11,601	—		11,601	—		—
Gary B. Halverson	—	—	—		—	—		—
James F. Kirsch	8,578	8,578	—		8,578	—		—
All Current Directors and Executive Officers as a group (18 Persons)(5)	8,382,544	476,024	7,906,520	(6)	459,152	7,906,520	(6)	5.47
Other Persons
BlackRock Inc.(7) 40 East 52nd Street New York, NY 10022	14,504,398	14,504,398	—		13,924,275	—		9.46
George W. Connell (8) Three Radnor Corporate Center, #450 Radnor, PA 19087	12,000,000	12,000,000	—		12,000,000	—		7.83
Bank of America Corporation (9) 100 N Tryon Street Charlotte, NC 28255	9,825,886	—	9,825,886		—	9,792,482		6.41
G1 Execution Services, LLC (10) 440 S. LaSalle Street, Suite 3030 Chicago, IL 60605 Susquehanna Investment Group Susquehanna Securities 401 E. City Avenue, Suite 220 Bala Cynwyd, PA 19004	9,381,666	9,381,666	—		9,381,666	—		6.12
The Vanguard Group, Inc.(11) 100 Vanguard Blvd. Malvern, PA 19355	8,869,664	8,780,860	88,804		99,304	—		5.79
Casablanca Capital LP (12) Douglas C. Taylor Donald Drapkin 450 Park Avenue, Suite 1403 New York, NY 10022	7,914,720	8,200	7,906,520		—	7,906,520		5.16

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 18

OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

(1)

Under the rules of the SEC, “beneficial ownership” includes having or sharing with others the power to vote or direct the investment of securities. Accordingly, a person having or sharing the power to vote or direct the investment of securities is deemed to “beneficially own” the securities even if he or she has no right to receive any part of the dividends on or the proceeds from the sale of the securities. Also, because “beneficial ownership” extends to persons, such as co-trustees under a trust, who share power to vote or control the disposition of the securities, the very same securities may be deemed “beneficially owned” by two or more persons shown in the table. Information with respect to “beneficial ownership” shown in the table above is based upon information supplied by our directors, nominees and executive officers and filings made with the SEC or furnished to us by any shareholder.


(2)	Less than one percent, except as otherwise indicated.


(3)	Includes 1,759.25 common shares issuable upon conversion of 2,500 depositary shares beneficially owned by Mr. Siegal, each of which represents 1/40 of a share of our mandatory convertible preferred stock that can be converted into common shares by the holder within 60 days.

(4)

Casablanca Capital LP serves as investment advisor to certain investment funds or managed accounts (collectively, the "Accounts"), and may be deemed to have beneficial ownership over the common shares held for such Accounts. Mr. Taylor, as a co-managing member of Casablanca GP, is in a position to indirectly determine the voting and investment decisions regarding 7,902,520 common shares held by the Accounts and may be deemed to “beneficially own” such common shares.


(5)	The number of executive officers has decreased since 2014.

(6)

Casablanca Capital LP serves as investment advisor to the Accounts, and may be deemed to have beneficial ownership over the common shares held for such Accounts. Mr. Taylor, as a co-managing member of Casablanca GP, is in a position to indirectly determine the voting and investment decisions regarding 7,902,520 common shares held by the Accounts and may be deemed to “beneficially own” such common shares.


(7)	BlackRock Inc. reported its ownership on Amendment No. 5 to Schedule 13G filed with the SEC on January 15, 2015.


(8)	George W. Connell reported his ownership on a Schedule 13G filed with the SEC on January 28, 2015.


(9)	Bank of America Corporation reported its ownership on a Schedule 13G filed with the SEC on February 13, 2015.


(10)	G1 Execution Services, LLC, Susquehanna Investment Group and Susquehanna Securities reported their combined ownership on a Schedule 13G filed with the SEC on February 13, 2015.


(11)	The Vanguard Group, Inc. reported its ownership on Amendment No. 3 to Schedule 13G filed with the SEC on February 11, 2015.


(12)	Casablanca Capital LP, Douglas C. Taylor and Donald Drapkin reported their combined ownership on Amendment No. 6 to Schedule 13D/A filed with the SEC on October 9, 2014.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 19



	COMPENSATION DISCUSSION AND ANALYSIS

In this section of the proxy statement, we discuss in detail our executive compensation program for 2014 for our named executive officers (the "NEOs") consisting of our principal executive officers, our chief financial officer (the "CFO"), the next three highest paid executive officers employed as of December 31, 2014, and one former executive officer who served during 2014 and whose compensation would have qualified him as being among the next three highest paid executive officers had he still been serving as of December 31, 2014. Our NEOs for 2014 are:


•	Lourenco Goncalves, Chairman, President and Chief Executive Officer (the "CEO"). Mr. Goncalves was appointed our Chairman, President & CEO on August 7, 2014.


•	Terrance M. Paradie, Executive Vice President, CFO and Treasurer.


•	P. Kelly Tompkins, Executive Vice President, Business Development.


•	Clifford T. Smith, Executive Vice President, Seaborne Iron Ore.


•	David L. Webb, Executive Vice President, Global Coal.


•	Gary B. Halverson, former President and CEO. Mr. Halverson's employment with Cliffs terminated on August 7, 2014.


•	James F. Kirsch, former executive Chairman. Mr. Kirsch was elected as Cliffs' non-executive Chairman in July 2013, became interim executive Chairman in January 2014 and on May 23, 2014 resigned and once again became Cliffs' non-executive Chairman until August 7, 2014.

EXECUTIVE SUMMARY

At our 2014 Annual Meeting of Shareholders on July 29, 2014, Casablanca Capital nominated a slate of six nominees for election as directors, all six of which were elected to Cliffs' Board. Since our Board consisted of 11 directors in total, Casablanca nominees then held the majority of the seats on our Board. As a result of these changes in our Board, we experienced a change in control on August 6, 2014 when the final voting results were confirmed.

Following our change in control, our new Board deemed it advisable and in the best interests of the Company to terminate Mr. Halverson’s employment as the President and CEO of the Company, effective August 7, 2014 and appoint Mr. Goncalves to the positions of Chairman, President and CEO, effective August 7, 2014.

The new Board also appointed a new Compensation Committee (the "New Committee”) and Committee Chair effective August 7, 2014. Most of the decisions described in this Compensation Discussion and Analysis (the "CD&A") were made by the Compensation Committee that existed prior to August 7, 2014 (the “Previous Committee”), the members of which are no longer on the Board. It is important to distinguish the decisions made by the Previous Committee for 2014 that are reflected in this CD&A from those of the New Committee, which for the most part will be reflected in next year’s proxy statement.



Key Decisions made by the Previous Committee		Key Decisions made by the New Committee
Established 2014 compensation levels and pay mix for all NEOs with the exception of our new CEO, Lourenco Goncalves		Reviewed and recommended for approval by the full Board the terms and conditions of the employment agreement for the new CEO, Lourenco Goncalves, including salary, retention payment and long-term equity grants
Approved performance metrics and potential threshold, target and maximum payouts under the Executive Management Performance Incentive Plan (or EMPI Plan)		Certified that the annual performance measures established by the Previous Committee were achieved and approved payments under the EMPI Plan
Granted long-term equity incentives to NEOs with the exception of our new CEO, Lourenco Goncalves		Hired a new independent executive compensation consultant
Approved a discretionary cash payment to our former executive Chairman

Certain of our compensation plans and programs, including our shareholder-approved incentive equity plans, contain change in control provisions which were triggered by the change in control on August 6, 2014. Accordingly, we were obligated to make significant payments to employees, including certain of our NEOs, under the terms of these plans and programs. Certain outstanding and unvested equity awards granted under our 2012 Incentive Equity Plan and 2007 Incentive Equity Plan accelerated and were paid out in connection with the change in control. Also, our deferred compensation balances under our 2005 Voluntary Non-Qualified Deferred Compensation (the "2005 VNQDC") Plan and 2012 Non-Qualified Deferred Compensation (the "2012 NQDC") Plan were accelerated and were paid out in connection with the change in control.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 20

COMPENSATION DISCUSSION AND ANALYSIS

Following the 2014 Annual Meeting, in response to shareholders concerns over our compensation programs, the New Committee, our new CEO, and our management team in concert with the material changes they were making in our strategic direction undertook a comprehensive review of our compensation programs, which we expect will continue well into 2015. This team also is reaching out to shareholders to ensure their concerns are heard.

2014 LEADERSHIP TRANSITIONS

As noted above, we experienced several NEO transitions during 2014:


•	The Board terminated Mr. Halverson’s employment as the Company's President and CEO effective August 7, 2014.


•	Mr. Kirsch, who was initially elected as non-executive Chairman of the Board in mid-2013 and subsequently elected as executive Chairman on January 1, 2014, resigned as executive Chairman May 23, 2014. Upon his employment with Cliffs, he ceased to be an independent director. However, Mr. Kirsch continued to serve as non-executive Chairman until August 7, 2014.


•	On August 7, 2014, our Board appointed Mr. Goncalves to the positions of Chairman, President and CEO, replacing Mr. Kirsch, our former non-executive Chairman, and Mr. Halverson, our former President and CEO.

As a result of these transitions, our CD&A and the related compensation tables and narratives cover seven NEOs for 2014 and analyze a variety of compensation decisions and actions, some of which were made specifically with regard to these transition events. Not all of the NEOs participated in or received all of the compensation elements described in this CD&A. For example, Mr. Goncalves did not receive the 2014 annual grant of performance shares and restricted share units because he was not serving with us at the time these awards were granted. When discussing each compensation element in this CD&A, we explain the degree to which each NEO participated or was eligible to participate in the applicable plan or program.

In connection with his appointment as our Chairman, President and CEO in August 2014, our New Committee recommended and the Board offered Mr. Goncalves a compensation package consisting of: an annual base salary of $1.2 million; a retention payment of $1.2 million (of which Mr. Goncalves is required to repay a pro-rata portion if he leaves the Company before December 31, 2017); and a long-term incentive award of 400,000 performance-based restricted share units (at target) and 250,000 stock options. Mr. Goncalves' long-term incentive awards, which are the largest component of his compensation, are wholly dependent on our future share price. These awards only have value if our share price increases. The compensation package offered to Mr. Goncalves was developed in consultation with a new independent compensation consultant, Pearl Meyer & Partners ("PM&P"), and was designed to reflect best practices in the market. Beginning in 2015, Mr. Goncalves became eligible to participate in the EMPI Plan, pursuant to which his annual incentive target for 2015 is 200% of his base salary, and his annual long-term equity incentive target will be equal to 400% of his base salary, with such component comprised of performance-based restricted share units, service-based restricted share units and stock options.

The following discussion covers compensation actions taken and decisions made during our 2014 fiscal year, but may also contain information regarding compensation actions taken and decisions made both before and after the fiscal year to the extent that such information enhances the understanding of our 2014 executive compensation program. This CD&A also describes the principles underlying our executive compensation policies and our most important executive compensation decisions for 2014, and provides an analysis of these policies and decisions. The discussion gives context for, and should be read together with, the data presented in the compensation tables, the footnotes and the narratives to those tables and the related disclosures appearing elsewhere in this proxy statement.

2014 BUSINESS RESULTS

Cliffs Natural Resources Inc. is a leading mining and natural resources company. The Company is a major supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. Cliffs also produces low-volatile metallurgical coal in the United States from its mines located in Alabama and West Virginia. Additionally, Cliffs operates an iron ore mining complex in Western Australia and owns two non-operating iron ore mines in Eastern Canada. During 2014, Cliffs shifted from a diversification strategy to one that focuses on strengthening our U.S. Iron Ore operations. We are the market-leading iron ore producer in the United States, supplying differentiated iron ore pellets under long-term contracts, some of which begin to expire in 2016, to the largest U.S. steel producers. Pricing protections and long-term supply, certainty provided by our existing contracts and our low-cost operating profile positions U.S. Iron Ore as our most stable and profitable business. We expect to continue to strengthen U.S. Iron Ore cost operating profile through our operational expertise and disciplined capital allocation policies.

As an extension of our re-focused U.S. Iron Ore strategy in 2014, we continue to consider further divestitures of Eastern Canadian Iron Ore, Asia Pacific Iron Ore and North American Coal businesses, and completed the sale of the Cliffs Logan County Coal assets in December of 2014, which made up about a third of Cliffs' North American Coal production. We believe the assets from these non-core segments have value and will only consummate a transaction where we believe the price fairly and adequately represents such value.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 21

COMPENSATION DISCUSSION AND ANALYSIS

Our Wabush Scully mine in Newfoundland and Labrador was idled by the end of the first quarter of 2014 and subsequently began to commence permanent closure in the fourth quarter of 2014. In November 2014, we announced that we were pursuing exit options for our Eastern Canadian Iron Ore operations and disclosed that, despite our cost-cutting progress at our Bloom Lake mine, we concluded that Phase I alone was not economically feasible based on our current operating plans. For the Bloom Lake mine to be profitable, we concluded that Phase II of the Bloom Lake mine must be developed to reduce the overall cash cost of operations. We could only develop Phase II of the Bloom Lake mine if we had been able to secure new equity partners to share in the capital costs, which we estimated to be approximately $1.2 billion. As the new equity partners were unable to commit within the timeframe we required, we determined that the Phase II expansion of the Bloom Lake mine was no longer a viable option for us and we shifted our focus to considering available possibilities and executing an exit option for Eastern Canadian Iron Ore operations that minimized the cash outflows and associated liabilities. In December 2014, iron ore production at the Bloom Lake mine was suspended and the Bloom Lake mine was placed in ‘‘care-and-maintenance’’ mode.

During 2014, we developed a highly disciplined financial and capital expenditure plan with a focus on improving our cost profile and increasing long-term profitability. We are focused on sizing our organization to better fit our new strategic direction and streamlining our businesses’ support functions by eliminating duplication. Our capital allocation plan has been focused on strengthening our core U.S. Iron Ore operations to promote greater free cash flow generation.

As a result of these efforts, Cliffs reported numerous cost reductions. The result of these cost reductions allowed us to maintain favorable operating margins in U.S. Iron Ore and Asia Pacific Iron Ore despite declining commodity prices. Furthermore, capital expenditures during 2014 were $284.1 million, a decrease from $861.6 million in 2013. We decreased year-over-year selling, general & administrative, or SG&A, and exploration expenses by 25%, or $73.1 million. Despite intense headwinds from both deteriorating pricing, which primarily impacted Asia Pacific Iron Ore and Eastern Canadian Iron Ore, and adverse weather in the beginning half of the year, which impacted U.S. Iron Ore and North American Coal, Cliffs reported Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA") of $929.7 million for 2014. This was primarily attributable to the U.S. Iron Ore segment, which reported Adjusted EBITDA of $831.2 million. See Annex C for a reconciliation to GAAP of our non-GAAP financial measures.

For the full year, we recorded a net loss attributable to Cliffs shareholders of $7.2 billion, or $47.52 per diluted share, compared with a net income attributable to Cliffs shareholders of $413.5 million, or $2.37 per diluted share, in 2013. The full-year results for both 2014 and 2013 include impairment charges related to goodwill and certain long-lived assets of $9.0 billion and $250.8 million, respectively. Excluding certain items as disclosed in Annex C, our full-year 2014 adjusted net income attributed to Cliffs' shareholders was $226.2 million, or $1.55 per diluted share, compared with an adjusted net income of $705.9 million, or $4.33 per diluted share, in 2013. This decrease in adjusted net income is primarily attributable to weaker results from the Asia Pacific Iron Ore, Eastern Canadian Iron Ore and North American Coal segments, which were negatively impacted by declining commodity prices.

Our market capitalization at December 31, 2014 was approximately $1.1 billion and our total shareholder return ("TSR"), was negative 72% on a year-over-year basis. The main factor contributing to our lower year-over-year share price was the 47% decline in the benchmark iron ore price, which opened the year at $135 per ton and ended the year at $72 per ton. This significant price decline was driven by the combination of increased low-cost supply of the commodity as well as softening demand from Chinese steel manufacturers. As a result of our previous strategy, many investors still associate this benchmark as a proxy for the value of the company. With Cliffs’ new strategy of focusing on strengthening our U.S. Iron Ore operations, the Company’s profitability is significantly less tied to the benchmark iron ore pricing. As we continue to execute on this strategy, we believe our value will decouple from the value of seaborne iron ore.

RESULTS OF THE 2014 SAY-ON-PAY VOTE

At our 2014 Annual Meeting of Shareholders on July 29, 2014, only 56.1% of our voting shareholders voted in favor of our annual advisory vote on our NEOs' compensation, commonly referred to as “Say-on-Pay”. These results reflect the concern our shareholders had with our programs prior to August 7, 2014.

In order to address these concerns, we have taken the following actions:


•	Our New Committee now consists of new Board members who were elected at the 2014 Annual Meeting;


•	We appointed a new Chairman of the Compensation Committee, Robert P. Fisher, Jr.;


•	We engaged a new independent compensation consultant, PM&P;


•	We undertook a comprehensive review of our executive compensation programs; and

•

In 2015, at the direction of the New Committee, we are implementing new executive compensation programs which will better align the interests of our NEOs with those of our shareholders. These changes were in direct response to shareholder concerns, some of which were expressed in public filings by Casablanca Capital prior to the 2014 Annual Meeting. These changes include simplifying our annual incentive to focus on EBITDA and safety performance metrics and changing the long-term incentive to include a mix of time vesting restricted share units, stock options and performance shares earned based on our relative TSR.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 22

COMPENSATION DISCUSSION AND ANALYSIS

Key Incentive Features of Our Compensation Program for 2014

Unless otherwise identified, the following discussion of the 2014 compensation describes programs approved by the Previous Committee.

At the direction of our Previous Committee, our historical compensation approach has been to reward for the achievement of operational and financial goals and to align compensation with performance and shareholder return. We generally maintained our compensation program and did not make significant changes to compensation elements in 2014, except as mentioned above. Our approach to 2014 compensation was designed to provide our NEOs with a mix of both fixed and variable short-term and long-term compensation that was intended to incentivize and retain our NEOs. Our variable compensation programs were designed to align compensation with short-term and long-term performance. Our annual incentive program tied payouts to the achievement of absolute performance results in the short-term. Our long-term equity incentive program tied payouts to our relative share price performance as compared to other metals and mining companies over the long-term (typically, three-year performance periods) and also provided retention incentives in the form of service-based restricted share units that vest in full at the end of the same three-year performance period. More specifically:


•	Annual Incentive Program: We selected EBITDA, cost control, production volume, supply inventory, capital expenditures and safety as the performance metrics for the EMPI Plan. In addition:


◦	The 2014 EMPI design for corporate officer positions was to measure corporate and global results and the design for business unit officer positions was to measure business unit results.


◦	We included a minimum EBITDA condition in our EMPI Plan, which means that no bonuses were payable under our EMPI Plan if our adjusted EBITDA had been less than $282 million (generally reflecting Cliffs’ total annual dividends, including those on common shares and mandatory convertible preferred stock, and Cliffs’ total annual interest expenses).


◦	The Compensation Committee was permitted (solely by exercising negative discretion) to increase or decrease the final EMPI Plan payout by up to 20%, based on its evaluation of an individual’s performance for 2014; provided, however, that any such increase did not result in a final EMPI Plan payout in excess of the maximum potential EMPI award.


•	Long-Term Incentive Program: We granted long-term performance shares that are tied to our relative TSR performance against the SPDR Metals and Mining ETF over a three-year performance period. We chose TSR as the sole metric for our performance share plan. In addition, we granted service-based restricted share units that vest at the end of the three-year performance period.

Relationship between Our Performance and CEO Compensation

The current Board including the New Committee believes the shareholder vote that resulted in a change in control on August 6, 2014 was a direct result of the poor performance of the Company. The termination of Mr. Halverson and the appointment of Mr. Goncalves as CEO does not allow for a reasonable analysis of the relationship between pay and performance. We believe the Board heard the concerns of shareholders and took appropriate actions to change the compensation programs. In addition, some of the individuals responsible for past performance and program design are no longer with the Company (a former CEO and Board members).

While the relationship between Mr. Goncalves’ compensation and Company performance cannot be appropriately measured over the short period he has been employed, Mr. Goncalves’ compensation is well aligned with our future performance. The equity grants, which are the largest component of Mr. Goncalves’ compensation, are wholly dependent on our future share price. If our share price increases, Mr. Goncalves will be rewarded through performance-based shares that are only earned based on increases in our share price and stock options that only have value if the share price increases (more fully described under "Other Equity Awards" on page 34).

Other Key Policies and Practices

The Previous Committee and the Board adopted the following key policies and practices over the past several years in response to evolving good governance practices in executive compensation and changes in our business and industry. The New Committee is in the process of a comprehensive review of executive compensation plans, policies and practices and agrees the following key policies and practices are appropriate:


•	A policy, effective mid-September 2013, that the vesting of all future equity grants will be subject to "double-trigger" change in control equity acceleration, rather than "single-trigger" acceleration.


•	An incentive compensation clawback policy applicable to our executive officers was adopted by the Board in November 2012.


•	Suspension of the performance-based contribution under the 401(k) Savings Plan beginning in fiscal year 2012 and continuing through 2014.


•	Elimination of tax gross-ups on change in control payments related to excise taxes and cash paid in lieu of health and welfare benefits effective January 2012.


•	Elimination of all industry service credits related to the supplemental retirement plan benefit for all future hires effective April 2012.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 23

COMPENSATION DISCUSSION AND ANALYSIS


•	A long-standing insider trading policy that prohibits executive officers from profiting from short- and long-term speculative swings in the value of our shares, including, but not limited to, short sales, put and call options, and hedging transactions.


•	An insider trading policy that also prohibits any officer or director pledging Cliffs' securities.


•	Retention of an independent compensation consultant to advise the Compensation Committee and keep it apprised of evolving market practices in executive compensation.


•	Share Ownership Guidelines that require our officers and directors to own a certain dollar amount of our common shares.


•	An annual Say-on-Pay vote.


•	Minimal non-compensatory perquisites and benefits for our executive officers.


•	An annual compensation-related risk review.

EXECUTIVE COMPENSATION PHILOSOPHY AND CORE PRINCIPLES

The Previous Committee designed our executive compensation program to help attract, motivate, reward and retain high-performing executives. The goal was to align pay with Cliffs’ performance in the short-term through variable cash compensation based on measures of financial performance and operational and strategic excellence, and over the long-term through stock-based incentives. Our compensation philosophy was to place a significant portion of compensation at risk based on our performance, and increase the portion of compensation that is at risk as the responsibility level of the individual increases, consistent with market practices. The Previous Committee also sought to balance this performance focus with sufficient retention incentives, including a competitive fixed salary and the use of time-based restricted share units in our long-term incentive program.

Our guiding compensation principles as established by the Previous Committee for 2014 were as follows:


•	Align short-term and long-term incentives with results delivered to shareholders.

•


•	Provide competitive fixed compensation elements over the short-term (base salary) and long-term (equity and retirement benefits) to encourage long-term retention of our key executives.


•	Structure programs to align with corporate governance best practices (for example, elimination of gross-ups related to change in control payments, conversion to double-trigger change in control equity vesting for future equity awards, use of Share Ownership Guidelines and adoption of a clawback policy related to incentive compensation for our executive officers).

In general, 2014 pay opportunities as approved by the Previous Committee for our NEOs (other than Mr. Goncalves, who was hired in August 2014 and whose compensation was approved by the New Committee) were intended to deliver target total pay opportunity between the median and 75^th percentile of the market in which we compete for talent in order to enable us to attract and retain the caliber of executive talent needed to execute on our business and strategic objectives.

As a result of the change in control as previously discussed, certain benefits were provided to the NEOs:

•

Mr. Halverson was entitled to receive certain severance benefits under his change in control severance agreement subject to him signing a general release of claims. Mr. Halverson received benefits including: a cash payment equal to the sum of three years of 2014 base salary; three years of incentive bonus at target for 2014; a pro-rated portion of 2014 incentive pay at target for 2014; accrued but unused 2014 vacation; outplacement services and financial planning perquisites; an equity payout reflective of vested grants and/or awards under the Company's 2012 Incentive Equity Plan; and a lump sum payment representing the sum of the present values of Mr. Halverson's full accrued benefit under the pertinent pension and retirement plans. For three years, the Company will continue to cover Mr. Halverson under all of the health and welfare plans in which he was participating on August 7, 2014, all at Company expense. These amounts are reflected in the 2014 Summary Compensation Table on page 39.


•	On May 23, 2014, Mr. Kirsch resigned his position as executive Chairman and terminated his employment. The Previous Committee, and the rest of Cliffs' Board in place at the time, provided Mr. Kirsch with a cash payment related to his service to the Company.

•

Mr. Goncalves' compensation arrangements, which were approved by the New Committee, occurred separate from our annual executive compensation process and the terms of his compensation reflect the financial incentives required for him to join our Company. As a result, Mr. Goncalves’ salary and target annual incentive are above our goal of targeting total cash compensation (base salary and annual incentive) near the market median. Mr. Goncalves’ performance-based restricted share unit and stock option awards are incentive based and dependent on the Company’s future share price. The terms of Mr. Goncalves’ compensation arrangements are included in an employment offer we entered into with him soon after he joined us.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 24

COMPENSATION DISCUSSION AND ANALYSIS

OVERSIGHT OF EXECUTIVE COMPENSATION

The composition of the Compensation Committee changed as a result of the election of new directors on August 7, 2014. None of the current members of the Compensation Committee were members of the Board prior to August 7, 2014 and therefore were not involved in any of the compensation decisions related to compensation prior to August 7, 2014.

The Compensation Committee’s primary function, as delegated to it by our Board, involves oversight concerning the design of our compensation programs, particularly the program for executive officers. The Compensation Committee also approves all employment offers, the officers’ participation in all benefit and retirement plans and all material changes to these plans. The following discusses our general practices with respect to evaluating and awarding executive compensation.

The Role of the Executive Officers

The following description of the role of the executive officers in the compensation process applies to both the Previous Committee and the New Committee.

In reviewing the compensation of the CEO and the other executive officers, the Compensation Committee is advised by its independent executive compensation consultant and our human resources staff. It is the Compensation Committee’s practice to request and consider proposals by the CEO as to the appropriate levels of salary and incentive award opportunities for all executive officers other than the CEO. The Compensation Committee establishes the CEO’s compensation independently of that of the other executive officers, so that an increase in the compensation of those officers, as proposed by the CEO, does not form the basis for a corresponding increase in the CEO’s compensation.

To set performance measures and levels for our annual and long-term incentive plans, our executive officers review our operational forecasts, key economic indicators affecting our businesses, historical performance, recent trends, and our strategic plans. Our executive team proposes performance measures that it believes to be most important and meaningful to the achievement of our strategic goals. The executive team also proposes what it believes to be the appropriate weighting to give to each factor in the calculation of the overall incentive awards, and threshold, target and maximum payout levels appropriate for each of the performance measures we choose.

The Compensation Committee, with the advice of its independent executive compensation consultant, reviews the proposed performance measures and weightings each December. At a subsequent meeting in February, the Compensation Committee reviews and approves threshold, target and maximum payout levels and makes the final determination of what performance measures, weightings and payout levels will be used for each incentive award. The Compensation Committee often directs members of management to work with its independent executive compensation consultant to provide information and otherwise help with the consultant’s analyses. However, the Compensation Committee does not delegate any of its decision making authority to executive officers or other members of management.

The Role of the Executive Compensation Consultant

The Previous Committee engaged Semler Brossy to serve as its independent executive compensation consultant. The New Committee engaged PM&P as its independent executive compensation consultant. The executive compensation consultants report directly to the Compensation Committee on all work assignments from the Compensation Committee. The Compensation Committee retained the executive compensation consultants directly although, in carrying out its assignments, the consultants also interacted with management when necessary and appropriate. Specifically, members of management interacted with the executive compensation consultants to provide compensation and performance data for individual executives and the company. In addition, the executive compensation consultants, in its discretion, sought input and feedback from the CEO and other members of management regarding its work product prior to presenting such work product to the Compensation Committee to confirm the work product’s alignment with the company’s business strategy, determine what additional data needed to be gathered, or identify other issues, if any.

The executive compensation consultants’ work for the Compensation Committee with respect to 2014 compensation decisions included:


•	Analyzing the competitiveness of our executive compensation programs in the Fall of 2014;


•	Providing information about market trends in executive and director pay practices;


•	Advising on compensation program design and structure;


•	Reviewing the relationship between executive compensation and company performance; and


•	Assisting in the preparation of our proxy statement.

The Independence of the Executive Compensation Consultant

The Previous Committee with respect to Semler Brossy, and the New Committee with respect to PM&P concluded that its compensation consultants, are independent and do not have a conflict of interest in its engagement by the Compensation Committee. In making this conclusion, the Compensation Committee considered the following factors confirmed to the Compensation Committee by the compensation consultant:

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 25

COMPENSATION DISCUSSION AND ANALYSIS


•	The executive compensation consultants provide no other services to the Company; they provide only executive and director compensation advisory services to the Compensation Committee;


•	The executive compensation consultants maintain a conflicts policy to prevent a conflict of interest or other independence issues;


•	None of the individuals on the executive compensation consultants’ team assigned to the engagement has any business or personal relationship with members of the Compensation Committee outside of the engagement;


•	Neither the individuals on the executive compensation consultants’ team assigned to the engagement, nor to our knowledge, either executive compensation firm, has any business or personal relationship with any of our executive officers outside of the engagement;


•	None of the individuals on the executive compensation consultants’ team assigned to the engagement maintains any direct individual position in our shares;


•	The executive compensation consultants have regular discussions with only the members of the Compensation Committee (or select members of the Compensation Committee) present and when it interacts with management, it is at the Compensation Committee chair’s request and/or with the chair’s knowledge and approval;


•	None of the individuals on the executive compensation consultants’ team assigned to the engagement have provided any gifts, benefits, or donations to us, nor have they received any gifts, benefits, or donations from us; and


•	The executive compensation consultants are bound by strict confidentiality and information sharing protocols.

Market for Talent

The Compensation Committee conducts an annual review of market pay practices for NEOs with the assistance of its outside compensation adviser. The Previous Committee's compensation consultant, Semler Brossy, conducted a review of market pay practices for 2014 executive compensation decisions. This review was based on Towers Watson’s executive compensation database, as well as a detailed proxy analysis of executive compensation among our compensation comparator group.

The compensation comparator group for 2014 was the same as for 2013 and 2012. The compensation comparator group for the 2014 analysis included the following 20 companies, which are similar to Cliffs in terms of size, revenue and market value:



Agrium Inc.	FMC Corporation
Airgas, Inc.	Goldcorp Inc.
Air Products and Chemicals, Inc.	Kinross Gold Corporation
Allegheny Technologies Incorporated	Mosaic Company (The)
Alpha Natural Resources, Inc.	Newmont Mining Corporation
Arch Coal, Inc.	Peabody Energy Corporation
Celanese Corporation	Praxair, Inc.
CF Industries Holdings, Inc.	Teck Resources Limited
CONSOL Energy Inc.	Vulcan Materials Company
Eastman Chemical Company	Walter Energy, Inc.

Pay Mix

Since our NEOs are in a position to directly influence our overall performance, a significant portion of their compensation is variable and tied to our short- and long-term performance, in order to align their interests with those of our shareholders. The variable pay components include the annual incentive (cash-based) and long-term incentive (equity-based) awards. For 2014, as approved by the Previous Committee for all NEOs (other than Mr. Goncalves, whose pay mix is the result of annualizing his base salary and on-hire grant approved by the New Committee) the mix of our total target direct compensation (comprised of base salary, annual incentive, and equity-based incentive compensation) is shown below:

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 26

COMPENSATION DISCUSSION AND ANALYSIS



2014 Target Pay Mix *
	Base Salary		Annual Incentive		Performance Shares		Restricted Share Units		Stock Options
Goncalves (1)	12	%	12	%	42	%	—		34	%
Paradie (2)	22	%	18	%	27	%	33	%	—
Tompkins	29	%	23	%	36	%	12	%	—
Smith (2)	22	%	18	%	27	%	33	%	—
Webb (2)	22	%	18	%	27	%	33	%	—
Halverson	17	%	24	%	45	%	14	%	—
Kirsch	24	%	28	%	25	%	23	%	—

*Figures have been rounded and exclude any cash retention award or severance payment made in 2014.


(1)	Includes Mr. Goncalves' retention payment (identified in the Annual Incentive column) and performance-based restricted share units (identified in the Performance Shares column).


(2)	Includes a retention grant of restricted share units on July 29, 2014.

As illustrated in the charts below, 88% of our current CEO’s total compensation, and 76%, on average, of total compensation for our other NEOs, is provided through annual incentives tied to the achievement of short-term performance goals and equity-based incentives that are dependent upon long-term corporate performance and share-price appreciation.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 27

COMPENSATION DISCUSSION AND ANALYSIS

Principal Elements of 2014 Compensation

During 2014, the executive compensation and benefits provided to our NEOs primarily consisted of the components listed in the following table, which provides a brief description of the principal elements of compensation, how performance factors into each type of compensation and the objectives served by each element. These elements are discussed in more detail in the sections that follow.

Fiscal Year 2014 Principal Compensation Elements



Element	Description	Performance Conditions	Primary Objectives
Base Salary	Fixed cash payment	Based on level of responsibility, experience and individual performance	Attraction and retention
EMPI Plan	Short-term incentive (annual cash payment)	Based on EBITDA, volume and cost control initiatives, supply chain inventory, capital expenditures and safety	Motivate the achievement of short-term strategic and financial objectives
Retention Payment	Short-term incentive (annual cash payment)	—	Retain key employees
Performance Shares	Long-term incentive (equity-based payment)	Based on TSR relative to a comparator group or volume weighted average share price (for Mr. Goncalves)	Attraction, retention and promotion of long-term strategic and financial objectives and long-term share performance
Restricted Share Units	Long-term retention (equity-based payment)	Value related to share performance	Attraction, retention and promotion of long-term share performance
Stock Options	Long-term incentive (equity-based payment)	Value related to share performance	Attraction, retention and alignment of our employee interests with those of the Company and our shareholders
Retirement and Welfare Benefits	Health and welfare benefits, deferred compensation, 401(k) company contributions, defined benefit pension participation and supplemental executive retirement plans	—	Attraction and long-term retention
Executive Perquisites	Financial services and company-paid parking	—	Avoid distraction from Cliffs’ duties

ANALYSIS OF 2014 COMPENSATION DECISIONS

Base Salary

The Previous Committee generally considered the following factors when approving 2014 annual base salaries: market median levels of base pay; individual performance; tenure and experience; retention considerations; the individual’s historical compensation; and internal fairness considerations. Increases in excess of 5% were primarily to move the executive's base salary closer to the market median.

Messrs. Halverson and Kirsch's base salaries were reviewed and proposed to the Compensation Committee by Semler Brossy. Semler Brossy's recommendation was based on Messrs. Halverson and Kirsch's positions and pay approximately at the median of the external market data.

As a new hire, Mr. Goncalves’ salary was not determined through our annual review process but rather in direct negotiation between the New Committee and Mr. Goncalves. The New Committee, with the help of PM&P, reviewed Semler Brossy benchmarking information and determined that the salary offered Mr. Goncalves, while above the median, is competitive and reasonable.



	Effective April 1, 2014 ($)	Percent Change from 2013
Goncalves (1)	1,200,000	N/A
Paradie	505,000	15%
Tompkins	520,000	5%
Smith	390,000	5%
Webb (2)	390,000	8%
Halverson (3)	950,000	N/A
Kirsch (3)	800,000	N/A

(1)Base salary effective August 7, 2014.

(2)Increase includes merit and promotional adjustment effective February 1, 2014.

(3)No changes were made to their base salaries because they were appointed to their respective positions in 2014.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 28

COMPENSATION DISCUSSION AND ANALYSIS

Annual Incentive Plan

Our EMPI Plan provides an opportunity for our participating NEOs to earn an annual cash incentive based on our financial performance relative to business plans and achievement against key corporate objectives. The objective of the EMPI Plan is to provide our participating NEOs with a competitive annual cash compensation opportunity while aligning actual pay results with Cliffs’ short-term financial and strategic performance. Target annual incentives generally are positioned at or above market median; thus, when combined with salaries at median, the total target cash compensation opportunity for our NEOs generally is positioned at or above market median on average. The positioning of individual NEOs may vary from this general target based on the factors described above.

2014 EMPI Plan Award Opportunities. In February 2014, for each NEO who was serving at such time, the Previous Committee established a threshold, target and maximum EMPI Plan opportunity, expressed as a percentage of base salary. Actual incentive payouts below maximum funding levels were determined under a weighted scoring system, with the scoring of each performance metric expressed as a percentage of the maximum payout. The target level of overall performance would produce a payout equal to 50% of the total maximum award, and an overall scoring at the threshold level would produce a payout equal to 25% of the maximum award. Performance below threshold would result in a payout of zero for the relevant factor.

EMPI Plan award opportunities (expressed as a percentage of base salary) approved for each of the NEOs (other than Mr. Goncalves) on February 24, 2014 were as follows:



	EMPI Plan Award Opportunities
	Threshold	Target	Maximum
Goncalves (1)	N/A	N/A	N/A
Paradie	40%	80%	160%
Tompkins	40%	80%	160%
Smith	40%	80%	160%
Webb	40%	80%	160%
Halverson (2)	70%	140%	280%
Kirsch	60%	120%	240%


(1)	Mr. Goncalves was hired in August 2014 and therefore was not eligible to participate in the EMPI Plan for 2014. As an incentive to join the Company and in lieu of participating in the 2014 annual incentive, the New Committee awarded Mr. Goncalves a retention payment equal to 50% of what is intended to be his target annual incentive opportunity.


(2)	As a result of Mr. Halverson's promotion to CEO in February 2014 his target bonus opportunity under the EMPI Plan for the 2014 performance period was increased by the Previous Committee from 120% to 140% of his year end salary, subject to the previous approved maximum opportunity of $2,280,000.

2014 EMPI Plan Underlying Performance Measures. The EMPI Plan uses an underlying “performance scorecard” with multiple performance standards that are related to Cliffs' business and operations plans for 2014. Cliffs' believes that a significant portion of our NEOs’ potential compensation should be dependent on our business results as well as our NEOs’ successful leadership.

The underlying performance metrics for our corporate employees are based on our corporate and global results, while the underlying performance metrics for our business unit employees are measured by their business unit results.

2014 EMPI Plan Target Setting and 2014 Results. Performance targets and ranges under the EMPI Plan were established and approved by the Previous Committee in the first quarter of 2014, taking into consideration management's financial plans for the current year. Each performance element was assigned a minimum threshold level, a target level and a maximum level, representing attainment of 25%, 50% and 100%, respectively, of the EMPI Plan maximum award opportunity associated with that element. For performance below the minimum threshold performance requirement for each metric, funding would be zero percent for that factor.

As a top level performance metric, the EMPI Plan includes a minimum EBITDA condition, which means that no amounts will be payable under our EMPI Plan if our adjusted EBITDA is less than $282 million (generally reflecting Cliffs’ total annual dividends, including those on common shares and mandatory convertible preferred stock, and Cliffs’ total annual interest expenses).

Specifically as a result of our change in control, and as permitted under the EMPI Plan, the New Committee approved and authorized the exclusions of impairment charges related to Bloom Lake and asset write-downs associated with sale of Logan County Coal from the determination of the minimum adjusted EBITDA condition, and by doing this the minimum EBITDA condition was satisfied. Actual payouts were then guided based on the weighted aggregate attainment for each underlying performance element using the assigned weightings.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 29

COMPENSATION DISCUSSION AND ANALYSIS

The specific elements, respective weightings and funding results for the underlying metrics are as follows:



2014 EMPI - Corporate
EMPI Plan Performance Metric	Threshold 50%	Target 100%	Maximum 200%	Corporate/Global Weighting (%)		2014 Actual		2014 Funding
United States Iron Ore
Production Volume in million long tons	21.5	22.6	23.2	10.0	%	22.4		9.4	%
Cash Cost of Sales / long ton	$68.40	$65.15	$63.50	10.0	%	$64.91		11.5	%
Eastern Canadian Iron Ore
Production Volume in million metric tons	5.7	6.0	6.2	5.0	%	5.9		4.4	%
Cash Cost of Sales (CAD) / metric ton	$96.75	$92.15	$89.85	5.0	%	$96.59		2.5	%
Asia Pacific Iron Ore
Production Volume in million metric tons	10.5	11.0	11.1	4.0	%	11.4		8.0	%
Cash Cost of Sales (AUD) / metric ton	$69.85	$66.50	$64.85	6.0	%	$57.66		12.0	%
North American Coal
Production Volume in million short tons	7.0	7.4	7.6	5.0	%	7.5		8.7	%
Cash Cost of Sales / short ton	$92.00	$87.60	$85.40	5.0	%	$81.22		10.0	%
EBITDA (USD$) in millions	$870.00	$1,170.00	$1,395.00	20.0	%	$525.10		—	%
Supply Inv. Qtrly Avg. Balance in millions	$210.00	$200.00	$195.00	10.0	%	$200.10		10.0	%
Capital Expenditures	80% - 85% OR 105% - 110% of Plan Capital Expenditures	85% - 90% OR 100% - 105% of Plan Capital Expenditures	90% - 100% of Plan Capital Expenditures	10.0	%	100.0	%	10.0	%
2014 Safety Scorecard	50 - 100 points	101 - 125 points	126+ points	10.0	%	188.0		20.0	%
			Total	100.0	%			106.5	%



2014 EMPI - United States Iron Ore
EMPI Plan Performance Metric	Threshold 50%	Target 100%	Maximum 200%	Business Unit Weighting (%)		2014 Actual		2014 Funding
United States Iron Ore
Production Volume in million long tons	21.5	22.6	23.2	25.0	%	22.4		23.6	%
Cash Cost of Sales / long ton	$68.40	$65.15	$63.50	25.0	%	$64.91		28.6	%
EBITDA (USD$) in millions	$870.00	$1,170.00	$1,395.00	20.0	%	$525.10		—	%
Supply Inv. Qtrly Avg. Balance in millions	$210.00	$200.00	$195.00	10.0	%	$200.10		10.0	%
Capital Expenditures	80% - 85% OR 105% - 110% of Plan Capital Expenditures	85% - 90% OR 100% - 105% of Plan Capital Expenditures	90% - 100% of Plan Capital Expenditures	10.0	%	100.0	%	10.0	%
2014 Safety Scorecard	50 - 100 points	101 - 125 points	126+ points	10.0	%	188.0		20.0	%
			Total	100.0	%			92.2	%

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 30

COMPENSATION DISCUSSION AND ANALYSIS



2014 EMPI - Eastern Canadian Iron Ore
EMPI Plan Performance Metric	Threshold 50%	Target 100%	Maximum 200%	Business Unit Weighting (%)		2014 Actual		2014 Funding
Eastern Canadian Iron Ore
Production Volume in million metric tons	5.7	6.0	6.2	25.0	%	5.9		22.2	%
Cash Cost of Sales (CAD) / metric ton	$96.75	$92.15	$89.85	25.0	%	$96.59		12.8	%
EBITDA (USD$) in millions	$870.00	$1,170.00	$1,395.00	20.0	%	$525.10		—	%
Supply Inv. Qtrly Avg. Balance in millions	$210.00	$200.00	$195.00	10.0	%	$200.10		10.0	%
Capital Expenditures	80% - 85% OR 105% - 110% of Plan Capital Expenditures	85% - 90% OR 100% - 105% of Plan Capital Expenditures	90% - 100% of Plan Capital Expenditures	10.0	%	100.0	%	10.0	%
2014 Safety Scorecard	50 - 100 points	101 - 125 points	126+ points	10.0	%	188.0		20.0	%
			Total	100.0	%			75.0	%



2014 EMPI - Asia Pacific Iron Ore
EMPI Plan Performance Metric	Threshold 50%	Target 100%	Maximum 200%	Business Unit Weighting (%)		2014 Actual		2014 Funding
Asia Pacific Iron Ore
Production Volume in million metric tons	10.5	11.0	11.1	20.0	%	11.4		40.0	%
Cash Cost of Sales (AUD) / metric ton	$69.85	$66.50	$64.85	30.0	%	$57.66		60.0	%
EBITDA (USD$) in millions	$870.00	$1,170.00	$1,395.00	20.0	%	$525.10		—	%
Supply Inv. Qtrly Avg. Balance in millions	$210.00	$200.00	$195.00	10.0	%	$200.10		10.0	%
Capital Expenditures	80% - 85% OR 105% - 110% of Plan Capital Expenditures	85% - 90% OR 100% - 105% of Plan Capital Expenditures	90% - 100% of Plan Capital Expenditures	10.0	%	100.0	%	10.0	%
2014 Safety Scorecard	50 - 100 points	101 - 125 points	126+ points	10.0	%	188.0		20.0	%
			Total	100.0	%			140.0	%



2014 EMPI - North American Coal
EMPI Plan Performance Metric	Threshold 50%	Target 100%	Maximum 200%	Business Unit Weighting (%)		2014 Actual		2014 Funding
North American Coal
Production Volume in million short tons	7.0	7.4	7.6	25.0	%	7.5		43.3	%
Cash Cost of Sales / short ton	$92.00	$87.60	$85.40	25.0	%	$81.22		50.0	%
EBITDA (USD$) in millions	$870.00	$1,170.00	$1,395.00	20.0	%	$525.10		—	%
Supply Inv. Qtrly Avg. Balance in millions	$210.00	$200.00	$195.00	10.0	%	$200.10		10.0	%
Capital Expenditures	80% - 85% OR 105% - 110% of Plan Capital Expenditures	85% - 90% OR 100% - 105% of Plan Capital Expenditures	90% - 100% of Plan Capital Expenditures	10.0	%	100.0	%	10.0	%
2014 Safety Scorecard	50 - 100 points	101 - 125 points	126+ points	10.0	%	188.0		20.0	%
			Total	100.0	%			133.3	%

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 31

COMPENSATION DISCUSSION AND ANALYSIS

Total annual incentives for 2014 under the EMPI Plan were paid in the amounts set forth in the following table to the NEOs. Mr. Halverson was no longer participating in the EMPI at the end of 2014 under the terms of his severance arrangements; instead, Mr. Halverson received a severance amount equal to a prorated payout of his potential earnings under the 2014 EMPI ($798,000). Mr. Kirsch was not eligible for an EMPI payment due to his voluntary termination of employment. The New Committee required a 100% cap on EMPI payments for the NEOs and allowed for an increase or decrease by up to 20% of the final EMPI Plan payout:



	EMPI Plan Payout ($)
Goncalves (1)	N/A
Paradie	404,000
Tompkins (2)	499,000
Smith	312,000
Webb	312,000
Halverson	—
Kirsch	—

(1) Mr. Goncalves was hired in August 2014 and therefore was not eligible to participate in the EMPI Plan for 2014.

(2) Mr. Tompkins received an additional 20% to his EMPI payment to reward his efforts in the sale of Logan County Coal.

Retention and Bonus Payments

As discussed above, Mr. Goncalves was appointed as our Chairman, President and CEO in August 2014 and therefore was not eligible to participate in the EMPI Plan for 2014. Instead, pursuant to the terms of his employment offer approved by the New Committee, Mr. Goncalves was granted a retention payment of $1,200,000, payable in cash after continuous employment through December 31, 2014. The retention payment is subject to a pro-rata clawback if Mr. Goncalves terminates employment with us for any reason prior to December 31, 2017. The amount of the retention payment was reviewed with our compensation consultant, PM&P, and determined to be reasonable.

Mr. Kirsch was awarded, by the Previous Committee, a discretionary cash payment of $744,000 to reflect his service as executive Chairman.

Long-Term Incentive Program

The objectives of our long-term incentive program are to reward our NEOs for sustained performance over multiple years, to enhance retention of NEOs by delaying the vesting of awards and, when compensation is realized, to align the long-term interests of our NEOs with those of our shareholders. For long-term incentive awards, we have historically used performance shares and restricted share units to reward and retain executives. The performance shares and restricted share units are denominated and payable in Cliffs’ common shares in order to align the interests of our executives with our shareholders through direct ownership.

Each year, we establish a target long-term incentive award opportunity for each NEO as a pre-determined percentage of base salary based on market competitive practices and internal equity considerations. In general, the Previous Committee sought to position target long-term incentive opportunities at or above the median of market for equivalent roles so that, in combination with base salaries near median, and at or above market annual incentive targets, the total target compensation opportunity for our NEOs is between the median and the 75^th percentile of market on average. Actual positioning may vary from this target for NEOs based on the factors described above. In addition, actual awards to each NEO may vary from the target established for each role, based on the CEO’s assessment of individual performance in the case of grants made to NEOs other than the CEO, and based on the Board’s assessment of the CEO’s performance in the case of grants made to the CEO.

Administrative Process. Long-term incentive awards for NEOs are granted annually on the date of the Compensation Committee’s approval or a later date as set by the Compensation Committee. Grants for new or newly promoted NEOs or for long-term retention are approved by the Compensation Committee at the next regularly scheduled Compensation Committee meeting following the hire or promotion date or in a special meeting, as needed. The grant date for new hire or promotion-related awards is the date of such approval or such later date as the Compensation Committee determines. We do not time grants to coordinate with the release of material non-public information. Beginning in 2014, all NEO grants were awarded under the Cliffs Natural Resources Inc. 2012 Incentive Equity Plan. Prior to 2013, grants were awarded under the Amended and Restated Cliffs Natural Resources 2007 Incentive Equity Plan. Additional grants awarded after our 2014 Annual Meeting were made under the Amended and Restated 2012 Incentive Equity Plan (which was approved by our shareholders at the 2014 Annual Meeting). In addition, certain equity grants awarded under the 2012 Incentive Equity Plan and the Amended and Restated 2012 Incentive Equity Plan are eligible for payment of accrued dividends at the end of the vesting or performance period, subject to the number of shares actually earned or vested.

Performance Shares. Performance shares were the primary vehicle used to deliver long-term incentives in 2014 (other than Mr. Goncalves who did not participate in this grant of performance shares). In 2014, performance shares comprised 75% (or 50%, in the case of Mr. Kirsch) of the total target annual long-term incentive grant. A performance share granted in 2014 provides an opportunity to earn common shares based on our performance over a three-year period, with potential funding between zero and 200% of the target grant depending on the level of attained

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 32

COMPENSATION DISCUSSION AND ANALYSIS

performance. We use performance shares to reward for shareholder results relative to industry conditions, taking into consideration TSR, as compared to comparator companies’ returns in the metals and mining industries (performance share comparator companies identified below).

The calibration of the pay-for-performance relationship for 2014 grants is as follows and payout is interpolated for performance between threshold, target and maximum levels:



		Performance Level
Performance Factor	Weight	Below Threshold	Threshold	Target	Maximum
Relative TSR	100%	Below 35^th percentile	35^th percentile	55^th percentile	75^th percentile
Payout		—%	50%	100%	200%

2014 - 2016 Performance Share Comparator Group. The comparator group used for the performance share awards is comprised of the constituent companies in the SPDR Metals and Mining ETF on the last trading day of the three-year performance period, which ends on December 31, 2016. As of December 31, 2014, the index included the following companies:



AK Steel Holding Corporation	CONSOL Energy Inc.	Reliance Steel & Aluminum Co.
Alcoa Inc.	Freeport-McMoRan Copper & Gold	Royal Gold, Inc.
Allegheny Technologies Incorporated	Globe Specialty Metals Inc.	RTI International Metals, Inc.
Alpha Natural Resources, Inc.	Haynes International, Inc.	Schnitzer Steel Industries Inc.
Arch Coal, Inc.	Hecla Mining Company	Steel Dynamics, Inc.
Carpenter Technology Corporation	Horsehead Holding Corp.	Stillwater Mining Company
Century Aluminum Company	Kaiser Aluminum Corporation	SunCoke Energy, Inc.
Cloud Peak Energy Inc.	Materion Corporation	Timken Steel Corporation
Coeur d’Alene Mines Corporation	Newmont Mining Corporation	United States Steel Corporation
Commercial Metals Company	Nucor Corporation	Westmoreland Coal Company
Compass Minerals International, Inc.	Peabody Energy Corporation	Worthington Industries, Inc.

The performance comparator group focuses on steel, metals and commodity mineral mining companies that generally will be affected by the same long-term market conditions as those that affect us. The Compensation Committee evaluates this comparator group for each new cycle of the performance share program based on recommendations made by its compensation consultant and makes adjustments as needed based on changes in the industry makeup and relevance of our specific comparators. The Previous Committee established the above comparator group. The New Committee, with the help of their independent compensation consultant, reviewed the comparator group and continued to use the same comparator group for 2015 performance share grants. The performance comparator group used to assess performance for performance share grants is not the same as the comparator group used to assess the competitiveness of our compensation, because the latter is limited to those companies who are similar in revenue and industry. As discussed above, for purposes of measuring relative TSR performance, we utilized a broader comparator group that was not determined solely by size or location.

Restricted Share Units. Restricted share units are earned based on continued employment and are retention-based awards. A restricted share unit award vests in full at the end of the same three-year period used for the performance shares, and is payable in our common shares. Restricted share units comprised 25% (or 50% in the case of Mr. Kirsch) of the total annual long-term incentive grant for our NEOs in 2014 (other than Mr. Goncalves who did not participate in the grant of restricted share units).

2014 - 2016 Performance Share and Restricted Share Unit Grants. On February 10, 2014, the Previous Committee approved target awards (expressed as a percent of base salary) of performance share and restricted share unit awards under the 2012 Incentive Equity Plan for our NEOs (other than Mr. Goncalves, who was not hired until August 2014). The number of shares subject to the awards granted to each NEO was determined by dividing the total grant values by the 60-day average closing price of our common shares ending on the date of grant ($23.67 for grants made in 2014). The use of the 60-day average price to calibrate the number of shares granted limits the potential to grant an unusually high or low number of shares due to an exceptionally low or high share price on the date of the grant. The following amounts of performance shares and restricted share units, valued at the closing share price of $20.58 per share on February 10, 2014, the date of grant, were awarded to our NEOs (other than Mr. Goncalves) for the 2014 - 2016 period:

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 33

COMPENSATION DISCUSSION AND ANALYSIS



	Target %		Total Grant Value ($)	Target Performance Shares (#)	Restricted Share Units (#)
Goncalves (1)	N/A		N/A	N/A	N/A
Paradie	175	%	768,457	28,010	9,330
Tompkins	175	%	791,301	28,840	9,610
Smith	175	%	593,527	21,630	7,210
Webb	175	%	593,527	21,630	7,210
Halverson	375	%	3,097,496	112,890	37,620
Kirsch (2)	225	%	1,565,109	38,025	38,025

(1) Mr. Goncalves was hired in August 2014 and therefore was not eligible to participate in the LTI for 2014.


(2)	Mr. Kirsch's long-term incentive grant for 2014 was comprised of 50% performance shares and 50% restricted share units due to his anticipated transitional role, for six to eighteen months, to bridge the leadership of Cliffs as Mr. Halverson took the responsibility of CEO.

Other Equity Awards

Performance-Based Restricted Share Units and Stock Options. Pursuant to Mr. Goncalves’ employment offer, the Board granted Mr. Goncalves 400,000 performance-based restricted share units, which vest if our shares achieve and maintain certain volume weighted average prices ("VWAP") for any period of ninety (90) consecutive calendar days during the performance period commencing on August 7, 2014 and ending on December 31, 2017. In addition, Mr. Goncalves was granted 250,000 stock options with an exercise price equal to the VWAP of the Company’s common shares at $13.83, which options vest in substantially equal installments on each of December 31, 2015, December 31, 2016 and December 31, 2017. As part of the negotiation of Mr. Goncalves’ compensation, the amount of the awards and the vesting terms were reviewed with our compensation consultant, PM&P, to ensure that the amounts were not unreasonable and determined in consideration of market competitive practices. The New Committee reviewed the reasonableness of Mr. Goncalves’ equity grants by comparing the value of such grants to the benchmarking prepared by Semler Brossy.

The New Committee believes executive performance will result and be ultimately measured through the share price. Therefore, in developing Mr. Goncalves’ equity grants, the New Committee provided that value would only be earned in the event of an increase in the share price. The performance-based restricted share is only earned for achieving a sustained share price over a 90-day period (as measured by VWAP) while the options will only provide value if the share price appreciates. The New Committee determined that the use of these performance-based restricted share units and options provide Mr. Goncalves with a balanced yet strong incentive to perform.

Restricted Share Units. In consideration of their efforts and due to the change in our leadership, Messrs. Paradie, Smith and Webb were granted by the Previous Committee additional restricted share unit awards on July 29, 2014 for 31,780 shares, 24,540 shares, and 24,540 shares, respectively. The number of restricted share units granted to each such NEO was equal in value to one year of base salary, divided by the closing price of our common shares. The restricted share units vested 50% on February 10, 2015 and will vest as to the remaining 50% on February 10, 2016.

Payouts Determined for 2012 – 2014 and 2013 - 2015 Long-Term Incentive Grants – Performance Shares and Restricted Share Units. The change in control triggered accelerated vesting and payment of outstanding grant awards under Cliffs' incentive equity plans. All performance shares granted as part of the 2012 and 2013 long-term incentive programs were earned at 100% of target. Performance shares were settled in cash based on the fair market value of the closing price of the Company’s shares on August 6, 2014, which was $17.15 (the date the Company certified the election results). Also, upon the change in control, all restricted share units granted as part of the 2012 and 2013 long-term incentive programs vested and were settled in cash based the closing price of our shares on August 6, 2014. These payouts are disclosed below in the 2014 Option Exercises and Stock Vested Table on page 45.

RETIREMENT AND DEFERRED COMPENSATION BENEFITS

Defined Benefit Pension Plan

We maintain a defined benefit pension plan for all U.S.-based employees (the "Pension Plan"), and a Supplemental Executive Retirement Plan (the "SERP"), in which all of the NEOs are eligible to participate following one year of service. The Previous Committee believed that pension benefits are a typical component of total benefits for employees and executives at companies in industries similar to ours, and that providing such benefits is important to delivering a competitive package to attract and retain employees. The objective of the SERP is to provide benefits above the statutory limits for qualified pension plans for highly paid executives. Additional detail is shown in the 2014 Pension Benefits Table below.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 34

COMPENSATION DISCUSSION AND ANALYSIS

Under the change in control, a lump sum payment (the "Non-accrued SERP Payment") is payable within the first five days of the seventh month after the NEOs separation from service in an amount equal to the actuarial equivalent of the future pension benefits which the NEO would have been entitled to accrue under the SERP during the continuation period, (including base salary and incentive pay) if the NEO had remained in the full-time employment of the Company for the entire continuation period. The “cash balance” benefit of the Pension Plan shall be based on the amount that would be the NEO’s account balance under the cash balance formula of the SERP. Mr. Halverson was the only NEO that received a lump sum SERP payment in connection with the change in control. These benefits are disclosed below in the 2014 Summary Compensation Table under "All Other Compensation" and described in footnote 7(f).

401(k) Savings Plan. Our U.S.-based employees, including our NEOs, are eligible to contribute up to 35% of their base salary under our 401(k) Savings Plan. Annual pre-tax contributions are limited by Internal Revenue Service regulations. For the 2014 calendar year, employee pre-tax contributions were limited to $17,500 ($23,000 for persons age 50 or older). We match 100% of employee contributions up to the first three percent, and 50% for the next two percent of contributions. We believe our 401(k) match is competitive and necessary to attract and retain employees. There was no accelerated 401(k) payout in connection with the change in control.

Deferred Compensation Plan

Under the 2012 NQDC Plan, the NEOs and other senior executives, are permitted to defer, on a pre-tax basis, up to 50% of their base salary and all or a portion of their annual incentive under the EMPI Plan. Prior to 2012, in the 2005 VNQDC Plan, NEOs and other senior executives were permitted to defer their EMPI awards in shares as well as the performance shares and restricted share units from the long-term awards. Additionally, we matched 25% of the EMPI awards deferred into share units; matched amounts vest at the end of five years. The 2012 NQDC Plan discontinued the stock deferrals and the 25% match. The Previous Committee believed the opportunity to defer compensation is a competitive benefit that addresses the goal of attracting and retaining talent. In 2014, our deferred compensation balances under our 2005 VNQDC Plan and 2012 NQDC Plan for Messrs. Paradie, Tompkins, Smith, Webb and Kirsch were accelerated and were paid out in connection with the change in control. These benefits are disclosed below in the 2014 Summary Compensation Table under "All Other Compensation" and described in footnote 7.

Deferrals earn interest at the Moody’s Corporate Average Bond Yield, which was approximately 4.3% for 2014, or any mutual investment option provided in the 401(k) Savings Plan for U.S. salaried employees. Additionally, the 2012 NQDC Plan provides for an annual supplemental matching contribution. The amount of the supplemental matching contribution is equal to what the NEO would have received as matching contributions in the 401(k) Savings Plan without regard to the applicable Internal Revenue Code limits for 2014.

Other Benefits

Our other benefits and perquisites for senior executives, including our NEOs (Mr. Goncalves' other benefits are described in his Employment Offer on page 36), are limited to company-paid parking, executive physicals, fitness facility reimbursement and personal financial services. The Previous Committee believed that these benefits will prevent distraction from duties as an executive officer and encourage health and well-being of our executive leadership team. Due to the location of our corporate offices, we provide company-paid parking to corporate employees in mid- to upper-level management positions and executive officers. These benefits are disclosed below in the 2014 Summary Compensation Table under “All Other Compensation” and described in footnote 7.

SUPPLEMENTARY COMPENSATION POLICIES

Cliffs uses several additional policies to ensure that our overall compensation structure is aligned with shareholder interests and is competitive with market practices. Specific policies include:

Share Ownership Guidelines

Our Board adopted Share Ownership Guidelines to ensure that senior executives, including our NEOs, have a meaningful direct ownership stake in Cliffs and that the interests of executives thereby are aligned with our shareholders. Senior executives, including our NEOs, are required to own the dollar value of shares at least equal to the respective multiple times their base salary. To be compliant, each executive has five years from the time he or she is appointed to his or her officer position to satisfy the Share Ownership Guidelines. The guidelines are as follows:



	Multiple of Base Pay
CEO	6x
Executive / Senior Vice President	3x
Vice President	1.5x

Due to the accelerated vesting and payout as a result of the change in control in August 2014 in combination with a share price decline during 2014, none of our NEOs were in compliance with guidelines as of December 31, 2014.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 35

COMPENSATION DISCUSSION AND ANALYSIS

Change in Control Severance Agreements

Effective as of January 1, 2014, the Previous Committee approved and we entered into new change in control severance agreements with all of our NEOs in service at such time. We also entered into a change in control severance agreement with Mr. Goncalves on September 11, 2014 at the direction of the New Committee. The Compensation Committee (both the Previous and New Committees) believes that such agreements support the goals of attracting and retaining highly talented individuals by clarifying the terms of employment and reducing the risks to the NEO in situations where the NEO believes, for example, that we may engage in a merger, be acquired in a hostile tender offer or involved in a proxy contest. In addition, the Compensation Committee believes that such agreements align the interests of NEOs with the interests of our shareholders if a qualified offer is made to acquire Cliffs, in that each of our NEOs would likely be aware of or involved in any such negotiation and it is to the benefit of our shareholders to have NEOs negotiating in the shareholders’ best interests without regard to the NEOs' personal financial interests. The level of benefits under these agreements was determined consistent with market practices at the time that the agreements were established. The agreements generally provide for the following change in control benefits (see accompanying narrative below for more details):


•	For grants made prior to mid-September 2013, automatic vesting of unvested equity incentives upon a change in control; however, for grants made on or after mid-September 2013, equity grants that are replaced, assumed or continued after the change in control will vest only upon a qualifying termination of employment following the change in control;


•	Depending on position, two or three times annual base salary and target annual incentive as severance upon termination (within 24 months) following the change in control, and, under certain circumstances, continuation of welfare benefits for two or three years, depending on position; and


•	Non-compete, confidentiality and non-solicitation restrictions on NEOs who receive severance payments following the change in control.

The change in control severance agreements that were in effect through December 31, 2013 with our NEOs serving at such time had been amended to eliminate (1) gross-ups relating to excise taxes following a change in control and tax gross-ups relating to cash payments in lieu of certain health and welfare benefits and (2) industry service credits related to the supplemental retirement plan benefit provided upon termination after a change in control were eliminated.

Employment Offer - Goncalves. Effective August 7, 2014, Mr. Goncalves was appointed as our Chairman, President and CEO. His employment offer package, which was recommended by the New Committee, approved by the Board and was reviewed by PM&P and determined to be consistent with the market competitive practices, included the following compensation:


•	Base salary ($1,200,000);


•	A retention payment ($1,200,000) payable in cash after continuous employment by the Company through December 31, 2014 and which is subject to a pro-rata clawback if Mr. Goncalves' employment terminates for any reason before December 31, 2017;


•	A grant of 400,000 performance-based restricted share units, based on a share price of $13.83, which results in the payout of shares, if our share price achieves and maintains certain VWAP targets for any period of 90 consecutive calendar days during the performance period commencing August 7, 2014 and ending December 31, 2017 as follows:


◦	During the performance period, attaining VWAP 25% greater than the original share price results in a payout of 300,000 shares;


◦	During the performance period, attaining VWAP 50% greater than the original share price results in a payout of 400,000 shares; and


◦	During the performance period, attaining VWAP 100% greater than the original share price results in a payout of 500,000 shares;


•	A grant of 250,000 stock options with an exercise price equal to $13.83, which was in excess of the fair market value of our common shares on the grant date, with such stock options vesting in substantially equal installments on each of December 31, 2015, December 31, 2016 and December 31, 2017 (subject to the CEO’s continued employment through each such vesting date); and


•	Certain customary perquisites including paid parking, executive financial services and participation in our retirement plans and health and welfare benefits offered to all of our salaried employees; as well as legal fees with regards to the negotiation and drafting of his employment offer, relocation expenses, apartment rental fees, and commuting expenses.

Severance Agreement and Release - Halverson. The Board terminated Mr. Halverson’s employment with the Company as its President & CEO, effective August 7, 2014. He received the following separation payment ($8,420,428) in exchange for his general release of claims and non-solicitation, non-disclosure and non-disparagement undertakings:


•	An amount equal in value to 36 months of base salary ($2,850,000);


•	An amount equal in value to three times his target bonus under the EMPI Plan ($3,990,000);

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 36

COMPENSATION DISCUSSION AND ANALYSIS


•	An amount equal in value to a target payment under the EMPI Plan ($798,000) for the 2014 plan year, which amount was prorated;


•	Accrued benefits under the Cliffs Defined Benefit Pension Plan and SERP ($579,479);


•	Accrued but unused vacation ($30,449);


•	Outplacement services ($142,500); and


•	Financial planning perquisites ($30,000).

Please see footnote 7(f) of the 2014 Summary Compensation Table for more information regarding Mr. Halverson’s separation-related payments, benefits and arrangements, including assumptions used in estimating these amounts.

Voluntary Termination - Kirsch. Mr. Kirsch resigned from his position and terminated his employment with Cliffs effective May 23, 2014. He received a discretionary cash payment of $744,000 approved by the Previous Committee for his service as executive Chairman.

Please see footnote 7(g) of the 2014 Summary Compensation Table for more information regarding Mr. Kirsch's separation-related payments.

Certain Material Tax and Accounting Implications

Section 162(m) of the Internal Revenue Code generally disallows a federal income tax deduction to public companies for compensation in excess of $1 million paid to the CEO and to each of the three other most highly compensated executive officers (other than the CFO) in any taxable year. However, compensation that qualifies as “performance-based compensation” under Section 162(m) of the Internal Revenue Code may be excluded from this $1 million limit. Our 2012 EMPI Plan and the Amended and Restated 2012 Incentive Equity Plan are intended to permit us to grant certain awards that may be able to qualify as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code. However, some grants of equity-based awards under the Amended and Restated 2012 Incentive Equity Plan and some awards under the 2012 EMPI Plan may not qualify as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code under certain circumstances. While the Compensation Committee considers the deductibility of the compensation it awards, it retains the flexibility to award compensation that is consistent with our objectives and philosophy even if it does not qualify for a tax deduction. The Compensation Committee believes that the tax deduction limitation should not be permitted to compromise our ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes, and it is possible that awards intended to qualify as “performance-based compensation” may not so qualify. Moreover, even if the Compensation Committee intends to grant compensation under the 2012 EMPI Plan and the Amended and Restated 2012 Incentive Equity Plan that qualifies as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code, we cannot guarantee that such compensation will so qualify or ultimately will be deductible.

In 2014, we entered into an employment agreement with Mr. Goncalves which will provide a salary in excess of $1 million. The Committee specifically considered the potential loss of deductibility of Mr. Goncalves salary when approving Mr. Goncalves’ salary and determined the salary appropriate.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 37



	COMPENSATION COMMITTEE REPORT

The following report has been submitted by the Compensation and Organization Committee of the Board:

The Compensation and Organization Committee of the Board has reviewed and discussed the Company’s Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation and Organization Committee recommended to the Board that the Compensation Discussion and Analysis be included in the definitive proxy statement on Schedule 14A for Cliffs’ 2015 Annual Meeting and in Cliffs’ Annual Report on Form 10-K for the year ended December 31, 2014, each as filed with the Securities and Exchange Commission.

This report is furnished on behalf of the Compensation and Organization Committee of the Board of Directors.

Robert P. Fisher, Jr., Chair

Joseph A. Rutkowski, Jr.

Douglas C. Taylor



	COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the individuals who served as members of the Compensation Committee in 2014 were or have been an officer or employee of ours or engaged in transactions with us (other than in his or her capacity as director).

None of our executive officers serves as a director or member of the Compensation Committee of another organization whose executive officers serve as a member of either our Board or our Compensation Committee.



	COMPENSATION-RELATED RISK ASSESSMENT

In 2014, Risk Management and the Human Resources Departments reviewed existing policies and plan design features within the framework of employee compensation plans in which employees (including the NEOs) participate in order to identify whether these arrangements had any design features that might encourage unnecessary and excessive risk taking that would have a material adverse effect on Cliffs. The review team analyzed a series of risk factors and concluded that the risk mitigation features in our compensation policies and plans, including pay mix (variable versus fixed and short-term versus long-term), multi-year performance periods, incentive compensation clawbacks and Share Ownership Guidelines, provide adequate safeguards to either prevent or discourage excessive risk taking. The review team did not identify any risk within the framework of our compensation policies and plans for our NEOs and our employees generally that are, either individually or in the aggregate, reasonably likely to have a material adverse effect on Cliffs. The Compensation Committee received a report summarizing the work of the review team and concurs with this conclusion.

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 38



	EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION TABLES

2014 Summary Compensation Table

The following table sets forth the compensation earned by our NEOs for 2014 for services rendered to Cliffs and our subsidiaries for the fiscal years ended December 31, 2014, 2013 and 2012 (as applicable).



Name and Principal Position(a)	Year (b)	Salary ($) (1)(2) (c)	Bonus ($) (1) (d)	Stock Awards ($) (3) (e)	Option Awards ($) (4) (f)	Non-Equity Incentive Plan Compensation ($) (1)(5) (g)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (6) (h)	All Other Compensation ($) (7) (i)	Total ($) (j)
Lourenco Goncalves (8) Chairman, President & CEO
	2014	482,308	1,200,000	4,244,000	3,457,500	—	—	93,334	9,477,142

Terrance M. Paradie EVP, CFO & Treasurer	2014	488,750	—	1,374,077	—	404,000	185,728	215,695	2,668,250
	2013	415,000	—	432,452	—	269,808	68	39,326	1,156,654
	2012	311,250	—	406,835	—	—	61,397	116,654	896,136
P. Kelly Tompkins EVP, Business Development	2014	513,750	—	838,310	—	499,000	201,850	199,087	2,251,997
	2013	484,125	—	1,091,597	—	364,241	5,738	39,566	1,985,267
	2012	446,125	—	1,060,147	—	—	103,957	23,100	1,633,329
Clifford T. Smith EVP, Seaborne Iron Ore
	2014	385,000	—	1,061,179	—	312,000	196,625	989,675	2,944,479

David L. Webb EVP, Global Coal
	2014	387,500	—	1,061,179	—	312,000	106,851	865,927	2,733,457

Gary B. Halverson (9) Former President & CEO	2014	572,436	—	3,281,507	—	—	579,479	8,717,116	13,150,538
Gary B. Halverson (9) Former President & CEO	2013	118,750	600,000	1,648,350	—	139,162	—	32,883	2,539,145
James F. Kirsch (10) Former Executive Chairman
	2014	520,660	744,000	1,627,090	—	—	—	187,039	3,078,789


(1)	2014 amounts in columns (c), (d), and (g) reflect the salary, bonus and non-equity incentive plan compensation for each NEO, respectively, before pre-tax reductions for contributions to the 401(k) Savings Plan, the 2012 NQDC Plan and certain other benefit plans.


(2)	The 2014 salary of the NEOs includes each NEO's base salary before the NEO's contribution to the 401(k) Savings Plan:


•	Mr. Webb's salary increase, which includes a merit and promotion adjustment, was effective February 1, 2014.


•	Messrs. Paradie, Tompkins and Smith received a salary increase, effective April 1, 2014.


•	Mr. Goncalves' salary was prorated to his hire date of August 7, 2014.


•	Messrs. Halverson and Kirsch did not receive a salary increase for 2014.


•	Mr. Kirsch's salary also includes fees earned or paid in cash as his directors compensation:


◦	Prorated second quarter 2014 non-executive chairman retainer ($52,198);


◦	Third quarter 2014 non-executive chairman retainer ($125,000);


◦	Supplemental retainer ($25,000); and


◦	Employee salary ($318,462).

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 39

EXECUTIVE COMPENSATION

The following table summarizes salary contributions for the 401(k) Savings Plan for NEOs in 2014:



	401(k) Contribution ($)	Catch-Up Contribution ($)	Total ($)
Goncalves	17,500	5,500	23,000
Paradie	17,500	—	17,500
Tompkins	17,500	4,750	22,250
Smith	17,500	5,500	23,000
Webb	17,500	5,500	23,000
Halverson	17,500	5,500	23,000
Kirsch	17,500	5,500	23,000

(3) (4)

The 2014 amounts in columns (e) and (f) reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, for awards of performance shares and performance-based restricted share units at target, restricted share units and stock options granted during 2014. For performance shares and performance-based restricted share units granted during 2014, the amounts reported are based on the probable outcome as of the grant date. For additional information, refer to Item 8, Note 7 in our Annual Report on Form 10-K for the year ended December 31, 2014. These types of awards are discussed in further detail in “Compensation Discussion and Analysis - Analysis of 2014 Compensation Decisions", under the sub-headings “2014 - 2016 Performance Share and Restricted Share Unit Grants” and "Other Equity Awards".

The table below shows the grant date fair values for the performance shares granted to our NEOs (other than Mr. Goncalves) on February 10, 2014, assuming a maximum payout of 200% and using a grant date fair value, computed in accordance with FASB ASC Topic 718, of $22.21 per share. With respect to Mr. Goncalves, the table below shows the grant date fair value for the performance-based restricted share units granted to him on November 17, 2014, assuming a maximum payout of 500,000 shares and using a grant date fair value, computed in accordance with FASB ASC Topic 718, of $10.61 per share.



	Maximum Fair Value of 2014-2016 Performance Shares and Performance-Based Restricted Share Units ($)
Goncalves	5,305,000
Paradie	1,244,204
Tompkins	1,281,073
Smith	960,805
Webb	960,805
Halverson	5,014,574
Kirsch (a)	1,689,071

(a) Mr. Kirsch's equity awards were forfeited due to his voluntary termination on May 23, 2014.


(5)	The 2014 amounts in column (g) reflect the incentive awards earned in 2014 under the EMPI Plan, which is discussed in further detail in “Compensation Discussion and Analysis - Analysis of 2014 Compensation " under the sub-heading “Annual Incentive Plan.”

(6)

The 2014 amounts in column (h) reflect the actuarial increase in the present value of the NEO’s benefits under the Pension Plan and the SERP, both of which are discussed in “Compensation Discussion and Analysis - Retirement and Deferred Compensation Benefits” under the sub-heading “Defined Benefit Pension Plan,” determined using interest rate and mortality assumptions consistent with those used in our financial statements and may include amounts in which the NEO is not fully vested. The present value of accumulated pension benefits for the NEOs increased from December 31, 2013 to December 31, 2014. This is primarily the result of the significant decrease in discount rates used to develop plan obligations (a function of decreasing corporate bond yields during the past year). This column also includes amounts for above-market interest for the NEOs’ deferrals into the 2005 VNQDC Plan and the 2012 NQDC Plan.

The following table summarizes changes in pension values and above-market earnings on deferred compensation in 2014:



	Present Value of Pension Accruals ($)	Above-Market Interest on Deferred Compensation ($)	Total ($)
Goncalves	—	—	—
Paradie	185,700	28	185,728
Tompkins	201,700	150	201,850
Smith	196,100	525	196,625
Webb	104,000	2,851	106,851
Halverson	579,479	—	579,479
Kirsch	—	—	—

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 40

EXECUTIVE COMPENSATION

(7)

The 2014 amounts in column (i) reflect the combined value of the NEOs' perquisites or the benefits attributable to our paid parking, executive physicals, financial services, dividends paid or accrued on equity holdings, matching contributions made on behalf of the executives under the 401(k) Savings Plan, the 2012 NQDC Plan, accelerated payouts in connection with the change in control and accelerated payouts under the non-qualified deferred compensation plan. Mr. Halverson’s amount also includes payouts related to his terminations and severance agreement, accelerated SERP payment and relocation. Mr. Kirsch’s additional amount reflect apartment rental fees.

The following table summarizes perquisites and other compensation in 2014:



	Paid Parking ($)	Executive Physicals ($)	Financial Services ($)	Dividends and Accrued Dividends ($)	401(k) Savings Plan Matching Contributions ($)	NQDC Plan Matching Contributions ($)	Other ($)		Total ($)
Goncalves	795	—	—	—	10,000	8,000	74,539	(a)	93,334
Paradie	3,180	—	10,153	31,938	10,247	9,303	150,874	(b)	215,695
Tompkins	3,180	—	2,125	37,650	10,150	10,021	135,961	(c)	199,087
Smith	3,180	—	10,059	24,666	10,400	3,910	937,460	(d)	989,675
Webb	3,180	—	9,797	24,666	7,700	7,800	812,784	(e)	865,927
Halverson	2,120	—	9,827	103,694	10,200	—	8,591,275	(f)	8,717,116
Kirsch	2,120	—	10,000	—	10,200	—	164,719	(g)	187,039

(a) Other compensation for Mr. Goncalves:


•	Includes legal fees incurred in connection with the negotiation and drafting of his new employment offer ($22,901);


•	Includes relocation, apartment rental fees, and commuting expenses ($48,578);


•	Reflects a tax gross-up on relocation expense ($2,971); and


•	Reflects a holiday gift card ($57) and a tax gross-up on the holiday gift card ($32).

(b) Other compensation for Mr. Paradie:


•	Reflects a non-qualified deferred compensation accelerated payment in connection with the change in control ($133,452);


•	Reflects a holiday gift card ($57) and a tax gross-up on the holiday gift card ($32); and


•	Reflects accrued dividend equivalents on 2013 equity grants ($17,333); but


•	Does not reflect Mr. Paradie’s accelerated vesting and payment of outstanding equity awards in connection with the change in control for:


◦	Performance shares and restricted share units granted during 2012 for the 2012-2014 period ($93,983) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15); and


◦	Performance shares and restricted share units granted during 2013 for the 2013-2015 period ($396,337) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15).

The value for these accelerated equity awards is not included in the “All Other Compensation” column of the 2014 Summary Compensation Table because amounts covering these awards were disclosed previously in the Summary Compensation Table in prior years (and thus would represent double-counting), and do not represent additional compensation. However, to provide shareholders with context for these amounts, the values are included here in this footnote.

•Reflects a non-qualified deferred compensation accelerated payment in connection with the change in control ($115,817);

•Reflects a holiday gift card ($57) and a tax gross-up on the holiday gift card ($32); and

•Reflects accrued dividend equivalents on 2013 equity grants ($20,055); but

•Does not reflect Mr. Tompkins’ accelerated vesting and payment of outstanding equity awards in connection with the change in control for:


◦	Performance shares and restricted share units granted during 2012 for the 2012-2014 period ($244,903) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15); and


◦	Performance shares and restricted share units granted during 2013 for the 2013-2015 period ($458,591) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15).

(d) Other compensation for Mr. Smith:


•	Reflects a non-qualified deferred compensation accelerated payment in connection with the change in control ($448,603);


•	Reflects a holiday gift card ($57) and a tax gross-up on the holiday gift card ($32) and a wellness gift card ($100) and tax gross-up on the wellness gift card ($90);


•	Reflects accrued dividend equivalents on 2013 equity grants ($14,573);


•	Reflects retirement eligible non-forfeitable restricted share units ($1,350); and


•	Reflects Mr. Smith’s accelerated vesting and payment of outstanding equity awards in connection with the change in control for:

CLIFFS NATURAL RESOURCES INC. - 2015 Proxy Statement 41

EXECUTIVE COMPENSATION


◦	Performance shares and restricted share units granted during 2012 for the 2012-2014 period ($139,430) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15); and


◦	Performance shares and restricted share units granted during 2013 for the 2013-2015 period ($333,225) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15).

The value for these accelerated equity awards is included in the “All Other Compensation” column of the 2014 Summary Compensation Table because amounts covering these awards were not disclosed previously in the Summary Compensation Table in prior years (and thus do not represent double-counting).

(e) Other compensation for Mr. Webb:


•	Reflects a non-qualified deferred compensation accelerated payment in connection with the change in control ($368,561);


•	Reflects a holiday gift card ($57) and a tax gross-up on the holiday gift card ($32);


•	Reflects accrued dividend equivalents on 2013 equity grants ($14,183); and


•	Reflects Mr. Webb’s accelerated vesting and payment of outstanding equity awards in connection with the change in control for:


◦	Performance shares and restricted share units granted during 2012 for the 2012-2014 period ($105,644) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15); and


◦	Performance shares and restricted share units granted during 2013 for the 2013-2015 period ($324,307) that were earned at 100% (target) performance level based on the closing price of Cliffs’ common shares on August 6, 2014 ($17.15).

(f) Other compensation for Mr. Halverson:


•	Includes payment related to his August 7, 2014 termination and Severance Agreement and Release for:


◦	An amount equal to 36 months base pay ($2,850,000);


◦	Three times target bonus under the EMPI Plan ($3,990,000);


◦	Incentive award earned in 2014 under the EMPI Plan ($798,000);


◦	Accrued but unused vacation ($30,449);


◦	Outplacement services ($142,500);


◦	Financial planning ($30,000);


◦	Relocation and apartment rental fees ($168,014);


◦	Reflects a tax gross-up on relocation expense ($2,381);


◦	Medicare and local tax gross-up after his termination ($452); and


◦	A cash payment that represents the sum of the present values of Mr. Halverson's full accrued benefit under the Cliffs Defined Benefit Pension Plan and SERP ($579,479);

•

But does not reflect an equity payout ($3,596,591) reflective of other vested grants and/or awards under the 2012 Incentive Equity Plan. The value for these accelerated equity awards is not included in the “All Other Compensation” column of the 2014 Summary Compensation Table because amounts covering these awards were otherwise disclosed in the “Stock Awards” column of the 2014 Summary Compensation Table or in the Summary Compensation Table in 2013 (and thus would represent double-counting), and do not represent additional compensation. However, to provide shareholders with context for these amounts, the values are included here in this footnote.


(g)	Reflects Mr. Kirsch's apartment rental fees ($30,382), non-qualified deferred compensation accelerated payment in connection with the change in control ($133,877); and Medicare and local tax gross-up after his termination ($460).

(8)

Mr. Goncalves was appointed to the positions of Chairman, President and Chief Executive Officer on August 7, 2014. Mr. Goncalves replaced Mr. Kirsch who served as Chairman since July 2013, and Mr. Halverson who served as CEO since February 2014. Since 2014 was the first year of disclosure for Mr. Goncalves, compensation information is shown for 2014 only. Mr. Goncalves' performance-based restricted share units and option awards, which are the largest component of his compensation, are wholly dependent on our future share price. These awards only have value if our share price increases.


(9)	Mr. Halverson was elected President & Chief Operating Officer effective November 18, 2013, and Chief Executive Officer on February 13, 2014. Effective August 7, 2014, Mr. Halverson was terminated from the Company. For additional details related to his termination, please refer to page 47.


(10)	Mr. Kirsch was elected as non-executive Chairman on July 9, 2013, and then became executive Chairman on January 1, 2014. Mr. Kirsch resigned from his position and terminated his employment with us, effective May 23, 2014, at which time he once again became non-executive Chairman.