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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 No.    )

Filed by the Registrant                  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material pursuant to Rule 14a-12

 

Martin Marietta Materials, Inc.

(Name of Registrant as Specified In Its Charter)

 

 

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

 

Payment of Filing Fee (Check the appropriate box):

 

 

No fee required.

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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Fee paid previously with preliminary materials.

   

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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LOGO

2021 ANNUAL MEETING OF SHAREHOLDERS | PROXY STATEMENT Martin Marietta 2021 Annual Meeting of Shareholders Proxy Statement A World-Class Organization Built for Success


Table of Contents

 

LOGO    April 13, 2021  

Dear Fellow Shareholder:

 

On behalf of the Martin Marietta Board of Directors and executive officers, I am pleased to invite you to attend Martin Marietta’s 2021 Annual Meeting of Shareholders. This document provides some of the highlights of our key actions and important decisions in 2020 as well as information about our financial performance. Please review this Proxy Statement and the 2020 Annual Report for more information about these topics.

 

Our Continuing Response to COVID-19

 

In this same letter last year, published in April 2020 at the beginning of the coronavirus (COVID-19) pandemic, I noted that our management and Board of Directors were actively monitoring emerging developments, preparing for and responding to the challenges and uncertainties posed by the pandemic, and proactively taking responsible steps across our enterprise to keep our business, including our employees, customers, vendors, and other stakeholders, safe and healthy. Throughout 2020 and as of the date of this letter, we have remained open for business and continued to meet the needs of our communities. This includes implementing enhanced facility and equipment cleaning, personal safety protocols, social distancing, remote work (where possible), and other changes, all of which we believe are consistent with the guidelines from the Centers for Disease Control and Prevention and the physicians associated with our industrial hygienist group that are familiar with our operations. We effectively established task forces related to COVID-19 planning and communications, canceled all non-essential business travel, and established contingency plans with respect to facility staffing.

 

LOGO

Record 2020 Financial Performance

Despite the challenges posed by COVID-19, 2020 was another outstanding year of achievement at Martin Marietta. We successfully managed as an essential business through the COVID-19 crisis with limited business disruption, achieving consolidated total revenues of $4.7 billion, which was driven by steady pricing gains in all product lines. While shipments were lower than the prior year due to headwinds from the global pandemic, we reported record financial results, including an 11% increase in Adjusted EBITDA, an 18% increase in Diluted EPS, and a 290 basis point increase in Adjusted EBITDA Margin from the prior year level. We increased our dividend 4% in August 2020 and returned $190.3 million to shareholders in 2020; we have returned more than $1.8 billion to shareholders since announcing a 20 million share repurchase authorization in February 2015.

Commitment to Sound Corporate Governance

We remained engaged with shareholders and other key stakeholders during 2020. In response to valuable feedback from shareholders, we continued to enhance our disclosure regarding our activities, risks and opportunities regarding sustainability and other environmental, social and governance issues, which is further addressed in the Sustainability section in this letter below. Our investor outreach in 2020 extended to 88 meetings (mostly virtual) with 313 investment groups in the United States, Canada, the United Kingdom, Germany, Switzerland, the Netherlands, and France, including most of our top 30 shareholders.

Over the past five years, we have added seven new independent directors. Most recently, Anthony R. Foxx, who served as the United States Secretary of Transportation and Mayor of Charlotte, North Carolina, joined the Board in November 2020, and David C. Wajsgras, who served as president of the Intelligence, Information and Services business of the former Raytheon Company, as well as its CFO, joined the Board in May 2020. We are delighted to have both Anthony and Dave, who each bring strong backgrounds and experience with publicly-traded companies and add unique insights into our Board mix. We also recognize the importance of diversity in our business and leadership, including on our Board. Our Board nominees demonstrate diversity in the form of gender, ethnicity, age and tenure, geography, and experience. Of note, women and ethnic minorities currently represent 45 percent of our Board.

 

  LOGO  


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World-Class Safety Performance

In 2020, we continued our impressive safety performance despite the challenges of the COVID-19 pandemic. Through the hard work and focus of our employees, safety awareness has remained high across the Company. Our employees know world-class safety performance is both critical and achievable; and, importantly, 2020’s results demonstrate we can continue to improve on our already strong safety record. Our company-wide Lost Time Incident Rate (LTIR) was 0.15, the fourth consecutive year of achieving world-class or better LTIR thresholds, and our Total Injury Incident Rate (TIIR) was 0.93, compared with 1.18 in 2019.

Sustainability

Since 2015, we have annually issued our Sustainability Report to share our story and provide information that we believe is responsive to requests from our shareholders and other stakeholders on the efforts and advancements we are making in these important areas. Since our first Sustainability Report in 2015, we have enhanced our reporting with more comprehensive descriptions of our outstanding safety and regulatory programs and performance, targeted and intentional support of education and health, and strong community involvement. In our sixth annual Sustainability Report issued in 2020, we included additional disclosure about our activities, accomplishments and opportunities associated with key sustainability matters, including those related to the environment. This included new disclosures of our direct greenhouse gas emissions across all of our business lines, as well as our emissions reductions targets for 2030. In our seventh Sustainability Report, to be issued in April 2021, we will provide additional information about greenhouse gas emissions related to our operations (including our indirect greenhouse gas emissions) and our efforts to achieve our commitments, including our community support during the COVID-19 pandemic. Our activities reflect that these matters continue to be part of our core approach and strategy that bring value to our shareholders and other stakeholders.

Your Vote Matters

I urge you to cast your vote promptly, either by returning the enclosed Proxy Card or by the electronic or telephone options described in our Proxy Statement – even if you plan to attend the Annual Meeting. We encourage you to vote so that your shares will be represented at the meeting.

On behalf of the entire Board of Directors, thank you for your continued investment in Martin Marietta. We look forward to continuing to deliver strong and responsible performance, innovation and growth to our customers, our shareholders and our other stakeholders.

Sincerely,

 

 

LOGO

C. Howard Nye

Chairman of the Board, President and Chief Executive Officer

 

  LOGO  


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LOGO

MARTIN MARIETTA MATERIALS, INC.

Notice of 2021 Annual Meeting of Shareholders

 

Time and Date:

11:45 a.m. Eastern Time

Thursday, May 13, 2021

 

Place:

4123 Parklake Avenue

Raleigh, North Carolina 27612

 

Items of Business:

 

1. To elect as Directors the eleven (11) nominees named in the attached Proxy Statement, each to serve for a one-year term until 2022, and until their successors are duly elected and qualified;

 

2. To ratify of the appointment of PricewaterhouseCoopers LLP as independent auditors for 2021;

 

3. To vote on an advisory resolution to approve the compensation of our named executive officers; and

 

4. Any other business that may properly come before the meeting.

 

Who May Vote:

Shareholders of record at the close of business on March 5, 2021.

 

Date of Availability:

This Notice, Proxy Statement, the Proxy Card, and the Notice of Meeting are being sent commencing on approximately April 13, 2021 to shareholders of record at the close of business on March 5, 2021.

 

Sincerely,

 

LOGO

Roselyn R. Bar

Executive Vice President, General Counsel

and Corporate Secretary

Raleigh, North Carolina

April 13, 2021

 

Important Notice Regarding Availability of Proxy
Materials for Martin Marietta’s Annual Meeting of
Shareholders to be held on May 13, 2021

 

How to Vote:

It is important that your shares be represented and voted at the Annual Meeting. We urge you to vote by using any of these methods.

 

  LOGO  

Via the internet

www.voteproxy.com

 

 

LOGO

 

By Telephone

1-800-PROXIES (1-800-776-9437) in the United States or

1-718-921-8500 from outside the United States.

  LOGO  

By Mail

Sign, date and mail your proxy card in the envelope provided.

  LOGO  

In Person

Attend the Annual Meeting and vote by ballot

 

 

Your vote is important. You may vote in person at the 2021 Annual Meeting of Shareholders (Annual Meeting) or submit a proxy over the internet. If you have received a paper copy of the Proxy Card (or if you request a paper copy of the materials), you may submit a proxy by telephone or by mail.

 

Whether or not you expect to attend the meeting, we hope you will date and sign the enclosed Proxy Card and mail it promptly in the enclosed stamped envelope. Submitting your proxy now will not prevent you from voting your shares at the meeting, as your proxy is revocable at your option.

 

If you submit your proxy by telephone or over the internet, you do not need to return your Proxy Card by mail.

   
   
   
   
   
   
  The Proxy Statement and Annual Report on Form 10-K
are available at https://ir.martinmarietta.com/reports-filings/annual-reports-and-proxies.

 

             


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Table of Contents

 

Proxy Statement Highlights      1  
The Board of Directors      9  

Board Effectiveness and Refreshment

     9  

Board Qualifications and Diversity

     11  

Board, Committee and Individual Director Evaluations

     13  

Board Committees

     13  
 Proposal 1:  Election of Directors      18  

Director Compensation

     23  

Director Compensation Table

     25  
Beneficial Owners and Management      26  

Stock Ownership

     26  

Delinquent Section 16(a) Reports

     27  
Corporate Governance Matters      28  

Corporate Governance Philosophy

     28  

Corporate Governance Board Practices

     29  
 Proposal 2:  Independent Auditors      34  

Summary of Fees

     34  

Pre-Approval Policies and Procedures

     35  

Audit Committee Review

     35  
Audit Committee Report      35  
Management Development and Compensation Committee Report      36  
Compensation Committee Interlocks and Insider Participation in Compensation Decisions      36  
Compensation Discussion and Analysis      37  

Introduction

     37  

Letter from Committee Chair

     38  

Summary of our Compensation Considerations

     40  

Responsiveness to Shareholders: Shareholder Engagement and Feedback on Executive Compensation Programs

     40  

Our 2020 Performance

     40  

Sustainability, Safety and the Health of Our Employees During the COVID-19 Pandemic

     42  

Compensation Decisions Yielding Alignment with Performance and Enhancing our Corporate Resilience

     45  

Pay Decisions and Compensation Governance Practices

     47  

Determination of CEO Compensation

     48  

2020 Chairman, President and CEO Compensation

     48  

2020 Named Executive Officers’ Compensation – Our Compensation Strategy

     49  

Considerations Regarding 2020 Compensation

     51  

2020 Base Salary

     51  

2020 Annual Cash Incentive Goals and Results

     52  

2020 Actual Incentive Cash Earned

     52  

Annual Incentive Feature: Stock Purchase Plan

     54  

2020 Long-Term Incentive Compensation Overview

     54  

PSU Awards (55% of LTI Award)

     54  

Selection of Relative TSR

     55  

Performance-Based RSU Awards (45% of LTI Award)

     56  

2020-2022 Performance Goals

     56  

2018-2020 PSU Award Payouts

     57  

Ongoing Corporate Governance Policies

     58  

Compensation Decision Process

     58  

Other Compensation Program Features

     60  

Compensation Program Risk Assessment

     60  

Stock-Based Awards Generally

     60  

Stock Ownership Requirements

     61  

Anti-Hedging and Pledging Policy

     61  

Clawback Policy

     62  

Our Use of Independent Compensation Consultants

     62  

Practice Regarding Timing of Equity Grants

     63  

Perquisites

     63  

Retirement and Other Benefits

     63  

Potential Payments upon Termination or Change of Control

     64  

Tax and Accounting Implications

     64  
Executive Compensation      65  

Executive Officer Compensation

     65  

Summary Compensation Table

     65  

Grants of Plan-Based Awards

     66  

Outstanding Equity Awards at Fiscal Year-End

     68  

Option Exercises and Stock Vested

     69  

Retirement and Other Benefits

     69  

Pension Benefits

     70  

Potential Payments Upon Termination or Change of Control

     72  

CEO Pay Ratio Disclosure

     75  
 Proposal 3:  Advisory Vote on the Compensation of Our Named Executive Officers      76  
Securities Authorized for Issuance Under Equity Compensation Plans      77  

Equity Compensation Plan Information

     77  

Description of the TXI Legacy Plan

     77  

Description of the Deferred Compensation Plan

     78  
Annual Meeting and Voting Information      79  

Incorporation by Reference

     82  

Shareholders’ Proposals for 2022 Annual Meeting

     82  
Appendix A: Martin Marietta Guidelines for Potential New Board Members      A-1  
Appendix B: Non-GAAP Measures      B-1  
 

 

2021 PROXY STATEMENT   LOGO  


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    PROXY

 

Proxy Statement Highlights

Shareholders Benefit from Martin Marietta’s Record 2020 Performance

This summary provides highlights of selected information about Martin Marietta Materials, Inc. (the Company, Martin Marietta, we or us) from this Proxy Statement. The Board of Directors is providing the Notice of 2021 Annual Meeting of Shareholders, this Proxy Statement and Proxy Card (the Proxy Materials) in connection with the Company’s solicitation of proxies for the 2021 Annual Meeting (the Annual Meeting) to be held on May 13, 2021, and at any adjournment or postponement thereof.

This proxy summary highlights information contained elsewhere in our Proxy Statement. The summary does not contain all the information that you should consider, and we encourage you to read the entire Proxy Statement before voting.

 

 

Proposals and Voting Recommendations

 

 

Proposal   Description     Board Voting
  Recommendation
  Page  
1   Election of eleven director nominees   LOGO  

FOR EACH DIRECTOR NOMINEE

    18  
2   Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors   LOGO  

 

FOR

 

 

 

 

34

 

 

3   Advisory vote on the Company’s named executive officer compensation   LOGO  

 

FOR

 

 

 

 

76

 

 

 

 

These are highlights of our financial performance in 2020:

 

  Products and Services revenues of $4.4 billion

 

  Net earnings attributable to Martin Marietta increased 18% to $721 million

 

  Adjusted EBITDA increased 11% to $1.39 billion*

 

  Earnings per diluted share increased 18% to $11.54*

 

  Adjusted EBITDA margin as a percentage of total revenues improved 290 basis points to 29.4%

 

  Cash flow from operations increased 9% to $1.05 billion

 

  Reduced debt by $261 million**; year-end leverage ratio at 1.9x

†Please see Appendix B for a reconciliation of non-GAAP measures to GAAP measures.

* Adjusted EBITDA and earnings per diluted share included $70 million and $0.87 per diluted share, respectively, of nonrecurring gains on nonoperating land sales and divested assets

** Included $149 million in external debt repayments and $112 million in corporate owned life insurance loans redeemed

 

RECORD FINANCIAL
PERFORMANCE

 

 

PRODUCTS AND SERVICES
REVENUES

$4.4 B

+0.2%

 

 

ADJUSTED EBITDA*

$1.39 B

+11%

 

 

DILUTED EPS

$11.54

+18%

 

 

ADJUSTED EBITDA MARGIN*

29.4%

+290 BPS

 

 

OPERATING CASH FLOW

$1.05 B

+9%

 

 

DEBT REDUCTION &

LEVERAGE RATIO

$261 M**

1.9x

 

 

 

 

 

 

 

  LOGO   MARTIN MARIETTA    1


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PROXY    

 

Measuring our Performance

 

 

 

 

LOGO

 

 

 

World-Class Safety

We are committed to our Guardian Angel safety culture where Zero is Possible, and achieved a world-class lost-time incident rate (LTIR) for the fourth consecutive year — Our Safest Year So Far

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

Record Financial Performance

We achieved record financial performance in 2020

LOGO

Source: Company filings, FactSet. Note: Index metrics based on median of individual index constituents; EPS defined as adjusted diluted EPS, as referred by company’s headline adjusted EPS on as-reported basis from December 31, 2019 to December 31, 2020.

 

2    2021 PROXY STATEMENT   LOGO  


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    PROXY

 

 

 

 

 

LOGO

 

 

 

Execution of Strategic Plan

Our strategic plan has transformed our business nearly doubling our market capitalization through each phase

 

LOGO

 

 

 

 

 

 

LOGO

 

 

 

Commitment to Sustainability

Sustainability is part of our culture, including operating in an environmentally responsible manner

 

LOGO

 

LOGO

 

  LOGO   MARTIN MARIETTA    3


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PROXY    

 

Our Board Practices Promote Sustainable Long-Term Shareholder Value

Corporate Governance Highlights

 

Our Board is accountable to our shareholders

 

  Annual election of directors

 

  Majority voting for uncontested director elections

 

  Proxy access right for shareholders

 

  No poison pill

 

  Disclosure of governance processes implemented by the Board and its Committees

 

Our Board is responsive to our shareholders and is proactive to understand their perspectives

 

  Proactive, year-round engagement with shareholders

 

  Engagement topics include Board refreshment, environmental, social and governance (ESG) matters, management compensation, and Board and management diversity

 

Our shareholders are entitled to voting rights in proportion to their economic interest

 

  One class of voting stock

 

  One share, one vote standard

  

Our Board adopted practices that enhance its effectiveness

 

  10 of 11 directors are independent

 

  3 of our directors are women

 

  3 of our directors are of ethnic diversity

 

  Significant Board refreshment with 7 new directors in the past 5 years

 

  Directors reflect a diverse mix of skills and experience

 

  Annual Board, committee and individual self-assessments

 

  Board access to management and employees

 

  Overboarding, anti-hedging and stock ownership policies

 

  

Our Board has strong, independent leadership

 

  Independent Lead Director

 

  Annual review of Board leadership structure

 

  Independent chairs of Board committees

 

Our Board has developed a management compensation structure that is aligned with the long-term strategy of the company

 

  Compensation programs reviewed to include short-and long-term goals tied to the long-range plan to and attract, retain, incentivize and reward excellent performance

Board Composition and Effectiveness

We seek to include a diverse group of Directors on our Board to provide different perspectives to the Board’s oversight responsibilities. Our Board nominees demonstrate diversity in the form of experience, geography, gender, ethnicity, age and tenure. We were recognized in 2019, 2017 and 2015 at the Women’s Forum of New York at its Biennial Breakfast of Corporate Champions for our Board diversity. We were also recognized by 2020 Women on Boards as a Winning ‘W’ Company for eight consecutive years for championing Board diversity.

 

  27%  

Women represent 27% of our Board nominees

 
  45%  

45% of our Board nominees bring diversity in gender or ethnicity

 
 

<7 years

 

 

The average tenure of our Board nominees is less than 7 years

 

 

4    2021 PROXY STATEMENT   LOGO  


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    PROXY

 

Practices Contributing to Board Effectiveness

 

 

Identification of diverse Board candidates

 

 

Meaningful refreshment

 

 

Rotation of Board committee assignments based on experience and expertise

 

 

Robust onboarding

 

 

Tenure and overboarding guidelines

 

 

Our Board refreshment has resulted in a decrease of the Board’s average tenure, with a greater mix of Directors with long-term knowledge of the Company, its strategy, opportunities and challenges, and those with new perspectives

Director Nominees

 

 

LOGO

 

LOGO

Board Attendance

In 2020, during their terms of service, all directors attended 100% of the Board meetings and all directors attended at least 75% of the committee meetings to which they were assigned. All directors then in office participated by telephone conference call in the May 2020 Annual Meeting.

 

  LOGO   MARTIN MARIETTA    5


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PROXY    

 

Effective Shareholder Engagement

Accountability to our shareholders is an important component of the Company’s success. We recognize the value of building informed relationships with our investors that promote further transparency and accountability. While proxy voting is one direct way to influence corporate behavior, proactive engagement with our investors can be effective and impactful. Investor views are communicated to the Board and are instrumental in the development of our governance, compensation and sustainability policies and inform our business strategy.

During 2020, we engaged in person through virtual meetings, by telephone and/or written correspondence with our largest institutional investors and other significant shareholders on an array of governance topics, including our executive compensation programs. We also engaged by telephone conference or written correspondence with stakeholders or other parties on various topics including board composition, executive compensation, human capital management, and ESG matters, as well as other topics of interest.

At our 2020 Annual Meeting of Shareholders, 95.4% of the shares cast voted in favor of the advisory vote on executive compensation, or Say On Pay. We made meaningful changes in 2018 to our compensation program based on feedback from shareholders consisting of:

 

 

The elimination of the excise tax gross-up in executive officers’ Employment Protection Agreements

 

 

The elimination of the walk-right and value of perks in the severance calculation in executive officers’ Employment Protection Agreements

 

 

The decision to not include these provisions in future Employment Protection Agreements

 

 

The elimination of the single-trigger vesting for equity awards beginning in 2019

 

6    2021 PROXY STATEMENT   LOGO  


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    PROXY

 

Proactively Engaging and Responding to Shareholders

 

 

LOGO

Shareholder Governance Highlights:

 

 

LOGO   

Majority voting standard for uncontested Director elections

 

       LOGO    Annual advisory vote to approve executive compensation
       
LOGO   

Longstanding active shareholder engagement

 

       LOGO   

We publish annually a Sustainability Report that discusses our commitment to our shareholders, employees and the communities we serve

•  We created a new position to better focus on these important issues

•  Our Board committees review the Company’s accomplishments with regard to sustainability

LOGO   

Annual advisory vote to ratify independent auditor

 

      
LOGO    No shares with enhanced voting rights       

 

  LOGO   MARTIN MARIETTA    7


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PROXY    OUR COMPENSATION APPROACH AND HIGHLIGHTS

 

Our Commitment to Our People and Pay-for-Performance

In 2020, we advanced our initiatives relating to engagement with our employees

 

 

Inclusion & Engagement Task Force

 

 

New Career Development Program providing employees with tools and resources for development, career opportunities, and succession planning

 

 

New High Deductible Healthcare Plan as a second healthcare plan alternative to employees

 

 

New Paid Time Off policy to enhance employee benefits package

Our Compensation Approach and Highlights

A substantial portion of compensation paid to our named executive officers (NEOs) is variable and performance-based. We use the 50th percentile of our peer group as a reference point when determining target compensation, but target pay is set based on a variety of factors and actual pay realized by our NEOs is dependent on our financial, operational and other related performance. Based on our record levels of performance in 2020, variable compensation payable under both our short-term and long-term incentive plans exceeded the target amounts established for each NEO, which is consistent with our pay-for-performance philosophy. All compensation paid to our CEO and other NEOs in 2020 was performance-based other than base salary: approximately 87% of our CEO’s compensation was performance-based and 74% of our other NEOs’ compensation was performance based.*

 

 

LOGO

* Based on grant date value of Performance Share Units (PSUs) and Restricted Stock Units (RSUs).

 

8    2021 PROXY STATEMENT   LOGO  


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The Board of Directors

The Board of Directors currently consists of eleven members, ten of whom are non-employee Directors. Under our Bylaws, nominations of persons for election to the Board may be made at an Annual Meeting of Shareholders by the Board and by any shareholder who complies with the notice procedures set forth in the Bylaws. As described in the Proxy Statement for our 2020 Annual Meeting, for a nomination to be properly made by a shareholder at the 2021 Annual Meeting, the shareholder’s notice must have been sent to, and received by, our Secretary at our principal executive offices between January 16, 2021 and February 15, 2021. No such notice was received during this period.

The Bylaws of the Company provide that a Director will retire at the Annual Meeting of Shareholders following the Director’s 75th birthday. None of our current Directors reached this mandatory retirement age this year.

The Board has nominated Anthony R. Foxx to stand for election by shareholders at the 2021 Annual Meeting. Mr. Foxx was first elected as a Director by the Board in November 2020. Mr. Foxx was initially identified by the Chairman, President and CEO and was recommended as a director nominee by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee from time to time retains a search firm to help identify director prospects, perform candidate outreach, assist in reference checks, and provide other related services. The recruiting process typically involves either the Chairman, President and CEO, the search firm or a member of the Nominating and Corporate Governance Committee contacting a prospect to gauge his or her interest and availability. A candidate will then meet with several members of the Nominating and Corporate Governance Committee and sometimes the Board. At the same time, the Nominating and Corporate Governance Committee and the search firm will contact references for the prospect. A background check is completed before a final recommendation is made to the Board to appoint a candidate to the Board.

The Board has nominated eleven persons for election as Directors to serve a one-year term expiring in 2022. Unless otherwise directed, proxies will be voted in favor of these nominees. Each nominee has agreed to serve if elected. Each of the nominees is currently serving as a Director. Should any nominee become unable to serve as a Director, the persons named in the enclosed form of proxy will, unless otherwise directed, vote for the election of such other person for such position as the present Board of Directors may recommend in place of such nominee. Proxies cannot be voted for a greater number of persons than the number of nominees named. Should any of the listed nominees be unavailable for election by reason of death or other unexpected occurrence, the proxy, to the extent permitted by applicable law, may be voted with discretionary authority in connection with the nomination by the Board and the election of any substitute nominee.

Board Effectiveness and Refreshment

Board composition is one of the most critical areas of focus for the Board of Directors. Having the right mix of people who bring diverse perspectives, business and professional experiences, and skills provides a foundation for robust dialogue, informed advice and collaboration in the boardroom. The Nominating and Corporate Governance Committee develops criteria for open Board positions, taking into account a variety of factors, which may include current Board member skills, composition, age, tenure, other diversity factors, the range of talents and experience that would best complement those already represented on the Board, the need for specialized expertise, and anticipated retirements to define gaps that may need to be filled through the Board refreshment process. The Board strives to ensure an environment that encourages diverse critical thinking and values innovative, strategic discussions to achieve a higher level of success for the Company.

The Nominating and Corporate Governance Committee screens and recommends candidates for nomination by the full Board. It uses a variety of methods to help identify potential Board candidates with the desired skills and background needed for the Company’s business, including from time to time informal networks, third-party search firms and other channels. When the Committee is assisted from time to time with its recruitment efforts by an outside search firm, the firm recommends candidates that satisfy the criteria defined by the Board, and provides background research and pertinent information regarding prospective candidates.

 

  LOGO   MARTIN MARIETTA    9


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THE BOARD OF DIRECTORS    BOARD EFFECTIVENESS AND REFRESHMENT

 

Once the Committee has identified a prospective nominee, it makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Committee takes into account various information, including information provided at the time of the candidate recommendation, the Committee’s own knowledge, and information obtained through inquiries to third parties to the extent the Committee deems appropriate. The preliminary determination is based primarily on the need for additional Board members and the likelihood that the prospective nominee can satisfy the criteria that the Committee has established. If the Committee determines, in consultation with the Chairman, President and CEO and other Directors as appropriate, that additional consideration is warranted, it may request management or a third-party search firm to gather additional information about the prospective nominee’s background and experience and to report its findings to the Committee. The Committee then evaluates the prospective nominee against the specific criteria that it has established for the position, as well as the standards and qualifications set out in the Company’s Corporate Governance Guidelines, including:

 

 

the ability of the prospective nominee to represent the interests of the shareholders of the Company;

 

 

the prospective nominee’s standards of integrity, commitment and independence of thought and judgment;

 

 

the prospective nominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties, including the prospective nominee’s service on other public company boards, as specifically set out in the Company’s Corporate Governance Guidelines;

 

 

the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board; and

 

 

the extent to which the prospective nominee helps the Board reflect the diversity of the Company’s shareholders, employees, customers and the communities in which it operates.

If the Committee decides, on the basis of its preliminary review, to proceed with further consideration, members of the Committee, the Chairman, President and CEO, as well as other members of the Board as appropriate, interview the nominee. After completing this evaluation and interview, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the new Director after considering the Committee’s report. A background check is completed before a final recommendation is made to the Board to appoint a candidate to the Board.

In selecting nominees for the Board, the Board seeks to achieve a mix of members who together bring experience and personal backgrounds relevant to the Company’s strategic priorities and the scope and complexity of the Company’s business. The Board also seeks a demonstrated ability to manage complex issues that involve a balance of risk and reward. The background information on current nominees beginning on page 18 and the skills matrix on page 11 set out how each of the current nominees contributes to the mix of experience and qualifications the Board seeks. In making its recommendations with respect to the nomination for re-election of existing Directors at the annual shareholders meeting, the Committee assesses the composition of the Board at the time and considers the extent to which the Board continues to reflect the criteria set forth above.

 

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BOARD QUALIFICATIONS AND DIVERSITY    THE BOARD OF DIRECTORS

 

Board Qualifications and Diversity

The following sets forth certain information for each nominee for election regarding age, gender, diversity, tenure and skills that are important to the Board of Directors.

 

 

Demographics and Background

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

Age

  63   70   73   49   70   58   67   61   72   59   61

Gender

  F   F   M   M   M   M   F   M   M   M   M

Ethnic Diversity

                                     

Tenure

  2   19   2   <1   4   11   16   1   13   4   <1

Qualification & Experience

                                           

Corporate Governance/Legal

Ensures background and knowledge necessary to provide effective oversight and governance

                     

Current or Former CEO of Public Company

Strong leadership skills and critical experience with demands and challenges of managing a large public organization

                                 

Financial or Accounting

Enables in-depth analysis of our financial statements, capital structure, financial transactions, and financial reporting process

                       

Government Relations/Regulatory/Sustainability

Critical for understanding complex regulatory and governmental environment that impacts our business and our strategic goals relating to sustainability

                     

Logistics/Operations

Necessary in overseeing a sustainable company that relies heavily on logistics

                             

Other Public Boards

Adds perspective important to shareholders and public company governance

                       

Risk Management

Facilitates understanding of the risks facing the Company and appropriate process and procedures for managing them

                     

Strategy/M&A

Supports setting of long-term corporate vision, disciplined strategic development and integration to facilitate the Company’s growth

                     

Technology

Facilitates business objectives and security of the Company’s proprietary and confidential data

                     

The Board has implemented a number of processes to assist it in refreshing the Board in an appropriate manner that helps create shareholder value.

 

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THE BOARD OF DIRECTORS    BOARD QUALIFICATIONS AND DIVERSITY

 

LOGO   

Board Refreshment Elements

 

Review of Board Candidates

  

The Board seeks a diverse group of candidates who, at a minimum, possess the background, skills, expertise and time to make a significant contribution to the Board, the Company and its shareholders. The Corporate Governance Guidelines list criteria against which candidates may be judged. In addition, the Nominating and Corporate Governance Committee considers, among other things:

 

  input from the Board’s self-assessment process to prioritize areas of expertise that were identified;

 

  investor feedback and perceptions;

 

  the candidates’ skills and competencies to ensure they are aligned with the Company’s future strategic challenges and opportunities; and

 

  the needs of the Board in light of recent and anticipated Board vacancies.

 

During the process of identifying and selecting director nominees, the Nominating and Corporate Governance Committee screens and recommends candidates for nomination by the full Board. The Bylaws provide that the size of the Board may range from 9 to 11 members.

 

Director candidates also may be identified by shareholders and will be evaluated under the same criteria applied to other director nominees and considered by the Nominating and Corporate Governance Committee. Information on the process and requirements for shareholder nominees may be found in our Bylaws on the Company’s website at https://ir.martinmarietta.com/corporate-governance/governance-documents-and-charters.

Board Assignments

   Each February, the Nominating and Corporate Governance Committee reviews the membership, tenure, leadership and commitments of each of the Committees and considers possible changes given the qualifications and skill sets of members on the Board or a desire for committee rotation or refreshment. The Nominating and Corporate Governance Committee also takes into consideration the membership requirements and responsibilities set forth in each of the respective Committee charters and the Corporate Governance Guidelines as well as any upcoming vacancies on the Board due to our mandatory retirement age. The Nominating and Corporate Governance Committee recommends to the Board any proposed changes to Committee assignments and leadership to be made effective at the next Annual Meeting of Shareholders. The Nominating and Corporate Governance Committee also reviews the operation of the Board generally.

Refreshment

   The Board has added seven new directors in the past five years. At the same time, obtaining a detailed understanding of the Company’s business takes time. We believe that implementing term limitations may prevent the Board from taking advantage of insight that longer tenure brings.

Annual Performance Assessment

   The Board conducts a self-assessment of its performance and effectiveness as well as that of its Committees on an annual basis. The self-assessment helps the Nominating and Corporate Governance Committee track progress in certain areas targeted for improvement from year-to-year and to identify ways to enhance the Board’s and its Committees’ effectiveness. For 2020, each director completed a written questionnaire. The questions were open-ended to solicit candid feedback. The collective ratings and comments are compiled and summarized and then discussed by the Nominating and Corporate Governance Committee and the full Board.

Onboarding and Education

   New directors are provided with an orientation about the Company, including our business operations, strategy and governance. Directors also are provided continuing education by subject matter experts and/or continuing education programs sponsored by educational and other institutions to assist them in staying abreast of developments in corporate governance and critical issues relating to the operation of public company boards. Members of our senior management regularly review with the Board the operating plan of each of our business segments and the Company as a whole. The Board also conducts periodic visits to our facilities as part of its regularly scheduled Board meetings.

 

 

LOGO   

Tenure Guidelines

 

Mandatory Retirement Age

   Directors must retire at the annual meeting following his or her 75th birthday.

Employment Change

   Directors must report to the Chairman of the Board and Chairman of the Nominating and Corporate Governance Committee regarding any significant change in principal employment or responsibilities to assure he/she can continue to commit the appropriate time to Board service.

 

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BOARD, COMMITTEE AND INDIVIDUAL DIRECTOR EVALUATIONS    THE BOARD OF DIRECTORS

 

Board, Committee and Individual Director Evaluations

As a part of our continuous improvement process intended to enhance the Board’s overall effectiveness, the Board regularly evaluates its performance through self-assessments, corporate governance reviews and periodic charter reviews. Those evaluations, changes in our business strategy or operating environment, and the future needs of the Board in light of anticipated director retirements are used to identify desired backgrounds and skill sets for future Board members. The feedback solicited from Board members regarding the Board, each Committee on which they serve, and individual Board members is one of the tools used to assist the Nominating and Corporate Governance Committee in its responsibility to evaluate Board and Committee performance annually.

 

LOGO

Board Committees

Martin Marietta’s Board of Directors has six standing Committees: the Audit Committee; the Ethics, Environment, Safety and Health Committee; the Executive Committee; the Finance Committee; the Management Development and Compensation Committee; and the Nominating and Corporate Governance Committee. Each Committee has a written charter that describes its purposes, membership, meeting structure, authority and responsibilities. These charters are reviewed by the respective Committee on an annual basis with any recommended changes adopted upon approval by our Board. The charters of our six standing Committees are posted on our website.

 

  LOGO   MARTIN MARIETTA    13


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THE BOARD OF DIRECTORS    BOARD COMMITTEES

 

Below is a summary of our current Committee structure and membership information.

 

Director

  Independent
Director
  Audit
Committee
  Ethics,
Environment,
Safety and
Health
Committee
  Executive
Committee
  Finance
Committee
  Management
Development
and
Compensation
Committee
  Nominating
and
Corporate
Governance
Committee

Dorothy M. Ables

Financial Expert

 

Yes

 

 

               

Sue W. Cole

  Yes                    

Smith W. Davis

  Yes       Chair              

Anthony R. Foxx

  Yes                      

John J. Koraleski

Lead Independent Director Financial Expert

 

Yes

 

     

     

Chair

   

C. Howard Nye*

              Chair            

Laree E. Perez

Financial Expert

 

Yes

 

Chair

                 

Thomas H. Pike

  Yes                    

Michael J. Quillen

  Yes             Chair      

Donald W. Slager

  Yes                     Chair

David C. Wajsgras

Financial Expert

 

Yes

 

         

*Mr. Nye is the only member of management on the Board.

The Executive Committee held no meetings during 2020. It has the authority to act during the intervals between the meetings of the Board of Directors and may exercise the powers of the Board in the management of the business and affairs of Martin Marietta as may be authorized by the Board of Directors, except to the extent such powers are reserved to the full Board by statute, by our Articles of Incorporation, or by our Bylaws. The Executive Committee’s current members are Directors Nye (Chair), Koraleski, and Quillen.

 

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BOARD COMMITTEES    THE BOARD OF DIRECTORS

 

The primary responsibilities, membership and meeting information for our other standing Committees are summarized below

 

LOGO    Audit Committee

 

   

Current Members:

Laree E. Perez (Chair)

Dorothy M. Ables

John J. Koraleski

David C. Wajsgras

  

Primary Responsibilities:

 

  Reviews our significant accounting principles, policies and practices in reporting our financial results under generally accepted accounting principles.

 

  Reviews our annual audited financial statements and related disclosures.

 

  Reviews management letters or internal control reports, and reviews our system of internal control over financial reporting.

 

  Appoints, retains and oversees the work of the independent auditors.

 

  Reviews the effectiveness of the independent audit effort.

 

  Pre-approves audit and permissible non-audit services provided by the independent registered public accounting firm.

 

  Reviews our interim financial results for each fiscal quarter.

 

  Reviews the qualifications and the plan and scope of work of the corporate internal audit function.

 

  Reviews and discusses the reports of our internal audit group.

 

  Reviews and discusses management’s assessment of the effectiveness of Martin Marietta’s system of internal control over financial reporting.

 

  Discusses Martin Marietta’s earnings press releases, as well as financial information and earnings guidance provided to analysts, investors and rating agencies.

 

  Discusses matters related to risk assessment and risk management and how the process is handled by management.

 

  Reviews and oversees related party transactions.

 

  Reviews complaints regarding accounting, internal controls or auditing matters.

 

  Considers allegations of possible financial fraud or other financial improprieties.

 

  Reviews annually the adequacy of the Committee charter and recommends proposed changes to the Board.

 

  Prepares the annual Audit Committee Report to be included in the Proxy Statement.

 

Other Governance Matters:

 

All members of the Audit Committee, including the Chair, are audit committee financial experts under applicable U.S. Securities and Exchange Commission (SEC) regulations.

 

The Chair of the Audit Committee is an independent Director.

 

The Chair of the Audit Committee has experience serving as a Chair and member of other public company audit committees.

 

All members satisfy the audit committee experience and independence standards required by the New York Stock Exchange (NYSE).

 

Meetings in 2020

8

 

Average Attendance in 2020:

100%

 

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THE BOARD OF DIRECTORS    BOARD COMMITTEES

 

LOGO    Ethics, Environment, Safety and Health Committee

 

   

Current Members:

Smith W. Davis (Chair)

Dorothy M. Ables

Sue W. Cole

  

Primary Responsibilities:

 

  Monitors compliance with our Code of Ethical Business Conduct and reviews all matters presented to it by the Corporate Ethics Officer concerning the ethical practices of Martin Marietta and its Directors, officers, and employees, including conflicts or potential conflicts of interest between Martin Marietta and any of its Directors, officers, and employees.

 

  Reviews and discusses our sustainability efforts, goals and risks, and our annual Sustainability Report.

 

  Reviews and monitors the adequacy of our policies and procedures and organizational structure for ensuring compliance with environmental laws and regulations.

 

  Reviews matters relating to our health and safety programs and performance.

 

  Reviews annually the adequacy of the Committee charter and recommends proposed changes to the Board.

 

Meetings in 2020

2

 

Average Attendance in 2020:

100%

 

LOGO    Finance Committee

 

   

Current Members:

Michael J. Quillen (Chair)

Anthony R. Foxx

Thomas H. Pike

Donald W. Slager

  

Primary Responsibilities:

 

  Provides general oversight relating to the management of our financial affairs.

 

  Reviews and approves establishment of lines of credit or other short-term borrowing arrangements and investing excess working capital funds on a short-term basis.

 

  Reviews and makes recommendations to the Board concerning changes to capital structure, including the incurrence of long-term debt, issuance of equity securities, share repurchases, and the payment of dividends, as well as capital expenditures.

 

  Approves our charitable contributions budget.

 

  Reviews annually the adequacy of the Committee charter and recommends proposed changes to the Board.

 

Meetings in 2020

4

 

Average Attendance in 2020:

100%

 

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BOARD COMMITTEES    THE BOARD OF DIRECTORS

 

LOGO    Management Development and Compensation Committee

 

   

Current Members:

John J. Koraleski (Chair)

Thomas H. Pike

Michael J. Quillen

  

Primary Responsibilities:

 

  Establishes an overall strategy with respect to compensation for officers and management to enable Martin Marietta to attract and retain qualified employees.

 

  Reviews and oversees executive succession and management development plans.

 

  Reviews and approves management’s assessment of the performance of executive officers, and reviews and approves the salary, incentive compensation, and other compensation of such officers.

 

  Approves and administers our equity and other plans relating to compensation of Martin Marietta’s directors and executive officers.

 

  Reviews and discusses the Compensation Discussion and Analysis and produces a compensation committee report as required by the SEC to be included in this Proxy Statement.

 

  Provides oversight of our Benefit Plan Committee, which administers Martin Marietta’s defined benefit and contribution plans.

 

  Reviews and approves the goals and objectives for the CEO’s compensation, evaluates the CEO’s performance in light of those goals and objectives, and determines and approves the CEO’s compensation.

 

  Makes recommendations to the Board on changes in the compensation of non-employee directors.

 

  Reviews annually the adequacy of the Committee charter and recommends proposed changes to the Board.

 

  Has the authority, in its sole discretion, to retain, pay, and terminate any consulting firm, if any, used to assist in evaluating director, CEO, or senior executive compensation.

 

Other Governance Matters:

 

All members are non-employee, independent Directors as required by the rules of the NYSE, the Martin Marietta Guidelines for Director’s Independence, applicable rules of the SEC, and the Committee’s charter.

 

Meetings in 2020

7

 

Average Attendance in 2020:

95%

 

LOGO    Nominating and Corporate Governance Committee

 

   

Current Members:

Donald W. Slager (Chair)

Sue W. Cole

Smith W. Davis

Laree E. Perez

  

Primary Responsibilities:

 

  Develops criteria for nominating and appointing directors, including Board size and composition, corporate governance policies, and individual director expertise, attributes and skills.

 

  Recommends to the Board the individuals to be nominated as directors.

 

  Recommends to the Board the appointees to be selected for service on the Board Committees.

 

  Oversees an annual review of the performance of the Board and each Committee.

 

  Reviews annually the adequacy of the Committee charter and recommends proposed changes to the Board.

 

  Oversees the development and implementation of a set of corporate governance principles applicable to Martin Marietta.

 

Other Governance Matters:

 

All members are non-employee, independent Directors as required by the rules of the NYSE.

 

Upon recommendation of this Committee, the Board of Directors has adopted a set of Corporate Governance Guidelines for Martin Marietta. The Guidelines are posted and available for public viewing on our website at https://ir.martinmarietta.com/corporate-governance. A copy may also be obtained upon request from Martin Marietta’s Corporate Secretary.

 

Meetings in 2020

4

 

Average Attendance in 2020:

100%

 

  LOGO   MARTIN MARIETTA    17


Table of Contents

 

 Proposal 1: 

 

Election of Directors

The following sets forth the age, experience, key attributes and other biographical information for each nominee for election as a director for a one-year term until the 2022 Annual Meeting of Shareholders.

 

     
LOGO

 

DOROTHY M.
ABLES

 

Director Since: 2018

Age: 63

Committees:

 

 

LOGO    LOGO

  

Ms. Ables joined the Martin Marietta Board in November 2018. Ms. Ables held a number of executive positions with Spectra Energy and predecessor companies, including serving from 2008 to 2017 as the Chief Administrative Officer of Spectra Energy Corp. where she was responsible for human resources, information technology, support services, community relations and audit services. Prior to that, she served as Vice President of Audit Services and Chief Ethics and Compliance Officer for Spectra Energy, Vice President and Chief Compliance Officer for Duke Energy Corporation, an American electric power holding company, and Senior Vice President and Chief Financial Officer for Duke Energy Gas Transmission. Spectra Energy was a Fortune 500 Company and one of North America’s leading pipeline and midstream companies prior to its acquisition by Enbridge Inc. in 2017. (NYSE: ENB) Ms. Ables started her career in the audit department of Peat, Marwick, Mitchell & Co. Ms. Ables serves as an Independent Director of Cabot Oil & Gas Corporation, (NYSE: COG) an independent oil and gas company, where she is Chair of the audit committee and a member of the compensation committee. She served as a Director of Spectra Energy Partners, an affiliate of Spectra Energy Corp., from 2013 to 2017. Ms. Ables attended the University of Texas at Austin where she earned a Bachelor of Business Administration degree in Accounting.

 

Key attributes, experience and skills:

 

•  More than nine years of C-Suite experience

 

•  Financial expertise acquired through serving as CFO of Duke Energy Gas Transmission and as Vice President of Audit Services and Chief Compliance Officer of Spectra Energy Corp. and Duke Energy Corporation

 

•  Valuable business leadership in human resources, information technology, community relations, finance and financial statements

 

•  Strong leadership skills and familiarity with Texas, an important state for the Company

    
     
LOGO

 

SUE W.

COLE

 

Director Since: 2002

Age: 70

Committees:

 

 

LOGO

  

Ms. Cole is the managing partner of SAGE Leadership & Strategy, LLC, an advisory firm for businesses, organizations and individuals relating to strategy, governance and leadership development. Ms. Cole was previously a principal of Granville Capital Inc., a registered investment advisory firm, from 2006 to 2011, and before that she was the Regional CEO, Mid-Atlantic Region, of U.S. Trust Company, N.A., where she was responsible for the overall strategic direction, growth, and leadership of its North Carolina, Philadelphia and Washington, D.C. offices. Ms. Cole previously held various positions in the U.S. Trust Company, N.A. and its predecessors. Ms. Cole serves as Chair of the compensation committee of Biscuitville, Inc., where she was previously Chairman of the Board. Ms. Cole has previously served on the public-company board of UNIFI, Inc. (NYSE: UFI), a manufacturer of textured yarns. She has also been active in community and charitable organizations, including previously serving as Chairman of the North Carolina Chamber of Commerce, on the investment committee of the University of North Carolina at Greensboro and as a member of the North Carolina Economic Development Board. Ms. Cole attended the University of North Carolina at Greensboro where she earned a Bachelor of Science degree in Business Administration and a Masters in Business Administration in Finance.

 

Key attributes, experience and skills:

 

•  Valuable experience in executive compensation, corporate governance, human resources, finance and financial statements, and customer service

 

•  Chief executive officer of several financial services businesses as well as several non-profit organizations

 

•  Strong leadership skills and familiarity with North Carolina, an important state for the Company

 

 

LOGO

 

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DIRECTOR NOMINEES    PROPOSAL 1: ELECTION OF DIRECTORS

 

     
LOGO

 

SMITH W.
DAVIS

 

Director Since: 2018

Age: 73

Committees:

 

 

LOGO    LOGO

Chair

  

Mr. Davis is a shareholder at Greenberg Traurig, LLP, an international law firm, where he focuses his practice on both legal reform (litigation-related policy matters) across a broad range of industries and issues related to natural gas pipelines. His work with respect to pipelines has centered on multiemployer pension policy and environmental issues. Previously, Mr. Davis served as senior partner at Akin Gump Strauss Hauer & Feld LLP, an international law firm focused on lobbying, where he provided counsel on a wide variety of legislative and regulatory matters, including those before a variety of congressional committees. Mr. Davis joined Akin Gump in 1979, and his practice included advising on legal matters relating to environmental issues, financial institutions, mergers and acquisitions, and pension reform. Mr. Davis also served on Akin Gump’s compensation and management committees. Prior to joining Akin Gump, Mr. Davis served as a counsel to the House Judiciary Committee. Mr. Davis attended Yale University where he received a Bachelors of Arts degree, magna cum laude, and Yale Law School where he received his Juris Doctor degree.

 

Key attributes, experience and skills:

 

•  Extensive experience in legal, compliance, and corporate governance

 

•  Strong leadership skills and expertise in governmental and regulatory issues, safety, health and environmental matters, mergers and acquisitions, executive compensation, financial affairs, and risk assessment

 

•  Brings additional perspective to the Board on diversity and corporate citizenship

    

 

    
     
LOGO

 

ANTHONY R.
FOXX

 

Director Since: 2020

Age: 49

Committees:

 

 

LOGO

  

Mr. Foxx is currently Chief Policy Officer and advisor to the President and Chief Executive Officer of Lyft, Inc., which he joined in October 2018. Prior to joining Lyft, he served as the seventeenth United States Secretary of Transportation from 2013 to 2017, where he led an agency with more than 55,000 employees and a $70 billion budget, whose primary goal was to ensure that America maintains the world’s safest, most efficient transportation system. Previously, Mr. Foxx served as the Mayor of Charlotte, North Carolina, from 2009 to 2013. Since January 2021, Mr. Foxx also serves as an independent director for CDW Corporation (NASDAQ: CDW), a leading multi-brand technology solutions provider to business, government, education, and healthcare customers. Mr. Foxx earned his Bachelors degree at Davidson College and his Juris Doctor degree at New York University Law School.

 

Key attributes, experience and skills:

 

•  Extensive experience in legal, compliance and corporate governance

 

•  Brings valuable experience from his elected position as Mayor of Charlotte, North Carolina and as United States Secretary of Transportation relating to leadership, finance matters, corporate governance, legal, governmental and regulatory issues, safety, health and environmental matters

 

•  Brings additional perspective to the Board on diversity and corporate citizenship

    

 

 

 

LOGO

 

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PROPOSAL 1: ELECTION OF DIRECTORS    DIRECTOR NOMINEES

 

     
LOGO

 

JOHN J.
KORALESKI

 

Director Since: 2016

Age: 70

 

Lead Independent
Director

 

Committees:

 

 

LOGO    LOGO    LOGO

Chair

  

Mr. Koraleski joined the Martin Marietta Board in 2016. Mr. Koraleski served from February 2015 through his retirement in September 2015 as executive Chairman of the Board of the Union Pacific Corporation (UP) (NYSE: UNP), which through its subsidiaries operates North America’s premier railroad franchise, covering 23 states across the western two-thirds of the United States. Prior to that, he was named President and Chief Executive Officer of the UP in March 2012, elected as a Director of the UP in July 2012 and appointed Chairman of the Board in 2014. Since joining the Union Pacific (Railroad) in 1972, Mr. Koraleski held a number of executive positions in the UP and the Railroad, including, Executive Vice President – Marketing and Sales from 1999 to 2012, Executive Vice President – Finance and Information Technology, Chief Financial Officer and Controller. Mr. Koraleski served as the Chairman of The Bridges Investment Fund, Inc., a general equity fund whose primary investment objective is to seek long-term capital appreciation, from 2005 through March 2012 and is a past Chairman of the Association of American Railroads. Mr. Koraleski earned a Bachelor’s and Master’s degree in business administration from the University of Nebraska at Omaha.

 

Key attributes, experience and skills:

 

•  Experience with the demands and challenges associated with managing a large publicly-traded organization from his experience as Chairman and CEO of Union Pacific

 

•  Extensive knowledge of financial system management, public company accounting, disclosure requirements and financial markets

 

•  Valuable expertise in talent management, compensation, governance and succession planning

 

•  Understanding of complex logistic operations, safety and rail operations

 

•  Broad strategic analysis and experience with acquisitions, integration, marketing and information technologies

    
     
LOGO

 

C. HOWARD
NYE

 

Director Since: 2010

Age: 58

Committees:

 

 

LOGO

Chair

  

Mr. Nye has served as Chairman of the Board of Martin Marietta since 2014, as President since 2006 and as Chief Executive Officer and a Director since 2010. Mr. Nye previously served as Chief Operating Officer from 2006 to 2009. Prior to joining Martin Marietta in 2006, Mr. Nye spent nearly 13 years in a series of increasingly responsible positions with Hanson PLC, an international building materials company. Mr. Nye received a Bachelor’s degree from Duke University and a Juris Doctor degree from Wake Forest University. In addition to his educational, professional, executive and related roles, Mr. Nye is a past Chairman of the Board of the National Stone, Sand & Gravel Association (NSSGA); he presently serves as Chairman of the North Carolina Chamber and as Senior Vice Chairman of the American Road & Transportation Builders Association (ARTBA). Mr. Nye is also a member of the Board of Directors of the United States Chamber of Commerce, the world’s largest business organization. Since 2018, Mr. Nye has been a member of the Board of Directors of General Dynamics Corporation (NYSE: GD), a global aerospace and defense company. From 2015 to 2018, Mr. Nye was also an independent director for Cree, Inc. (NASDAQ: CREE), an American manufacturer and marketer of lighting-class lighting products. In 2019, Forbes magazine recognized Mr. Nye as one of America’s Most Innovative Leaders; he was previously recognized by both Aggregates Manager and Pit & Quarry magazines, as Aggman of the Year and a Hall of Fame inductee, respectively. Mr. Nye has also served on numerous other state, local and/or philanthropic organizations including the boards of directors of the University of North Carolina Health System and the Research Triangle Foundation, as well as the Board of Governors of the Research Triangle Institute. He also served as Co-Chair of the NC FIRST Commission (evaluating North Carolina’s current and future transportation investment needs).

 

Key attributes, experience and skills:

 

•  Extensive knowledge of the building materials industry

 

•  Extensive leadership, business, operating, marketing, mergers and acquisitions, legal, customer-relations, and safety and environmental experience

 

•  Understands the competitive nature of the business and has strong management skills, broad executive experience, and corporate governance expertise

 

•  Broad strategic vision for the future growth of Martin Marietta

 

LOGO

 

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DIRECTOR NOMINEES    PROPOSAL 1: ELECTION OF DIRECTORS

 

     
LOGO

 

LAREE E.
PEREZ

 

Director Since: 2004

Age: 67

Committees:

 

 

LOGO    LOGO

Chair

  

Ms. Perez is an investment consultant with DeRoy & Devereaux, an independent investment adviser, where she has provided client consulting services since 2015. She was previously Owner and Managing Partner of The Medallion Company, LLC, a consulting firm, from 2003 to 2015. Ms. Perez was previously a Director of GenOn Energy, Inc. (NYSE: GEN), one of the largest power producers in the United States, from 2002 to 2012, and served as the Chairman of the audit committee of GenOn Energy, Inc. from 2002 to 2007 and a member of its audit and risk and finance oversight committees from 2008 to 2012. Previously, she was Vice President of Loomis, Sayles & Company, L.P. and co-founder, President and Chief Executive Officer of Medallion Investment Company, Inc. In addition to civic and charitable organizations, Ms. Perez served as Vice Chairman of the Board of Regents at Baylor University and previously served on the Board of Trustees of New Mexico State University, where she was also Chairman of the Board. Ms. Perez earned a Bachelor’s degree from Baylor University in Finance and Economics.

 

Key attributes, experience and skills:

 

•  Significant business, financial and private investment experience

 

•  Significant expertise with respect to financial statements, corporate finance, accounting and capital markets, mergers and acquisitions, and strategic analysis

 

•  Insight into auditing best practices

 

•  Familiarity with the southwestern United States

    
    
    
    
    
     
LOGO

 

THOMAS H.
PIKE

 

Director Since: 2019

Age: 61

Committees:

 

 

LOGO    LOGO

  

Mr. Pike joined the Martin Marietta Board in July 2019. Mr. Pike served as Chief Executive Officer and a member of the Board of Directors of Quintiles Transnational Holdings, Inc. (Quintiles) from April 2012 until its merger with IMS Health in December 2016 to create IQVIA (NYSE:IQV). Before its merger with IMS, Quintiles had a network of more than 35,000 employees conducting business in approximately 100 countries. Mr. Pike led Quintiles through a successful public offering and helped grow into a Fortune 500 company. Under Mr. Pike’s leadership, Quintiles was named one of the world’s Most Ethical Companies in 2016. Prior to Quintiles, Mr. Pike spent 22 years at Accenture (NYSE: ACN), a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations, until December 2009. At Accenture, Mr. Pike’s roles included serving as Chief Risk Officer and Managing Director of the North America Health and Products business areas. He previously served as the global Chief Operating Officer for Accenture’s Resources operating group and had also served as Accenture’s Chief Strategy Officer. Since leaving Accenture in December 2009 and until joining Quintiles in April 2012, Mr. Pike was involved with a number of start-ups in the technology and healthcare sectors. Early in his career Mr. Pike was a consultant with McKinsey & Company. Mr. Pike earned his Bachelor’s degree in accounting from the University of Delaware.

 

Key attributes, experience and skills:

 

•  More than 15 years of C-Suite experience

 

•  Broad strategic and financial experience

 

•  Extensive experience in mergers and acquisitions, integration, and strategic development and analysis

 

•  Significant mentorship, business and operating experience in a public company

 

•  Valuable knowledge of financial system management, public company accounting, disclosure requirements and financial markets

 

 

LOGO

 

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Table of Contents

PROPOSAL 1: ELECTION OF DIRECTORS    DIRECTOR NOMINEES

 

     
LOGO

 

MICHAEL J.
QUILLEN

 

Director Since: 2008

Age: 72

Committees:

 

 

LOGO    LOGO    LOGO

Chair

  

Mr. Quillen was the founder and served as Chief Executive Officer of Alpha Natural Resources, Inc. (NYSE: ANR), a leading eastern United States coal supplier, from its formation in 2004 until its merger with Foundation Coal Holdings, Inc. in July 2009, and served as President and Chairman of ANR from 2006 to 2009, and non-Executive Chairman until May 2012. Mr. Quillen held senior executive positions in the coal industry throughout his career at Pittston/Pittston Coal Sales Corp., AMVEST Corporation, NERCO Coal Corporation, Addington, Inc. and Mid-Vol Leasing, Inc. Mr. Quillen also serves as an independent director of Alpha Metallurgical Resources, Inc., a leading coal supplier with underground and surface coal mining complexes across Northern and Central Appalachia. He has also served as Chairman (Rector) of the Board of Visitors of Virginia Polytechnic Institute and State University from July 2012 to June 2018. He was Chairman of the audit and finance committee of Virginia Polytechnic Institute and State University from July 2010 to June 2012. He also served on the Virginia Port Authority from 2003 to 2012 and as Chairman from July 2011 to December 2012. Mr. Quillen attended Virginia Polytechnic Institute and State University, earning both Bachelor’s and Master’s degrees in Civil Engineering.

 

Key attributes, experience and skills:

 

•  Valuable business, leadership, management, financial, and mergers and acquisitions experience

 

•  Extensive experience related to mining companies, governmental and regulatory issues, safety, health and environmental matters

 

•  Tremendous insight and expertise with respect to strategic analysis, the natural resources industry, and energy

 

•  Wealth of knowledge related to transportation

    
    
    
    
     
LOGO

 

DONALD W.
SLAGER

 

Director Since: 2016

Age: 59

Committees:

 

 

LOGO    LOGO

Chair

  

Mr. Slager serves as President and Chief Executive Officer of Republic Services, Inc. (Republic) (NYSE: RSG), a service provider in the non-hazardous solid waste industry, holding this position since January 2011. Prior to this, he served as President and Chief Operating Officer of Republic from December 2008 until his promotion to CEO. Prior to that, Mr. Slager served in the same capacity for Allied Waste Industries, Inc. (Allied Waste), from 2005 to 2008, prior to its merger with Republic. Mr. Slager was Executive Vice President and Chief Operating Officer of Allied Waste between 2003 and 2004. Prior to that, Mr. Slager held varying positions of increasing responsibility with Allied Waste. Mr. Slager also has served as a Director of Republic since 2010. Mr. Slager previously served as an independent Director of UTi Worldwide Inc. (UTi) from 2009 to January 2016, where he served as Chairman of the nominating and corporate governance committee and as a member of both the compensation and risk committees. UTi, a former NYSE listed company, was an international, non-asset-based supply chain services and solutions company providing air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services until it was acquired by DSV A/S, a third-party logistics services provider, in January 2016. Mr. Slager has completed the Northwestern University Kellogg School Advanced Executive Program and holds a certificate from the Stanford University Board Consortium Development Program.

 

Key attributes, experience and skills:

 

•  More than 16 years of C-Suite experience

 

•  More than 29 years of general management experience in a complex, capital intensive and logistics business

 

•  Extensive experience in mergers and acquisitions, integration, and strategic development and analysis

 

•  Valuable experience from his membership on the boards of directors of two publicly-traded companies

 

LOGO

 

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Table of Contents

DIRECTOR NOMINEES    PROPOSAL 1: ELECTION OF DIRECTORS

 

     
LOGO

 

DAVID C.
WAJSGRAS

 

Director Since: 2020

Age: 61

 

Committees:

 

 

LOGO

  

Mr. Wajsgras served as Raytheon Company (NYSE: RTN) vice president and president of the Intelligence, lnformation and Services (IIS) business from March 2015 to April 2020. Raytheon is a major U.S. defense contractor and industrial corporation. IIS provides a full range of technical and professional services to intelligence, defense, federal and commercial customers worldwide. The business specializes in global Intelligence, Surveillance and Reconnaissance; navigation; Department of Defense space and weather solutions; cybersecurity; analytics; training; logistics; mission support; engineering; automation and sustainment solutions; and international and domestic Air Traffic Management systems. Prior to this role, he was senior vice president and chief financial officer (CFO) of Raytheon from March 2006 to March 2015. Mr. Wajsgras is also an independent director of Parsons Corporation (NYSE: PSN), a digitally enabled solutions provider focused on the defense, intelligence, and critical infrastructure markets. He was named Federal Computer Week’s prestigious Industry Eagle Award winner in 2018 for his pivotal role in the U.S. government Information Technology community. In 2012, Mr. Wajsgras was named one of the Wall Street Journal’s 25 Best CFOs among the larger companies in the Standard & Poor’s 500 Index. Mr. Wajsgras earned his Bachelor’s degree in accounting from the University of Maryland. He has a Masters in Business Administration from American University.

 

Key attributes, experience and skills:

 

•  Extensive financial and operating experience

 

•  Knowledge of corporate finance, strategic planning and risk management processes

 

•  Experience as a public company CFO, as well as expansive knowledge of accounting principles and practices, auditing, internal control over financial reporting, and risk management processes

 

•  Expertise in cybersecurity products and services

 

LOGO       

The Board Unanimously Recommends a Vote “FOR” all Nominees for Election to the Board of Directors on this Proposal 1

 

Director Compensation

Martin Marietta uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board of Directors. In setting Director compensation, Martin Marietta considers the significant amount of time that Directors expend in fulfilling their duties to Martin Marietta as well as the skill level required by Martin Marietta of members of the Board. The Board determines reasonable compensation for Directors upon recommendation of the Management Development and Compensation Committee of the Board, which retains an independent compensation consultant to assist it in making each recommendation.

Cash Compensation Paid to Board Members

The cash-based elements of annual Director compensation for fiscal year 2020 paid in quarterly installments, measured from the end of the month during which the 2020 Annual Meeting of Shareholders was held, were as follows.

 

Cash Component Amount

 

Annual Board Cash retainer

   $ 120,000  

Annual Audit Committee chair retainer1

   $ 20,000  

Annual Management Development and Compensation Committee chair retainer2

   $ 17,500  

Annual Finance Committee chair retainer2

   $ 15,000  

Annual Nominating and Corporate Governance Committee chair retainer2

   $ 15,000  

Annual Ethics, Environment, Safety and Health Committee chair retainer2

   $ 8,000  

Annual Audit Committee member retainer2

   $ 5,000  

Annual Lead Independent Director retainer3

   $ 30,250  

 

LOGO

 

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PROPOSAL 1: ELECTION OF DIRECTORS    DIRECTOR NOMINEES

 

1

This is in addition to the annual retainer and the annual Audit Committee member retainer

2

This is in addition to the annual retainer in view of increased responsibilities

3

This is in addition to the annual retainer and the annual Committee chair retainers in view of increased responsibilities.

The Company reimburses Directors for the travel expenses of, or provides transportation on Company aircraft for, Board and Committee meetings, meetings with management or independent consultants or advisors, and other Company-related events, such as Investor Day and meetings with potential Board candidates. No Directors received personal use of Martin Marietta’s aircraft or other perquisites or personal benefits in 2020.

Equity Compensation Paid to Board Members

Non-employee Directors received an award of restricted stock units (RSUs) with a value of $130,000 (rounded up to the nearest RSU) based on the closing price as of the date of grant, which was generally immediately following the 2020 Annual Meeting of Shareholders in May 2020. In May 2020, this award was 770 RSUs. Mr. Foxx received his RSU award of 508 RSUs when he joined the Board. The RSUs granted to the Directors in 2020 were fully vested upon award. Directors are required to defer at least 50% of the RSUs until retirement from the Board. Directors may choose to voluntarily defer an additional portion of their RSUs, and any RSUs that are not so deferred are settled in shares of common stock of Martin Marietta as soon as practicable following the grant date. The RSUs were awarded under the Martin Marietta Amended and Restated Stock-Based Award Plan (the Stock Plan), which was approved by shareholders on May 19, 2016. The Stock Plan provides that, during any calendar year, no non-employee Director may be granted (i) restricted shares and other full-value stock-based awards, including RSUs, in respect of more than 7,000 shares of common stock of Martin Marietta or (ii) options or stock appreciation rights in respect of more than 20,000 shares of common stock of Martin Marietta.

The Directors do not have voting or investment power for their respective RSUs.

Deferred Compensation Program for Board Members

The Common Stock Purchase Plan for Directors provides that non-employee Directors may elect to receive all or a portion of their fees earned in 2020 in the form of Martin Marietta common stock units. If deferral is elected, there is a mandatory deferral minimum time of three years with, subject to certain restrictions, redeferrals at each Director’s election up to the date the person ceases to be a Director or the date that is one year and one month following the date that the person ceases to be a Director. Directors may elect to receive payment of the deferred amount in a single lump sum or in equal annual installments for a period of up to ten years. By resolution adopted by Martin Marietta’s Board of Directors on May 17, 2018, amounts deferred under the plan in common stock are credited toward units of common stock at 100% of the fair market value of the common stock (the closing price of the common stock as reported in The Wall Street Journal) on the date the Director fees would otherwise be paid. Prior to that, amounts deferred under the plan in common stock were credited toward units of common stock at a 20% discount from the fair market value of the common stock (the closing price of the common stock as reported in The Wall Street Journal) on the date the Director fees would otherwise be paid. There are no matching contributions made by Martin Marietta. Dividend equivalents are paid on the units at the same rate as dividends are paid to all shareholders. The Directors do not have voting or investment power for their respective common stock units. Directors may also elect to defer their fees into a cash-based account on the same basis. Amounts deferred under the plan in cash are credited with interest at the prime rate as of January 1 of that year.

 

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DIRECTOR COMPENSATION    PROPOSAL 1: ELECTION OF DIRECTORS

 

Director Compensation Table

The table below summarizes the compensation paid by Martin Marietta to each person who served as a non-employee Director during the fiscal year ended December 31, 2020.

 

Name1

Fees Earned or
Paid in Cash ($)2
Stock
Awards ($)3
Change in Pension
Value and
Nonqualified Deferred
Compensation
Earnings ($)4
All Other
Compensation ($)5
Total ($)     

(a)

(b) (c) (f) (g) (h)

Dorothy M. Ables

  125,000     130,138     211     4,312     259,661  

Sue W. Cole

  120,000     130,138     25,856     59,563     335,557  

Smith W. Davis

  128,000     130,138     377     7,504     266,019  

Anthony R. Foxx6

  30,000     130,139     125     290     160,554  

John J. Koraleski

  165,189     130,138     748     10,209     306,284  

Laree E. Perez

  145,000     130,138     12,622     33,326     321,086  

Thomas H. Pike

  120,000     130,138     70     2,596     252,804  

Michael J. Quillen

  138,813     130,138     12,777     38,036     319,764  

Donald W. Slager

  135,000     130,138     570     6,200     271,908  

David C. Wajsgras

  93,750     130,138     20     2,171     226,079  

Stephen P. Zelnak, Jr.7

  33,750     0     3,711     17,188     54,649  

 

1

Mr. Nye, who is the Chief Executive Officer of Martin Marietta and a member of the Board of Directors, is not included in this table because he is not compensated separately for his service as a Director. The compensation received by Mr. Nye as an employee of Martin Marietta is shown in the Summary Compensation Table on page 65.

2

The amounts in column (b) reflect fees earned in 2020. Some of these fees were deferred pursuant to the Common Stock Purchase Plan for Directors in the form of common stock units. The number of units of common stock credited in 2020 to each of the Directors under the Common Stock Purchase Plan for Directors and the grant date fair value for these awards determined in accordance with FASB ASC Topic 718, are as follows: Ms. Ables, 0; Ms. Cole, 550 units and $120,233 value, respectively; Mr. Davis, 587 units and $128,355 value, respectively; Mr. Foxx, 0; Mr. Koraleski, 758 units and $165,451 value, respectively; Ms. Perez, 0; Mr. Pike, 0; Mr. Quillen, 637 units and $139,458 value, respectively; Mr. Slager, 0; Mr. Wajsgras, 436 units and $94,100 value, respectively; and Mr. Zelnak, 75 units and $17,065 value, respectively. The number of units credited to each of the Directors as of December 31, 2020, including units accumulated under the plan for all years of service as a Director, is as follows: Ms. Ables, 0; Ms. Cole, 15,636; Mr. Davis, 1,610; Mr. Foxx, 0; Mr. Koraleski, 1,993; Ms. Perez, 5,258; Mr. Pike, 0; Mr. Quillen, 6,909; Mr. Slager, 0; and Mr. Wajsgras, 436.

3

Each Director who was serving immediately following the 2020 Annual Meeting of Shareholder received 770 RSUs in May 2020. Mr. Foxx received 508 RSUs upon joining the Board in November 2020. The amounts in column (c) reflect the grant date fair value for these awards determined in accordance with FASB ASC Topic 718. The RSUs fully vested upon award and will be distributed to the Director upon retirement, except Ms. Perez and Mr. Quillen, who each received a distribution of 385 unrestricted shares of common stock and deferred the distribution of 385 RSUs until retirement. As of December 31, 2020, each Director held RSUs in the amounts as follows: Ms. Ables, 2,114; Ms. Cole, 10,923; Mr. Davis, 1,979; Mr. Foxx, 508; Mr. Koraleski, 2,918; Ms. Perez, 9,714; Mr. Pike, 1,348; Mr. Quillen, 9,714; Mr. Slager, 2,957; and Mr. Wajsgras, 770. As of December 31, 2020, none of the Directors held options for common stock. Mr. Zelnak’s RSUs were distributed upon his retirement.

4

The amounts in column (f) reflect interest paid on fees deferred in cash under the Common Stock Purchase Plan for Directors.

5

The amounts in column (g) reflect for each Director the dollar value of dividend equivalents paid in 2020 on common stock units held under the Common Stock Purchase Plan for Directors. The Directors did not receive perquisites or other personal benefits in 2020.

6

Mr. Foxx’s fees were prorated since he joined the Board in November 2020.

7

Mr. Zelnak retired at the 2020 Annual Meeting of Shareholders in accordance with the Bylaws that provide for retirement at the annual meeting of shareholders following the Director’s 75th birthday.

 

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Table of Contents

 

Beneficial Owners and Management

Stock Ownership

How much stock do Martin Marietta’s Directors and executive officers own?

The following table sets forth information as of March 5, 2021 with respect to the shares of common stock that are beneficially owned by the Directors, the Chief Executive Officer, the Chief Financial Officer, and the three other named executive officers who are listed in the Summary Compensation Table on page 65 of this Proxy Statement, individually, and by all Directors and executive officers of Martin Marietta as a group. The address of each beneficial owner below is Martin Marietta’s principal executive office.

 

Name of Beneficial Owner

Amount and Nature
of Beneficial
Ownership1
Deferred and
Restricted Units5
Total

Dorothy M. Ables

  2,114 2      2,114

Roselyn R. Bar

  50,568 3    7,308   57,876

Sue W. Cole

  31,852 2,4      31,852

Smith W. Davis

  3,684 2      3,684

Anthony R. Foxx

  508 2      508

Daniel L. Grant

  19,004 3    1,953   20,957

John J. Koraleski

  11,940 2      11,940

Craig M. LaTorre

  1,202 3    9,637   10,839

James A. J. Nickolas

  6,036 3    9,427   15,463

C. Howard Nye

  149,370 3    40,308   189,678

Laree E. Perez

  15,357 2      15,357

Thomas H. Pike

  1,438 2      1,438

Michael J. Quillen

  21,264 2      21,264

Donald W. Slager

  2,957 2      2,957

David C. Wajsgras

  1,299 2      1,299

All Directors and executive officers as a group (17 individual including those named above)

  323,422 3,4    82,826   406,248

 

1

As to the shares reported, unless indicated otherwise, (i) beneficial ownership is direct, and (ii) the person indicated has sole voting and investment power. None of the Directors or named executive officers individually own in excess of one percent of the shares of common stock outstanding. All Directors and executive officers as a group own .65% of the shares of common stock outstanding as of March 5, 2021. None of the shares reported are pledged as security.

2

Amounts reported include (1) compensation paid on an annual basis that Directors have received in common stock units that are deferred pursuant to the Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors and (2) RSUs that each Director received in 2020 as part of their compensation. The Directors do not have voting or investment power for their respective common stock units and RSUs. The number of common stock units credited to each of the Directors pursuant to the Common Stock Purchase Plan as of March 5, 2021 is as follows: Ms. Ables, 0; Ms. Cole, 15,470; Mr. Davis, 1,705; Mr. Foxx, 0; Mr. Koraleski, 2,122; Ms. Perez, 5,258; Mr. Pike, 90; Mr. Quillen, 6,756; Mr. Slager, 0; and Mr. Wajsgras, 529.

3

The number of shares owned for each of Mr. Nye, Ms. Bar, Mr. LaTorre, Mr. Grant, Mr. Nickolas and all Directors and executive officers as a group assumes that options held by each of them covering shares of common stock in the amounts indicated, which are currently exercisable within 60 days of March 5, 2021, have been exercised: Mr. Nye, 0; Ms. Bar, 0; Mr. Grant, 1,892; Mr. LaTorre, 0; Mr. Nickolas, 0; and all Directors and executive officers as a group, 1,892.

4

Includes an approximation of the number of shares in an IRA account.

5

The amounts reported include common stock units credited to each of the NEOs in connection with (i) their deferral of a portion of their cash bonus under the Martin Marietta Materials, Inc. Incentive Stock Plan, and (ii) RSUs (not including any performance-based share units (PSUs) granted under the Martin Marietta Amended and Restated Stock-Based Award Plan (the Plan) that are subject to forfeiture in accordance with the terms of the Stock Plan and are scheduled to vest within 60 days of March 5, 2021), each in the following amounts: Mr. Nye, 20,175 and 20,133, respectively; Ms. Bar, 3,736 and 3,572, respectively; Mr. Nickolas, 1,987 and 7,440, respectively; Mr. Grant, 930 and 1,023, respectively; Mr. LaTorre, 1,037 and 8,600, respectively; and all Directors and executive officers as a group, 29,676 and 53,150, respectively. There are no voting rights associated with the stock units or RSUs.

 

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Table of Contents

DELINQUENT SECTION 16(A) REPORTS    BENEFICIAL OWNERS AND MANAGEMENT

 

Who are the largest owners of Martin Marietta’s stock?

The following table sets forth information with respect to the shares of common stock which are held by persons known to Martin Marietta to be the beneficial owners of more than 5% of such stock as of March 5, 2021. To the best of Martin Marietta’s knowledge, based on filings with the Securities and Exchange Commission as noted below, no person beneficially owned more than 5% of any class of Martin Marietta’s outstanding voting securities at the close of business on March 5, 2021, except for those shown below.

 

Name and Address of Beneficial Owner

   Amount and Nature of  
Beneficial Ownership
   Percent of Class  

The Vanguard Group, Inc.1

       6,605,279        10.61 %

BlackRock, Inc.2

       3,803,693        6.10 %

Select Equity Group, L.P.3

       3,527,092        5.66 %

State Street Corporation4

       3,325,517        5.34 %

Aristotle Capital Management, LLC5

       3,279,463        5.27 %

 

1

As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2020 filed with the SEC on February 10, 2021, indicating sole power to vote 0 shares, shared power to vote 101,571 shares, sole power to dispose of 6,333,956 shares, and shared power to dispose of 271,323 shares. The Vanguard Group, Inc.’s address is 100 Vanguard Blvd., Malvern, Pennsylvania 19355, and it filed this Schedule 13G/A as a parent holding company or control person for its subsidiaries Vanguard Asset Management, Limited; Vanguard Fiduciary Trust Company; Vanguard Global Advisors, LLC; Vanguard Group (Ireland) Limited; Vanguard Investments Australia Ltd; Vanguard Investments; Canada Inc.; Vanguard Investments Hong Kong Limited; and Vanguard Investments UK, Limited.

2

As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2020 filed with the SEC on January 29, 2021, indicating sole power to vote 3,330,095 shares, shared power to vote 0 shares, sole power to dispose of 3,803,693 shares, and shared power to dispose of 0 shares. BlackRock, Inc.’s address is 55 East 52nd Street, New York, New York 10055, and it filed this Schedule 13G/A as a parent holding company or control person for its subsidiaries BlackRock Life Limited; BlackRock International Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management; Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A.; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; BlackRock (Singapore) Limited; and BlackRock Fund Managers Ltd.

3

As reported in Schedule 13G reporting beneficial ownership as of December 31, 2020 filed with the SEC on February 12, 2021, indicating sole power to vote 0 shares, shared power to vote 3,527,092 shares, sole power to dispose of 0 shares, and shared power to dispose of 3,527,092 shares. Select Equity Group, L.P.’s address is 380 Lafayette Street, 6th Floor, New York, New York 10003.

4

As reported in Schedule 13G reporting beneficial ownership as of December 31, 2020 filed with the SEC on February 10, 2021, indicating sole power to vote 0 shares, shared power to vote 2,927,491 shares, sole power to dispose of 0 shares, and shared power to dispose of 3,325,090 shares. State Street Corporation’s address is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111, and it filed this Schedule 13G as a parent holding company or control person for its subsidiaries SSGA Funds Management, Inc.; State Street Global Advisors Limited (UK); State Street Global Advisors Ltd (Canada); State Street Global Advisors, Australia Limited; State Street Global Advisors (Japan) Co., Ltd; State Street Global Advisors Asia Ltd; State Street Global Advisors Singapore Ltd; State Street Global Advisors GmbH; State Street Global Advisors Ireland Limited; and State Street Global Advisors Trust company.

5

As reported in Schedule 13G reporting beneficial ownership as of December 31, 2020 filed with the Securities and Exchange Commission on February 2, 2021, indicating sole power to vote 2,501,407 shares, shared power to vote 0 shares, sole power to dispose of 3,279,463 shares, and shared power to dispose of 0 shares. Aristotle Capital Management, LLC’s address is 11100 Santa Monica Blvd., Suite 1700, Los Angeles, California 90025.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires Directors and officers of Martin Marietta and persons who own more than 10% of our common stock to file with the SEC reports of ownership and reports in changes in ownership of such common stock. Based solely on its review of copies of reports filed with the SEC, the Company believes that during fiscal year 2020, such filing requirements were timely satisfied except for (1) due to an administrative error, a Form 4 was filed one day late on behalf of each of Ms. Bar and Messrs. Cardin, Grant, LaTorre, Mohr, Nickolas and Nye on February 24,

 

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CORPORATE GOVERNANCE MATTERS    CORPORATE GOVERNANCE PHILOSOPHY

 

2020 to report award and vesting transactions under the Stock Plan and, as applicable, shares withheld for taxes; (2) eight quarterly dividend reinvestments in 2018 and 2019 relating to 86.861 shares in the aggregate that should have been previously reported on two Form 5s were inadvertently reported late by Mr. Grant; (3) 21 quarterly dividend reinvestments in 2015, 2016, 2017, 2018, 2019 and 2020 relating to 159.687 shares in the aggregate that should have been previously reported on Form 4 or 5 and were inadvertently reported late by Mr. Zelnak; and (4) three sales in 2020 relating to 18,234.687 shares in the aggregate that should have been previously reported on Form 4 were inadvertently reported late by Mr. Zelnak.

Corporate Governance Matters

Corporate Governance Philosophy

Martin Marietta has a culture dedicated to ethical business behavior and responsible corporate activity, which we believe promotes the long-term interests of shareholders. This commitment is reflected in our Corporate Governance Guidelines, posted and available for public viewing on Martin Marietta’s website at https://ir.martinmarietta.com/corporate-governance/governance-documents-and-charters, which set forth a flexible framework within which the Board, assisted by its Committees, directs the affairs of Martin Marietta. The Guidelines address, among other things, the composition and functions of the Board of Directors, director qualifications and independence, Chief Executive Officer performance evaluation and management succession, Board Committees and the selection of new Directors.

Martin Marietta’s Code of Ethical Business Conduct has been in place since the 1980s and is regularly updated. It applies to all Board members, officers, and employees, providing our policies and expectations on a number of topics, including our commitment to good citizenship, promoting a positive and safe work environment, avoiding conflicts of interest, honoring the confidentiality of sensitive information, preservation and use of Company assets, compliance with all laws, and operating with integrity in all that we do. To implement the Code of Ethical Business Conduct, Board members, officers, and employees participate regularly in ethics training. There have been no waivers from any provisions of our Code of Ethical Business Conduct to any Board member or executive officer.

In addition, the Board believes that accountability to shareholders is a hallmark of good governance and critical to Martin Marietta’s success. To that end, management regularly engages with shareholders on a variety of topics throughout the year, including sustainability and governance, to ensure we are addressing their questions, thoughts and concerns, to seek input and to provide perspective on Company policies and practices. Feedback received during these discussions is shared with the Board and directly impacts deliberations on material topics. See discussion of our shareholder outreach on pages 6, 38 and 40.

 

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The chart below provides a snapshot of Martin Marietta’s governance highlights.

 

 

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Corporate Governance Board Practices

Who are Martin Marietta’s independent Directors?

All of Martin Marietta’s Directors are non-employee Directors except Mr. Nye. Mr. Nye neither sits in the executive sessions of the independent Directors (unless invited to attend for a specific discussion) nor does he participate in any action of the Board relating to any executive compensation which he may receive.

In assessing the independence of its members and nominees, the Board has adopted for Martin Marietta a set of Guidelines for Director’s Independence (Guidelines). The Guidelines are posted and available for public viewing on Martin Marietta’s website at https://ir.martinmarietta.com/corporate-governance/governance-documents-and-charters. These Guidelines reflect the rules of the NYSE, applicable requirements of the SEC, and other standards determined by the Board to be important in assessing the independence of Board members. The Board has determined that, other than Mr. Nye, all members of the Board are “independent” under these Guidelines, resulting in 91% of the Board being independent. The Board of Directors has determined that no Director (except Mr. Nye), or nominee, or any person or organization with which the Director or nominee has any affiliation, has a relationship with Martin Marietta that may interfere with his or her independence from Martin Marietta and its management. In making this “independence” determination, the Board considered other entities with which the Directors were affiliated and any business Martin Marietta had done with such entities.

 

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Do the independent Directors ever meet without management?

Martin Marietta’s Corporate Governance Guidelines adopted by the Board provide that at least two Board meetings each year will include an executive session of the non-employee Directors to discuss such topics as they may choose, including a discussion of the performance of Martin Marietta’s Chairman and Chief Executive Officer. In 2020, Martin Marietta’s independent Directors met at each regularly scheduled Board meeting, consisting of four times in executive session without management, in addition to executive sessions held by Committees of the Board. In 2020, all the independent Directors were non-employees.

What is the Board’s leadership structure?

Our Corporate Governance Guidelines provide that the Board’s policy as to whether the Chairman and CEO positions should be separate is to adopt the practice that best serves the Company’s needs at any particular time. The Nominating and Corporate Governance Committee and the Board discussed Board leadership alternatives in connection with combining the Chairman and CEO roles.

The Board believes that, at the present time, the Company is best served by allocating governance responsibilities between a combined Chairman and CEO and a Lead Independent Director with robust responsibilities. This structure allows the Company to present a single face to our constituencies through the combined Chairman and CEO position while at the same time providing an active role and voice for the independent directors through the Lead Independent Director.

 

Reasons for Combined Chair and CEO

Key highlights

•  The independent Board members believe that Mr. Nye has extensive experience in all facets of the building materials industry, in both the U.S. and with global competitors.

•  Mr. Nye has been effective in creating shareholder value through strategic acquisitions and divestitures, with achievement of expected synergies.

•  Mr. Nye has in-depth knowledge of safety, health, operational, environmental, and regulatory considerations that impact the business and oversight of management.

•  Mr. Nye has demonstrated his leadership and vision to guide the Board in its oversight of management with the development of three five-year strategic plans, with the current Strategic Operating Analysis and Review (SOAR 2025) discussed with and approved by the Board in August 2020.

•  Mr. Nye has engaged in an active investor relations program, including the Company’s Investor Day presentations, and leads the Board in understanding the perspective of the Company’s shareholders.

•  Mr. Nye is the only member of management on the Board.

•  Strong independent directors comprise 91% of the current Board, and open communications exist between Mr. Nye and the independent directors.

As a result of Mr. Nye’s tenure at Martin Marietta and strong performance as a leader since his election as CEO, the Board believes he is uniquely qualified through his experience, education and expertise to be the person who promotes strong and visionary leadership for our Board, as well as important recognition as the leader of Martin Marietta by our customers, employees and other constituencies. The Board also believes that Mr. Nye’s serving as both Chairman and CEO is appropriate taking into consideration the size and nature of our business, Mr. Nye’s effective and careful formulation and execution of our strategic plan, his established working relationship and open communication with our other Directors, both during meetings and in the intervals between meetings, the significant board-level experience of our independent Directors as a whole, the strong independent leadership and accountability to shareholders provided by 91% of our Directors being independent, the independent leadership provided by our Committee chairs, and our Board culture in which Mr. Nye and the other Directors are able to thoughtfully debate different points of view and reach consensus in an efficient manner.

 

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Does the Board have a Lead Independent Director?

In deciding that a combined Chairman and Chief Executive Officer position is the appropriate leadership structure for the Company at this time, the Nominating and Corporate Governance Committee and Board also recognized the benefit of independent leadership to enhance the effectiveness of the Board’s oversight role and communications between the Board and Mr. Nye. Accordingly, in November 2014, our Corporate Governance Guidelines were revised to provide that in the event the Chairman and Chief Executive Officer positions are held by one person, our independent Directors may designate a Lead Independent Director from among the independent Directors. The designation of the Lead Independent Director is to be made annually, with the expectation of the Board that the Lead Independent Director will be re-appointed for multiple, consecutive one-year terms. John J. Koraleski currently serves as the Lead Independent Director.

The responsibilities of the Lead Independent Director include:

 

 

Presiding at Board meetings when the Chairman is not present.

 

 

Presiding at executive sessions of the independent Directors, and meeting separately with the Chairman after executive sessions to review the matters discussed during the executive sessions.

 

 

Acting as a liaison between the Chairman and the independent Directors.

 

 

Suggesting to the Chairman agenda items for Board meetings and consulting with the Chairman regarding Board meeting schedules.

 

 

Calling, where necessary, executive sessions of independent Directors.

 

 

Being available to meet with shareholders and other key constituents.

 

 

Acting as a resource for, and counsel to, the Chairman.

 

 

In addition, the Lead Independent Director attends and meets with shareholders at Company-sponsored Investor Days.

What is the Board’s role in risk oversight?

Our Board currently has ten independent members and only one non-independent member, Mr. Nye. A number of our independent Board members are serving or have served as members of senior management of other public companies, have served as directors of other public companies, and otherwise have experience and/or educational backgrounds that we believe qualify them to effectively assess risk. Each of our Board Committees, including our Audit, Management Development and Compensation, and Nominating and Corporate Governance Committees, are comprised solely of independent Directors, each with a different independent Director serving as Chair of the Committee (other than the Executive Committee, which does not meet on a regular basis).

The Board has overall responsibility for oversight of risk management. The Board believes that an effective risk management system will (1) timely identify the material risks that Martin Marietta faces, (2) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or relevant Board Committee, (3) determine whether the risk is excessive or appropriate under the circumstances and designed to achieve a legitimate corporate goal, (4) implement risk management responses consistent with Martin Marietta’s risk profile, and (5) integrate risk management into Martin Marietta’s decision-making.

The Board delegates certain responsibilities to the Committees to assist in fulfilling its risk oversight responsibilities. Each of the Committees reports regularly to the full Board of Directors as to actions taken and topics discussed. In addition, the Board regularly reviews with management the most significant risks facing Martin Marietta, the probabilities of those risks occurring, the steps taken to mitigate any impact of risks, and management’s general risk management strategy. In addition, the Board encourages management to promote a corporate culture that incorporates risk management into Martin Marietta’s day-to-day operations.

The Board has designated the Audit Committee to take the lead in overseeing risks related to financial reporting, financial statements, internal control environment, internal audit, independent audit, cybersecurity, and accounting processes. The Finance Committee evaluates risks associated with Martin Marietta’s capital structure, including credit and liquidity risks. The Management Development and Compensation Committee oversees aspects of risk related to the annual performance

 

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evaluation of our Chief Executive Officer, succession planning and ensuring that executive compensation is appropriate to meet Martin Marietta’s objectives. That Committee’s assessment of the design features of our executive compensation program that reduce the risk of excessive risk-taking are discussed in the Compensation Discussion and Analysis on page 37. The Nominating and Corporate Governance Committee oversees aspects of risk related to the composition of the Board and its Committees, Board performance and best practices in corporate governance. The Ethics, Environment, Safety and Health Committee monitors risks for the Company in key areas of Martin Marietta’s sustainability program, including health, safety, and the environment as well as the Company’s ethics program.

While the Board oversees Martin Marietta’s risk management, the executive officers are responsible for the day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and is appropriate whether the positions of Chairman and Chief Executive Officer are separate or held by the same individual.

How would interested parties make their concerns known to the independent Directors?

The Board of Directors provides a process for shareholders and other interested parties to send communications to the Board. Shareholders and other interested parties may communicate anonymously and confidentially with the Board through Martin Marietta’s Ethics Hotline at +1 (800) 209-4508. The Board has also designated the Corporate Secretary to facilitate communications to the Board. Shareholders and other interested parties may communicate directly with the Board of Directors, or directly with the independent Directors, or an individual Director, including the Lead Independent Director, by writing to Martin Marietta, Attn: Corporate Secretary, 4123 Parklake Avenue, Raleigh, North Carolina 27612.

All communications by shareholders or other interested parties addressed to the Board will be sent directly to Board members. While Martin Marietta’s Ethics Office and the Corporate Secretary may review, sort, and summarize these communications, all direct communications will be presented to the independent Directors unless there is instruction from them to filter such communications (and in such event, any communication that has been filtered out will be made available to any independent Director who wishes to review it).

Martin Marietta and its Board of Directors will continue to review and evaluate the process by which shareholders or other interested persons communicate with Martin Marietta and the Board and may adopt other or further processes and procedures in this regard. If so, we will identify those policies and procedures on our website at www.martinmarietta.com.

How often did the Board meet during 2020?

Martin Marietta’s Board of Directors held four regularly scheduled meetings during 2020. There were also a total of 25 Committee meetings in 2020. In addition, management confers frequently with its Directors on an informal basis to discuss Company affairs.

How many times did Directors attend meetings of the Board and its Committees?

In 2020, all Directors attended 100% of the meetings of the Board of Directors during their term of service on the Board. All Directors attended at least 75% of the meetings of the Committees of the Board on which they served (during the periods that they served).

Will the Directors attend the Annual Meeting?

Martin Marietta’s Directors are expected to be available by telephone conference to respond to questions and react to comments at the Martin Marietta’s Annual Meeting of Shareholders although frequently no Shareholders other than Directors and Officers attend these meetings. In 2020, all then-current Directors participated by telephone conference the Annual Meeting in May.

Will the Nominating and Corporate Governance Committee consider any Director candidates recommended by shareholders?

The Nominating and Corporate Governance Committee will consider nominees recommended by shareholders for election as a Director at an Annual Meeting of Shareholders of Martin Marietta, if the shareholder making such recommendation complies with the advance notice provisions and other criteria specified in the Bylaws of Martin Marietta. The Bylaws of

 

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Martin Marietta require advance notice for any proposal for the nomination for election as a Director at an Annual Meeting of Shareholders that is not included in Martin Marietta’s Notice of Meeting or made by or at the direction of the Board of Directors. In general, nominations must be delivered to the Secretary of Martin Marietta at its principal executive offices, 4123 Parklake Avenue, Raleigh, North Carolina 27612, not less than 60 days nor more than 90 days prior to the first anniversary of the mailing of the Proxy Statement in connection with the preceding year’s Annual Meeting of Shareholders and must contain specified information concerning the nominee and the shareholder proposing the nomination. Any shareholder desiring a copy of the Bylaws of Martin Marietta will be furnished a copy without charge upon written request to the Secretary of Martin Marietta. Since the 2020 Annual Meeting, Martin Marietta has not made any material changes to the procedures by which shareholders may nominate individuals for election as Directors. Additional information is contained in the section entitled Shareholders’ Proposals For 2022 Annual Meeting below.

How does the Board select nominees for the Board?

The Nominating and Corporate Governance Committee will consider candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. The Committee may also retain a third-party executive search firm to identify potential candidates for its consideration from time to time. The Committee makes an initial determination as to whether to conduct a full evaluation of the candidate, and reviews all information provided to the Committee, including the recommendations for the prospective candidate and the Committee’s own knowledge of the prospective candidate. If the Committee determines that additional consideration is warranted, interviews are conducted by the members of the Committee, as well as the Chief Executive Officer of Martin Marietta; appropriate inquiries are conducted into the background and qualifications of potential candidates; the Committee meets to discuss its evaluation and feedback from the Chief Executive Officer; and, if the Committee determines to do so, it makes a recommendation to the full Board as to the persons who should be nominated by the Board. The Board of Directors determines the nominees after considering the recommendation and report of the Committee.

In evaluating any potential candidate, the Nominating and Corporate Governance Committee considers the extent to which the candidate has the personal characteristics and core competencies outlined in the Guidelines for Potential New Board Members adopted by the Committee, and takes into account all other factors it considers appropriate. A copy of these Guidelines is attached to this Proxy Statement as Appendix A.

Do the Board Committees have charters? How can shareholders obtain them?

Martin Marietta’s Board of Directors has adopted written charters meeting the requirements of the NYSE for the Audit Committee, Management Development and Compensation Committee, and Nominating and Corporate Governance Committee. These charters address the purposes and responsibilities of each Committee, as described above, and provide for an annual performance evaluation of each Committee. Copies of these charters, and the charters of the other Committees of the Board, are posted on Martin Marietta’s website at https://ir.martinmarietta.com/corporate-governance/governance-documents-and-charters, along with copies of Martin Marietta’s Corporate Governance Guidelines, Code of Ethical Business Conduct, and Guidelines for Director’s Independence.

How are transactions with persons related to Martin Marietta reviewed?

The SEC requires Martin Marietta to disclose in this Proxy Statement certain transactions in which Martin Marietta participates and in which certain persons considered “related persons” of Martin Marietta have a direct or indirect material interest. These “related persons” would include the Directors and executive officers of Martin Marietta, nominees for Director, certain control persons, and their immediate family members. Since January 1, 2020, there have been no such transactions.

Each Director, executive officer, and nominee for Director of Martin Marietta receives and agrees to abide by Martin Marietta’s Code of Ethical Business Conduct. Martin Marietta considers that any transaction in which Martin Marietta participates and in which any related person of Martin Marietta has a direct or indirect material interest will be subject to review, approval or ratification, as appropriate under the circumstances, by Martin Marietta under the standards enumerated in Martin Marietta’s Code of Ethical Business Conduct. If a proposed transaction is one in which a Director of Martin Marietta has an actual or potential conflict of interest, it will be subject to review by the Chairman of the Board of Directors and the Chairman of the Nominating and Corporate Governance Committee.

 

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Any waivers of the Code of Ethical Business Conduct for Directors and executive officers may be made only by Martin Marietta’s Board of Directors or any Committee to which it delegates that authority. Any waivers for Directors and executive officers and any amendments to the Code of Ethical Business Conduct will be promptly disclosed on our website, www.martinmarietta.com.

In assessing the independence of its members, the Board considers any interests a director may have in any transactions in which Martin Marietta participates. The Board also considers other entities with which the Directors are affiliated and any business Martin Marietta has done with such entities.

 

 Proposal 2: 

 

Independent Auditors

The Audit Committee has appointed PricewaterhouseCoopers LLP (PwC), an independent registered public accounting firm, to audit the consolidated financial statements of Martin Marietta and the effectiveness of Martin Marietta’s internal control over financial reporting for the 2021 fiscal year and the Board of Directors recommends that the shareholders ratify this appointment. The ratification of the appointment of PwC is being submitted to the shareholders because the Board of Directors believes this to be good corporate practice. Should the shareholders fail to ratify this appointment, the Audit Committee will review the matter and determine, in its sole discretion, whether PwC or another independent registered public accounting firm should be retained.

PwC served as Martin Marietta’s independent auditors for 2020 and audited the consolidated financial statements of Martin Marietta for the year ended December 31, 2020 and the effectiveness of Martin Marietta’s internal control over financial reporting as of December 31, 2020. In connection with the audit of Martin Marietta’s 2020 consolidated financial statements, Martin Marietta entered into an engagement letter with PwC that sets forth the terms by which PwC would perform audit services for Martin Marietta.

The Audit Committee is solely responsible for retaining or terminating Martin Marietta’s independent auditors. Representatives of PwC are expected to attend the Annual Meeting, will have the opportunity to make a statement if they so desire, and will be available to respond to questions from shareholders.

 

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The Board Unanimously Recommends a Vote “FOR” on this  Proposal 2    

  
 

Summary of Fees

The following table summarizes the aggregate of fees billed for professional services rendered to Martin Marietta by PwC in 2020 and 2019.

 

     2020      2019  

Audit Fees1

   $ 2,667,000      $ 2,819,000  

Audit-Related Fees2

     100,000        100,000  

Tax Fees

             

All Other Fees3

     3,000        3,000  

TOTAL

   $ 2,770,000      $ 2,922,000  

Percentage of Audit & Audit-Related Fees to Total Fees

     99.9      99.9

 

1

Services in connection with the annual consolidated financial statement audit, the annual internal controls audit, and reviews of the consolidated financial statements included in the quarterly reports.

2

Services in connection with audit-related services, including agreed-upon procedures reports and subsidiary audits.

3

Other fees include license fees for technical accounting software. In 2020, services also included a comfort letter and consent related to a debt offering.

 

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Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by its independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee has delegated to the Chair of the Audit Committee authority to approve permitted services, provided that the Chair reports any decision to the Committee at its next scheduled meeting.

Audit Committee Review

In connection with the Audit Committee’s review of services rendered and fees billed by the independent auditor, the Audit Committee has considered whether the provision of the non-audit related services described above is compatible with maintaining the independent auditors’ independence and has concluded that the provision of these services did not compromise such independence.

Audit Committee Report

The Audit Committee operates under a written charter adopted by the Board of Directors, which is reassessed at least annually for adequacy by the Audit Committee. The Directors who serve on the Audit Committee have no financial or personal ties to Martin Marietta (other than Director compensation and equity ownership as described in this Proxy Statement) and are all “independent” for purposes of the SEC’s regulations, the NYSE listing standards, and the Guidelines for Director’s Independence adopted by the Board of Directors. The Board of Directors has determined that none of the Audit Committee members has a relationship with Martin Marietta that may interfere with the Director’s independence from Martin Marietta and its management. Copies of the Audit Committee’s charter and Martin Marietta’s Guidelines for Director’s Independence can be viewed on Martin Marietta’s website at https://ir.martinmarietta.com/corporate-governance/governance-documents-and-charters.

The Board of Directors has charged the Audit Committee with a number of responsibilities, including review of the adequacy of Martin Marietta’s financial reporting, accounting systems, and internal controls. Martin Marietta’s independent auditors and the vice president of the internal audit function report directly and are ultimately accountable to the Audit Committee.

In the discharge of its responsibilities, the Audit Committee has reviewed and discussed with management and the independent auditors Martin Marietta’s audited consolidated financial statements for fiscal year 2020 and has discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB), the SEC and the NYSE. In addition, the Committee has discussed with the independent auditors matters such as the quality (in addition to acceptability), clarity, consistency, and completeness of Martin Marietta’s financial reporting, as required by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the PCAOB).

The Audit Committee has received from the independent auditors written disclosures and a letter concerning the independent auditors’ independence from Martin Marietta, as required by the PCAOB in Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent auditors the independent auditors’ independence. These disclosures have been reviewed by the Committee and discussed with the independent auditors.

Based on these reviews and discussions, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in Martin Marietta’s 2020 Annual Report on Form 10-K for filing with the SEC.

February 17, 2021

AUDIT COMMITTEE

Laree E. Perez, Chair

Dorothy M. Ables

John J. Koraleski

David C. Wajsgras

 

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Management Development and Compensation Committee Report

The Management Development and Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 37 of this Proxy Statement. Based on this review and discussion, the Management Development and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Martin Marietta’s 2021 Annual Report on Form 10-K and this Proxy Statement.

February 17, 2021

MANAGEMENT DEVELOPMENT AND

COMPENSATION COMMITTEE

John J. Koraleski, Chair

Thomas H. Pike

Michael J. Quillen

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

The members of Martin Marietta’s Management Development and Compensation Committee are Directors Koraleski, Pike, and Quillen, none of whom has ever been an officer or employee of Martin Marietta or any of its subsidiaries, or had any relationship requiring disclosure by Martin Marietta under Item 404 of Regulation S-K of the SEC. There are no executive officer-Director interlocks where an executive of Martin Marietta serves on the compensation committee of another corporation that has an executive officer serving on Martin Marietta’s Board of Directors.

 

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Compensation Discussion and Analysis

 

Introduction      37  
Letter from Committee Chair      38  
Summary of Our Compensation Considerations      40  
Responsiveness to Shareholders      40  
Shareholder Engagement and Feedback on Executive Compensation Programs      40  
Our 2020 Performance      40  
Sustainability, Safety and the Health of Our Employees During the COVID-19 Pandemic      42  
Compensation Decisions Yielding Alignment with Performance and Enhancing Our Corporate Resilience      45  
Pay Decisions and Compensation Governance Practices      47  
Determination of CEO Compensation      48  
2020 Chairman, President and CEO Compensation      48  
2020 Named Executive Officers’ Compensation – Our Compensation Strategy      49  
Considerations Regarding 2020 Compensation      51  
2020 Base Salary      51  
2020 Annual Cash Incentive Goals and Results      52  
2020 Actual Incentive Cash Earned      52  
Annual Incentive Feature: Stock Purchase Plan      54  
2020 Long-Term Incentive Compensation Overview      54  
PSU Awards (55% of LTI Award)      54  
Selection of Relative TSR      55  
Performance-Based RSU Awards (45% of LTI Award)      56  
2020-2022 Performance Goals      56  
2018-2020 PSU Award Payouts      57  
Ongoing Corporate Governance Policies      58  
Compensation Decision Process      58  
Compensation Program Risk Assessment      60  
Stock-Based Awards Generally      60  
Stock Ownership Requirements      61  
Anti-Hedging and Pledging Policy      61  
Clawback Policy      62  
Our Use of Independent Compensation Consultants      62  
Practice Regarding Timing of Equity Grants      63  
Perquisites      63  
Retirement and Other Benefits      63  
Potential Payments upon Termination or Change of Control      64  
Tax and Accounting Implications      64  

Introduction

This Compensation Discussion and Analysis, or CD&A, describes our 2020 executive compensation program and the attendant oversight provided by the Management Development and Compensation Committee of the Board of Directors (the Committee). It also summarizes our executive compensation structure and discusses the compensation earned by Martin Marietta’s named executive officers, or NEOs (the CEO, the CFO, and the three other most highly compensated executive officers in 2020), as presented below in the tables under “Executive Compensation” following this CD&A, which contain detailed compensation information quantifying and further explaining our NEOs’ compensation.

The Company did not change the executive compensation program despite the COVID-19 pandemic, including retaining pre-established performance goals.

For 2020, our NEOs were:

 

NEO

  Title    

C. Howard Nye

  Chairman of the Board, President and Chief Executive Officer  

James A. J. Nickolas

  Senior Vice President and Chief Financial Officer    

Roselyn R. Bar

  Executive Vice President, General Counsel and Corporate Secretary  

Daniel L. Grant

  Senior Vice President – Strategy and Development    

Craig M. LaTorre

  Senior Vice President and Chief Human Resource Officer    
 

 

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Letter from Committee Chair

Dear Fellow Shareholders:

Due to the pandemic and related economic disruption, 2020 was a very challenging year for Martin Marietta as well as the entire country and economy. During these unprecedented times, we have taken action to support our employees, their families, our customers, our supply chain, and the communities we serve. We are proud of our workforce, which has demonstrated the needed resilience to be successful. Despite the significant economic uncertainty and headwinds created by the COVID-19 pandemic, Martin Marietta achieved substantial success in meeting our strategic, financial and social objectives.

In the face of these challenges, we remain committed to maintaining strong executive pay and governance practices in which compensation is tied to performance. We look at a broad range of criteria when assessing performance, including financial, engagement with our shareholders, safety and health, our employees’ well-being, sustainability and others. These factors, which I’ve summarized, are discussed in detail below in the CDA. The Committee retained Pay Governance, a leading independent consulting firm, to help in this regard.

Financial Performance

As a result of our commitment to SOAR and proactive management of the business through the pandemic, 2020 was a year of continuing growth for Martin Marietta despite the challenges and uncertainty resulting from COVID-19. For the ninth consecutive year, the Company achieved annual products and services revenue, gross profit, adjusted EBITDA and adjusted EPS growth.

 

 

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Note: See Appendix B for a reconciliation of non-GAAP measures to GAAP measures.

Engagement with Our Shareholders

We regularly engage with our shareholders to understand the executive compensation topics that matter most to them. We view a continuing, constructive dialogue with our long-term shareholders as critically important to ensuring that we remain aligned with their interests. We regularly talk to long-term shareholders and appreciate the opportunity to gain further insight and understanding into their views. Typically, management speaks with at least our top 25 shareholders, representing approximately 64% of our outstanding shares, at least annually. In 2020 our investor relations outreach extended to 88 meetings (mostly virtual) with 313 investment groups in the United States, Canada, the United Kingdom, Germany, Switzerland, the Netherlands, and France.

Safety

We have adopted a safety culture built on Guardian Angel, a safety program we first introduced in 2000 to

encourage our employees to look out for each other to make sure everyone goes home safely each day. This

program has propelled us to new heights in safety performance. In 2020, we rolled out a comprehensive

safety mentoring process to pair new employees with committed safety champions.

Our Employees

Martin Marietta recognizes that our success would not be possible without our hard-working and loyal employees, and our Guardian Angel safety program and ONE employer brand form the foundation of our exceptional Company culture.

 

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    LETTER FROM COMMITTEE CHAIR

 

Rooted in our values of safety, integrity, excellence, community and stewardship, and driven by our World-Class vision, our employees demonstrated exceptional commitment in 2020, following strict COVID-19 protocols to keep their coworkers, communities and family members safe, while continuing essential business operations with minimal disruption. While keeping employees safe and healthy has been the Company’s priority since before the onset of the COVID-19 pandemic, we also made progress on a variety of other important employee-related initiatives in 2020. Importantly, we also formalized our efforts to increase diversity in our workplace with the formation of our Inclusion and Engagement Steering Committee, comprised of employees with diverse race, gender, background, experience and other factors. We believe this will also drive us to be better and attract the best talent available.

One of this Committee’s most important responsibilities is ensuring that our employees and management team are incentivized and rewarded when they achieve excellent performance. We are also focused on the appropriate development of our management team by providing opportunities to learn, expand their skill sets, and have opportunities available to them. We pride ourselves on saying that our employees come to Martin Marietta not for a job, but for a career. These objectives are an important part of maintaining a company that is sustainable, resilient and capable of delivering long-term growth.

Sustainability

Sustainability is part of our core strategy and Martin Marietta has a long track record of building solid foundations, caring about our employees, our communities and the environment, while responsibly growing our company. One of our commitments to our shareholders and other stakeholders is to improve each year on these metrics. In addition, we have endeavored to tell our story better each year, informing our shareholders and other stakeholders about our efforts, costs, risks, goals, and the relationship between our goals and management compensation. In 2020 we advanced this objective by providing enhanced disclosure regarding our carbon footprint and other environmental matters, including setting our goals for reduction by 2030.

Executive Compensation in 2020

The Committee believes that our executive compensation programs should evolve and be adjusted over time to support the achievement of our business goals, to reflect our challenges, and to promote near- and long-term shareholder value. During 2020, the Committee reviewed and evaluated market trends and best practices in designing and implementing elements of our compensation program. The Committee continues to believe that the goals for our executive compensation programs are to attract talented managers and incentivize and reward achievements that create value for our shareholders.

Our annual incentives are based on the achievement of various performance metrics, including overall financial

performance, shareholder returns, safety performance, sustainability, environmental and regulatory compliance results, management of working capital, and organic and inorganic growth. In addition, after the start of the COVID-19 pandemic and as further described below, the Committee created a “Resilience Scorecard” to align our executive and employee teams with maintaining our health and safety. We view this Resilience Scorecard as a tool we can use to assess whether the Company’s long-term success is durable and sustainable.

Our long-term incentives are designed to align executives with shareholder interests and to tie incentives with long-term goals. To ensure our plans achieve these goals, we conduct an annual assessment of compensation practices, which are more fully described below.

We believe that our executive incentive plans are highly motivational and create alignment with our performance and the shareholders’ experience. For 2020, as described above, our excellent industry-leading financial performance yielded an award of 190% of target for the annual incentive and an achievement of 200.8% under the Performance Share Units against the targets set for the 2018-2020 performance period. This is a shareholder aligned outcome.

In closing, the Committee believes that we have a very robust business model that yields attractive increases in shareholder value and positions us well for the future. Our executive compensation program helps drive those goals, and rewards our management and employees when they are achieved. We appreciate your support and welcome your feedback on our executive compensation programs and look forward to ongoing dialogue.

Sincerely,

John J. Koraleski, Chair

Management Development and Compensation Committee

 

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Table of Contents

 

Summary of Our Compensation Considerations

Responsive to Shareholders: Shareholder Engagement and Feedback on Executive Compensation Programs

 

Avenues of engagement      Discussion highlights

 

LOGO

  

 

We hold in-person and/or virtual meetings with investor groups across the globe

    

 

  Financial and operating performance of the Company

 

  Executive compensation, pay-for-performance

 

  Safety, environment and sustainability

 

  Ongoing company strategy

 

LOGO

  

 

 

We conduct quarterly conference calls with analysts

 

LOGO

  

 

We engage with investors continually through meetings, calls and emails

 

LOGO

  

 

We report investor feedback to the Committee and the Board to assist in aligning pay and performance

 

As a reflection of our commitment to shareholders, Institutional Investor again recognized Martin Marietta’s Investor Relations Team in 2020 as leaders in the Homebuilders & Building Products category. Factors contributing to the Company’s high marks include accessibility of senior executives, timely and appropriate disclosures, quick and thorough responses to questions, and a well-informed and empowered investor relations team.

  

We consider the input of our shareholders, along with emerging best practices, to ensure alignment with our executive pay programs. At our 2020 Annual Meeting of Shareholders, 95.4% of the shares cast voted in favor of the advisory vote on executive compensation, or Say On Pay vote.

 

Our 2020 Performance

Building on prior-year success and demonstrating the resiliency of our business in challenging circumstances, 2020 proved to be another year of outstanding financial and safety performance for Martin Marietta. We functioned as an essential business during the COVID-19 pandemic in 2020 with limited business disruption, achieving consolidated revenues of $4.7 billion, consistent with the prior year, which reflected steady pricing gains in all product lines offsetting a modest decline in aggregates shipments. While aggregates shipments were lower than the prior year due to headwinds from the global pandemic, we reported record financial results with an increase of 11% in Adjusted EBITDA, 290 basis point improvement in Adjusted EBITDA Margin, and 18.5% increase in Diluted Earnings Per Share from the prior year level.

Despite a year filled with unprecedented disruption caused by the COVID-19 pandemic, we achieved our ninth consecutive year of growth for products and services revenues, adjusted gross profit, Adjusted EBITDA and adjusted earnings per diluted share (after adjusting for the one-time earnings per diluted share benefit in 2017 resulting from the Tax Cuts and Jobs Act of 2017). Additionally, we delivered the best safety performance in our Company’s history.

 

 

 

LOGO    NET EARNINGS attributable to Martin Marietta of $721.0 million and ADJUSTED EBITDA* OF $1.393 BILLION, an increase of 11%    LOGO    Returned $190 MILLION TO SHAREHOLDERS via dividends and share repurchases
 
LOGO    Continuous commitment to SUSTAINABILITY, which is included in our strategy and compensation decisions    LOGO    Fourth consecutive year of WORLD-CLASS SAFETY performance
 
LOGO    Disciplined management through COVID-19 pandemic ensured EMPLOYEE HEALTH AND SAFETY with minimal business disruption    LOGO    Successful completion of NEW FIVE-YEAR STRATEGIC PLAN, SOAR 2025, to guide future growth and improvement

 

 

 

*

See Appendix B for reconciliation to reported net earnings attributable to Martin Marietta. Adjusted EBITDA is a metric used for executive performance targets.

 

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    SUMMARY OF OUR COMPENSATION CONSIDERATIONS

 

In 2020, we completed our latest five-year strategic planning process, or Strategic Operating Analysis and Review (SOAR), as previously scheduled before the COVID-19 pandemic began. The SOAR process, supplemented by our annual plan, has guided us since 2010 as we have grown the business in an intentional, contemplative, and disciplined manner. SOAR 2025 sets ambitious yet achievable targets for future growth and value creation.

Our impressive performance since 2010 reflects our resiliency, disciplined management, and the power of the SOAR process:

 

2020 Highlights

 

 

 

LOGO   

Consolidated revenues of $4.7 billion, reflecting pricing growth in all product lines of our Building materials business, that offset the impact of lower aggregates shipments due to COVID-19

 

LOGO   

Achieved 9th consecutive year of growth in products and services revenues gross profit, adjusted EBITDA and adjusted earnings per diluted share growth (after adjusting for the one-time earnings per share benefit in 2017 resulting from the Tax Cuts and Jobs Act of 2017)

 

LOGO   

Record-setting results from 2015 to 2020 yielded a 5-year TSR of 118% versus the S&P 500 return of 103% during the same period

 

Disciplined Capital Allocation

 

 

 

LOGO   

$75 million contributed to the Company’s qualified pension plan, resulting in a fully-funded plan

 

LOGO   

Repurchased 211,000 shares for $50 million ($237.40 per share); 13.5 million shares remaining on our February 2015 authorization

 

LOGO   

Board approved a 4% quarterly dividend increase ($2.28/share on an annualized basis) in August, continuing the Company’s track record of dividend growth

 

LOGO   

Maintained our investment grade credit rating, exiting the year with a 1.9x leverage ratio

 

 

Martin Marietta’s ability to consistently translate revenue growth into increased profitability has also given us the ability to protect our balance sheet in order to make prudent acquisitions and capital investments in our business, while achieving a debt-to-EBITDA leverage ratio of 1.9x at year-end. As a result, we have been able to position our business as an aggregates leader in 90% of the geographies in which we operate and align our product offerings to leverage strategic cement and targeted downstream opportunities. This led to our significant outperformance of our peers over the five-year period ended December 31, 2020, during which time we delivered a 118 percent total shareholder return.

 

 

LOGO                  LOGO

 

*

Volume peak was 12/31/2005.

 

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SUMMARY OF OUR COMPENSATION CONSIDERATIONS    

 

Sustainability, Safety and the Health of Our Employees During the COVID-19 Pandemic

Our sustainability efforts and our commitment to our employees go hand-in-hand. We discuss these important topics in several places in our public filings, including our annual Sustainability Report and our Annual Report on Form 10-K for the year ended December 31, 2020 where we discuss the importance of Human Capital to our Company. We encourage you to read those materials. In this section, we would like to highlight several of these topics and tell you about our achievements in these areas-namely, what Sustainability means to us generally, Environmental Stewardship, Safety, and Our Employees.

Sustainability

Our approach to Sustainability is embedded in four vital pillars of Safety, Environment, Employees, and Community. We continued to achieve improvements in each of these areas in 2020.

 

LOGO    LOGO    LOGO    LOGO

Safe

Operations

 

Protecting all who come in contact with our products & operations, and creating a culture of responsible leadership

  

Environmental

Stewardship

 

Protecting the Earth’s resources and reducing our environmental impact

  

Employee

Well-Being

 

Support and investing
in our people – the foundation of our success

  

Community

Well-Being

 

Being a responsible neighbor and supporting the communities that are home to our operations

Track records such as ours are built purposefully; they are the result of a deliberate focus on fulfilling our responsibilities to our shareholders, our employees and other stakeholders. These responsibilities include:

 

LOGO    Demanding and facilitating a safe, ethical workplace for our employees    LOGO    Creating a positive, lasting impact on our communities and the environment    LOGO    Growing our business and responsibly investing our capital for maximum return

 

 

In furtherance of these continuing commitments, we have:

 

  Included performance relating to Environment, Health, Safety and Sustainability (collectively, EHS) in our management strategy

 

  Considered achievement of individual and company-wide goals in regard to EHS in management compensation decisions

 

  Developed a task force relating to Sustainability with a view towards assessing and improving Company performance and disclosure against world-class achievements

 

  Report regularly, at least twice annually, our progress on EHS issues to our Ethics, Environment, Health and Safety Committee (EESHC), an independent Committee of the Board of Directors

These critical matters are important to this Committee, the full Board, and management of Martin Marietta.

SOAR, supplemented by our annual plan, has guided us since 2010 as we have grown our business, driven our safety incidents to record low levels, achieved record financial performance and created positive impacts on our communities and the environment. Key managers from across our business and our senior leadership team engage throughout the year on material topics, including safety, employee well-being, community well-being and the environment.

 

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    SUMMARY OF OUR COMPENSATION CONSIDERATIONS

 

 

Both SOAR and our annual plan are reviewed and endorsed by all members of our Board of Directors. Our EESHC is an experienced, diverse and knowledgeable group and has for decades overseen our ongoing efforts to hone truly sustainable business practices. Our full Board visits our operations frequently to hear firsthand from our team and see the positive impact we have on our communities.

  

Sustainability is a key component of our strategy and business plan at Martin Marietta. Sustainability excellence is not only the right thing to do and a key driver of shareholder value, it is a vital component of both our strategic planning process, SOAR, and our annual planning process.

 

LOGO    Environmental Stewardship     

We have made the following enhancements to our Sustainability activities:

 

 

In our 2019 Sustainability Report, issued in April 2020, we reported our Scope 1 greenhouse gas (GHG) emissions across all business lines for the first time. In that report, we also disclosed Scope 1 GHG emissions reduction targets across both our cement and magnesia specialties operations, which are the sources of most of our Scope 1 GHG emissions, for 2030 over a 2010 baseline year.

 

 

Our 2020 Sustainability Report, which will be issued in April 2021, we will expand the extensive disclosures included in our 2019 Sustainability Report. These will include additional key sustainability matters, such as Scope 2 GHG emissions data across all of our business lines.

 

 

Our Chairman and CEO, joined by other senior managers, engaged with six of our largest shareholders in 2020 specifically on Sustainability issues. In addition, we discussed Sustainability issues with almost all of 313 investor groups we met with through virtual conferences, roadshows, field trips, and group meetings during the year.

 

LOGO    Safety     

 

2020 was our safest year on record which strengthens our belief that Zero is Possible. This means operating our business without any safety incidents. Our goal is zero. We look to world-class companies and safety incident rates for guidance as to how we achieve this. We have continued to make headway in 2020 towards this important goal.

Several of our facilities were recognized by the National Stone, Sand and Gravel Association (NSSGA) as Safety Excellence Award winners. These awards recognize operations that have gone the longest duration without a reportable incident in their size category, based on data provided by the U.S. Department of Labor’s Mine Safety and Health Administration. In 2020, our Benson Quarry and Onslow Quarry in North Carolina won gold-level honors, while our Charlotte Quarry in North Carolina earned a silver award, and our Moore Quarry in Iowa and San Pedro Quarry in Texas received bronze awards. As an enterprise, Martin Marietta received bronze-level honors in the large company category by the NSSGA in its Louis Greisemer Silver Safety Awards.

 

The National Mining Association’s Sentinels of Safety Award recognizes coal and mineral mining operations in 10 categories for recording the most hours in a calendar year without a single lost-time injury. A minimum of 4,000 hours is required for award consideration. The award categories reflect the safety accomplishments of both small and large mines.

  

Our Chattanooga Quarry was recognized by being awarded the National Mining Association’s prestigious Sentinels of Safety Award.

 

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SUMMARY OF OUR COMPENSATION CONSIDERATIONS    

 

We achieved our fourth consecutive year of world-class

Lost-Time Incident Rate (LTIR) performance

 

Achieving World-Class Safety: LTIR

 

   Safest Year on Record: TIIR
LOGO    LOGO

Note: Safety data current as of 12/31/20. LTIR per 200,000 hours worked. World-class levels based on general industries.

For Martin Marietta, safety performance sets our foundation for long-term financial strength and successful SOAR execution. Simply said, a safe operation is a profitable one. All awards are meaningful, but it is particularly satisfying when we are recognized for achievement of one of our core values.

 

LOGO

   Our Employees         

 

 

 

LOGO     

   We implemented a new Personal Time Off (PTO) policy in April 2020 that provides employees with an increase in PTO benefits each year, and we continued to enhance our competitive offering of employee health, welfare and retirement benefits as well. We also launched an Inclusion and Engagement Task Force which is focused on hiring, developing, and retaining diverse employees. Through these important efforts in 2020, we continued to build a compelling connection with current and potential employees, increase the visibility and attractiveness of Martin Marietta as an employer of choice to strengthen our talent pipeline, and increase employee engagement, morale and retention.

 

LOGO   

Diversity and Inclusion at a Glance

 

40%    of workforce are minorities         33%    of workforce are racial/ethnic minorities                 10%    of workforce are women        

We are committed to fostering diversity and inclusion, and strive to maintain a culture and adherence to core values that attract and celebrate diversity in our workplace. We believe that diversity promotes creativity, innovation, and mutual respect, which are all core to our values. We recognize that the unique viewpoints and experiences of every employee are important to achieving our mission to be a world-class organization, and have implemented initiatives that we believe will allow us to continue to improve on those objectives.

Although we do not necessarily believe that the Equal Employment Opportunity Commission data required on Form EEO-1 fully reflects our job-role structure, we will start making the data available on our website by 2022.

 

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    SUMMARY OF OUR COMPENSATION CONSIDERATIONS

 

Compensation Decisions Yielding Alignment with Performance and Enhancing Our Corporate Resilience

As described below under 2020 Actual Incentive Cash Earned, the objective financial metrics in our annual plan that were measured for purposes of the 2020 Annual Cash Incentive were Pre-Tax Earnings and EBITDA, which are viewed as indicative of the Company’s profitability, and Days Sales Outstanding (DSO), which is viewed as indicative of the Company’s cash flow. All of these are important measures reflecting our performance and the creation of value for shareholders. In addition, the Committee considered the following, which are also described on pages 40-41 under Summary of Our Compensation Considerations:

 

 

A detailed assessment of Martin Marietta’s overall financial performance and each segment’s financial performance, including the highlights and the challenges.

 

 

Shareholder returns, including the consistent delivery of value to Martin Marietta’s shareholders.

 

 

Our safety performance, which continues to be world class and industry leading.

 

 

Outstanding environmental and regulatory compliance results, sustainability initiatives, and cybersecurity protections.

 

 

Continuing achievement of excellent management of working capital.

 

 

The successful organic and inorganic growth of Martin Marietta.

These resulted in strong payouts in response to the Company’s strong performance in 2020 – our pay-for-performance aligns our performance with management’s pay and with shareholders’ interests.

We also wanted to ensure that our Company and business model were resilient and robust enough to survive and thrive under all challenging circumstances, regardless of whether they are predictable or within management’s control. In this regard, the Committee developed a Resilience Scorecard that includes the key criteria described in the chart below that in our view measure our company’s ability to remain strong through severe, unexpected circumstances, as well as assessing management’s actions and whether they were appropriate in responding to and managing through events such as the pandemic. The Resilience Scorecard allows the Committee to apply a multiplier of 0.75x to 1.25x to management’s annual award that would be otherwise based on pre-event factors. These qualitative factors are important to position the Company to minimize the adverse impact of the pandemic and rebound quickly as the event subsides and the economy strengthens. We believe this scorecard is valuable to us under all circumstances, and not just to a pandemic. In the case of the pandemic’s impact on the Company’s performance in 2020, the Committee determined not to apply any multiplier in the Resilience Scorecard to management’s executive compensation for 2020. Further, the Committee made no COVID-19-related adjustments to our compensation based on the scorecard.

 

Category

   Resilience Assessment Criteria

1. Employees

  

  Act effectively to keep employees safe and productive through enhanced equipment and faculty cleaning protocols, robust distancing and monitoring, and remote working

 

  Effectively and promptly communicate and manage guidance and instructions, to employees through the newly-formed Martin Marietta Health Hub

 

  Provide financial support and emotional care to employees

 

  Offer opportunities for continued employee growth and development

2. Operations

  

  Ensure continuity of critical products and services

 

  Minimize supply chain disruptions

 

  Effectively and nimbly manage schedules and budgets for major capital projects (operations, IT systems, etc.)

 

  Take steps to appropriately manage fixed and variables costs

 

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SUMMARY OF OUR COMPENSATION CONSIDERATIONS    

 

Category

   Resilience Assessment Criteria

3. Financial

  

  Optimize revenues and cash management/liquidity without jeopardizing the future of the Company’s financial strength and flexibility

 

  Protect the balance sheet and allocate capital responsibly, including with regard to internal projects, transactions, dividends and share repurchases

4. Customers/Suppliers

  

  Ensure on-time delivery and completion of projects during the pandemic or other non-recurring event

 

  Effectively manage inventory to satisfy customer needs

 

  Communicate operating status and preventative measures being taken

5. Strategy

  

  Maintain Company long-term vision and strategic direction

 

  Take actions to ensure continuation and execution of strategic transactions

6. Stakeholder Engagement

  

  Maintain leadership effectiveness

 

  Frequently communicate and engage with the Board to keep them well-informed and appropriately respond to questions

 

  Engage in open dialogue and transparency with shareholders, analysts, potential investors and other stakeholders

7. ESG

  

  Undertake community outreach efforts (disaster preparedness support, corporate giving)

 

  Focus on safety, as well as health of employees, customers and visitors

 

  Environmental compliance and enhanced disclosure and responsiveness regarding sustainability goals

The Committee also took into consideration that as an “essential business” under state and local laws, the Company’s operations remained open throughout the pandemic, as well as management’s response to the COVID-19 global pandemic, which included ensuring the health of our employees while continuing operations with minimal disruptions and continuing to serve our customers. After considering the Company’s achievements in 2020 with respect to the criteria outlined in the Resilience Scorecard, the Committee determined that it would not apply any adjustment to the annual incentive awards.

 

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PAY DECISIONS AND COMPENSATION GOVERNANCE PRACTICES    COMPENSATION DISCUSSION AND ANALYSIS

 

Pay Decisions and Compensation Governance Practices

A number of key 2020 compensation-related decisions resulted from our achievements, which are discussed more fully in this section. The Committee believes that our executive compensation program continues to reflect a strong pay-for-performance philosophy and is well aligned with the interests of shareholders. In addition, we believe that our compensation practices are consistent with our pay decisions.

 

WHAT WE DO

   YES…

Pay for performance

   Tie pay to performance by ensuring that a significant portion of NEO compensation is performance-based and at-risk.

Median compensation targets

   We generally aim to align all compensation elements for our executives with the median of our peer group companies.

PSUs are a substantial portion of LTI

   PSU grants, tied to our achievement of specified performance measures, comprised approximately 55% of the total value of annual long-term incentive grants made to our NEOs in 2020. Performance-based RSUs comprised the remaining 45%.

Independent compensation consultant

   The Committee retains an independent compensation consultant.

Robust share ownership requirements

   We have robust stock ownership guidelines of 7 times base salary for the CEO, 5 times base salary for our other NEOs, and 5 times annual retainer for Directors. We also have an equity retention requirement of 50% of net shares paid as incentive compensation until ownership guidelines are met.

Clawback policy

   We have a compensation recovery (clawback) policy that requires officers to forfeit certain cash-based incentive compensation and/or equity-based incentive compensation if the company restates its financial statements due to the officer’s misconduct.

Regular engagement with shareholders

   We engage with shareholders to hear their views on compensation and other issues.

Annual elections

   All of our Directors stand for election each year.

 

WHAT WE DON’T DO

   NO…

No employment contracts

   None of our NEOs or other executive officers have employment contracts that guarantee continued employment.

No dividends on unvested awards

   Our 2020 RSU and PSU awards require three years to fully vest and dividends paid on shares of common stock of Martin Marietta during the vesting period are only paid to award holders if and when an award vests.

No pledging of shares

   Our directors and executive officers are not permitted to pledge Martin Marietta shares as collateral for loans or any other purpose.

No hedging

   We prohibit directors and executive officers from engaging in short sales of Martin Marietta stock or similar transactions intended to hedge or offset the market value of Martin Marietta stock owned by them.

No 280G gross-ups

   We do not provide executives with Section 280G excise tax gross-ups.

Minimal executive perquisites

   We do not provide NEOs with country club reimbursements, personal use of the Company aircraft unrelated to business travel, or other excessive perks.

 

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COMPENSATION DISCUSSION AND ANALYSIS    DETERMINATION OF CEO COMPENSATION

 

Determination of CEO Compensation

At each February Committee meeting, without the CEO present, the Committee reviews and evaluates CEO performance, and determines achievement levels for the prior year. At this meeting, the Committee also discusses an evaluation of the CEO’s performance, competitive compensation data, and salary and annual incentive pay recommendations with the independent members of the Board. In addition, the Committee reviews and discusses an award of RSUs and the target PSU grant size for the CEO at that meeting, which is also discussed with the independent members of the Board. The Committee’s independent compensation consultant provides the Committee with comparative compensation, background materials and analysis, and its recommendation in connection with these determinations.

CEO Target Opportunity Mix*

 

 

LOGO

 

 

*

We consider base salary and annual incentives as short-term pay and PSUs and RSUs as long-term pay. We do not include retirement or other compensation components in the chart.

2020 Chairman, President and CEO Compensation

 

Base Salary

For 2020, Mr. Nye’s base salary was set at $1,225,000 (effective March 1, 2020).

2020 Annual Incentive

Mr. Nye’s target annual incentive amount for 2020 was $1,697,500 (140% of salary received for the year). His actual annual incentive for 2020 was $3,300,000, or 194% of target.

2020-2022 Long-Term Incentives

In 2020, Mr. Nye’s target LTI award was 490% of base salary. He was granted an LTI award of approximately $6.0 million, which was allocated 55%, or $3.3 million, in PSUs and 45%, or $2.7 million, in performance-based RSUs. RSUs will vest pro rata over three years if the performance measure is satisfied, while the vesting of PSUs will be based upon our results relative to the three-year performance goals that were established in the beginning of 2020.

Benefit and Retirement Plans

Mr. Nye is eligible for benefit and retirement programs similar to other employees. None of our executives received additional years of service credits or other forms of formula enhancements under our benefit or retirement plans. Our pension formula is based on years of service and pension eligible compensation, which is a similar formula offered by other companies with defined benefit plans. Mr. Nye is not eligible for retiree health benefits.

Perquisites

Mr. Nye received limited executive perquisites. We provide company-leased cars to the NEOs for their use. Additionally, we pay for the insurance, maintenance and fuel for such vehicles. The value of personal mileage is charged to the NEO as imputed income. We make the company-owned aircraft available to the CEO and other senior executives for business travel only. We do not provide other perquisites, such as country club memberships, to the NEOs. The Committee reviews our policies and determines whether and to what extent perquisites should be modified or continued.

2020 Target Pay Mix

We believe that most of the compensation opportunities to our CEO should be variable and the variable elements of the compensation package should tie to the Company’s long-term success and the achievement of sustainable long-term total return to our shareholders. A significant portion of our CEO’s target compensation is variable and in the form of LTI, and more than half of total target pay is in the form of equity incentives.

 

 

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2020 NAMED EXECUTIVE OFFICERS’ COMPENSATION—OUR COMPENSATION STRATEGY    COMPENSATION DISCUSSION AND ANALYSIS

 

2020 Named Executive Officers’ Compensation – Our Compensation Strategy

Our executive compensation program is specifically designed to:

 

 

Attract and retain top-caliber, knowledgeable and experienced senior executives.

 

 

Motivate our executives to achieve superior results and build long-term value for shareholders.

 

 

Reward performance that meets or exceeds established goals consistent with our strategic aims and upholding integrity.

 

 

Align individual objectives with the Company’s objectives without fostering excessive or inappropriate risk-taking.

 

 

Encourage an ownership mentality and align the long-term financial interests of our executives with those of our shareholders.

 

 

Be market competitive with our peers with whom we compete for talent.

 

 

Provide reward systems that are measurable and easily understood by our executives and shareholders.

 

 

Inspire exceptional management and resiliency in times of unexpected and extraordinary circumstances.

 

 

Reinforce the succession planning process undertaken on a company-wide basis by building bench strength and by identifying and retaining senior leadership capable of achieving the Company’s long-term growth, profitability and other objectives.

In 2020, our executive compensation structure consisted of three primary components: base salary, annual incentives, and long-term incentives. Within the long-term incentive component, we utilized a balanced portfolio of PSUs and performance-based RSUs.

 

 

LOGO

Martin Marietta has a long-standing commitment to pay for performance. We fulfill that aim by providing a majority of compensation through programs in which the amounts ultimately received vary in order to best reflect our financial, operational and strategic performance.

 

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COMPENSATION DISCUSSION AND ANALYSIS     2020 NAMED EXECUTIVE OFFICERS’ COMPENSATION—OUR COMPENSATION STRATEGY

 

The following table summarizes the key elements of our 2020 executive compensation program:

 

Element

   Primary Purpose    Key Characteristics

Base Salary

   To compensate the executive fairly and competitively for the responsibility level of the position.    Fixed compensation that is reviewed annually.

Annual Performance-Based Incentive Awards

   To motivate and reward organizational and individual achievement of annual, Company and individual objectives.    Variable compensation component; based on pre-established Company and individual performance goals.

Incentive Stock Plan

   To ensure executives invest certain levels of their annual incentive compensation into Martin Marietta stock units.    To promote sustainable performance results, a portion of each NEO’s annual cash incentive compensation (35% for the CEO and 20% for the other NEOs) is automatically converted into common stock units. NEOs may elect to convert up to 50% of their annual cash incentive compensation into common stock units.

Long-Term

Incentive Awards

   To align executives with shareholder interests, to reinforce long-term value creation, and to provide a balanced portfolio of long-term incentive opportunities.    Variable compensation component. Reviewed and granted annually. Program splits long-term incentives for NEOs at 55% PSUs and 45% RSUs.

Performance Share Units (PSUs)

   To motivate executives by tying incentives to our multi-year financial goals and relative TSR reinforcing the link between our executive officers and our shareholders.    Grants based on three-year adjusted EBITDA and Sales Growth goals, with a modifier based on TSR performance relative to peers.

Performance-Based Restricted Stock Units (RSUs)

   To motivate the appropriate behaviors for delivering superior long-term total shareholder return.    Stock price growth. Awards are subject to achievement of one-year adjusted EBITDA goals.

Health/Welfare Plan and

Retirement Benefits

   To provide competitive benefits promoting employee health and productivity and support financial security.    Fixed compensation component.

Perquisites and Other Benefits

   To provide limited business-related benefits, where appropriate, and to assist in attracting and retaining executive officers.    Fixed compensation component.

Change-in-Control Protection

   To provide continuity of management and bridge future employment if terminated following a change in control.    Fixed compensation component; only paid in the event the executive’s employment is terminated other than for “cause” or for “good reason,” in either case, in connection with a change in control.

 

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CONSIDERATIONS REGARDING 2020 COMPENSATION    COMPENSATION DISCUSSION AND ANALYSIS

 

Considerations Regarding 2020 Compensation

The following chart summarizes the target compensation in our 2020 executive compensation program:

 

Pay Component

   Summary

Base Salary

  

  At the February 2020 meeting, the Committee reviewed competitive market data and individual performance evaluations. Increases were effective March 1, 2020 for all NEOs.

Target Annual Cash

Incentives

  

  Our CEO’s target incentive for 2020 was 140% of base earnings. For other NEOs’ target incentives for 2020 were 70% to 80% of base earnings.

  Our shareholders in 2016 approved an Executive Cash Incentive Plan that fixed the bonus amounts based on certain objective criteria and allowed the Committee to reduce the award based on enumerated factors in the plan.

  Our CEO is required to invest a minimum of 35% of his annual cash bonus into stock units, which are required to be held generally for a period of three years.

  Other NEOs are required to invest a minimum of 20% of their annual cash bonus into stock units, which are held generally for a period of three years.

Long-Term

Incentives

  

  Our LTI structure consists of PSUs and performance-based RSUs.

  The LTI awards for NEOs in 2020 were weighted 55% PSUs and 45% RSUs. The LTI grant size is based on competitive market data.

  PSU awards in 2020 are earned based on achievement of performance levels, with 33% based on three-year cumulative Sales Growth and 67% based on three-year cumulative adjusted EBITDA performance. The Company’s relative TSR ranking compared to the S&P 500 provides a modifier to the award up to 20%.

  RSU awards to NEOs in 2020 are subject to the achievement of one-year adjusted EBITDA performance.

Total Compensation

  

  The Committee uses the size-adjusted 50th percentile of our Compensation Peer Group as a guide in setting the target for the total compensation opportunity, but considers a variety of factors in setting compensation, including the short-term and longer-term performance and leadership characteristics of the executive, and may vary materially. Overall, the Committee believes targeted compensation should be more heavily weighted on variable “at-risk” compensation and longer-term components.

The committee approved the following actual compensation items in February 2020:

2020 Base Salary

The Committee determines base salaries for the NEOs and other executives based on a number of factors, including but not limited to, market data, individual performance, the Company’s performance, internal pay equity, the advice of the Committee’s independent compensation consultant, management recommendations (except for the CEO), and, for the CEO, the Committee’s assessment of Mr. Nye’s performance. Based on these factors, the Committee approved the following increases in base salary.

 

 

Mr. Nye: 6.52% increase, based on his excellent achievements during his CEO tenure, and specifically his performance in 2019.

 

 

Other NEOs: approximately 3.4% to 7.6% increases, based on a review of competitive market data and individual performance evaluations.

 

NEO

  

2020

Base Salary

    

2019

Base Salary

 

C. Howard Nye

   $ 1,225,000      $ 1,150,000  

James A. J. Nickolas

   $ 565,000      $ 525,000  

Roselyn R. Bar

   $ 590,000      $ 570,000  

Craig M. LaTorre

   $ 495,000      $ 475,000  

Daniel L. Grant

   $ 410,000      $ 396,500  

 

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COMPENSATION DISCUSSION AND ANALYSIS    2020 ANNUAL CASH INCENTIVE GOALS AND RESULTS

 

2020 Annual Cash Incentive Goals and Results

NEOs and other executives are eligible to earn annual incentive compensation under our Executive Cash Incentive Plan based on the achievement of various performance metrics. Individual NEO targets (as a percent of base salary) are approved by the Committee at the beginning of the year based on a review of competitive market data, the advice of the Committee’s independent compensation consultant, and internal pay equity.

The Committee awards actual annual cash incentive compensation based on achievement against corporate performance objectives and individualized targeted goals. This furthers Martin Marietta’s compensation philosophy to encourage superior performance and reward the achievement of Martin Marietta’s annual goals. The Committee determined the 2020 incentive awards in February 2021. In 2020, all of the executive officers participated in the plan. The annual incentive compensation level paid for 2020 for the NEOs other than Mr. Nye was 190% to 210% of target. The annual incentive compensation level paid for 2020 for Mr. Nye was 194%.

In determining the incentive payment for the CEO, the Committee first reviews the achievements of Martin Marietta for the past year as compared to its targeted goals set at the end of the previous year. Our financial goals are established at the completion of our annual planning process, which for 2020 were determined in November 2019. The annual planning process includes reviews of the assumptions used by the business segments in generating their financial projections, such as industry trends and competitive assessments, current and future projected performance levels, and the risks and opportunities surrounding these baseline assumptions. The annual plan on which our financial goals are based is tied to the business environment in which we operate and can vary year-over-year.

Key individual performance criteria are established for each NEO, which are intended to drive strategic focus and support operational results in the Company and the functional groups. For the NEOs other than Mr. Nye, 50% of the determination is made with respect to Martin Marietta’s performance against the same goals as for Mr. Nye and 50% is based on the individual’s performance against established objectives.

The individualized target goals are tailored for each executive, based on his or her specific areas of responsibility and the then-current and longer-term goals of Martin Marietta. In addition, achievement of the goals typically is in part dependent on conditions outside the control of each of the NEOs. For example, our business may be adversely affected by hurricanes or other weather-related conditions, which could have the result of impeding the achievement of certain performance-based goals. Similar to the Committee’s assessment of financial goals, the Committee’s assessment of individual performance goals generally excludes non-recurring or extraordinary items.

The Committee also reviewed and considered management’s furtherance of its strategic plan, including a primary objective of value-enhancing growth, and the advancement of the Mission, Vision, and Values of the Company to unify management with the same objectives.

The Committee conducted a comparative review of the individual contributions of each of the executive officers towards achieving these goals. The Committee also considered qualitative measures of performance for the executive officers, such as adherence to and implementation of Martin Marietta’s Code of Ethical Business Conduct, customer satisfaction, and product quality.

The maximum incentive compensation is fixed based on objective criteria as described in the Executive Cash Incentive Plan, and the Committee then determines an appropriate award payout beneath the maximum amount based on the factors described above. We set challenging, but attainable, targets and our NEOs have a reasonable expectation of receiving cash incentive awards that reflect the achievement of our short- and long-term objectives as well as their individual performances.

2020 Actual Incentive Cash Earned

In 2020, the Committee determined that Company and individual performance warranted the annual incentive payments in the chart below based on a review of financial metrics and other important achievements. The Committee reviews the

 

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2020 ACTUAL INCENTIVE CASH EARNED    COMPENSATION DISCUSSION AND ANALYSIS

 

NEOs’ performance based on continuous improvement from the preceding year. As described above, the Committee considered the following financial metrics in making this determination:

 

 

Pre-Tax Earnings (profitability) as against prior year and current year plan

 

 

EBITDA (profitability) as against prior year and current year plan

 

 

DSO (cash flow) as against prior year and current year plan

 

 

The factors outlined in the Resilience Scorecard, although the Committee did not adjust the award based on these factors

The table below summarizes the targets for 2020, individual achievements and annual incentive award earned by each NEO:

 

NEO

2020 Individual Goals

Target Annual

Incentive Bonus

(% of Salary)

2020 Target

Annual

Incentive*

2020 Actual

Annual

Incentive

C. Howard Nye

  Drive continuous improvement in the Company’s safety culture and performance

 

  Generate long-term value for shareholders through development and execution of the Company’s Strategic Operating Analysis and Review (SOAR) Plan, organic and inorganic growth, including prudent allocation of capital

 

  Effective development and execution of management succession and development plans

 

  Successfully lead the Company through the global pandemic

  140 % $ 1,697,500 $ 3,300,000

James A. J. Nickolas

  Continue to develop the talent and capability of finance team

 

  Effective development and oversight of financial filings, audits and accounting

 

  Develop and execute necessary plans to ensure the strength of the Company’s balance sheet

  75 % $ 418,750 $ 795,781

Roselyn R. Bar

  Effective management of the legal department, including appropriate handling of compliance and securities laws matters, annual and periodic reporting, corporate governance, and robust case assessment

 

  Provide oversight of ethics program as Chief Ethics Officer

 

  Continue to improve processes and management of Corporate Secretary function

  80 % $ 469,333 $ 985,692

Craig M. LaTorre

  Define and develop the safety strategy and gain business alignment on long-term safety initiatives

 

  Execute the Company’s COVID-19 protocols to protect employee health and safety

 

  Develop and implement key Human Resources priorities, which include talent acquisition, employee development, performance management and succession planning

  70 % $ 344,167 $ 688,410

Daniel L. Grant

  Continue to lead strategic merger and acquisition and asset disposition projects and initiatives that align with our business objectives

 

  Development of Strategy and Development personnel

 

  Facilitate the development of the Company’s Strategic Operating Analysis and Review (SOAR) 2025 plan

  70 % $ 285,425 $ 570,902

 

*

Based on actual base salary earned in 2020.

 

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COMPENSATION DISCUSSION AND ANALYSIS    ANNUAL INCENTIVE FEATURE: STOCK PURCHASE PLAN

 

Annual Incentive Feature: Stock Purchase Plan

The Incentive Stock Plan further promotes the alignment of executive compensation levels with our investors’ financial interests by requiring that a portion of the annual bonus award be deferred into Company stock units that vest based on continued service. Executive officers can also elect to defer amounts above the mandatory deferral amount. The voluntary election allows executives to invest up to 50% of their annual cash incentive compensation to purchase units that are subsequently converted into shares of common stock pursuant to the terms of the plan at a 20% discount from the market price of Martin Marietta’s common stock on the date the amount of the incentive compensation is determined. The discount is used to account for the risk of trading current cash compensation for “at-risk” shares which may decline in value.

The mandatory portion requires executives to invest a minimum of 20% of their cash incentive compensation towards the crediting of units under the plan. The CEO is required to invest a minimum of 35% of his cash incentive compensation towards the crediting of such units.

The units generally vest in three years from the date of the award and are distributed in shares of common stock. If an executive officer voluntarily terminates employment before the units vest, the stock units are forfeited and the executive officer receives a cash payment equal to the lesser of the cash that was invested or the fair value of the share units on the day of termination. Mr. Nye deferred the maximum of 50% of his 2020 cash bonus in stock units.

The mandatory contribution requirement directly links a portion of executive officer compensation to shareholder returns. The vesting aspect, combined with the yearly stock purchase requirement, creates continuous overlapping three-year cycles, which encourage executive officer retention and provide a continuous link of a significant portion of executive officer compensation with shareholder return over the long-term to reward these executive officers in line with our shareholders when our stock price increases.

2020 Long-Term Incentive Compensation Overview

Our LTI plan’s design reflects the objectives of our compensation program and is in-line with current market approaches, based on the advice of the Committee’s independent compensation consultant. Our plan design objectives are a simplified LTI program that is transparent and enhances the line of sight between our performance and compensation.

The award in 2020 for all NEOs was determined as a fixed percentage of base salary with some variation for position and grade, which amount was converted into common stock units based on the average Martin Marietta stock price for the 20-day period ending on February 19, 2020, the day the Martin Marietta Board of Directors confirmed the award, or $266.2545. This award value was then divided into PSUs and performance-based RSUs, with 55% of the total award for NEOs consisting of the PSUs at target level and 45% of the total award for NEOs consisting of performance-based RSUs. The Committee believes that the incentive mix (PSUs and performance-based RSUs) constitutes an appropriate pay process and streamlined plan, which more fully reflects the performance of the Company and is better aligned with each NEO’s role within Martin Marietta. See a further description under Outstanding Equity Awards at Fiscal Year-End and corresponding footnotes on page 68.

The following table provides a notional example of the LTI plan design.

 

Salary

$

  

LTI

Target

%

  

LTI

Target

Value

$

  

PSU

%

  

PSU

Value

$

  

RSU

%

  

RSU

Value

$

$150,000    140%    $210,000    55%    $115,500    45%    $94,500

PSU Awards (55% of LTI Award)

One of our compensation objectives is to align the potential rewards to senior management with increases in shareholder value. In that regard, the PSUs give the recipient the opportunity to receive Martin Marietta common stock if specific performance goals are achieved, consisting of:

 

1)

Earnings before Interest, Income Taxes, Depreciation and Amortization (EBITDA), measuring profitability and comprising 67% of the total target award, and

 

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PSU AWARDS (55% OF LTI AWARD)    COMPENSATION DISCUSSION AND ANALYSIS

 

2)

Sales Growth, measuring growth and comprising 33% of the total target award.

 

3)

In addition, relative Total Shareholder Return (rTSR) will act as a modifier for the performance such that Martin Marietta’s performance will be measured against the S&P 500, and will modify the total award by a range of -20% to +20%.

The following table summarizes the weighting of our PSU performance measures:

 

Cumulative

EBITDA

  

Cumulative

Sales Growth

  

Relative TSR

Modifier    

67%    33%    +/-20%

EBITDA and Sales Growth are two of the drivers of our performance and metrics of significance to our investors. The total payout opportunity for PSUs in 2020 was 0% to 240%: 50% of target if the threshold level is satisfied, 100% of target if the target level is satisfied, and 200% of target if the maximum level is satisfied. The rTSR modifier over the three-year measurement period is then applied to the final award to adjust it up or down by up to 20%. The threshold must be satisfied to receive PSUs for each performance metric. If the threshold is not met, none of the PSUs relating to that metric will vest.

Performance for each metric is measured independently, so PSUs can be earned as long as the threshold is satisfied for at least one metric. The “Target” level is generally viewed as achievable although it has not been achieved every year. The “Maximum” level is a stretch that is attainable if we outperform in the area measured. PSU payments are capped at the target level if three-year TSR is negative.

The performance will be measured in February 2023 for the three-year period beginning January 2020 through December 2022 to determine (1) the three-year cumulative EBITDA for Martin Marietta against the target identified in the PSU Award Agreement, and (2) the three-year cumulative Sales Growth against the target identified in the PSU Award Agreement. The payment amount will be further modified by the rTSR for the three-year period as against the S&P 500, as set forth in the PSU Award Agreement. The Committee in its discretion may adjust the final award values only as set forth in the Agreement, either collectively or on an individual basis, in recognition of factors that are unusual or nonrecurring.

Over the three-year performance period, up to one-third of the target PSUs may be earned each year based on one-third of the three-year cumulative EBITDA and Sales Growth goals. Each year, any earned PSUs are not distributed until the end of the three-year measurement period when the cumulative three-year performance is determined. The actual PSUs will equal the greater of the total PSUs earned for each of the annual periods (capped at 100% of the annual target, that is, one-third of the cumulative target) or the amount earned for cumulative three-year performance (capped at 200% of target). The final amount of earned PSUs to be distributed is then subject to the three-year rTSR modifier.

The PSUs will convert to unrestricted common stock and be distributed conditioned upon and to the extent that the performance goals have been met, which will be determined in February 2023. These awards are also generally subject to continued employment through the date the PSUs vest. The actual financial performance targets and achievement against those targets will be disclosed at the end of the three-year performance period.

Selection of Relative TSR

We selected rTSR for the PSUs to measure our performance against the companies in the S&P 500 index. We recognize that every industry faces different challenges and opportunities, and that the S&P 500 index does not perfectly correlate to the environment in which Martin Marietta operates. However, we believe that the majority of our closest competitors are not publicly-held companies or are not U.S. companies, and therefore accurate information to potentially use as comparisons is not readily available. As a result, we believe that comparing our TSR against the S&P 500 index is appropriate because (1) it measures the interest of investors for whom we compete, (2) there is no consensus of a significantly better peer group with readily available comparable financial information; and (3) by using rTSR as a modifier rather than a primary measurement, we give our other performance measures more weight and their focus on profitability and growth both provide long-term value creation.

 

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COMPENSATION DISCUSSION AND ANALYSIS    SELECTION OF RELATIVE TSR

 

We believe that EBITDA, Sales Growth and rTSR metrics drive the behaviors of our management team in ways that are intended to create the most value for our shareholders.

Performance-Based RSU Awards (45% of LTI Award)

RSUs vest in three equal portions, each on the anniversary of the grant date (February 19, 2020) over a period of three years, subject to satisfaction of the performance measure and generally to continued employment through each one of those anniversaries. Once the restricted period ends (each anniversary for one third of the total RSU award), the recipient will be issued unrestricted shares of common stock (minus applicable taxes). The 2020 RSUs awarded to executive officers are also subject to a performance measure that a stated level of EBITDA be achieved during the first year. If the performance measure is satisfied, then the RSUs will continue to vest. If the performance measure is not satisfied, then the RSUs will be forfeited. For the 2020 grants, the performance measure was satisfied.

2020-2022 Performance Goals

In setting minimum and maximum levels of payment, we reviewed historical levels of performance against our long-range plan commitments and conducted sensitivity analyses on alternative outcomes focused on identifying likely minimum and maximum boundary performance levels. Levels between 100% and the minimum and maximum levels were derived using linear interpolation between the performance hurdles.

The specific EBITDA and Sales Growth target values for the 2020-2022 PSUs are not publicly disclosed at the time of grant due to the proprietary nature and competitive sensitivity of the information. However, the method used to calculate the awards will be based on actual performance compared to our 2020-2022 targets, with straight-line interpolation between points. The individual award agreements require the adjustment of goals to ensure that the ultimate payouts are not impacted to the benefit or detriment of management by specified events, such as unplanned pension contributions, changes in accounting (GAAP) standards or impact of an acquisition or divestiture. The Committee may exercise its discretion to reduce the final vesting percentage to no more than target if the Company’s three-year TSR is less than zero.

The following table provides a summary of the long-term incentives that each of the NEOs was granted in 2020.

 

NEO

  

RSUs

(3 year annual
installment vesting
subject to achievement
of performance
measure)

(# of shares)

  

PSUs – Target

(3 year cliff vesting

subject to achievement

of performance

measures)

(# of shares)

C. Howard Nye

       10,141        11,804

James A. J. Nickolas

       1,672        1,946

Roselyn R. Bar

       1,746        2,032

Craig M. LaTorre

       1,255        1,461

Daniel L. Grant

       901        1,049

In setting performance goals for the three-year PSUs awarded in 2020, the Committee considered various factors in choosing the metrics and establishing the goals, including:

 

 

The metrics reflect drivers of our performance and we believe are important to our investors.

 

 

The goals are consistent with our business plan and positive over prior year.

 

 

We have a history of setting challenging target and maximum goals.

In addition, we have looked at the alignment of our payouts with the Company’s performance, including TSR, and found that pay and performance are aligned.

 

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2020-2022 PERFORMANCE GOALS    COMPENSATION DISCUSSION AND ANALYSIS

 

2020 Performance Goals and Metrics

 

Relative TSR (Modifier +/- 20%)*

        EBITDA (67%)***        Sales Growth (33%)

TSR

Percentile

Achievement

  

Payout

Factor

      

EBITDA

Achievement

  

Payout

Factor**

      

Sales

Growth

Achievement

  

Payout

Factor**

         ³ 75th

   +20% (Maximum)      Plan + ³ $.52B    200% (Maximum)      Plan + ³ 4.5%    200% (Maximum)

        50th

   0% adjustment (Target)      Plan EBITDA    100% (Target)      Plan Growth    100% (Target)

         £ 25th

   -20% (Threshold)      Plan - $1.275B    50% (Threshold)      Plan - 1.5%    50% (Threshold)
              Plan - < $1.275B    0%        Plan - < 1.5%    0%

 

*

rTSR is calculated as (i) the average of our closing stock price over the final 20 trading days of the measurement period, minus the average of our closing stock price over the first 20 trading days of the measurement period, plus the value of reinvested dividends divided by (ii) the average of our closing stock price over the first 20 trading days of the measurement period, and is measured against each of the companies in the S&P 500 index (excluding any Companies acquired during the measurement period).

**

Threshold and maximum are a percentage of the target.

***

EBITDA is calculated from Martin Marietta’s audited financial statements in the same manner as set forth in the reconciliations as provided in Appendix B, with the exception that adjustments are taken for certain nonrecurring items in accordance with the award agreements.

2018-2020 PSU Award Payouts

PSUs that were granted in 2018 vested on December 31, 2020, because the applicable performance criteria were satisfied. These PSUs were certified and paid out in February 2021. The PSU payouts for the three-year performance period ended December 31, 2020 were calculated by comparing actual corporate performance for each metric for the period January 1, 2018 through December 31, 2020, against a table of payment levels from 0% to 200% (with the 100% payout level being considered target) established at the beginning of the performance period.

For the three-year performance period ended December 31, 2020, actual results were 200% of target. The results were above targeted level for each metric. EBITDA (weighted 67%) was $3.78 billion compared to our pre-established target of $3.24 billion and generated a 200% payout factor and Sales Growth (weighted 33%) was 13.92% compared to our pre-established target of 4.50% and generated a 200% payout factor. The rTSR modifier, which provides for an adjustment up or down of up to 20%, resulted in a 100.4% adjustment as our TSR over the three-year measurement period was at the 51st percentile of S&P 500 companies over the same period. The awards are calculated pursuant to the provisions provided in the award agreements. The Committee cannot make any adjustments to the final payout factor beyond the adjustments specified in the award agreements.

 

Measure

Performance

Target

Performance

Result

Weighting

Weighted

Payout Factor

EBITDA

  $3.24B     $3.78B     67%   134%

Sales Growth

  4.5%   13.92%   33%     66%  

Relative TSR

  50th percentile     51st percentile     +/-20%     100.4% of total award  

 

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COMPENSATION DISCUSSION AND ANALYSIS    2018-2020 PSU AWARD PAYOUTS

 

Based on a weighted payout factor of 200.8%, the following table shows the payouts under the 2018-2020 PSU made in February 2021.

 

Payment Calculation for PSUs Granted in 2018

Certified on February 20, 2021

 

NEO

   Target Units Granted
in 2018 (shares)
    

Payout

(shares)

 

C. Howard Nye

     9,940        19,960  

James A. J. Nickolas

     1,956        3,928  

Roselyn R. Bar

     2,140        4,298  

Craig M. LaTorre*

     0        0  

Daniel L. Grant

     1,120        2,249  

 

*

Mr. LaTorre commenced employment in July 2018 after the PSUs were granted.

Ongoing Corporate Governance Policies

We endeavor to maintain good corporate governance standards relating to our executive compensation policies and practices, including the following that were in effect during 2020 that directly impacted compensation:

 

 

The Committee is comprised solely of independent Directors who regularly schedule and meet in executive sessions without management present.

 

 

The Committee’s independent compensation consultant is retained directly by the Committee.

 

 

The Committee conducts an annual review of and approves our compensation strategy, including a review of our compensation-related risk profile, to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company.

 

 

We pay for performance, with approximately 87% of our CEO’s total target pay opportunity being performance-based “at-risk” compensation.

 

 

We cap PSU payments at target if three-year TSR is negative, regardless of our ranking.

 

 

We limit perquisites and other benefits.

Compensation Decision Process

Role of Management and the Committee

The Committee is responsible for carrying out the philosophy and objectives of the Board of Directors related to executive compensation in addition to its responsibilities of overseeing the development and succession of executive management of Martin Marietta. The Committee has the authority to determine compensation and benefits for Martin Marietta’s executive officers. The Committee members are each non-employee, independent Board members pursuant to the NYSE rules, and the Committee operates pursuant to a written charter, a copy of which can be viewed on Martin Marietta’s website at ir.martinmarietta.com/corporate-governance.

The performance of the CEO and each other executive officer is reviewed regularly by the Committee. Based on this review, the Committee sets compensation for all executive officers. Compensation decisions with respect to the executive officers other than the CEO are based in part on recommendations by the CEO, with input from the Senior Vice President and Chief Human Resource Officer, with respect to salary adjustments and annual cash and equity awards. The Committee can accept, reject or modify any recommended adjustments or awards to executive officers. For the CEO, the Committee sets the levels of annual adjustments and awards based on the criteria it deems to be appropriate under the circumstances with input from the independent compensation consultant. There are no employment agreements between Martin Marietta and any executive officer of Martin Marietta, including the CEO.

 

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COMPENSATION DECISION PROCESS    COMPENSATION DISCUSSION AND ANALYSIS

 

Role of the Independent Compensation Consultant

The Committee retained Pay Governance, an independent compensation consultant, in accordance with the Committee’s charter, in April 2020. Prior to April 2020, Mercer served as the Committee’s independent compensation consultant.

The consultant reports directly to the Committee. The Committee retains sole authority to hire or terminate the consultant, approve its compensation, determine the nature and scope of services, and evaluate performance. The compensation consultant attends Committee meetings, either in person or by telephone, as requested, and communicates with the Committee Chair between meetings. The Committee makes all final decisions.

The compensation consultant’s specific roles include, but are not limited to, the following:

 

 

Advise the Committee on executive compensation trends and regulatory developments and other factors affecting executive officer compensation, as well as any other areas of concern or risk.

 

 

Provide a total compensation assessment for executives compared to peer companies and recommendations for executive pay.

 

 

Serve as a resource to the Committee Chair for meeting agendas and supporting materials in advance of each meeting.

 

 

Review and comment on proxy disclosure items, including this CD&A.

 

 

Advise the Committee on management’s pay recommendations.

Based on these activities, the compensation consultant makes recommendations regarding, and proposes adjustments to, our executive officer compensation program as it deems appropriate. While the consultant works closely with the appropriate members of our executive management team in performing these activities, the consultant reports directly to and is retained by the Committee on all executive compensation matters, and speaks to the Committee and the Chair of the Committee on a regular basis without management present.

Role of Peer Companies and Competitive Market Data

The Committee considered peer groups for two elements of the executive compensation program in 2020: the Compensation Peer Group, consisting of 15 companies that the Committee believes compete with us for talent, and the TSR Peer Group, consisting of the S&P 500, which the Committee believes compete with us for investors and is used to assess the achievement of rTSR measured for the PSU awards.

Annually, the Committee studies competitive total compensation market data provided by its independent compensation consultant. To assess competitive pay levels, the Committee reviews and approves the composition of our Compensation Peer Group. The following peer group criteria are considered:

 

 

Company size (approximately 0.4 times to 2.5 times Martin Marietta’s annual revenues);

 

 

Company market cap;

 

 

Companies in similar industries based on Global Industry Classification Standard (GICS) code classifications;

 

 

Direct competitors for business and management talent that are publicly-traded in the United States;

 

 

Companies covered by the investment analysts that track Martin Marietta; and

 

 

Companies that include Martin Marietta in their compensation peer group.

The following companies comprised our Compensation Peer Group for 2020 base salary and long-term incentive pay decisions:

 

   

Albemarle Corporation

  Louisiana-Pacific Corporation   Stanley Black & Decker, Inc.   Vulcan Materials Company  
   

Eagle Materials Inc.

  Masco Corporation  

Summit Materials, Inc.

  Westlake Chemical Corporation  
   

FMC Corporation

 

Nucor Corporation

 

The Mosaic Company

  Weyerhaeuser Company
   

Fortune Brands Home & Security, Inc.

  Owens Corning   USG Corporation    

 

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COMPENSATION DISCUSSION AND ANALYSIS     COMPENSATION DECISION PROCESS

 

The Committee studies competitive total compensation data from various sources, including proxy statements of the peer group. Since proxy statements do not provide precise comparisons by position to our executive officers, in 2020 the Committee also took into consideration published independent compensation surveys of companies with revenue in the range of $2.5 billion to $8.0 billion as to median levels for each executive officer as well as private compensation survey data. Where available, size-adjusted market values were developed using regression analysis. This statistical technique accounts for revenue size differences within the peer group and develops an estimated market value for a similar-size company as Martin Marietta. The size-adjusted 50th percentile for total compensation is a key reference point for the Committee. On average, the target for our NEO total compensation opportunities is competitively positioned within a reasonable range of the size-adjusted 50th percentile.

Although the Committee uses the size-adjusted 50th percentile as its starting point in setting compensation levels, the compensation packages for executive officers may vary materially from it based on several factors. Market data, position, tenure, individual and organization performance, retention needs and internal pay equity have been the primary factors considered in decisions to increase or decrease compensation opportunities. Specifically, the Committee typically sets compensation levels below the size-adjusted 50th percentile for executive officers with relatively less relevant experience, less responsibility, less tenure with Martin Marietta and/or lower performance ratings. Conversely, if an officer consistently receives favorable performance ratings, accumulates years of service and expertise in relevant areas, has more responsibility and/or has significant other achievements, his or her compensation will typically be above the size-adjusted 50th percentile.

Other Compensation Program Features

Compensation Program Risk Assessment

We perform a thorough annual review of our compensation program structure and all compensation programs, which are also reviewed in detail with the Committee. We believe our executive pay is appropriate and provides necessary incentives to our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. Our compensation structure does not include features that are reasonably likely to have a material adverse effect on the Company. Compensation program features that mitigate against risks include the following:

 

 

Our annual incentive compensation plan does not provide payment for poor individual or corporate performance, regardless of whether the failure to achieve target was outside management’s control.

 

 

There are caps on the long-term equity awards, even if the required performance-related criteria are exceeded.

 

 

A majority of the NEOs’ compensation is long-term, with equity grants vesting over three to five years, depending on the award.

 

 

Our compensation is not based on highly leveraged short-term incentives that encourage high risk investments at the expense of long-term value.

 

 

Long-term compensation to executive officers is based on specific performance measures that balance long-term growth and returns.

 

 

The Committee uses benchmarking data and the advice of its independent compensation consultant to keep compensation in line with typical market practices and appropriate to Martin Marietta’s needs.

 

 

We use a balanced portfolio of long-term incentive programs.

 

 

The Committee’s governance process requires review and approval of all compensation over a certain amount.

Stock-Based Awards Generally

All of Martin Marietta’s active equity-based award plans have been approved by shareholders. Our Stock Plan requires a minimum vesting period of 12 months for restricted stock or RSUs and a minimum vesting period of 36 months for stock options or stock appreciation rights (SARs). The Company has not issued SARs and has not issued stock options since 2015.

 

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STOCK OWNERSHIP REQUIREMENTS    COMPENSATION DISCUSSION AND ANALYSIS

 

Stock Ownership Requirements

In 2018, the Board adopted robust formal Stock Ownership Guidelines for executive officers and members of the Board of Directors. These require the following ownership levels as a multiple of base salary or annual cash retainer, as applicable:

 

Title

   Annual Base
Salary Multiple

Chairman, President and CEO

   7 times

Other Executive Officers

   5 times

Other Members of the Board of Directors

   5 times

The following types of equity instruments count in determining stock ownership for purposes of these guidelines:

 

 

Shares owned separately by the covered person or owned either jointly with, or separately by, his or her immediate family members residing in the same household;

 

 

Shares held in trust for the benefit of the covered person or his or her immediate family members;

 

 

Shares purchased on the open market;

 

 

Shares obtained through stock option exercise (and not thereafter sold);

 

 

Vested shares pursuant to RSUs;

 

 

Unvested RSUs;

 

 

Shares held pursuant to deferred stock unit plans for Directors or executive officers; and

 

 

Shares acquired under the Company’s Savings and Investment Plan and similar plans or arrangements

Covered persons who are employees are expected to meet these requirements within five years of the later of becoming a covered person and the date of adoption of the policy. Until such time as such covered person has met these requirements, he or she is expected to retain 50% of any shares of common stock received upon vesting of RSUs, deferred stock unit awards, PSUs, the exercise of stock options, and other similar equity awards, net of amounts withheld to pay taxes and the exercise price of stock options until the applicable Guideline level is met.

Stock ownership does not include vested or unvested stock options, unvested PSUs and vested or unvested stock appreciation rights.

All of the Company’s executive officers and members of the Board of Directors are in compliance with the Stock Ownership Guidelines.

We also require a holding period of annual cash incentive compensation converted to Martin Marietta share equivalents as described below, with vesting generally in three years. There is no additional holding period beyond the vesting date, however a significant portion of the executive compensation program is in the form of equity awards that vest over three years generally.

Our CEO must invest a minimum of 35% of each year’s cash bonus award in common stock units of Martin Marietta. Executive officers must invest a minimum of 20% of their annual bonus. Stock is purchased at a 20% discount to the price on the grant date to account for the additional risk of taking a common stock unit payment in lieu of a risk-free cash payment. In 2020, Mr. Nye deferred the maximum of 50% of his cash bonus in common stock units.

Anti-Hedging and Pledging Policy

Our policies prohibit hedging and pledging of Martin Marietta stock by all directors and executive officers. Under our policies, directors and executive officers may not engage in any hedging or monetization transactions, such as puts, calls, options, other derivative securities, prepaid variable forward contracts, equity swaps, collars, exchange funds and short sales with respect to Company stock, the purpose of which is to hedge or offset any decrease in the market value of such stock. This policy also prohibits Directors and executive officers from purchasing Company stock on margin, borrowing against Company stock on margin, or pledging Company stock as collateral for any loan.

 

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COMPENSATION DISCUSSION AND ANALYSIS    CLAWBACK POLICY

 

Clawback Policy

We also have a clawback policy. If the Board determines that an officer’s intentional misconduct, gross negligence or failure to report such acts by another person was a contributing factor in requiring us to restate any of our financial statements or constituted fraud, bribery or another illegal act (or contributed to another person’s fraud, bribery or other illegal act) which adversely impacted our financial position or reputation, then the Board shall take such action as it deems in the best interest of the Company and necessary to remedy the misconduct and prevent its recurrence. Among other actions, the Board may seek to recover or require reimbursement of any amount awarded to the officer in the form of an annual incentive bonus or LTI award. There were no events requiring Board consideration of a clawback action during 2020.

Our Use of Independent Compensation Consultants

The independent compensation consultant provides important information about market practices, the types and amounts of compensation offered to executives generally and the role of corporate governance considerations in making compensation decisions. The Committee’s charter authorizes it to retain outside advisors that it believes are appropriate to assist in evaluating executive compensation.

In April 2020, the Committee retained Pay Governance as a new independent compensation consultant. Prior to this change, Mercer served as the Committee’s independent compensation consultant.

In connection with its retention of Pay Governance, the Committee considered the following factors in assessing Pay Governance independence:

 

 

The provision of services provided by Pay Governance to Martin Marietta in addition to compensation advisory services.

 

 

The compensation paid to Pay Governance is less than 1% of Pay Governance’s revenues.

 

 

Pay Governance has business ethics and insider trading and stock ownership policies, which are designed to avoid conflicts of interest.

 

 

Pay Governance employees supporting the engagement do not own Martin Marietta securities.

 

 

Pay Governance employees supporting the engagement have no business or personal relationships with members of the Compensation Committee or with any Martin Marietta executive officer.

At a special meeting in April 2020, the Committee discussed the engagement of Pay Governance. At that time, Pay Governance confirmed the validity of each of the factors described above.

The nature and scope of Pay Governance engagement was determined by the Committee and not limited in any way by management. The Committee also considered Pay Governance Global Business Standards intended to address potential conflicts of interests with respect to their executive compensation consulting services and the other factors required to be considered by applicable SEC and NYSE rules in approving the Committee’s engagement of Pay Governance for 2020. Based on this review, the Committee did not identify that Pay Governance had any conflicts of interest that would prevent Pay Governance from independently advising the Committee. Pay Governance did not provide any additional services beyond those relating to director and executive officer compensation in an amount in excess of $120,000 in 2020.

For the period from January 1, 2020 to April 7, 2020, the Committee paid Mercer, its former executive compensation consultant, $77,768 for its compensation advisory services. During 2020, Mercer and its Marsh & McLennan affiliates were also retained by management to provide services unrelated to executive compensation, including property/casualty insurance brokerage services and administration of a risk management information system. The aggregate fees paid for those other services for 2020 were $295,198. The Committee and the Board did not review or approve the other services provided to us by Mercer and its Marsh & McLennan affiliates as those services are approved by management in the normal course of business.

We were advised by Mercer that the reporting relationship and compensation of the individual Mercer consultants who performed executive compensation consulting services for our Committee were separate from, and were not determined by reference to, Mercer’s or Marsh & McLennan’s other lines of business or their other work for us. The Committee

 

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PRACTICE REGARDING TIMING OF EQUITY GRANTS    COMPENSATION DISCUSSION AND ANALYSIS

 

considered these separate reporting relationships and compensation structures, the provision of other services to the Company by Mercer and Marsh & McLennan (including in prior years), and the absence of any business or personal relationship between our officers and Directors and the specific Mercer consultants advising the Company (other than the consulting relationship with the Committee). The Committee also considered Mercer’s Global Business Standards intended to address potential conflicts of interests with respect to their executive compensation consulting services and the other factors required to be considered by applicable SEC and NYSE rules in approving the Committee’s engagement of Mercer for the portion of 2020. Based on this review, the Committee did not identify that Mercer had any conflicts of interest that would prevent Mercer from independently advising the Committee during the term of its engagement in 2020.

Practice Regarding Timing of Equity Grants

The stock purchase awards under our Incentive Stock Plan and the PSUs and RSUs awarded under our LTI program, each as described above, were granted in 2020 at the Committee’s regularly scheduled meetings in February following the availability of financial results for the prior year. Newly hired executive officers may, subject to the discretion of the Committee, receive an award of RSUs as of the date of their hire. The number of such RSUs is based on the NYSE closing price of Martin Marietta’s common stock on the date of the grant or the first date of employment, whichever is later. The Committee’s schedule is determined several months in advance and the proximity of any awards to earnings announcements or other market events is coincidental.

Our practice with regard to the timing of equity grants is:

 

 

No equity award may be backdated. A future date may be used if, among other reasons, the Committee’s action occurs in connection with a new employee who has not yet commenced employment.

 

 

Proposed equity awards are presented to the Committee in February of each year. Off-cycle awards may be considered in the Committee’s discretion in special circumstances, which may include hiring, retention or acquisition transactions.

In addition, our existing stock award plan prohibits repricing of stock options or paying cash for underwater stock options.

Perquisites

Martin Marietta provides executives with perquisites that the Committee believes are appropriate, reasonable and consistent with its overall compensation program to better enable Martin Marietta to attract and retain superior employees for key positions. The Committee periodically reviews the types and levels of perquisites provided to the NEOs. The value of each of the NEO’s perquisites, determined in accordance with SEC rules, is included in the annual compensation set forth in the Summary Compensation Table.

In 2020, we provided personal use of leased automobiles to NEOs. We pay for the insurance, maintenance and fuel for such vehicles, and the value of personal mileage and use is charged to the NEO as imputed income. We make the company-owned aircraft available to the CEO and other senior executives for business travel. If the NEO is accompanied by his or her spouse on such trips, that use is included in the NEO’s taxable income for the year and the incremental cost, if any, is included as “All Other Compensation” in the Summary Compensation Table required to be included in our Proxy Statement for that year.

Martin Marietta also provides to executive officers, as well as most other salaried employees, certain other fringe benefits such as tuition reimbursement, airline club dues, professional society dues, and food and recreational fees incidental to official company functions. We do not provide other perquisites, such as country club memberships or financial planning services, to the NEOs or other employees.

Retirement and Other Benefits

In order to maintain market competitive levels of compensation, we provide retirement and other benefits to the NEOs and other employees, including:

 

 

Medical and dental benefits

 

 

Life, accidental death and disability insurance

 

 

Pension and savings plans

 

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COMPENSATION DISCUSSION AND ANALYSIS    POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

 

The benefits under the defined benefit pension plan are more valuable for employees who remain with Martin Marietta for longer periods, thereby furthering our objectives of retaining individuals with more expertise in relevant areas and who can also participate in management development for purposes of executive succession planning. All of Martin Marietta’s salaried employees in the United States are eligible to participate in our retirement and other plans, and the NEOs participate in the plans on the same terms as Martin Marietta’s other salaried employees.

Additional information regarding these benefits is under the heading Pension Benefits Table on page 71 and the accompanying narrative.

Potential Payments upon Termination or Change of Control

We do not have written employment agreements with executives. Instead, each of our NEOs has a change of control severance agreement (an Employment Protection Agreement) that provides for retention and continuity in order to minimize disruptions during a pending or anticipated change of control. The agreements are triggered only by a qualifying termination of employment in connection with a change of control. Martin Marietta’s equity-based award plans and retirement plans also provide for certain post-termination payments and benefits, as well as, for equity awards granted prior to 2020, the acceleration of time periods for purposes of vesting in, or realizing gain from, such equity award in the event of a change of control. The Committee believes these payments and benefits are also important to align the interests of the executive officers with the interests of the shareholders because the agreements will reduce or eliminate the reluctance to pursue potential change of control transactions that may ultimately lead to termination of their employment but would otherwise be in the best interests of our shareholders. The Employment Protection Agreements are described on page 73 of this Proxy Statement.

Tax and Accounting Implications

In administering the compensation program for NEOs, for awards made in 2021 the Committee considered tax consequences, including the limit on deductibility on compensation in excess of $1 million to certain executive officers under Section 162(m) of the Internal Revenue Code and the consequences under financial accounting standards.

While the Committee considers the tax deductibility as one factor in determining executive compensation, the Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program to attract talent, promote retention, or recognize and reward desired performance even if the awards are not deductible for income tax purposes.

 

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Executive Compensation

Executive Officer Compensation

The following tables show annual and long-term compensation, for services in all capacities to Martin Marietta, earned by the Chief Executive Officer, the Chief Financial Officer, and the three other most highly compensated executive officers in 2020, which we refer to collectively in this Proxy Statement as the “named executive officers” or “NEOs.” These tables and the accompanying narratives should be read in conjunction with the Compensation Discussion and Analysis section of this Proxy Statement, which provides a detailed overview of the methods used by Martin Marietta to compensate its officers, including the named executive officers.

Summary Compensation Table

The table below summarizes the total compensation paid to or earned by each of the named executive officers for the fiscal years set forth below. Martin Marietta has not entered into any employment agreements with any of the named executive officers.

Summary Compensation Table

 

Name and

Principal Position

  Year
  Salary ($)1
    Bonus
($)
    Stock
Awards ($)2
    Option
Awards ($)3
    Non-Equity
Incentive Plan
Compensation ($)4
    Change in
Pension Value and
Non-Qualified
Deferred
Compensation
Earnings ($)5
    All Other
Compensation
($)6
    Total ($)
 

(a)

  (b)   (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  
                 

C. Howard Nye

Chairman, President

and CEO

  2020     1,212,500         6,751,124         1,650,000       3,172,259       32,705       12,818,588  
 

2019

    1,141,667         6,294,708         1,450,000       3,073,183       238,800       12,198,358  
  2018     1,090,833               5,046,900               1,050,000       1,235,634       110,091       8,533,458  

James A. J. Nickolas

Senior Vice President

and CFO

  2020     558,333         1,000,155         636,625       306,951       29,682       2,531,747  
 

2019

    518,967         1,100,171         529,346       240,591       32,587       2,421,662  
  2018     485,667               899,577               451,670       91,960       84,393       2,013,267  

Roselyn R. Bar

Executive Vice President,

General Counsel and

Corporate Secretary

  2020     586,667         1,173,894         689,984       1,618,248       31,368       4,100,161  
 

2019

    565,417         1,301,753         585,772       2,153,409       79,931       4,686,282  
  2018     537,783               1,073,594               496,912       940,466       52,958       3,101,713  

Craig M. LaTorre7

Senior Vice President, Chief

Human Resource Officer

  2020     491,667         769,024         550,728       270,763       25,627       2,107,809  
 

2019

    456,250         736,506         419,050       142,339       21,305       1,775,450  
                                                                   

Daniel L. Grant

Senior Vice President,

Strategy & Development

  2020     407,750         453,287         570,902       271,947       29,680       1,733,566  
 

2019

    394,417         631,506         353,398       317,458       56,555       1,753,334  
  2018     380,383               527,756               308,871       163,952       41,967       1,422,929  

 

1

The amounts in column (c) reflect the base salary actually paid.

2

No amounts that qualify as bonuses were payable during the last three years. The amounts in column (e) reflect the aggregate grant date fair value of awards made in the year reported, determined in accordance with FASB ASC Topic 718 (without any assumption for early forfeiture), of awards of RSUs and awards of PSUs, which are described in more detail on pages 54 to 58 under the heading “2020 Long-Term Incentive Compensation.” The amounts included in the table reflects the value of the units granted, which are subject to forfeiture if the executive does not remain in the employment of Martin Marietta for the requisite time period (generally three years) or if Martin Marietta does not achieve the performance criteria, where applicable. The amounts reported include the amounts of cash bonuses deferred in common stock units by each named executive officer pursuant to Martin Marietta’s Incentive Stock Plan, which is discussed in further detail on page 54 under the heading “Annual Incentive Feature: Stock Purchase Plan”. The amount in column (e) includes PSUs based on the target level of performance. Assuming the maximum payout under the PSUs granted in 2020, whose payout will be determined in February 2023 based on the Company’s performance in 2020-2022, the amounts reported above for 2020 would be as follows: Mr. Nye, $7,563,153; Mr. Nickolas, $1,246,857; Ms. Bar, $1,301,959; Mr. LaTorre, $936,104; and Mr. Grant, $672,124. Assumptions used in the calculation of these amounts are included in Note A to Martin Marietta’s audited financial statements for the fiscal year ended December 31, 2020, included in Martin Marietta’s Annual Report on Form 10-K filed with the SEC on February 19, 2021. The amounts of cash bonus deferred in 2020 for each named executive officer are included in column (e) as follows: Mr. Nye, $1,650,000; Mr. Nickolas, $159,156; Ms. Bar, $295,708; Mr. LaTorre, $137,682; and Mr. Grant, $0.

 

3

The Company does not issue SARs and has not granted any stock options since 2015. The Stock Plan prohibits share recycling for stock options or SARs.

 

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EXECUTIVE COMPENSATION    SUMMARY COMPENSATION TABLE

 

4

The amounts in column (g) for 2020 reflect the cash paid to the named individuals earned in 2020 and paid in 2021 under annual incentive arrangements discussed in further detail on page 52 under the heading “2020 Annual Cash Incentive Goals and Results” and not deferred pursuant to Martin Marietta’s Incentive Stock Plan, which is discussed in further detail on page 54 under the heading “Annual Incentive Feature: Stock Purchase Plan.”

5

The amounts in column (h) reflect the aggregate increase in the actuarial present value of the named executive officer’s accumulated benefits during 2020, 2019 and 2018, respectively, under all defined benefit retirement plans established by Martin Marietta determined using interest rate and mortality rate assumptions consistent with those used in Martin Marietta’s financial statements and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested.

6

The amount shown in column (i) for 2020 reflects for each named executive officer: matching contributions allocated by Martin Marietta to each of the named executive officers pursuant to the Savings and Investment Plan, which is more fully described on pages 69 to 70 under the heading “Retirement and Other Benefits” in the following amounts: Mr. Nye, $9,975; Mr. Nickolas, $9,975; Ms. Bar, $9,975; Mr. LaTorre, $9,565; and Mr. Grant, $8,651; the value attributable to life insurance benefits provided to the named executive officers, which is more fully described on pages 69 to 70 under the heading “Retirement and Other Benefits” in the following amounts: Mr. Nye, $10,062; Mr. Nickolas, $3,705; Ms. Bar, $6,564; Mr. LaTorre, $1,896; and Mr. Grant, $14,754; the value attributable to personal use of leased automobiles provided by Martin Marietta in the following amounts: Mr. Nye, $12,668; Mr. Nickolas, $16,003; Ms. Bar, $14,830; Mr. LaTorre, $14,167; and Mr. Grant, $6,275. These values are included as compensation on the W-2 of named executive officers who receive such benefits. Each such named executive officer is responsible for paying income tax on such amount. The amounts in column (i) also reflect the dollar value of dividend equivalents on units credited under the equity awards as computed for financial statement reporting purposes for each fiscal year ended December 31, 2020, 2019 and 2018 in accordance with FASB ASC Topic 718.

7

Mr. LaTorre was not a named executive officer for purposes of the Summary Compensation Table in 2018.

Grants of Plan-Based Awards

The table below shows each grant of an award made to a named executive officer in the fiscal year ended December 31, 2020. This includes equity awards made to the named executive officers under the Stock Plan and the Incentive Stock Plan.

Grants of Plan-Based Awards Table

 

Name

  Grant Date
  Estimated Future Payouts Under
Non-Equity Incentive Plan Award
   

 

  Estimated Future Payouts Under Equity
Incentive Plan Awards
  All Other Stock
Awards:
Number of
Shares of
Stock or
Units (#)
  Grant Date
Fair Value of  
Stock and
Option
Awards4
($)
  Threshold ($)
  Target ($)
  Maximum ($)
      Threshold (#)
  Target (#)
  Maximum (#)

(a)

  (b)   (c)   (d)   (e)       (f)   (g)   (h)   (i)   (j)
                   

C. Howard Nye

  2/17/211     848,750   3,750,000       3,262   14,410     1,061,129
  2/19/202           4,722   11,804   28,330     3,151,314
  2/19/203                               10,141   1,949,810

James A. J. Nickolas

  2/17/211     335,000   6,000,000           322     5,764         104,747
  2/19/202              779   1,946     4,671         519,524
  2/19/203                                 1,672       321,475

Roselyn R. Bar

  2/17/211     328,533   5,250,000           542     8,646         176,313
  2/19/202           813   2,032     4,877         542,483
  2/19/203                                 1,746       335,703

Craig M. LaTorre

  2/17/211     275,334   6,000,000           265     5,764           86,205
  2/19/202           585   1,461     3,507         390,043
  2/19/203                                 1,255       241,299

Daniel L. Grant

  2/17/211     285,425   7,500,000            
  2/19/202           420   1,049     2,518         280,052
  2/19/203                                   901