SCHEDULE 14A
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Martin Marietta Materials, Inc. | ||||
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April 17, 2017 |
Dear Fellow Shareholder:
On behalf of the Martin Marietta Board of Directors and executive officers, it is my pleasure to invite you to our 2017 Annual Meeting of Shareholders.
Strong Financial Performance 2016 was an exceptional year for Martin Marietta. We established several new financial records and demonstrated the earnings power of our strategically-positioned assets, driven by a more durable, construction-centric recovery. Our record performance and market position yielded strong returns for our shareholders, delivering a 64% total shareholder return, the 9th best in the S&P 500. And, as always, we achieved these results while remaining committed to the safety, ethics, integrity and values that are the hallmark of Martin Marietta.
Shareholder Engagement We held an Investor Day in Dallas, Texas in 2016. Management provided overviews of our accomplishments relative to our five-year Strategic Operating Analysis and Review (SOAR 2020), outlined generally objectives for SOAR 2020 and offered a snapshot of the potential earnings power of the business. However, Texas was, literally, the shows star. Presentations from our regional management provided insight into the fundamental drivers of the Texas economy. Operations tours were provided at both the Bridgeport/Chico Quarry Complex as well as the Midlothian Cement Plant, including facilities that were added in our recent acquisition of Texas Industries. |
Our investor outreach in 2016 extended to 127 meetings with 314 investor groups, and conversations with most of our top 20 shareholders. We visited with our shareholders across the United States and in Toronto, Frankfurt, London, Edinburgh and Paris. We also issued our second Sustainability Report in 2016 - Building Solid Foundations Partnering for Stronger Communities - in response to our shareholders request that we share our story on the efforts and improvements we are making in this important aspect. From our world-class safety programs and performance, to our targeted and intentional support of education and health, and environmental programs that ensure operational excellence, we have a solid foundation and an exciting opportunity to build upon.
Governance Developments
There were several important changes to our corporate governance in 2016. First, shareholders approved amendments to our Articles of Incorporation that provide for annual elections of directors. Second, the Board did not renew the shareholder rights plan that expired in October 2016. Our Board continues to review our governance policies to ensure we are able to create appropriate value for our shareholders.
Board Member Changes
At this years meeting, William E. McDonald will retire in accordance with the mandatory retirement provision in our bylaws. We wish Bill well in retirement and are extremely grateful for his steady guidance and thoughtful leadership given generously through his 21 years on our Board.
We also added two new Board members in 2016, namely John J. Koraleski, former Chairman and CEO of Union Pacific Railroad, and Donald W. Slager, President and CEO of Republic Services. We are delighted to have both Jack and Don, who each bring strong backgrounds and experience with publicly-traded companies to provide their insights into our Board mix.
Proxy Voting
Because your proxy vote matters, I urge you to cast it promptly even if you plan to attend the Annual Meeting. We encourage you to vote so that your shares will be represented and voted at the meeting.
Thank you for your continued support of Martin Marietta.
Sincerely,
C. Howard Nye
Chairman of the Board, President and Chief Executive Officer
MARTIN MARIETTA MATERIALS, INC.
2710 Wycliff Road, Raleigh, North Carolina 27607
Notice of Annual Meeting of Shareholders
To Be Held May 18, 2017
To Our Shareholders:
The Annual Meeting of Shareholders of Martin Marietta Materials, Inc. will be held on Thursday, May 18, 2017, at 11:30 a.m. at our principal office located at 2710 Wycliff Road, Raleigh, North Carolina. At the meeting, the holders of our outstanding common stock will act on the following matters:
(1) | Election as Directors the four (4) nominees named in the attached proxy statement, each to serve their respective term as described in the attached proxy statement, and until their successors are duly elected and qualified; |
(2) | Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors for 2017; |
(3) | Advisory vote to approve the compensation of our named executive officers; |
(4) | Advisory vote to select the frequency of future shareholder votes to approve the compensation of our named executive officers; |
(5) | A shareholder proposal described in the accompanying proxy statement, if properly presented at the Annual Meeting; and |
(6) | Any other business that may properly come before the meeting. |
All holders of record of Martin Marietta common stock (NYSE: MLM) at the close of business on March 10, 2017 are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements of the meeting.
We have enclosed our 2016 Annual Report to Shareholders. The report is not part of the proxy soliciting materials for the Annual Meeting.
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.
Sincerely,
Roselyn R. Bar
Executive Vice President, General
Counsel and Secretary
Raleigh, North Carolina
April 17, 2017
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL SHAREHOLDER MEETING TO BE HELD ON MAY 18, 2017:
Martin Mariettas proxy statement, form of proxy card and 2016 Annual Report to Shareholders are also available at ir.martinmarietta.com/reports.cfm.
This Proxy Summary highlights information about Martin Marietta that can be found elsewhere in this proxy statement. It does not contain all of the information you should consider in voting your shares. We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote. This proxy statement, the proxy card, and the notice of meeting are being sent commencing on approximately April 17, 2017 to shareholders of record on March 10, 2017.
2017 Annual Meeting of Shareholders
Meeting Date: |
May 18, 2017 |
Place: |
2710 Wycliff Road, Raleigh, NC | |||||
Time: |
11:30 am ET
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Record Date: | March 10, 2017 |
Your vote is important. You may vote in person at the 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.
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Via the Internet
www.voteproxy.com. |
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In Person
Attend the Annual Meeting and vote by ballot. | |||||
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By Telephone
1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from outside the United States. |
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By Mail
Sign, date and mail your proxy card in the envelope provided. |
If you submit your proxy by telephone or over the internet, you do not need to return your proxy card by mail.
PROPOSALS AND VOTING RECOMMENDATIONS
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Proposal | Description | Board Voting Recommendation | Page | |||||
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Election of Four Director Nominees | FOR ALL DIRECTOR NOMINEES |
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Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors | FOR |
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Advisory Vote on Companys Executive Compensation | FOR |
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Advisory Vote on Frequency of Shareholder Votes on Executive Compensation | EVERY 1 YEAR |
57 | |||||
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Advisory Vote on Shareholder Proposal Requesting that the Board Amend the Bylaws to Provide for Proxy Access | AGAINST |
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2017 PROXY STATEMENT
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Shareholders Benefit from Martin Mariettas Strong 2016 Performance
Record net sales of $3.58 billion up 9.4% from 2015 |
Record gross profit of $909 million up 25.9% |
Record operating earnings of $667.3 million up 39.2% |
Net earnings attributable to Martin Marietta of $425.4 million, an increase of 47% over 2015 |
Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $971.6 million up 29.4% from 2015 |
Earnings attributable to common shareholders per diluted share of $6.63 compared with $4.29, up 54.5% |
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Notes: Peak and trough years are measured against the reported earnings with no adjustments for unusual or infrequent items. Trough years vary for each measure as follows: Net Sales 2009; Gross Profit 2011; Operating Earnings 2012; Net Earnings 2011; EBITDA - 2012
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2017 PROXY STATEMENT
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A reconciliation of Net Earnings Attributable to Martin Marietta to EBITDA is included in Annex B.
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Corporate Governance Highlights
Recent Updates
| Declassified Board phase-in beginsDirectors elected in 2017 to serve one-year terms |
| Modifications to our long-term equity compensation and cash incentive programs |
Board of Directors
| Lead Independent Director |
| 10 Directors; 9 are non-employees; 8 are independent |
| Key committee Chairs are independent |
| Executive sessions of non-management Directors at each regularly-scheduled meeting |
| All Directors attended 100% of all Board and committee meetings in 2016 |
| Limited membership on other public company boards |
| Code of Ethical Business Conduct and ethics program that reports to a Board Committee |
| Regular Board self-assessments and Director peer review |
| Risk oversight by full Board and Committees |
Shareholder Interest
| Majority voting standard for uncontested Director elections |
| No shareholder rights plan |
| Annual advisory vote to ratify independent auditor |
| Annual advisory vote to approve executive compensation |
| Longstanding active shareholder engagement |
2017 PROXY STATEMENT
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Board Composition
In 2016, we elected two new Directors to the Board, each with extensive experience serving as chief executive officers and members of the board of directors of large publicly-traded companies. We were recognized in 2015 at the Womens Forum of New York at its Biennial Breakfast of Corporate Champions for our Board diversity.
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Board Attendance
In 2016, all directors attended 100% of the total Board and committee meetings to which they were assigned. All incumbent directors attended the May 2016 Annual Meeting, except for Mr. Koraleski who joined the Board in August 2016.
Our Compensation Approach
A substantial portion of compensation paid to our named executive officers (NEOs) is variable and performance-based. We use the 50th percentile of our comparator group to set target compensation, but actual pay realized by our NEOs is dependent on our financial, operational and other related performance. Based on our record levels of performance in 2016, 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.
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2017 PROXY STATEMENT
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Shareholder Rights and Governance Practices
Will any other matters be presented at the Annual Meeting?
At the time this proxy statement was filed with the Securities and Exchange Commission, the Board of Directors was not aware that any matters not referred to herein would be presented for action at the Annual Meeting. If any other matters properly come before the meeting, it is intended that the persons named in the enclosed proxy will vote the shares represented by proxies on such matters in accordance with the recommendation of the Board of Directors, or, if no recommendation is given, in their own discretion. It is also intended that discretionary authority will be exercised with respect to the vote on any matters incident to the conduct of the meeting.
What are the Boards recommendations?
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors. The Boards recommendation, as well as a description of each proposal, is set forth in this proxy statement. The Board recommends a vote:
| FOR the election of the nominated slate of Directors; |
| FOR the ratification of the selection of PricewaterhouseCoopers LLP as independent auditors; |
| FOR the approval, on a non-binding advisory basis, of the compensation of our named executive officers as described in this proxy statement; |
| FOR the selection of EVERY 1 YEAR for the frequency of future non-binding advisory votes on the compensation of our named executive officers; and |
| AGAINST the advisory vote on the shareholder proposal requesting that the Board amend the Bylaws to provide for proxy access. |
2017 PROXY STATEMENT
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein are generally identified by the words believe, project, expect, anticipate, estimate, intend, strategy, future, opportunity, plan, may, should, will, would, will be, will continue, will likely result, and similar expressions. Forward-looking statements are based on the beliefs and assumptions of our management and on currently available information. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our annual report on Form 10-K for the fiscal year ended December 31, 2016. We undertake no responsibility to publicly update or revise any forward-looking statement.
The Board of Directors currently consists of ten members, nine of whom are non-employee Directors. At the 2016 Annual Meeting, shareholders approved the Board of Directors proposal to amend our Articles of Incorporation to phase out the classification of the terms of our Directors and to provide instead for the annual election of our Directors. Prior to the charter amendment, our Board of Directors was divided into three classes, with each class serving three-year terms. Now, commencing with this 2017 Annual Meeting of Shareholders, our Directors will be elected to one-year terms of office after the current terms of the Directors of each class expire at the 2017, 2018 and 2019 Annual Meetings of Shareholders.
The Board of Directors has nominated four persons for election as Directors to serve a one-year term expiring in 2018. 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. Mr. Koraleski was appointed as a Director as of August 15, 2016. 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.
Under our Bylaws, nominations of persons for election to the Board of Directors may be made at an Annual Meeting of Shareholders by the Board of Directors and by any shareholder who complies with the notice procedures set forth in the Bylaws. As described in the proxy statement for our 2016 Annual Meeting, for a nomination to be properly made by a shareholder at the 2017 Annual Meeting, the shareholders notice must have been sent to, and received by, our Secretary at our principal executive offices between January 20, 2017 and February 19, 2017. No such notice was received during this period. Should any of the following 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 of Directors and the election of any substitute nominee.
The Bylaws of the Corporation provide that a Director will retire at the Annual Meeting of Shareholders following the Directors 75th birthday. One of our current Directors, William E. McDonald, reached this mandatory retirement age this year and is not eligible for election at the Annual Meeting for a new term. Mr. McDonald has stated that he intends to serve as a Director of the Corporation through the commencement of the 2017 Annual Meeting of Shareholders, after which he will retire from the Board. The Board extends its sincere appreciation to Mr. McDonald for his years of service and thoughtful Board leadership. Mr. McDonald has given generously of his time and has consistently provided the Board with independent insight and advice, which have been invaluable to the Board and to Martin Marietta. In light of the retirement of Mr. McDonald, the Board of Directors has set the size of the Board of Directors at nine effective upon the commencement of the 2017 Annual Meeting.
The recruiting process typically involves either a 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 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. During 2015-2016, the Nominating and Corporate Governance Committee retained a search firm to help identify director prospects, perform candidate outreach, assist in reference checks, and provide other related services. Nominated to the Board in August 2016, Mr. Koraleski was initially identified by the Chairman, President and CEO and was recommended as a Director nominee by the Nominating and Corporate Governance Committee.
Proxies cannot be voted for a greater number of persons than the number of nominees named.
The following sets forth the age and certain other biographical information for each of the nominees for election and for each of the other members of the Board of Directors as of the date of this proxy statement.
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2017 PROXY STATEMENT
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Election of Directors
Nominees for election to the Board of Directors for a Term Continuing Until 2018:
◆SUE W. COLE
Director Since: 2002
Age: 66
Chair of the Nominating and Corporate Governance Committee and member of the Management Development and Compensation Committee. |
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 advisor, 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 has previously served on the public-company board of UNIFI, Inc. She has also been active in community and charitable organizations, including previously serving as Chairman of the North Carolina Chamber, on the Investment Committee of the University of North Carolina at Greensboro and as a member on the North Carolina Economic Development Board. Ms. Cole attended the University of North Carolina at Greensboro where she earned a B.S. in Business Administration and an M.B.A. 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 and investment advisory businesses as well as several non-profit organizations
Strong leadership skills and familiarity with governmental affairs |
◆MICHAEL J. QUILLEN
Director Since: 2008
Age: 68
Lead Independent Director, Chair of the Management Development and Compensation Committee, Member of the Executive Committee and the Nominating and Corporate Governance Committee. |
Mr. Quillen was the founder and served as Chief Executive Officer of Alpha Natural Resources, Inc. (ANR), a leading Appalachian coal supplier, since 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. He has also served as Chairman (Rector) of the Board of Visitors of Virginia Polytechnic Institute and State University from July 2012 to June 2014 and was reappointed to an additional four-year term on the Board of Governors in July 2014. 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 Bachelors and Masters 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 |
2017 PROXY STATEMENT
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Proposal 1: Election of Directors ◆ Director Nominees
◆JOHN J. KORALESKI
Director Since: 2016
Age: 66
Member of the Audit Committee, Executive Committee and Management Development and Compensation Committee. |
Mr. Koraleski served from February 2015 through his retirement in September 2015 as executive Chairman of the Board of the Union Pacific Corporation (UP), which through its subsidiaries operates North Americas 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 Bachelors and Masters 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 |
◆STEPHEN P. ZELNAK, JR.
Director Since: 1993
Age: 72
Chair of the Finance Committee and Member of the Ethics, Environment, Safety and Health Committee. |
Mr. Zelnak currently serves as Chairman of the Board of Beazer Homes USA, Inc., a geographically diversified homebuilder with active operations in 13 states within three geographic regions in the United States. He previously served as Chief Executive Officer of Martin Marietta from 1993 to 2009, President from 1993 to 2006, Chairman of the Board from 1997 through 2009, Executive Chairman from January 2010 to May 2010, and non-Executive Chairman from May 2010 until May 2014. Mr. Zelnak joined Martin Marietta Corporation in 1981 and was responsible for the aggregates operations since 1982. Mr. Zelnak is also Chairman and majority owner of ZP Enterprises, LLC, a private investment firm. In addition to community and charitable organizations, Mr. Zelnak has served as Chairman of the North Carolina Chamber and the National Stone, Sand and Gravel Association. He currently serves on the Advisory Board of the College of Management at North Carolina State University and is a Trustee Emeritus of the Georgia Tech Foundation Board. Mr. Zelnak received a Bachelors degree from Georgia Institute of Technology and Masters degrees in Administrative Science and Business Administration from the University of Alabama system. |
Key attributes, experience and skills:
Former Chairman and CEO of Martin Marietta
Extensive mentorship, business and operating experience
Knowledge of all aspects of Martin Marietta and the construction aggregates industry
Broad strategic and financial experience
Knowledge of the homebuilding industry and factors that impact construction
Corporate governance |
The Board Unanimously Recommends a Vote FOR All Nominees for Election to the Board of Directors |
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2017 PROXY STATEMENT
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Director Nominees ◆ Proposal 1: Election of Directors
Other Directors Whose Terms Continue Until 2018:
◆DAVID G. MAFFUCCI
Director Since: 2005
Age: 66
Chair of the Audit Committee and member of the Ethics, Environment, Safety and Health Committee. |
Mr. Maffucci is a Director of Domtar Corporation, which designs, manufactures, markets and distributes a wide variety of fiber-based products, including communication papers, specialty and packaging papers, market pulp and absorbent hygiene products. He is currently the Chair of its Audit Committee and a member of its Finance Committee and Nominating and Corporate Governance Committee. Mr. Maffucci previously served as Executive Vice President and Chief Financial Officer of Xerium Technologies, Inc., a manufacturer and supplier of consumable products used in paper production, from 2009 to 2010, as well as on its Board of Directors from 2008 until 2010, serving on its Audit and Compensation Committees from 2008 to 2009. On March 30, 2010, Xerium Technologies, Inc. filed a voluntary petition for relief under Chapter 11 of the Federal bankruptcy laws as part of a pre-arranged restructuring plan with the support of its lenders. On May 25, 2010, Xerium Technologies, Inc. emerged from Chapter 11 protection. Mr. Maffucci also served as Executive Vice President and Chief Financial Officer of Bowater Incorporated. Mr. Maffucci previously worked at KPMG and is a Certified Public Accountant. He received his Bachelors degree from Sacred Heart University. |
Key attributes, experience and skills:
Extensive financial experience with a large public accounting firm
Accounting principles and practices, auditing, internal control over financial reporting, and risk management processes
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◆DONALD W. SLAGER
Director Since: 2016
Age: 55
Member of the Ethics, Environment, Safety and Health Committee and the Finance Committee. |
Donald W. Slager serves as President and Chief Executive Officer of Republic Services, Inc., 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 Services. 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 13 years of C-Suite experience
More than 26 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 two publicly-traded board of directors |
2017 PROXY STATEMENT
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Proposal 1: Election of Directors ◆ Director Nominees
Other Directors Whose Terms Continue Until 2019:
◆C. HOWARD NYE
Director Since: 2010
Age: 54
Chairman of the Board (since 2014) and Chair of the Executive Committee (since 2014) |
Mr. Nye has served as Chairman of the Board since 2014 and as President and Chief Executive Officer of Martin Marietta since January 1, 2010. He previously served as President and Chief Operating Officer of Martin Marietta from August 2006 to 2009. From 2003 to 2006, Mr. Nye served as Executive Vice President of Hanson Aggregates North America, a producer of aggregates for the construction industry, and in other managerial roles since 1993. Mr. Nye is also currently an independent Director of CREE, Inc., a multi-national manufacturer and market-leading innovator of lighting-class LEDs, LED lighting, and semiconductor solutions for wireless and power applications, where he serves as a member on the Compensation Committee and Chair of the Governance and Nominations Committee. Mr. Nye has also been active in a number of various business, civic, and education organizations, including serving as a member of the Executive Committee and past Chairman of the Board of Directors of the National Stone, Sand & Gravel Association, Vice Chairman of the Board of Directors of the American Road & Transportation Builders Association (ARTBA), and a member of the Board of Directors of the United States Chamber of Commerce. Mr. Nye has also been a gubernatorial appointee to the North Carolina Mining Commission. Mr. Nye received an A.B. degree from Duke University and a J.D. degree from Wake Forest University. |
Key attributes, experience and skills:
Extensive knowledge of the construction aggregates 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 and broad executive experience
Broad strategic vision for the future growth of Martin Marietta |
◆LAREE E. PEREZ
Director Since: 2004
Age: 63
Chair of the Ethics, Environment, Safety and Health Committee and member of the Audit Committee |
Ms. Perez has served as Owner and Managing Partner of The Medallion Company, LLC, a consulting firm, since 2003. In 2015, she became employed as an investment consultant with DeRoy & Devereaux, an independent investment adviser, where she provides client consulting services. Ms. Perez was previously a Director of GenOn Energy, Inc., 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 recently 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 Bachelors 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 |
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2017 PROXY STATEMENT
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Director Nominees ◆ Proposal 1: Election of Directors
◆DENNIS L. REDIKER
Director Since: 2003
Age: 73
Member of the Audit Committee and the Finance Committee. |
Mr. Rediker served as the President and Chief Operating Officer of Utility Composite Solutions International (UCSI), a developer and maker of composite materials for utility and municipal lighting applications, from 2011 until its sale to Highland Industries in 2016. He is currently providing consulting and transition services to Highland Industries. From 2009 to 2011, Mr. Rediker served as the President and Chief Operating Officer of B4C, LLC, a developer and maker of ceramic materials for defense and aerospace applications. He previously served as President and Chief Executive Officer and Director of The Standard Register Company, and as the Chief Executive Officer and a Director of English China Clays, plc. Mr. Rediker received a Bachelors degree from the University of California at Santa Barbara in electrical engineering. |
Key attributes, experience and skills:
Significant operating, financial, leadership, strategic, audit, and marketing experience
Extensive experience in mergers and acquisitions, environmental and safety, and customer service
Expertise in corporate strategy
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2017 PROXY STATEMENT
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11
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Proposal 1: Election of Directors ◆ Director Compensation
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, 2016.
Name1 (a) |
Fees Paid in Cash ($)2 (b) |
Stock ($)3 (c) |
Option ($)4 (d) |
Non-Equity ($) (e) |
Change in Pension Earnings ($)5 (f) |
All Other ($)6 (g) |
Total ($) (h) |
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Sue W. Cole |
108,000 | 100,053 | 9,982 | 64,603 | 282,638 | |||||||||||||||||
John J. Koraleski |
52,500 | 100,129 | 2 | 422 | 153,053 | |||||||||||||||||
David G. Maffucci |
120,000 | 100,053 | 5,725 | 32,923 | 258,701 | |||||||||||||||||
William E. McDonald |
102,000 | 100,053 | 12,238 | 67,464 | 281,755 | |||||||||||||||||
Frank H. Menaker, Jr.7 |
26,250 | 0 | 5,201 | 17,712 | 49,163 | |||||||||||||||||
Laree E. Perez |
113,000 | 100,053 | 4,361 | 28,366 | 245,780 | |||||||||||||||||
Michael J. Quillen |
131,000 | 100,053 | 3,941 | 58,395 | 293,389 | |||||||||||||||||
Dennis L. Rediker |
105,000 | 100,053 | 7,669 | 35,071 | 247,793 | |||||||||||||||||
Richard A. Vinroot7 |
27,000 | 0 | 4,832 | 35,663 | 67,495 | |||||||||||||||||
Donald W. Slager |
75,000 | 100,053 | 6 | 671 | 175,730 | |||||||||||||||||
Stephen P. Zelnak, Jr. |
106,000 | 100,053 | 3,012 | 34,535 | 243,600 |
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 43. |
2 | The amounts in column (b) reflect fees earned in 2016. 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 2016 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, which includes the 20% discount, are as follows: Ms. Cole, 755 units and $108,236 value, respectively; Mr. Koraleski, 0; Mr. Maffucci, 169 units and $24,245 value, respectively; Mr. McDonald, 717 units and $102,289 value, respectively; Mr. Menaker, 231 units and $26,356 value, respectively Ms. Perez, 160 units and $22,956 value, respectively; Mr. Quillen, 912 units and $131,275 value, respectively; Mr. Rediker, 148 units and $21,194 value, respectively; Mr. Vinroot, 237 units and $27,041 value, respectively; Mr. Slager, 0; and Mr. Zelnak, 370 units and $53,297 value, respectively. The number of units credited to each of the Directors as of December 31, 2016, including units accumulated under the plan for all years of service as a Director, is as follows: Ms. Cole, 14,622; Mr. Maffucci, 8,895; Mr. McDonald, 17,223; Mr. Menaker, 0; Ms. Perez, 5,258; Mr. Quillen, 7,359; Mr. Rediker, 9,709; Mr. Vinroot, 15,290; and Mr. Zelnak, 5,881. The 20% discount from the market price of Martin Mariettas common stock used in converting to common stock is reported in column (g). |
3 | Each Director who was serving immediately following the 2016 Annual Meeting of Shareholder received 541 RSUs in 2016. Mr. Koraleski, who was appointed to the Board on August 15, 2016, received 502 RSUs in 2016. 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 Mr. Maffucci received a distribution of 271 unrestricted shares of common stock and deferred the distribution of 270 RSUs until retirement. |
4 | As of December 31, 2016, each Director held options for common stock in the amounts as follows: Ms. Cole, 6,000; Mr. Koraleski, 0; Mr. Maffucci, 0; Mr. McDonald, 6,000; Mr. Menaker, 6,000; Ms. Perez, 6,000; Mr. Quillen, 3,000; Mr. Rediker, 0; Mr. Slager, 0; Mr. Vinroot, 3,000; and Mr. Zelnak, 0. |
5 | The amounts in column (f) reflect interest paid on fees deferred in cash under the Common Stock Purchase Plan for Directors. |
6 | The amounts in column (g) reflect for each Director: (i) an amount equal to the 20% discount from the market price of Martin Mariettas common stock used in converting fees deferred in 2016 into common stock units pursuant to the Common Stock Purchase Plan for Directors, and (ii) the dollar value of dividend equivalents paid in 2016 on common stock units held under the plan. The Directors did not receive perquisites or other personal benefits in 2016. |
7 | Messrs. Menaker and Vinroot retired at the 2016 Annual Meeting of Shareholders in accordance with the Bylaws that provide for retirement following the Directors 75th birthday. |
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2017 PROXY STATEMENT
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Beneficial Owners and Management
How much stock do Martin Mariettas Directors and executive officers own?
The following table sets forth information as of March 10, 2017 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 43 of this proxy statement, individually, and by all Directors and executive officers of Martin Marietta as a group.
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership1 |
Deferred and Restricted Units |
Total | |||
Roselyn R. Bar |
41,7992 | 17,867 | 59,666 | |||
Sue W. Cole |
32,9123,4 | | 32,912 | |||
Daniel L. Grant |
9712 | 11,959 | 12,930 | |||
John J. Koraleski |
5023 | | 502 | |||
Anne H. Lloyd |
63,2452 | 20,996 | 84,241 | |||
David G. Maffucci |
16,6583 | | 16,658 | |||
Donald A. McCunniff |
10,7112 | 13,444 | 24,155 | |||
William E. McDonald |
25,8753 | | 25,875 | |||
C. Howard Nye |
124,9562 | 59,306 | 184,262 | |||
Laree E. Perez |
16,7653 | | 16,765 | |||
Michael J. Quillen |
19,0593 | | 19,059 | |||
Dennis L. Rediker |
18,2473 | | 18,247 | |||
Donald W. Slager |
5413 | | 541 | |||
Stephen P. Zelnak, Jr. |
6,9383 | | 6,938 | |||
All Directors and executive officers as a group (15 individuals including those named above) |
398,1043,4 | 134,7155 | 532,8196 |
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 8.45% of the shares of common stock outstanding as of March 10, 2017. None of the shares reported are pledged as security. |
2 | The number of shares owned for each of Mr. Nye, Ms. Lloyd, Ms. Bar, Mr. McCunniff and Mr. Grant 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 10, 2017, have been exercised: Mr. Nye, 66,018; Ms. Lloyd, 26,339; Ms. Bar, 14,097; Mr. McCunniff, 8,238; and Mr. Grant, 0. |
3 | 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 2016 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 10, 2017 is as follows: Ms. Cole, 14,779; Mr. Koraleski, 0; Mr. Maffucci, 8,930; Mr. McDonald, 17,368; Ms. Perez, 5,258; Mr. Quillen, 7,552; Mr. Rediker, 9,740; Mr. Slager, 0; and Mr. Zelnak, 5,960. Amounts reported also include options for common stock for each Director, all of which are currently exercisable, as follows: Ms. Cole, 3,000; Mr. Koraleski, 0; Mr. Maffucci, 0; Mr. McDonald, 0; Ms. Perez, 3,000; Mr. Quillen, 3,000; Mr. Rediker, 0; Mr. Slager, 0; and Mr. Zelnak, 0. |
4 | Includes an approximation of the number of shares in IRA account. |
5 | The amounts reported include common stock units credited to each of the named executives 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 Stock Plan that are subject to forfeiture in accordance with the terms of the plan, each in the following amounts: Mr. Nye, 16,992 and 42,314, respectively; Ms. Lloyd, 3,119 and 17,877, respectively; Ms. Bar, 2,856 and 15,011, respectively; Mr. McCunniff, 1,491 and 11,953, respectively; and Mr. Grant, 1,980 and 9,979, respectively. There are no voting rights associated with the stock units. |
2017 PROXY STATEMENT
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13
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Security Ownership of Certain Beneficial Ownership and Management ◆ Section 16(a) Beneficial Ownership Reporting Compliance
6 | Amounts reported include: (1) 127,216 options held by Directors and executive officers, which are currently exercisable or exercisable within 60 days of March 10, 2017; (2) 28,086 common stock units credited to executive officers in connection with their deferral of a portion of their cash bonus under the Martin Marietta Materials, Inc. Incentive Stock Plan; (3) 106,629 common stock units credited to executive officers in connection with RSUs granted under the Stock Plan that are subject to forfeiture in accordance with the terms of the Plan; and (4) 58,163 common stock units credited to the Directors in connection with RSUs granted under the Stock Plan. There are no voting rights associated with the stock units. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Directors and officers of Martin Marietta and persons who own more than 10% of the common stock to file with the Securities and Exchange Commission initial reports of ownership and reports in changes in ownership of the common stock. Directors, officers and more than 10% shareholders are required by Securities and Exchange Commission regulations to furnish to Martin Marietta copies of all Section 16(a) reports filed. Based solely on its review of copies of reports furnished to Martin Marietta and written representations of Directors and officers, the company believes that during fiscal year 2016, such filing requirements were satisfied.
Who are the largest owners of Martin Mariettas 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 10, 2017. To the best of Martin Mariettas 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 Mariettas outstanding voting securities at the close of business on March 10, 2017, except for those shown below.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class | ||
The Vanguard Group1 100 Vanguard Boulevard V26 Malvern, PA 19355 |
6,031,329 | 9.5% | ||
BlackRock, Inc.2 55 East 52nd Street New York, NY 10055 |
3,690,187 | 5.8% | ||
T. Rowe Price Associates, Inc.3 100 East Pratt St. Baltimore, MD 21202-1009 |
3,628,096 | 5.7% |
1 | As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2016 filed with the Securities and Exchange Commission on February 10, 2017, indicating sole power to vote 96,957 shares, shared power to vote 10,329 shares, sole power to dispose of 5,925,589 shares, and shared power to dispose of 105,740 shares. |
2 | As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2016 filed with the Securities and Exchange Commission on January 25, 2017, indicating sole power to vote 3,161,955 shares and sole power to dispose of 3,690,187 shares. |
3 | As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2016 filed with the Securities and Exchange Commission on February 7, 2017, indicating sole power to vote 1,177,200 shares and sole power to dispose of 3,628,096 shares. |
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2017 PROXY STATEMENT
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Corporate Governance Philosophy
The chart below provides a snapshot of Martin Mariettas governance highlights.
2017 PROXY STATEMENT
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15
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Corporate Governance Matters ◆ Corporate Governance Philosophy
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2017 PROXY STATEMENT
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Corporate Governance Philosophy ◆ Corporate Governance Matters
2017 PROXY STATEMENT
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17
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Corporate Governance Matters ◆ Corporate Governance Philosophy
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2017 PROXY STATEMENT
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Board Committees ◆ Corporate Governance Matters
Below is a summary of our current committee structure and membership information.
Director | Audit Committee |
Ethics, Environment, |
Executive Committee |
Finance Committee |
Management Development and Compensation Committee |
Nominating and Corporate Governance Committee | ||||||
Sue W. Cole |
Chair | |||||||||||
David G. Maffucci Financial Expert |
Chair |
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John J. Koraleski Financial Expert |
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William E. McDonald |
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C. Howard Nye |
Chair | |||||||||||
Laree E. Perez Financial Expert |
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Chair |
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Michael J. Quillen Lead Independent Director |
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Chair |
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Dennis L. Rediker Financial Expert |
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Donald W. Slager |
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Stephen P. Zelnak, Jr. |
Chair | |||||||||||
Number of Meetings in 2016 |
11 |
2 |
0 |
5 |
5 |
2 |
2017 PROXY STATEMENT
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19
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Corporate Governance Matters ◆ Board Committees
The primary responsibilities, membership and meeting information for our other standing committees are summarized below.
Current Members: David G. Maffucci (Chair) John J. Koraleski Laree E. Perez Dennis L. Rediker |
Meetings in 2016: 11 |
Average Attendance in 2016: 100% | ||
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 accountants;
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 of the first three fiscal quarters;
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 managements assessment of the effectiveness of Martin Mariettas system of internal control over financial reporting;
discusses Martin Mariettas earnings press releases, as well as financial information and earnings guidance provided to analysts 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; and
prepares the annual Audit Committee Report to be included in the proxy statement.
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Other Governance Matters: All members satisfy the audit committee experience and independence standards required by NYSE, and have been determined to be financially literate.
Each member of the Audit Committee has been determined to be an audit committee financial expert under applicable SEC regulations. |
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2017 PROXY STATEMENT
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Board Committees ◆ Corporate Governance Matters
Current Members: Laree E. Perez (Chair) David G. Maffucci Donald W. Slager Stephen P. Zelnak, Jr. |
Meetings in 2016: 2 |
Average Attendance in 2016: 100% | ||
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 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; and
reviews annually the adequacy of the committee charter and recommends proposed changes to the Board.
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Current Members: Stephen P. Zelnak, Jr. (Chair) Dennis L. Rediker Donald W. Slager |
Meetings in 2016: 5 |
Average Attendance in 2016: 100% | ||
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 contributions budget; and
reviews annually the adequacy of the committee charter and recommends proposed changes to the Board.
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2017 PROXY STATEMENT
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21
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Corporate Governance Matters ◆ Board Committees
Current Members: Michael J. Quillen (Chair) Sue Cole John J. Koraleski William E. McDonald |
Meetings in 2016: 5 |
Average Attendance in 2016: 100% | ||
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 managements assessment of the performance of executive officers, and reviews and approves the salary, bonus, and other compensation of such officers;
approves and administers our equity and other plans relating to compensation of Martin Mariettas directors and elected 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 Mariettas defined benefit and contribution plans;
reviews and approves the goals and objectives for the CEOs compensation, evaluates the CEOs performance in light of those goals and objectives, and determines and approves the CEOs 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; and
has the authority, in its sole discretion, to retain, pay, and terminate any consulting firm, if any, used to assist in evaluating director, chief executive officer, or senior executive compensation.
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Current Members: Sue W. Cole (Chair) William E. McDonald Michael J. Quillen |
Meetings in 2016: 2 |
Average Attendance in 2016: 100% | ||
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; and
oversees the development and implementation of a set of corporate governance principles applicable to Martin Marietta.
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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 www.martinmarietta.com. A copy may also be obtained upon request from Martin Mariettas Corporate Secretary. |
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2017 PROXY STATEMENT
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Board Committees ◆ Corporate Governance Matters
2017 PROXY STATEMENT
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Independent Auditors
(Item 2 on Proxy Card)
The Board of Directors recommends that the shareholders ratify the appointment of PricewaterhouseCoopers LLP (PwC), an independent registered public accounting firm, to audit the consolidated financial statements of Martin Marietta and the effectiveness of Martin Mariettas internal control over financial reporting for the 2017 fiscal year. The ratification of the appointment of PricewaterhouseCoopers LLP is being submitted to the shareholders because management 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 Mariettas independent auditors for 2016 and audited the consolidated financial statements of Martin Marietta for the year ended December 31, 2016 and the effectiveness of Martin Mariettas internal control over financial reporting as of December 31, 2016. In connection with the audit of Martin Mariettas 2016 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 in 2016.
The Audit Committee conducted a competitive process with multiple firms to determine the Companys independent registered public accounting firm for the fiscal year ending December 31, 2016. The Audit Committee invited several firms to participate in this process, including its then-incumbent independent auditor, Ernst & Young LLP (EY). As a result of this process, on March 14, 2016, the Audit Committee dismissed EY as its independent registered public accounting firm for the fiscal year ending December 31, 2016. During the fiscal years ended December 31, 2015 and 2014 and in the subsequent interim period through March 14, 2016, there were no disagreements (as that term is described in Item 304(a)(1)(iv) of Regulation S-K of the rules and regulations of the SEC and the related instructions) with EY on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of such disagreements in their reports on the consolidated financial statements.
The audit reports of EY on the Companys consolidated financial statements as of and for the fiscal years ended December 31, 2015 and 2014 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2015 and 2014 and in the subsequent interim period through March 14, 2016 there were no reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the SEC.
On March 14, 2016, the Audit Committee approved the appointment of PwC as the Companys new independent registered public accounting firm for the year ending December 31, 2016. During the fiscal years ended December 31, 2015 and 2014 and in the subsequent interim period through March 14, 2016, neither the Company nor anyone acting on its behalf consulted with PwC regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Companys consolidated financial statements, and neither a written report nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event as defined in Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the SEC.
The Audit Committee is solely responsible for retaining or terminating Martin Mariettas 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 |
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2017 PROXY STATEMENT
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Summary of Fees ◆ Proposal 2: Independent Auditors
The following table summarizes the aggregate fees billed for professional services rendered to Martin Marietta by PwC in 2016 and EY in 2015. A description of these various fees and services follows the table.
2016 | 2015 | |||
Audit Fees |
$2,473,000 | $2,825,000 | ||
Audit-Related Fees |
103,000 | 90,000 | ||
Tax Fees |
40,000 | 853,000 | ||
All Other Fees |
0 | 0 | ||
TOTAL |
$2,616,000 | $3,768,000 | ||
Percentage of Audit & Audit-Related Fees to Total Fees |
98.5% | 77.4% |
2017 PROXY STATEMENT
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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 Securities and Exchange Commissions regulations, the New York Stock Exchange listing standards, and the Guidelines for Directors 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 Directors independence from Martin Marietta and its management. Copies of the Audit Committees charter and Martin Mariettas Guidelines for Directors Independence can be viewed on Martin Mariettas website at www.martinmarietta.com.
The Board of Directors has charged the Audit Committee with a number of responsibilities, including review of the adequacy of Martin Mariettas financial reporting, accounting systems, and internal controls. Martin Mariettas 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 Mariettas audited consolidated financial statements for fiscal year 2016. 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 Mariettas financial reporting, as required by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.
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 Public Company Accounting Oversight Board 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 Mariettas 2016 Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
February 22, 2017
AUDIT COMMITTEE
David G. Maffucci, Chair
John J. Koraleski
Laree E. Perez
Dennis L. Rediker
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2017 PROXY STATEMENT
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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 28 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 Mariettas Annual Report on Form 10-K and this Proxy Statement.
February 23, 2017
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
Michael J. Quillen, Chair
Sue W. Cole
John J. Koraleski
William E. McDonald
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
The members of Martin Mariettas Management Development and Compensation Committee are Directors Cole, Koraleski, McDonald 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. 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 Mariettas Board of Directors.
2017 PROXY STATEMENT
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Compensation Discussion and Analysis
For 2016, our named executive officers (NEOs) were:
NEO |
Title | |
C. Howard Nye |
Chairman of the Board, President and Chief Executive Officer | |
Anne H. Lloyd |
Executive Vice President and Chief Financial Officer | |
Roselyn R. Bar |
Executive Vice President, General Counsel and Corporate Secretary | |
Donald A. McCunniff |
Senior Vice President Human Resources | |
Daniel L. Grant |
Senior Vice President Strategy & Development |
Another Record Year: Performance Through Transformation
◆ | Record net sales of $3.6 billion |
◆ | Record gross profit of $908.9 million |
◆ | Record net sales and gross margin with 80% of peak shipment volumes |
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2017 PROXY STATEMENT
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Executive Summary ◆ Compensation Discussion and Analysis
In 2016, we continued to execute on our strategic plan, following the $2.8 billion acquisition of Texas Industries, Inc. in 2014, and focused on strategically positioning ourselves in high-growth areas.
Despite significant precipitation in many of our key markets and modest shipment volume increases, we achieved record growth in 2016 that led to increased profits versus the prior year. Effective management provided us the ability to prudently reinvest in our business, pursue strategic opportunities, and return cash to our shareholders. Based on our strategy, we have achieved the number 1 or 2 position in 85% of the regions in which we operate, giving us a foundation for durable growth.
In summary, Martin Marietta continued to execute its strategic plan while delivering strong performance in 2016:
2017 PROXY STATEMENT
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Compensation Discussion and Analysis ◆ 2016 Say-On-Pay Vote and Shareholder Outreach
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2017 PROXY STATEMENT
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Pay Decisions in 2016 Made in Light of Performance ◆ Compensation Discussion and Analysis
Pay Decisions in 2016 Made in Light of Performance
WHAT WE DO |
WHAT WE DONT DO |
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Pay for performance. Tie pay to performance by ensuring that a significant portion of NEO compensation is performance-based and at-risk. |
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No employment contracts. None of our NEOs or other executive officers have employment contracts that guarantee continued employment. |
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Median compensation targets. All compensation elements of our executives are generally targeted at the median of our peer group companies. |
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No dividends on unvested awards. Our 2016 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. |
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PSUs are a substantial portion of LTI. PSU grants, tied to our achievement of specified performance measures, comprised approximately 67% of the total value of annual long-term incentive grants made to our NEOs in 2016. RSUs comprised the remaining 33%. | |||||||||
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Independent compensation consultant. The Compensation Committee uses an independent compensation consultant. | |||||||||
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Minimal executive perquisites. |
A number of key 2016 compensation-related decisions resulted from these significant events and accomplishments, which are discussed more fully below. 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
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 Companys 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. |
| Provide reward systems that are measurable and easily understood by our managers and shareholders. |
| Reinforce the succession planning process undertaken on a company-wide basis by building bench strength and by identifying and retaining senior leadership, both capable of achieving the Companys growth, profitability and other objectives. |
In 2016, our executive compensation structure consisted of three primary components: base salary, annual incentives, and long-term incentives. Within the long-term incentive component, we changed our program in 2016 to eliminate options and utilized a balanced portfolio of performance-based share units (PSUs) and restricted stock units (RSUs).
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Compensation Discussion and Analysis ◆ Our Compensation Strategy
The following table summarizes the key elements of our 2016 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 strategic, financial 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 bonus into Martin Marietta stock units. | Executives may invest up to 50% of their annual bonus into stock units, with a mandatory minimum of 35% for our CEO and 20% for other NEOs to be invested in 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 opportunity. | Variable compensation component. Reviewed and granted annually. New program in 2016 splits long-term incentives for NEOs at 67% PSUs and 33% RSUs. | ||
Performance Share Units (PSU) |
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 Return on Sales (ROS), EBITDA and TSR performance relative to peers. | ||
Restricted Stock Units (RSUs) |
To motivate the appropriate behaviors delivering superior long-term total shareholder return. Also promotes a base-level of executive retention. | Stock price growth. | ||
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 executives employment is terminated following a change-in-control. | ||
Severance Protection |
To bridge future employment if terminated other than for cause. | Fixed compensation component; only paid in the event the executives employment is terminated other than for cause. |
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2017 PROXY STATEMENT
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Performance-Related Compensation ◆ Compensation Discussion and Analysis
Performance-Related Compensation
A substantial portion of our CEOs and executive officers compensation is at risk and will vary depending upon our performance. Most of the opportunities to achieve long-term equity incentives granted to our CEO and other executive officers in 2016 were performance-related consisting of PSUs that comprised 67% of the long-term equity awards.
Approximately 67% of our CEOs total pay opportunity at target levels is performance-based at risk compensation.
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Compensation Discussion and Analysis ◆ Compensation Decision Process
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2017 PROXY STATEMENT
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Compensation Decision Process ◆ Compensation Discussion and Analysis
The following companies comprised our Compensation Peer Group for 2016 base salary, bonus, and long-term incentive pay decisions:
Albermarle Corporation |
Granite Construction Inc. |
Owens Corning |
Vulcan Materials Company | |||
Armstrong World Industries |
Louisiana-Pacific Corporation |
Peabody Energy Corp. |
W. R. Grace & Co. | |||
Compass Minerals International |
Masco Corporation |
USG Corp. |
Westlake Chemical Corporation | |||
CONSOL Energy, Inc. |
Nucor Corporation |
The Valspar Corporation |
Weyerhaeuser Company | |||
FMC Corporation |
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Compensation Discussion and Analysis ◆ Considerations Regarding 2016 Compensation
Considerations Regarding 2016 Compensation
The following chart summarizes the target compensation in our 2016 executive compensation program:
Pay Component |
Summary | |
Base Salary |
At the February 2016 meeting, the Committee reviewed competitive market data and individual performance evaluations. The Committee approved base salary increases as follows: Mr. Nye: 3.1% increase, based on his excellent achievements as CEO since 2010 in an economic environment that resulted in muted shipment volume recovery, and specifically his performance in 2016. Other NEOs: approximately 3.0% increases, based on a review of competitive market data and individual performance evaluations. | |
Target Annual Cash Incentives |
Mr. Nyes target bonus was increased in 2016 to 110% of his base earnings. Other NEO target bonuses (as a % of base earnings) did not change in 2016. Our 2016 Executive Incentive Plan design did not change. Our CEO is required to invest a minimum of 35% of his annual cash bonus into stock units, which are 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 structure changed in 2016 to include PSUs and RSUs, and eliminate stock options. The LTI awards for NEOs in 2016 were weighted 2/3 PSUs and 1/3 RSUs. The LTI grant size is based on competitive market data. PSU awards in 2016 are earned based on achievement of performance levels, with 75% based on three-year return on sales and cumulative EBITDA performance, and 25% based on TSR ranking compared to major U.S. companies in similar industries. | |
Total Compensation |
Targeted total compensation opportunity is the size-adjusted 50th percentile of our Compensation Peer Group. 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 2016.
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 Companys performance, and management recommendations (except for the CEO). At the February 2016 meeting, based on a review of competitive market data and managements recommendations based on individual performance (except for the CEO), and the Committees assessment of Mr. Nyes performance, the Committee approved the following increases.
NEO |
2015 Base Salary |
Percentage Increase* |
Reason | Effective Date |
2016 Base Salary | |||||
C. Howard Nye |
$980,000 | 3.1% | Merit Increase | 3/1/16 | $1,010,000 | |||||
Anne H. Lloyd |
$526,600 | 3.0% | Merit Increase | 3/1/16 | $ 543,700 | |||||
Roselyn R. Bar |
$493,000 | 3.0% | Merit Increase | 3/1/16 | $ 497,300 | |||||
Donald A. McCunniff |
$360,300 | 3.0% | Merit Increase | 3/1/16 | $ 372,000 | |||||
Daniel L. Grant |
$340,000 | 3.3% | Merit Increase | 3/1/16 | $ 351,100 |
* | NEO base salaries were increased on March 1, 2016. The percentage increase reflects the annualized amount; actual increases were pro-rated from the last increase date. |
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2017 PROXY STATEMENT
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Considerations Regarding 2016 Compensation ◆ Compensation Discussion and Analysis
1 | Total Incident Injury Rate per 200,000 man hours worked. |
2 | Reported as of 12.31.14 by Bureau of Labor Statistics. Latest available data. |
3 | Reported by Mine Safety and Health Administration for 2010 2015 and by National Stone, Sand and Gravel Association for year to date as of 06.30.16 (latest data available) for the Aggregates Industry. |
The Committee also considered our efforts to tell our sustainability story, which is part of our core strategy. We completed and issued the Companys second annual sustainability report. Building Solid Foundations Partnering for Stronger Communities represents our latest publication sharing Martin Mariettas sustainability story in 2016 from the perspective of our employees. From our world-class safety programs and performance, to our targeted and intentional support of housing, hunger reduction and healthcare, to environmental programs that ensure operational excellence, we have a solid foundation and an exciting opportunity to build upon.
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Compensation Discussion and Analysis ◆ Considerations Regarding 2016 Compensation
2016 Actual Incentive Cash Earned
The table below summarizes the targets for 2016 and annual incentive award earned by each NEO:
NEO |
Target Annual Incentive Bonus |
2016 Target Annual Incentive** |
2016 Actual Annual Incentive |
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C. Howard Nye* |
110 | %* | $ | 1,105,500 | $ | 2,000,000 | ||||||
Anne H. Lloyd |
80 | % | $ | 432,680 | $ | 657,674 | ||||||
Roselyn R. Bar |
80 | % | $ | 397,267 | $ | 623,709 | ||||||
Donald A. McCunniff |
70 | % | $ | 259,035 | $ | 404,095 | ||||||
Daniel L. Grant |
70 | % | $ | 244,475 | $ | 378,936 |
* | Mr. Nye has no target bonus under the Executive Incentive Plan, but the Committee in 2016 generally considered an appropriate target for Mr. Nye to be 110% of base salary earnings in evaluating his bonus level. |
** | Based on actual base earnings in 2016. |
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2017 PROXY STATEMENT
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Considerations Regarding 2016 Compensation ◆ Compensation Discussion and Analysis
2017 PROXY STATEMENT
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Compensation Discussion and Analysis ◆ Considerations Regarding 2016 Compensation
AECOM Technology |
Eagle Materials |
KBR Inc. |
Steel Dynamics | |||
Alcoa |
Emcor Group |
Louisiana Pacific |
Stillwater Mining | |||
Allegheny Technologies |
Fluor Corporation |
Newmont Mining |
TimkenSteel Corporation | |||
Carpenter Technology |
Freeport-McMoran |
Nucor Corporation |
U.S. Steel | |||
Century Aluminum |
Granite Construction |
Quanta Services |
Vulcan Materials | |||
Commercial Metals |
Jacobs Engineering |
Reliance Steel & Aluminum |
Worthington Industries | |||
Compass Minerals International |
The actual financial performance targets and achievement against those targets will be disclosed at the end of the three-year performance period.
The following table provides a summary of the long-term incentives that each of the NEOs received in 2016.
NEO |
RSUs (1-year pro rata vesting) (# of shares) |
PSUs Target (# of shares) |
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C. Howard Nye |
10,670 | 21,339 | ||||||
Anne H. Lloyd |
2,509 | 5,017 | ||||||
Roselyn R. Bar |
2,349 | 4,697 | ||||||
Donald A. McCunniff |
1,471 | 2,942 | ||||||
Daniel L. Grant |
1,204 | 2,407 |
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2017 PROXY STATEMENT
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Considerations Regarding 2016 Compensation ◆ Compensation Discussion and Analysis
2016 Long-Term Incentive Vesting of Prior Grants
PSUs that were granted in 2014 vested on December 31, 2016, because the applicable performance criteria were satisfied. These PSUs were certified and paid out in February 2017 at 107.91% of the amount of the original grant made in 2014. The PSU payment percentage of 107.91% was based on: (1) 3-year average ROS of 17.3% as against a target of 19.5%; (2) 3-year cumulative EBITDA of $2.34 billion as against a target of $2.64 billion, and (3) TSR performance of our common stock relative to the TSR Peer Group of 96th percentile as against a target of the 50th percentile.
Payment Calculation for PSUs Granted in 2014 Certified on February 23, 2017 |
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NEO |
Target Units Granted in 2014 |
Percentage Payable |
Units Payable |
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C. Howard Nye |
2,799 | 107.91 | % | 3,021 | ||||||||
Anne H. Lloyd |
1,584 | 107.91 | % | 1,710 | ||||||||
Roselyn R. Bar |
1,322 | 107.91 | % | 1,427 | ||||||||
Donald A. McCunniff |
1,084 | 107.91 | % | 1,170 | ||||||||
Daniel L. Grant |
1,029 | 107.91 | % | 1,111 |
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41
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Compensation Discussion and Analysis ◆ Potential Payments upon Termination or Change of Control
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2017 PROXY STATEMENT
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Executive Officer Compensation
The following tables show annual and long-term compensation, for services in all capacities to Martin Marietta, earned by the Chief Executive Officer, the Chief Financial Officer, and three other executive officers serving as such on December 31, 2016, which we refer to collectively as the named executive officers or NEOs. These tables and the accompanying narratives should be read in conjunction with the Compensation Discussion and Analysis section of this proxy statement, which provides a detailed overview of the methods used by Martin Marietta to compensate its officers, including the named executive officers.
The table below summarizes the total compensation paid to or earned by each of the named executive officers for the fiscal years set forth below. Martin Marietta has not entered into any employment agreements with any of the named executive officers.
SUMMARY COMPENSATION TABLE
Name and Principal Position (a) |
Year (b) |
Salary ($) (c) |
Bonus ($)1 (d) |
Stock Awards ($)2 (e) |
Option Awards ($)3 (f) |
Non-Equity Incentive Plan Compensation ($) (g) |
Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)4 (h) |
All Other Compensation ($)5 (i) |
Total ($) (j) |
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C. Howard Nye Chairman, President and CEO |
2016 | 1,005,000 | 1,300,000 | 4,682,240 | 687,864 | 364,227 | 8,039,331 | |||||||||||||||||||||||||||||
2015 | 977,500 | 603,606 | 1,697,067 | 731,763 | 496,430 | 241,027 | 4,747,393 | |||||||||||||||||||||||||||||
2014 | 928,755 | 715,000 | 4,418,415 | 589,817 | 710,125 | 241,092 | 7,603,204 | |||||||||||||||||||||||||||||
Anne H. Lloyd Executive Vice President and CFO |
2016 | 540,850 | 526,139 | 1,067,845 | 490,109 | 91,421 | 2,716,364 | |||||||||||||||||||||||||||||
2015 | 525,325 | 319,398 | 603,530 | 233,668 | 253,253 | 88,118 | 2,023,292 | |||||||||||||||||||||||||||||
2014 | 510,775 | 407,280 | 2,093,845 | 199,906 | 604,298 | 79,879 | 3,895,983 | |||||||||||||||||||||||||||||
Roselyn R. Bar Executive Vice President, General Counsel and Corporate Secretary |
2016 | 496,583 | 498,967 | 1,001,335 | 528,522 | 100,915 | 2,626,322 | |||||||||||||||||||||||||||||
2015 | 445,121 | 241,033 | 491,597 | 190,732 | 276,972 | 76,735 | 1,722,190 | |||||||||||||||||||||||||||||
2014 | 425,496 | 346,400 | 1,734,847 | 163,129 | 591,148 | 69,356 | 3,330,376 | |||||||||||||||||||||||||||||
Donald A. McCunniff Senior Vice President, Human Resources |
2016 | 370,050 | 323,276 | 629,840 | 160,803 | 71,038 | 1,555,007 | |||||||||||||||||||||||||||||
2015 | 359,425 | 191,214 | 397,832 | 153,682 | 116,533 | 64,564 | 1,283,250 | |||||||||||||||||||||||||||||
2014 | 349,442 | 282,000 | 1,418,203 | 131,432 | 141,894 | 54,572 | 2,377,543 | |||||||||||||||||||||||||||||
Daniel L. Grant Senior Vice President Strategy & Development |
2016 | 349,250 | 303,149 | 525,032 | 98,052 | 63,434 | 1,338,917 | |||||||||||||||||||||||||||||
2015 | 339,083 | 180,392 | 292,075 | 83,853 | 130,575 | 56,853 | 1,082,831 | |||||||||||||||||||||||||||||
2014 | 328,667 | 234,360 | 1,260,978 | 70,861 | 107,937 | 42,373 | 2,045,176 |
1 | The amounts in column (d) for 2016 reflect the cash bonuses to the named individuals earned in 2016 and paid in 2017 under annual incentive arrangements discussed in further detail on pages 36 to 38 under the headings Annual Cash Incentive: Executive Incentive Plan and 2016 CEO Annual Incentive Award Earned. The amounts in this column include the amounts of bonus irrevocably deferred in common stock units at the election of each named executive officer pursuant to Martin Mariettas Incentive Stock Plan, which is discussed in further detail on page 39 under the heading Annual Incentive Feature: Performance-Based Stock Purchase Plan. The amounts deferred in 2016 for each of the named executive officers at his or her election are as follows: Mr. Nye, $300,000; Ms. Lloyd, $0; Ms. Bar, $62,371; Mr. McCunniff, $0; and Mr. Grant, $18,947. The number of stock units and the related grant date fair value attributable to the amounts of bonus so deferred by the named executive officers appear in columns (i) and (l), respectively, of the Grants of Plan-Based Awards Table on page 45. Column (e) includes the amounts mandatorily deferred in 2016 under the Incentive Stock Plan. |
2 | 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; awards related to the amount of cash bonus irrevocably and mandatorily deferred in common stock units by each named executive officer pursuant to Martin Mariettas Incentive Stock Plan, which is discussed in further detail on page 39 under the heading Annual Incentive Feature: Performance-Based Stock Purchase Plan; and awards of PSUs, which are described in more |
2017 PROXY STATEMENT
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43
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Executive Compensation ◆ Summary Compensation Table
detail on pages 39 to 40 under the heading Long-Term Incentive Compensation. The amounts included in the table reflects the value of the units granted, which is subject to forfeiture if the executive does not remain in the employment of Martin Marietta for the requisite time period (generally three or four years) and, in the case of the PSUs, if Martin Marietta does not achieve the applicable performance criteria. The amounts in column (e) do not include the 20% discount on the Incentive Stock Plan units, which is reported in column (i). The amount in column (e) also includes PSUs, which were first awarded in 2014, and assumes the number of shares based on the target level of performance. Assuming the maximum payout under the PSUs granted in 2015, which will be determined in January 2018 based on the Companys performance in 2015-2017 for awards granted in 2015, the amounts reported above for 2015 would be as follows: Mr. Nye, $784,021; Ms. Lloyd, $421,313; Ms. Bar, $351,637; Mr. McCunniff, $288,256; and Mr. Grant, $271,976. Assuming the maximum payout under the PSUs granted in 2016, which will be determined in January 2019 based on the Companys performance in 2016-2018 for awards granted in 2016, the amounts reported above for 2016 would be as follows: Mr. Nye, $5,309,570; Ms. Lloyd, $1,248,330; Ms. Bar, $1,168,708; Mr. McCunniff, $732,028; and Mr. Grant, $598,910. Assumptions used in the calculation of these amounts are included in Note A to Martin Mariettas audited financial statements for the fiscal year ended December 31, 2016, included in Martin Mariettas Annual Report on Form 10-K filed with the SEC on February 24, 2017. The amounts of cash bonus deferred in 2016 at the election of each named executive officer are included in column (d). The amounts of cash bonus mandatorily deferred in 2016 for each of the named executive officers are as follows: Mr. Nye, $700,000; Ms. Lloyd, $131,535; Ms. Bar, $124,742; Mr. McCunniff, $80,819; and Mr. Grant, $75,787. |
3 | The amounts in column (f) reflect the grant date fair value, determined in accordance with FASB ASC Topic 718 (without any assumption for early forfeiture), of option awards made in the year reported. |
4 | The amounts in column (h) reflect the aggregate increase in the actuarial present value of the named executive officers accumulated benefits during 2016, 2015 and 2014, 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 Mariettas financial statements and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested. |
5 | The amount shown in column (i) for 2016 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 page 49 under the heading Retirement and Other Benefits, the value attributable to life insurance benefits provided to the named executive officers, which is more fully described on page 49 under the heading Retirement and Other Benefits; the value attributable to personal use of leased automobiles provided by Martin Marietta; and personal use of the corporate plane in 2016. 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. None of the elements that are perquisites or personal benefits exceed the greater of $25,000 or 10% of the total perquisites for each named executive officer. The amounts in column (i) also reflect the 20% discount from the market price of Martin Mariettas common stock pursuant to the elective deferrals under the Incentive Stock Plan in each of 2016, 2015 and 2014, and the dollar value of dividend equivalents on units credited under the equity awards as computed for financial statement reporting purposes for each fiscal year ended December 31, 2016, 2015 and 2014 in accordance with FASB ASC Topic 718. |
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2017 PROXY STATEMENT
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Grants of Plan-Based Awards ◆ Executive Compensation
The table below shows each grant of an award made to a named executive officer in the fiscal year ended December 31, 2016. This includes equity awards made to the named executive officers under the Stock Plan and the Incentive Stock Plan.
GRANTS OF PLAN-BASED AWARDS TABLE
Estimated Future Payouts |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other of Stock |
All Other Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards6 |
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Name |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
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(a) |
(b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j)5 | (k) | (l) | |||||||||||||||||||||||||||||||||
C. Howard Nye |
2/23/17 | 2 | 5,991 | 1,250,202 | ||||||||||||||||||||||||||||||||||||||||
2/4/16 | 10,670 | 21,339 | 42,678 | 2,654,785 | ||||||||||||||||||||||||||||||||||||||||
2/4/16 | 3 | 10,670 | 1,327,455 | |||||||||||||||||||||||||||||||||||||||||
Anne H. Lloyd |
2/23/17 | 2 | 432,680 | |||||||||||||||||||||||||||||||||||||||||
2/23/17 | 2 | 788 | 164,440 | |||||||||||||||||||||||||||||||||||||||||
2/4/16 | 4 | 2,509 | 5,017 | 10,034 | 624,165 | |||||||||||||||||||||||||||||||||||||||
2/4/16 | 3 | 2,509 | 312,145 | |||||||||||||||||||||||||||||||||||||||||
Roselyn R. Bar |
2/23/17 | 2 | 397,267 | |||||||||||||||||||||||||||||||||||||||||
2/23/17 | 2 | 1,121 | 233,930 | |||||||||||||||||||||||||||||||||||||||||
2/4/16 | 4 | 2,349 | 4,697 | 9,394 | 584,354 | |||||||||||||||||||||||||||||||||||||||
2/4/16 | 3 | 2,349 | 292,240 | |||||||||||||||||||||||||||||||||||||||||
Donald A. McCunniff |
2/23/17 | 2 | 259,035 | |||||||||||||||||||||||||||||||||||||||||
2/23/17 | 2 | 485 | 101,210 | |||||||||||||||||||||||||||||||||||||||||
2/4/16 | 4 | 1,471 | 2,942 | 5,884 | 366,014 | |||||||||||||||||||||||||||||||||||||||
2/4/16 | 3 | 1,471 | 183,007 | |||||||||||||||||||||||||||||||||||||||||
Daniel L. Grant |
2/23/17 | 2 | 244,475 | |||||||||||||||||||||||||||||||||||||||||
2/23/17 | 2 | 568 | 118,530 | |||||||||||||||||||||||||||||||||||||||||
2/4/16 | 4 | 1,204 | 2,407 | 4,814 | 299,455 | |||||||||||||||||||||||||||||||||||||||
2/4/16 | 3 | 1,204 | 149,790 |
1 | The amounts shown in column (d) reflect the target level of annual bonus that could have been earned in 2016, payable in 2017 pursuant to the Executive Incentive Plan. There is no threshold amount since the program does not provide for an amount to be paid if performance falls below the performance goals and in 2016 there was no maximum level of annual bonus that could have been earned. These amounts shown in column (d) have not been reduced by the amounts that were mandatorily and voluntarily invested pursuant to the Incentive Stock Plan, which are also reported in column (i) of this table corresponding to footnote 2. The amount earned in cash and voluntarily deferred is also included in column (d) of the Summary Compensation Table. Mandatory deferrals of payments under the Incentive Stock Plan into common stock units are included in column (e) of the Summary Compensation Table on page 43. Mr. Nye does not participate in the Executive Incentive Plan. |
2 | The amounts shown in column (i) include the amount of cash bonus earned in 2016 but paid in 2017 that was deferred in units of common stock under the Incentive Stock Plan. Participants in this program for 2016 were approved on May 19, 2016. These awards are discussed under the heading Annual Incentive Feature: Performance-Based Stock Purchase Plan on page 39. These awards are also included in part, for NEOs other than Mr. Nye, in column (d) of this table and in full, for all NEOs, in columns (d), (e) and (i) of the Summary Compensation Table on page 43. |
3 | The amounts shown in column (i) reflect the number of RSUs granted in 2016 to each of the named executive officers pursuant to the Stock-Based Award Plan. These awards are discussed under the heading Long-Term Incentive Compensation on pages 39 to 40. These awards are also included in column (e) of the Summary Compensation Table on page 43. |
4 | The amounts shown in columns (f), (g) and (h) reflect the threshold, target and maximum, respectively, levels of PSUs payable if the performance measurements are satisfied in the period 2016-2018. These awards are discussed under the heading Long-Term Incentive Compensation on pages 39 to 40. |
5 | No options to purchase shares of Martin Mariettas common stock were granted in 2016. |
6 | The amounts shown in column (l) reflect the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718. The components of these amounts are included in columns (d), (e) and (i) of the Summary Compensation Table on page 43. |
2017 PROXY STATEMENT
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45
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Executive Compensation ◆ Grants of Plan-Based Awards
46
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2017 PROXY STATEMENT
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Outstanding Equity Awards at Fiscal Year-End ◆ Executive Compensation
Outstanding Equity Awards at Fiscal Year-End
The table below shows for each of the named executive officers information with respect to the unexercised stock options (columns (b), (c), (e), and (f)), stock unit awards (columns (g) and (h)) that have not vested, and equity incentive plan awards (columns (d), (i), and (j)) outstanding on December 31, 2016.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||
Name |
Number of (#) |
Number of (#) |
Equity (#) |
Option ($) |
Option Expiration Date |
Number (#) |
Market Value of Shares or Units of Stock That Have Not Vested1 ($) |
Equity Not Vested |
Equity Other ($) |
|||||||||||||||||||||||||||
(a) |
(b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
C. Howard Nye |
|
15,039 11,196 12,609 16,317 10,857 0 0 |
|
|
0 0 0 0 3,618 6,792 9,510 |
2 3 4 |
|
79.79 95.27 86.90 69.12 108.24 121.00 154.58 |
|
|
5/27/2017 5/27/2018 5/12/2019 5/24/2020 5/23/2023 5/22/2024 5/21/2025 |
|
|
6,792 22,070 6,340 10,670 6,335 4,666 |
5 6 7 8 9 10 |
|
1,504,632 4,889,167 1,404,500 2,363,725 1,403,393 1,033,659 |
|
|
5598 7224 42,678 |
11 12 13 |
|
1,240,125 1,600,333 9,454,457 |
| ||||||||||||
Anne H. Lloyd |
|
9,060 3,794 4,274 5,530 3,681 0 0 |
|
|
0 0 0 0 1,224 2,302 3,036 |
2 3 4 |
|
79.79 95.27 86.90 69.12 108.24 121.00 154.58 |
|
|
5/27/2017 5/27/2018 5/12/2019 5/24/2020 5/23/2023 5/22/2024 5/21/2025 |
|
|
2,302 11,878 2,025 2,509 1,328 1,003 |
5 6 7 8 9 10 |
|
509,962 2,631,333 448,598 555,819 294,192 222,195 |
|
|
3168 3882 10,034 |
11 12 13 |
|
701,807 859,979 2,222,832 |
| ||||||||||||
Roselyn R. Bar |
|
3,096 3,485 4,513 3,003 0 0 |
|
|
0 0 0 1,001 1,877 2,478 |
2 3 4 |
|
95.27 86.90 69.12 108.24 121.00 154.58 |
|
|
5/27/2018 5/12/2019 5/24/2020 5/23/2023 5/22/2024 5/21/2025 |
|
|
1,879 9,913 1,653 2,349 978 757 |
5 6 7 8 9 10 |
|
416,255 2,196,027 366,189 520,374 216,656 167,698 |
|
|
2644 3240 9394 |
11 12 13 |
|
585,725 717,757 2,081,053 |
| ||||||||||||
Donald A. McCunniff |
|
3,637 2,421 1,514 666 |
|
|
0 805 1,513 1,997 |
2 3 4 |
|
69.12 108.24 121.00 154.58 |
|
|
5/24/2020 5/23/2023 5/22/2024 5/21/2025 |
|
|
1,514 8,127 1,332 1,471 525 481 |
5 6 7 8 9 10 |
|
335,396 1,800,374 295,078 325,871 116,303 106,556 |
|
|
2168 2656 5884 |
11 12 13 |
|
480,277 588,384 1,303,483 |
| ||||||||||||
Daniel L. Grant |
|
0 0 |
|
|
816 1,076 |
3 4 |
|
121.00 154.58 |
|
|
5/22/2024 5/21/2025 |
|
|
816 7,643 718 1,163 732 680 |
5 6 7 8 9 10 |
|
180,768 1,693,154 159,059 257,639 162,160 150,640 |
|
|
2058 2506 4814 |
11 12 13 |
|
455,909 555,154 1,066,445 |
|
1 | Based on the closing price of our common stock as of December 30, 2016 ($221.53). |
2 | Options exercisable on May 23, 2017. |
3 | Options exercisable ratably in installments on May 24, 2017 and 2018. |
4 | Options exercisable ratably in installments on May 21, 2017, 2018 and 2019. |
5 | RSU restrictions lapse on May 22, 2017. |
6 | RSU restrictions lapse August 21, 2019. |
2017 PROXY STATEMENT
|
47
|
Executive Compensation ◆ Option Exercises and Stock Vested
7 | RSU restrictions lapse on May 21, 2018. |
8 | RSU restrictions lapse ratably in installments on February 4, 2017, February 4, 2018 and February 4, 2019. |
9 | Incentive Stock Plan units restrictions lapse on December 1, 2017. |
10 | Incentive Stock Plan units restrictions lapse on December 1, 2018. |
11 | The amount for these outstanding awards of PSUs are presented at the maximum performance levels. The awards generally vest at December 31, 2016. |
12 | The amount for these outstanding awards of PSUs are presented at the maximum performance levels. The awards generally vest at December 31, 2017. |
13 | The amount for these outstanding awards of PSUs are presented at the maximum performance levels. The awards generally vest at December 31, 2018. |
Option Exercises and Stock Vested
The table below shows on an aggregated basis for each of the named executive officers information on (1) the exercise of options for the purchase of Martin Mariettas common stock and (2) the vesting of stock, including RSUs and Incentive Stock Plan units, during the last completed fiscal year. There are no awards of stock appreciation rights for Martin Mariettas common stock or other similar instruments.
OPTION EXERCISES AND STOCK VESTED TABLE
OPTION AWARDS | STOCK AWARDS | |||||||||||||||
Name (a) |
Number (#) (b) |
Value Realized ($) (c) |
Number of (#) (d) |
Value Realized ($) (e) |
||||||||||||
C. Howard Nye |
25,669 | 1,783,571 | 11,246 | 1,901,829 | ||||||||||||
Anne H. Lloyd |
13,578 | 921,947 | 3,390 | 588,335 | ||||||||||||
Roselyn R. Bar |
18,478 | 1,755,893 | 2,817 | 486,892 | ||||||||||||
Donald A. McCunniff |
2,060 | 364,260 | ||||||||||||||
Daniel L. Grant |
1,175 | 83,132 | 41 | 9,057 |
1 | The amounts in column (e) include the value of RSUs at the time of vesting and the appreciation of both mandatory and voluntary contributions under the Incentive Stock Plan. |
48
|
2017 PROXY STATEMENT
|
Option Exercises and Stock Vested ◆ Executive Compensation
2017 PROXY STATEMENT
|
49
|
Executive Compensation ◆ Pension Benefits
The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under our Pension Plan and SERP, determined using interest rate and mortality rate assumptions consistent with those used in Martin Mariettas financial statements.
PENSION BENEFITS TABLE
Name (a) |
Plan Name (b) |
Numbers of Years Credited Service (#) (c) |
Present Value of ($)1 (d) |
Payments During Last Fiscal Year ($) (e) |
||||||||||
C. Howard Nye |
Pension Plan SERP |
|
10.417 10.417 |
|
|
372,213 2,792,924 |
|
|||||||
Anne H. Lloyd |
Pension Plan SERP |
|
18.583 18.583 |
|
|
746,658 2,127,637 |
|
|||||||
Roselyn R. Bar |
Pension Plan SERP |
|
22.500 22.500 |
|
|
1,035,383 2,094,440 |
|
|||||||
Donald A. McCunniff |
Pension Plan SERP |
|
5.417 5.417 |
|
|
247,210 340,753 |
|
|||||||
Daniel L. Grant |
Pension Plan SERP |
|
3.333 3.333 |
|
|
155,684 180,880 |
|
1 | Amounts in column (d) reflect the valuation method and use the assumptions that are included in Notes A and J to Martin Mariettas audited financial statements for the fiscal year ended December 31, 2016, included in Martin Mariettas Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2017. |
50
|
2017 PROXY STATEMENT
|
Potential Payments Upon Termination or Change of Control ◆ Executive Compensation
Potential Payments Upon Termination or Change of Control
2017 PROXY STATEMENT
|
51
|
Executive Compensation ◆ Potential Payments Upon Termination or Change of Control
52
|
2017 PROXY STATEMENT
|
Potential Payments Upon Termination or Change of Control ◆ Executive Compensation
Value of Payments Upon Termination. The following tables show the potential incremental value of payments to each of our named executive officers upon termination, including in the event of a Change of Control of Martin Marietta, assuming a December 31, 2016 termination date and, where applicable, using the NYSE closing price of our common stock of $221.53 on December 30, 2016 (the last trading day of 2016).
POTENTIAL INCREMENTAL VALUE OF PAYMENTS UPON TERMINATION
OR CHANGE OF CONTROL AT DECEMBER 31, 2016
Name |
Benefit or Payment1 | Retirement10 ($) |
Involuntary Not-for- Cause Termination ($) |
Disability ($) |
Death ($) |
Change- of- Control ($) |
||||||||||||||||
Cash Severance2 | 9,048,795 | |||||||||||||||||||||
Unvested Restricted Stock Units3 | 5,272,857 | 4,889,167 | 10,162,024 | 10,162,024 | 10,162,024 | |||||||||||||||||
Unexercisable Options4 | 341,048 | 341,048 | 341,048 | 341,048 | ||||||||||||||||||
Unvested Incentive Stock Plan Units5 | 1,422,740 | 744,750 | 1,422,740 | 1,422,740 | 1,422,740 | |||||||||||||||||
C. Howard Nye |
Performance Shares6 | 5,527,395 | 5,527,395 | 5,527,395 | 5,527,395 | |||||||||||||||||
Retirement Plans7 | 2,084,680 | 563,404 | 7,964,021 | |||||||||||||||||||
Health and Welfare Benefits8 | 80,196 | |||||||||||||||||||||
Retiree Medical Benefits9 | ||||||||||||||||||||||
Excise Tax & Gross-up | 12,912,210 | |||||||||||||||||||||
Cash Severance2 | 3,625,839 | |||||||||||||||||||||
Unvested Restricted Stock Units3 | 1,514,379 | 2,631,333 | 4,145,712 | 4,145,712 | 4,145,712 | |||||||||||||||||
Unexercisable Options4 | 115,447 | 115,447 | 115,447 | 115,447 | ||||||||||||||||||
Unvested Incentive Stock Plan Units5 | 301,344 | 157,057 | 301,344 | 301,344 | 301,344 | |||||||||||||||||
Anne H. Lloyd |
Performance Shares6 | 1,541,406 | 1,541,406 | 1,541,406 | 1,541,406 | |||||||||||||||||
Retirement Plans7 | 43,721 | 4,072,579 | ||||||||||||||||||||
Health and Welfare Benefits8 | 8,993 | |||||||||||||||||||||
Retiree Medical Benefits9 | ||||||||||||||||||||||
Excise Tax & Gross-up | 5,041,826 | |||||||||||||||||||||
Cash Severance2 | 3,392,745 | |||||||||||||||||||||
Unvested Restricted Stock Units3 | 1,302,818 | 2,196,027 | 3,498,845 | 3,498,845 | 3,498,845 | |||||||||||||||||
Unexercisable Options4 | 94,270 | 94,270 | 94,270 | 94,270 | ||||||||||||||||||
Unvested Incentive Stock Plan Units5 | 224,132 | 116,298 | 224,132 | 224,132 | 224,132 | |||||||||||||||||
Roselyn R. Bar |
Performance Shares6 | 1,399,405 | 1,399,405 | 1,399,405 | 1,399,405 | |||||||||||||||||
Retirement Plans7 | 3,124,077 | |||||||||||||||||||||
Health and Welfare Benefits8 | 57,841 | |||||||||||||||||||||
Retiree Medical Benefits9 | 48,243 | |||||||||||||||||||||
Excise Tax & Gross-up | 4,405,031 | |||||||||||||||||||||
Cash Severance2 | 2,357,589 | |||||||||||||||||||||
Unvested Restricted Stock Units3 | 956,345 | 1,800,374 | 2,756,719 | 2,756,719 | 2,756,719 | |||||||||||||||||
Unexercisable Options4 | 75,901 | 75,901 | 75,901 | 75,901 | ||||||||||||||||||
Unvested Incentive Stock Plan Units5 | 129,555 | 65,176 | 129,555 | 129,555 | 129,555 | |||||||||||||||||
Donald A. McCunniff |
Performance Shares6 | 945,933 | 945,933 | 945,933 | 945,933 | |||||||||||||||||
Retirement Plans7 | 183,345 | 4,790 | 1,010,569 | |||||||||||||||||||
Health and Welfare Benefits8 | 34,136 | |||||||||||||||||||||
Retiree Medical Benefits9 | ||||||||||||||||||||||
Excise Tax & Gross-up | 2,637,736 | |||||||||||||||||||||
Cash Severance2 | 2,204,137 | |||||||||||||||||||||
Unvested Restricted Stock Units3 | 597,466 | 1,693,154 | 2,290,620 | 2,290,620 | 2,290,620 | |||||||||||||||||
Unexercisable Options4 | 21,027 | 21,027 | 21,027 | 21,027 | ||||||||||||||||||
Unvested Incentive Stock Plan Units5 | 181,643 | 91,144 | 181,643 | 181,643 | 181,643 | |||||||||||||||||
Daniel L. Grant |
Performance Shares6 | 810,800 | 810,800 | 810,800 | 810,800 | |||||||||||||||||
Retirement Plans7 | 290,072 | 662,208 | ||||||||||||||||||||
Health and Welfare Benefits8 | 33,369 | |||||||||||||||||||||
Retiree Medical Benefits9 | ||||||||||||||||||||||
Excise Tax & Gross-up | 2,246,733 |
1 | The table does not include information with respect to plans or arrangements that are available generally to all salaried employees and that do not discriminate in favor of executive officers. The table reflects the incremental value over the amounts to which the named executive officer would have been entitled on a voluntary resignation on December 31, 2016. |
2 | Assumes all earned base salary has been paid. |
3 | Reflects the estimated lump-sum intrinsic value of all unvested RSUs. |
4 | Reflects the estimated lump-sum intrinsic value of unvested stock options. |
2017 PROXY STATEMENT
|
53
|
Executive Compensation ◆ Potential Payments Upon Termination or Change of Control
5 | Reflects the difference between the value of the unvested Incentive Stock Plan share units at year-end and the amount of cash invested by the executive officer in the share units. |
6 | Reflects the estimated lump-sum intrinsic value of all unvested PSUs. |
7 | The table does not include information related to the form and amount of payments or benefits that are not enhanced or accelerated in connection with any termination that would be provided by Martin Mariettas retirement plans, which is disclosed in the Pension Benefits Table and the accompanying narrative on page 50. Change of Control values include the incremental value of the benefit (including three times Martin Mariettas match to the defined contribution plan) payable upon a qualifying termination of employment following a Change of Control. |
8 | Reflects the estimated incremental lump-sum present value of all future premiums that would be paid on behalf of the named executive officer under Martin Mariettas health and welfare plans, including long-term disability and life insurance. |
9 | Reflects the estimated incremental value of the benefit to which the named executive officer would be entitled upon a qualifying termination of employment following a Change of Control. Assumes postretirement medical coverage begins after 3 years of active welfare coverage but no earlier than age 55. |
10 | Mr. Nye and Mr. Grant were not eligible to retire on December 31, 2016. Reflects the value as if Mr. Nye and Mr. Grant were retirement eligible. |
54
|
2017 PROXY STATEMENT
|
Advisory Vote on the Compensation of Our Named Executive Officers
(Item 3 on Proxy Card)
|
|
|
The Board Unanimously Recommends a Vote FOR This Proposal 3 |
2017 PROXY STATEMENT
|
55
|
Advisory Vote on Frequency of Executive Compensation Vote
(Item 4 on Proxy Card)
|
|
|
The Board Unanimously Recommends a Vote FOR Every 1 Year on This Proposal 4 |
56
|
2017 PROXY STATEMENT
|
Advisory Vote on Shareholder Proposal Requesting that the Board Amend the Bylaws to Provide for Proxy Access
(Item 5 on Proxy Card)
The shareholder identified below has submitted the following proposal to be voted upon at the Annual Meeting. In accordance with SEC rules, we are reprinting the proposal and supporting statements as they were submitted to us. Martin Marietta is not responsible for the contents thereof or any inaccuracies the proposal may contain.
2017 PROXY STATEMENT
|
57
|
Proposal 5: Advisory Vote on Shareholder Proposal ◆ Board of Directors Statement in Opposition to Proposal 5
58
|
2017 PROXY STATEMENT
|
Board of Directors Statement in Opposition to Proposal 5 ◆ Proposal 5: Advisory Vote on Shareholder Proposal
|
|
|
The Board Unanimously Recommends a Vote AGAINST This Proposal 5 |
2017 PROXY STATEMENT
|
59
|
Securities Authorized for Issuance
Under Equity Compensation Plans
The following table shows information as of December 31, 2016 regarding Martin Mariettas compensation plans that allow Martin Marietta to issue its equity securities. Martin Mariettas equity compensation plans consist of the Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors (the Directors Plan), the Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan (the Stock-Based Award Plan), under which the Martin Marietta Materials, Inc. Incentive Stock Plan (the Incentive Stock Plan) was adopted, the Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan (the Omnibus Securities Award Plan), and the Martin Marietta Materials, Inc. Shareholder Value Achievement Plan (the Achievement Plan). Martin Mariettas shareholders have approved all of these plans. Martin Marietta has not entered into any individual compensation arrangements that would allow it to issue its equity securities to employees or non-employees in exchange for goods or services.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category |
Number of securities options, warrants, (a) |
Weighted-average (b)3 |
Number of securities for future issuance reflected in column (c) |
|||||||||
Equity compensation plans approved by shareholders |
735,592 | 1 | $ | 106.03 | 911,345 | 4 | ||||||
Equity compensation plans not approved by shareholders |
141,374 | 2 | $ | 57.63 | 0 | 5 | ||||||
TOTAL |
876,966 | $ | 93.11 | 911,345 |
1 | Includes 287,678 stock options that have a weighted-average exercise price of $108.07; 407,586 restricted stock units that have a $0 exercise price; and 40,328 stock units granted in accordance with Martin Mariettas Incentive Stock Plan that are credited to participants at an average weighted cost of $91.51. The restricted stock units and stock units granted in accordance with Martin Mariettas Incentive Stock Plan represent Martin Mariettas obligation to issue shares in the future subject to certain conditions in accordance with Martin Mariettas Stock-Based Award Plan. |
2 | Represents stock options and restricted stock units granted to legacy Texas Industries, Inc. (TXI) employees and employees hired after July 1, 2014. |
3 | The weighted-average exercise price does not take into account the restricted stock units and stock units for which there is no exercise price. |
4 | Includes shares of Martin Mariettas common stock available for issuance (other than those reported in column (a)) under Martin Mariettas equity compensation plans as of December 31, 2016 in the following amounts: Directors Plan (148,720 shares), Stock-Based Award Plan (911,345 shares), and Shareholder Value Achievement Plan (207,975 shares). Also excludes Texas Industries Inc. stock-based award plans (1,861,288 shares). The Directors Plan provides that nonemployee directors may elect to receive all or a portion of their fees in the form of common stock. Under the Achievement Plan, awards can be granted to key senior employees based on certain common stock performance over a long-term period. No awards have been granted under this plan since 2000. |
5 | There are 1,842,476 shares of Martin Mariettas common stock available for issuance to legacy TXI employees. These shares will be used to settle currently outstanding awards but no further awards will be granted for these shares, as indicated by management in connection with the approval by shareholders of the Amended and Restated Stock-Based Award Plan on May 19, 2016. |
60
|
2017 PROXY STATEMENT
|
Description of the Deferred Compensation Plan ◆ Securities Authorized for Issuance Under Equity Compensation Plans
2017 PROXY STATEMENT
|
61
|
Annual Meeting and Voting Information
62
|
2017 PROXY STATEMENT
|
◆ Annual Meeting and Voting Information
2017 PROXY STATEMENT
|
63
|
Annual Meeting and Voting Information ◆
Shareholders Proposals for 2018 Annual Meeting
64
|
2017 PROXY STATEMENT
|
MARTIN MARIETTA
GUIDELINES FOR POTENTIAL NEW BOARD MEMBERS
2017 PROXY STATEMENT
|
A-1
|
NON-GAAP MEASURES
Non-GAAP financial measures disclosed by management are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies.
Gross margin as a percentage of net sales represents a non-GAAP measure. The Company presents this ratio based on net sales, as it is consistent with the basis by which management reviews the Companys operating results. Management believes it is consistent with the basis by which investors analyze the Companys operating results given that freight and delivery revenues and costs represent pass-throughs and have no profit mark-up. Gross margin calculated as percentages of total revenues represents the most directly comparable financial measure calculated in accordance with generally accepted accounting principles (GAAP).
EBITDA is a widely accepted financial indicator of a companys ability to service and/or incur indebtedness. EBITDA is not defined by GAAP and, as such, should not be construed as an alternative to net earnings or operating cash flow.
The following presents (i) the calculations of consolidated gross margin for the years ended December 31, 2016 and 2015 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales; and (ii) a reconciliation of net earnings attributable to Martin Marietta to consolidated EBITDA for the years ended December 31, 2016 and 2015.
(in all tables, dollars in thousands)
Consolidated Gross Margin in Accordance with GAAP for years ended December 31:
2016 | 2015 | |||||||
Gross profit |
$ | 908,966 | $ | 721,767 | ||||
|
|
|
|
|
| |||
Total revenues |
$ | 3,818,749 | $ | 3,539,570 | ||||
|
|
|
|
|
| |||
Gross margin |
23.8 | % | 20.4 | % |
Consolidated Gross Margin (Excluding Freight and Delivery Revenues) for years ended December 31:
2016 | 2015 | |||||||
Gross profit |
$ | 908,966 | $ | 721,767 | ||||
|
|
|
|
|
| |||
Total revenues |
$ | 3,818,749 | $ | 3,539,570 | ||||
Less: Freight and delivery revenues |
(241,982 | ) | (271,454 | ) | ||||
|
|
|
|
|
| |||
Net sales |
$ | 3,576,767 | $ | 3,268,116 | ||||
|
|
|
|
|
| |||
Gross margin (excluding freight and delivery revenues) |
25.4 | % | 22.1 | % |
Consolidated EBITDA for years ended December 31:
2016 | 2015 | |||||||
Net earnings attributable to Martin Marietta |
$ | 425,386 | $ | 288,792 | ||||
Add back: |
81,677 | 76,287 | ||||||
Interest expense |
181,524 | 124,793 | ||||||
Income tax expense for controlling interests |
283,003 | 260,836 | ||||||
|
|
|
|
|
| |||
Depreciation, depletion and amortization expense |
$ | 971,590 | $ | 750,708 | ||||
|
|
|
|
|
| |||
Consolidated EBITDA |
2017 PROXY STATEMENT
|
B-1
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MARTINANNUAL MARIETTA MEETING OF SHAREHOLDERS MATERIALS, OF INC. May 18, 2017 PROXY VOTING INSTRUCTIONS INTERNET - Access www.voteproxy.com and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. COMPANY NUMBER MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending ACCOUNT NUMBER the Annual Meeting. GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The proxy statement, form of proxy card and 2016 Annual Report to Shareholders are available for review on the Internet at ir.martinmarietta.com/annuals-proxies.cfm Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. ---------------- 00033333304030000000 6 051817 THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR ITEMS 1, 2 AND 3, FOR THE SELECTION OF EVERY 1 YEAR ON ITEM 4, AND AGAINST ITEM 5. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE This proxy is solicited by the Board of Directors of Martin Marietta Materials, Inc. and when properly executed will be voted as specified herein and, unless otherwise directed, will be voted FOR the election of all nominees as Directors, FOR the ratification of the selection of PricewaterhouseCoopers as independent auditors, FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers, EVERY 1 YEAR on the selection, by a non-binding advisory vote, of the frequency of future shareholder votes to approve the compensation of our named executive officers, and AGAINST a shareholder proposal asking the Board of Directors to adopt a proxy access bylaw. Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy Statement is hereby acknowledged. 1. Election of Directors: Sue W. Cole Michael J. Quillen John J. Koraleski Stephen P. Zelnak, Jr. 2. Ratification of selection of PricewaterhouseCoopers as independent auditors. 3. Approval, by a non-binding advisory vote, of the compensation of Martin Marietta Materials, Inc.s named executive officers. 4. Selection, by a non-binding advisory vote, of the frequency of future shareholder votes to approve the compensation of Martin Marietta Materials, Inc.s named executive officers. 5. Shareholder proposal asking the Board of Directors to adopt a proxy access bylaw. 6. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournments thereof. FOR AGAINST ABSTAIN ABSTAIN EVERY 3 YEARS EVERY 2 YEARS EVERY 1 YEAR FOR AGAINST ABSTAIN To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. Signature of Shareholder Date: Signature of Shareholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
ANNUAL MEETING OF SHAREHOLDERS OF MARTIN MARIETTA MATERIALS, INC. May 18, 2017 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The proxy statement, form of proxy card and 2016 Annual Report to Shareholders are available for review on the Internet at ir.martinmarietta.com/annuals-proxies.cfm Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 00033333304030000000 6 051817 THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR ITEMS 1, 2 AND 3, FOR THE SELECTION OF EVERY 1 YEAR ON ITEM 4, AND AGAINST ITEM 5. x PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE This proxy is solicited by the Board of Directors of Martin Marietta Materials, 1. Election of Directors: FOR AGAINST This proxy is solicited by the Board of Directors of Martin Marietta Materials, Inc. and when properly executed will be voted as specified herein and, unless otherwise directed, will be voted FOR the election of all nominees as Directors, FOR the ratification of the selection of PricewaterhouseCoopers as independent auditors, FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers, EVERY 1 YEAR on the selection, by a non-binding advisory vote, of the frequency of future shareholder votes to approve the compensation of our named executive officers, and AGAINST a shareholder proposal asking the Board of Directors to adopt a proxy access bylaw. Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy Statement is hereby acknowledged. To indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above. may not the Please be box submitted at note right and that via this method. 1. Election of Directors: FOR AGAINST ABSTAIN Sue W. Cole Michael J. Quillen John J. Koraleski Stephen P. Zelnak, Jr. 2. Ratification of selection of PricewaterhouseCoopers as independent auditors. 3. Approval, by a non-binding advisory vote, of the compensation of Martin Marietta Materials, Inc.s named executive officers. EVERY EVERY EVERY 4. Selection, shareholder by votes a non-binding to approve advisory the compensation vote, of the frequency of Martin of Marietta future 1 YEAR 2 YEARS 3 YEARS ABSTAIN Materials, Inc.s named executive officers. FOR AGAINST ABSTAIN 5. Shareholder proposal asking the Board of Directors to adopt a proxy access bylaw. 6. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournments thereof. Signature of Shareholder Date: Signature of Shareholder Date: Note: Please title as such. sign exactly If the signer as your is a name corporation, or names please appear sign on full this corporate Proxy. When name shares by duly are authorized held jointly, officer, each giving holder full should title as sign. such. When If signer signing is a as partnership, executor, please administrator, sign in attorney, partnership trustee name or by guardian, authorized please person. give full
0 ------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475 MARTIN MARIETTA MATERIALS, INC. Proxy solicited by the Board of Directors for the Annual Meeting to be held May 18, 2017 The undersigned hereby appoints C. Howard Nye and Anne H. Lloyd, and each or either of them, proxies, with full power of substitution, with the powers the undersigned would possess if personally present, to vote, as designated below, all shares of the common stock of the undersigned in Martin Marietta Materials, Inc. at the Annual Meeting of Shareholders to be held on May 18, 2017, and at any adjournment thereof. (Continued and to be signed on the reverse side) 1.1