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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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| Martin Marietta Materials, Inc. | ||||
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April 18, 2018 |
Dear Fellow Shareholder:
| On behalf of the Martin Marietta Board of Directors and executive officers, it is my pleasure to invite you to our 2018 Annual Meeting of Shareholders.
Strong Financial Performance 2017 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. We delivered record revenues, profitability and earnings per diluted share for both the fourth quarter and full year 2017, building on the momentum created by record performance in prior years. And, as always, we achieved these results while remaining committed to the safety, ethics, integrity and values that are the hallmark of Martin Marietta.
World-Class Safety Performance Our 2017 safety performance was the best in Martin Marietta’s history. Through the hard work and focus of our employees, safety awareness has been elevated across the Company, yielding impressive results. Our employees know world-class safety performance is possible; and, importantly, 2017’s results demonstrate this goal is attainable. Specifically, half of our operating divisions exceeded the |
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world-class Total Injury Incident Rate (TIIR) (i.e., a TIIR of 0.90 or lower), and company-wide, with a Lost Time Incident Rate (LTIR) of 0.13, we bested the world-class LTIR of 0.20 or lower.
Shareholder Engagement and Governance
Our investor outreach in 2017 extended to 86 meetings with 296 investor groups, and conversations with most of our top 20 shareholders. We visited with our shareholders across the United States and in Toronto, Amsterdam, Brussels, The Hague, London, Edinburgh and Paris. We also issued our third Sustainability Report in 2017 - Building. Caring. Growing. - 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.
We also have a commitment to sound corporate governance and independent leadership in our boardroom. In this regard, we made several important changes to our corporate governance. First, our Board adopted a proxy access bylaw in response to the favorable advisory vote of a majority of our shareholders at our 2017 annual meeting of shareholders. Second, our Board adopted formal guidelines and policies relating to Stock Ownership for Board members and executive officers, Hedging and Pledging of Stock for Board members and executive officers, and Clawbacks for executive officers, which you can read more about in the attached proxy statement. Our Board continues to review our governance policies to ensure we are able to create appropriate value for our shareholders.
Board Member Changes
We also are nominating for election a new Board member in 2018, namely Smith W. Davis, a partner with the law firm of Akin Gump Strauss Hauer & Feld LLP in Washington DC. Mr. Davis is an expert in legal and regulatory matters, as well as governance, environmental and compensation matters. We are delighted to nominate Mr. Davis to our Board, who brings a strong background and adds a new and diverse perspective to 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
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MARTIN MARIETTA MATERIALS, INC.
2710 Wycliff Road, Raleigh, North Carolina 27607
Notice of Annual Meeting of Shareholders
To Be Held May 17, 2018
To Our Shareholders:
The Annual Meeting of Shareholders of Martin Marietta Materials, Inc. will be held on Thursday, May 17, 2018, 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 seven (7) 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 2018; |
| (3) | Advisory vote to approve the compensation of our named executive officers; and |
| (4) | 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 9, 2018 are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements of the meeting.
The Board of Directors unanimously recommends that you vote FOR proposals 1, 2, and 3.
This notice and the accompanying proxy statement are being first mailed to shareholders on or about April 18, 2018. We have enclosed our 2017 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 18, 2018
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL SHAREHOLDER MEETING TO BE HELD ON MAY 17, 2018:
Martin Marietta’s proxy statement, form of proxy card and 2017 Annual Report to Shareholders are also available at ir.martinmarietta.com/investor-relations/reports-filings.
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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 18, 2018 to shareholders of record on March 9, 2018.
2018 Annual Meeting of Shareholders
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Meeting Date: |
May 17, 2018 |
Place: |
2710 Wycliff Road, Raleigh, NC | |||||
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11:30 am ET
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Record Date: | March 9, 2018 | |||||
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 Seven Director Nominees |
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Ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors |
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Advisory Vote on Company’s Executive Compensation |
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63 | |||||
FOR ALL DIRECTOR NOMINEES
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2018 PROXY STATEMENT
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Shareholders Benefit from Martin Marietta’s Record 2017 Performance
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Record total revenues of almost $4.0 billion up 3.9% from 2016 |
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Record gross profit of $972 million up 6.6%, and a 24.5% gross margin |
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Record operating earnings of $700 million up 3.4% |
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Record net earnings attributable to Martin Marietta of $713.4 million, an increase of 68% over 2016 |
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Record earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.004 billion, up 3% from 2016 |
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Record earnings attributable to common shareholders per diluted share of $11.25. |
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* Reconciliation of Net Earnings Attributable to Martin Marietta to EBITDA is included in Appendix B.
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Corporate Governance Highlights: Creating Sustainable Long-Term Shareholder Value
Recent Updates
| • | Our shareholders have the ability to nominate director candidates and have those nominees included in our proxy statement, subject to meeting the requirements in our Bylaws, a shareholder right known as proxy access |
| • | Declassified Board phase-in continues—Directors elected annually in 2017 and 2018 to serve one-year terms |
| • | Adoption of Stock Ownership Guidelines |
| • | Adoption of Hedging and Pledging Policy |
| • | Adoption of Clawback Policy |
Board of Directors
| • | Lead Independent Director |
| • | 10 Directors/Nominees; 9 are non-employees; 9 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 2017 |
| • | 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 |
| • | We publish annually a Sustainability Report that discusses our commitment to our shareholders, employees and the communities that we serve |
Board Composition
We nominated for election at our 2018 annual meeting of shareholders a new Director to the Board who has extensive experience in regulatory and legal matters. We were recognized in 2017 and 2015 at the Women’s Forum of New York at its Biennial Breakfast of Corporate Champions for our Board diversity. We were also recognized by 2020 Women on Boards as a Winning ‘W’ Company for seven consecutive years for championing board diversity.
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These charts assume that Smith W. Davis is elected at the annual meeting of shareholders.
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Board Attendance
In 2017, all directors attended 100% of the total Board and committee meetings to which they were assigned. All directors attended the May 2017 Annual Meeting.
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 as a reference point when determining target compensation, but target pay is set based on a variety of factors and actual pay realized by our NEOs is dependent on our financial, operational and other related performance. Based on our record levels of performance in 2017, variable compensation payable under both our short-term and long-term incentive plans exceeded the target amounts established for each NEO, which is consistent with our pay-for-performance philosophy. All compensation paid to our CEO and other NEOs in 2017 was performance-based other than base salary: 86% of our CEO’s compensation was performance-based and approximately 80% of our NEOs compensation was performance based.*
| * | Based on grant date value of PSUs and RSUs. Other NEO Compensation includes Mr. Nickolas, who commenced employment with the Company in August 2017. |
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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 Board’s 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 Board’s 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; and |
| • | FOR the approval, on a non-binding advisory basis, of the compensation of our NEOs as described in this 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, 2017. We undertake no responsibility to publicly update or revise any forward-looking statement.
The Board of Directors currently consists of nine members, eight 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. Commencing with the 2017 Annual Meeting of Shareholders, our Directors are elected to one-year terms of office after the current terms of the Directors of each class expire at this 2018 Annual Meeting of Shareholders and the 2019 Annual Meeting.
The Board of Directors has nominated seven persons for election as Directors to serve a one-year term expiring in 2019. Unless otherwise directed, proxies will be voted in favor of these nominees. Each nominee has agreed to serve if elected. Each of the nominees, except Mr. Davis, is currently serving as a Director. Should any nominee become unable to serve as a Director, the persons named in the enclosed form of proxy will, unless otherwise directed, vote for the election of such other person for such position as the present Board of Directors may recommend in place of such nominee. Proxies cannot be voted for a greater number of persons than the number of nominees named.
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 2017 Annual Meeting, for a nomination to be properly made by a shareholder at the 2018 Annual Meeting, the shareholder’s notice must have been sent to, and received by, our Secretary at our principal executive offices between January 17, 2018 and February 16, 2018. 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.
Working closely with the full Board, the Nominating and Corporate Governance Committee develops criteria for open Board positions. In developing these criteria, the Committee takes into account a variety of factors, which may include: the current composition of the Board and expected retirements from the Board; the range of talents, experiences and skills that would best complement those already represented on the Board; and the need for financial or other specialized expertise. Applying these criteria, the Committee considers candidates for Board membership suggested by Committee members, other Board members, and management. The Committee has also retained a third-party executive search firm to identify and review candidates from time to time.
Once the Committee has identified a prospective nominee, it makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Committee takes into account various information, including information provided at the time of the candidate recommendation, the Committee’s own knowledge, and information obtained through inquiries to third parties to the extent the Committee deems appropriate. The preliminary determination is based primarily on the need for additional Board members and the likelihood that the prospective nominee can satisfy the criteria that the Committee has established. If the Committee determines, in consultation with the Chairman, President and CEO and other Directors as appropriate, that additional consideration is warranted, it may request management or a third-party search firm to gather additional information about the prospective nominee’s background and experience and to report its findings to the Committee. The Committee then evaluates the prospective nominee against the specific criteria that it has established for the position, as well as the standards and qualifications set out in the Company’s Corporate Governance Guidelines, including:
| • | the ability of the prospective nominee to represent the interests of the shareholders of the Company; |
| • | the prospective nominee’s standards of integrity, commitment and independence of thought and judgment; |
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| • | the prospective nominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties, including the prospective nominee’s service on other public company boards, as specifically set out in the Company’s Corporate Governance Guidelines; |
| • | the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board; and |
| • | the extent to which the prospective nominee helps the Board reflect the diversity of the Company’s shareholders, employees, customers and the communities in which it operates. |
If the Committee decides, on the basis of its preliminary review, to proceed with further consideration, members of the Committee, the Chairman, President and CEO, as well as other members of the Board as appropriate, interview the nominee. After completing this evaluation and interview, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the new Director after considering the Committee’s report. A background check is completed before a final recommendation is made to the Board to appoint a candidate to the Board.
In selecting nominees for Director, the Board seeks to achieve a mix of members who together bring experience and personal backgrounds relevant to the Company’s strategic priorities and the scope and complexity of the Company’s business. The Board also seeks demonstrated ability to manage complex issues that involve a balance of risk and reward. The background information on current nominees beginning on page 8 sets out how each of the current nominees contributes to the mix of experience and qualifications the Board seeks. In making its recommendations with respect to the nomination for re-election of existing Directors at the annual shareholders meeting, the Committee assesses the composition of the Board at the time and considers the extent to which the Board continues to reflect the criteria set forth above.
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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Election of Directors
Nominees for Election to the Board of Directors for a Term Continuing Until 2019:
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◆SUE W. COLE
Director Since: 2002
Age: 67
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 Bachelor of Science degree in Business Administration and a Masters in Business Administration in Finance. |
Key attributes, experience and skills:
• Valuable experience in executive compensation, corporate governance, human resources, finance and financial statements, and customer service
• Chief executive officer of several financial services businesses as well as several non-profit organizations
• Strong leadership skills and familiarity with North Carolina, an important state for the Company |
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◆SMITH W. DAVIS
Age: 70 |
Mr. Davis is a senior partner at Akin Gump Strauss Hauer & Feld LLP, an international law firm, where he provides counsel on a wide variety of legislative and regulatory matters, including those before a variety of congressional committees. Mr. Davis joined Akin Gump in 1979 and his practice has included advising on legal matters relating to environmental issues, financial institutions, mergers and acquisitions, and pension reform. Mr. Davis also has served on the law firm’s compensation and management committees. Prior to joining Akin Gump, Mr. Davis served as a counsel to the House Judiciary Committee. Mr. Davis attended Yale University where he received a Bachelors of Arts degree, magna cum laude and Yale Law School where he received his Juris Doctor degree. |
Key attributes, experience and skills:
• Extensive experience in legal, compliance, and corporate governance
• Strong leadership skills and expertise in governmental and regulatory issues, safety, health and environmental matters, mergers and acquisitions, executive compensation, financial affairs, and risk assessment.
• Brings new perspective to the Board on diversity and corporate citizenship |
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Director Nominees ◆ Proposal 1: Election of Directors
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◆JOHN J. KORALESKI
Director Since: 2016
Age: 67
Member of the Audit Committee, Executive Committee and Management Development and Compensation Committee. |
Mr. Koraleski joined the Martin Marietta Board in 2016. Mr. Koraleski served from February 2015 through his retirement in September 2015 as executive Chairman of the Board of the Union Pacific Corporation (UP), which through its subsidiaries operates North America’s premier railroad franchise, covering 23 states across the western two-thirds of the United States. Prior to that, he was named President and Chief Executive Officer of the UP in March 2012, elected as a Director of the UP in July 2012 and appointed Chairman of the Board in 2014. Since joining the Union Pacific (Railroad) in 1972, Mr. Koraleski held a number of executive positions in the UP and the Railroad, including, Executive Vice President – Marketing and Sales from 1999 to 2012, Executive Vice President – Finance and Information Technology, Chief Financial Officer and Controller. Mr. Koraleski served as the Chairman of The Bridges Investment Fund, Inc., a general equity fund whose primary investment objective is to seek long-term capital appreciation, from 2005 through March 2012 and is a past Chairman of the Association of American Railroads. Mr. Koraleski earned a Bachelor’s and Master’s degree in business administration from the University of Nebraska at Omaha. |
Key attributes,
• Experience 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 |
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◆DAVID G. MAFFUCCI
Director Since: 2005
Age: 67
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 Bachelor’s degree from Sacred Heart University. |
Key attributes,
• 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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Proposal 1: Election of Directors ◆ Director Nominees
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◆MICHAEL J. QUILLEN Director Since: 2008 Age: 69 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 Bachelor’s and Master’s degrees in Civil Engineering. |
Key attributes, • 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 |
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◆DONALD W. SLAGER
Director Since: 2016
Age: 56
Member of the Finance Committee and the Nominating and Corporate Governance Committee. |
Mr. 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 |
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Director Nominees ◆ Proposal 1: Election of Directors
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◆STEPHEN P. ZELNAK, JR. Director Since: 1993
Age: 73
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 Bachelor’s degree from Georgia Institute of Technology and Master’s 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 |
|
The Board Unanimously Recommends a Vote “FOR” All Nominees for Election to the Board of Directors |
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Table of Contents
Proposal 1: Election of Directors ◆ Director Nominees
Other Directors Whose Terms Continue Until 2019:
|
◆C. HOWARD NYE
Director Since: 2010
Age: 55
Chairman of the Board and Chair of the Executive Committee |
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 Chairman of the Steering Committee, as a member of the Executive Committee and Nominating & Leadership Development 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 a Bachelor’s degree from Duke University and a Juris Doctor 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: 64
Chair of the Ethics, Environment, Safety and |
Ms. Perez is an investment consultant with DeRoy & Devereaux, an independent investment adviser, where she has provided client consulting services since 2015. She was previously Owner and Managing Partner of The Medallion Company, LLC, a consulting firm, from 2003 to 2015. Ms. Perez was previously a Director of GenOn Energy, Inc., 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 Bachelor’s degree from Baylor University in Finance and Economics. |
Key attributes, experience and skills:
• Significant business, financial and private investment experience
• Significant expertise with respect to financial statements, corporate finance, accounting and capital markets, mergers and acquisitions, and strategic analysis
• Insight into auditing best practices
• Familiarity with the southwestern United States |
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Table of Contents
Director Nominees ◆ Proposal 1: Election of Directors
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◆DENNIS L. REDIKER
Director Since: 2003
Age: 74
Member of the Audit Committee and the Finance Committee |
Mr. Rediker served as the President and Chief Operating Officer of Utility Composite Solutions International, 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 Bachelor’s 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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2018 PROXY STATEMENT
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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, 2017.
| Name1 (a) |
Fees Paid in Cash ($)2 (b) |
Stock ($)3 (c) |
Change in Pension Earnings ($)5 (f) |
All Other ($)6 (g) |
Total ($) (h) |
|||||||||
| Sue W. Cole |
108,000 | 100,195 | 12,565 | 68,449 | 289,209 | |||||||||
| John J. Koraleski |
105,000 | 100,195 | 34 | 1,432 | 206,661 | |||||||||
| David G. Maffucci |
120,000 | 100,195 | 7,403 | 34,872 | 262,470 | |||||||||
| William E. McDonald7 |
25,000 | — | 6,279 | 33,774 | 65,053 | |||||||||
| Laree E. Perez |
113,000 | 100,195 | 5,721 | 23,959 | 242,875 | |||||||||
| Michael J. Quillen |
133,000 | 100,195 | 5,387 | 61,748 | 300,330 | |||||||||
| Dennis L. Rediker |
105,000 | 100,195 | 9,683 | 37,691 | 252,569 | |||||||||
| Donald W. Slager |
100,000 | 100,195 | 44 | 1,499 | 201,738 | |||||||||
| Stephen P. Zelnak, Jr. |
108,000 | 100,195 | 4,178 | 37,215 | 249,588 | |||||||||
| 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 51. |
| 2 | The amounts in column (b) reflect fees earned in 2017. 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 2017 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, 630 units and $108,337 value, respectively; Mr. Koraleski, 0; Mr. Maffucci, 141 units and $24,249 value, respectively; Mr. McDonald, 145 units and $25,050 value, respectively; Ms. Perez, 0; Mr. Quillen, 776 units and $133,441 value, respectively; Mr. Rediker, 124 units and $21,326 value, respectively; Mr. Slager, 0; and Mr. Zelnak, 316 units and $54,344 value, respectively. The number of units credited to each of the Directors as of December 31, 2017, including units accumulated under the plan for all years of service as a Director, is as follows: Ms. Cole, 15,252; Mr. Koraleski, 0; Mr. Maffucci, 9,036; Mr. McDonald, 6,507; Ms. Perez, 5,258; Mr. Quillen, 7,593; Mr. Rediker, 9,833; and Mr. Zelnak, 6,197. The 20% discount from the market price of Martin Marietta’s common stock used in converting to common stock is reported in column (g). |
| 3 | Each Director who was serving immediately following the 2017 Annual Meeting of Shareholder received 437 RSUs in 2017. 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, Ms. Perez and Mr. Quillen each received a distribution of 219 unrestricted shares of common stock and deferred the distribution of 218 RSUs until retirement. As of December 31, 2017, each Director held RSUs in the amounts as follows: Ms. Cole, 8,944; Mr. Koraleski, 939; Mr. Maffucci, 7,675; Ms. Perez, 8,725; Mr. Quillen, 8,725; Mr. Rediker, 8,944; Mr. Slager, 978; and Mr. Zelnak, 7,565. As of December 31, 2017, each Director held options for common stock in the amounts as follows: Ms. Cole, 3,000; Mr. Koraleski, 0; Mr. Maffucci, 0; Ms. Perez, 3,000; Mr. Quillen, 3,000; Mr. Rediker, 0; Mr. Slager, 0; and Mr. Zelnak, 0. |
| 4 | The amounts in column (f) reflect interest paid on fees deferred in cash under the Common Stock Purchase Plan for Directors. |
| 5 | The amounts in column (g) reflect for each Director: (i) an amount equal to the 20% discount from the market price of Martin Marietta’s common stock used in converting fees deferred in 2017 into common stock units pursuant to the Common Stock Purchase Plan for Directors, and (ii) the dollar value of dividend equivalents paid in 2017 on common stock units held under the plan. The Directors did not receive perquisites or other personal benefits in 2017. |
| 6 | Mr. McDonald retired at the 2017 Annual Meeting of Shareholders in accordance with the Bylaws that provide for retirement following the Director’s 75th birthday. |
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2018 PROXY STATEMENT
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Table of Contents
Beneficial Owners and Management
How much stock do Martin Marietta’s Directors and executive officers own?
The following table sets forth information as of March 9, 2018 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 51 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 Units5 |
Total | |||||||||
| Roselyn R. Bar |
48,0962 | 19,808 | 67,904 | |||||||||
| Sue W. Cole |
33,9883,4 | — | 33,988 | |||||||||
| Daniel L. Grant |
3,9052 | 13,308 | 17,213 | |||||||||
| John J. Koraleski |
1,6003 | — | 1,600 | |||||||||
| Anne H. Lloyd6 |
58,7802 | 21,673 | 80,453 | |||||||||
| David G. Maffucci |
17,2383 | — | 17,238 | |||||||||
| Donald A. McCunniff |
13,6952 | 14,689 | 28,384 | |||||||||
| James A. J. Nickolas |
— | 8,317 | 8,317 | |||||||||
| C. Howard Nye |
131,5972 | 66,810 | 198,407 | |||||||||
| Laree E. Perez |
14,2023 | — | 14,202 | |||||||||
| Michael J. Quillen |
20,2833 | — | 20,283 | |||||||||
| Dennis L. Rediker |
18,8103 | — | 18,810 | |||||||||
| Donald W. Slager |
9783 | — | 978 | |||||||||
| Stephen P. Zelnak, Jr. |
13,8453 | — | 13,845 | |||||||||
| All Directors and executive officers as a group (15 individuals including those named above) |
392,3413,4 | 158,785 | 551,126 | |||||||||
| 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 0.75% of the shares of common stock outstanding as of March 9, 2018. None of the shares reported are pledged as security. |
| 2 | The number of shares owned for each of Mr. Nye, Ms. Bar, Mr. McCunniff, Mr. Grant, Ms. Lloyd and all Directors and executive officers as a group assumes that options held by each of them covering shares of common stock in the amounts indicated, which are currently exercisable within 60 days of March 9, 2018, have been exercised: Mr. Nye, 61,163; Ms. Bar, 16,865; Mr. McCunniff, 8,647; Mr. Grant, 767; Ms. Lloyd, 20,667 and all Directors and executive officers as a group, 97,112. |
| 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 2017 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 9, 2018 is as follows: Ms. Cole, 15,418; Mr. Koraleski, 161; Mr. Maffucci, 9,073; Ms. Perez, 5,258; Mr. Quillen, 7,457; Mr. Rediker, 9,866; Mr. Slager, 0; and Mr. Zelnak, 6,280. Amounts reported also include 3,000 options for common stock held by each of Ms. Cole and Mr. Quillen. |
| 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 NEOs in connection with (i) their deferral of a portion of their cash bonus under the Martin Marietta Materials, Inc. Incentive Stock Plan, and (ii) RSUs (not including any performance-based share units (PSUs) granted under the Stock Plan that are subject to forfeiture in accordance with the terms of the plan, each in the following amounts: Mr. Nye, 16,550 and 50,260, respectively; Ms. Bar, 2,813 and 16,995, respectively; Mr. Nickolas, 0 and 8,317, respectively; Mr. McCunniff, 1,440 and 13,249, respectively; Mr. Grant, 1,750 and 11,558, respectively; Ms. Lloyd, 3,119 and 18,554, respectively; and all Directors and executive officers as a group, 23,875 and 113,237 respectively. There are no voting rights associated with the stock units. |
| 6 | Ms. Lloyd retired as Executive Vice President – Chief Financial Officer as of December 31, 2017. The amounts reported reflect ownership as of May 24, 2017 and includes restricted stock awards that vested and were distributed before March 9, 2018. |
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2018 PROXY STATEMENT
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Table of Contents
Security Ownership of Certain Beneficial Ownership and Management ◆ Section 16(a) Beneficial Ownership Reporting Compliance
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 2017, such filing requirements were satisfied.
Who are the largest owners of Martin Marietta’s stock?
The following table sets forth information with respect to the shares of common stock which are held by persons known to Martin Marietta to be the beneficial owners of more than 5% of such stock as of March 9, 2018. To the best of Martin Marietta’s knowledge, based on filings with the Securities and Exchange Commission as noted below, no person beneficially owned more than 5% of any class of Martin Marietta’s outstanding voting securities at the close of business on March 9, 2018, 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 |
6,510,846 | 10.35% | ||
| BlackRock, Inc.2 55 East 52nd Street New York, NY 10055 |
3,861,669 | 6.1% |
| 1 | As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2017 filed with the Securities and Exchange Commission on February 9, 2018, indicating sole power to vote 88,098 shares, shared power to vote 12,310 shares, sole power to dispose of 6,410,973 shares, and shared power to dispose of 99,873 shares. |
| 2 | As reported in Schedule 13G/A reporting beneficial ownership as of December 31, 2017 filed with the Securities and Exchange Commission on January 25, 2018, indicating sole power to vote 3,337,349 shares and sole power to dispose of 3,861,669 shares. |
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Table of Contents
Table of Contents
Corporate Governance Matters ◆ Corporate Governance Philosophy
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18
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2018 PROXY STATEMENT
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Table of Contents
Corporate Governance Philosophy ◆ Corporate Governance Matters
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2018 PROXY STATEMENT
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Table of Contents
Corporate Governance Matters ◆ Corporate Governance Philosophy
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2018 PROXY STATEMENT
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Table of Contents
Board Committees ◆ Corporate Governance Matters
Below is a summary of our current committee structure and membership information.
| Director | Audit Committee |
Ethics, Environment, Health Committee |
Executive Committee |
Finance Committee |
Management Compensation |
Nominating Governance | ||||||||
| Sue W. Cole |
|
Chair | ||||||||||||
| John J. Koraleski Financial Expert |
|
|
|
|
|
|||||||||
| David G. Maffucci Financial Expert |
Chair |
|
||||||||||||
|
C. Howard Nye |
Chair | |||||||||||||
| Laree E. Perez Financial Expert |
|
Chair |
||||||||||||
| Michael J. Quillen Lead Independent Director |
|
|
Chair |
|
| |||||||||
| Dennis L. Rediker Financial Expert |
|
|
||||||||||||
|
Donald W. Slager |
|
| ||||||||||||
|
Stephen P. Zelnak, Jr. |
|
Chair |
||||||||||||
| Number of Meetings |
8 |
2 |
0 |
5 |
|
6 |
|
3 | ||||||
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2018 PROXY STATEMENT
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Table of Contents
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 2017: 8 |
Average Attendance in 2017: 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 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 management’s assessment of the effectiveness of Martin Marietta’s system of internal control over financial reporting;
• discusses Martin Marietta’s earnings press releases, as well as financial information and earnings guidance provided to analysts, investors and rating agencies;
• discusses matters related to risk assessment and risk management and how the process is handled by management;
• reviews and oversees related party transactions;
• reviews complaints regarding accounting, internal controls or auditing matters;
• considers allegations of possible financial fraud or other financial improprieties;
• reviews annually the adequacy of the committee charter and recommends proposed changes to the Board; and
• prepares the annual Audit Committee Report to be included in the proxy statement.
| ||||
|
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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Table of Contents
Board Committees ◆ Corporate Governance Matters
| ||||
| Current Members: Laree E. Perez (Chair) David G. Maffucci Stephen P. Zelnak, Jr. |
Meetings in 2017: 2 |
Average Attendance in 2017: 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. | ||||
| ||||
| Current Members: Stephen P. Zelnak, Jr. (Chair) Dennis L. Rediker Donald W. Slager |
Meetings in 2017: 5 |
Average Attendance in 2017: 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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Corporate Governance Matters ◆ Board Committees
|
| ||||
| Current Members: Michael J. Quillen (Chair) Sue W. Cole John J. Koraleski |
Meetings in 2017: 6 |
Average Attendance in 2017: 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 management’s assessment of the performance of executive officers, and reviews and approves the salary, incentive compensation, and other compensation of such officers;
• approves and administers our equity and other plans relating to compensation of Martin Marietta’s directors and 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 Marietta’s defined benefit and contribution plans;
• reviews and approves the goals and objectives for the CEO’s compensation, evaluates the CEO’s performance in light of those goals and objectives, and determines and approves the CEO’s compensation;
• makes recommendations to the Board on changes in the compensation of non-employee directors;
• reviews annually the adequacy of the committee charter and recommends proposed changes to the Board; 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.
| ||||
|
Other Governance Matters: All members are non-employee, independent Directors, as required by the rules of the NYSE, the Martin Marietta Guidelines for Director’s Independence and the Committee’s charter. | ||||
|
|
||||
| Current Members: Sue W. Cole (Chair) Michael J. Quillen Donald W. Slager |
Meetings in 2017: 3 |
Average Attendance in 2017: 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.
| ||||
|
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 Marietta’s Corporate Secretary.
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Table of Contents
Board Committees ◆ Corporate Governance Matters
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Corporate Governance Matters ◆ Board Committees
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Table of Contents
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 Marietta’s internal control over financial reporting for the 2018 fiscal year. The ratification of the appointment of PwC is being submitted to the shareholders because the Board of Directors believes this to be good corporate practice. Should the shareholders fail to ratify this appointment, the Audit Committee will review the matter and determine, in its sole discretion, whether PwC or another independent registered public accounting firm should be retained.
PwC served as Martin Marietta’s independent auditors for 2017 and audited the consolidated financial statements of Martin Marietta for the year ended December 31, 2017 and the effectiveness of Martin Marietta’s internal control over financial reporting as of December 31, 2017. In connection with the audit of Martin Marietta’s 2017 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 2017.
The Audit Committee conducted a competitive process with multiple firms to determine the Company’s 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 year ended December 31, 2015 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 Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2015 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 year ended December 31, 2015 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 Company’s 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 Company’s 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 Marietta’s independent auditors. Representatives of PwC are expected to attend the Annual Meeting, will have the opportunity to make a statement if they so desire, and will be available to respond to questions from shareholders.
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|
The Board Unanimously Recommends a Vote “FOR” on this Proposal 2 |
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2018 PROXY STATEMENT
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Table of Contents
Proposal 2: Independent Auditors ◆ Summary of Fees
The following table summarizes the aggregate fees billed for professional services rendered to Martin Marietta by PwC in 2017 and 2016.
|
2017
|
2016
| |||||
|
|
$ | 2,872,000 | $2,473,000
| |||
|
|
103,000 |
103,000
| ||||
|
|
20,000 |
40,000
| ||||
|
|
|
0
|
|
0
| ||
|
TOTAL
|
$ | 2,995,000 |
$2,616,000
| |||
|
Percentage of Audit & Audit-Related Fees to Total Fees |
99.3 | % |
98.5% | |||
| 1 | Services in connection with the annual consolidated financial statement audit, the annual internal controls audit, and reviews of the consolidated financial statements included in the quarterly reports. |
| 2 | Services in connection with audit-related services, including agreed-upon procedures reports, subsidiary audits and continuing education. |
| 3 | Services in connection with tax advice related to transfer pricing issues. |
| 4 | There were no other fees billed for other professional services rendered or products provided by PwC to Martin Marietta for 2017 or 2016. |
|
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|
2018 PROXY STATEMENT
|
|
Table of Contents
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 Commission’s regulations, the New York Stock Exchange listing standards, and the Guidelines for Director’s Independence adopted by the Board of Directors. The Board of Directors has determined that none of the Audit Committee members has a relationship with Martin Marietta that may interfere with the Director’s independence from Martin Marietta and its management. Copies of the Audit Committee’s charter and Martin Marietta’s Guidelines for Director’s Independence can be viewed on Martin Marietta’s website at www.martinmarietta.com.
The Board of Directors has charged the Audit Committee with a number of responsibilities, including review of the adequacy of Martin Marietta’s financial reporting, accounting systems, and internal controls. Martin Marietta’s independent auditors and the vice president of the internal audit function report directly and are ultimately accountable to the Audit Committee.
In the discharge of its responsibilities, the Audit Committee has reviewed and discussed with management and the independent auditors Martin Marietta’s audited consolidated financial statements for fiscal year 2017. In addition, the Committee has discussed with the independent auditors matters such as the quality (in addition to acceptability), clarity, consistency, and completeness of Martin Marietta’s financial reporting, as required by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the 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 Marietta’s 2017 Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
February 21, 2018
AUDIT COMMITTEE
David G. Maffucci, Chair
John J. Koraleski
Laree E. Perez
Dennis L. Rediker
|
|
2018 PROXY STATEMENT
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29
|
Table of Contents
Compensation Committee Report
The Management Development and Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 31 of this Proxy Statement. Based on this review and discussion, the Management Development and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Martin Marietta’s Annual Report on Form 10-K and this Proxy Statement.
February 22, 2018
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
Michael J. Quillen, Chair
Sue W. Cole
John J. Koraleski
Compensation Committee Interlocks and Insider
Participation in Compensation Decisions
The members of Martin Marietta’s Management Development and Compensation Committee are Directors Cole, Koraleski, 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 Marietta’s Board of Directors.
|
30
|
2018 PROXY STATEMENT
|
|
Table of Contents
Compensation Discussion and Analysis
For 2017, our NEOs were:
|
NEO
|
Title
| |
|
C. Howard Nye
|
Chairman of the Board, President and Chief Executive Officer
| |
| James A. J. Nickolas
|
Senior Vice President and Chief Financial Officer
| |
| Roselyn R. Bar
|
Executive Vice President, General Counsel and Corporate Secretary
| |
| Daniel L. Grant
|
Senior Vice President – Strategy and Development
| |
| Donald A. McCunniff
|
Senior Vice President – Human Resources
| |
Executive Summary
Another Record Year: Performance Through Transformation
|
◆ Record total revenues of $4.0 billion |
||||
| ◆ Record gross profit of $971.9 million |
||||
| ◆ Record net earnings of $713.4 million, despite 1 million tons lower of aggregates shipments than 2016 |
||||
| ◆ Record EBITDA* of $1.004 billion |
||||
|
◆ Record earnings per diluted share of $11.25 |
||||
* See Appendix B for a reconciliation of net earnings attributable to EBITDA.
|
|
2018 PROXY STATEMENT
|
31
|
Table of Contents
Compensation Discussion and Analysis ◆ Executive Summary
Our performance earned us recognition, including being ranked #72 in Fortune’s 100 fastest growing companies in the world in 2017. Our TSR for the 3-year and 5-year periods represented a premium relative to the performance of the S&P 500 TSR and the S&P 500 Materials Index TSR.
In 2017, we continued to focus on strategically positioning ourselves in high-growth areas. Consistent with our strategic plan and our assessment of the attractiveness of markets, we entered into an agreement to acquire Bluegrass Materials, the largest privately-held, pure-play aggregates business in the United States with locations in Maryland, Georgia, Kentucky, Tennessee and South Carolina.
Despite significant precipitation in many of our key markets and shipment volume decreases, we achieved record financial performance in 2017 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 2017 as compared to 2016:
|
32
|
2018 PROXY STATEMENT
|
|
Table of Contents
Executive Summary ◆ Compensation Discussion and Analysis
|
|
2018 PROXY STATEMENT
|
33
|
Table of Contents
Compensation Discussion and Analysis ◆ Executive Summary
In 2017, we updated our Code of Ethical Business Conduct and provided in-person ethics training to our over 8,000 employees and contractors. The training in 2017 demonstrated how an employee could use the Code in real-life scenarios and provided employees other tools to help in making the right decisions and considering the hard questions of ‘right vs. right.’ Each class opened with an in-depth discussion of the refreshed Mission, Vision, and Values, and continued to cover important and relevant topics. The in-person training, which occurs every three years, is an important component of the Company’s overall ethics program, which includes computer-based training and an ethics hotline.
|
|
Shareholder Outreach
|
34
|
2018 PROXY STATEMENT
|
|
Table of Contents
2017 Say-On-Pay Vote and Shareholder Outreach ◆ Compensation Discussion and Analysis
Shareholder Feedback on Proxy Access
At our 2017 Annual Meeting, a nonbinding advisory shareholder proposal to adopt a proxy access Bylaw was supported by a majority of the shares that voted on the proposal. Martin Marietta engaged in discussion with some of our largest shareholders regarding proxy access and, while not unanimous in their view, they generally supported the concept of proxy access. Based on the vote, these discussions, and additional dialogue with the proposal’s proponent, the Board amended our Bylaws in February 2018 to implement proxy access.
Components of Executive Compensation – Performance-Related Compensation
Each NEO receives a mix of fixed and variable components of compensation. A substantial portion of our CEO’s and other executive officers’ compensation is at risk and will vary depending upon our performance. All of the opportunities to achieve long-term equity incentives (LTI) granted to our CEO and other executive officers in 2017 (other than Mr. Nickolas, who did not receive a PSUs award in 2017 as he was hired in August 2017) were performance-related consisting of PSUs that comprised 55% of the long-term equity awards and performance-related RSUs that comprised 45% of the awards. The following charts summarize the various forms of compensation and demonstrate that in 2017 over 87 percent of the CEO’s compensation and 79 percent of other NEO compensation is variable and tied to company performance.
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|
2018 PROXY STATEMENT
|
35
|
Table of Contents
Table of Contents
2017 Chairman, President and CEO Compensation ◆ Compensation Discussion and Analysis
A number of key 2017 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
2017 Chairman, President and CEO Compensation
CEO Target Opportunity Mix*
| * | We consider base salary and annual incentives as short-term pay and PSUs and RSUs as long-term pay. We do not include retirement or other compensation components in the chart. |
|
|
2018 PROXY STATEMENT
|
37
|
Table of Contents
Compensation Discussion and Analysis ◆ Our Compensation Strategy
Our executive compensation program is specifically designed to:
| • | Attract and retain top-caliber, knowledgeable and experienced senior executives. |
| • | Motivate our executives to achieve superior results and build long-term value for shareholders. |
| • | Reward performance that meets or exceeds established goals consistent with our strategic aims and upholding integrity. |
| • | Align individual objectives with the Company’s objectives without fostering excessive or inappropriate risk-taking. |
| • | Encourage an ownership mentality and align the long-term financial interests of our executives with those of our shareholders. |
| • | Be market competitive with our peers. |
| • | 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 Company’s growth, profitability and other objectives. |
In 2017, our executive compensation structure consisted of three primary components: base salary, annual incentives, and long-term incentives. Within the long-term incentive component, we utilized a balanced portfolio of PSUs and performance-based RSUs.
|
38
|
2018 PROXY STATEMENT
|
|
Table of Contents
Our Compensation Strategy ◆ Compensation Discussion and Analysis
The following table summarizes the key elements of our 2017 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-
|
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 incentive compensation into Martin Marietta stock units.
|
To promote sustainable performance results, a portion of each NEO’s annual cash incentive compensation (35% for the CEO and 20% for the other NEOs) is automatically converted into common stock units. NEOs may elect to convert up to 50% of their annual cash incentive compensation into common stock units.
| ||
|
Long-Term Incentive Awards
|
To align executives with shareholder interests, to reinforce long-term value creation, and to provide a balanced portfolio of long-term incentive opportunities.
|
Variable compensation component. Reviewed and granted annually. New program in 2017 splits long-term incentives for NEOs at 55% PSUs and 45% RSUs.
| ||
|
Performance Share
|
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, EBITDA and Sales Growth, with a modifier based on 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. Awards are subject to achievement of one-year EBITDA.
| ||
|
Health/Welfare Plan and Retirement Benefits
|
To provide competitive benefits promoting employee health and productivity and support financial security.
|
Fixed compensation component.
| ||
|
Perquisites and Other Benefits
|
To provide limited business-related benefits, where appropriate, and to assist in attracting and retaining executive officers.
|
Fixed compensation component.
| ||
|
Change-in-Control Protection
|
To provide continuity of management and bridge future employment if terminated following a change-in-control.
|
Fixed compensation component; only paid in the event the executive’s employment is terminated other than “for cause” or for “good reason”, in either case, in connection with a change in control
|
Ongoing Corporate Governance Policies
|
|
2018 PROXY STATEMENT
|
39
|
Table of Contents
Compensation Discussion and Analysis ◆ Ongoing Corporate Governance Policies
|
40
|
2018 PROXY STATEMENT
|
|
Table of Contents
Compensation Decision Process ◆ Compensation Discussion and Analysis
The following companies comprised our Compensation Peer Group for 2017 base salary 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 |
|
|
2018 PROXY STATEMENT
|
41
|
Table of Contents
Table of Contents
Considerations Regarding 2017 Compensation ◆ Compensation Discussion and Analysis
Considerations Regarding 2017 Compensation
The following chart summarizes the target compensation in our 2017 executive compensation program:
|
Pay Component
|
Summary
|
|||
|
Base Salary |
• At the February 2017 meeting, the Committee reviewed competitive market data and individual performance evaluations. • The Committee approved base salary increases as follows: • Mr. Nye: 3.5% 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 2017. • Other NEOs: approximately 3.0% to 3.3% increases, based on a review of competitive market data and individual performance evaluations.
|
|||
|
Target Annual Cash Incentives |
• NEO target bonuses (as a percentage of base earnings) did not change in 2017 other than Ms. Bar, whose target increased in connection with a promotion in November 2016. • Our shareholders in 2016 approved a new Cash Incentive Plan that fixed the bonus amounts based on certain objective criteria and allowed the Committee to reduce the award based on enumerated factors in the plan. The Committee implemented the Executive Cash Incentive Plan by reference to amounts payable under our Executive Incentive Plan. • 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. Mr. Nickolas and Ms. Lloyd did not participate in this program in 2017.
|
|||
|
Long-Term Incentives |
• Our LTI structure consisted of PSUs and performance-based RSUs. • The LTI awards for NEOs in 2017 were weighted 55% PSUs and 45% RSUs. The LTI grant size is based on competitive market data. • PSU awards in 2017 are earned based on achievement of performance levels, with 33% based on three-year cumulative Sales Growth and 67% based on three-year cumulative EBITDA performance. The Company’s relative TSR ranking compared to major U.S. companies in similar industries provides a modifier to the award up to 20%. • RSU awards to NEOs in 2017 are subject to the achievement of one-year EBITDA performance.
|
|||
|
Total Compensation |
The Committee uses the size-adjusted 50th percentile of our Compensation Peer Group as a guidepost in setting the target for the total compensation opportunity, but considers a variety of factors in setting compensation. 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 2017.
Base Salary
The Committee determines base salaries for the NEOs and other executives based on a number of factors, including but not limited to, market data, individual performance, the Company’s performance, and management recommendations (except for the CEO). At the February 2017 meeting (other than for Mr. Nickolas), based on a review of competitive market data and management’s recommendations based on individual performance (except for the CEO), and the Committee’s assessment of Mr. Nye’s performance, the Committee approved the following increases.
| NEO
|
2017 Base Salary
|
Effective Date*
|
2016 Base Salary
|
|||||
|
C. Howard Nye
|
$1,045,000
|
3/1/17
|
$
|
1,010,000
|
| |||
|
James A. J. Nickolas
|
$ 470,000
|
8/21/17
|
|
—
|
| |||
|
Roselyn R. Bar
|
$ 514,200
|
3/1/17
|
$
|
497,300
|
| |||
|
Donald A. McCunniff
|
$ 384,300
|
3/1/17
|
$
|
372,000
|
| |||
|
Daniel L. Grant
|
$ 362,300
|
3/1/17
|
$
|
351,100
|
| |||
| * | NEO base salaries were increased on March 1, 2017. Mr. Nickolas commenced employment with the Company in August 2017. |
|
|
2018 PROXY STATEMENT
|
43
|
Table of Contents
Compensation Discussion and Analysis ◆ Considerations Regarding 2017 Compensation
| ¹ | Total Injury Incident Rate per 200,000 hours worked |
| ² | General Industry, Asphalt Paving, Cement and Ready Mix reported via BLS through 2016 |
| 3 | Aggregates Industry reported per MSHA website - Stone, Sand & Gravel |
| * | Martin Marietta Year End 2017 performance |
These safety metrics are ones that we are proud of:
| • | More than 90% of our 400+ facilities had no reportable incidents |
| • | 19 sites reached 500,000 hours without any incidents and 11 surpassed one million hours of incident-free work |
| • | 64 sites surpassed 500,000 hours without a lost time incident and 11 exceeded the million-hour mark in that category |
|
44
|
2018 PROXY STATEMENT
|
|
Table of Contents
Considerations Regarding 2017 Compensation ◆ Compensation Discussion and Analysis
The Committee also considered our efforts to tell our sustainability story, which is part of our core strategy. We completed and issued the Company’s third annual sustainability report. “Building. Caring. Growing.” represents our latest publication sharing Martin Marietta’s sustainability story – in 2017 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.
|
|
2018 PROXY STATEMENT
|
45
|
Table of Contents
Compensation Discussion and Analysis ◆ Considerations Regarding 2017 Compensation
2017 Actual Incentive Cash Earned
The table below summarizes the targets for 2017 and annual incentive award earned by each NEO:
| NEO
|
Target Annual Incentive Bonus
|
2017 Target Annual Incentive*
|
2017 Actual Annual Incentive
|
|||||||||
|
C. Howard Nye
|
|
110%
|
|
$
|
1,143,083
|
|
$
|
2,000,000
|
| |||
|
James A. J. Nickolas
|
|
75%
|
|
$
|
129,702
|
|
$
|
162,127
|
| |||
|
Roselyn R. Bar
|
|
80%
|
|
$
|
409,107
|
|
$
|
634,115
|
| |||
|
Donald A. McCunniff
|
|
70%
|
|
$
|
267,575
|
|
$
|
401,363
|
| |||
|
Daniel L. Grant
|
|
70%
|
|
$
|
252,303
|
|
$
|
340,609
|
| |||
| * | Based on actual base earnings in 2017. |
|
46
|
2018 PROXY STATEMENT
|
|
Table of Contents
Considerations Regarding 2017 Compensation ◆ Compensation Discussion and Analysis
|
|
2018 PROXY STATEMENT
|
47
|
Table of Contents
Compensation Discussion and Analysis ◆ Considerations Regarding 2017 Compensation
The following table provides a summary of the long-term incentives that each of the NEOs received in 2017.
| NEO |
RSUs (3 year annual (# of shares) |
PSUs – Target (3 year cliff vesting subject to achievement of performance measures) (# of shares) |
||||||
|
C. Howard Nye
|
|
9,755
|
|
|
11,355
|
| ||
|
James A. J. Nickolas
|
|
6,636
|
*
|
|
—
|
| ||
|
Roselyn R. Bar
|
|
2,807
|
|
|
3,267
|
| ||
|
Donald A. McCunniff
|
|
2,122
|
|
|
2,470
|
| ||
|
Daniel L. Grant
|
|
1,898
|
|
|
2,210
|
| ||
| * | The RSUs granted to Mr. Nickolas were awarded on August 21, 2017 in connection with his hiring and vest over one-, two-, and five-year periods subject to his continued employment. |
2017 Long-Term Incentive Vesting of Prior Grants
PSUs that were granted in 2015 vested on December 31, 2017, because the applicable performance criteria were satisfied. These PSUs were certified and paid out in February 2018 at 94.75% of the amount of the original grant made in 2015 based on: (1) 3-year average Return on Sales (ROS) of 18.4% as against a target of 19.5%; (2) 3-year cumulative EBITDA of $2.91 billion as against a target of $3.42 billion, and (3) TSR performance of our common stock relative to the TSR Peer Group of 93rd percentile as against a target of the 50th percentile.
| Payment Calculation for PSUs Granted in 2015 Certified on February 22, 2018 |
||||||||||||
| NEO |
Target Units Granted in 2015 |
Percentage Payable |
Units Payable |
|||||||||
|
C. Howard Nye
|
|
3,612
|
|
|
95
|
%
|
|
3,423
|
| |||
|
James A.J. Nickolas*
|
|
—
|
|
|
—
|
|
|
—
|
| |||
|
Roselyn R. Bar
|
|
1,620
|
|
|
95
|
%
|
|
1,535
|
| |||
|
Donald A. McCunniff
|
|
1,328
|
|
|
95
|
%
|
|
1,259
|
| |||
|
Daniel L. Grant
|
|
1,253
|
|
|
95
|
%
|
|
1,188
|
| |||
| * | Mr. Nickolas commenced employment with the Company in August 2017. |
|
48
|
2018 PROXY STATEMENT
|
|
Table of Contents
Stock Ownership Guidelines ◆ Compensation Discussion and Analysis
|
|
2018 PROXY STATEMENT
|
49
|
Table of Contents
Compensation Discussion and Analysis ◆ Retirement and Other Benefits
|
50
|
2018 PROXY STATEMENT
|
|
Table of Contents
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, each individual who served as Chief Financial Officer during 2017, and three other executive officers serving as such on December 31, 2017, which we refer to collectively in this section of this proxy statement as the “named executive officers” or “NEOs.” These tables and the accompanying narratives should be read in conjunction with the Compensation Discussion and Analysis section of this proxy statement, which provides a detailed overview of the methods used by Martin Marietta to compensate its officers, including the named executive officers.
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 |
Option Awards ($)3 (f) |
Non-Equity Compensation (g) |
Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)5 (h) |
All
Other Compensation ($)6 (i) |
Total ($) (j) |
|||||||||||||||||||||||||||
|
C. Howard Nye Chairman, President and CEO |
|
2017 |
|
|
1,039,167 |
|
|
— |
|
|
5,431,412 |
|
— |
|
1,000,000
|
|
|
1,414,782 |
|
|
103,804 |
|
|
8,989,165 |
| |||||||||||
|
|
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
|
| |||||||||||||
|
James A.J. Nickolas Senior Vice President and CFO |
|
2017
|
|
|
172,936
|
|
|
—
|
|
|
1,320,232
|
|
— |
|
162,127
|
|
25,995 |
|
8,534
|
|
1,689,824 | |||||||||||||||
|
Roselyn R. Bar Executive Vice President, General Counsel and Corporate Secretary |
|
2017
|
|
|
511,383
|
|
|
—
|
|
|
1,433,583
|
|
— |
|
475,586
|
|
1,039,249 |
|
52,062 |
|
3,511,863 | |||||||||||||||
|
|
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
|
| |||||||||||||
|
Donald A. McCunniff Senior Vice President, Human Resources |
|
2017
|
|
|
382,250
|
|
|
—
|
|
|
1,044,225
|
|
— |
|
321,090
|
|
292,574 |
|
51,251
|
|
2,091,390 | |||||||||||||||
|
|
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
|
| |||||||||||||
|
Daniel L. Grant Senior Vice President, Strategy & Development |
|
2017
|
|
|
360,433
|
|
|
—
|
|
|
947,503
|
|
— |
|
255,457
|
|
193,221 |
|
38,825 |
|
1,795,439 | |||||||||||||||
|
|
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
|
| |||||||||||||
| Former Executive Officer: Anne H. Lloyd Executive Vice President and CFO |
|
2017
|
|
|
580,423
|
|
|
—
|
|
|
1,353,145
|
|
— |
|
446,227
|
|
869,162 |
|
78,089
|
|
3,327,046 | |||||||||||||||
|
|
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
|
| |||||||||||||
| 1 | The amounts in column (d) for 2016 and 2015 reflect the cash bonuses to the named individuals earned under annual incentive arrangements. 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 Marietta’s Incentive Stock Plan, which is discussed in further detail on page 46 under the heading “Annual Incentive Feature: Performance-Based Stock Purchase Plan.” Column (e) includes the amounts mandatorily deferred in 2016 and 2015 under the Incentive Stock Plan. |
|
|
2018 PROXY STATEMENT
|
51
|
Table of Contents
Executive Compensation ◆ Summary Compensation Table
| 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; and awards of PSUs, which are described in more detail on pages 46 to 48 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 years) and, in the case of the PSUs, if Martin Marietta does not achieve the applicable performance criteria. The amounts reported for 2016 and 2015 include awards related to the amount of cash bonus irrevocably and mandatorily deferred in common stock units by each named executive officer pursuant to Martin Marietta’s Incentive Stock Plan, which is discussed in further detail on page 46 under the heading “Annual Incentive Feature: Performance-Based Stock Purchase Plan”. The amounts in column (e) for 2016 and 2015 do not include the 20% discount on the Incentive Stock Plan units, which is reported in column (i). The amount in column (e) includes PSUs based on the target level of performance. Assuming the maximum payout under the PSUs granted in 2017, which will be determined in January 2020 based on the Company’s performance in 2017-2019, the amounts reported above for 2017 would be as follows: Mr. Nye, $4,767,283; Mr. Nickolas, $0; Ms. Bar, $1,371,617; Mr. McCunniff, $1,037,005; Mr. Grant, $927,846; and Ms. Lloyd, $1,455,585. Assumptions used in the calculation of these amounts are included in Note A to Martin Marietta’s audited financial statements for the fiscal year ended December 31, 2017, included in Martin Marietta’s Annual Report on Form 10-K filed with the SEC on February 24, 2018. The amounts of cash bonus deferred in 2017 for each named executive officer are included in column (e) as follows: Mr. Nye, $1,000,000; Mr. Nickolas, $0; Ms. Bar, $158,529; Mr. McCunniff, $80,273; Mr. Grant, $85,152; and Ms. Lloyd, $0. |
| 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 (g) for 2017 reflect the cash paid to the named individuals earned in 2017 and paid in 2018 under annual incentive arrangements discussed in further detail on pages 44 to 48 under the headings “Annual Cash Incentive: Executive Cash Incentive Plan” and “2017 CEO Annual Incentive Award Earned” and not deferred pursuant to Martin Marietta’s Incentive Stock Plan, which is discussed in further detail on page 46 under the heading “Annual Incentive Feature: Performance-Based Stock Purchase Plan.” |
| 5 | The amounts in column (h) reflect the aggregate increase in the actuarial present value of the named executive officer’s accumulated benefits during 2017, 2016 and 2015, respectively, under all defined benefit retirement plans established by Martin Marietta determined using interest rate and mortality rate assumptions consistent with those used in Martin Marietta’s financial statements and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested. |
| 6 | The amount shown in column (i) for 2017 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 56 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 56 under the heading “Retirement and Other Benefits”; and the value attributable to personal use of leased automobiles provided by Martin Marietta. 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 $25,000 or 10% of the total perquisites for each named executive officer. The amounts in column (i) also reflect the 20% discount from the market price of Martin Marietta’s common stock pursuant to the elective deferrals under the Incentive Stock Plan in each of 2016 and 2015, and the dollar value of dividend equivalents on units credited under the equity awards as computed for financial statement reporting purposes for each fiscal year ended December 31, 2017, 2016 and 2015 in accordance with FASB ASC Topic 718. |
|
52
|
2018 PROXY STATEMENT
|
|
Table of Contents
Grants of Plan-Based Awards ◆ Executive Compensation
The table below shows each grant of an award made to a named executive officer in the fiscal year ended December 31, 2017. This includes equity awards made to the named executive officers under the Stock Plan and the Incentive Stock Plan.
GRANTS OF PLAN-BASED AWARDS TABLE
|
Estimated Future Payouts |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other of Stock |
Grant Date Fair Value of Stock and Option Awards4 |
|||||||||||||||||||||||||||||||||
| Name |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||
| (a) |
(b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | |||||||||||||||||||||||||||
|
C. Howard Nye |
|
2/22/18
|
1
|
|
571,542
|
|
|
3,750,000
|
|
|
3,233
|
|
|
21,214
|
|
|
685,784
|
| ||||||||||||||||||
|
|
3/28/17
|
|
|
5,678
|
|
|
11,355
|
|
|
22,710
|
|
|
2,383,642
|
| ||||||||||||||||||||||
|
|
3/28/17
|
2
|
|
9,755
|
|
|
2,047,770
|
| ||||||||||||||||||||||||||||
|
James A. J. Nickolas |
|
2/22/18
|
1
|
|
129,702
|
|
|
7,500,000
|
|
|||||||||||||||||||||||||||
| 8/21/17 | 2 | 6,636 | 1,320,232 | |||||||||||||||||||||||||||||||||
|
Roselyn R. Bar |
|
2/22/18
|
1
|
|
306,830
|
|
|
5,625,000
|
|
|
579
|
|
|
10,607
|
|
122,817 | ||||||||||||||||||||
|
|
3/28/17
|
3
|
|
1,634
|
|
|
3,267
|
|
|
6,534
|
|
|
685,809
|
| ||||||||||||||||||||||
|
|
3/28/17
|
2
|
|
2,807
|
|
|
589,245
|
| ||||||||||||||||||||||||||||
|
Donald A. McCunniff |
|
2/22/18 |
1 |
|
214,060 |
|
|
6,000,000 |
|
303 | 8,486 | 64,272 | ||||||||||||||||||||||||
|
|
3/28/17 |
3 |
|
1,235 |
|
|
2,470 |
|
|
4,940 |
|
|
518,502 |
| ||||||||||||||||||||||
|
|
3/28/17
|
2
|
|
2,122
|
|
|
445,450
|
| ||||||||||||||||||||||||||||
|
Daniel L. Grant |
|
2/22/18
|
1
|
|
189,227
|
|
|
5,625,000
|
|
|
357
|
|
|
10,607
|
|
75,727 | ||||||||||||||||||||
|
|
3/28/17
|
3
|
|
1,105
|
|
|
2,210
|
|
|
4,420
|
|
|
463,923
|
| ||||||||||||||||||||||
|
|
3/28/17
|
2
|
|
1,898
|
|
|
398,428
|
| ||||||||||||||||||||||||||||
|
Former Executive Officer: Anne H. Lloyd |
|
2/22/18
|
1
|
|
446,227
|
|
|
7,500,000
|
|
|||||||||||||||||||||||||||
|
|
3/28/17
|
3
|
|
1,734
|
|
|
3,467
|
|
|
6,934
|
|
|
727,793
|
| ||||||||||||||||||||||
|
|
3/28/17
|
2
|
|
2,979
|
|
|
625,352
|
| ||||||||||||||||||||||||||||
| 1 | The amounts shown in this row reflect the annual bonus that could have been earned in 2017, payable in 2018, pursuant to the Executive Cash Incentive Plan. For each named executive officer, the amounts shown in columns (d) and (e) reflect the portion of the annual bonus that would have been paid in cash if, respectively, target and maximum performance was achieved for the year (i.e., after reduction for the total portion that would be deferred pursuant to the Incentive Stock Plan pursuant to both mandatory and voluntary deferrals). The amounts shown in columns (g) and (h) reflect the portion of the annual bonus that would have been deferred pursuant to the Incentive Stock Plan if, respectively, target and maximum performance was achieved for the year, inclusive of the 20% discount. Participants in the Incentive Stock Plan for 2017 were approved on May 18, 2017. Therefore, Mr. Nickolas, who commenced employment with the Company in August 2017, did not participate in the Incentive Stock Plan in 2017. These awards are discussed under the heading “Annual Incentive Feature: Performance-Based Stock Purchase Plan” on page 46. The actual amounts paid are reflected in the Summary Compensation Table on page 51. |
|
|
2018 PROXY STATEMENT
|
53
|
Table of Contents
Executive Compensation ◆ Grants of Plan-Based Awards
| 2 | The amounts shown in column (i) reflect the number of RSUs granted in 2017 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 46 to 48. These awards are also included in column (e) of the Summary Compensation Table on page 51. |
| 3 | 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 2017-2019. These awards are discussed under the heading “Long-Term Incentive Compensation” on pages 46 to 48. |
| 4 | No options to purchase shares of Martin Marietta’s common stock were granted in 2017. The amounts shown in column (l) reflect the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718. |
|
54
|
2018 PROXY STATEMENT
|
|
Table of Contents
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, 2017.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||
| Name |
Number
of (#) |
Number
of (#) |
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)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||||||||||||||||
| C. Howard Nye |
|
11,196 12,609 16,317 14,475 3,396 3,170 |
|
|
0 0 0 0 3,396 6,340 |
2 3 |
|
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 |
|
|
22,070 6,340 7,112 9,755 4,666 5,991 |
4 5 6 7 8 9 |
|
4,878,353 1,401,394 1,572,036 2,156,245 1,031,373 1,324,251 |
|
|
3,612 21,339 11,355 |
10 11 12 |
|
798,396 4,716,773 2,509,909 |
| ||||||||
| James A. J. Nickolas |
6,636 | 13 | 1,466,821 | |||||||||||||||||||||||||||||
| Roselyn R. Bar |
|
3,096 3,485 4,513 4,004 940 827 |
|
|
0 0 0 0 937 1,651 |
2 3 |
|
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 |
|
|
9,913 1,653 1,566 2,807 757 1,121 |
4 5 6 7 8 9 |
|
2,191,170 365,379 346,149 620,459 167,327 247,786 |
|
|
1,620 4,697 3,267 |
10 11 12 |
|
358,085 1,038,225 722,138 |
| ||||||||
| Donald A. McCunniff |
|
1,818 3,226 2,271 1,332 |
|
|
0 805 756 1,331 |
2 3 |
|
69.12 108.24 121.00 154.58 |
|
|
5/24/2020 5/23/2023 5/22/2024 5/21/2025 |
|
|
8,127 1,332 980 2,122 481 485 |
4 5 6 7 8 9 |
|
1,796,392 294,425 216,619 469,047 106,320 107,240 |
|
|
1,328 2,942 2,470 |
10 11 12 |
|
293,541 650,300 545,969 |
| ||||||||
| Daniel L. Grant |
|
408 359 |
|
|
408 717 |
2 3 |
|
121.00 154.58 |
|
|
5/22/2024 5/21/2025 |
|
|
7,643 718 802 1,833 680 568 |
4 5 6 7 8 9 |
|
1,689,409 158,707 177,274 405,166 150,307 125,551 |
|
|
1,253 2,407 2,210 |
10 11 12 |
|
276,963 532,043 488,498 |
| ||||||||
| Former Executive Officer: Anne H. Lloyd |
|
0 0 |
|
|
1,151 2,023 |
2 3 |
|
121.00 154.58 |
|
|
5/22/2024 5/21/2025 |
|
|
11,878 2,025 1,672 2,979 1,003 788 |
4 5 6 7 8 9 |
|
2,625,513 447,606 369,579 658,478 221,703 174,180 |
|
|
1,941 5,017 3,467 |
10 11 12 |
|
429,039 1,108,958 766,346 |
| ||||||||
| 1 | Based on the closing price of our common stock as of December 29, 2017 ($221.04). |
| 2 | Options exercisable on May 22, 2018. |
| 3 | Options exercisable ratably in installments on May 21, 2018 and 2019. |
| 4 | RSU restrictions lapse August 21, 2019. |
| 5 | RSU restrictions lapse on May 21, 2018. |
| 6 | RSU restrictions lapse ratably in installments on February 4, 2018 and February 4, 2019. |
|
|
2018 PROXY STATEMENT
|
55
|
Table of Contents
Executive Compensation ◆ Outstanding Equity Awards at Fiscal Year-End
| 7 | RSU restrictions lapse ratably in installments on March 28, 2018, March 28, 2019 and March 28, 2020. |
| 8 | Incentive Stock Plan units restrictions lapse on December 1, 2018. |
| 9 | Incentive Stock Plan units restrictions lapse on December 1, 2019. |
| 10 | The amount for these outstanding awards of PSUs are presented at the target performance levels. The awards generally vest at December 31, 2017. |
| 11 | The amount for these outstanding awards of PSUs are presented at the target performance levels. The awards generally vest at December 31, 2018. |
| 12 | The amount for these outstanding awards of PSUs are presented at the target performance levels. The awards generally vest at December 31, 2019. |
| 13 | RSU vests as follows subject to continued employment on the dates of vesting: 1,506 units vest on December 31, 2018, 1,083 units vest on December 31, 2019, and 4,047 units vest on August 21, 2022. If Mr. Nickolas’ employment terminates prior to August 21, 2022 as a result of his voluntary termination or the Company’s termination of Mr. Nickolas for cause, all outstanding RSUs expire and he is required to return to the Company the value of any vested shares of common stock that vested in connection with this award. |
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 Marietta’s common stock and (2) the vesting of stock, including RSUs, PSUs and Incentive Stock Plan units, during the last completed fiscal year. There are no awards of stock appreciation rights for Martin Marietta’s common stock or other similar instruments.
OPTION EXERCISES AND STOCK VESTED TABLE
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||
| Name (a) |
Number of Shares (#) (b) |
Value Realized ($) (c) |
Number
of (#) (d) |
Value Realized ($) (e) |
||||||||||||
| C. Howard Nye |
15,039 | 2,396,740 | 20,108 | 3,854,461 | ||||||||||||
| James A. J. Nickolas |
0 | 0 | 0 | 0 | ||||||||||||
| Roselyn R. Bar |
0 | 0 | 5,175 | 1,054,936 | ||||||||||||
| Donald A. McCunniff |
1,819 | 308,057 | 3,789 | 792,065 | ||||||||||||
| Daniel L. Grant |
0 | 0 | 3,085 | 979,118 | ||||||||||||
| Former Executive Officer: Anne H. Lloyd |
29,727 | 3,878,895 | 6,307 | 1,270,720 | ||||||||||||
| 1 | The amounts in column (e) include the value of RSUs and PSUs at the time of vesting and the appreciation of both mandatory and voluntary contributions under the Incentive Stock Plan. |
|
56
|
2018 PROXY STATEMENT
|
|
Table of Contents
Option Exercises and Stock Vested ◆ Executive Compensation
|
|
2018 PROXY STATEMENT
|
57
|
Table of Contents
Executive Compensation ◆ Pension Benefits
The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under our Pension Plan and SERP, determined using interest rate and mortality rate assumptions consistent with those used in Martin Marietta’s financial statements.
PENSION BENEFITS TABLE
| Name (a) |
Plan Name (b) |
Numbers of Years Credited Service (#) (c) |
Present Value of Accumulated Benefit ($)1 (d) |
Payments During Last Fiscal Year ($) (e) |
||||||||||
| C. Howard Nye |
Pension Plan SERP |
|
11.417 11.417 |
|
|
476,596 4,103,323 |
|
|||||||
| James A. J. Nickolas |
Pension Plan SERP |
|
.417 .417 |
|
|
13,278 12,717 |
|
|||||||
| Roselyn R. Bar |
Pension Plan SERP |
|
23.500 23.500 |
|
|
1,235,701 2,933,371 |
|
|||||||
| Donald A. McCunniff |
Pension Plan SERP |
|
6.417 6.417 |
|
|
331,290 549,247 |
|
|||||||
| Daniel L. Grant |
Pension Plan SERP |
|
4.333 4.333 |
|
|
224,692 305,093 |
|
|||||||
| Former Executive Officer: Anne H. Lloyd |
Pension Plan SERP |
|
19.583 19.583 |
|
|
915,257 2,828,200 |
|
|||||||
| 1 | Amounts in column (d) reflect the valuation method and use the assumptions that are included in Notes A and J to Martin Marietta’s audited financial statements for the fiscal year ended December 31, 2017, included in Martin Marietta’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 23, 2018. |
|
58
|
2018 PROXY STATEMENT
|
|
Table of Contents
Table of Contents
Executive Compensation ◆ Potential Payments Upon Termination or Change of Control
|
60
|
2018 PROXY STATEMENT
|
|
Table of Contents
Potential Payments Upon Termination or Change of Control ◆ Executive Compensation
Value of Payments Upon Termination. The following table shows 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, 2017 termination date and, where applicable, using the NYSE closing price of our common stock of $221.04 on December 29, 2017 (the last trading day of 2017).
POTENTIAL INCREMENTAL VALUE OF PAYMENTS UPON TERMINATION
OR CHANGE OF CONTROL AT DECEMBER 31, 20171
| Name |
Benefit or Payment2 |
Retirement ($) |
Involuntary Not-for- Cause Termination ($) |
Disability ($) |
Death ($) |
Change- of- Control ($) |
||||||||||||||||
| Cash Severance3 | 9,146,391 | |||||||||||||||||||||
| Unvested Restricted Stock Units4 | 5,129,675 | 4,878,353 | 10,008,028 | 10,008,028 | 10,008,028 | |||||||||||||||||
| Unexercisable Options5 | 762,225 | 762,225 | 762,225 | 762,225 | ||||||||||||||||||
| Unvested Incentive Stock Plan Units6 | 891,311 | 462,289 | 891,311 | 891,311 | 891,311 | |||||||||||||||||
| C. Howard Nye |
Performance Shares7 | 7,226,682 | 7,226,682 | 7,226,682 | 7,226,682 | |||||||||||||||||
| Retirement Plans8 | 1,823,680 | 0 | 11,998,395 | |||||||||||||||||||
| Health and Welfare Benefits9 | 80,027 | |||||||||||||||||||||
| Retiree Medical Benefits10 | 0 | |||||||||||||||||||||
| Excise Tax & Gross-up | 15,583,834 | |||||||||||||||||||||
| Cash Severance3 | 1,413,531 | |||||||||||||||||||||
| Unvested Restricted Stock Units4 | 0 | 1,466,821 | 1,466,821 | 1,466,821 | 1,466,821 | |||||||||||||||||
| Unexercisable Options5 | 0 | |||||||||||||||||||||
| Unvested Incentive Stock Plan Units6 | 0 | |||||||||||||||||||||
| James A. J. Nickolas |
Performance Shares7 | 0 | ||||||||||||||||||||
| Retirement Plans8 | 452,374 | 0 | 492,058 | |||||||||||||||||||
| Health and Welfare Benefits9 | 75,983 | |||||||||||||||||||||
| Retiree Medical Benefits10 | 0 | |||||||||||||||||||||
| Excise Tax & Gross-up | 1,269,472 | |||||||||||||||||||||
| Cash Severance3 | 3,442,713 | |||||||||||||||||||||
| Unvested Restricted Stock Units4 | 1,331,987 | 2,191,170 | 3,523,157 | 3,523,157 | 3,523,157 | |||||||||||||||||
| Unexercisable Options5 | 204,102 | 204,102 | 204,102 | 204,102 | ||||||||||||||||||
| Unvested Incentive Stock Plan Units6 | 152,677 | 77,377 | 152,677 | 152,677 | 152,677 | |||||||||||||||||
| Roselyn R. Bar |
Performance Shares7 | 1,760,363 | 1,760,363 | 1,760,363 | 1,760,363 | |||||||||||||||||
| Retirement Plans8 | 0 | 0 | 5,131,360 | |||||||||||||||||||
| Health and Welfare Benefits9 | 47,211 | |||||||||||||||||||||
| Retiree Medical Benefits10 | 0 | |||||||||||||||||||||
| Excise Tax & Gross-up | 5,449,717 | |||||||||||||||||||||
| Cash Severance3 | 2,395,722 | |||||||||||||||||||||
| Unvested Restricted Stock Units4 | 980,091 | 1,796,392 | 2,776,483 | 2,776,483 | 2,776,483 | |||||||||||||||||
| Unexercisable Options5 | 164,254 | 164,254 | 164,254 | 164,254 | ||||||||||||||||||
| Unvested Incentive Stock Plan Units6 | 84,902 | 45,624 | 84,902 | 84,902 | 84,902 | |||||||||||||||||
| Donald A. McCunniff |
Performance Shares7 | 1,196,268 | 1,196,268 | 1,196,268 | 1,196,268 | |||||||||||||||||
| Retirement Plans8 | 185,652 | 0 | 1,382,454 | |||||||||||||||||||
| Health and Welfare Benefits9 | 33,872 | |||||||||||||||||||||
| Retiree Medical Benefits10 | 0 | |||||||||||||||||||||
| Excise Tax & Gross-up | 2,821,040 | |||||||||||||||||||||
| Cash Severance3 | 2,238,580 | |||||||||||||||||||||
| Unvested Restricted Stock Units4 | 741,147 | 1,689,409 | 2,430,556 | 2,430,556 | 2,430,556 | |||||||||||||||||
| Unexercisable Options5 | 88,557 | 88,557 | 88,557 | 88,557 | ||||||||||||||||||
| Unvested Incentive Stock Plan Units6 | 113,477 | 62,550 | 113,477 | 113,477 | 113,477 | |||||||||||||||||
| Daniel L. Grant11 |
Performance Shares7 | 1,020,542 | 1,020,542 | 1,020,542 | 1,020,542 | |||||||||||||||||
| Retirement Plans8 | 377,648 | 0 | 959,816 | |||||||||||||||||||
| Health and Welfare Benefits9 | 33,035 | |||||||||||||||||||||
| Retiree Medical Benefits10 | 0 | |||||||||||||||||||||
| Excise Tax & Gross-up | 2,390,824 | |||||||||||||||||||||
|
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2018 PROXY STATEMENT
|
61
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Table of Contents
Executive Compensation ◆ Potential Payments Upon Termination or Change of Control
| 1 | Ms. Lloyd retired from the Company on December 31, 2017. In connection with her separation, she received the following: salary in the amount of $1,962,100; health and welfare benefits in the amount of $94,628; continued vesting of unvested RSUs with a value of $395,883; continued vesting of unexercisable options with a value of $115,447; unvested Incentive Stock Plan units with a value of $301,344; continued vesting of PSUs with a value of $1,541,406; and a severance payment of $671,000 payable on January 1, 2021. In addition, Ms. Lloyd’s Employment Protection Agreement terminated as of September 30, 2017. |
| 2 | 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, 2017. |
| 3 | Assumes all earned base salary has been paid. |
| 4 | Reflects the estimated lump-sum intrinsic value of all unvested RSUs. |
| 5 | Reflects the estimated lump-sum intrinsic value of unvested stock options. |
| 6 | 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. |
| 7 | Reflects the estimated lump-sum intrinsic value of all unvested PSUs. |
| 8 | 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 Marietta’s retirement plans, which is disclosed in the Pension Benefits Table and the accompanying narrative on page 58. Change of Control values include the incremental value of the benefit (including three times Martin Marietta’s match to the defined contribution plan) payable upon a qualifying termination of employment following a Change of Control. |
| 9 | 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 Marietta’s health and welfare plans, including long-term disability and life insurance. |
| 10 | 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. |
| 11 | Mr. Grant was not eligible to retire on December 31, 2017. Reflects the value as if Mr. Grant were retirement eligible. |
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2018 PROXY STATEMENT
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Table of Contents
Table of Contents
Securities Authorized for Issuance
Under Equity Compensation Plans
The following table shows information as of December 31, 2017 regarding Martin Marietta’s compensation plans that allow Martin Marietta to issue its equity securities. Martin Marietta’s 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 Marietta’s 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
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Number of securities for future issuance reflected in column (c)
|
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Equity compensation plans approved by shareholders
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682,6191
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$114.25
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1,190,8684
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Equity compensation plans not approved by shareholders
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112,6882
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$ 51.66
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05
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TOTAL
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795,307
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$ 96.18
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1,190,868
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| |||
| 1 | Includes 203,870 stock options that have a weighted-average exercise price of $110.63; 440,461 restricted stock units that have a $0 exercise price; and 38,288 stock units granted in accordance with Martin Marietta’s Incentive Stock Plan that are credited to participants at an average weighted cost of $133.54. The restricted stock units and stock units granted in accordance with Martin Marietta’s Incentive Stock Plan represent Martin Marietta’s obligation to issue shares in the future subject to certain conditions in accordance with Martin Marietta’s 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 Marietta’s common stock available for issuance (other than those reported in column (a)) under Martin Marietta’s equity compensation plans as of December 31, 2017 in the following amounts: Directors’ Plan (146,588 shares), Stock-Based Award Plan (836,305 shares), and Shareholder Value Achievement Plan (207,975 shares). Also excludes Texas Industries Inc. stock-based award plans (1,865,240 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 1,865,240 shares of Martin Marietta’s 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, 2017. |
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64
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2018 PROXY STATEMENT
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Table of Contents
Description of the TXI Legacy Plan ◆ Securities Authorized for Issuance Under Equity Compensation Plans
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2018 PROXY STATEMENT
|
65
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Table of Contents
Table of Contents
◆ Annual Meeting and Voting Information
|
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2018 PROXY STATEMENT
|
67
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Table of Contents
Table of Contents
Table of Contents
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.
EBITDA is a widely accepted financial indicator of a company’s 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 a reconciliation of net earnings attributable to Martin Marietta to consolidated EBITDA for the years ended December 31, 2017, 2016, 2015 and 2010
(dollars in thousands)
Consolidated EBITDA for years ended December 31:
|
2017
|
2016
|
2015
|
2010
|
|||||||||||||||||||||||||||||
|
Net earnings attributable to Martin Marietta |
$ | 713,342 | $ | 425,386 | $ | 288,792 | $ | 97,012 | ||||||||||||||||||||||||
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Add back: |
||||||||||||||||||||||||||||||||
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Interest expense |
91,487 | 81,677 | 76,287 | 68,456 | ||||||||||||||||||||||||||||
|
Income tax (benefit) expense for controlling interests |
(94,401 | ) | 181,524 | 124,863 | 29,307 | |||||||||||||||||||||||||||
|
Depreciation, depletion and amortization expense |
293,951 | 283,003 | 260,836 | 179,877 | ||||||||||||||||||||||||||||
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Consolidated EBITDA
|
$ | 1,004,379 | $ | 971,590 | $ | 750,778 | $ | 374,652 | ||||||||||||||||||||||||
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2018 PROXY STATEMENT
|
B-1
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Table of Contents
Table of Contents
ANNUAL MEETING OF SHAREHOLDERS OF
MARTIN MARIETTA MATERIALS, INC.
May 17, 2018
|
PROXY VOTING INSTRUCTIONS
|
|
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The proxy statement, form of proxy card and 2017 Annual Report to Shareholders are available for review on the Internet at http://ir.martinmarietta.com/investor-relations/reports-filings
|
i Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. i
| ⬛ 00033333333300000000 8 | 051718 |
| YOU DO NOT NEED TO MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” ITEMS 1, 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒
|
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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, and FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers. The Board of Directors recommends voting FOR each item.
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy Statement is hereby acknowledged. |
1. |
Election of Directors: |
FOR |
AGAINST |
ABSTAIN | |||||||
|
Sue W. Cole |
☐ | ☐ | ☐ | |||||||||
|
Smith W. Davis |
☐ | ☐ | ☐ | |||||||||
|
John J. Koraleski |
☐ | ☐ | ☐ | |||||||||
|
David G. Maffucci |
☐ | ☐ | ☐ | |||||||||
|
Michael J. Quillen |
☐ | ☐ | ☐ | |||||||||
|
Donald W. Slager |
☐ | ☐ | ☐ | |||||||||
|
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. |
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournments thereof.
| |||||||||||
| 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. | ⬛ |
Table of Contents
ANNUAL MEETING OF SHAREHOLDERS OF
MARTIN MARIETTA MATERIALS, INC.
May 17, 2018
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 2017 Annual Report to Shareholders
are available for review on the Internet at http://ir.martinmarietta.com/investor-relations/reports-filings
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
i Please detach along perforated line and mail in the envelope provided. i
| ⬛ | 00033333333300000000 8 | 051718 |
YOU DO NOT NEED TO MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’
RECOMMENDATIONS.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” ITEMS 1, 2 AND 3.
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, and FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers. The Board of Directors recommends voting FOR each item.
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy Statement is hereby acknowledged. |
1. |
Election of Directors: |
FOR |
AGAINST |
ABSTAIN | |||||||
|
Sue W. Cole |
☐ | ☐ | ☐ | |||||||||
|
Smith W. Davis |
☐ | ☐ | ☐ | |||||||||
|
John J. Koraleski |
☐ | ☐ | ☐ | |||||||||
|
David G. Maffucci |
☐ | ☐ | ☐ | |||||||||
|
Michael J. Quillen |
☐ | ☐ | ☐ | |||||||||
|
Donald W. Slager |
☐ | ☐ | ☐ | |||||||||
|
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. |
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting, or any adjournments thereof.
| |||||||||||
|
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. | ⬛ |
Table of Contents
| 0 | ⬛ | |||||
|
MARTIN MARIETTA MATERIALS, INC. |
||||||
|
Proxy solicited by the Board of Directors for the |
||||||
| Annual Meeting to be held May 17, 2018 | ||||||
|
The undersigned hereby appoints C. Howard Nye and James A. J. Nickolas, 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 17, 2018, and at any adjournment thereof. |
||||||
|
(Continued and to be signed on the reverse side) |
||||||
|
⬛ |
1.1 |
14475 |
⬛ | |||