Page 60 - Martin Marietta - 2021 Proxy Statement

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

2) Sales Growth, measuring growth and comprising 33% of the total target award.
3) In addition, relative Total Shareholder Return (rTSR) will act as a modifier for the performance such that Martin
Marietta’s performance will be measured against the S&P 500, and will modify the total award by a range of -20% to
+20%.

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

Cumulative Cumulative Relative TSR
EBITDA Sales Growth Modifier
67% 33% +/-20%

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

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

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

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

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

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

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