Page 59 - Martin Marietta - 2022 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS / ANNUAL INCENTIVE FEATURE: STOCK PURCHASE PLAN

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

The units generally vest in three years from the date of the award and are distributed in shares of common stock. If an
executive officer voluntarily terminates employment before the units vest, the stock units are forfeited and the executive
officer receives a cash payment equal to the lesser of the cash that was invested or the fair value of the share units on the
day of termination. Mr. Nye deferred 35% of his 2021 cash bonus in stock units.

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

2021 Long-Term Incentive Compensation Overview

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

The award in 2021 for all NEOs was determined as a fixed percentage of base salary with some variation for position and
grade, which amount was converted into common stock units based on the average Martin Marietta stock price for the
20-day period ending on February 17, 2021, the day the Martin Marietta Board of Directors confirmed the award, or
$304.6665. This award value was then divided into PSUs and performance-based RSUs, with 55% of the total award for
NEOs consisting of the PSUs at target level and 45% of the total award for NEOs consisting of performance-based RSUs.
The Committee believes that the incentive mix (PSUs and performance-based RSUs) constitutes an appropriate pay process
and streamlined plan, which more fully reflects the performance of the Company and is better aligned with each NEO’s
role within Martin Marietta. See a further description under Outstanding Equity Awards at Fiscal Year-End and
corresponding footnotes on page 68.

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

LTI
LTI Target PSU RSU
Salary Target Value PSU Value RSU Value
$ % $ % $ % $
$150,000 140% $210,000 55% $115,500 45% $94,500

PSU Awards (55% of LTI Award)

One of our compensation objectives is to align the potential rewards to senior management with increases in shareholder
value. In that regard, the PSUs give the recipient the opportunity to receive Martin Marietta common stock if specific
performance goals are achieved, consisting of:
1) Earnings before Interest, Income Taxes, Depreciation and Amortization (EBITDA), measuring profitability and
comprising 67% of the total target award, and
2) Sales Growth, measuring growth and comprising 33% of the total target award.

54 2022 PROXY STATEMENT