Page 86 - Martin Marietta - 2023 Proxy Statement

EXECUTIVE COMPENSATION / POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Payments Upon or in Connection With a Change of Control. Martin Marietta has entered into Employment Protection
Agreements, as amended from time to time, with each of the named executive officers. The purpose of these agreements
is to provide Martin Marietta’s key executives with payments and benefits upon certain types of terminations within two
years following a “Change of Control.” For purposes of the agreements, a Change of Control is generally defined as (i) the
acquisition by any person, or related group of persons, of 40% or more of either the outstanding common stock of Martin
Marietta or the combined voting power of Martin Marietta’s outstanding securities, (ii) consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all of Martin Marietta’s assets following which
Martin Marietta’s shareholders before such event fail to own more than 50% of the resulting entity, (iii) a change in the
majority membership of the Board, or (iv) a liquidation or dissolution of Martin Marietta.

The agreements provide that if, within the two-year period following a Change of Control, an executive is terminated
without “Cause” (as defined in the agreements) or terminates his or her employment with “Good Reason” (as defined in
the agreements), Martin Marietta is obligated to pay the executive, in a lump sum, an amount equal to three times the
sum of the executive’s base salary, annual bonus, and Martin Marietta’s match to the defined contribution plan; the
payment of a pro-rata annual target bonus in the year of termination as determined under the Executive Cash Incentive
Plan (for Mr. Nye such target bonus is 140% for purposes of the Employment Protection Agreement) and to provide
continuation of health, medical and other insurance benefits for a period of three years following termination. The
rationale for selecting these triggers is to encourage the named executive officers to remain focused on Martin Marietta,
its performance and matters that are in the best interests of its shareholders rather than be distracted by the personal
impact to their employment that the Change of Control may have. For purposes of the agreements, “base salary” means
the highest annual rate of base salary that the executive received within the twelve-month period ending on the date of
the Change of Control, and “annual bonus” means the executive’s highest annual bonus paid during the period beginning
five years prior to the Change of Control and ending on the date of the executive’s termination of employment. Executives
also are credited with an additional three years of service under the Pension Plan and are eligible to retire after age 55
without reduction in benefits and with a lump sum payment based on a 0% discount rate. Martin Marietta must also
continue to provide the executive all benefits provided under Martin Marietta’s defined benefit and defined contribution
retirement plans and provide the executive with the same retiree medical benefits that were in effect for retirees
immediately prior to the Change of Control. The agreements also have confidentiality requirements to ensure that the
executives do not disclose any confidential information relating to Martin Marietta.

The agreements were amended in December 2018 in response to the 2018 Say On Pay vote that was supported by 78.9%
of the shareholders that voted. The amendments eliminated (1) the “gross up” payments that compensate the executives
for any golden parachute excise taxes imposed under the Internal Revenue Code; (2) the “walk-right” if the executive
voluntarily terminates his or her employment for any reason during the thirty-day period following the second anniversary
of the Change of Control; and (3) the inclusion of the value of perquisites in the severance payment provided for in the
agreements.

The term of the agreements is one year following their effective dates. On each anniversary date of the effective date, the
agreements are renewed for one additional year, unless either party gives notice of its intent to cancel the automatic
extension. If, prior to termination, a Change of Control occurs or the Board becomes aware of circumstances which in the
ordinary course could result in a Change of Control, then under no circumstances will the agreements terminate prior to
the second anniversary of the Change of Control.

In addition, the Stock Plan, pursuant to which equity-based awards are made to the executive officers, provides that upon
the occurrence of a Change of Control of Martin Marietta as provided in the Employment Protection Agreements, all time
periods for purposes of vesting in, or realizing gain from, any outstanding award under the plan will automatically
accelerate. For purposes of such vesting, any performance criteria will be deemed achieved at the greater of target
performance and actual performance, as measured through the date of the Change of Control. In December 2018, in
response to the 2018 Say On Pay vote, the Company’s form of RSU award agreement and PSU award agreement were
changed such that future grants of RSUs and PSUs will require termination of the executive’s employment in connection
with a Change of Control in order for accelerated vesting to occur.

80 2023 PROXY STATEMENT