Page 71 - Martin Marietta - 2024 Proxy Statement

SELECTION OF RELATIVE TSR / COMPENSATION DISCUSSION AND ANALYSIS

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 similar companies in the
building construction materials industry 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.

We believe that Adjusted EBITDA, Sales Growth and rTSR metrics drive the behaviors of our management team in ways
that are intended to create the most value for our shareholders.

RSU Awards (45% of LTI Award)
RSUs vest in three equal portions, each on the anniversary of the grant date (February 24, 2023) over a period of three
years, subject generally to continued employment through each one of those anniversaries. Once the restricted period
ends (each anniversary for one third of the total RSU award), the recipient will be issued unrestricted shares of common
stock (minus applicable taxes). The Committee believes that time-based RSUs align executive officers’ interests with those
of shareholders, provides significant retentive characteristics and balances the significant amount of performance-based
compensation provided, including the transition to the formulaic performance-based short term incentive award in 2023.

2023-2025 Performance Goals
In setting minimum and maximum levels of payment, we reviewed historical levels of performance against our long-range
plan commitments and conducted sensitivity analyses on alternative outcomes focused on identifying likely minimum and
maximum boundary performance levels. Levels between 100% and the minimum and maximum levels were derived using
linear interpolation between the performance hurdles.

The specific Adjusted EBITDA and Sales Growth target values for the 2023-2025 PSUs are not publicly disclosed at the time
of grant due to the proprietary nature and competitive sensitivity of the information. We discussed this approach to
forward-looking targets with shareholders as part of our 2023 outreach efforts, and shareholders are supportive of
keeping the targets confidential until the awards vest and are distributed. We have presented the target level for each of
these metrics by reference to our internal plan level and quantified these amounts above and below that level for the
maximum and threshold levels, respectively. The method used to calculate the awards will be based on actual performance
compared to our 2023-2025 targets, with straight-line interpolation between points. The individual award agreements
require the adjustment of goals to ensure that the ultimate payouts are not impacted to the benefit or detriment of
management by specified events, such as unplanned pension contributions, changes in GAAP accounting standards or
impact of an acquisition or divestiture. The Committee may exercise its discretion to reduce the final vesting percentage to
no more than target if the Company’s three-year TSR is less than zero.

In setting performance goals for the three-year PSUs awarded in 2023, the Committee considered various factors and
received advice from its independent compensation consultant in choosing the metrics and establishing the goals,
including:
• The metrics reflect drivers of our performance and we believe are important to our investors.

• The goals are consistent with our business plan and positive over prior year.
• We have a history of setting challenging target and maximum goals.

In addition, we have looked at the alignment of our payouts with the Company’s performance, including TSR, and found
that pay and performance are aligned.

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