Page 50 - Proxy Statement - 2020

Compensation Discussion and Analysis / 2019 Annual Cash Incentive Goals and Results

2019 Annual Cash Incentive Goals and Results

NEOs and other executives are eligible to earn annual incentive • Outstanding environmental and regulatory compliance
compensation under our Executive Cash Incentive Plan based on results, sustainability initiatives, and cybersecurity
the achievement of various performance metrics. Individual NEO protections.
targets (as a percent of base salary) are approved by the
• Continuing achievement of excellent management of
Committee at the beginning of the year based on a review of
working capital.
competitive market data, the advice of the Committee’s
independent compensation consultant, and internal pay equity. • The successful organic and inorganic growth of Martin
Marietta.
The Committee awards actual annual cash incentive
Key individual performance criteria are established for each NEO,
compensation based on achievement against corporate
which are intended to drive strategic focus and support
performance objectives and individualized targeted goals. This
operational results in the Company and the functional groups.
furthers Martin Marietta’s compensation philosophy to
For the NEOs other than Mr. Nye, 50% of the determination is
encourage superior performance and reward the achievement of
made with respect to Martin Marietta’s performance against the
Martin Marietta’s annual goals. The Committee determined the
same goals as for Mr. Nye and 50% is based on the individual’s
2019 incentive awards in February 2020. In 2019, all of the
performance against established objectives.
executive officers participated in the plan. The annual incentive
compensation level paid for 2019 for the NEOs other than
The individualized target goals are tailored for each executive,
Mr. Nye was 160% to 185% of target. The annual incentive
based on his or her specific areas of responsibility and the then-
compensation level paid for 2019 for Mr. Nye was 195%.
current and longer-term goals of Martin Marietta. In addition,
achievement of the goals typically is in part dependent on
In determining the incentive payment for the CEO, the
conditions outside the control of each of the NEOs. For example,
Committee first reviews the achievements of Martin Marietta for
our business may be adversely affected by hurricanes or other
the past year as compared to its targeted goals set at the end of
weather-related conditions, which could have the result of
the previous year. Our financial goals are established at the
impeding the achievement of certain performance-based goals.
completion of our annual planning process, which for 2019 were
Similar to the Committee’s assessment of financial goals, the
determined in November 2018. The annual planning process
Committee’s assessment of individual performance goals
includes reviews of the assumptions used by the business
generally excludes non-recurring or extraordinary items.
segments in generating their financial projections, such as
industry trends and competitive assessments, current and future
The Committee also reviewed and considered management’s
projected performance levels, and the risks and opportunities
furtherance of its strategic plan, including a primary objective of
surrounding these baseline assumptions. The annual plan on
value-enhancing growth, and the adoption of Mission, Vision,
which our financial goals are based is tied to the business
and Values of the Company to unify management with the
environment in which we operate and can vary year-over-year.
same objectives.
The objective financial metrics in our annual plan that were
The Committee conducted a comparative review of the
measured for purposes of the 2019 Annual Cash Incentive were
individual contributions of each of the executive officers towards
Pre-Tax Earnings and EBITDA, which are viewed as indicative of
achieving these goals. The Committee also considered
the Company’s profitability, and Days Sales Outstanding (DSO),
qualitative measures of performance for the executive officers,
which is viewed as indicative of the Company’s cash flow. All of
such as adherence to and implementation of Martin Marietta’s
these are important measures reflecting our performance and
Code of Ethical Business Conduct, customer satisfaction, and
the creation of value for shareholders. In addition, the
product quality.
Committee considered the following:
• A detailed assessment of Martin Marietta’s overall financial The maximum incentive compensation is fixed based on
performance and each segment’s financial performance, objective criteria as described in the Executive Cash Incentive
including the highlights and the challenges. Plan, and the Committee then determines an appropriate award
payout beneath the maximum amount based on the factors
• Shareholder returns, including the consistent delivery of
described above. We set challenging, but attainable, targets and
value to Martin Marietta’s shareholders.
our NEOs have a reasonable expectation of receiving cash
• Our safety performance, which continues to be industry incentive awards that reflect the achievement of our short- and
leading even though we increased hourly headcount and long-term objectives as well as their individual performances.
continued to train new employees hired through new
acquisitions.
46 2020 PROXY STATEMENT