Page 52 - Proxy Statement - 2020

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

Annual Incentive Feature: Performance-Based Stock Marietta Board of Directors confirmed the award, or $182.895.
Purchase Plan This award value was then divided into PSUs and performance-
The Incentive Stock Plan further promotes the alignment of based RSUs, with 55% of the total award for NEOs consisting of
executive compensation levels with our investors’ financial the PSUs at target level and 45% of the total award for NEOs
interests by requiring that a portion of the annual bonus award consisting of performance-based RSUs. The Committee believes
be deferred into Company stock units that vest based on that the incentive mix (PSUs and performance-based RSUs)
continued service. Executive officers can also elect to defer constitutes an appropriate pay process and streamlined plan,
amounts above the mandatory deferral amount. The voluntary which more fully reflects the performance of the Company and
election allows executives to invest up to 50% of their annual is better aligned with each NEO’s role within Martin Marietta.
cash incentive compensation to purchase units that are See a further description under Outstanding Equity Awards at
subsequently converted into shares of common stock pursuant Fiscal Year-End and corresponding footnotes on pages 60 to 61.
to the terms of the plan at a 20% discount from the market
price of Martin Marietta’s common stock on the date the The following table provides a notional example of the LTI plan
amount of the incentive compensation is determined. The design.
discount is used to account for the risk of trading current cash
LTI
compensation for “at-risk” shares which may decline in value.
LTI Target PSU RSU
Salary Target Value PSU Value RSU Value
The mandatory portion requires executives to invest a minimum $ % $ % $ % $
of 20% of their cash incentive compensation towards the 150,000 140% 210,000 55% 115,500 45% 94,500
crediting of units under the plan. The CEO is required to invest a
minimum of 35% of his cash incentive compensation towards
the crediting of such units. PSU Awards (55% of LTI Award)

The units generally vest in three years from the date of the One of our compensation objectives is to align the potential
award and are distributed in shares of common stock. If an rewards to senior management with increases in shareholder
executive officer voluntarily terminates employment before the value. In that regard, the PSUs give the recipient the opportunity
units vest, the stock units are forfeited and the executive officer to receive Martin Marietta common stock if specific performance
receives a cash payment equal to the lesser of the cash that was goals are achieved, consisting of:
invested or the fair value of the share units on the day of
(1) Earnings before Interest, Income Taxes, Depreciation and
termination. Mr. Nye deferred the maximum of 50% of his 2019
Amortization (EBITDA), measuring profitability and
cash bonus in stock units.
comprising 67% of the total target award, and
The mandatory contribution requirement directly links a portion (2) Sales Growth, measuring growth and comprising 33% of
of executive officer compensation to shareholder returns. The the total target award.
vesting aspect, combined with the yearly stock purchase
(3) In addition, relative Total Shareholder Return (rTSR) will act
requirement, creates continuous overlapping three-year cycles,
as a modifier for the performance such that Martin
which encourage executive officer retention and provide a
Marietta’s performance will be measured against the S&P
continuous link of a significant portion of executive officer
500, and will modify the total award by a range of -20% to
compensation with shareholder return over the long-term to
+20%.
reward these executive officers in line with our shareholders
when our stock price increases.
The following table summarizes the weighting of our PSU
performance measures:
2019 Long-Term Incentive
Cumulative Cumulative Relative TSR
Compensation Overview EBITDA Sales Growth Modifier
Our LTI plan’s design reflects the objectives of our compensation 67% 33% +/- 20%
program and is in-line with current market approaches, based on
EBITDA and Sales Growth are two of the drivers of our
the advice of the Committee’s independent compensation
performance and metrics of significance to our investors. The
consultant. Our plan design objectives are a simplified LTI program,
total payout opportunity for PSUs in 2019 was 0% to 240%:
that is transparent and enhances the line of sight between our
50% of target if the threshold level is satisfied, 100% of target
performance and compensation.
if the target level is satisfied, and 200% of target if the
The award in 2019 for all NEOs was determined as a fixed maximum level is satisfied. The rTSR modifier over the three-year
percentage of base salary with some variation for position and measurement period is then applied to the final award to adjust
grade, which amount was converted into common stock units it up or down by up to 20%. The threshold must be satisfied to
based on the average Martin Marietta stock price for the 20-day receive PSUs for each performance metric. If the threshold is not
period ending on February 20, 2019, the day the Martin met, none of the PSUs relating to that metric will vest.

48 2020 PROXY STATEMENT