Page 57 - Proxy Statement - 2020

Compensation Decision Process / Compensation Discussion and Analysis

data. Where available, size-adjusted market values were • Long-term compensation to executive officers is based on
developed using regression analysis. This statistical technique specific performance measures that balance long-term
accounts for revenue size differences within the peer group and growth and returns.
develops an estimated market value for a similar-size company
• The Committee uses benchmarking data and the advice of
as Martin Marietta. The size-adjusted 50th percentile for total
its independent compensation consultant to keep
compensation is a key reference point for the Committee. On
compensation in line with typical market practices and
average, the target for our NEO total compensation
appropriate to Martin Marietta’s needs.
opportunities is competitively positioned within a reasonable
• We use a balanced portfolio of long-term incentive
range of the size-adjusted 50th percentile.
programs.
Although the Committee uses the size-adjusted 50th percentile • The Committee’s governance process requires review and
as its starting point in setting compensation levels, the approval of all compensation over a certain amount.
compensation packages for executive officers may vary
materially from it based on several factors. Market data, Stock-Based Awards Generally
position, tenure, individual and organization performance,
retention needs and internal pay equity have been the primary All of Martin Marietta’s active equity-based award plans have
factors considered in decisions to increase or decrease been approved by shareholders. Our Stock Plan requires a
compensation opportunities. Specifically, the Committee minimum vesting period of 12 months for restricted stock or
typically sets compensation levels below the size-adjusted 50th RSUs and a minimum vesting period of 36 months for stock
percentile for executive officers with relatively less relevant options or stock appreciation rights (SARs). The Company has
experience, less responsibility, less tenure with Martin Marietta not issued SARs and has not issued options since 2015.
and/or lower performance ratings. Conversely, if an officer
consistently receives favorable performance ratings, accumulates Stock Ownership Requirements
years of service and expertise in relevant areas, has more
responsibility and/or has significant other achievements, his or In 2018, the Board adopted robust formal Stock Ownership
her compensation will typically be above the size-adjusted 50th Guidelines for executive officers and members of the Board of
percentile. Directors. These require the following ownership levels as a
multiple of base salary or annual cash retainer, as applicable:
Compensation Program Risk Annual Base
Assessment Title Salary Multiple
Chairman, President and CEO 7 times
We perform a thorough annual review of our compensation
Other Executive Officers 5 times
program structure and all compensation programs, which are also
reviewed in detail with the Committee. We believe our executive Other Members of the Board of Directors 5 times
pay is appropriate and provides necessary incentives to our
The following types of equity instruments count in determining
executives to achieve our financial and strategic goals without
stock ownership for purposes of these guidelines:
encouraging them to take excessive risks in their business
decisions. Our compensation structure does not include features • Shares owned separately by the covered person or owned
that are reasonably likely to have a material adverse effect on the either jointly with, or separately by, his or her immediate
Company. Compensation program features that mitigate against family members residing in the same household;
risks include the following: • Shares held in trust for the benefit of the covered person or
• Our annual incentive compensation plan does not provide his or her immediate family members;
payment for poor individual or corporate performance, • Shares purchased on the open market;
regardless of whether the failure to achieve target was
• Shares obtained through stock option exercise (and not
outside management’s control.
thereafter sold);
• There are caps on the long-term equity awards, even if the
• Vested shares pursuant to RSUs;
required performance-related criteria are exceeded.
• Unvested RSUs;
• A majority of the NEOs’ compensation is long-term, with
equity grants vesting over three to five years, depending on • Shares held pursuant to deferred stock unit plans for
the award. Directors or executive officers; and
• Our compensation is not based on highly-leveraged short- • Shares acquired under the Company’s Savings and
term incentives that encourage high risk investments at the Investment Plan and similar plans or arrangements
expense of long-term value.

2020 PROXY STATEMENT 53