Page 69 - Proxy Statement - 2020

Potential Payments Upon Termination or Change of Control / Executive Compensation

outstanding securities, (ii) consummation of a reorganization, confidentiality requirements to ensure that the executives do not
merger or consolidation or sale or other disposition of all or disclose any confidential information relating to Martin Marietta.
substantially all of Martin Marietta’s assets following which
Martin Marietta’s shareholders before such event fail to own The agreements were amended in December 2018 in response
more than 50% of the resulting entity, (iii) a change in the to the 2018 Say On Pay vote that was supported by 78.9% of
majority membership of the Board, or (iv) a liquidation or the shareholders that voted. The amendments eliminated (1) the
dissolution of Martin Marietta. “gross up” payments that compensate the executives for any
golden parachute excise taxes imposed under the Internal
The agreements provide that if, within the two-year period Revenue Code; (2) the “walk-right” if the executive voluntarily
following a Change of Control, an executive is terminated terminates his or her employment for any reason during the
without “Cause” (as defined in the agreements) or terminates thirty-day period following the second anniversary of the
his or her employment with “Good Reason” (as defined in the Change of Control; and (3) the inclusion of the value of
agreements), Martin Marietta is obligated to pay the executive, perquisites in the severance payment provided for in the
in a lump sum, an amount equal to three times the sum of the agreements.
executive’s base salary, annual bonus, and Martin Marietta’s
match to the defined contribution plan; the payment of a The term of the agreements is one year following their effective
pro-rata annual target bonus in the year of termination as dates. On each anniversary date of the effective date, the
determined under the Executive Cash Incentive Plan (for Mr. Nye agreements are renewed for one additional year, unless either
such target bonus is 130% for purposes of the Employment party gives notice of its intent to cancel the automatic extension.
Protection Agreement) and to provide continuation of health, If, prior to termination, a Change of Control occurs or the Board
medical and other insurance benefits for a period of three years becomes aware of circumstances which in the ordinary course
following termination. The rationale for selecting these triggers could result in a Change of Control, then under no
is to encourage the named executive officers to remain focused circumstances will the agreements terminate prior to the second
on Martin Marietta, its performance and matters that are in the anniversary of the Change of Control.
best interests of its shareholders rather than be distracted by the
In addition, the Stock Plan, pursuant to which equity-based
personal impact to their employment that the Change of
awards are made to the executive officers, provides that upon
Control may have. For purposes of the agreements, “base
the occurrence of a Change of Control of Martin Marietta as
salary” means the highest annual rate of base salary that the
provided in the Employment Protection Agreements, all time
executive received within the twelve-month period ending on
periods for purposes of vesting in, or realizing gain from, any
the date of the Change of Control, and “annual bonus” means
outstanding award under the plan will automatically accelerate.
the executive’s highest annual bonus paid during the period
For purposes of such vesting, any performance criteria will be
beginning five years prior to the Change of Control and ending
deemed achieved at the greater of target performance and
on the date of the executive’s termination of employment.
actual performance, as measured through the date of the
Executives also are credited with an additional three years of
Change of Control. In December 2018, in response to the 2018
service under the Pension Plan and are eligible to retire after age
Say On Pay vote, the Company’s form of RSU award agreement
55 without reduction in benefits and with a lump sum payment
and PSU award agreement were changed such that future
based on a 0% discount rate. Martin Marietta must also
grants of RSUs and PSUs will require termination of the
continue to provide the executive all benefits provided under
executive’s employment in connection with a Change of Control
Martin Marietta’s defined benefit and defined contribution
in order for accelerated vesting to occur.
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

2020 PROXY STATEMENT 65