<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Martin Marietta Materials, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NOTICE OF 2000
ANNUAL MEETING OF
SHAREHOLDERS AND
PROXY STATEMENT
(MARTIN MARIETTA MATERIALS LOGO)
<PAGE> 3
(MARTIN MARIETTA MATERIALS LOGO)
2710 WYCLIFF ROAD
RALEIGH, NORTH CAROLINA 27607
March 24, 2000
Dear Fellow Shareholder:
The Directors and Officers of Martin Marietta Materials, Inc. join me in
inviting you to attend the Corporation's Annual Meeting of Shareholders. The
formal notice of this meeting and the Proxy Statement accompany this letter.
By attending the meeting, you will have an opportunity to hear the plans for the
Corporation's future, to meet the Directors and Officers and to participate in
the business of the meeting. If it is not possible for you to attend, please
return the enclosed proxy immediately to ensure that your shares will be voted.
We look forward to seeing you in the Capital Ballroom at the North Raleigh
Hilton in Raleigh, North Carolina at 10:30 a.m. on May 23, 2000.
Sincerely,
/s/ STEPHEN P. ZELNAK, JR.
Stephen P. Zelnak, Jr.
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 4
MARTIN MARIETTA MATERIALS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2000
To the Holders of the Common Stock of Martin Marietta Materials, Inc.:
The Annual Meeting of Shareholders of Martin Marietta Materials, Inc.
(the "Corporation") will be held on Tuesday, May 23, 2000, at 10:30 a.m. at the
North Raleigh Hilton, 3415 Wake Forest Road, Raleigh, North Carolina. Attendance
at the Annual Meeting of Shareholders of the Corporation will be limited to
shareholders of record at the close of business on March 17, 2000 or their
proxies, beneficial owners presenting satisfactory evidence of ownership on that
date, and invited guests of the Corporation.
The purposes of the meeting are:
(1) to elect three (3) Directors, each to serve for a term of three
(3) years until the Annual Meeting of Shareholders in 2003 and
until their successors are duly elected and qualified;
(2) to ratify the appointment of independent auditors; and
(3) to transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 17, 2000
as the record date for determination of shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof.
Whether or not you expect to attend the meeting, we hope you will date
and sign the enclosed Proxy Card and mail it promptly in the enclosed stamped
envelope.
By Order of the Board of Directors,
/s/ ROSELYN R. BAR
Roselyn R. Bar
Corporate Secretary and
Associate General Counsel
Raleigh, North Carolina
March 24, 2000
<PAGE> 5
PROXY STATEMENT
GENERAL INFORMATION
The Annual Meeting of Shareholders of Martin Marietta Materials, Inc., a
North Carolina corporation (the "Corporation"), will be held on Tuesday, May 23,
2000, at the North Raleigh Hilton, 3415 Wake Forest Road, Raleigh, North
Carolina, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders ("Annual Meeting" or "Meeting"). This statement is
furnished in connection with the solicitation by the Board of Directors of the
Corporation of proxies to be used at such meeting and at any and all
adjournments of such meeting.
The Corporation's Annual Report for the fiscal year ended December 31,
1999, including audited financial statements, is being mailed to shareholders
with this Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to date, sign
and return your proxy in the enclosed envelope. You may revoke your proxy at any
time prior to its exercise at the Annual Meeting (i) by filing with the
Corporation's Secretary an instrument revoking the proxy prior to the Meeting,
(ii) by timely delivery to the Corporation's Secretary, or at the Meeting, of a
subsequently dated and executed proxy, or (iii) if you attend the Meeting, by
voting your shares in person. Attendance at the Meeting will not in and of
itself constitute a revocation of a proxy.
The principal office of the Corporation is at 2710 Wycliff Road, Raleigh,
North Carolina 27607. This Proxy Statement, the Proxy Card, and the Notice of
Meeting will be sent commencing approximately March 27, 2000 to shareholders of
record on March 17, 2000.
VOTING SECURITIES AND RECORD DATE
Only shareholders of record at the close of business on March 17, 2000
are entitled to notice of and to vote at the Annual Meeting. On March 17, 2000,
there were 46,727,259 shares outstanding of the Corporation's Common Stock, $.01
par value per share ("Common Stock" or "Stock"). Each share is entitled to one
vote.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by an independent inspector of election appointed by the Corporation's Board of
Directors for the Meeting from First Union National Bank, the Corporation's
transfer agent. The inspector of election will determine whether a quorum is
present. For purposes of determining the presence of a quorum, abstentions will
be counted as shares that are present and entitled to vote. If a broker
indicates on the proxy that it does not have discretionary authority to vote on
a particular matter and specific instructions are not received from the
shareholder regarding that matter, those shares represented by the proxy will
not be considered as present and entitled to vote with respect to that matter.
The election of Directors requires a plurality of the votes cast with a
quorum present. Any other proposal presented at the meeting will be approved if
more votes are cast by proxy or in person in favor of the proposal than are cast
against it. Brokers holding shares for beneficial
1
<PAGE> 6
owners must vote those shares according to the specific instructions they
receive from the beneficial owners. If specific instructions are not received,
brokers may generally vote these shares in their discretion. However, the New
York Stock Exchange rules preclude brokers from exercising their voting
discretion on certain proposals. In such cases, absent specific instructions
from the beneficial owner, the broker may not vote on those proposals. This
results in what is known as a "broker non-vote." Because the Corporation's
Bylaws require the affirmative vote of either a plurality or majority of the
votes cast for or against the proposal at the Meeting to authorize action on any
matter (as described above), abstentions and broker non-votes, which will not be
counted "for" or "against" proposals, have no effect on the vote for the
election of Directors or approval of any of the other proposals.
Each participant in the Corporation's Performance Sharing Plan and
Savings and Investment Plan may direct the trustee as to the manner in which
shares of Common Stock allocated to the plan participant's account are to be
voted. If the plan participant does not return a voting instruction card to the
trustee in a timely manner or returns a card without indicating any voting
instructions, the trustee will vote the shares in the same proportion as shares
for which the trustee receives voting instructions for that plan.
ELECTION OF DIRECTORS
The Corporation's Restated Articles of Incorporation, as amended, provide
for a classified board of directors such that the Board of Directors is divided
into three classes, each of which serves for three years. The Board of Directors
has nominated three persons for election as Directors to serve three-year terms
expiring in 2003. Unless otherwise directed, proxies will be voted in favor of
these three nominees. Each nominee has agreed to serve if elected. Each of the
nominees is currently serving as a Director. Should any nominee become unable to
serve as a Director, the persons named in the enclosed form of proxy will,
unless otherwise directed, vote for the election of such other person for such
position as the present Board of Directors may recommend in place of such
nominee.
The following sets forth certain biographical information, current
occupation and business experience for the past five years for each of the
nominees for election and for each of the other members of the Board of
Directors.
2
<PAGE> 7
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERMS EXPIRING IN 2003
- --------------------------------------------------------------------------------
WILLIAM E. MCDONALD (57)
Director (since 1996), member of the Audit and Compensation Committees.
Mr. McDonald has served as Senior Vice President, Customer Service Operations,
Sprint Corporation since January 1, 1998. He was previously President and Chief
Executive Officer of Sprint Mid-Atlantic Operations from 1993 through 1997 and
President and Chief Executive Officer for Sprint/United Telephone-Eastern from
1988 to 1993.
- --------------------------------------------------------------------------------
FRANK H. MENAKER, JR. (59)
Director (since 1993), member of the Ethics, Environment, Safety and Health and
Audit Committees.
Mr. Menaker has served as Senior Vice President and General Counsel of Lockheed
Martin Corporation since July 1996. He served as Vice President and General
Counsel of Lockheed Martin Corporation from March 1995 to July 1996 and as Vice
President of Martin Marietta Corporation from 1982 until 1995, and as General
Counsel of Martin Marietta Corporation from 1981 until 1995.
- --------------------------------------------------------------------------------
RICHARD A. VINROOT (58)
Director (since 1996), member of the Ethics, Environment, Safety and Health
Committee.
Mr. Vinroot has been a member of the law firm of Robinson, Bradshaw & Hinson,
P.A. in Charlotte, North Carolina since 1969. From 1991 to 1995, Mr. Vinroot
served as Mayor of Charlotte, North Carolina.
- --------------------------------------------------------------------------------
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR ELECTION TO THE
BOARD OF DIRECTORS.
3
<PAGE> 8
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2001
- --------------------------------------------------------------------------------
RICHARD G. ADAMSON (67)
Director (since 1994), member of the Ethics, Environment, Safety and Health and
Audit Committees.
Mr. Adamson served as Vice President, Strategic Development for Martin Marietta
Corporation from April 1993 until his retirement in January 1995. From 1984
until April 1993, he served as Vice President, Business Development of Martin
Marietta Corporation.
- --------------------------------------------------------------------------------
MARCUS C. BENNETT (64)
Director (since 1993), Chairman of the Executive and Finance Committees, member
of the Compensation Committee.
Mr. Bennett served as Executive Vice President and Chief Financial Officer of
Lockheed Martin Corporation from July 1996 until his retirement on January 31,
1999. He continues to be a Director of Lockheed Martin Corporation, a position
he has held since March 1995. From March 1995 until July 1996 he served as
Senior Vice President and Chief Financial Officer of Lockheed Martin Corporation
and from 1988 until 1995 he served as Vice President and Chief Financial Officer
of Martin Marietta Corporation. He also served as a Director of Martin Marietta
Corporation from 1993 to 1995. Mr. Bennett joined Martin Marietta Corporation in
1959. Mr. Bennett is also a Director of Carpenter Technologies, Inc. and Comsat
Corporation.
- --------------------------------------------------------------------------------
BOBBY F. LEONARD (67)
Director (since 1994), Chairman of the Compensation Committee and member of the
Finance Committee.
Mr. Leonard served as Vice President, Human Resources of Martin Marietta
Corporation from 1981 until his retirement in March 1995. He is currently in
private law practice in Maryland.
4
<PAGE> 9
TERMS EXPIRING IN 2002
- --------------------------------------------------------------------------------
JAMES M. REED (67)
Director (since 1994), Chairman of the Audit Committee, member of the Executive
and Finance Committees.
Mr. Reed served as Chief Financial Officer of Union Camp Corporation from 1977
and as Vice Chairman of the Board of Union Camp Corporation from 1993 until his
retirement on November 30, 1997. Mr. Reed is also a Director of Bush Boake Allen
Inc.
- --------------------------------------------------------------------------------
WILLIAM B. SANSOM (58)
Director (since 1994), Chairman of the Ethics, Environment, Safety and Health
Committee and a member of the Compensation Committee.
Mr. Sansom has served as the Chairman and Chief Executive Officer of The H.T.
Hackney Co. since May 1983. During 1979 to 1983, he served in Tennessee State
Government, first as Commissioner of Transportation and then as Commissioner of
Finance and Administration. He has also previously served on the Board of
Directors of the National Crushed Stone Association. Mr. Sansom is a Director of
First Tennessee National Corporation and Astec Industries, Inc.
- --------------------------------------------------------------------------------
STEPHEN P. ZELNAK, JR. (55)
Chairman of the Board (since 1997) and Director (since 1993), member of the
Executive and Finance Committees.
Mr. Zelnak has served as President and Chief Executive Officer of Martin
Marietta Materials, Inc. since 1993, and previously served as the President of
Martin Marietta Corporation's Materials Group from 1992 until the formation of
the Corporation, and of Martin Marietta Corporation's Aggregates Division since
1982. Mr. Zelnak also served as a Vice President of Martin Marietta Corporation
from 1989 until 1994, when he resigned as an officer of Martin Marietta
Corporation effective upon the completion of the initial public offering of a
portion of the Corporation's Common Stock. Mr. Zelnak joined Martin Marietta
Corporation in 1981.
5
<PAGE> 10
BOARD OF DIRECTORS
The Corporation's Board of Directors held five meetings during 1999, all
of which were regularly scheduled meetings. In addition, management confers
frequently with its Directors on an informal basis to discuss Corporation
affairs. Other than Directors who are also officers of the Corporation,
Directors serving in 1999 received an annual retainer of $25,000 and were each
granted 1,500 non-qualified stock option awards in accordance with the Martin
Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan. Directors
also received $1,000 for each regular or special meeting of the Board and $500
for each Board committee meeting attended, in addition to reimbursement for
travel and other expenses related to attendance at Board and committee meetings.
Each committee chairman (other than the chairman of the Executive Committee)
also receives an annual fee of $1,000.
Pursuant to the Amended and Restated Martin Marietta Materials, Inc.
Common Stock Purchase Plan for Directors, Directors may currently receive their
compensation in cash and may defer the payment commencement date for all or a
portion of their fees (in the form of cash or Common Stock) until the date the
person ceases to be a Director or the date that is one month and one year
following the date the person ceases to be a Director. Directors may elect to
receive payment of the deferred amount in a single lump sum or in equal annual
installments for a period of up to ten years. The Board of Directors unanimously
agreed that a minimum of 30% of each Director's annual retainer would be paid in
Common Stock and deferred under the plan.
The Corporation's Board of Directors has five standing committees: an
Audit Committee, a Compensation Committee, an Ethics, Environment, Safety and
Health Committee, an Executive Committee and a Finance Committee.
The Audit Committee, which is composed of Directors who are not officers
or employees of the Corporation, held four meetings during 1999. The Audit
Committee possesses and may exercise the powers of the Board of Directors,
except when such powers are by statute or the Articles of Incorporation or
Bylaws reserved to the full Board, relating to all accounting and auditing
matters of the Corporation. The Audit Committee recommends to the Board of
Directors the selection of the independent auditors. The Committee also monitors
the independence of the independent auditors. The Committee reviews the scope
and timing of work to be performed by the independent auditors; compensation to
be paid to the independent auditors; financial accounting and reporting
principles used by the Corporation; policies and procedures concerning audits,
accounting and financial controls; recommendations to improve existing
practices; and results of the audit and the report of the independent auditors.
The Committee also reviews the qualifications and the plan and scope of work of
the corporate internal audit function. The Committee's current members are
Directors Reed (Chairman), Adamson, McDonald and Menaker.
The Compensation Committee is composed of Directors who are not officers
or employees of the Corporation and who are also "non-employee" and "outside"
Directors as those terms are defined by Rule 16b-3 promulgated under the
Securities and Exchange Act of 1934 and Section 162(m) of the Internal Revenue
Code of 1986. It held five meetings during 1999. The Committee has the power to
fix the compensation and benefits to be paid for all elected officers and
employees. The Committee also approves and administers the grants of stock
6
<PAGE> 11
options and any other equity-based awards that may be granted by the
Corporation. The Committee has the power to administer any other compensation
plan in connection with which the Corporation or any of its employees may
realize a benefit from administration by disinterested Directors. The
Committee's current members are Directors Leonard (Chairman), Bennett, McDonald
and Sansom.
The Ethics, Environment, Safety and Health Committee held four meetings
during 1999. It monitors compliance with the Martin Marietta Materials, Inc.
Code of Ethics and Standards of Conduct and reviews all matters presented to it
by the Corporate Ethics Officer concerning the ethical practices of the
Corporation and its employees, including conflicts or potential conflicts of
interest between the Corporation and any of its employees. The Committee also
reviews and monitors the adequacy of the Corporation's policies and procedures
and organizational structure for ensuring compliance with environmental laws and
regulations, and matters relating to health and safety. The Committee's current
members are Directors Sansom (Chairman), Adamson, Menaker and Vinroot.
The Executive Committee held no meetings during 1999. It has the
authority to act during the intervals between the meetings of the Board of
Directors and may exercise the powers of the Board in the management of the
business and affairs of the Corporation as may be authorized by the Board of
Directors. The Committee's current members are Directors Bennett (Chairman),
Reed and Zelnak.
The Finance Committee held four meetings during 1999. It has been
delegated general oversight powers related to the management of the financial
affairs of the Corporation, including but not limited to, establishing lines of
credit or other short-term borrowing arrangements and investing excess working
capital funds on a short-term basis. The Committee reviews and makes
recommendations to the Board of Directors concerning changes to capital
structure, including the incurrence of long-term debt, issuance of equity
securities and the payment of dividends, as well as capital expenditures and the
contributions budget. The Committee's current members are Directors Bennett
(Chairman), Leonard, Reed and Zelnak.
The Bylaws of the Corporation require advance notice for any proposal for
the nomination for election as a Director at an annual meeting of shareholders
that is not included in the Corporation's notice of meeting or made by or at the
direction of the Board of Directors. In general, nominations must be delivered
to the Secretary of the Corporation at its principal executive offices, 2710
Wycliff Road, Raleigh, North Carolina 27607, not less than 60 days nor more than
90 days prior to the first anniversary of the preceding year's annual meeting
and must contain specified information concerning the nominee and the
shareholder proposing the nomination. Any shareholder desiring a copy of the
Bylaws of the Corporation will be furnished a copy without charge upon written
request to the Secretary of the Corporation.
During the year ended December 31, 1999, no Director attended fewer than
75% of the aggregate of (1) the total number of meetings of the Board of
Directors (held during the period for which he has been a director) and (2) the
total number of meetings held by all committees of the Board on which he served
(during the periods that he served).
7
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
FIVE PERCENT SHAREHOLDERS
The following table sets forth information with respect to the shares of
Common Stock which are held by persons known to the Corporation to be the
beneficial owners of more than 5% of such stock as of March 20, 2000. To the
best of the Corporation's knowledge, no person (other than as disclosed below)
owned more than 5 percent of any class of the Corporation's outstanding voting
securities at the close of business on March 20, 2000.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Davis Selected Advisers, L.P.(1) 6,776,803 14.5%
124 East Marcy Street
Santa Fe, NM 87501
American Express Financial 4,330,588 9.3%
Corporation(2)
IDS Tower 10
Minneapolis, MN 55440
FMR Corp(3) 3,495,614 7.5%
82 Devonshire St.
Boston, MA 02109
Brinson Partners, Inc.(4) 2,453,501 5.3%
209 South LaSalle
Chicago, IL 60604-1295
General Electric Investment 2,348,321 5.0%
Corporation(5)
3003 Summer Street
Stamford, CT 06904
</TABLE>
- ------------------------
(1) As reported in Schedule 13G dated February 10, 2000 filed with the
Securities and Exchange Commission.
(2) As reported in Schedule 13G dated December 31, 1999 filed with the
Securities and Exchange Commission. The total includes 38,200 shares over
which the shareholder has shared voting power with its parent holding
company, American Express Company, and 4,330,588 shares over which the
shareholder has shared dispositive power with its parent holding company,
American Express Company. American Express Company disclaims beneficial
ownership of the shares referred to in the Schedule 13G.
(3) As of March 13, 2000 as reported to the Corporation. The total includes
stock held by certain affiliated entities and individuals over which FMR
Corp. and such affiliates have the sole power to vote or to direct the vote
of 1,813,830 and the sole power to dispose or direct the disposition of
3,495,614 shares as a result of acting as investment adviser or subadviser
to certain investment companies.
(4) As reported in Schedule 13G dated February 4, 2000 filed with the Securities
and Exchange Commission. The total includes 2,412,151 shares over which the
shareholder has shared dispositive power with its parent holding company,
UBS AG, and 2,453,501 shares over which UBS AG has reported beneficial
ownership. The shareholder and UBS AG each disclaim beneficial ownership as
to the shares referred to in the Schedule 13G.
(5) As reported in Schedule 13G dated February 14, 2000 filed with the
Securities and Exchange Commission. The total includes stock held by certain
affiliated entities and individuals over which General Electric Investment
Corporation and such affiliates have the shared power to vote or to direct
the vote of 1,325,414 shares, the sole power to dispose or direct the
disposition of 39,600 shares and the sole power to dispose or direct the
disposition of 983,307 shares as a result of acting as investment adviser or
sub-adviser to certain investment companies. General Electric Company
disclaims beneficial ownership of the shares referred to in the Schedule
13G.
8
<PAGE> 13
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of March 20, 2000 with
respect to the shares of Common Stock that are held by the Directors and
nominees, the Chief Executive Officer, and the four most highly compensated
executive officers, individually, and by all Directors and executive officers of
the Corporation as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)
---------------- -----------------------
<S> <C>
Richard G. Adamson............................. 5,653(2)
Marcus C. Bennett.............................. 9,873(2)
Bruce A. Deerson............................... 42,394(3)(4)
Janice K. Henry................................ 48,605(3)(4)
Bobby F. Leonard............................... 8,803(2)
William E. McDonald............................ 4,698(2)
Frank H. Menaker, Jr. ......................... 8,281(2)
James M. Reed.................................. 7,765(2)
William B. Sansom.............................. 6,923(2)
Philip J. Sipling.............................. 64,097(3)(4)
Richard A. Vinroot............................. 5,636(2)
Robert R. Winchester........................... 26,411(3)
Stephen P. Zelnak, Jr. ........................ 93,048(3)(5)
All Directors and executive officers as a group
(16 individuals including those named
above)...................................... 400,699(3)
</TABLE>
- ------------------------
(1) As to the shares reported, unless indicated otherwise, (i) beneficial
ownership is direct, and (ii) the person indicated has sole voting and
investment power. None of the directors or named executive officers
individually or as a group own in excess of one percent of the shares of
Common Stock outstanding.
(2) Amounts reported include compensation paid on a quarterly basis that
Directors have received in Common Stock units that is deferred pursuant to
the Amended and Restated Martin Marietta Materials, Inc. Common Stock
Purchase Plan for Directors. The Directors do not have voting or investment
power for their respective share units. The number of Common Stock units
credited to each of the Directors as of March 20, 2000 is as follows: Mr.
Adamson, 1,253; Mr. Bennett, 2,873; Mr. Leonard, 1,053; Mr. McDonald, 1,698;
Mr. Menaker, 2,731; Mr. Reed, 1,765; Mr. Sansom, 2,873; and Mr. Vinroot,
2,636. Amounts reported also include options for Common Stock in the amount
of 3,000 for each Director, which are currently exercisable within 60 days
of March 20, 2000.
(3) The number of shares owned for each of Messrs. Deerson, Sipling, Winchester,
Zelnak and Ms. Henry and all Directors and executive officers as a group
assumes that options held by each of them covering shares of Common Stock in
the amounts indicated, which are currently exercisable within 60 days of
March 20, 2000, have been exercised: Mr. Deerson, 31,999; Ms. Henry, 41,332;
Mr. Sipling, 54,666; Mr. Winchester, 20,000; Mr. Zelnak, 71,667; and all
Directors and executive officers as a group, 287,662. The amounts reported
do not include Common Stock units credited to each of the named executives
in connection with their deferral of a portion of their cash bonus under the
Martin Marietta Materials, Inc. Incentive Stock Plan that have not vested as
of March 20, 2000 in the following amounts: Mr. Deerson, 1,161; Ms. Henry,
4,499; Mr. Sipling, 6,237; Mr. Winchester, 1,357; Mr. Zelnak, 22,643; and
all Directors and executive officers as a group, 42,731.
(4) Includes an approximation of the number of shares in the participant's
account in the Martin Marietta Materials, Inc. Performance Sharing Plan.
(5) Includes 10,000 shares held by the Zelnak Private Foundation of which Mr.
Zelnak and his wife are trustees and share voting and investment power.
9
<PAGE> 14
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Directors and officers of the
Corporation and persons who own more than 10% of the Common Stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
in changes in ownership of the Common Stock. Directors, officers and more than
10% shareholders are required by Securities and Exchange Commission regulations
to furnish to the Corporation copies of all Section 16(a) reports filed.
Based solely on its review of the copies of reports furnished to the
Corporation and written representations that no other reports were required for
the year ended 1999, the Corporation is not aware of any reporting person who
failed to file on a timely basis all reports required by Section 16(a) to be
filed during 1999.
INDEPENDENT AUDITORS
The Board of Directors recommends that the shareholders ratify the
appointment of Ernst & Young LLP, independent auditors, to audit the
consolidated financial statements of the Corporation for the fiscal year 2000.
The ratification of the appointment of Ernst & Young LLP is being submitted to
the shareholders because management believes this to be good corporate practice.
Should the shareholders fail to ratify this appointment, the Board of Directors
will review the matter. Representatives of Ernst & Young LLP are expected to
attend the Annual Meeting of Shareholders of the Corporation, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions from shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF SELECTION OF ERNST
& YOUNG LLP AS INDEPENDENT AUDITORS.
EXECUTIVE COMPENSATION
The following tables show annual and long-term compensation received from
the Corporation for services in all capacities to the Corporation of the Chief
Executive Officer and the next four most highly compensated executive officers
for the years ended December 31, 1999, 1998 and 1997. Other than compensation
paid by the Corporation as set forth below, no annual or long-term compensation
of any kind was paid to the Chief Executive Officer or other named executive
officers of the Corporation in each of the years in the three-year period ended
December 31, 1999.
10
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS/SARS(#)(3) COMPENSATION(4)
- --------------------------- ---- -------- -------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Zelnak, Jr. ............... 1999 $615,000 $297,500 $383,798 75,000 $5,600
Chairman, President 1998 558,333 300,000 386,673 60,000 5,600
and Chief Executive Officer 1997 490,000 225,000 288,745 54,000 5,600
Philip J. Sipling..................... 1999 303,333 83,800 108,202 25,000 5,600
Executive Vice President 1998 269,375 76,772 99,002 20,000 5,600
1997 223,625 64,400 82,350 18,000 5,536
Janice K. Henry....................... 1999 246,417 62,850 81,178 17,500 5,600
Senior Vice President, 1998 213,333 102,000 67,342 14,000 5,600
Chief Financial Officer 1997 195,000 46,800 59,978 13,000 5,600
and Treasurer
Robert R. Winchester.................. 1999 228,000 82,400 32,286 7,500 5,600
Senior Vice President 1998 223,000 110,184 16,494 15,000 5,600
1997 207,667 104,850 15,478 15,000 5,600
Bruce A. Deerson...................... 1999 213,333 70,700 26,104 12,500 5,600
Vice President and 1998 193,750 130,285 19,507 10,000 5,600
General Counsel 1997 178,583 77,130 12,272 10,000 4,676
</TABLE>
- ------------------------
(1) Bonuses earned in 1999 were paid pursuant to the Martin Marietta Materials,
Inc. Executive Incentive Plan. A portion of the cash bonus in 1999, 1998 and
1997 to be paid to the named executive officers and certain other key
employees of the Corporation was deferred into stock-based awards pursuant
to the Martin Marietta Materials, Inc. Incentive Stock Plan. The amounts
deferred in 1999 for each of the named executive officers are as follows:
Mr. Zelnak, $297,500; Mr. Sipling, $83,800; Ms. Henry, $62,850; Mr.
Winchester, $25,000; and Mr. Deerson, $20,000. The amounts deferred in 1998
for each of the named executive officers are as follows: Mr. Zelnak,
$300,000; Mr. Sipling, $76,772; Ms. Henry, $52,000; Mr. Winchester, $12,243;
and Mr. Deerson, $14,168. The amounts deferred in 1997 for each of the named
executive officers are as follows: Mr. Zelnak, $225,000; Mr. Sipling,
$64,400; Ms. Henry, $46,800; Mr. Winchester, $11,650; and Mr. Deerson,
$8,570. The amounts reported under "Bonus" do not include such deferred
portion which are reported under "Other Annual Compensation." The amount
reported under "Bonus" also includes a one-time cash bonus paid to Ms. Henry
and Mr. Deerson for 1998, which amount was not eligible for deferral under
the Martin Marietta Materials, Inc. Incentive Stock Plan.
(2) The amounts reported under "Other Annual Compensation" represent the value
of units that correspond to Common Stock credited to participants under the
Martin Marietta Materials, Inc. Incentive Stock Plan (the "Plan"). Pursuant
to the Plan, each participant at his or her election is permitted to use up
to 50% of the annual incentive bonus earned by the participant to be
credited towards units ("Units") that will subsequently be converted into
Common Stock of the Corporation pursuant to the terms of the Plan at a 20%
discount from the fair market value of the Common Stock (the closing price
of the Common Stock as reported in the Wall Street Journal) on the date the
amount of the bonus is determined. Each of the executive officers named are
required to use a minimum of 10% of the annual incentive bonus towards the
crediting of Units under the Plan, except for Mr. Zelnak, who is required to
use a minimum of 25% towards the crediting of such Units. Any election to
purchase Units under the Plan (in addition to the mandatory purchases) must
be made at least six months prior to the date the amount of the annual
incentive bonus is determined. The Units credited under the Plan generally
vest on December 1 in the year that is immediately preceding three years
from the date of grant, at which time shares of Common Stock are issued to
the participant. Dividend equivalents are paid on the Units at the same rate
as dividends are paid to all shareholders. Such payments are included in the
amounts reported. The amounts reported under "Other Annual Compensation"
represent the market value on the date of grant of the Units credited to
each named executive officer. The number of Units credited for 1999 to each
of the named executives is as follows: Mr. Zelnak, 8,019; Mr. Sipling,
2,259; Ms. Henry, 1,695; Mr. Winchester, 674; and Mr. Deerson, 540. The
number of Units credited for 1998 to each of the named executives is as
follows: Mr. Zelnak, 6,865; Mr. Sipling, 1,757; Ms. Henry, 1,190; Mr.
Winchester, 281; and Mr. Deerson 325. The number of Units credited for 1997
to each of the named executives is as follows: Mr. Zelnak, 7,759; Mr.
Sipling, 2,221; Ms. Henry, 1,614; Mr. Winchester, 402; and Mr. Deerson, 296.
The cost of perquisites furnished to each executive officer did not exceed
the lesser of $50,000 or 10% of such officer's salary and bonus.
(3) Options granted are for Common Stock of the Corporation.
(4) Amounts reported under "All Other Compensation" represent matching
contributions to the Corporation's Performance Sharing Plan.
11
<PAGE> 16
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants of options for the Corporation's
Common Stock awarded pursuant to the Martin Marietta Materials, Inc. Amended and
Restated Stock-Based Award Plan (the "Stock-Based Award Plan") to the named
executives in the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT
NO. OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME GRANTED FISCAL YEAR 1999 PER SHARE DATE 5% 10%
- ---- ---------- ---------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Zelnak, Jr. .................... 75,000 18.83% $48.00 8/19/09 $2,264,021 $5,737,473
Philip J. Sipling.......................... 25,000 6.28% 48.00 8/19/09 754,674 1,912,491
Janice K. Henry............................ 17,500 4.39% 48.00 8/19/09 528,271 1,338,744
Robert R. Winchester....................... 7,500 1.88% 48.00 8/19/09 226,402 573,747
Bruce A. Deerson........................... 12,500 3.14% 48.00 8/19/09 377,337 956,245
</TABLE>
- ------------------------
(1) Awards under the Stock-Based Award Plan are granted at the discretion of a
disinterested committee (the "Committee") of the Board of Directors of the
Corporation upon the recommendation of management of the Corporation, except
for Mr. Zelnak, for whom the Committee formulates its own decision, and may
be awarded based on past performance or as incentive for future efforts. A
maximum of 5,000,000 shares of the Corporation's stock are authorized under
the Stock-Based Award Plan for grants to key employees. Each award under the
Stock-Based Award Plan is evidenced by an award agreement setting forth the
number and type of stock-based incentives subject to the award and such
other terms and conditions applicable to the award as determined by the
Committee. Under the award agreements, the 1999 options will vest and become
exercisable in three approximately equal increments on August 19, 2000, 2001
and 2002 and expire 10 years from the date of grant. No individual may
receive annual grants for more than 10 percent of the shares available under
the Stock-Based Award Plan. Options awarded in 1999 expire ninety days
following termination of employment, except in instances following death,
disability or retirement. In the event of death, all outstanding options
vest immediately and will expire one year following the date of death. In
instances of disability or normal retirement, the award agreement states
that the terms of all outstanding options will be unaffected by such
retirement or disability. In the event of early retirement, options that are
not vested will terminate on the second business day after such retirement
and options that are vested will terminate 90 days thereafter unless the
Chief Executive Officer or, in the case of persons subject to Section 16 of
the Securities Exchange Act of 1934, the Committee determines that all
outstanding options will be unaffected by such retirement. In the event of a
change in control (as defined in the Stock-Based Award Plan), the vesting
date of all outstanding options are accelerated so as to cause all
outstanding options to become exercisable. The exercise price of the shares
of Common Stock subject to options is set by the Committee and must be at
least 100% of the fair market value of the shares on the date the option is
granted. The award agreement provides that shares to be issued upon exercise
of options may be purchased by the Company in the open market.
(2) The dollar amounts set forth in these columns are the result of calculations
at the 5 percent and 10 percent rates set by the Securities and Exchange
Commission, and therefore are not intended to forecast possible future
appreciation, if any, of the price of the Common Stock.
12
<PAGE> 17
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTIONS VALUES
Shown below is information relating to (1) the exercise of options for
the purchase of the Corporation's Common Stock during the last completed fiscal
year and (2) the fiscal year-end value of unexercised options for the
Corporation's Common Stock under the Martin Marietta Materials, Inc. Amended
Omnibus Securities Award Plan and the Amended and Restated Stock-Based Award
Plan for the named executives. There are no awards of stock appreciation rights
("SARs") for the Corporation's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
SHARES AT FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Zelnak, Jr. .................... -- -- 71,667 133,000 $460,422 $99,000
Philip J. Sipling.......................... -- -- 54,666 44,334 740,250 33,000
Janice K. Henry............................ -- -- 41,332 31,168 570,663 23,837
Robert R. Winchester....................... 31,000 $1,278,313 20,000 22,500 138,750 27,500
Bruce A. Deerson........................... -- -- 31,999 22,501 448,413 18,337
</TABLE>
- ------------------------
(1) Options granted by the Corporation in 1999 as shown in "Option Grants in
Last Fiscal Year" on page 12, all of which were unexercisable at year-end,
are included in this table. Options granted by the Corporation in 1998,
one-third of which vested in 1999; in 1997, two-thirds of which vested in
1999; and in 1995 and in prior years, all of which were vested in 1999, are
also included in this table.
(2) The value presented represents the difference between the closing price of
the stock at year-end and the exercise price of the options. Options that
were not in-the-money at year-end are not included in this table.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
Shown below is information on awards under the long-term incentive plan
granted to the named executives in the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
PERFORMANCE
NO. OF OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
SHARES, PERIOD UNTIL NON-STOCK PRICE-BASED PLANS(2)
UNITS OR MATURATION -------------------------------------
NAME OTHER RIGHTS OR PAYOUT(1) THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---- ------------ ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Stephen P. Zelnak, Jr............................ N/A 3 years 992 1,983 2,975
Philip J. Sipling................................ N/A 3 years 518 1,035 1,553
Janice K. Henry.................................. N/A 3 years 423 845 1,268
Robert R. Winchester............................. -- -- -- -- --
Bruce A. Deerson................................. N/A 3 years 337 673 1,010
</TABLE>
- ------------------------
(1) The performance period for awards granted in 1999 under the Shareholder
Value Achievement Plan (the "Achievement Plan") is the three fiscal years
beginning January 1, 1999 and ending December 31, 2001.
(2) Awards are denominated in units that relate to a number of shares of the
Corporation's Common Stock where threshold, target and maximum numbers
represent the degree to which the performance goals are achieved at the end
of the three-year performance period. Awards under the Achievement Plan are
based upon a combination of factors, including a total return to
shareholders formula which compares the Corporation's total return to
shareholders to that of the Standard & Poor's 500 Index and to a peer group
of companies. If the Corporation fails to meet the threshold performance
objectives, no award is made under the Achievement Plan.
13
<PAGE> 18
PENSION PLANS
The named executives participated in the Martin Marietta Materials, Inc.
Pension Plan (the "Pension Plan"), which was sponsored by the Corporation and
covered all of the Corporation's executive officers and substantially all of the
salaried employees of the Corporation on a non-contributing basis. Set forth
below is a pension plan table which shows the estimated annual benefits payable
under the Pension Plan and the Martin Marietta Materials, Inc. Supplemental
Excess Retirement Plan ("SERP") upon retirement for specified earnings and years
of service under the pension plans.
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 40
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000................................. $ 20,839 $ 27,785 $ 34,731 $ 41,677 $ 56,124
$150,000(1).............................. 32,089 42,785 53,481 64,177 86,124
$200,000(1).............................. 43,339 57,785 72,231 86,677 116,124
$300,000(1).............................. 65,839 87,785 109,731 131,677 176,124
$400,000(1).............................. 88,339 117,785 147,231 176,677 236,124
$500,000(1).............................. 110,839 147,785 184,731 221,677 296,124
$750,000(1).............................. 167,089 222,785 278,481 334,177 446,124
$1,000,000(1)............................ 223,339 297,785 372,231 446,677 596,124
$1,250,000(1)............................ 279,589 372,785 465,981 559,177 746,124
</TABLE>
- ------------------------
(1) The benefits payable under the Pension Plan may be limited by sections
401(a)(17) and 415 of the Internal Revenue Code. The maximum earnings amount
in 1999 which may be considered to compute a benefit in accordance with
Section 401(a)(17) of the Code is $160,000. The maximum annual amount
payable under the Plan as of December 31, 1999 in accordance with Section
415(b) of the Code is $130,000.
Compensation covered by the pension plans generally includes, but is not
limited to, base salary, executive incentive compensation awards, lump sum
payments in lieu of a salary increase, and overtime. The normal retirement age
under the pension plans is 65, but unreduced early retirement benefits are
available at age 62 and reduced benefits are available as early as age 55. The
calculation of benefits under the pension plans is generally based on an annual
accrual rate, average compensation for the highest consecutive five years of the
ten years preceding retirement and the participant's number of years of credited
service. Maximum benefits payable under the Pension Plan are subject to current
Internal Revenue Code limitations. The SERP generally provides for the payment
of benefits in excess of the Internal Revenue Code limits, which benefits vest
in the same manner that benefits vest under the Pension Plan. The SERP also
provides for a lump sum payment of the vested benefits provided by the SERP in
connection with a change in control if a participant's employment is terminated
simultaneously with or subsequent to the change in control. The amounts listed
in the foregoing table are not subject to any deduction for Social Security
benefits or other offsets amounts.
As of December 31, 1999, the estimated total annual benefits payable upon
retirement at age 65 for the individuals named in the compensation table, based
on continued employment at current compensation, are as follows: Mr. Zelnak,
$518,694; Mr. Sipling, $184,236; Ms. Henry, $211,619; Mr. Winchester, $154,920;
and Mr. Deerson, $162,273. These amounts include benefits that are payable under
the SERP. The years of credited service upon assumed retirement at age 65 for
Mr. Zelnak, Mr. Sipling, Ms. Henry, Mr. Winchester, and Mr. Deerson are 28.75
years, 27.67 years, 41.67 years, 31.08 years, and 36.75 years, respectively.
14
<PAGE> 19
EMPLOYMENT PROTECTION AGREEMENTS
The Corporation has entered into Employment Protection Agreements, as
amended from time to time, (the "Agreements") with each of the named executive
officers. The purpose of these Agreements is to provide the Corporation's key
executives with payments and benefits upon certain types of terminations within
two years and 30 days following a "Change of Control." For purposes of the
Agreements, a Change of Control is generally defined as (i) the acquisition by
any person, or related group of persons, of 40% or more of either the
outstanding Common Stock of the Corporation or the combined voting power of the
Corporation's outstanding securities, (ii) consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the Corporation's assets following which the Corporation's shareholders
before such event fail to own more than 50% of the resulting entity, (iii) a
change in the majority membership of the Board, (iv) a liquidation or
dissolution of the Corporation, or (v) a sale of all or substantially all of the
Corporation's assets.
The Agreements provide that if, within the two-year period following a
Change of Control, an executive is terminated without "Cause" (as defined in the
Agreements) or terminates his employment with "Good Reason" (as defined in the
Agreements), or if the executive voluntarily terminates his employment for any
reason during the thirty-day period following the second anniversary of the
Change of Control, the Corporation is obligated to pay the executive, in a lump
sum, an amount equal to twice the sum of the executive's "Base Salary" and
"Annual Bonus." For purposes of the Agreements, Base Salary means the highest
annual rate of base salary that the executive received within the twelve-month
period ending on the date of the Change of Control and Annual Bonus means the
executive's highest annual bonus paid during the period beginning five years
prior to the Change of Control and ending on the date of the executive's
termination of employment. In addition, for two years following termination of
employment, the Corporation must provide the executive with welfare benefits
that are generally as favorable as those the executive enjoyed prior to the
Change of Control. Furthermore, the Agreements provide for "gross up" payments
to compensate the executives for any golden parachute excise taxes imposed under
the Internal Revenue Code on account of the severance amounts.
The term of the Agreements is three years following their effective
dates. On each anniversary date of the effective date, the Agreements are
renewed for one additional year, unless either party gives notice of its intent
to cancel the automatic extension.
15
<PAGE> 20
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation Committee (the "Committee") of the Board of Directors, which
consists entirely of Board members who are neither officers nor employees of the
Corporation. The role of the Compensation Committee is, among other things, to
approve salaries and other compensation of the executive officers of the
Corporation and to review, approve and administer grants of stock options and
equity-related awards to all employees, including the principal officers of the
Corporation, and to administer any other compensation plan in connection with
which the Corporation or any of its employees may realize a benefit from
administration by disinterested Directors.
GENERAL COMPENSATION PHILOSOPHY
The Committee supports the Corporation's belief that executive
compensation should further the Corporation's strategic goals. To accomplish
this, the Committee's philosophy with respect to executive compensation holds
that the Corporation's employees are its most important resource and should be
compensated fairly in order to achieve optimum operating performance for the
Corporation. The Committee focuses on operating performance rather than
short-term changes in stock price based on its view that the long-term operating
performance of the Corporation will be reflected by stock price performance over
the long-term. Competitive compensation levels serve to attract and retain
individuals of outstanding ability and motivate such individuals to sustain high
levels of personal performance. The type and amount of compensation granted is
based upon the subjective judgment of the Committee; nevertheless, in the
exercise of its discretion, the Committee considers a number of objective
criteria which are discussed below in the context of the components of
compensation to which they apply.
COMPENSATION STRUCTURE AND AWARDS FOR 1999
The key elements of the Corporation's compensation structure are base
salary, annual incentives and long-term incentives, each of which is intended to
accomplish the overall compensation philosophy.
Annual Compensation -- Base Salary. In setting base salaries for 1999,
the Committee reviewed information drawn from various sources, including proxy
statements and surveys conducted by an outside compensation consulting firm of a
selected peer group of companies in the aggregates, cement and specialty
chemical industries, including those in the Performance Graph peer group on page
21, and of a selected group of general industry companies with comparable
revenues to those of the Corporation. The group of companies reflected in the
compensation surveys was broader than the group of peer companies set forth in
the Performance Graph on page 21 because of the Committee's belief that the
larger group better represents the market within which it competes for executive
talent. The Committee also considered the advice of independent compensation
advisors. The targeted value of an executive's base salary is generally set at
median competitive levels although an executive's base salary may be higher or
lower than the target to reflect the executive's responsibilities, level of
experience, performance in past years and other factors.
16
<PAGE> 21
Salaries for executives are reviewed by the Compensation Committee on an
annual basis and may be increased at that time based on: (1) the Committee's
agreement on the individual's contribution to the Corporation, and (2) increases
in median competitive pay levels. The competitive market rate and proposed
individual salary for each executive is presented by the Chief Executive Officer
to the Committee, along with data supporting the recommendations. The Committee
retains complete discretion in awarding salaries for executives. The total cash
compensation (base salary and bonus described below) for each of the named
executive officers was at approximately the median compensation of executives
having similar responsibilities in the compensation surveys, including those in
the Performance Graph peer group.
The base salary for the Chairman, President and Chief Executive Officer
of the Corporation was increased during 1999 to $635,000. This represents an
approximate 10 percent increase from 1998. The rate of increase in 1999
reflected the Committee's unanimous agreement on Mr. Zelnak's continued superior
leadership ability as reflected by a sustained level of acquisitions completed
in 1999, the successful integration of the Redland Stone acquisition and the
Corporation's continued excellent financial performance as to record sales and
earnings. Under Mr. Zelnak's guidance, the Corporation achieved strong earnings
growth and remained an industry leader in performance as measured by return on
sales and return on investment. In addition, the Committee also reviewed base
salary data for chief executive officers in the compensation studies and in the
Performance Graph peer group.
Annual Compensation -- Bonus. To encourage achievement of the
performance objectives of the Corporation, a significant portion of annual
compensation takes the form of an incentive compensation bonus. In 1999, under
the Corporation's Executive Incentive Plan, the maximum amount that an executive
could receive was based upon a percentage of that executive's base salary. All
of the executive officers participate in the plan, except for Mr. Zelnak, for
whom bonus consideration is made outside the plan.
For awards granted under the plan, following review of the achievements
of the Corporation as compared to the targeted goals set at the end of the
previous year, a comparative review of each of the individual contributions of
all participants towards achieving these goals is conducted. The Compensation
Committee also considers qualitative measures of performance such as adherence
to and implementation of the Corporation's policy on ethics and standards of
conduct, customer satisfaction and product quality.
The amount actually awarded to each participant in the plan is based upon
the Compensation Committee's assessment of each individual's achievement of
targeted objectives, including standard measures of financial performance such
as sales, earnings, return on capital investments and cash generation. These
objectives are established at the beginning of each plan year and are based upon
the Corporation's Long Range Operating Plan. For executives in corporate staff
positions, 50 percent of the determination is made with respect to the
Corporation's performance and 50 percent is based on the individual's
performance.
The Committee considers the recommendations of the Corporation's Chief
Executive Officer but retains complete discretion in performing these reviews
and in determining the amount of actual awards, if any.
17
<PAGE> 22
Mr. Zelnak was awarded an annual incentive bonus of $595,000 for 1999.
Consistent with its compensation philosophy that focuses on financial and
operating performance rather than short-term changes in stock price, the
Committee believes that an evaluation of overall corporate performance should
take into account the accomplishments described in this report as well as the
breadth of Mr. Zelnak's operating responsibility. Mr. Zelnak's bonus for 1999
was awarded based on consideration of many diverse factors, including his
outstanding performance and leadership in connection with the Corporation's
financial achievements and successful acquisitions. The Corporation's Incentive
Stock Plan (discussed more generally below) requires Mr. Zelnak to use 25% of
his 1999 annual incentive bonus towards credits of Common Stock units at a 20%
discount to market value. These units generally vest in three years. In
addition, Mr. Zelnak made an irrevocable choice six months prior to the bonus
determination to use 25% more, for a total of 50% of his annual incentive bonus,
towards Common Stock units. Although there was no special attempt to set Mr.
Zelnak's 1999 bonus in any particular relationship to the compensation data, Mr.
Zelnak's bonus was above the median level of bonus compensation of CEO's in the
compensation surveys, including those in the Performance Graph peer group. His
total cash compensation (base salary and bonus) was slightly above the median
compensation of those CEOs. The Compensation Committee retains complete
discretion in determining the amount of incentive compensation to be awarded to
Mr. Zelnak. Consequently, no particular weighting of criteria is required or
performed.
Long Term Compensation -- Stock Options. Stock options awarded under
the Corporation's Amended and Restated Stock-Based Award Plan link the
compensation provided to a group of 135 executive officers and key personnel
with gains realized by the shareholders. The vesting periods associated with
stock options encourage continued employment with the Corporation while also
serving to confer on recipients an ownership interest in the Corporation.
The number of options granted to an individual is based upon survey data
provided by compensation consultants. The data shows the value of option awards
as a multiple of base pay for comparable executive positions in other
corporations. In making 1999 stock option award decisions, the Committee elected
to provide option awards, as a multiple of base salary, near the average for
awards made by firms in a national compensation group comprised of the same
companies surveyed in the Compensation Committee's review of base salaries. The
determination of the number of options awarded is within the complete discretion
of the Committee, which considers the recommendations of the Chief Executive
Officer with respect to participants other than the Chief Executive Officer, and
which formulates its own decision with respect to the Chief Executive Officer.
The Committee awarded Mr. Zelnak 75,000 options in 1999 to align Mr. Zelnak's
compensation directly with the Corporation's performance. In exercising its
discretion, the Committee generally follows the same procedures as are followed
in determining the amount of incentive compensation awards discussed above.
Since long-term awards vest over time, the Committee grants new awards to
provide continuing incentives for future performance without regard to the
number of options currently held by the recipient. Options awarded are not
transferable and have an exercise price equal to the closing price of the
Corporation's Common Stock on the date of grant, and therefore, have no value to
the recipient unless the price of the Common Stock increases.
18
<PAGE> 23
Long Term Compensation -- Incentive Stock Awards. In 1999, a group of
51 executive officers and key personnel participated in the Martin Marietta
Materials, Inc. Incentive Stock Plan. The plan is intended to give key employees
who participate in the Executive Incentive Plan the opportunity to invest up to
50% of their annual incentive awards to purchase units that are subsequently
converted into shares of Common Stock pursuant to the terms of the plan at a 20%
discount from the market price of the Corporation's Common Stock on the date of
the award. The units become fully vested and are distributed in the form of
unrestricted Common Stock after approximately three years of continued
additional employment with the Corporation. Participation in the plan is
elective, except that executive officers of the Corporation are required to
invest a minimum percentage of their annual incentive awards in units that are
subsequently converted into the Corporation's Common Stock in accordance with
the terms of the Incentive Stock Plan. The plan is intended to assist the
Corporation in attracting and retaining key employees, to link directly
executive officer and management compensation to shareholder returns, and to
foster stock ownership in the Corporation among its key employees.
Long Term Compensation -- Shareholder Value Achievement Plan Awards. In
1999, a group of 15 executive officers and key personnel was granted awards
under the Martin Marietta Materials, Inc. Shareholder Value Achievement Plan
(the "Achievement Plan"). The primary purpose of the Achievement Plan is to
foster and promote the long-term growth and performance of the Corporation by
enhancing the Corporation's ability to attract and retain qualified key
employees and motivate key employees through performance-based incentives.
The 1999 awards granted under the Achievement Plan allow long term
incentives to be earned by the Chief Executive Officer and the other
participants when the Corporation attains specific return on capital goals that
are equally weighted and are determined by a total return to shareholders
ranking that must be at least in the 40th percentile as compared to the Standard
and Poor's index of 400 MidCap companies and a specified peer group. The peer
group differs and is larger than the peer group used in the Performance Graph
because the Corporation has historically compared its financial performance
against this larger competitor group for compensation purposes. Awards earned
under this plan are made in Common Stock that vests at the end of a three-year
period if the performance goals are attained. The objective of this plan is to
focus senior management's attention on certain critical factors affecting the
Corporation's long term performance and reward them for making successful long
term decisions. The value of these awards may vary considerably based on the
Corporation's stock price performance.
Stock-Based Awards -- Generally. The value, if any, of stock-based
awards is dependent upon the performance of the Corporation's Common Stock.
Further, as noted above, in exercising its discretion in determining the type
and amount of award made, the Committee considers many factors related to the
Corporation's performance and the performance of the individual being considered
for an award. While objective criteria are carefully considered, the Committee
has the discretion to make awards as it deems appropriate. Therefore, there is
no formula that results in a direct or quantifiable correlation between
performance and stock-related awards.
19
<PAGE> 24
POLICY WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code which makes certain "non-performance based" compensation
to the named executives in excess of $1 million non-deductible to the
Corporation. One of the named executive officers received annual compensation
exceeding $1 million in 1999.
The Committee has taken steps to qualify certain compensation to ensure
deductibility. The Committee has determined that, in reviewing the design and
administration of the executive compensation program, its compensation
objectives discussed above will be met if, in connection with other
compensation, it retains the flexibility to exercise subjective judgment in
assessing an executive's performance. The Committee believes that the
achievement of the Corporation's general compensation policies and objectives
that are currently in place best serves shareholder interests.
March 21, 2000
COMPENSATION COMMITTEE
Bobby F. Leonard, Chairman
Marcus C. Bennett
William E. McDonald
William B. Sansom
20
<PAGE> 25
COMPARISON CUMULATIVE TOTAL RETURN(1)
MARTIN MARIETTA MATERIALS, INC., S&P 500
AND PEER GROUP INDICES
The following graph compares the performance of the Corporation's Common
Stock to that of the Standard & Poor's 500 Stock Index ("S&P 500") and a market
capitalization weighted index containing a group of peer companies in the
aggregates and cement industries selected by the Corporation. The peer group
consists of the following companies: Florida Rock Industries, Inc., Lafarge
Corporation, Martin Marietta Materials, Inc. and Vulcan Materials Company.(2)
GRAPH
<TABLE>
<CAPTION>
MLM PEER INDEX S&P 500
--- ---------- -------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 118.81 113.26 137.58
1996 136.63 124.94 169.17
1997 218.23 199.74 225.60
1998 375.46 280.28 290.08
1999 250.26 225.71 351.12
</TABLE>
- ------------------------
(1) Assumes that the investment in the Corporation's Common Stock and each index
was $100, with quarterly reinvestment of dividends.
(2) The peer group index includes CalMat Co. up until the time of its merger
into Vulcan Materials Company as of January 6, 1999.
21
<PAGE> 26
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
There are no executive officer-director interlocks where an executive of
the Corporation serves on the compensation committee of another corporation that
has an executive officer serving on the Corporation's Board of Directors.
Messrs. Bennett, Leonard, McDonald and Sansom served on the Corporation's
Compensation Committee during 1999. Mr. Bennett served as Executive Vice
President and Chief Financial Officer of Lockheed Martin Corporation from July
1996 until his retirement on January 31, 1999 and is a Director of Lockheed
Martin Corporation which, until the Split-Off, owned approximately 81% of the
Corporation's Common Stock. He is not, and was not, an officer or employee of
the Corporation or any of its subsidiaries. Information with respect to
transactions between the Corporation and Lockheed Martin Corporation can be
found in "Certain Related Transactions" below.
CERTAIN RELATED TRANSACTIONS
The following transactions involve amounts exceeding $60,000 in which
certain shareholders or Directors of the Corporation may have a material
interest.
TRANSACTIONS WITH LOCKHEED MARTIN CORPORATION
In October 1996, the Corporation's Common Stock that was held by Lockheed
Martin Corporation became available to the public market when Lockheed Martin
disposed of its 81% ownership interest (the "Split-Off"). Before the effective
date of the Split-Off, Lockheed Martin Corporation and Martin Marietta
Investments Inc. held voting power over shares of Common Stock that represented
approximately 72.2% and 8.8%, respectively, of the shares entitled to be cast
for the election of the Board of Directors and approval of other proposals.
Martin Marietta Investments Inc. is a wholly-owned subsidiary of Lockheed Martin
Corporation, which is a Maryland corporation that was formed as the parent
corporation of Martin Marietta Corporation and Lockheed Corporation as a result
of the business combination of those two companies in March 1995. Martin
Marietta Corporation and Lockheed Corporation were subsequently merged into
Lockheed Martin Corporation in January 1996. Lockheed Martin Corporation is the
successor to Martin Marietta Technologies, Inc., which formerly held
approximately 72.2% of the Corporation's Common Stock.
The Corporation was included in Lockheed Martin Corporation's
consolidated tax group until and including the effective day of the Split-Off,
and therefore the taxable income (or loss) of the Corporation and its
subsidiaries (the "Materials Consolidated Group") was included in the Lockheed
Martin Corporation consolidated federal income tax return until such date. The
Corporation and Lockheed Martin Corporation, as successor to Martin Marietta
Corporation, are parties to a Tax Sharing Agreement, dated February 18, 1994,
that allocates responsibility between the Corporation and Lockheed Martin
Corporation for their respective shares of the consolidated federal income tax
liability of Lockheed Martin Corporation and certain other liabilities. Pursuant
to the Tax Sharing Agreement, the Corporation and Lockheed Martin Corporation
make payments between them such that, with respect to any period, the amount of
22
<PAGE> 27
taxes paid by the Corporation or any refund payable to the Corporation is
determined as though the Corporation filed separate federal, state and local
income tax returns (including any amounts determined to be due as a result of a
redetermination of the tax liability of Lockheed Martin Corporation arising from
an audit or otherwise) as the common parent of an affiliated group of
corporations filing a consolidated return rather than a consolidated subsidiary
of Lockheed Martin Corporation.
In anticipation of the Split-Off, the Corporation and Lockheed Martin
Corporation entered into a Supplemental Tax Sharing Agreement and a Tax
Assurance Agreement. The Supplemental Tax Sharing Agreement allocates
responsibility between the Corporation and Lockheed Martin Corporation for
certain tax liabilities (including any related liability of the Corporation or
Lockheed Martin Corporation to stockholders of Lockheed Martin Corporation) that
may result from the failure of the Split-Off to qualify as a fully tax-free
distribution. Pursuant to this agreement, any such liability generally will be
allocated 81% to Lockheed Martin Corporation and 19% to the Corporation, subject
to a maximum allocation of $25 million to the Corporation. However, if either
Lockheed Martin Corporation or the Corporation (but not both) knowingly or
willfully breaches a covenant contained in the Tax Assurance Agreement, which
contains covenants relating to the parties' post-Split-Off conduct which could
jeopardize the qualification of the Split-Off as fully tax-free (if, among other
things, there is a change of law or in the ruling policy of the IRS), and the
failure of the Split-Off to qualify as a fully tax-free distribution would not
have occurred but for such breach, the resulting liability will be allocated
solely to the breaching party. The Corporation would not be solely liable for
the resulting liability if it first obtained an opinion of counsel (satisfactory
to Lockheed Martin Corporation) to the effect that any action underlying a
breach would not cause the Split-Off to fail to qualify as a fully tax-free
distribution. Furthermore, if either Lockheed Martin Corporation or the
Corporation is acquired in a manner that causes the failure of the Split-Off to
qualify as a fully tax-free distribution under Section 355 of the Internal
Revenue Code (including the recognition of gain to Lockheed Martin Corporation
on the distribution of the Corporation's Common Stock pursuant to Section 355(d)
of the Internal Revenue Code) and the gain did not result from a breach of the
Tax Assurance Agreement, the resulting liability will be allocated solely to the
corporation so acquired.
OTHER TRANSACTIONS
Mr. Vinroot is a partner with the law firm of Robinson, Bradshaw &
Hinson, P.A., which has provided certain legal services for the Corporation in
an amount less than 5% of such firm's gross revenues for the firm's last fiscal
year.
23
<PAGE> 28
FINANCIAL STATEMENTS
Upon the written request of any shareholder, the Corporation will provide
without charge a copy of its Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the Securities and Exchange Commission. Requests
should be mailed to the Corporate Secretary, Martin Marietta Materials, Inc.,
2710 Wycliff Road, Raleigh, North Carolina 27607.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice
of Meeting, this Proxy Statement and proxies and the cost of soliciting proxies
relating to the meeting, if any, has been or will be paid by the Corporation. In
addition to use of the mails, proxies may be solicited by officers, directors
and other regular employees of the Corporation by telephone, facsimile or
personal solicitation, and no additional compensation will be paid to such
individuals. The Corporation will use the services of Morrow & Co., Inc., a
professional soliciting organization, to assist in obtaining in person or by
proxy the largest number of shareholder vote as is possible. The Corporation
estimates its expenses for solicitation services will not exceed $15,000. The
Corporation will, if requested, reimburse banks, brokerage houses and other
custodians, nominees and certain fiduciaries for their reasonable expenses
incurred in mailing proxy materials to their principals.
OTHER MATTERS
At the time this Proxy Statement was filed with the Securities and
Exchange Commission, the Board of Directors was not aware that any matters not
referred to herein would be presented for action at the Annual Meeting. If any
other matters properly come before the Meeting, it is intended that the persons
named in the enclosed proxy will vote the shares represented by proxies on such
matters in accordance with their judgment in the best interest of the
Corporation. It is also intended that discretionary authority will be exercised
with respect to the vote on any matters incident to the conduct of the meeting.
SHAREHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Proposals by shareholders for nominations for directors or other matters
intended to be presented at the 2001 Annual Meeting of Shareholders of the
Corporation must be received by the Secretary of the Corporation no later than
November 27, 2000 in order to be included in the Proxy Statement and on the
Proxy Card that will be solicited by the Board of Directors in connection with
that meeting. The inclusion of any proposal will be subject to applicable rules
of the Securities and Exchange Commission. In addition, the Bylaws of the
Corporation establish an advance notice requirement for any proposal of business
to be considered at an annual meeting of shareholders, including the nomination
of any person for election as director. In general, written notice must be
received by the Secretary of the Corporation at its principal executive office,
2710 Wycliff Road, Raleigh, North Carolina 27607, not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting and must contain specified information concerning the matter to be
brought before such meeting and concerning the shareholder proposing such a
matter. Accordingly, to be considered at the 2001
24
<PAGE> 29
Annual Meeting of Shareholders, proposals must be received by the Secretary of
the Corporation no earlier than February 22, 2001 and no later than March 24,
2001. Any waiver by the Corporation of these requirements with respect to the
submission of a particular shareholder proposal shall not constitute a waiver
with respect to the submission of any other shareholder proposal nor shall it
obligate the Corporation to waive these requirements with respect to future
submissions of the shareholder proposal or any other shareholder proposal. Any
shareholder desiring a copy of the Bylaws of the Corporation will be furnished
one without charge upon written request to the Secretary of the Corporation at
its principal executive office, 2710 Wycliff Road, Raleigh, North Carolina
27607.
MARTIN MARIETTA MATERIALS, INC.
March 24, 2000
25
<PAGE> 30
(MARTIN MARIETTA MATERIALS, INC.)
Martin Marietta Materials, Inc.
2710 Wycliff Road
919-781-4550
www.martinmarietta.com
NYSE Stock Symbol: MLM
<PAGE> 31
- FOLD AND DETACH HERE -
MARTIN MARIETTA MATERIALS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD MAY 23, 2000
The undersigned hereby appoints Stephen P. Zelnak, Jr. and Janice K. Henry, and
each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the Common Stock of the undersigned in Martin
Marietta Materials, Inc. at the Annual Meeting of Shareholders to be held on May
23, 2000, and at any adjournment thereof.
1. ELECTION OF DIRECTORS: Nominees are William E. McDonald, Frank H. Menaker,
Jr. and Richard A. Vinroot.
[ ] FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) I have written below)
-----------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for the listed nominees
2. RATIFICATION OF SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENTS
THEREOF.
<PAGE> 32
MARTIN MARIETTA MATERIALS, INC.
- FOLD AND DETACH HERE -
This proxy is solicited by the Board of Directors and when properly executed
will be voted as specified herein and, unless otherwise directed, will be voted
FOR the election of all nominees as Directors and FOR the ratification of
selection of Ernst & Young LLP as independent auditors. The Board of Directors
recommends voting FOR each item.
Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy
Statement is hereby acknowledged.
PLEASE DATE AND SIGN EXACTLY AS
PRINTED BELOW AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
Dated: , 2000
---------------------
----------------------------------
Signature and Title
----------------------------------
Signature if held jointly
(WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC., GIVE TITLE AS
SUCH. IF JOINT ACCOUNT, EACH JOINT
OWNER SHOULD SIGN. IF A
CORPORATION OR A PARTNERSHIP, SIGN
FULL CORPORATE NAME OR PARTNERSHIP
NAME, AS THE CASE MAY BE, BY AN
AUTHORIZED PERSON.)
