UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
(Rule 14a-101)
SCHEDULE
14A INFORMATION
Proxy
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Exchange
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1200
Urban Center Drive
Birmingham,
Alabama 35242
April 2,
2010
Dear
Fellow Shareholder:
You are
cordially invited to attend the 2010 Annual Meeting of the Shareholders of
Vulcan Materials Company, which will be held at the company’s headquarters, 1200
Urban Center Drive, Birmingham, Alabama 35242, on May 14, 2010, at 9:00 a.m.,
Central Daylight Time.
We hope
that you will attend the meeting. However, whether or not you plan to
attend the meeting, we encourage you to vote by proxy. We are once
again taking advantage of the Securities and Exchange Commission rule that
allows companies to furnish their proxy materials over the Internet. As a
result, we are mailing to many of our shareholders a notice instead of a paper
copy of this proxy statement and our 2009 Annual Report to Shareholders. The
notice contains instructions on how each of our shareholders may receive a paper
copy of our proxy materials, including this proxy statement, our 2009 Annual
Report to Shareholders and proxy card. All shareholders who do not receive a
notice will receive a paper copy of the proxy materials by mail. We believe that
this process provides shareholders with the information they need, while
conserving our natural resources and reducing the costs of printing and
distributing our proxy materials.
For your
convenience, you can vote your proxy in one of the following ways:
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Use
the Internet at the web address shown on your proxy
card;
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Use
the telephone number shown on your proxy card;
or
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Complete,
sign, date and return the enclosed proxy card in the postage-paid envelope
provided.
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Instructions
regarding each method of voting are contained in the proxy statement and on the
enclosed proxy card. If you attend the Annual Meeting and desire to
vote your shares personally rather than by proxy, you may withdraw your proxy at
any time before it is exercised. Your vote is
important. Whether you own one share or many, your prompt vote is
greatly appreciated.
Thank you
for your ongoing support and continued interest in our company.
Sincerely
yours,
DONALD M.
JAMES
Chairman
and
Chief
Executive Officer
1200
Urban Center Drive
Birmingham,
Alabama 35242
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 14, 2010
To
our Shareholders:
NOTICE IS
HEREBY GIVEN that the 2010 Annual Meeting of Shareholders of Vulcan Materials
Company will be held at the company’s headquarters, 1200 Urban Center Drive,
Birmingham, Alabama 35242, on Friday, May 14, 2010, at 9:00 a.m., Central
Daylight Time, for the following purposes:
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1.
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To
elect four nominees as directors;
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2.
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To
ratify the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for
2010;
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3.
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To
vote on a shareholder proposal; and
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4.
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To
conduct such other business as may properly come before the meeting or any
adjournments or postponements
thereof.
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Only
shareholders as of the close of business on March 17, 2010 are entitled to
receive notice of, to attend and to vote at the meeting.
By Order
of the Board of Directors,
JERRY F.
PERKINS, JR.
Secretary
Birmingham,
Alabama
April 2,
2010
NOTE — WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON, TO ASSURE THE
PRESENCE
OF A QUORUM, PLEASE VOTE YOUR PROXY BY INTERNET OR TELEPHONE AS
INSTRUCTED
IN THESE MATERIALS OR BY COMPLETING, DATING, SIGNING AND MAILING
THE
ENCLOSED
PROXY CARD AS SOON AS POSSIBLE.
TABLE
OF CONTENTS
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1
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PROPOSAL
1.
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ELECTION
OF DIRECTORS
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6
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PROPOSAL
2.
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RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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11
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PROPOSAL
3.
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SHAREHOLDER
PROPOSAL
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11
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CORPORATE
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GOVERNANCE
OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
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13
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Director
Independence
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13
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Director
Nomination Process
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Board
Leadership Structure
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Non-Management
Executive Sessions and Presiding Director
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15
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Meetings
and Attendance
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Annual
Meeting Policy
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Committees
of the Board of Directors
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16
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Risk
Management
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Compensation
Committee Interlocks and Insider Participation
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Transactions
with Related Persons
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19
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Shareholder
Communication with Our Board of Directors
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Policy
on Reporting of Concerns Regarding Accounting Matters
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REPORT
OF THE AUDIT COMMITTEE
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INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
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Fees
Paid to Independent Registered Public Accounting Firm
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Pre-Approval
of Services Performed by Independent Registered Public Accounting
Firm
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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EQUITY
COMPENSATION PLANS
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26
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COMPENSATION
COMMITTEE REPORT
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27
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COMPENSATION
DISCUSSION AND ANALYSIS
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27
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EXECUTIVE
COMPENSATION
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36
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DIRECTOR
COMPENSATION
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50
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GENERAL
INFORMATION
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52
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Section
16(a) Beneficial Ownership Reporting Compliance
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52
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Shareholder
Proposals For 2011
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52
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VULCAN
MATERIALS COMPANY
1200
URBAN CENTER DRIVE, BIRMINGHAM, ALABAMA 35242
PROXY
STATEMENT FOR
ANNUAL
MEETING OF SHAREHOLDERS
MAY
14, 2010
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why
am I receiving these materials?
This
proxy statement is furnished in connection with the solicitation by our Board of
Directors of proxies to be voted at the 2010 Annual Meeting of Shareholders for
the purposes set forth in the accompanying notice, and at any adjournments or
postponements thereof. This proxy statement is being sent to all
shareholders of record as of the close of business on March 17, 2010 for use at
the 2010 Annual Meeting of Shareholders. This proxy statement, the
enclosed proxy card and Vulcan’s 2009 Annual Report to Shareholders are being
first mailed or made available to our shareholders on or about April 2,
2010. The meeting will be held at our company’s headquarters, 1200
Urban Center Drive, Birmingham, Alabama 35242 on Friday, May 14, 2010, at 9:00
a.m., Central Daylight Time.
Why
did I receive a notice in the mail regarding the Internet availability of the
proxy materials instead of a paper copy of the proxy materials?
As with
last year, we are pleased to be using the Securities and Exchange Commission’s
rule that allows companies to furnish their proxy materials over the
Internet. As a result, we are mailing to many of our shareholders a
notice about the Internet availability of proxy materials instead of a paper
copy of the proxy materials. All shareholders receiving the notice
will have the ability to access the proxy materials over the Internet and
request to receive a paper copy of the proxy materials by
mail. Instructions on how to access the proxy materials over the
Internet or to request a paper copy may be found in the notice. In
addition, the notice contains instructions on how shareholders may request to
receive proxy materials in printed form by mail or electronically on an ongoing
basis.
Why
did I not receive a notice about the Internet availability of the proxy
materials?
For those
shareholders who did not receive a notice regarding Internet availability, we
have determined to send to them paper copies of the proxy materials instead of a
notice about the Internet availability of the proxy materials.
If
I received a notice about Internet availability, how can I access the proxy
materials over the Internet?
Your
notice about the Internet availability of the proxy materials, proxy card or
voting instruction card will contain instructions on how to:
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View
our proxy materials for the 2010 Annual Meeting of Shareholders on the
Internet; and
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Instruct
us to send our future proxy materials to you
electronically.
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Choosing
to receive your future proxy materials electronically will help us conserve
natural resources and reduce the costs of printing and distributing our proxy
materials. If you choose to receive future proxy materials
electronically, we will provide instructions containing a link to the website
where those materials are available and a link to the proxy voting
website. Your election to receive proxy materials electronically will
remain in effect until you revoke it.
How
may I obtain a paper copy of the proxy materials?
Shareholders
receiving a notice about the Internet availability of the proxy materials will
find instructions about how to obtain a paper copy of the proxy materials on
their notice. All shareholders who do not receive the notice will
receive a paper copy of the proxy materials by mail.
What
should I do if I receive more than one notice about the Internet availability of
the proxy materials or more than one paper copy of the proxy
materials?
You may
receive more than one notice or more than one paper copy of the proxy materials,
including multiple paper copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your shares in
more than one brokerage account, you may receive a separate notice or a separate
voting instruction card for each brokerage account in which you hold
shares. If you are a shareholder of record and your shares are
registered in more than one name, you may receive more than one notice or more
than one proxy card. To vote all of your shares by proxy, you must
complete, date, sign and return each proxy card and voting instruction card that
you receive or vote over the Internet or telephone the shares represented by
each notice that you receive (unless you have requested and received a proxy
card or voting instruction card for the shares represented by one or more of the
notices).
Who
can attend the Annual Meeting?
Only
shareholders of our company as of the close of business on the record date,
March 17, 2010, their authorized representatives and invited guests of our
company will be able to attend the annual meeting.
Who
is entitled to vote?
All of
our shareholders as of the record date, March 17, 2010, will be entitled to vote
at the 2010 Annual Meeting of Shareholders. As of the close of
business on such date, we had 480,000,000 authorized shares of common stock, of
which 127,689,522 shares were outstanding and entitled to vote. Each
share of common stock is entitled to one vote on each matter properly brought
before the meeting. Our amended and restated by-laws do not provide
for cumulative voting and, accordingly, our shareholders do not have cumulative
voting rights with respect to the election of directors.
What
is the difference between a shareholder of record and a beneficial holder of
shares?
If your
common stock is held directly in your name with our transfer agent, Bank of New
York Mellon, you are considered a “shareholder of record” with respect to those
shares. If this is the case, the proxy materials, or the notice of
Internet availability of proxy materials, have been sent or provided directly to
you.
If your
common stock is held in a stock brokerage account or by a bank or other nominee,
you are considered the “beneficial holder” of the shares held for you in what is
known as “street name.” If this is the case, the proxy materials, or
the notice of Internet availability of proxy materials, should have been
forwarded to you by your brokerage firm, bank or other nominee, or their agent,
which is considered the shareholder of record with respect to these shares. As a
beneficial holder, you have the right to direct your bank, broker or nominee on
how to vote the shares.
How
do I vote?
Proxies
are solicited to give all shareholders who are entitled to vote on the matters
that come before the meeting the opportunity to vote their shares whether or not
they attend the meeting in person. You can vote in one of the
following manners:
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By
Internet – Shareholders who received a notice about the Internet
availability of the proxy materials may submit proxies over the Internet
by following the instructions on the notice. Shareholders who
have received a paper copy of a proxy card or voting instruction card by
mail may submit proxies over the Internet by following the instructions on
the proxy card or the voting instruction
card.
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By
Telephone – Shareholders of record who live in the United States or Canada
may submit proxies by telephone by calling 1-866-540-5760 and following
the instructions. Shareholders of record who have received a notice about
the Internet availability of the proxy materials will need to have the
control number that appears on their notice available when voting.
Shareholders of record who have received a proxy card by mail will need to
have the control number that appears on their proxy card available when
voting. In addition, most shareholders who are beneficial owners of their
shares living in the United States or Canada and who have received a
voting instruction card by mail may vote by phone by calling the number
specified on the voting instruction card provided by their broker, trustee
or nominee. Those shareholders should check the voting instruction card
for telephone voting
availability.
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By
Mail – Shareholders who have received a paper copy of a proxy card by mail
may submit proxies by completing, signing and dating their proxy card and
mailing it in the accompanying pre-addressed
envelope.
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In
Person – Shareholders of record may vote shares held in their name in
person at the annual meeting. Shares for which a shareholder is
the beneficial holder but not the shareholder of record may be voted in
person at the annual meeting only if such shareholder is able to obtain a
legal proxy from the broker, trustee or nominee that holds the
shareholder’s shares, indicating that the shareholder was the beneficial
holder as of the record date and the number of shares for which the
shareholder was the beneficial owner on the record
date.
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Shareholders
are encouraged to vote their proxies by Internet, telephone or completing,
signing, dating and returning a proxy card, but not by more than one
method. Choosing to vote via the Internet or calling the toll-free
number listed on the proxy card will save our company expense. If you
vote via the Internet or by telephone, please do not return a signed proxy card,
unless you intend to change your vote. If you vote by more than one
method, only the last vote that is received by the vote tabulator will be
counted, and each previous vote will be disregarded.
How
do I specify how I want my shares voted?
You can
specify how you want your shares voted on each proposal by marking the
appropriate boxes on the proxy card or submitting your vote on each proposal via
the telephone or Internet. Please review the voting instructions on
the proxy card and read the entire text concerning the proposals in this proxy
statement prior to voting.
If a
proxy is properly given and not revoked, it will be voted in accordance with the
instructions, if any, given by the shareholder. If your signed proxy
card or your telephone or Internet instructions do not specify how your shares
are to be voted on a proposal, your shares will be voted: (a) FOR the election
of the nominees for directors described in this proxy statement; (b) FOR
ratification of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm; (c) AGAINST the shareholder proposal; and (d)
in accordance with the recommendation of our Board of Directors on any other
proposal that may properly come before the meeting or any postponement or
adjournment thereof.
How
are my shares voted if I am a beneficial holder and I do not return voting
instructions?
Your
shares may be voted on certain matters if they are held in the name of a bank or
brokerage firm, even if you do not provide the bank or brokerage firm with
voting instructions. Banks and brokerage firms have the authority,
under the listing standards of the New York Stock Exchange, to vote shares on
certain “routine” matters for which their clients do not provide voting
instructions by the tenth day before the meeting. The ratification of
our independent registered public accounting firm is the only routine matter to
be considered at this year’s meeting.
What
items will be voted upon at the Annual Meeting?
There are
three proposals that will be presented at the meeting:
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election
of four nominees as directors;
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ratification
of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for the fiscal year ended December 31,
2010; and
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a
shareholder proposal.
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We know
of no other matters that may be brought before the meeting. However,
if any other matters are properly presented for action, it is the intention of
the proxies named on the proxy card to vote on them consistent with the
recommendations of our Board of Directors.
What
are the Board of Directors’ voting recommendations?
For the
reasons set forth in more detail later in this proxy statement, our Board
recommends:
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a
vote FOR the election of each of the director
nominees;
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a
vote FOR the ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm for the fiscal year
ended December 31, 2010; and
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a
vote AGAINST the shareholder
proposal.
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What
constitutes a quorum for the Annual Meeting?
A
majority of the issued and outstanding shares of the capital stock entitled to
vote, represented in person or by proxy, is required to constitute a
quorum. If a quorum is not present at the time of the Annual Meeting
of Shareholders, the shareholders entitled to vote, present in person or by
proxy, shall have the power to adjourn the Annual Meeting until a quorum shall
be present or represented by proxy.
How
many votes are required to pass the proposals?
The
affirmative vote of a plurality of the votes cast is required to elect each of
the director nominees, and a majority of the votes cast is required to ratify
the appointment of Deloitte & Touche LLP and to approve the shareholder
proposal.
How
are the votes counted?
For
purposes of determining the number of votes cast with respect to a particular
matter, only those cast “For” or “Against” and, with respect to the election of
directors, “Withheld” are included. Abstentions and broker non-votes
are counted only for purposes of determining whether a quorum is present at the
meeting, are not considered votes cast, and thus will not affect the outcome of
the vote on the proposals.
How
can I revoke my proxy?
You may
revoke your proxy at any time before it is voted at the meeting by taking one of
the following actions:
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by
giving written notice of the revocation prior to the 2010 Annual Meeting
of Shareholders to: Corporate Secretary, Vulcan Materials Company, 1200
Urban Center Drive, Birmingham, Alabama
35242;
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by
executing and delivering another valid proxy with a later
date;
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by
voting by telephone or Internet at a later date;
or
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by
attending the 2010 Annual Meeting of Shareholders and voting in person by
written ballot.
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If you
vote by more than one method, only the last vote that is received will be
counted, and each previous vote will be disregarded.
Who
counts the votes?
Tabulation
of the votes cast at the meeting is conducted by Bank of New York Mellon,
independent inspectors of election.
Is
my vote confidential?
Proxy
instructions, ballots and voting tabulations that identify individual
shareholders are handled in a manner that protects your voting
privacy. Your vote will not be disclosed either within our company or
to third parties, except: (1) as necessary to meet applicable legal
requirements; (2) to allow for the tabulation of votes and certification of the
vote; and (3) to facilitate a successful proxy solicitation.
Who
will pay for the costs involved in the solicitation of proxies?
Our
company is making this solicitation and will pay the entire cost of preparing,
assembling, printing, mailing and distributing the notices and these proxy
materials and soliciting votes. In addition to the mailing of notices
and these proxy materials, the solicitation of proxies or votes may be made in
person or by telephone.
What
is “householding” and how does it affect me?
Some
banks and brokers may be participating in the practice of “householding” proxy
statements and annual reports. This means that only one copy of this
proxy statement or our 2009 Annual Report to Shareholders may have been sent to
multiple shareholders in your household. We will promptly deliver a
separate copy of either or both documents to you if you write or call us at the
following address or phone number: Vulcan Materials Company, P.O. Box
385014, Birmingham, Alabama 35238-5014, Attention: Mark D. Warren, Director,
Investor Relations, phone: (205) 298-3220. If you want to receive
separate copies of our Annual Report to Shareholders and proxy statement in the
future, or if you are receiving multiple copies and would like to receive only
one copy for your household, you should contact your bank or broker, or you may
contact us at the above address and phone number.
Where
can I find the voting results of the Annual Meeting?
The
preliminary voting results will be announced at the Annual Meeting of
Shareholders. The final voting results will be reported in a Current
Report on Form 8-K filed with the Securities and Exchange Commission within four
business days of the Annual Meeting and posted on our website.
Can
I view the proxy statement and Annual Report on Form 10-K over the Internet
instead of receiving them in the mail?
You may
access our company’s proxy statement and Annual Report on Form 10-K for the year
ended December 31, 2009, included in our 2009 Annual Report to Shareholders, via
the Internet at www.vulcanmaterials.com under
the heading “Investor Relations.” For next year’s shareholders’ meeting, you can
help us save significant printing and mailing expenses by consenting to access
the proxy statement, proxy card and Annual Report to Shareholders electronically
over the Internet. If you hold your shares in your own name (instead of through
a bank, broker or other nominee), you can choose this option by following the
instructions at the Internet website at
http://bnymellon.mobular.net/bnymellon/vmc. If you choose to receive your proxy
materials and Annual Report to Shareholders electronically, then prior to next
year’s shareholders’ meeting you will receive notification when the proxy
materials and Annual Report to Shareholders are available for on-line review
over the Internet, as well as the instructions for voting electronically over
the Internet. Your choice for electronic distribution will remain in effect for
subsequent meetings, unless you revoke it prior to future meetings by revoking
your request online or by sending a written request to: Corporate Secretary,
Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama
35242.
A copy of
our Annual Report on Form 10-K for the year ended December 31, 2009 will be
provided to you without charge upon written request to Mark D. Warren, Director,
Investor Relations, Vulcan Materials Company, 1200 Urban Center Drive,
Birmingham, Alabama 35242.
PROPOSAL
1. ELECTION OF DIRECTORS
In
accordance with the amended and restated by-laws of our company, our Board of
Directors is required to be comprised of not fewer than nine nor more than 12
directors. Our by-laws further provide that the number of directors
may be set by a resolution adopted by a majority of our Board of
Directors. Pursuant to our by-laws, the Board is divided into three
classes, with the term of office of one class expiring each year. One
class is elected at each annual meeting, and each director is chosen to serve
until the third succeeding Annual Meeting of Shareholders. Our
by-laws provide that a director shall retire from the Board at the annual
meeting following his or her 74th
birthday, provided that the Board may waive the mandatory retirement age and
nominate such director for an additional term of one or more years if the Board
determines that such an extension is in the best interests of our company and
its shareholders. Directors who will reach retirement age before a
three-year term would expire are elected to a term consistent with their
retirement date.
Our Board
has nominated Douglas J. McGregor and Vincent J. Trosino as directors to serve
three-year terms expiring in 2013. In addition, Philip J. Carroll,
Jr. has been nominated as a director to serve a two-year term expiring in 2012,
and James V. Napier has been nominated as a director to serve a one-year term
expiring in 2011. Unless otherwise directed, proxies will be voted in
favor of these four nominees. Should any of the nominees be unable to
accept election, the proxies will be voted for the election of such other person
or persons nominated by our Board on the recommendation of the Governance
Committee. Each of the nominees has consented to serve if elected,
and our Board has no reason to believe that any of the persons nominated will be
unable to serve as a director.
NOMINEES
FOR RE-ELECTION TO THE BOARD OF DIRECTORS
TERMS
EXPIRING IN 2013
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Douglas
J. McGregor
Age:
69. Director since 1992.
Senior
Advisor, Blue Point Capital Partners, Cleveland, Ohio (a national private
equity firm), since January 2003. From June 2000 until December
2002, Mr. McGregor was the President, Chief Operating Officer and Chief
Restructuring Officer of Burlington Industries, Inc., Greensboro, North
Carolina. In 2001 Burlington and certain of its subsidiaries
filed voluntary petitions under Chapter 11, Title 11 of the United States
Code.
Key
attributes, experience and skills: Mr. McGregor’s
position as Senior Advisor of Blue Point Capital Partners, a private
equity firm, provides the Board with valuable financial and investment
experience. In addition to his executive experience at
Burlington Industries, Mr. McGregor served as Chairman and Chief Executive
Officer of M.A. Hanna, an international specialty chemicals company, and
as a senior executive of Rockwell International, a major manufacturing
conglomerate, providing him with valuable business, leadership and
management experience with issues facing large industrial and mining
companies.
Committee
memberships: Audit; Executive; Finance and Pension
Funds.
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Vincent
J. Trosino
Age:
69. Director since 2003.
Retired;
President, Vice Chairman of the Board and Chief Operating Officer of State
Farm Mutual Automobile Insurance Company, Bloomington, Illinois (a mutual
insurance company), from 1998 until December 2006.
Key
attributes, experience and skills: As a result of his
tenure as the President and Chief Operating Officer of State Farm, Mr.
Trosino brings to the Board significant experience in financial matters,
risk assessment, management, marketing and human resources. In
addition, he provides the Board with knowledge and insight regarding the
insurance industry, an important consideration to the Company’s evaluation
and mitigation of risk areas.
Committee
memberships: Audit; Finance and Pension
Funds.
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TERM
EXPIRING IN 2012
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Philip
J. Carroll, Jr.
Age:
72. Director since 1999.
Retired;
Chairman and Chief Executive Officer of Fluor Corporation, Aliso Viejo,
California (an engineering, construction and diversified services
company), from July 1998 to February 2002.
Key
attributes, experience and skills: Mr. Carroll’s service
as Chief Executive Officer of Fluor provides him with valuable business,
leadership and management experience and gives him a keen understanding of
the construction industry. Prior to joining Fluor, Mr. Carroll
spent 37 years with Shell Oil Company, including as President and Chief
Executive Officer, which provides him with valuable insight into the
financial, organizational and operational management issues crucial to a
large public company.
Other
directorships: BAE Systems; Texas Medical Center;
Environfuels, LLC.
Committee
memberships: Compensation; Executive;
Governance.
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TERM
EXPIRING IN 2011
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James
V. Napier
Age:
73. Director since 1983.
Retired;
Chairman of the Board of Scientific-Atlanta, Inc., Atlanta, Georgia (a
manufacturer and designer of telecommunication systems, satellite-based
communications networks, and instrumentation for industrial,
telecommunications and government applications) from 1992 to
2000.
Key
attributes, experience and skills: As a result of his
experience as Chairman of Scientific Atlanta and, prior to that, as Chief
Executive Officer of HBO & Company and Continental Telecom, Mr. Napier
provides valuable business, leadership and management experience and
brings important perspectives on the issues facing our
Company. He also has significant experience serving as a
director of other large public companies.
Other
directorships: Intelligent Systems, Inc.; WABTEC,
Corp. Mr. Napier previously served on the boards of McKesson
Corporation and Scientific-Atlanta, Inc.
Committee
memberships: Compensation; Finance and Pension
Funds.
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The
Board of Directors recommends a vote FOR
each
of the nominees named above.
DIRECTORS
CONTINUING IN OFFICE
TERMS
EXPIRING IN 2012
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Phillip
W. Farmer
Age:
71. Director since 1999.
Retired;
Chairman of the Board of Harris Corporation, Melbourne, Florida (an
international communications equipment company), from February 2003 until
June 2003; Chairman, President and Chief Executive Officer from June 2000
to February 2003.
Key
attributes, experience and skills: Having served as
Chairman and Chief Executive Officer of Harris Corporation, Mr. Farmer
brings to the Board valuable public company leadership and management
experience. Mr. Farmer also provides financial expertise to our
Board, including through his service as our Audit Committee chairman as
well as his prior experience on the audit committee of another public
company.
Committee
memberships: Audit;
Executive; Governance.
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H.
Allen Franklin
Age: 65. Director
since 2001.
Retired;
Chairman and Chief Executive Officer of Southern Company, Atlanta, Georgia
(a super-regional energy company in the Southeast and a leading U.S.
producer of energy), from April 2004 until July 2004; Chairman, President
and Chief Executive Officer from April 2001 to April 2004.
Key
attributes, experience and skills: As a result of Mr.
Franklin’s tenure as Chairman and Chief Executive Officer of Southern
Company, Mr. Franklin provides the Board with valuable business,
leadership and management experience with issues facing an industrial
company, including governmental and regulatory issues and safety, health
and environmental matters. He also brings to the Board
organizational and operational management skills as well as governance and
compensation experience.
Committee
memberships: Compensation; Executive; Safety, Health and
Environmental Affairs.
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Richard
T. O’Brien
Age: 56. Director
since 2008.
President
and Chief Executive Officer of Newmont Mining Corporation, Greenwood
Village, Colorado (an international gold production company); President
and Chief Financial Officer during 2006 and 2007; Senior Vice President
and Chief Financial Officer from 2005 until 2006; Executive Vice President
and Chief Financial Officer, AGL Resources, Atlanta, Georgia (a natural
gas distribution, marketing and energy service company), from 2001 until
2005.
Key
attributes, experience and skills: As President and
Chief Executive Officer of Newmont Mining, Mr. O’Brien has valuable
experience in managing the issues that face a publicly held company with
domestic and international mining operations. In addition, he
has extensive financial and accounting expertise, having previously served
as Chief Financial Officer of Newmont and AGL Resources and, as a result,
is designated as a financial expert on our Audit Committee.
Other
directorships: Newmont Mining Corporation; Inergy
Holdings, LP.
Committee
memberships: Audit; Safety, Health and Environmental
Affairs.
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Donald
B. Rice
Age:
70. Director since 1986.(*)
President
and Chief Executive Officer of Agensys, Inc., Santa Monica, California (a
biotechnology company developing monoclonal antibody therapeutics for
cancer; since December 2007, a subsidiary of Astellas Pharma, Inc.), since
1996; Former U.S. Secretary of the Air Force.
Key
attributes, experience and skills: Dr. Rice’s service as
the President and Chief Executive Officer of Agensys provides him with
valuable business, leadership and management experience. Dr.
Rice’s experience as Secretary of the Air Force, and in other government
positions, provides him with valuable experience in public policy,
governmental affairs, management, and strategy. He also has
significant experience serving as a director of a number of other large
public companies.
Other
directorships: Chevron Corp.; Wells Fargo &
Company. Dr. Rice previously served on the Boards of Unocal
Corp. and Amgen, Inc.
Committee
memberships: Compensation; Executive;
Governance.
(*)Dr.
Rice was first elected a director in 1986, and served until May 1989, when
he was appointed Secretary of the Air Force. He was re-elected
a director by our Board of Directors on February 12,
1993.
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TERMS
EXPIRING IN 2011
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Donald
M. James
Age:
61. Director since 1996.
Chairman
and Chief Executive Officer of Vulcan since May 1997.
Key
attributes, experience and skills: As a result of Mr.
James’ tenure as Chairman and Chief Executive Officer of our company since
1997, he brings to the Board extensive leadership, management, operating,
financial, and legal experience and knowledge of our company and the
aggregates industry. Mr. James also has experience serving as a
director of a number of other large public companies.
Other
directorships: The Southern Company; Wells Fargo &
Company. Mr. James previously served on the boards of Wachovia
Corporation and Protective Life Corporation.
Committee
memberships: Executive.
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Ann
McLaughlin Korologos
Age:
68. Director since 1990.(*)
Former
U.S. Secretary of Labor; Former Chairman of the RAND Corporation Board of
Trustees, Santa Monica, California (a nonprofit institution that helps
improve policy and decision making through research and analysis), April
2004 – April 2009; Senior Advisor to Benedetto, Gartland & Company,
Inc. (an investment banking firm in New York), from October 1996 until
December 2005.
Key
attributes, experience and skills: As a result of her
governmental and professional experiences, Mrs. Korologos possesses
particular knowledge and experience in a variety of areas, including
regulatory and governmental affairs, human resources, governance, strategy
and social responsibility issues. She also has significant
experience serving as a director of a number of other large public
companies.
Other
directorships: AMR Corporation; Harman International
Industries, Inc.; Kellogg Company; Host Hotels & Resorts,
Inc. Ms. Korologos previously served on the board of the
Federal National Mortgage Association (Fannie Mae) and Microsoft
Corporation.
Committee
memberships: Governance; Safety, Health and Environmental
Affairs.
(*)
Ms. Korologos was first elected a director in 1990 and served until May
14, 2004. She was re-elected a director by our Board of
Directors on July 13,
2007.
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James
T. Prokopanko
Age: 56. Director
since 2009.
President
and Chief Executive Officer of The Mosaic Company, Plymouth, Minnesota
(the leading producer and marketer of concentrated phosphate and potash
crop nutrients for the global agriculture industry) since January 2007;
Executive Vice President and Chief Operating Officer from July 2006 until
January 2007. Corporate Vice President of Cargill,
Incorporated (an international producer and marketer of food,
agricultural, financial and industrial products and services) from 2004
until 2006, Minneapolis, Minnesota.
Key
attributes, experience and skills: As a result of his
position as President and Chief Executive Officer of The Mosaic Company,
Mr. Prokopanko provides the Board with valuable business, leadership and
management experience in managing the issues that face a publicly held
company engaged in a mineral extraction industry. In addition,
he provides the Board with knowledge of industry and financial and
accounting expertise.
Other
directorships: The Mosaic Company.
Committee
memberships: Audit; Governance.
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Kathleen
Wilson-Thompson
Age: 52. Director
since 2009.
Senior
Vice-President and Chief Human Resources Officer of Walgreen Co. since
January 2010, Deerfield, Illinois; Senior Vice-President, Global Human
Resources, from July 2005 until January 2010 and Vice President and Chief
Counsel, US Businesses, Labor and Employment of The Kellogg Company,
Battle Creek, Michigan (a retail food manufacturer and distributor) from
2000 until July 2005.
Key
attributes, experience and skills: As a result of her
service as a Senior Vice President in Human Resources at Walgreen Co. and
The Kellogg Company, Mrs. Wilson-Thompson brings to the Board valuable
experience in managing personnel, human resource and organizational issues
that face a labor-intensive workforce. In addition, prior to
beginning her career in human resources, Mrs. Wilson-Thompson practiced
law at a private law firm and as in-house counsel at Kellogg, which
provides her with additional perspective in dealing with legal, regulatory
and risk matters affecting the Company.
Committee
memberships: Finance and Pension Funds; Safety, Health
and Environmental
Affairs.
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PROPOSAL
2. RATIFICATION OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee, which is comprised solely of independent directors, has appointed
Deloitte & Touche LLP as the independent registered public accounting firm
for our company and its subsidiaries for the fiscal year ended December 31,
2010. The function of the independent registered public accounting
firm is to audit our accounts and records; to report on the consolidated balance
sheet, the related statements of consolidated earnings, consolidated
shareholders’ equity and consolidated statements of cash flows of our company
and its subsidiaries; and to perform such other appropriate accounting services
as may be required and approved by the Audit Committee. Although
shareholder ratification is not required, our Board has determined that it would
be desirable to request an expression from the shareholders as to whether or not
they support this appointment. Even if the appointment of Deloitte
& Touche LLP is ratified by majority of the votes cast at the meeting, the
Audit Committee may, in its discretion, direct the appointment of another
independent registered accounting firm at any time during the year, if it
believes such appointment is in the best interests of the company and the
shareholders. If a majority of the votes cast at the meeting fails to
ratify the selection of Deloitte & Touche LLP as our independent registered
public accounting firm, the Audit Committee will consider the selection of
another independent registered public accounting firm for future
years.
The firm
of Deloitte & Touche LLP, or its predecessors, has audited our financial
statements since 1956. A representative of that firm is expected to
be present at the meeting, will be given an opportunity to make a statement and
will be available to respond to appropriate questions.
The
Board of Directors recommends a vote FOR
the
proposal to ratify the appointment of Deloitte & Touche LLP as our
company’s
independent
registered public accounting firm.
PROPOSAL
3. SHAREHOLDER PROPOSAL
Our
company has been advised that the United Brotherhood of Carpenters and Joiners
of America, 101 Constitution Avenue, N.W., Washington, D.C. 20001, a beneficial
owner of 1,913 shares of our company’s common stock, intends to present the
following proposal and supporting statement at the annual
meeting. The proposal will be voted on only if properly presented at
the annual meeting. In accordance with rules of the Securities and
Exchange Commission, the text of the resolution and supporting statement is
printed verbatim from the proponent’s submission, and we take no responsibility
for them. To ensure that readers can easily distinguish between the
materials provided by the proponent and the materials we have provided, we have
placed a box around material provided by the proponent.
Our Board
of Directors strongly opposes the adoption of the proposal and asks you to
review our Board’s response, which follows the proponent’s supporting
statement.
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Shareholder
Proposal
Resolved: That
the shareholders of Vulcan Materials Company (“Company”) hereby request
that the Board of Directors initiate the appropriate process to amend the
Company’s certificate of incorporation to provide that director nominees
shall be elected by the affirmative vote of the majority of votes cast at
an annual meeting of shareholders, with a plurality vote standard retained
for contested director elections, that is, when the number of director
nominees exceeds the number of board seats.
Supporting
Statement: In order to provide shareholders a meaningful
role in director elections, Vulcan Materials’ director election vote
standard should be changed to a majority vote standard. A
majority vote standard would require that a nominee receive a majority of
the votes cast in order to be elected. The standard is
particularly well-suited for the vast majority of director elections in
which only board nominated candidates are on the ballot. We
believe that a majority vote standard in board elections would establish a
challenging vote standard for board nominees and improve the performance
of individual directors and entire boards. Vulcan Materials
presently uses a plurality vote standard in all director
elections. Under the plurality vote standard, a nominee for the
board can be elected with as little as a single affirmative vote, even if
a substantial majority of the votes cast are “withheld” from the
nominee.
In
response to strong shareholder support for a majority vote standard in
director elections, a strong majority of the nation’s leading companies,
including Intel, General Electric, Motorola, Hewlett-Packard, Morgan
Stanley, Wal-Mart, Home Depot, Gannett, Marathon Oil, and Safeway have
adopted a majority vote standard in company by-laws or certificates of
incorporation. Additionally, these companies have adopted
director resignation policies in their by-laws or corporate governance
policies to address post-election issues related to the status of director
nominees that fail to win election. However, our Company has
responded only partially to the call for change, simply adopting a
post-election director resignation policy that sets procedures for
addressing the status of director nominees that receive more “withhold”
votes than “for” votes. The plurality vote standard remains in
place.
We
believe that a post-election director resignation policy without a
majority vote standard in Company by-laws or certificate of incorporation
is an inadequate reform. The critical first step in
establishing a meaningful majority vote policy is the adoption of a
majority vote standard. A majority vote standard combined with
a post-election director resignation policy would establish a meaningful
right for shareholders to elect directors, and reserve for the Board an
important post-election role in determining the continued status of an
unelected director. We feel that this combination of the
majority vote standard with a post-election policy represents a true
majority vote standard.
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Company
Statement in Opposition
The Board
believes that our company’s existing governance structure effectively addresses
the concerns raised by the shareholder proposal. In 2006, the Board
adopted a policy (Director Resignation Policy) under our company’s Corporate
Governance Guidelines to take into account the majority election of
directors. The Director Resignation Policy provides that in a
non-contested election, any director nominee who receives more votes “withheld”
than votes “for” his or her election will immediately tender his or her
resignation to the Board. The Governance Committee, which is composed
exclusively of independent directors, will then review and consider the
resignation and recommend to the Board whether to accept it.
The
Director Resignation Policy ensures that a director nominee who receives less
than a majority vote will not serve or remain on the Board without undergoing a
high degree of scrutiny by both the Governance Committee and the
Board. Thus, the Board believes the Director Resignation Policy
effectively addresses the concerns raised by the proposal. In
addition, our adoption of the Director Resignation Policy is consistent with the
approach taken by many other public companies.
Our
company is incorporated under the laws of New Jersey, and our shareholders
currently elect directors by plurality voting. Plurality voting is
the default standard under New Jersey law, has long been the accepted default
standard among most public companies and, in 2006, was recommended by the
American Bar Association as the preferred standard for director
elections. Our Director Resignation Policy modifies the plurality
voting standard in uncontested elections in a manner that affords our
shareholders significant input. However, it also retains for the
Board the ability to exercise its judgment based upon a case-by-case analysis
and the needs of our company at any point in time. The Board believes
this flexibility is in the best interest of all shareholders and is preferable
to a rigid majority vote standard. A rigid majority vote standard
could have unintended adverse consequences for our company and its shareholders,
including the possibility of an entire slate of nominees not receiving the
requisite number of votes, leaving the Board with an insufficient number of
directors to fulfill its obligations and causing our company to fail to comply
with New York Stock Exchange independence standards and listing
requirements.
The
proponent’s characterization of plurality voting, particularly the statement
that a director may be elected by a single vote even if a substantial majority
of the votes cast are “withheld,” is unrealistic and inconsistent with the
company’s historical voting results. During the past 10 years, the average
affirmative vote for directors has exceeded 96% of shares voted through the
plurality voting process. As a result, the adoption of a majority
voting standard would not have affected the outcome of our election
process. Moreover, the independent Governance Committee applies
stringent criteria in identifying and nominating director candidates and has
established procedures to consider and evaluate director candidates recommended
by our shareholders. See “Corporate Governance Of Our Company And
Practices Of Our Board Of Directors — Director Nomination
Process.” This process has been instrumental in creating a board
consisting of highly qualified directors from diverse backgrounds. It
also has resulted in a board comprised entirely of independent directors (as
defined by the New York Stock Exchange) with the exception of our Chairman, who
also serves as our CEO.
We
believe that our Director Resignation Policy provides shareholders a meaningful
and significant role in the election of directors, and for the reasons presented
above, we do not believe that the shareholder proposal is in the best interests
of our company or its shareholders.
The
Board of Directors unanimously recommends a vote “AGAINST” the shareholder
proposal.
CORPORATE
GOVERNANCE OF OUR COMPANY AND
PRACTICES
OF OUR BOARD OF DIRECTORS
Our
company takes its corporate governance responsibilities very seriously and has
adopted Corporate Governance Guidelines that provide a framework for the
governance of our company. The Guidelines build on practices that we
have followed for many years and, we believe, demonstrate our continuing
commitment to corporate governance excellence.
In
addition, we have a Business Conduct Policy that applies to all of our employees
and directors and deals with a variety of corporate compliance issues, including
conflicts of interest, compliance with laws, confidentiality of company
information, fair dealing and use of company assets. All employees and directors
are required to fill out a questionnaire annually regarding their personal
compliance with the Business Conduct Policy and are encouraged to report any
illegal or unethical behavior of which they become aware.
Our Board
has adopted a Code of Ethics for the Chief Executive Officer and Senior
Financial Officers. The Code of Ethics defines “Senior Financial
Officers” to include the Chief Financial Officer, Controller and Principal
Accounting Officer. The Code of Ethics covers such topics as financial
reporting, conflicts of interest and compliance with laws. If we make
any amendment to, or waiver of, any provision of the Code of Ethics, we will
disclose such information on our website. As discussed in this proxy
statement, our Governance Committee regularly reviews corporate governance
developments and adopts appropriate practices as warranted. You can
access our amended and restated by-laws, Corporate Governance Guidelines,
Business Conduct Policy and Code of Ethics at our website www.vulcanmaterials.com or
you can obtain a printed copy free of charge by writing to us at: Corporate
Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham,
Alabama 35242. Please note that the information contained on our
website is not incorporated by reference in, nor considered to be a part of,
this proxy statement.
Director
Independence
Our Board
believes that all of the directors, with the exception of our Chairman and CEO
Don James, are independent under the New York Stock Exchange listing standards,
our Board’s Director Independence Criteria, and the applicable SEC rules and
regulations. The New York Stock Exchange listing standards provide
that a director does not qualify as independent unless our Board affirmatively
determines that the director has no material relationship with our company
(either directly or as a partner, shareholder or officer of an organization that
has a relationship with our company). The New York Stock Exchange
rules require a board to consider all of the relevant facts and circumstances in
determining the materiality of a director’s relationship with our company and
permit the Board to adopt and disclose standards to assist the Board in making
determinations of independence. Accordingly, the Board has adopted
the Director Independence Criteria to assist it in determining whether a
director has a material relationship with our company. The Director
Independence Criteria provide that a director will be considered independent if
he or she:
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(a)
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has
not been an employee of our company, or any of its consolidated
subsidiaries, during the last three
years;
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(b)
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has
not received more than $120,000 per year in direct compensation from our
company, or any of its consolidated subsidiaries, other than director and
committee fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in any way on
continued service) during the last three
years;
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(c)
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is
not a current partner or employee of our company’s independent auditor and
has not been employed by the present or former independent auditor of our
company and personally worked on our company’s audit during the last three
years.
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(d)
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during
the last three years, has not been part of an interlocking directorate in
which an executive officer of our company, or any of its consolidated
subsidiaries, served on the compensation committee of another company that
concurrently employs the director;
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(e)
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is
not, and has not been in the past three years, an executive officer or an
employee of another company (exclusive of charitable organizations) that
makes payments to, or receives payments from, our company, or any of its
consolidated subsidiaries, for property or services in an amount which, in
any single fiscal year, exceeds the greater of $1,000,000 or 2% of the
consolidated gross revenues of such other
company;
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(f)
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has
no immediate family member who is an executive officer of our company, or
any of its consolidated
subsidiaries;
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(g)
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has
no immediate family member meeting any of the criteria set forth in
(b)-(e); except with respect to item (c) in which case an immediate family
member may be an employee (not a partner) of the independent auditor so
long as such family member does not personally work on our company’s
audit; and
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(h)
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has
no other material relationship with our company, or any of its
consolidated subsidiaries, either directly or as a partner, shareholder,
director or officer of an organization that has a material relationship
with our company or any of its consolidated
subsidiaries.
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For
purposes of determining director independence, “immediate family member” is
defined as a spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law, brothers and sisters-in-law and anyone (other than
domestic employees) who share the director’s home. Individuals who
are no longer immediate family members as a result of legal separation or
divorce, or those who have died or become incapacitated, are not taken into
consideration with respect to the determination of a director’s
independence.
Further,
the Director Independence Criteria require our Board to consider all relevant
facts and circumstances, including a director’s commercial, industrial, banking,
consulting, legal, accounting, familial and charitable relationships and such
other criteria as our Board may determine from time to time.
In
February 2010, the Board conducted an evaluation of director independence, based
on the Director Independence Criteria, the New York Stock Exchange listing
standards and applicable SEC rules and regulations. In connection with this
review, the Board evaluated commercial, industrial, banking, consulting, legal,
accounting and charitable relationships with each director or immediate family
member and their related interests and our company and its subsidiaries,
including those relationships described under “Other Matters Relating to
Executive Officers and Directors.”
As a
result of this evaluation, the Board affirmatively determined that all of the
directors other than our Chairman and CEO, Don James, are independent directors
under our Board’s Director Independence Criteria, the New York Stock Exchange
listing standards and the applicable SEC rules and regulations.
Director
Nomination Process
The
Governance Committee considers director candidates recommended by our
shareholders. Any shareholder wishing to recommend a candidate for
election at the 2011 Annual Meeting must submit that recommendation in writing,
addressed to the Governance Committee, in care of our Corporate Secretary, at
1200 Urban Center Drive, Birmingham, Alabama 35242, by December 3,
2010. The notice should include the following:
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·
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The
name and address of the shareholder who intends to make the nomination(s)
and of the person or persons to be
nominated;
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·
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A
representation that the shareholder is a holder of record or a beneficial
holder of stock entitled to vote at the meeting (including the number of
shares the shareholder owns) and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the
notice;
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·
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A
description of all arrangements and understandings between the shareholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
the shareholder;
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·
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Such
other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC (whether or not such rules are
applicable) had each nominee been nominated, or intended to be nominated,
by our Board of Directors, including the candidate’s name, biographical
information, and qualifications;
and
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·
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The
written consent of each nominee to serve as a director if so
elected.
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The
Governance Committee will identify nominees by first evaluating the current
members of our Board willing to continue service. Current members of
our Board with skills and experience that are relevant to our business and who
are willing to continue in service are considered for nomination, balancing the
value of continuity of service by existing members of our Board with the
potential benefits of obtaining new Board members. If any member of
the Board does not wish to continue in service or if the Governance Committee or
the Board decides not to nominate a current Board member for reelection, the
Governance Committee may identify the desired skills and experience for a new
nominee in light of the above criteria. Directors and members of
management also may suggest candidates for Board service. Timely
recommendations by our shareholders will receive equal consideration by the
Governance Committee. In some cases the committee engages, for a fee,
the services of a third-party executive search firm to assist it in identifying
and evaluating nominees for director.
Board
Leadership Structure
Our Board
understands the importance of evaluating and determining the optimal leadership
structure so as to provide independent oversight of management. Our
Board also understands that there is no single, generally accepted approach to
providing Board leadership and that given the dynamic and competitive
environment in which we operate, the right Board leadership structure may vary
from time to time. For this reason, our Board does not have a policy
with respect to the separation of the offices of Chairman of the Board and Chief
Executive Officer. The Board has determined that our Company should
have the flexibility to combine or separate these functions as circumstances
deem appropriate. At this time, the Board believes that it is in the
best interests of our company and its shareholders to have Don James serve as
our Chairman of the Board and Chief Executive Officer.
At this
time, our Board believes that there are a number of advantages to consolidating
the positions of Chairman and Chief Executive Officer, including the
following:
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·
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Mr.
James, with over 17 years experience with our company, including over 12
years of experience as Chief Executive Officer, has the knowledge,
expertise and experience to understand the opportunities and challenges
facing our company, as well as the leadership and management skills to
promote and execute our values and strategy, particularly given the
economic environment;
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|
·
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Consolidating
the positions allows Mr. James to lead board discussions regarding our
business and strategy, and provides decisive and effective leadership for
our company;
|
|
·
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Combining
the positions creates a firm link between management and the Board that
promotes the development and implementation of our corporate strategy;
and
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·
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Consolidating
the positions allows timely communication with our Board on critical
business matters.
|
Based on
the aforementioned advantages, our Board has determined that this leadership
structure is optimal for our company.
In considering its leadership
structure, our Board has taken a number of additional factors into
account. The Board, which consists exclusively of independent
directors other than Mr. James and all of whom are highly qualified and
experienced, exercises a strong independent oversight function. This
oversight function is enhanced by the fact that all of the Board’s key
Committees – Audit, Compensation and Governance – are comprised entirely of
independent directors. Most significantly, our Corporate Governance
Guidelines provide for a non-management presiding director, a position which is
filled by rotation among the chairs of our Board committees. Among
other things, the non-management presiding director is responsible for reviewing
and approving the agenda in advance of each Board meeting, facilitating
communication among directors and between the Board and Mr. James and chairing
an executive session of the independent directors at each Board
meeting. Our Board believes that these factors provide the
appropriate balance between the authority of those who oversee our company and
those who manage it on a day-to-day basis.
Non-Management
Executive Sessions and Presiding Director
Our Board
of Directors has adopted a policy relating to non-management executive
sessions. Under this policy, the Board of Directors meets at each
regularly scheduled Board meeting in an executive session in which management
directors and other members of management do not participate. During
2009, the non-management directors met in executive session five
times.
Each year
at the May Board meeting, our Board designates a non-management presiding
director, a position which is filled by rotation among the chairs of our Board
committees. The duties of the presiding director are delineated in
our Corporate Governance Guidelines, which are available on our website at www.vulcanmaterials.com. The
Chairman of the Finance and Pension Funds Committee, Douglas J. McGregor, served
as the presiding director at the executive sessions after the annual meeting in
2009. Donald B. Rice, Chairman of the Governance Committee, will
serve as the presiding director following the 2010 Annual Meeting of
Shareholders.
Meetings
and Attendance
Our Board
held eight meetings in 2009. In 2009, each director attended more
than 75% of the total number of meetings of the Board and meetings of the
committees of which he or she was a member.
Annual
Meeting Policy
Our
directors are expected to attend the Annual Meeting of
Shareholders. In furtherance of this policy, our Board holds a
regularly scheduled Board meeting on the same day as the Annual Meeting of
Shareholders. In 2009, all of the Board members attended the Annual
Meeting.
Committees
of the Board of Directors
Our Board
of Directors has established six standing committees as follows:
|
·
|
Compensation
Committee;
|
|
·
|
Safety,
Health and Environmental Affairs Committee;
and
|
|
·
|
Finance
and Pension Funds Committee.
|
The
charters of the Audit, Compensation and Governance Committees are available on
our website at www.vulcanmaterials.com, or
you can obtain a printed copy free of charge by writing to us at: Corporate
Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham,
Alabama 35242.
All of
the Board Committees, other than the Executive Committee, are comprised entirely
of independent, non-management directors.
Executive
Committee
The
Executive Committee has the same powers as our Board of Directors, except as
limited by the New Jersey Business Corporation Act. In practice, the
powers of the Executive Committee are exercised only for matters that arise
between meetings of the Board. Members of the Executive Committee are
Messrs. James (Chair), Carroll, Farmer, Franklin, McGregor and
Rice. The Executive Committee did not meet in 2009.
Audit
Committee
The Audit
Committee advises our Board and management from time to time with respect to
internal controls, financial systems and procedures, accounting policies and
other significant aspects of our company’s financial
management. Pursuant to its charter, the Audit Committee selects our
company’s independent registered public accounting firm and oversees the
arrangements for, and approves the scope of, the audits to be performed by the
independent registered public accounting firm. The Audit Committee’s
primary responsibilities under its written charter include the
following:
|
·
|
Hiring,
evaluating and, when appropriate, replacing the independent registered
public accounting firm, whose duty it is to audit our books and accounts
for the fiscal year in which it is
appointed;
|
|
·
|
Determining
the compensation to be paid to the independent registered public
accounting firm and, in its sole discretion, approving all audit and
engagement fees and terms and pre-approving all auditing and non-auditing
services of such firm, other than certain de minimis non-audit
services;
|
|
·
|
Reviewing
and discussing with management, the independent registered public
accounting firm and internal auditors our internal reporting, audit
procedures and the adequacy and effectiveness of our disclosure controls
and procedures;
|
|
·
|
Reviewing
and discussing with management and the independent registered public
accounting firm the audited financial statements to be included in our
Annual Report on Form 10-K, the quarterly financial statements to be
included in our Quarterly Reports on Form 10-Q, our disclosures under
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” and the selection, application and disclosure of
accounting policies used in our financial
statements;
|
|
·
|
Reviewing
and discussing with management quarterly earnings press releases and
financial information and earnings guidance provided to analysts and
rating agencies; and
|
|
·
|
Reviewing
and reassessing the adequacy of the Audit Committee Charter adopted by our
Board of Directors, and recommending proposed changes to our Board of
Directors.
|
The
members of the Audit Committee are Messrs. Farmer (Chair), McGregor, O’Brien,
Prokopanko and Trosino. All members of our Audit Committee are non-management
directors. Our Board of Directors has determined that each is “independent” and
“financially literate” within the meaning of the listing standards of the New
York Stock Exchange, SEC rules and regulations, and the Director Independence
Criteria adopted by our Board of Directors and posted on our website at www.vulcanmaterials.com under
“Investor Relations.” In addition, our Board has determined that Mr. O’Brien is
an “audit committee financial expert” as defined by rules adopted by the SEC.
The Audit Committee met six times during 2009. Further details about the role of
the Audit Committee may be found in the Report of the Audit Committee on page 21
of this proxy statement.
Compensation
Committee
Pursuant
to the Compensation Committee Charter, the Compensation Committee is responsible
for, among other things:
|
·
|
determining
and setting the amount of compensation paid to each of our executive
officers, including the Chief Executive Officer, senior officers and
division presidents;
|
|
·
|
reviewing
compensation plans relating to our
officers;
|
|
·
|
interpreting
and administering the Executive Incentive Plan and the 2006 Omnibus
Long-Term Incentive Plan; and
|
|
·
|
making
recommendations to the Board with respect to compensation paid by our
company to any director.
|
The
Compensation Committee also reviews and discusses with management the
Compensation Discussion and Analysis required by SEC rules to be included in our
proxy statement.
The
Compensation Committee has engaged Compensation Strategies, Inc. as its
independent compensation consultant. For a description of the process
undertaken by the Compensation Committee to set compensation and the role of
Compensation Strategies in that process, please refer to the section entitled
“Compensation Discussion and Analysis” in this proxy statement.
The
members of the Compensation Committee are Messrs. Carroll (Chair), Franklin,
Napier and Rice. The Compensation Committee is comprised solely of
non-management directors who are “independent” within the meaning of the listing
standards of the New York Stock Exchange and the Board’s Director Independence
Criteria. The Compensation Committee met five times during 2009.
Governance
Committee
The
Governance Committee is responsible for reviewing and assessing our policies and
practices relating to corporate governance, including our Corporate Governance
Guidelines. The Governance Committee also plans for the succession of
the Chief Executive Officer and other senior executives. In addition,
the Governance Committee serves as the nominating committee and as such it is
responsible for identifying and assessing candidates, including making
recommendations to our Board regarding such candidates. In fulfilling its
responsibilities, the Governance Committee, among other things:
|
·
|
identifies
individuals qualified to become Board members consistent with criteria
established in its charter;
|
|
·
|
recommends
to our Board director nominees for the next annual meeting of
shareholders; and
|
|
·
|
evaluates
individuals suggested by shareholders as director
nominees.
|
The
directors are responsible for overseeing our company’s business consistent with
their fiduciary duty to our shareholders. The Board and the
Governance Committee consider the qualifications of directors and director
candidates individually and in the broader context of the Board’s overall
composition and our company’s current and future needs.
In
recommending director candidates to the Board, the Governance Committee Charter
requires the committee to select individuals who, at a minimum, possess high
ethical standards, integrity and sound business judgment. In its
assessment of each potential candidate, the Governance Committee will review the
candidate’s experience, potential conflicts of interest, understanding of our
company’s industry or related industries, financial acumen and such other
factors the committee determines are pertinent in light of the current needs of
the Board. The Governance Committee also considers diversity as
another relevant factor, such as diversity of gender, race, ethnicity, age,
education, professional experience and differences in viewpoints and
skills. The Committee does not have a formal policy with respect to
diversity; however, the Board and the Committee believe that it is important
that the Board members represent diverse viewpoints. In considering
candidates for the Board, the Governance Committee considers the entirety of
each candidate’s credentials in the context of these standards.
The
Governance Committee also takes into account the ability of a candidate, if
elected a director, to devote the time and effort necessary to fulfill his or
her responsibilities as a Board member, and the needs of our company given the
range of talent and experience represented on the Board. The
Governance Committee believes it appropriate for at least one member of the
Board to meet the criteria for an “audit committee financial expert” as defined
by the SEC rules, and that a substantial majority of the members of the Board
meet the definition of “independence” as defined by the listing standards of the
New York Stock Exchange and the Board’s Director Independence
Criteria.
The
Governance Committee also reviews our Board’s committee structure and recommends
to our Board, for its approval, directors to serve as members of each
committee. The Governance Committee also is responsible for
overseeing the evaluations of the Board and its committees.
Members
of the Governance Committee are Dr. Rice (Chair), Ms. Korologos
and Messrs. Carroll, Farmer and Prokopanko. The Governance Committee
is comprised solely of non-management directors who are “independent” within the
meaning of the listing standards of the New York Stock Exchange and the Board’s
Director Independence Criteria. The Governance Committee met three
times during 2009.
Safety,
Health and Environmental Affairs Committee
The
Safety, Health and Environmental Affairs Committee has the responsibility for
reviewing our policies, practices and programs with respect to the management of
safety, health and environmental affairs and monitoring our compliance with
safety, health and environmental laws and regulations. Members of the
Safety, Health and Environmental Affairs Committee are Mr. Franklin (Chair), Ms.
Korologos, Mr. O’Brien and Ms. Wilson-Thompson. The Committee met two
times during 2009.
Finance
and Pension Funds Committee
The
Finance and Pension Funds Committee has responsibility for overseeing our
financial policies and recommending to our Board financial policies and actions
to accommodate our goals and operating strategies while maintaining a sound
financial condition. Its functions include keeping informed about our
financial condition, recommending a dividend policy, reviewing and recommending
changes in the quarterly dividend payments, and evaluating and making
recommendations concerning the appropriate mix of debt and equity, incurrence of
long-term debt, and changes in the authorized limit of short-term
debt. The Finance and Pension Funds Committee also is responsible for
overseeing the funding and management of assets for pension plans sponsored by
our company. To fulfill these functions, it establishes funding
policies and methods consistent with pension plan objectives and the Employee
Retirement Income Security Act of 1974, selects and removes investment managers,
and appoints trustees for the pension plans. Members of the Finance
and Pension Funds Committee are Mr. McGregor (Chair), Ms. Wilson-Thompson and
Messrs. Napier and Trosino. The Finance and Pension Funds Committee
met three times in 2009.
Risk
Management
Although
the Board of Directors has the ultimate oversight responsibility for the risk
management process, various committees of the Board assist the Board in
fulfilling its oversight responsibilities in certain areas of
risk. In particular, the Audit Committee focuses on financial risk,
including internal controls, and discusses with management, the internal
auditors, and our independent registered public accounting firm our company’s
policies with respect to risk assessment and risk management. Our
Audit Committee also assists the Board in fulfilling its duties and oversight
responsibilities relating to our company’s compliance and ethics
programs. In addition, our Safety, Health and Environmental Affairs
Committee assists the Board in fulfilling its responsibilities with respect to
safety, health and environmental laws and regulations and works closely with our
company’s legal and regulatory groups. The Compensation Committee also assists
the Board in fulfilling its oversight responsibilities to create long-term value
for our company, while discouraging behavior that leads to excessive
risk. Finally, the Finance and Pension Funds Committee assists the
Board in managing risk relating to investment of the pension funds
assets.
Compensation
Committee Interlocks and Insider Participation
None.
Transactions
with Related Persons
The
brother-in-law of Mr. Donald James, our Chairman and Chief Executive Officer,
and the son of Mr. Philip Carroll, Jr., a member of our Board of Directors, are
both partners in a large law firm that has provided legal services to our
company since its inception. In determining that this is not a
material relationship involving Mr. James or Mr. Carroll, our Board determined
that payments made by our company to the firm represented less than 1% of the
firm’s consolidated gross revenues in 2009, and the revenues from our company
received by Mr. James’ brother-in-law and Mr. Carroll’s son as a result of their
status as partners were not material. Additionally, our Board made
the assessment that Mr. Carroll was independent and that this was not a material
relationship. Neither Mr. James’ brother-in-law nor Mr. Carroll’s son
now has or has had in the past any interest in matters handled by the firm for
our company other than their proportional interest in the firm’s revenues, and
neither has received billing credit or a disproportionate percentage of the
revenues as a result of fees paid by our company to the firm.
Patriot
Transportation Holding, Inc.
John D.
Baker, II served on our Board until May, 2009. Mr. Baker serves as
Chief Executive Officer and President and is a director of Patriot
Transportation Holding, Inc., or Patriot Transportation. Prior to its merger
with our company, Florida Rock Industries, Inc., or Florida Rock, entered into a
joint venture agreement with a subsidiary of Patriot Transportation called
Florida Rock Properties, or FRP. The joint venture agreement establishes a real
estate joint venture to develop land located in Florida. Under the terms of the
joint venture, FRP contributed land that Florida Rock leased from FRP under a
long-term mining lease. Our company continues to mine the property and pay
royalties to FRP for as long as mining does not interfere with the development
of the property. Florida Rock contributed two parcels of land that it owned as
well as its leasehold interest to land it was mining. Our company jointly
controls the joint venture with FRP, and we each have a mandatory obligation to
fund additional capital contributions of up to $2 million. Distributions also
are made on a 50-50 basis.
The
property does not yet have the necessary entitlements for real estate
development. Approval to develop real property in Florida entails an extensive
entitlement process involving multiple and overlapping regulatory jurisdictions,
and the outcome is inherently uncertain. We expect that the entitlement process
may take several years to complete.
Patriot
Transportation hauls petroleum products, cement, construction aggregates and
other products for our company. Patriot Transportation has numerous hauling
competitors at all terminal and plant sites and the rates charged are,
accordingly, established by competitive conditions.
Our
company also leases from FRP certain construction aggregates mining sites and
other properties. Our company paid rents, royalties and charges for
transportation services to subsidiaries of Patriot Transportation totaling
approximately $5,491,310 in 2009.
Proposed
Sale of Bahamian Aggregates Operations
Ted
Baker, son of former director John D. Baker II, indirectly owns a 50% equity
interest in Bahamas Materials Company Limited, a Bahamian corporation
(“BMCL”). On December 21, 2009, our company entered into a Share and
Asset Purchase Agreement with BMCL to sell to BMCL all of the outstanding shares
of capital stock of FRI Bahamas, Ltd. (“FRI Bahamas”), a subsidiary of the
company, and ten ready mix concrete trucks. FRI Bahamas operates,
through a subsidiary, an aggregates quarry, two ready mixed concrete plants and
a concrete block plant in Freeport, Bahamas. We anticipate that the
transaction will close in the second quarter of 2010. The purchase
price is estimated to be approximately $15.1, to be paid in a combination of
cash at closing and a promissory note bearing a market rate of interest, secured
by full recourse guarantees from John Baker, Ted Baker and the other 50% equity
owner of BMCL.
Shareholder
Communication with Our Board of Directors
Our Board
has established a process for shareholders and other interested parties to
communicate directly with the presiding director or with the non-management
directors individually or as a group. Any shareholder or other
interested party who desires to contact one or more of our non-management
directors, including our Board’s presiding director, may send correspondence to
the following address:
|
Board
of Directors (or presiding director or name of individual
director)
|
|
|
c/o
Corporate Secretary
|
|
|
Vulcan
Materials Company
|
|
|
1200
Urban Center Drive
|
|
|
Birmingham,
Alabama 35242
|
|
All such
communications will be forwarded to the appropriate director or directors
specified in such communications as soon as practicable in accordance with the
Policy on Shareholder Communications with the Board, adopted by the independent
directors in February 2004.
Policy
on Reporting of Concerns Regarding Accounting Matters
As
provided on our website at www.vulcanmaterials.com under
the heading “Investor Relations” under the subheading “Corporate Governance –
Contact the Board of Directors,” any shareholder or interested party who has any
concerns or complaints relating to accounting, internal accounting controls or
auditing matters, may contact the Audit Committee by writing to the following
address:
|
Vulcan
Audit Committee
|
|
|
c/o
Corporate Secretary
|
|
|
Vulcan
Materials Company
|
|
|
1200
Urban Center Drive
|
|
|
Birmingham,
Alabama 35242
|
|
REPORT
OF THE AUDIT COMMITTEE
The Audit
Committee of the Board is responsible for, among other things, reviewing our
company’s financial statements with management and our company’s independent
registered public accounting firm. The Audit Committee acts under a
written charter which is available on our website at www.vulcanmaterials.com. Each
member of the Audit Committee is an independent director as determined by our
Board, based on the requirements of the New York Stock Exchange, the SEC and our
Board’s Director Independence Criteria.
Our
company’s management has the primary responsibility for our company’s financial
statements and financial reporting process, including the system of internal
controls. Deloitte & Touche LLP, our independent registered
public accounting firm, is responsible for expressing an opinion on the
conformity of our company’s audited financial statements with generally accepted
accounting principles. Our independent registered public accounting
firm also audits, in accordance with the standards of the Public Company
Accounting Oversight Board (the “PCAOB”), the effectiveness of our company’s
internal control over financial reporting. The Audit Committee is
responsible for monitoring and overseeing these processes.
In this
context, the Audit Committee has reviewed and discussed our company’s audited
financial statements with management and the independent registered public
accounting firm. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees) as amended. In addition, the Audit Committee has received
from the independent registered public accounting firm the written disclosures
and letter required by the applicable requirements of the PCAOB regarding the
independent accountant’s communications with the Audit Committee concerning
independence, and discussed with the independent accountant its
independence. The Audit Committee has also considered whether the
independent registered public accounting firm’s provision of any non-audit
services is compatible with the firm’s independence. The Audit
Committee has concluded that the independent registered public accounting firm
is independent from our company and management.
Based on
the reviews and discussions noted above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in our
company’s Annual Report on Form 10-K for the year ended December 31, 2009, for
filing with the SEC.
|
Audit
Committee
|
|
|
|
|
|
Phillip
W. Farmer, Chair
|
|
|
Douglas
J. McGregor
|
|
|
Richard
T. O’Brien
|
|
|
James
T. Prokopanko
|
|
|
Vincent
J. Trosino
|
|
The
Report of the Audit Committee does not constitute soliciting material, and shall
not be deemed to be filed or incorporated by reference into any other company
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the company specifically
incorporates the Report of the Audit Committee by reference
therein.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Fees
Paid to Independent Registered Public Accounting Firm
Aggregate
fees billed to us for the fiscal years ended December 31, 2009 and 2008, by
Deloitte & Touche LLP, and its affiliates, all of which are subsidiaries of
Deloitte, LLP, the United States member firm of Deloitte Touche Tohmatsu, are as
follows:
|
|
2009
|
|
|
2008
|
|
Audit
Fees(1)
|
|
$ |
5,033,618 |
|
|
$ |
4,231,315 |
|
Audit
Related Fees(2)
|
|
|
333,780 |
|
|
|
420,014 |
|
Tax
Fees(3)
|
|
|
123,003 |
|
|
|
261,286 |
|
All
Other Fees
|
|
|
0 |
|
|
|
0 |
|
Total
|
|
$ |
5,490,401 |
|
|
$ |
4,912,615 |
|
(1)
|
Consists
of fees for the audit of our financial statements, including the audit of
the effectiveness of our internal control over financial reporting,
reviews of our quarterly financial statements, services associated with
other Securities and Exchange Commission filings, and services associated
with debt and common stock
offerings.
|
(2)
|
Includes
fees for the audits of our employee benefit
plans.
|
(3)
|
Consists
of tax fees for services related to tax consulting
services.
|
Pre-Approval
of Services Performed by Independent Registered Public Accounting
Firm
The Audit
Committee has policies and procedures that require the pre-approval by the Audit
Committee of all fees paid to, and all services performed by, our company’s
independent registered public accounting firm. At the beginning of
each year, the Audit Committee approves the proposed services, including the
nature, type and scope of services contemplated and the related fees, to be
rendered by the independent registered public accounting firm during the
year.
During
the year, circumstances may arise when it may become necessary to engage the
independent registered public accounting firm for additional services not
contemplated in the original pre-approval. In those instances, the
Audit Committee requires specific pre-approval before engaging the independent
registered public accounting firm. The Audit Committee has delegated
pre-approval authority to the Chair of the Audit Committee for those instances
when pre-approval is needed prior to a scheduled Audit Committee
meeting. The Chair of the Audit Committee must report on such
approvals at the next scheduled Audit Committee meeting. The Audit
Committee pre-approved all audit, audit-related, tax and other services
performed by Deloitte & Touche LLP during the fiscal year ended December 31,
2009.
No
audit-related, tax or other services were rendered in 2009 pursuant to the de minimis exception to the
pre-approval requirement set forth in the Securities Exchange Act Rule
2-01(c)(7)(i)(C).
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
Security
Ownership of Certain Beneficial Owners
The
following is information regarding persons known to us to have beneficial
ownership of more than 5% of the outstanding common stock of our company, which
is our only outstanding class of voting securities, as of the dates indicated in
the footnotes below.
Name and Address of
Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(# of shares)
|
|
|
Percent of
Class
|
|
|
|
|
|
|
|
|
State
Farm Mutual Automobile Insurance
|
|
|
12,069,201 |
(1) |
|
|
9.58 |
% |
Company
and Affiliates
|
|
|
|
|
|
|
|
|
One
State Farm Plaza
|
|
|
|
|
|
|
|
|
Bloomington,
Illinois 61710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davis
Selected Advisors, L.P.
|
|
|
8,287,767 |
(2) |
|
|
6.61 |
% |
2949
East Elvira Road, Suite 101
|
|
|
|
|
|
|
|
|
Tucson,
Arizona 85706
|
|
|
|
|
|
|
|
|
(1)
|
Based
on information contained in a Schedule 13G, dated January 26, 2010, filed
with the SEC. According to this Schedule
13G, the listed entity has sole voting and dispositive power over
12,017,600 shares.
|
(2)
|
Based
on information contained in a Schedule 13G/A, dated February 12, 2010,
filed with the SEC. Of the total number of shares beneficially
owned, the listed entity has sole voting power over 6,915,660 shares, and
sole dispositive power over 8,287,767
shares.
|
Security
Ownership of Management
The
following table sets forth information, unless otherwise indicated, as of March
1, 2010, regarding beneficial ownership of our company’s common stock, our only
outstanding class of equity securities, by each of our directors, each of our
named executive officers identified in the Summary Compensation Table on page 36
of this proxy statement, and the directors and executive officers as a
group. We believe that, for each of the individuals set forth in the
table below, such individual’s financial interest is aligned with the interests
of our other shareholders because the value of such individual’s total holdings
will increase or decrease in line with the price of our common
stock.
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(# of shares)
|
|
|
Percent of
Class
|
|
Nonemployee
Directors(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip
J. Carroll, Jr.
|
|
|
30,635 |
|
|
|
* |
|
Phillip
W. Farmer(2)
|
|
|
30,932 |
|
|
|
* |
|
H.
Allen Franklin
|
|
|
24,725 |
|
|
|
* |
|
Ann
McLaughlin Korologos
|
|
|
26,666 |
|
|
|
* |
|
Douglas
J. McGregor(3)
|
|
|
67,253 |
|
|
|
* |
|
James
V. Napier
|
|
|
27,429 |
|
|
|
* |
|
Richard
T. O’Brien
|
|
|
1,971 |
|
|
|
* |
|
James
T. Prokopanko(4)
|
|
|
0 |
|
|
|
* |
|
Donald
B. Rice
|
|
|
65,455 |
|
|
|
* |
|
Vincent
J. Trosino
|
|
|
25,205 |
|
|
|
* |
|
Kathleen
Wilson-Thompson(4)
|
|
|
0 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer and other Named Executive Officers(5)
|
|
|
|
|
|
|
|
|
Donald
M. James
|
|
|
1,685,940 |
|
|
|
1.3 |
% |
Daniel
F. Sansone
|
|
|
254,632 |
|
|
|
* |
|
Ronald
G. McAbee
|
|
|
184,408 |
|
|
|
* |
|
Danny
R. Shepherd
|
|
|
111,606 |
|
|
|
* |
|
Robert
A. Wason
|
|
|
161,476 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
All
Directors and Executive Officers as a group (17 persons)
|
|
|
2,824,972 |
|
|
|
2.2 |
% |
*Less
than 1% of issued and outstanding shares of our company’s common
stock.
(1)
|
Beneficial
ownership for the nonemployee directors includes all shares held of record
or in street name and, if noted, by trusts or family
members. The amounts also include restricted shares granted
under our Restricted Stock Plan for Nonemployee Directors, phantom shares
settled in stock accrued under the Directors’ Deferred Compensation Plan,
and deferred stock units awarded under the Deferred Stock Plan for
Nonemployee Directors and the 2006 Omnibus Long-Term Incentive Plan, as
follows:
|
|
|
Shares Owned
Directly or Indirectly
|
|
|
Restricted Shares
|
|
|
Phantom Shares Held
Pursuant to Plans
|
|
Philip J. Carroll, Jr.
|
|
|
6,752 |
|
|
|
0 |
|
|
|
23,883 |
|
Phillip
W. Farmer
|
|
|
6,550 |
|
|
|
0 |
|
|
|
24,382 |
|
H.
Allen Franklin
|
|
|
0 |
|
|
|
4,000 |
|
|
|
20,725 |
|
Ann
McLaughlin Korologos
|
|
|
3,639 |
|
|
|
0 |
|
|
|
23,027 |
|
Douglas
J. McGregor
|
|
|
1,350 |
|
|
|
6,445 |
|
|
|
59,458 |
|
James
V. Napier
|
|
|
8,791 |
|
|
|
0 |
|
|
|
18,638 |
|
Richard
T. O’Brien
|
|
|
0 |
|
|
|
0 |
|
|
|
1,971 |
|
James
T. Prokopanko
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Donald
B. Rice
|
|
|
48,395 |
|
|
|
0 |
|
|
|
17,060 |
|
Vincent
J. Trosino
|
|
|
8,200 |
|
|
|
2,000 |
|
|
|
15,005 |
|
Kathleen
Wilson-Thompson
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
(2)
|
All
shares held in a trust of which Mr. Farmer is the
trustee.
|
(3)
|
Includes
1,350 shares
held in a trust of which Mr. McGregor is the
trustee.
|
(4)
|
Mr.
Prokopanko and Ms. Wilson-Thompson were both elected directors in December
2009.
|
(5)
|
Beneficial
ownership for the executive officers includes shares held of record or in
street name. The amounts also include shares that may be
acquired upon the exercise of options which are presently exercisable or
that will become exercisable on or before April 30, 2010, shares credited
to the executives’ accounts under our Thrift Plan for Salaried Employees,
or Thrift Plan, and deferred stock units as
follows:
|
|
|
Shares Owned
Directly or
Indirectly
|
|
|
Exercisable
Options
|
|
|
Thrift Plan
|
|
|
Deferred
Stock Units
|
|
Don
James
|
|
|
181,428 |
|
|
|
1,348,512 |
|
|
|
28,343 |
|
|
|
127,657 |
|
Dan
Sansone
|
|
|
27,165 |
|
|
|
190,568 |
|
|
|
20,496 |
|
|
|
16,403 |
|
Ron
McAbee
|
|
|
8,526 |
|
|
|
145,142 |
|
|
|
26,472 |
|
|
|
4,268 |
|
Danny
Shepherd
|
|
|
10,953 |
|
|
|
92,342 |
|
|
|
7,564 |
|
|
|
747 |
|
Bob
Wason
|
|
|
34,446 |
|
|
|
112,428 |
|
|
|
10,332 |
|
|
|
4,270 |
|
EQUITY COMPENSATION
PLANS
The table
below sets forth information regarding the number of shares of our common stock
authorized for issuance under all of our equity compensation plans as of
December 31, 2009.
Equity Compensation Plan
Information
|
|
Plan Category
|
|
Number of
securities to
be issued upon
exercise
of outstanding
options, warrants
and rights
(a)
|
|
|
Weighted-
average
exercise price of
outstanding
options,
warrants and
rights
(b)
|
|
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
(c)
|
|
Equity
compensation plans approved by security holders(1):
|
|
|
|
|
|
|
|
|
|
1996 Long-Term Incentive Plan
(For Employees)
(2)
|
|
|
|
|
|
|
|
|
|
Stock
Options
|
|
|
4,566,253 |
|
|
$ |
51.32 |
|
|
|
|
Performance
Share Units
|
|
|
0 |
|
|
|
|
|
|
|
|
Deferred
Stock Units
|
|
|
173,502 |
|
|
|
|
|
|
|
|
Total 1996
Long-Term Incentive Plan
|
|
|
4,739,755 |
|
|
|
|
|
|
|
0 |
(2) |
Deferred Stock Plan for
Non-employee Directors(2)
|
|
|
9,374 |
|
|
|
|
|
|
|
0 |
(2) |
Restricted Stock Plan for
Non-employee Directors(2)
|
|
|
16,516 |
|
|
|
|
|
|
|
0 |
(2) |
2000 Florida Rock Industries
Amended & Restated Stock Plan(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Only Stock Appreciation Rights
|
|
|
121,210 |
|
|
$ |
47.47 |
|
|
|
|
|
Performance
Share Units
|
|
|
76,620 |
|
|
|
|
|
|
|
|
|
Total 2000
Florida Rock Industries Stock Plan
|
|
|
197,830 |
|
|
$ |
47.47 |
|
|
|
183,180 |
|
2006
Omnibus Long-Term Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Only Stock Appreciation Rights
|
|
|
1,745,113 |
|
|
$ |
66.87 |
|
|
|
|
|
Performance
Share Units
|
|
|
1,534,360 |
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
|
1,800 |
|
|
|
|
|
|
|
|
|
Deferred
Stock Units for Non-employee Directors
|
|
|
89,946 |
|
|
|
|
|
|
|
|
|
Total 2006
Omnibus Plan
|
|
|
3,371,219 |
|
|
$ |
66.87 |
|
|
|
2,026,583 |
|
Equity
compensation plans not approved by security holders
|
|
NONE
|
|
|
|
|
|
|
NONE
|
|
Total
of All Plans
|
|
|
8,334,694 |
|
|
|
|
|
|
|
2,209,763 |
|
|
(1)
|
All
of our company’s equity compensation plans have been approved by the
shareholders of our company or, in the case of the 2000 Florida Rock
Industries Amended and Restated Stock Plan, by shareholders of Florida
Rock Industries, Inc., prior to our acquisition of that Company. Column
(a) sets forth the number of shares of common stock issuable upon the
exercise of options, warrants or rights outstanding under the 1996
Long-Term Incentive Plan (1996 LTIP), the Deferred Stock Plan for
Nonemployee Directors, the Restricted Stock Plan for Nonemployee
Directors, the 2000 Florida Rock Industries Amended and Restated Stock
Plan, and the 2006 Omnibus Long-Term Incentive Plan (Omnibus Plan). The
weighted-average exercise price of outstanding stock options is shown in
Column (b). The remaining number of shares that may be issued under the
equity compensation plans are shown in Column
(c).
|
|
(2)
|
Future
grants will not be made under these plans. The plans will be used only for
the administration and payment of grants that were outstanding when the
Omnibus Plan was approved.
|
|
(3)
|
This
plan was approved by the Florida Rock Industries, Inc. shareholders.
Shares available have been adjusted for the merger
transaction. Units are only available for granting of awards
until September 30, 2010.
|
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis as set forth below with management and, based on such review and
discussions, recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
|
The
Compensation Committee
|
|
|
|
|
|
Philip
J. Carroll, Jr., Chair
|
|
|
H.
Allen Franklin
|
|
|
James
V. Napier
|
|
|
Donald
B. Rice
|
|
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of Compensation Philosophy and Program
Our
Corporate Mission Statement provides that our “success is dependent upon the
talent, dedication and performance of all employees.” Without the
dedication and performance of our employees, including our named executive
officers, we will be unable to accomplish our corporate goals. Our
compensation program for our named executive officers is intended to motivate
them to achieve our strategic goals and operational plans by:
|
·
|
Keeping
our salary and benefits for the named executive officers competitive with
industrial companies of similar size so that we are able to hire and
retain individuals of the highest caliber and to discourage them from
seeking other employment
opportunities;
|
|
·
|
Linking
a meaningful portion of compensation to our company’s performance, thereby
encouraging the creation of shareholder value over the short- and
long-term;
|
|
·
|
Motivating,
recognizing and rewarding individual excellence;
and
|
|
·
|
Paying
a meaningful portion of total compensation in our stock and encouraging
significant stock accumulation in order to align the interests of our
management and shareholders.
|
The
Compensation Committee, which is comprised entirely of independent directors,
administers our executive compensation program in accordance with the
Compensation Committee’s charter. The current charter is available on our
website at www.vulcanmaterials.com. In
performing its duties, the Compensation Committee is guided by its charter. The
role of the Committee is to:
|
·
|
Annually
review and approve corporate goals and objectives relevant to the
compensation of our Chief Executive Officer and then evaluate the Chief
Executive Officer’s performance in light of these goals and objectives and
set the Chief Executive Officer’s compensation levels based on this
evaluation and report to the full Board of
Directors;
|
|
·
|
Determine
and fix base salary and awards made to named executive officers under our
incentive compensation plans and equity-based
plans;
|
|
·
|
Administer
our Executive Incentive Plan (EIP) and 2006 Omnibus Long-Term Incentive
Plan (Omnibus Plan);
|
|
·
|
Report
to the Board its approval or disapproval of recommendations of the Chief
Executive Officer for material changes in existing retirement and benefit
plans applicable to the named executive officers;
and
|
|
·
|
Make
regular reports to the Board, including an annual report regarding its
determination of compensation levels for the Chief Executive Officer and
the other named executive officers.
|
Our
elements of compensation for the named executive officers, all of which are
discussed in greater detail below, include:
|
·
|
short-term
performance-based bonus;
|
|
·
|
long-term
equity-based incentives;
|
|
·
|
retirement
and pension benefits;
|
|
·
|
health
and welfare benefits and perquisites;
and
|
|
·
|
change-in-control
protections.
|
The
Committee reviews compensation tally sheets that show the total compensation of
the Chief Executive Officer and each of the other named executive officers when
making executive compensation decisions. The tally sheets are
prepared by our internal corporate compensation group. Each of these
tally sheets presents the dollar amount of the named executive officers’
compensation, broken out into base salary, annual performance-based bonus and
long-term equity-based incentive awards.
Compensation
Consultant and Market Information
Pursuant
to its charter, the Compensation Committee is authorized to retain external
advisors and consultants at our company’s expense. In 2009, the
Committee engaged Compensation Strategies, Inc. (CSI) as its independent
compensation consultant. In connection with this engagement, CSI
provides the following services:
|
·
|
Conducts
periodic comprehensive studies of executive compensation and makes
recommendations regarding the components of executive compensation,
including target levels for base salary, annual bonus and long-term
equity-based incentive awards and change-in-control
protections.
|
|
·
|
Advises
the Committee regarding competitive practices, the design of new programs,
and new laws, rules and regulations relating to executive compensation;
and
|
|
·
|
Prepares
an annual study of, and provides recommendations for, compensation of the
Board of Directors;
|
In
performing its services in 2009, CSI interacted collaboratively with our
Committee and members of senior management. CSI provided the
Committee with its observations as to the relative competitiveness of our
compensation programs with comparable companies based upon its review of the
various components of market data set forth above. In addition, CSI
provided its recommendations with respect to Board compensation, as well as its
advice on regulatory compliance and development of new
programs. Representatives of CSI attended four meetings of the
Committee in 2009, and participated in the executive session of the
Committee. Our named executive officers do not attend this executive
session.
CSI acts
at the direction of and reports to the Committee, although it meets with
management from time to time to discuss compensation initiatives. The
Committee has not requested, and does not intend to request, that CSI provide
any non-compensation related services to our company. CSI does not
have any business relationships with our company beyond the services provided as
the independent consultant to the Committee.
In light
of the economic environment in 2009, no studies or analyses of competitive
executive compensation were performed. This was considered
appropriate since no merit increases or short-term bonuses were paid in
2009.
Measuring
Performance – Economic Profit
We are
committed to excellence in our performance, both financially and operationally,
and to earning superior returns for our shareholders. To encourage
and reward superior performance, we have linked a substantial portion of our
named executive officers’ compensation to our performance as measured by a
standard referred to as “Economic Profit” or “EP.”
In 1996,
we adopted EP as the quantifiable financial performance measure by which company
performance is measured for short-term and some long-term
incentives. EP measures the extent to which operating earnings exceed
an operating capital charge. Operating earnings are based on net
earnings, but exclude interest income and expense, gains and losses on
investments, deferred income taxes, and results of certain discontinued
operations. The operating capital charge is based on our company’s
average assets and liabilities associated with operating earnings, as defined
above, multiplied by the estimated cost of capital. We believe that
changes in EP correlate with changes in shareholder value better than other
commonly used financial performance measures.
EP is
used not only as a measure for incentive compensation; it pervades every aspect
of the management process, including planning, capital budgeting, and evaluating
investment projects, including acquisitions and other growth
initiatives. It also is used by management to measure the financial
performance of our company and its business units. We believe EP is
the best standard for setting financial goals for our executive
compensation. The description of our 2009 EP performance targets, a
comparison of our 2009 EP performance to those performance targets and a summary
of how the 2009 EP performance affected compensation of our named executive
officers is set forth in the section entitled “Elements of
Compensation.”
Benchmarking
Total Compensation
As noted
above, no total compensation benchmarking studies or analyses were conducted in
2009.
The total
direct compensation for each named executive officer is reviewed annually to
ensure it is appropriate based on:
|
·
|
individual
performance;
|
|
·
|
recent
and long-term company performance;
and
|
|
·
|
competitive
or market levels of performance.
|
Risk
Considerations
Our
compensation programs are discretionary, balanced and focused and give
considerable weight to the long-term performance of our
company. Under this structure, the highest amount of compensation can
be achieved through consistent superior performance over sustained periods of
time. In addition, significant amounts of compensation are deferred
or only realizable upon retirement. This provides strong incentives
to manage the company for the long term, while avoiding excessive risk taking in
the short term. Goals and objectives reflect a balanced mix of
quantitative and qualitative performance measures to avoid excessive weight on a
single performance measure. Likewise, the elements of compensation
are balanced among current cash payments and long-term equity-based incentive
awards. The Compensation Committee retains discretion to adjust
compensation for quality of performance and adherence to our company’s
values.
Tax
and Accounting Considerations
Compliance with
Internal Revenue Code Section 162(m). In administering the
compensation program for executive officers, the Compensation Committee
considers the applicability of Section 162(m) of the Internal Revenue Code, the
financial consequences under accounting standards and the tax consequences in
our analysis of total compensation and the mix of compensation among individual
elements. Section 162(m) prohibits public companies from taking a tax
deduction for compensation that is paid to any one of certain employees in
excess of one million dollars, unless the compensation qualifies as
performance-based compensation within the meaning of the Internal Revenue
Code. To preserve the deductibility of compensation, we intend that
bonus payments made pursuant to the EIP and, generally, grants of long-term
incentives under our Omnibus Plan, qualify as “qualified performance-based
compensation.” The Compensation Committee has the discretion to
design and implement compensation elements that may not be deductible under
Section 162(m) if the Compensation Committee determines that, despite the tax
consequences, those elements are in our best interest to adopt.
Expensing of
Stock Options. We consider the tax and accounting implications
to our company in allocating awards among various compensation vehicles and seek
to preserve the tax deduction for compensatory awards. For example,
we do not issue incentive stock options (ISOs), even though ISOs provide
potential tax advantages to the recipient, because of the negative tax and
accounting consequences to our company.
Compensation
Determination Process and Role of the Named Executive Officers in the
Process
The Chief
Executive Officer is responsible for conducting an annual performance evaluation
of each of the other named executive officers. The evaluations take
into account such items as the performance of the business unit or function for
which the executive officer is responsible, safety, health and environmental
performance and effective management of our company’s natural resources, among
other items. In addition, the Chief Executive Officer has the
opportunity to request input from CSI regarding competitive
practices. Based on the foregoing and the results of the competitive
benchmarking report (conducted in the prior year in the case of 2009), the Chief
Executive Officer makes a recommendation to the Compensation Committee for the
compensation of each of the other named executive officers, broken out into base
salary, and target levels of annual performance-based bonus and long-term
equity-based incentive awards. The Compensation Committee meets
during the year to discuss and set the compensation of the named executive
officers and considers the recommendations of the Chief Executive Officer as
well as the compensation information described above. The Chief
Executive Officer participates in these meetings. While the
Compensation Committee gives appropriate consideration to the information
presented by the Chief Executive Officer, it will adjust the recommendations and
set the compensation for the other named executive officers based on its review
of the relevant compensation information and considerations that it deems
relevant.
The
Compensation Committee separately reviews and determines the Chief Executive
Officer’s compensation. It annually reviews his base salary, annual
performance-based bonus and potential
long-term equity-based incentive awards. In setting such
compensation, the Compensation Committee takes account of recommendations made
by CSI. After the Compensation Committee has determined the total
compensation for the Chief Executive Officer, the Chairman of the Compensation
Committee presents the overall compensation package to the entire Board of
Directors for ratification.
Overall
Compensation Goals
In
creating and administering our compensation program, we seek to reward employees
for:
|
·
|
Generating
increasing levels of EP;
|
|
·
|
Behavior
that compliments our strategic goals and operational
plans; and
|
|
·
|
Adherence
to our high ethical business
standards.
|
As
discussed in more detail below, the overall compensation program strives to
achieve a balance between the need to reward achievement of short-term or annual
performance goals and the need to encourage long-term employee retention and
performance by providing the following forms of compensation:
|
·
|
Cash
compensation in the form of base salary and annual short-term
performance-based bonuses pursuant to the EIP;
and
|
|
·
|
Long-term
equity awards pursuant to the Omnibus Plan, including performance share
units (PSUs) and stock options in the form of Stock Only Stock
Appreciation Rights (SOSARs).
|
Each
element of our compensation program is set forth below, with an explanation of
the factors considered in making awards of each element. We have not
targeted a specified percentage of total compensation for cash compensation or
short-term or long-term equity-based incentive awards. Rather, based
on the results of the competitive benchmarking, we have established incentive
target levels for each of the named executive officers. These levels
are expressed as a percentage of base salary for short-term incentives and for
long-term incentives as a percentage of the estimated base salary market rate
for the position. Base pay, short-term incentive opportunity and
long-term incentive opportunity are targeted at the median competitive
levels. The target award percentages vary by position and level of
responsibility. In our view, as the level of responsibility for an
executive increases, so should the percentage of total compensation at
risk. This is achieved through higher target levels of short-term
performance-based bonuses and long-term
equity awards, the magnitude of which vary with performance. In
determining compensation for 2009, the Compensation Committee did not make
adjustments for incentives realized in prior years or wealth accumulation
through realized and unrealized equity gains and post-employment payments.
Similarly, compensation for 2009 was not adjusted for potential payments to the
named executive officers that are contingent upon the occurrence of a corporate
change-in-control.
We do not
have written employment agreements with executives. We have entered into
agreements with our named executive officers, however, that provide for
severance payments upon certain change-in-control events.
We apply
the same policies and methodology in setting the principal elements of
compensation for our Chief Executive Officer as we apply for our other named
executive officers. The primary difference between the award amounts
granted to the Chief Executive Officer as compared to the other named executive
officers is a reflection of differences in the level and scope of responsibility
of their respective positions, the market’s pattern of providing progressive
award opportunities at higher levels, and individual performance. As
a result, our Chief Executive Officer’s base salary, annual
performance-based bonus opportunity and
long-term equity-based incentive awards opportunities are greater than those of
the other named executive officers.
Elements
of Compensation
The base
salary element of our compensation program is designed to be competitive in the
market for compensation paid to similarly-situated, competent and skilled
executives. The Compensation Committee utilizes the information and procedures
described above to set base salaries in reference to each individual’s
performance, contribution to business results, and market compensation. The
Compensation Committee determines if base salary increases are appropriate for
our named executive officers after consideration of:
|
·
|
The
named executive officer’s pattern of achievement with respect to
performance relative to the budget and business plan in his/her area(s) of
responsibility and overall managerial effectiveness with respect to
planning, personnel development, communications, regulatory compliance and
similar matters;
|
|
·
|
Competitive
pay levels for similarly situated executives set forth in the compensation
surveys;
|
|
·
|
Marketplace
trends in salary increases; and
|
|
·
|
Retention
risks, fairness in view of our overall salary increases and the named
executive officer’s potential for future contributions to the
organization, and the ability of our company to pay the increased
salaries.
|
Base
salaries of the named executive officers are reviewed on an annual basis, as
well as at the time of a promotion or change in responsibilities. To
ensure the salaries paid to our named executive officers are competitive
relative to the marketplace, the Committee reviews the compensation analysis and
data from Hewitt Associates, Inc. and Towers Watson. This analysis
serves as a starting point for evaluating appropriate levels of base
pay. We generally target the 50th
percentile of the market (the midpoint of the base salary range) because we
believe this is the appropriate level for evaluating the competitiveness of our
compensation. This benchmark is determined by the procedures
described above and serves as a starting point for evaluating appropriate levels
of base pay. However, the Compensation Committee has determined that Mr. James’
experience, performance and tenure in his position warrant a base salary that is
higher than the 50th percentile for chief executive officers in our competitive
market. Increases in salaries are discretionary based on the nature and
responsibilities of the position, individual performance, changes in the market
compensation levels and the other factors set forth above. The base salaries
paid to our named executive officers for 2009, 2008 and 2007 are set forth in
the Summary Compensation Table in the “Salary” column. For 2009, the
Compensation Committee determined that, based on economic conditions in the
construction and financial markets, it was appropriate to provide no increases
in base salaries for our named executive officers.
To
further our goal of aligning the executives’ interests to those of our
shareholders, we generally reward superior performance through our bonus program
and long-term equity-based incentives rather than through base pay.
Our
short-term incentive program is designed to motivate our executives, including
the named executive officers, and reward them with cash payments for achieving
quantifiable near-term business results. The goal of this program is
to link performance and payment, and reward behaviors that create value for our
shareholders, by comparing financial results to pre-established objective
performance targets. Payment of the bonus is based on the overall
performance of our company, the performance of specific divisions or business
units or a combination of these, as applicable, and the performance of the named
executive officer individually.
As
described in more detail below, we set the target levels for “average annual
bonuses” at competitive market levels consistent with similarly situated
executives in the compensation surveys. The bonus opportunity is
expressed as a percentage of base salary. Average levels of
performance yield a bonus that is average relative to levels in the compensation
surveys. We then provide significant upside opportunity and downside
risk to actual bonus payments based on actual financial performance of our
company or the relevant business unit, as appropriate. Our evaluation
of the company’s annual financial performance results from our analysis of how
our EP measures compare to targeted EP for the year. Our method for
establishing the EP goal each year is discussed below.
In
general, short-term incentives to our named executive officers are paid through
the EIP. Annually at its February meeting, the Compensation Committee
establishes the EIP participants and their maximum bonus under the EIP. The EIP
was approved by our shareholders and is structured so that cash bonus payments
will satisfy the requirements for performance-based compensation under Section
162(m) of the Internal Revenue Code. The payment of the bonus is conditioned
upon satisfaction of the specific performance goals for the year as established
by the Compensation Committee. The maximum bonus may not exceed $7,000,000. If
the Compensation Committee determines the performance goals are satisfied, the
bonus earned under the EIP may be paid to our named executive officers who
participate in the EIP, subject to the Committee’s discretion to adjust the
bonus downward. In determining the downward adjustment, if any, the Committee
may utilize a pre-established objective formula or standard and other financial
or non-financial factors.
Economic Profit
Methodology
The
Compensation Committee establishes EP goals annually at its February meeting
based on the average of the previous year’s actual EP and the previous year’s EP
goal for our company and for each of its divisions. Goals are then adjusted to
reflect the short-term impact of significant long-term strategic and growth
investments. These adjustments are applied in order to provide appropriate
incentives and rewards for pursuing such investments. An EP goal
represents the amount of EP that must be earned in order for an “Average Annual
Bonus” (average bonus or bonus) to be paid. The average bonus is expressed as a
percentage of base salary and established for each named executive officer based
on the comparison group set forth in the compensation surveys. A chart
reflecting the average bonuses expressed as a percentage of base salary and the
percentage of average bonus paid for each named executive officer is set forth
below. In the case of the Chief Executive Officer, the average bonus is equal to
100% of base salary. The bonus paid for performance above or below
the EP goal is calculated according to a scale that is determined each year. The
scale is not a pro rata increase or decrease in the percentage of the goal that
is achieved. Rather, the scale determines the recommended level of
bonus payment reflecting principally the level of capital investment in the
relevant business unit and the historical volatility of EP. The bonus
will exceed “Average Annual Bonus” to reward performance when the EP goal is
exceeded. The bonus will fall short of “Average Annual Bonus” when actual
performance falls below the EP goal, and can be reduced to $0 if performance is
sufficiently lower than the EP goal.
With
respect to our 2009 fiscal year, the Committee reviewed the performance of the
Chief Executive Officer and each of the named executive officers and concluded
each had performed well in a difficult economic environment. However,
the company’s results at the corporate level under the EP formula and the EIP
awards fell sufficiently short of the performance goals that no bonus payments
were made to the Chief Executive Officer or any of the other named executive
officers. Even though the minimum financial performance goal was
achieved in 2009, the Compensation Committee exercised its discretion to pay no
bonuses to EIP participants in 2009, as reflected in the table
below.
|
|
Amount of
“Average Annual
Bonus”
Expressed
as a Percentage of
Base
Salary
|
|
|
% of “Average
Annual Bonus”
Paid
|
|
|
|
|
|
|
|
|
|
|
Don
James
|
|
|
100 |
% |
|
|
0 |
% |
Dan
Sansone
|
|
|
70 |
% |
|
|
0 |
% |
Ron
McAbee
|
|
|
65 |
% |
|
|
0 |
% |
Danny
Shepherd
|
|
|
65 |
% |
|
|
0 |
% |
Bob
Wason
|
|
|
55 |
% |
|
|
0 |
% |
|
Ø
|
Long-Term Equity-Based
Incentives
|
Our
long-term equity-based incentive compensation program is designed to reward the
named executive officers based on the performance of our company over a period
of years, by providing potentially significant payments based on the creation of
value for our shareholders and by improving EP performance. The goals
of the long-term incentive program are to:
|
·
|
Motivate
financial performance over the
long-term;
|
|
·
|
Recognize
and reward superior financial performance of our
company;
|
|
·
|
Provide
a retention element to our compensation
program;
|
|
·
|
Help
executive officers accumulate shares of our stock to ensure their
interests are aligned with our shareholders’ interests;
and
|
|
·
|
Promote
compliance with the stock ownership guidelines for
executives.
|
2009 Long-Term
Incentive Grants. The Compensation
Committee has established a “standard percentage” of each named
executive officer’s base salary midpoint for his position (determined as
described above) that it used when making a long-term award to each named
executive officer. The standard percentage is based principally upon
the compensation analysis described in the “Overview” above. The
Committee sets the standard at approximately the 50th
percentile of the awards made to individuals with similar positions in the
market. The targeted value of long-term incentive grants for each of
the named executive officers is determined by multiplying the applicable
standard percentage by the base salary midpoint of each named executive
officer’s position. The standard percentages for each of our named
executive officers is set forth in the table below, although the Compensation
Committee retains the discretion to deviate from these standards in the actual
long-term incentive grants it makes each year.
|
|
Standard Long-Term
Award Expressed as
a Percentage of Base
Salary Midpoint
|
|
Don
James
|
|
|
225 |
% |
Dan
Sansone
|
|
|
100 |
% |
Ron
McAbee
|
|
|
100 |
% |
Danny
Shepherd
|
|
|
100 |
% |
Bob
Wason
|
|
|
75 |
% |
The
Omnibus Plan provides a variety of forms of incentives that the Compensation
Committee may, in its discretion, use for granting long-term incentives. These
include stock options, SOSARs, PSUs and restricted stock. Subject to
the limitations under the Omnibus Plan, the Compensation Committee may adjust
the amount awarded to reflect our company’s past performance, based on total
shareholder return or other quantifiable financial measures deemed appropriate
by the Compensation Committee. “Total shareholder return” is computed
as the average annual rate of return using both stock price appreciation or
depreciation and quarterly dividend reinvestment. Stock price
appreciation or depreciation is based on a point-to-point calculation, using
relevant data at the end of the year.
In 2009,
the Committee granted a combination of SOSARs and PSUs to each of the named
executive officers, the total number of which was calibrated to approximate the
award value that is described above. The number of units to be
granted is determined by valuing SOSARs and PSUs under valuation principles that
are similar to Financial Accounting Standard Board (FASB), ASC Topic 718
“Compensation – Stock Compensation” (formerly SFAS No. 123(R)) subject to
certain adjustments recommended by CSI. The Committee normally grants
a number of units that approximates the 50th
percentile of the market. However, the Committee retains the
discretion to make adjustments each year to the number of units
granted. In 2008, grants were made at the standard award value, as
shown in the table above. However, in 2009, the Committee determined that it was
appropriate to raise the value of long-term awards based on our historical
performance by approximately 50% over the standard value due to strong financial
performance of the company for the five-year period ended December 31, 2008, as
measured by total shareholder return of the company compared to total
shareholder return of the S&P 500 index. Expressed in terms of their value,
approximately two-thirds of the 2009 grants consisted of SOSARs and one-third
consisted of PSUs. These awards are reflected below under the heading
“Executive Compensation” in the Summary Compensation Table and the table of
Grants of Plan Based Awards.
2009 Long-Term
Incentive Payments. There were no PSUs reaching maturity on
December 31, 2008 requiring payment in 2009. In February 2009, the
Committee did authorize payment of PSUs that were granted in 2007 and 2008 that
were accelerated due to the death of certain participants.
In March
2009, payments were made for vested Deferred Stock Units (DSUs) from grants made
in 2001, 2002 and 2003. All of the named executive officers elected
to defer payment of the DSUs through the Executive Deferred Compensation
Plan.
Timing of
Equity-Based Incentive Compensation. The Compensation
Committee sets performance targets for PSU grants for the year at its February
meeting. Payments, if any, pursuant to previously set performance
targets are also authorized at the February meeting. The
establishment of incentive compensation goals and the granting of equity-based
awards have not been timed with the release of non-public material
information. Instead, goals and awards typically have been
established at the February meeting. Typically, additional
equity-based incentive grants have been made to executive officers at other
times during the year upon hire or promotion. All such equity-based
awards are priced on the date of grant.
Stock Ownership
Guidelines. In order to align the interests of the named
executive officers with our shareholders, and to promote a long-term focus for
these officers, our company has executive stock ownership guidelines for the
officers of our company and its subsidiaries. The guidelines are based on
management’s and CSI’s assessment of market practice. The stock
ownership requirements are higher for the Chief Executive Officer than for the
other named executive officers for the reasons discussed previously under the
section “Overall Compensation Goals.” All of the named executive
officers currently meet or exceed our ownership guidelines.
The
guidelines for the named executive officers are expressed as a multiple of base
salary as per the table below:
Name
|
|
Multiple of Salary
Ownership Guidelines (1)
|
|
Don
James
|
|
|
7 |
x |
Dan
Sansone
|
|
|
3 |
x |
Ron
McAbee
|
|
|
3 |
x |
Danny
Shepherd
|
|
|
3 |
x |
Bob
Wason
|
|
|
3 |
x |
(1) Types
of ownership counted toward the guidelines include the following:
|
·
|
Stock-based
thrift plan holdings;
|
|
·
|
Stock-based
holdings in the deferred compensation and excess benefit plans;
and
|
|
·
|
Indirect
holdings, such as shares owned by a family member, shares held in trust
for the benefit of the named executive officer or a family member, or
shares held in trust for which such officer is
trustee.
|
Beginning
in February 2009 management elected to exclude from consideration the “in the
money” value of vested options, when determining satisfaction of these
guidelines. Notwithstanding this change, the Chief Executive Officer and each of
the other named executive officers continue to meet or exceed our ownership
guidelines.
Newly
appointed officers are expected to meet the applicable ownership requirement
within five years of their appointment. Compliance with the ownership
guidelines is reviewed annually by the Chief Executive Officer and reported to
the Committee.
|
Ø
|
Benefits and
Perquisites
|
Named
executive officers participate in each of the benefit plans or arrangements that
are made available to all salaried employees generally, including medical and
dental benefits, life, accidental death and disability insurance, and pension
and savings plans. With respect to disability benefits, our company
pays 100% of the premiums for individual long-term disability policies that
insure base pay and target bonus in excess of that insured under the group
contract up to $500,000 in total. In addition, the named executive
officers participate in the Unfunded Supplemental Benefit Plan and have
change-in-control agreements (as described below). The Chief
Executive Officer also has a Supplemental Executive Retirement Agreement, which
is discussed in more detail below.
We
provide company-owned cars to the named executive officers for their
use. Additionally, we pay for the insurance, maintenance and fuel for
such vehicles. Executives reimburse us for personal
use. We also make the company-owned aircraft available to the Chief
Executive Officer and senior executives for business travel. The
aircraft is available to the Chief Executive Officer and the other named
executive officers for personal use at the expense of the named executive
officer. In 2009, neither the Chief Executive Officer nor any of the
named executive officers used the aircraft for personal purposes. We
do not provide other perquisites to the named executive officers such as club
memberships or financial planning services.
The
Compensation Committee reviews our policies and determines whether and to what
extent perquisites should be continued.
|
Ø
|
Change-in-Control
Protection
|
Each of
our named executive officers has change-in-control protection that provides for
severance payments and accelerated vesting or payment of equity-based incentive
awards. We provide such protections in order to minimize disruptions
during a pending or anticipated change in control. In 2009, we did not
consider the amount of severance payments or the number of incentive awards
subject to acceleration of vesting under the change-in-control agreements in
determining the other compensation elements to which the named executive
officers were entitled. For a detailed description of the
change-in-control provisions, refer to “Payments Upon Termination or
Change-in-Control” on page 43.
|
Ø
|
Retirement and Pension
Benefits
|
Our
company provides the following retirement and pension benefits to its named
executive officers:
Benefit
|
|
Reason for Providing
Benefit
|
Retirement
Income Plan
|
|
This
pension plan is available to all salaried employees of our company hired
prior to July 15, 2007.
|
Unfunded
Supplemental Benefit Plan
|
|
The
Unfunded Supplemental Benefit Plan provides for benefits that are not
permitted under the Retirement Income Plan and the 401(k) plan due to
Internal Revenue Service pay and benefit limitations for qualified
plans. This plan is designed to provide retirement income
benefits, as a percentage of pay, which are similar for all employees
regardless of compensation levels. The Unfunded Supplemental Benefit Plan
eliminates the effect of tax limitations on the payment of retirement
benefits, except to the extent that it is an unfunded plan and a general
obligation of our company.
|
Supplemental
Executive
Retirement
Agreement (SERA)
|
|
Only
Mr. James has a SERA. The effect of the SERA is to give Mr.
James 1.2 years of service credit for every year he participates in the
Retirement Income Plan. The purpose of the SERA is to provide an incentive
and retention device. The Plan will provide Mr. James with a
full career pension in the event that he remains employed with the Company
until age 65.
|
A
discussion of all retirement benefits provided to the named executive officers
is set forth under the heading “Retirement and Pension Benefits” on page
41.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information for the three most recently completed
fiscal years concerning the compensation of our principal executive officer,
principal financial officer, and our three other most highly compensated
executive officers employed as of December 31, 2009, determined on the basis of
their total compensation for 2009.
Name
and
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
($)
|
|
|
Option
|
|
|
Non-Equity
Incentive
Plan
Compensation (2)
($)
|
|
|
Change
in
Pension
Value
And
Nonqualified
Deferred
Compensation
Earnings
($)(3)
|
|
|
All
Other
Compensation
($)(4)
|
|
|
Total
($)
|
|
Donald
M. James
Chairman
and
Chief
Executive Officer
|
|
2009
|
|
|
1,250,004 |
|
|
|
0 |
|
|
|
1,366,571 |
|
|
|
3,469,689 |
|
|
|
0 |
|
|
|
4,763,796 |
|
|
|
239,799 |
|
|
|
11,089,819 |
|
|
2008
|
|
|
1,241,670 |
|
|
|
0 |
|
|
|
1,334,021 |
|
|
|
1,482,000 |
|
|
|
0 |
|
|
|
5,047,044 |
|
|
|
431,049 |
|
|
|
9,535,784 |
|
|
2007
|
|
|
1,187,500 |
|
|
|
0 |
|
|
|
1,588,350 |
|
|
|
3,801,413 |
|
|
|
2,900,000 |
|
|
|
4,461,801 |
|
|
|
418,376 |
|
|
|
14,357,440 |
|
Daniel
F. Sansone
Senior
Vice President and
Chief
Financial Officer
|
|
2009
|
|
|
500,004 |
|
|
|
0 |
|
|
|
284,378 |
|
|
|
713,563 |
|
|
|
0 |
|
|
|
660,490 |
|
|
|
40,715 |
|
|
|
2,199,150 |
|
|
2008
|
|
|
495,838 |
|
|
|
0 |
|
|
|
273,645 |
|
|
|
308,058 |
|
|
|
0 |
|
|
|
679,337 |
|
|
|
86,279 |
|
|
|
1,843,157 |
|
|
2007
|
|
|
470,008 |
|
|
|
0 |
|
|
|
311,317 |
|
|
|
753,107 |
|
|
|
660,000 |
|
|
|
451,941 |
|
|
|
86,328 |
|
|
|
2,732,701 |
|
Ronald
G. McAbee
Senior
Vice President,
Construction
Materials - West
|
|
2009
|
|
|
400,008 |
|
|
|
0 |
|
|
|
263,347 |
|
|
|
661,089 |
|
|
|
0 |
|
|
|
521,104 |
|
|
|
36,876 |
|
|
|
1,882,424 |
|
|
2008
|
|
|
391,673 |
|
|
|
0 |
|
|
|
253,122 |
|
|
|
285,532 |
|
|
|
0 |
|
|
|
868,631 |
|
|
|
71,305 |
|
|
|
1,870,263 |
|
|
2007
|
|
|
370,833 |
|
|
|
0 |
|
|
|
277,432 |
|
|
|
668,365 |
|
|
|
564,000 |
|
|
|
1,130,219 |
|
|
|
155,663 |
|
|
|
3,166,512 |
|
Danny
R. Shepherd
Senior
Vice President,
Construction
Materials - East
|
|
2009
|
|
|
400,008 |
|
|
|
0 |
|
|
|
263,347 |
|
|
|
661,089 |
|
|
|
0 |
|
|
|
499,332 |
|
|
|
36,297 |
|
|
|
1,860,073 |
|
|
2008
|
|
|
391,674 |
|
|
|
0 |
|
|
|
253,122 |
|
|
|
285,532 |
|
|
|
0 |
|
|
|
648,608 |
|
|
|
60,887 |
|
|
|
1,693,823 |
|
|
2007
|
|
|
320,837 |
|
|
|
0 |
|
|
|
277,432 |
|
|
|
668,365 |
|
|
|
485,000 |
|
|
|
352,137 |
|
|
|
47,047 |
|
|
|
2,150,818 |
|
Robert
A. Wason IV
Senior
Vice President,
General
Counsel
|
|
2009
|
|
|
377,504 |
|
|
|
0 |
|
|
|
168,250 |
|
|
|
436,746 |
|
|
|
0 |
|
|
|
500,026 |
|
|
|
33,693 |
|
|
|
1,516,219 |
|
|
2008
|
|
|
362,504 |
|
|
|
0 |
|
|
|
136,139 |
|
|
|
153,338 |
|
|
|
0 |
|
|
|
374,835 |
|
|
|
64,192 |
|
|
|
1,091,008 |
|
|
2007
|
|
|
347,170 |
|
|
|
0 |
|
|
|
155,658 |
|
|
|
388,855 |
|
|
|
445,000 |
|
|
|
391,929 |
|
|
|
45,540 |
|
|
|
1,774,152 |
|
(1)
|
Pursuant
to the rules of the Securities and Exchange Commission, we
have provided a grant date fair value for Stock Awards and Option
Awards in accordance with the provisions of FASB ASC Topic
718. For Option Awards (including SOSARs), the fair value is
estimated as of the date of grant using the Black-Scholes option pricing
model, which requires the use of certain assumptions, including the
risk-free interest rate, dividend yield, volatility and expected
term. The risk-free interest rate is based on the yield at the
date of grant of a U.S. Treasury security with a maturity period equal to
or approximating the option's expected term. The dividend yield
assumption is based on our historical dividend payouts. The
volatility assumption is based on the historical volatility, and
expectations regarding future volatility, of our common stock over a
period equal to the option's expected term and the market-based implied
volatility derived from options trading on our common
stock. The expected term of options granted is based on
historical experience and expectations about future exercises and
represents the period of time that options granted are expected to be
outstanding. For Performance Share Awards, the fair value is
estimated on the date of grant using a Monte Carlo simulation
model. We do not believe that the fair values estimated on the
grant date, either by the Black-Scholes model or any other model, are
necessarily indicative of the values that might eventually be realized by
an executive.
|
(2)
|
No
payments pursuant to the 2001 Executive Incentive Plan (EIP) were made in
2009 (for 2008 performance) or 2010 (for 2009 performance). See discussion
of EIP plan under heading “Compensation Discussion and Analysis”
above.
|
(3)
|
Includes
only the amount of change in pension value because our company does not
provide any above market earnings on deferred
compensation.
|
(4)
|
Includes
thrift plan contributions, company-paid life insurance premiums, deferred
stock unit dividend equivalents granted in 2009 and personal use of
company automobile, as set forth in the following table. None
of the named executive officers used the company aircraft for personal use
in 2009.
|
Name
|
|
Non-
Qualified
Thrift Plan
Contributions
($)
|
|
|
Qualified
Thrift Plan
Contributions
($)
|
|
|
Company
Paid Life
Insurance
Premiums
($)
|
|
|
DSU
Dividend
Equivalents
($)
|
|
|
Personal
Use of
Company
Automobile
($)
|
|
|
Total
($)
|
|
Don
James
|
|
|
40,200 |
|
|
|
9,800 |
|
|
|
1,440 |
|
|
|
186,298 |
|
|
|
3,209 |
|
|
|
239,799 |
|
Dan
Sansone
|
|
|
10,200 |
|
|
|
9,800 |
|
|
|
1,440 |
|
|
|
19,275 |
|
|
|
0 |
|
|
|
40,715 |
|
Ron
McAbee
|
|
|
6,200 |
|
|
|
9,800 |
|
|
|
1,440 |
|
|
|
17,153 |
|
|
|
965 |
|
|
|
36,876 |
|
Danny
Shepherd
|
|
|
6,200 |
|
|
|
9,800 |
|
|
|
1,440 |
|
|
|
15,334 |
|
|
|
1,233 |
|
|
|
36,297 |
|
Bob
Wason
|
|
|
5,300 |
|
|
|
9,800 |
|
|
|
1,440 |
|
|
|
17,153 |
|
|
|
619 |
|
|
|
33,693 |
|
The
following table sets forth the grants of plan-based awards in 2009 to our named
executive officers:
Grants
of Plan-Based Awards
|
|
|
|
Estimated
Future Payouts
Under
Non-Equity Incentive Plan
Awards
|
|
|
Estimated
Future Payouts
Under
Equity Incentive Plan
Awards
(# of shares)
|
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
|
|
|
Exercise
or
Base
Price
of
Option
Awards
|
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
Units
(#)
|
|
|
Options
(#)
|
|
|
($/Sh)
(1)
|
|
|
Awards
($)
(2)
|
|
Don
James
|
|
2/12/2009
|
|
|
0 |
|
|
|
1,250,004 |
|
|
|
5,000,016 |
|
|
|
0 |
|
|
|
29,890 |
|
|
|
59,780 |
|
|
|
0 |
|
|
|
235,390 |
|
|
|
47.47 |
|
|
|
4,836,220 |
|
Dan
Sansone
|
|
2/12/2009
|
|
|
0 |
|
|
|
350,003 |
|
|
|
1,400,012 |
|
|
|
0 |
|
|
|
6,220 |
|
|
|
12,440 |
|
|
|
0 |
|
|
|
48,410 |
|
|
|
47.47 |
|
|
|
997,941 |
|
Ron
McAbee
|
|
2/12/2009
|
|
|
0 |
|
|
|
260,005 |
|
|
|
1,040,020 |
|
|
|
0 |
|
|
|
5,760 |
|
|
|
11,520 |
|
|
|
0 |
|
|
|
44,850 |
|
|
|
47.47 |
|
|
|
924,436 |
|
Danny
Shepherd
|
|
2/12/2009
|
|
|
0 |
|
|
|
260,005 |
|
|
|
1,040,020 |
|
|
|
0 |
|
|
|
5,760 |
|
|
|
11,520 |
|
|
|
0 |
|
|
|
44,850 |
|
|
|
47.47 |
|
|
|
924,436 |
|
Bob
Wason
|
|
2/12/2009
|
|
|
0 |
|
|
|
209,000 |
|
|
|
836,000 |
|
|
|
0 |
|
|
|
3,680 |
|
|
|
7,360 |
|
|
|
0 |
|
|
|
29,630 |
|
|
|
47.47 |
|
|
|
604,996 |
|
(1)
Exercise
price was determined using the closing price of our common stock on the grant
date as required under the Omnibus Plan.
(2) Amount
represents the grant date fair values for the SOSARs and PSUs calculated in
accordance with FASB ASC Topic 718. The grant date fair value of
$14.74 for the SOSARs was calculated using a Black-Scholes pricing
model. The assumptions used to determine the value of the options
include: an expected volatility of 35.04% (derived using the daily closing stock
prices for the seven and one-half years preceding the grant date, a dividend
yield of 2.22%, an interest rate of 2.14% (the rate of a U.S. Treasury note with
a maturity date on seven and one-half years from the grant date), and an
expected time of exercise of seven and one-half years from grant
date. The grant date fair value of $45.72 for the PSUs was calculated
using a Monte Carlo simulation model. Fair value was calculated on
the target grant.
Option
Exercises and Stock Vested
Certain
information concerning each exercise of stock options and each vesting of stock
during the fiscal year ended December 31, 2009, for each of the named executive
officers on an aggregate basis is set forth in the table below.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
Value
Realized on
Exercise ($)
(1)
|
|
|
Number of
Shares
Acquired on
Vesting (#)
(2)
|
|
|
Value
Realized on
Vesting ($)
(3)
|
|
Don
James
|
|
|
220,000 |
|
|
|
1,572,614 |
|
|
|
24,192 |
|
|
|
1,023,201 |
|
Dan
Sansone
|
|
|
29,000 |
|
|
|
395,422 |
|
|
|
2,487 |
|
|
|
105,288 |
|
Ron
McAbee
|
|
|
11,500 |
|
|
|
203,046 |
|
|
|
2,258 |
|
|
|
95,502 |
|
Danny
Shepherd
|
|
|
0 |
|
|
|
0 |
|
|
|
824 |
|
|
|
34,851 |
|
Bob
Wason
|
|
|
28,500 |
|
|
|
329,439 |
|
|
|
2,258 |
|
|
|
95,502 |
|
(1)
Calculated
by multiplying the difference between the fair market value of our common stock
on the date of exercise and the option exercise price by the number of options
exercised.
(2)
Represents
the Deferred Stock Units (DSUs) and the Performance Share Units (PSUs) earned
under the 1996 LTIP. Both DSUs and PSUs were paid 100% in
stock.
(3)
Calculated
by multiplying the number of units vested by the high/low average price of our
common stock on the vesting date.
|
Ø
|
Deferred Compensation
Plan
|
Our
Executive Deferred Compensation Plan was established in 1998 to allow executives
to defer a portion of their current year’s compensation in a tax efficient
manner. We believe that providing a tax deferral plan gives our
executives flexibility in tax and financial planning and provides an additional
benefit at little cost to our shareholders. Our company does not make
any contributions to the plan on behalf of the participants. Because
our company purchases assets that mirror, to the extent possible, participants’
deemed investment elections under the plan, the only costs to our company
related to the plan are administrative costs and any contributions that may be
necessary to true-up account balances with deemed investment
results. The plan allows executives with annual compensation (base
salary and average annual short-term bonus) of $200,000 or more to defer receipt
of up to 50% of base salary, up to 100% of annual cash bonus and, beginning in
2007, up to 100% (net of taxes) of long-term incentive awards, which are not
excluded from deferral eligibility by the Internal Revenue Code (or regulations
thereunder), until a date selected by the participant. The amounts
deferred are deemed invested as designated by participants in our company’s
common stock (a “phantom stock” account) or in dollar-denominated accounts that
mirror the gains or losses of the various investment options available under our
company’s 401(k) plan. The plan does not offer any guaranteed return
to participants.
The plan
is funded by a “rabbi trust” arrangement owned by our company, which holds
assets that correspond to the deemed investments of the plan
participants. Participants have an unsecured contractual commitment
from our company to pay when due the amounts to which the participants are
entitled. Upon the death or disability of a participant or upon a
change in control of our company, all deferred amounts and all earnings related
thereto will be paid to the participant in a single lump sum cash
payment.
Effective
for deferrals made after January 1, 2007, the plan permits executives to defer
PSUs and DSUs into the plan, which would, absent such deferral, be distributed
to the executives. The PSU and DSU deferrals, other than described
below, will be credited to the plan participant accounts in the form of phantom
stock and an equal number of shares of our common stock will be deposited by our
company into the rabbi trust. The only exceptions are
the PSU distributions that were paid in 2007, which were distributed one-half in
cash and one-half in stock, and accordingly, deferrals were proportionately
allocated between the cash account and the stock account. Deferrals
of long-term incentive compensation payments are invested in phantom stock of
our company and may not be reallocated to an alternative investment
option.
The
following table shows the contributions, earnings, distributions and year-end
account values for the named executives under the plan.
Nonqualified Deferred Compensation
Plan
|
|
Name
|
|
Executive
Contributions in
Last Fiscal Year
|
|
|
Registrant
Contributions in
Last Fiscal Year
|
|
|
Aggregate
Earnings in
Last Fiscal
Year
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at
Last Fiscal
Year End(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Don
James
|
|
|
1,128,732 |
|
|
|
-0- |
|
|
|
(1,018,198 |
) |
|
|
-0- |
|
|
|
8,396,489 |
|
Dan
Sansone
|
|
|
88,134 |
|
|
|
-0- |
|
|
|
146,121 |
|
|
|
(67,564 |
) |
|
|
2,200,968 |
|
Ron
McAbee
|
|
|
79,572 |
|
|
|
-0- |
|
|
|
(14,127 |
) |
|
|
(86,544 |
) |
|
|
613,623 |
|
Danny
Shepherd
|
|
|
27,267 |
|
|
|
-0- |
|
|
|
(84,218 |
) |
|
|
-0- |
|
|
|
596,902 |
|
Bob
Wason
|
|
|
79,417 |
|
|
|
-0- |
|
|
|
340,523 |
|
|
|
-0- |
|
|
|
1,616,094 |
|
(1)
|
Includes
both the executive contributions and the earnings on those
contributions. Cash based salary and cash annual bonus amounts
contributed by the executives are included in the amounts reported in the
Summary Compensation Table in the year of deferral. PSU and DSU deferrals
are included as compensation in the year of the grant. Above-market
earnings are not reported as our company does not provide for such
earnings on deferred
compensation.
|
Outstanding
Equity Awards at Fiscal Year-End
Certain
information concerning unexercised options, stock that has not vested and equity
incentive plan awards for each of the named executive officers outstanding as of
December 31, 2009 is set forth in the table below:
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Unexercise-
able)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
(11)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(12)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#) (13)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested ($) (12)
|
|
Don
James
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
44.9000 |
|
2/9/2011
|
|
|
14,538 |
(4)
|
|
|
765,716 |
|
|
|
15,000 |
(8)
|
|
|
790,050 |
|
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
45.9500 |
|
2/7/2012
|
|
|
21,223 |
(5)
|
|
|
1,117,815 |
|
|
|
19,500 |
(9)
|
|
|
1,027,065 |
|
|
|
|
145,000 |
|
|
|
0 |
|
|
|
|
31.4650 |
|
2/13/2013
|
|
|
39,396 |
(6)
|
|
|
2,074,987 |
|
|
|
29,890 |
(10)
|
|
|
1,574,306 |
|
|
|
|
130,000 |
|
|
|
0 |
|
|
|
|
46.7600 |
|
2/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,000 |
|
|
|
0 |
|
|
|
|
57.0950 |
|
2/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,000 |
|
|
|
0 |
|
|
|
|
68.6300 |
|
12/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,800 |
|
|
|
0 |
|
|
|
|
69.3100 |
|
1/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,167 |
(1)
|
|
|
37,083 |
|
|
|
|
109.200 |
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
(2)
|
|
|
50,000 |
|
|
|
|
70.6900 |
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(3)
|
|
|
235,390 |
|
|
|
|
47.4700 |
|
2/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan
Sansone
|
|
|
19,000 |
|
|
|
0 |
|
|
|
|
44.9000 |
|
2/9/2011
|
|
|
1,454 |
(4)
|
|
|
76,582 |
|
|
|
2,940 |
(8)
|
|
|
154,850 |
|
|
|
|
19,000 |
|
|
|
0 |
|
|
|
|
45.9500 |
|
2/7/2012
|
|
|
2,124 |
(5)
|
|
|
111,871 |
|
|
|
4,000 |
(9)
|
|
|
210,680 |
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
31.4650 |
|
2/13/2013
|
|
|
4,216 |
(6)
|
|
|
222,057 |
|
|
|
6,220 |
|
|
|
327,607 |
|
|
|
|
12,000 |
|
|
|
0 |
|
|
|
|
46.7600 |
|
2/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000 |
|
|
|
0 |
|
|
|
|
57.0950 |
|
2/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
|
0 |
|
|
|
|
54.8350 |
|
5/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,000 |
|
|
|
0 |
|
|
|
|
68.6300 |
|
12/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,693 |
(1)
|
|
|
7,347 |
|
|
|
|
109.200 |
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,197 |
(2)
|
|
|
10,393 |
|
|
|
|
70.6900 |
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(3)
|
|
|
48,410 |
|
|
|
|
47.4700 |
|
2/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron
McAbee
|
|
|
11,500 |
|
|
|
0 |
|
|
|
|
42.3438 |
|
2/10/2010
|
|
|
1,454 |
(4)
|
|
|
76,582 |
|
|
|
2,620 |
(8)
|
|
|
137,995 |
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
44.9000 |
|
2/9/2011
|
|
|
2,124 |
(5)
|
|
|
111,871 |
|
|
|
3,700 |
(9)
|
|
|
194,879 |
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
45.9500 |
|
2/7/2012
|
|
|
3,300 |
(6)
|
|
|
173,811 |
|
|
|
5,760 |
(10)
|
|
|
303,379 |
|
|
|
|
11,000 |
|
|
|
0 |
|
|
|
|
31.4650 |
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
46.7600 |
|
2/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
57.0950 |
|
2/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
0 |
|
|
|
|
68.6300 |
|
12/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,040 |
(1)
|
|
|
6,520 |
|
|
|
|
109.200 |
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,817 |
(2)
|
|
|
9,633 |
|
|
|
|
70.6900 |
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(3)
|
|
|
44,850 |
|
|
|
|
47.4700 |
|
2/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Danny
|
|
|
3,000 |
|
|
|
0 |
|
|
|
|
46.2750 |
|
5/1/2012
|
|
|
3,300 |
(6)
|
|
|
173,811 |
|
|
|
2,620 |
(8)
|
|
|
137,995 |
|
Shepherd
|
|
|
2,200 |
|
|
|
0 |
|
|
|
|
31.4650 |
|
2/13/2013
|
|
|
4,041 |
(7)
|
|
|
212,839 |
|
|
|
3,700 |
(9)
|
|
|
194,879 |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
|
46.7600 |
|
2/12/2014
|
|
|
|
|
|
|
|
|
|
|
5,760 |
(10)
|
|
|
303,379 |
|
|
|
|
11,000 |
|
|
|
0 |
|
|
|
|
57.0950 |
|
2/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
0 |
|
|
|
|
68.6300 |
|
12/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,040 |
(1)
|
|
|
6,520 |
|
|
|
|
109.200 |
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,817 |
(2)
|
|
|
9,633 |
|
|
|
|
70.6900 |
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(3)
|
|
|
44,850 |
|
|
|
|
47.4700 |
|
2/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
Stock Awards
|
|
Bob
Wason
|
|
|
16,000 |
|
|
|
0 |
|
|
|
44.9000 |
|
2/9/2011
|
|
|
1,454 |
(4)
|
|
|
76,582 |
|
|
|
1,470 |
(8)
|
|
|
77,425 |
|
|
|
|
16,000 |
|
|
|
0 |
|
|
|
45.9500 |
|
2/7/2012
|
|
|
2,124 |
(5)
|
|
|
111,871 |
|
|
|
1,990 |
(9)
|
|
|
104,813 |
|
|
|
|
11,000 |
|
|
|
0 |
|
|
|
31.4650 |
|
2/13/2013
|
|
|
3,330 |
(6)
|
|
|
173,811 |
|
|
|
3,680 |
(10)
|
|
|
193,826 |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
46.7600 |
|
2/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
0 |
|
|
|
57.0950 |
|
2/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
0 |
|
|
|
68.6300 |
|
12/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,587 |
(1)
|
|
|
3,793 |
|
|
|
109.200 |
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,587 |
(2)
|
|
|
5,173 |
|
|
|
70.6900 |
|
2/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(3)
|
|
|
29,630 |
|
|
|
47.4700 |
|
2/12/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
in footnotes 1 through 3 vest at a rate of 33⅓% per year in years 1 -
3.
(1) Options
with vesting dates of 2/8/08, 2/8/09, and 2/8/10.
(2) Options
with vesting dates of 2/7/09, 2/7/10, and 2/7/11.
(3) Options
with vesting dates of 2/12/10, 2/12/11, and 2/12/12.
DSUs in
footnotes 4 through 7 vest at the rate of 20% per year in years 6 -
10.
(4) DSUs
with vesting dates of 3/1/07, 3/1/08, 3/1/09, 3/1/10, and 3/1/11.
(5) DSUs
with vesting dates of 3/1/08, 3/1/09, 3/1/10, 3/1/11, and 3/1/12.
(6) DSUs
with vesting dates of 3/1/09, 3/1/10, 3/1/11, 3/1/12, and 3/1/13.
(7) DSUs
with vesting dates of 3/1/10, 3/1/11, 3/1/12, 3/1/13, and 3/1/14.
PSUs in
footnotes 8 - 10 cliff vest 100% after a three-year performance
period.
(8) PSUs
with vesting date of 12/31/09.
(9) PSUs
with vesting date of 12/31/10.
(10) PSUs
with vesting date of 12/31/11.
(11) DSUs
include dividend equivalents through 12/31/09.
(12) Based
on closing price of our common stock on the New York Stock Exchange on December
31, 2009.
(13)
Unvested PSUs adjusted to maximum allowed under the
agreements.
Retirement
and Pension Benefits
Generally
all full-time, salaried employees of our company, including the named executive
officers that were hired prior to July 15, 2007 participate in our company’s
funded pension plan after completing one year of service. Retirement
benefits become payable as early as the date on which participants both attain
age 55 and complete one year of service.
The
following table provides for each named executive the number of years of
credited service and the present value of accumulated benefits as of December
31, 2009 under each plan in which the executive participates. The
narrative that follows this table provides a description of the material
features of each plan.
Pension
Benefits
|
|
Name |
|
Plan
Name
|
|
Number
of
Years
of
Credited
Service
|
|
|
Present
Value
of
Accumulated
Benefit(1)
|
|
|
Payments
During
Last
Fiscal
Year
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
Don
James
|
Retirement
Income Plan
|
|
|
17 |
|
|
|
725,084 |
|
|
|
0 |
|
Supplemental
Benefit Plan
|
|
|
17 |
|
|
|
11,248,450 |
|
|
|
0 |
|
Supp.
Executive Retirement Agreement
|
|
|
20 4/12 |
|
|
|
14,259,913 |
|
|
|
0 |
|
Dan
Sansone
|
Retirement
Income Plan
|
|
|
21
10/12 |
|
|
|
715,115 |
|
|
|
0 |
|
Supplemental
Benefit Plan
|
|
|
21
10/12 |
|
|
|
2,558,340 |
|
|
|
0 |
|
Ron
McAbee
|
Retirement
Income Plan
|
|
|
35
11/12 |
|
|
|
1,451,912 |
|
|
|
0 |
|
Supplemental
Benefit Plan
|
|
|
35
11/12 |
|
|
|
4,018,426 |
|
|
|
0 |
|
Danny
Shepherd
|
Retirement
Income Plan
|
|
|
26 8/12 |
|
|
|
882,447 |
|
|
|
0 |
|
Supplemental
Benefit Plan
|
|
|
26 8/12 |
|
|
|
1,744,564 |
|
|
|
0 |
|
Bob
Wason
|
Retirement
Income Plan
|
|
|
21 9/12 |
|
|
|
742,400 |
|
|
|
0 |
|
|
Supplemental
Benefit Plan
|
|
|
21 9/12 |
|
|
|
1,625,800 |
|
|
|
0 |
|
(1)
|
The
present value of accumulated benefits are based on benefits payable at age
62, the earliest age under the plans at which benefits are not reduced, or
current age if the participant is older than age 62. The following FASB
ASC Topic 715 “Compensation- Retirement Benefits” (formerly SFAS No. 87),
assumptions as of 12/31/2009 were used to determine the present
values:
|
|
(i)
|
Discount
rate of 5.20%;
|
|
(ii)
|
Mortality
based on the RP-2000 Combined Healthy Mortality Table with improvement
projected to 2013;
|
|
(iii)
|
Present
values for lump sums are based on projected segmented interest rates and
the prescribed 2009 IRS Mortality
Table;
|
|
(iv)
|
Supplemental
Executive Retirement Agreement and Supplemental Executive Retirement Plan
benefits assumed to be paid as a 10 Year Term Certain Annuity;
and
|
|
(v)
|
For
the Retirement Income Plan, 40% of the 12/31/2000 benefit assumed to be
paid as a lump sum, with the remainder of the accrued
benefit assumed to be paid as a single life
annuity.
|
The
Retirement Income Plan for Salaried Employees, or Retirement Plan, provides
benefits under a funded noncontributory defined benefit plan and covers most
salaried employees, including all executive officers, hired prior to July 15,
2007. Employees hired after July 15, 2007 are covered under a 401(k) Plan that
includes company matching of employee contributions and an annual discretionary
profit-sharing contribution to all eligible participants. In order to attract
and retain high quality employees, we believe that it is necessary for our
company to provide an attractive employee benefits package that includes a
competitive retirement program.
The
normal retirement date is defined in the Retirement Plan as the first day of the
calendar month immediately following a participant’s 65th
birthday; however, service continues to accrue under the Retirement Plan if the
participant works beyond age 65 (subject to a maximum service cap of 40 years).
The amount of benefit is based on earnings, service and the age at which a
participant commences receiving a benefit. Eligible earnings under the
Retirement Plan, or “Final Average Earnings,” is the average of a participant’s
highest 36 consecutive months of earnings and includes base monthly salary and
any awards under the EIP, as reflected in the “Salary” and “Non-equity Incentive
Plan Compensation” columns of the Summary Compensation Table. Under Section 415
of the Internal Revenue Code, the maximum annual benefit allowable under the
Plan for an employee retiring at age 65 in 2009 is $195,000, an amount which may
change in subsequent years as determined by the Internal Revenue Service. In
addition, Section 401 of the Internal Revenue Code limits the amount of a
participant’s compensation that may be taken into account under the Plan to
$245,000, an amount that is also subject to change by the Internal Revenue
Service.
The
Retirement Plan formula provides a monthly benefit equal to 0.9% of final
average earnings per year of service accrued prior to age 45, plus 1.2% of final
average earnings per year of service accrued after age 44, plus .5% of Final
Average Earnings in excess of 50% of the Social Security Wage Base applied to
all years of service. A vested participant may commence receiving
early retirement benefits under the Retirement Plan as early as age
55. The amount of early retirement reduction depends on the age of a
participant when active employment ceases. If active employment
ceases after age 55 and retirement income commences at age 62, or later, the
monthly benefit is not reduced. However, if the benefit commences
prior to age 62, the monthly benefit is reduced at a rate of 7% per year for
commencement between ages 55 and 62. If active employment ceases
prior to age 55, the monthly benefit is actuarially reduced for commencement
between ages 55 and 65.
A
participant must have either five years of vested service, as defined in the
Retirement Plan, or be at least age 55 with one year of service, to be vested
and eligible for a benefit. The normal form of retirement benefit
under the Retirement Plan for an unmarried participant is a single life annuity,
which is a monthly payment for life. The normal form of retirement
benefit under the Retirement Plan for a married participant is a 75% joint and
survivor annuity, which is a monthly payment for the life of the participant,
and thereafter 75% of that amount to the surviving spouse payable for their
lifetime. The Retirement Plan also permits the participant to elect,
with spousal consent, other annuity options and a lump sum payment for benefits
accrued prior to 2001. The optional forms of payment are subject to
actuarial adjustment.
|
Ø
|
Unfunded Supplemental Benefit
Plan
|
The
Unfunded Supplemental Benefit Plan for Salaried Employees, or the Supplemental
Plan, enables our company to pay, to any person whose pension under the
Retirement Plan has been reduced as a result of the limitations imposed by
Sections 401 and 415 of the Internal Revenue Code, an amount equal to the
difference between the amount the person would have received under the
Retirement Plan had there been no limitations and the amount the person will
receive under the Retirement Plan after giving effect to the
limitations.
The
Supplemental Plan is unfunded and amounts payable to the employees covered
thereby are considered to be general obligations of our company; however, the
Supplemental Plan contains provisions that allow for the funding of a rabbi
trust to improve the security of the benefit, to some extent, upon the
occurrence of a Change in Control (as defined in the Supplemental
Plan).
The
determination of the benefit amount and the payment options under the
Supplemental Plan are the same as the Retirement Plan, except as
follows. Effective January 1, 2007, the Supplemental Plan was amended
to allow existing participants to make an election to receive supplemental
pension benefits in the form of installment payments over a period of 10 years,
thereby accelerating payout somewhat and minimizing to some extent the risk of
future non-payment. The installment payments are actuarially
equivalent to the various annuity options available under the Retirement
Plan. New participants in the Supplemental Benefit Plan on or after
January 1, 2007 automatically will receive their supplemental pension benefits
in the form of installment payments over a period of 10 years and have no other
payment options.
|
Ø
|
Supplemental Executive
Retirement Agreement
|
Mr. James
is entitled to benefits under a Supplemental Executive Retirement Agreement, or
SERA, that provides for additional retirement benefits based on the formula in
the Retirement Plan using his actual years of service multiplied by
1.2. The maximum benefit service provided by the combination of the
SERA and the Retirement Plan is 40 years. Under the SERA, Mr. James
was credited, as of December 31, 2009, with additional service
years. The SERA is an unfunded, noncontributory defined benefit
plan.
The SERA
was established in 2001 as an additional retention incentive for the Chief
Executive Officer. This program supplements the monthly retirement
benefits Mr. James could receive under the Retirement Plan and the Supplemental
Plan, as Mr. James was hired by our company later in his career and would not
have otherwise been able to accrue the normal retirement benefit provided under
those programs.
The
following named executives are currently eligible for early retirement under the
following plans. Eligible under the Retirement Plan and the
Supplemental Plan are Don James (age 61), Dan Sansone (age 57), Ron McAbee (age
62), Danny Shepherd (age 58) and Bob Wason (age 58). Mr. James also
is eligible for early retirement under the SERA.
Payments
upon Termination or Change in Control
This
section describes and estimates payments that could be made to the named
executive officers under different termination and change-in-control
events. The estimated payments would be made under the terms of our
company’s compensation and benefits programs or the change-in-control severance
agreements with each of the named executive officers. The amount of
potential payments is calculated as if the different events occurred as of
December 31, 2009 and assumes that the price of our company’s common stock is
the closing market price as of December 31, 2009.
|
Ø
|
Description of Termination and
Change-in-Control Events
|
The
following charts list different types of termination and change-in-control, or
CIC, events that can affect the treatment of payments under our company’s
compensation and benefit programs. These events also affect payments
to the named executive officers under their CIC agreements. Except
for Messrs. James, Sansone and Wason, no payments are made under the CIC
agreements unless, within two years of the change in control, the named
executive officer is involuntarily terminated or he voluntarily terminates for
good reason (as described below). The agreements with Messrs. James
and Sansone provide for a 30-day window immediately following the first
anniversary of the CIC during which they may elect to terminate their employment
and receive the benefits provided under the CIC agreement.
|
·
|
Retirement
or Retirement Eligible – Termination of a named executive officer who is
at least 55 years old and has at least one year of credited
service.
|
|
·
|
Lay
Off – Termination by our company of a named executive officer who is not
retirement eligible.
|
|
·
|
Resignation
– Voluntary termination by a named executive officer who is not retirement
eligible.
|
|
·
|
Death
or Disability – Termination of a named executive officer due to death or
disability.
|
|
·
|
Involuntary
Termination – Termination of a named executive officer for
cause. Cause includes individual performance below minimum
performance standards and
misconduct.
|
The
following chart describes the treatment of different pay and benefit elements in
connection with the non-CIC termination events shown.
Program
|
|
Retirement/Retirement
Eligible
|
|
Lay Off (Involuntary
Termination Not For
Cause)
|
|
Resignation
|
|
Death or Disability
|
|
Involuntary
Termination
(For Cause)
|
Pension:
■ Retirement
Plan
■ Supplemental
Plan
■ SERA
|
|
Participant
may commence benefit payment
|
|
Participant
is considered Terminated Vested
|
|
Participant
is considered Terminated Vested
|
|
Spouse
may commence survivor benefit on or after the date that the Participant
would have attained age 55
|
|
Participant
may commence benefit payment or will be Terminated Vested depending on
age
|
Executive
Deferred Compensation
|
|
Payment
commences the year after retirement in the form elected
|
|
Payout
made the year following the year of termination in a lump
sum
|
|
Payout
made the year following the year of termination in a lump
sum
|
|
Payment
commences the year after death or disability in the form
elected
|
|
Payout
made the year following the year of termination in a lump
sum
|
EIP
|
|
Eligible
to receive full payment
|
|
Eligible
to receive full payment
|
|
Eligible
to receive full payment
|
|
Eligible
to receive full payment
|
|
No
payment
|
Stock
Options
|
|
Full
term to exercise vested options; if 62 or older, non-vested options
continue to vest; noncompetition agreement may be required for exercising
vested options
|
|
Non-vested
options forfeited; 30 days to exercise vested options
|
|
Non-vested
options forfeited; 30 days to exercise vested options
|
|
Vesting
accelerated. Under death, estate has one year to exercise.
Under disability, have full remaining term to exercise.
|
|
Forfeit
all, vested and non-vested
|
DSUs
|
|
If
age 62 or older, vesting is accelerated; otherwise forfeit non-vested
DSUs
|
|
Non-vested
are forfeited
|
|
Non-vested
are forfeited
|
|
Vesting
is accelerated on a pro-rata basis
|
|
Non-vested
are forfeited
|
PSUs
|
|
Vesting
is accelerated
|
|
Non-vested
are forfeited
|
|
Non-vested
are forfeited
|
|
Vesting
is accelerated
|
|
Forfeit
all, vested and non-vested
|
Thrift
Plan
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
Account
distributed by March 1 of the following year
|
|
May
take payment or defer until age 70½
|
401(k)
and
Profit
Sharing
Retirement
Plan
(eff.
7/15/07)
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
Account
distributed by March 1 of the following year
|
|
May
take payment or defer until age 70½
|
Supplemental
Thrift Plan
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
May
take payment or defer until age 70½
|
|
Account
distributed by March 1 of the following year
|
|
May
take payment or defer until age 70½
|
Severance
Benefits
|
|
None
|
|
None
|
|
None
|
|
None
|
|
None
|
Health
Benefits
|
|
May
continue to age 65 if age + service equals at least 70
|
|
Coverage
ceases; eligible for coverage extension under COBRA
|
|
Coverage
ceases; eligible for coverage extension under COBRA
|
|
Under
age 55, 3 months spousal extension, then COBRA; over age 55, same as
retiree
|
|
Under
age 55, same as resignation; over age 55, same as
retiree
|
|
·
|
A
CIC occurs under our company’s compensation plans
upon:
|
|
(i)
|
acquisition
by any person or group of more than 50% of the total fair market value or
voting power of our common stock. A transfer or issuance of our stock is
counted only if the stock remains outstanding after the transaction. An
increase in stock ownership as a result of the company’s acquisition of
its own stock in exchange for property is counted for purposes of the
change in ownership standard;
|
|
(ii)
|
(a)
acquisition by a person or group during a 12-month period of stock
possessing 30% of the total voting power of our stock,
or
|
|
(b) replacement
of a majority of our Board of Directors during any 12-month period by
directors not endorsed by a majority of the members of our Board prior to
the date of the appointment or election;
or
|
|
(iii)
|
acquisition
by a person or group during a 12-month period of our assets having a total
gross fair market value of 40% of the total gross fair market value of our
assets immediately prior to such acquisition. An exception exists for a
transfer of our assets to a shareholder controlled entity, including
transfer to a person owning 50% or more of the total value or voting power
of our shares.
|
|
·
|
For
purposes of our CIC agreements, a CIC is defined as: (a) the acquisition
by any individual entity or group of 20% or more of the then outstanding
or voting shares of our company; (b) a change in the majority membership
of the Board of Directors; or (c) consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all
of our company’s assets unless our company’s shareholders before such
business combination or sale own more than 60% of the outstanding common
stock following the business combination or
sale.
|
|
·
|
Involuntary
CIC Termination or Voluntary CIC Termination for Good Reason – Employment
is terminated within two years of a CIC, other than for cause, or the
employee voluntarily terminates for Good
Reason.
|
“Good
reason” for voluntary termination within two years of a CIC is generally
satisfied when there is a reduction in salary, incentive compensation
opportunity or benefits, relocation of over 35 miles or a diminution in duties
and responsibilities.
The
following table describes treatment of payments under pay and benefit programs
upon a CIC, and upon a termination (voluntary or involuntary) upon a
CIC.
Plan or Program
|
|
CIC
|
|
CIC with Termination
|
Pension:
§ Retirement
Plan
§ Supplemental
Plan
§ SERA
|
|
No
impact
|
|
Service
ceases except to the extent that additional service is provided under the
terms of the CIC agreements
|
Executive
Deferred Compensation Plan
|
|
Accelerate
all deferred amounts and pay lump sum within 10 business
days
|
|
Accelerate
all deferred amounts and pay lump sum within 10 business
days
|
EIP
|
|
The
amount paid will be equal to the greater of (A) the average bonus during
the three preceding years, (B) the target bonus, or (C) the bonus
determined under the Plan for the year in which the CIC
occurs.
|
|
The
amount paid will be equal to the greater of (A) the average bonus during
the three preceding years, (B) the target bonus, or (C) the bonus
determined under the Plan for the year in which the CIC
occurs.
|
Stock
Options
|
|
Immediately
deemed fully vested and exercisable; remaining term to
exercise
|
|
Immediately
deemed fully vested and exercisable; remaining term to
exercise
|
DSUs
|
|
All
immediately deemed non-forfeitable; pay on 90th day following the
CIC
|
|
All
immediately deemed non-forfeitable; pay on 90th day following the
CIC
|
PSUs
|
|
Vesting
is accelerated; pay within 2½ months after end of the year in which the
CIC occurs
|
|
Vesting
is accelerated; pay within 2½ months after end of the year in which the
CIC occurs
|
Thrift
Plan
|
|
No
impact
|
|
Service
ceases except to the extent that additional service is provided under the
terms of the CIC agreements. Participant entitled to
distribution.
|
401(k)
and Profit Sharing Retirement Plan
(eff.
7/15/07)
|
|
No
impact
|
|
Service
ceases except to the extent that additional service is provided under the
terms of the CIC Agreements. Participant is entitled to
distribution.
|
Supplemental
Thrift Plan
|
|
No
impact
|
|
Participant
entitled to distribution.
|
Severance
Benefits
|
|
No
impact
|
|
Payment
is 3 times the named executive’s annual base salary, short-term bonus and
LTI amount.
|
Health
Benefits
|
|
No
impact
|
|
3
year coverage extension
|
This
section describes and estimates payments that would become payable to the named
executive officers upon a termination or change-in-control as of December 31,
2009.
Pension Benefits
The
monthly amounts that would have become payable to our named executive officers
if the termination events occurred as of December 31, 2009 under the Retirement
Plan, the Supplemental Plan, and the SERA are itemized in the chart set forth
below. The amounts shown in the chart are monthly benefit amounts
whereas the pension values shown in the Summary Compensation and Pension
Benefits Tables are present values of all the monthly values anticipated to be
paid over the lifetimes of our named executive officers and their
spouses. These plans are described in the notes following the Pension
Benefits Table. All the named executive officers were retirement
eligible on December 31, 2009. The benefits were determined using the
same assumptions used to compute benefit values in the Pension Benefit Table
with three exceptions. First, the benefit payments were assumed to
commence as soon as possible instead of at normal retirement. Second,
approximate early retirement reductions were applied. Finally, the
benefits were not adjusted to reflect optional forms of payment. All
benefits are the amounts that would be paid monthly over the named executive
officer’s life, except for the value of CIC enhanced benefits which would be
paid in a lump sum.
Name
|
|
Retirement
(Monthly Payments)
($)
|
|
Resignation or
Involuntary Retirement
(monthly payments)
($)
|
|
Death
(monthly
payments to a
spouse)
($)
|
|
CIC (Value of
Enhanced
Benefits)(1)
($)
|
|
Don
James
|
Retirement
Plan
|
5,178 |
|
Same
as Retirement
|
|
|
3,366 |
|
|
0 |
|
Supplemental
Plan
|
91,751 |
|
Same
as Retirement
|
|
|
59,638 |
|
|
0 |
|
SERA
|
116,315 |
|
Same
as Retirement
|
|
|
75,605 |
|
|
8,168,499 |
|
Defined
Contribution
|
0 |
|
None
|
|
|
0 |
|
|
150,000 |
|
Dan
Sansone
|
Retirement
Plan
|
6,182 |
|
Same
as Retirement
|
|
|
4,018 |
|
|
0 |
|
Supplemental
Plan
|
25,025 |
|
Same
as Retirement
|
|
|
16,266 |
|
|
1,718,950 |
|
Defined
Contribution
|
0 |
|
None
|
|
|
0 |
|
|
60,000 |
|
Ron
McAbee
|
Retirement
Plan
|
10,014 |
|
Same
as Retirement
|
|
|
6,509 |
|
|
0 |
|
Supplemental
Plan
|
31,555 |
|
Same
as Retirement
|
|
|
20,510 |
|
|
548,064 |
|
Defined
Contribution
|
0 |
|
None
|
|
|
0 |
|
|
48,000 |
|
Danny
Shepherd
|
Retirement
Plan
|
7,329 |
|
Same
as Retirement
|
|
|
4,764 |
|
|
0 |
|
Supplemental
Plan
|
16,290 |
|
Same
as Retirement
|
|
|
10,558 |
|
|
1,223,999 |
|
Defined
Contribution
|
0 |
|
None
|
|
|
0 |
|
|
48,000 |
|
Bob
Wason
|
Retirement
Plan
|
6,210 |
|
Same
as Retirement
|
|
|
4,036 |
|
|
0 |
|
Supplemental
Plan
|
15,245 |
|
Same
as Retirement
|
|
|
9,909 |
|
|
1,190,928 |
|
Defined
Contribution
|
0 |
|
None
|
|
|
0 |
|
|
45,300 |
|
(1) Value
of retirement and defined contribution enhancements is payable in lump sum in
the event of a CIC.
In
accordance with CIC agreements, lump-sum values for Supplemental Plan and SERA
pension benefits are based upon credit for three years of service for each named
executive, except for Mr. James, who would receive credit for 6.6 years of
service. The defined contribution amounts represent three years of
company matching contributions for each executive.
Long-Term Incentives
Deferred Stock Units
(DSUs)
The chart
below shows the number of DSUs for which vesting would be accelerated under
certain events.
|
|
Retirement
|
|
|
CIC
(With or Without Termination)
|
|
Name
|
|
Number of
Deferred Stock
Units with
Accelerated
Vesting
(#)
|
|
|
Total Number of
Deferred Stock
Units Following
Accelerated
Vesting
(#)
|
|
|
Number of
Deferred Stock
Units with
Accelerated
Vesting
(#)
|
|
|
Total Number of
Deferred Stock
Units Following
Accelerated
Vesting
(#)
|
|
Don
James
|
|
|
0 |
|
|
|
0 |
|
|
|
75,157 |
|
|
|
75,157 |
|
Dan
Sansone
|
|
|
0 |
|
|
|
0 |
|
|
|
7,794 |
|
|
|
7,794 |
|
Ron
McAbee
|
|
|
6,878 |
|
|
|
6,878 |
|
|
|
6,878 |
|
|
|
6,878 |
|
Danny
Shepherd
|
|
|
0 |
|
|
|
0 |
|
|
|
7,341 |
|
|
|
7,341 |
|
Bob
Wason
|
|
|
0 |
|
|
|
0 |
|
|
|
6,878 |
|
|
|
6,878 |
|
Performance Share Units
(PSUs)
The chart
below shows the number of PSUs for which vesting would be accelerated under
certain events. Unvested PSUs were adjusted to the maximum allowed under the
agreements because the performance was unknown at December 31,
2009.
|
|
Retirement
|
|
|
CIC
(With or Without Termination)
|
|
Name
|
|
Number of
Performance
Share Units with
Accelerated
Vesting
(#)
|
|
|
Total Number of
Performance Share
Units Following
Accelerated
Vesting
(#)
|
|
|
Number of
Performance
Share Units with
Accelerated
Vesting
(#)
|
|
|
Total Number of
Performance Share
Units Following
Accelerated
Vesting
(#)
|
|
Don
James
|
|
|
45,927 |
|
|
|
57,477 |
|
|
|
98,780 |
|
|
|
110,330 |
|
Dan
Sansone
|
|
|
9,480 |
|
|
|
11,744 |
|
|
|
20,440 |
|
|
|
22,704 |
|
Ron
McAbee
|
|
|
18,920 |
|
|
|
20,937 |
|
|
|
18,920 |
|
|
|
20,937 |
|
Danny
Shepherd
|
|
|
8,773 |
|
|
|
10,790 |
|
|
|
18,920 |
|
|
|
20,937 |
|
Bob
Wason
|
|
|
5,106 |
|
|
|
6,238 |
|
|
|
11,340 |
|
|
|
12,472 |
|
Stock Options
Stock
options would be treated as described in the termination and CIC charts
above. The chart below shows the number of stock options for which
vesting would be accelerated under certain events.
|
|
Retirement
|
|
|
CIC
(With or Without Termination)
|
|
Name
|
|
Number of Options
with Accelerated
Vesting
(#)
|
|
|
Total Number of
Options Following
Accelerated Vesting
(#)
|
|
|
Number of Options
with Accelerated
Vesting
(#)
|
|
|
Total Number of
Options Following
Accelerated Vesting
(#)
|
|
Don
James
|
|
|
148,879 |
|
|
|
1,356,846 |
|
|
|
322,473 |
|
|
|
1,530,440 |
|
Dan
Sansone
|
|
|
30,413 |
|
|
|
192,303 |
|
|
|
66,150 |
|
|
|
228,040 |
|
Ron
McAbee
|
|
|
61,003 |
|
|
|
191,360 |
|
|
|
61,003 |
|
|
|
191,360 |
|
Danny
Shepherd
|
|
|
27,892 |
|
|
|
93,949 |
|
|
|
61,003 |
|
|
|
127,060 |
|
Bob
Wason
|
|
|
17,119 |
|
|
|
113,293 |
|
|
|
38,596 |
|
|
|
134,770 |
|
Executive Deferred Compensation
Plan
The
aggregate balances reported in the Nonqualified Deferred Compensation Table
would be payable to the named executive officers as described in the termination
events and CIC-Related Events chart above. There is no enhancement or
acceleration of payments under these plans associated with termination or CIC
events, other than the lump sum payment opportunity described in the above
charts. The lump sums that would be payable are those that are
reported in the Nonqualified Deferred Compensation Table.
Health Benefits
Because
Messrs. James, Sansone, McAbee, Shepherd and Wason are eligible for early
retirement and health care benefits are provided to early retirees, there is no
incremental payment associated with the termination or CIC events.
Severance Benefits
Our
company has entered into individual CIC agreements with each of our named
executive officers. In addition to the treatment of the benefits
described above, our named executive officers are entitled to a severance
benefit, if within two years of a CIC they are involuntarily terminated, without
cause or they voluntarily terminate for Good Reason. Further, Messrs.
James, Sansone and Wason may elect to voluntarily terminate their employment
during the 30 days following the first anniversary of a CIC, and receive
severance benefits. In any case, benefits are not paid unless the
named executive officer releases us from any claims he may have against
us.
The CIC
severance payment is three times the named executive officer’s base annual
salary, short-term bonus, and LTI amount, as each is defined in the CIC
agreements, and includes the continuation of health, medical and other fringe
benefits for a period of two years following termination. If any
portion of the severance payment is an “excess parachute payment,” as defined
under Internal Revenue Code Section 280G, we will pay on behalf of the named
executive officer an additional amount to make the named executive officer whole
for golden parachute tax liability – a “280G tax gross-up.”
The table
below reflects an estimate of the severance payments that would be made to our
named executive officers if they were terminated as of December 31, 2009 in
connection with a CIC.
Name
|
|
Severance Amount
($)
|
|
Don
James
|
|
|
18,601,250 |
|
Dan
Sansone
|
|
|
4,725,000 |
|
Ron
McAbee
|
|
|
4,132,000 |
|
Danny
Shepherd
|
|
|
3,700,000 |
|
Bob
Wason
|
|
|
3,147,750 |
|
The table
below reflects an estimate of the value of 280G tax gross-up amounts due and
payable to the Internal Revenue Service in connection with a CIC that results in
severance payments.
Name
|
|
280G Tax Gross-Up
($) (1)
|
|
Don
James
|
|
|
0 |
(2) |
Dan
Sansone
|
|
|
2,963,125 |
|
Ron
McAbee
|
|
|
2,022,389 |
|
Danny
Shepherd
|
|
|
2,602,783 |
|
Bob
Wason
|
|
|
1,940,337 |
|
(1)
Based on
payment of equity components of compensation valued at $52.67 per share, the
reported fair market value of our company’s common stock as of December 31,
2009.
(2) No
280G tax gross-up is triggered as the estimated severance amount is not in
excess of the IRS cap.
DIRECTOR
COMPENSATION
We use a
combination of cash and stock-based compensation to attract and retain qualified
candidates to serve on our Board of Directors. In setting director
compensation, our company considers the significant amount of time that
directors expend on fulfilling their duties to our company, as well as the
limited pool of, and competition among public companies for, well-qualified
Board members. Additional amounts are paid to committee chairs in
recognition of the substantial responsibilities of the
chair. Directors are subject to a minimum share ownership
requirement. Within five years of becoming a director, each director
is required to own at least 5,000 shares of our company’s common
stock. Shares or units held by a director under a deferred
compensation plan are included in calculating the director’s
ownership.
Cash Compensation Paid to Board
Members. Members of the Board who are not employees of our
company are paid a retainer of $45,000 per year, plus the following
fees:
|
·
|
$ 5,000
Board meeting fee for in-person
attendance;
|
|
·
|
$ 3,000
Committee meeting fee for in-person
attendance;
|
|
·
|
$ 1,500
Board and committee fees for telephonic meetings or actions by written
consent;
|
|
·
|
$ 20,000
Audit Committee chair retainer fee;
|
|
·
|
$ 10,000
Compensation Committee chair retainer
fee;
|
|
·
|
$ 5,000
Retainer fee for all other committee chairs;
and
|
|
·
|
$ 1,500
Presiding Director fee per quarter.
|
Deferred Compensation
Plan. We maintain a Deferred Compensation Plan for directors
who are not employees of our company (Directors’ Deferred Compensation Plan),
under which such directors are permitted to defer the cash compensation to which
they are entitled for specified periods or until they cease to be
directors. The deferred amounts, at the election of the director, are
either: (i) credited with interest at prescribed rates; or (ii) converted into a
number of DSUs equivalent to the number of shares of our company’s common stock
(based on the market price at the time of deferral) that could be purchased with
the amount deferred. Whenever a dividend is paid on our common stock,
the DSU accounts are credited with an additional number of stock units
corresponding to the amount of the dividend. At the end of the
deferral period, the DSUs are settled in shares of our company’s common stock,
and interest-based deferrals are settled in cash. The Directors’
Deferred Compensation Plan also provides for a lump-sum settlement of a
director’s deferred compensation account in stock or cash, as applicable, if
following a Change of Control (as defined in the Directors’ Deferred
Compensation Plan): (i) the participating director ceases to be a member of the
Board; (ii) the Directors’ Deferred Compensation Plan is terminated; or (iii)
our company’s capital structure is changed materially. The Directors’
Deferred Compensation Plan was approved by our company’s shareholders in
1993.
Deferred Stock
Units. Equity-based grants are awarded to our non-management
directors on an annual basis. These grants represent a significant
portion of their compensation package. We believe that equity grants
promote a greater alignment of interests between our directors and our
shareholders through increasing their ownership of our common
stock. Further, we believe that equity grants support our ability to
attract and retain qualified individuals to serve as directors of our company by
affording them an opportunity to share in our future success.
In May
2009, 1,930 DSUs were granted to each non-management director pursuant to the
Omnibus Plan, which was approved by our shareholders in 2006. These
units vest on the third anniversary of the grant; however, payment may be
deferred beyond that date. The DSUs are an unfunded, unsecured
obligation of our company, and no shares have been set aside for these
grants. The non-management directors have no right to receive the
DSUs until the restrictions imposed either lapse or are
waived. Generally, the restrictions expire at the earliest of vesting
or when the non-management director reaches age 74 (or the then-current
mandatory retirement age for directors), or the non-management director ceases
to be a director because of death, disability or a CIC. However, the
Compensation Committee, subject to Board approval, may waive restrictions in the
event the non-management director fails to remain a director for any reason
other than retirement at the mandatory age, death or
disability. During the period the shares are restricted, the
non-management directors have no right to vote the shares. Dividend
equivalents are credited as additional DSUs quarterly when dividends are paid on
our stock. The DSUs are settled in shares of our common stock when
the restrictions expire.
In prior
years, grants to our directors were made under the Restricted Stock Plan for
Nonemployee Directors or the Deferred Stock Plan for Nonemployee
Directors. No further grants will be made under either of these
plans.
Director
Summary Compensation Table
The table
below summarizes the compensation paid by our company to non-employee directors
for the fiscal year ended December 31, 2009.
Name(1)
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards(2)
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation(3)
($)
|
|
|
Total
($)
|
|
Philip
J. Carroll
|
|
|
110,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,619 |
|
|
|
210,584 |
|
Phillip
W. Farmer
|
|
|
121,500 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,283 |
|
|
|
221,748 |
|
H.
Allen Franklin
|
|
|
108,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
13,900 |
|
|
|
213,865 |
|
Ann
McLaughlin Korologos
|
|
|
94,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,544 |
|
|
|
191,509 |
|
Douglas
J. McGregor
|
|
|
106,500 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
21,498 |
|
|
|
219,963 |
|
James
V. Napier
|
|
|
103,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10,791 |
|
|
|
205,756 |
|
Richard
T. O’Brien
|
|
|
94,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,920 |
|
|
|
187,885 |
|
James T.
Prokopanko(4)
|
|
|
5,000 |
|
|
|
-0- |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
-0- |
|
|
|
5,000 |
|
Donald
B. Rice
|
|
|
105,000 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
21,498 |
|
|
|
218,463 |
|
Vincent
J. Trosino
|
|
|
90,500 |
|
|
|
91,965 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10,464 |
|
|
|
192,929 |
|
Kathleen
Wilson-Thompson(4)
|
|
|
5,000 |
|
|
|
-0- |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
-0- |
|
|
|
5,000 |
|
(1)
|
Donald
M. James, Chief Executive Officer and Chairman of the Board, is not
included in this table as he is an employee of our company and receives no
additional compensation for his service as a director. Mr.
James’ compensation is shown in the Summary Compensation
Table.
|
(2)
|
This
column represents the accounting expense for the awards granted in 2009;
therefore, the values shown here are not representative of the amounts
that may eventually be realized by a director. Pursuant to the rules of
the SEC, we have provided a grant date fair value for stock awards in
accordance with the provisions of FASB ASC Topic 718. For DSUs, the fair
value is estimated on the date of grant based on the closing market price
of our stock on the grant date. At December 31, 2009, the aggregate number
of restricted stock units and DSUs accumulated on account for all years of
service, including dividend equivalent units
were:
|
Name
|
|
Units
|
|
Philip
J. Carroll
|
|
|
5,951 |
|
Phillip
W. Farmer
|
|
|
6,387 |
|
H.
Allen Franklin
|
|
|
10,261 |
|
Ann
McLaughlin Korologos
|
|
|
4,323 |
|
Douglas
J. McGregor
|
|
|
15,500 |
|
James
V. Napier
|
|
|
7,375 |
|
Richard
T. O’Brien
|
|
|
1,971 |
|
James
T. Prokopanko
|
|
|
0 |
|
Donald
B. Rice
|
|
|
15,500 |
|
Vincent
J. Trosino
|
|
|
7,891 |
|
Kathleen
Wilson-Thompson
|
|
|
0 |
|
(3)
|
None
of our directors received perquisites or other personal benefits in excess
of $10,000. The amounts set forth in this column represent the accounting
expense for the dividend equivalents earned in 2009 by our directors for
outstanding equity awards which earn dividend
equivalents.
|
(4)
|
Mr.
Prokopanko and Ms. Wilson-Thompson were elected as directors in December
2009.
|
GENERAL
INFORMATION
Section
16(a) Beneficial Ownership Reporting Compliance
Under
Section 16(a) of the Securities Exchange Act of 1934, as amended, each of our
directors and executive officers, and any beneficial owner of more than 10% of
our common stock, is required to file with the SEC initial reports of beneficial
ownership of our common stock and reports of changes in beneficial ownership of
our common stock. Such persons also are required by SEC regulations
to furnish us with copies of all such reports. Based solely on our
review of the copies of such reports furnished to us for the year ended December
31, 2009, and on the written representations made by our directors and executive
officers that no other reports were required, we believe that during the year
ended December 31, 2009 all reports were filed in a timely manner, except
for one late filing made by Ann McLaughlin Korologos.
Shareholder
Proposals For 2011
To be
eligible for consideration for inclusion in our proxy statement and form of
proxy for our 2011 annual meeting, a shareholder’s proposal must be received by
us at our principal office no later than December 3, 2010. Proposals
should be addressed to Jerry F. Perkins Jr., Secretary, P. O. Box 385014,
Birmingham, Alabama 35238-5014. Proposals received after that date
will be considered untimely and will not be eligible for inclusion in the 2011
proxy statement. If a shareholder desires to bring a matter before
our annual meeting and the matter is submitted outside the process of Securities
Exchange Act Rule 14a-8, including with respect to nominations for election as
directors, the shareholder must follow the procedures set forth in our by-laws.
Our by-laws provide generally that shareholder proposals and director
nominations to be considered at an annual meeting may be made by a shareholder
only if (1) the shareholder is a shareholder of record and is entitled to vote
at the meeting, and (2) the shareholder gives timely written notice of the
matter to our corporate secretary. To be timely, a shareholder’s notice must be
received at our principal executive offices not earlier than the close of
business on the 120th day and not later than the close of business on the 90th
day prior to the first anniversary of the preceding year’s annual meeting.
However, in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than the close of
business on the 120th day prior to the date of such annual meeting and not later
than the close of business on the later of the 90th day prior to the date of
such annual meeting or, if the first public announcement of the date of such
annual meeting is less than 100 days prior to the date of such annual meeting,
the 10th day following the day on which public announcement of the date of such
meeting is first made by our company. The notice must set forth the
information required by the provisions of our by-laws dealing with shareholder
proposals and nominations of directors.
VULCAN
MATERIALS COMPANY
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JERRY
F. PERKINS, JR.
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Secretary
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1200
Urban Center Drive
Birmingham,
Alabama 35242
April 2,
2010
YOUR
VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We
encourage you to take advantage of Internet or telephone voting.
Both
are available 24 hours a day, 7 days a week.
Internet
and telephone voting is available through 11:59 PM Eastern Time the day prior to
the shareholder meeting date.
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INTERNET
http://www.proxyvoting.com/vmc
Use the Internet to vote your proxy. Have your proxy card in hand
when you Access the web site.
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OR
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TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy
card in hand when you call.
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If
you vote your proxy by Internet or by telephone, you do NOT need to mail
back your proxy card.
To
vote by mail, mark, sign and date your proxy card and return it in the
enclosed postage-paid
envelope.
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Your
Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy
card.
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WO#
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Fulfillment#
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70188
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71670
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FOLD AND DETACH HERE
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THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTIONS INDICATED, WILL
BE
VOTED
“FOR” THE ELECTION OF ALL DIRECTORS, “FOR” ITEM 2 AND “AGAINST” ITEM
3.
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Please
mark your votes as
indicated
in this
example
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x |
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The
Board of Directors recommends you to vote “Against” the
shareholder
proposal in item
3.
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1.
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FOR
ALL
o
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WITHHOLD
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01
Douglas J. McGregor
02
Vincent J. Trosino
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Philip J. Carroll, Jr.
04
James V. Napier
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2. Vote
to ratify Deloitte & Touche, LLP as our
independent
public accounting firm for 2010
3. Vote
on the Shareholder
Proposal
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(INSTRUCTIONS:
To withhold authority to vote for any individual nominee, mark the
“Exceptions” box above and write that nominee’s name in the space provided
below.)
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*Exceptions
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NOTE:
Please sign as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such.
You
can now access your Vulcan Materials Company account
online.
Access
your Vulcan Materials Company account online via Investor
ServiceDirect®
(ISD).
BNY
Mellon Shareowner Services, the transfer agent for Vulcan Materials
Company, now makes it easy
and convenient to get current information on your shareholder
account.
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·
View account
status ·
View payment
history for dividends
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View
certificate
history ·
Make address
changes
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View book-entry
information ·
Obtain a
duplicate 1099 tax form
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Visit
us on the web at http://www.bnymellon.com/shareowner/isd
For
Technical Assistance Call 1-877-978-7778 between
9am-7pm
Monday-Friday
Eastern Time
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Choose
MLinkSM for
fast, easy and secure 24/7 online access to your future proxy materials,
investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect® at
www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through
enrollment.
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TOLL
FREE NUMBER: 1-800-370-1163
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Important
notice regarding the Internet availability of proxy materials for the
Annual Meeting of Shareholders. The Proxy Statement and the 2009
Annual Report to Shareholders are available at: http://www.proxyvoting.com/vmc
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FOLD AND DETACH HERE
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PROXY
VULCAN
MATERIALS COMPANY
Annual
Meeting of Shareholders – May 14, 2010
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY
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The
undersigned hereby appoints Phillip W. Farmer, H. Allen Franklin and
Donald B. Rice, and each of them, with power to act without the other and
with power of substitution, as proxies and attorneys-in-fact and hereby
authorizes them to represent and vote, as provided on the other side, all
the shares of Vulcan Materials Company Common Stock which the undersigned
is entitled to vote, and, in their discretion, to vote upon such other
business as may properly come before the Annual Meeting of Shareholders of
the company to be held Friday, May 14, 2010 or at any adjournment or
postponement thereof, with all powers which the undersigned would possess
if present at the Meeting.
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Address
Change/Comments
(Mark
the corresponding box on the reverse side)
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BNY
MELLON SHAREOWNER SERVICES
P.O.
BOX 3550
SOUTH
HACKENSACK, NJ 07606-9250
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(Continued
and to be marked, dated and signed, on the other
side)
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Filfillment
71670
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