SCHEDULE 14A

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Summit Materials is a market-leading producer of aggregates and cement with vertically integrated operations that supply ready-mix concrete, asphalt, as well as paving services in select markets.

We are geographically diverse, materials-led business of scale that offers customers in the United States and British Columbia, Canada high quality products and services for the public infrastructure, residential and non-residential end markets. Our operations benefit from Summit’s access to capital, IT resources, performance optimization practices and a highly-experienced management team. We believe this model allows us to realize the benefits of locally invested operators with the expertise and economies of scale of a larger entity.

In 2023, Summit Materials’ Board had a busy and productive year as our Company delivered record financial performance and embarked upon the transformational combination with Argos USA to create a materials-led enterprise with national scale. Despite the significant effort involved in a transformational deal, the team never lost sight of its objectives, and Summit reported record annual net revenue and profitability, maintained a strong balance sheet, and allocated capital in alignment with the highest potential for growth and shareholder value creation.

We were delighted that the Argos transaction was overwhelmingly approved by an over 98% vote of our shareholders. We believe that support reflects the strong strategic and financial rationale of the combination. Our improved geographic diversification will enhance our ability to meet customer demand for cement in a capacity-constrained domestic market.

Subsequent to the transaction, we expanded our roster of Independent Directors. Their individual strengths and unique backgrounds together with a shared commitment to our mission and values will be invaluable as we integrate Argos USA into the Summit family and pursue our growth and return objectives. Please join me in welcoming Jorge Mario Velasquez, Irene Moshouris, and Juan Esteban Calle to the Summit Materials Board of Directors, who joined on January 12, 2024. Following these appointments, and together with the retirement of John Murphy, the Board consists of 11 directors, 10 of whom are independent.

I wish to thank John Murphy, who retired from the Summit Board after 12 years of service to the Company, including service as Chairman of the Audit Committee. John’s disciplined counsel on capital allocation matters helped set the stage for Summit’s success.

From a governance perspective, we strive to balance agility with foresight, which are both essential for strategic execution. Over the last three years, Summit has increased its Return on Invested Capital (ROIC) by 240 basis points and increased its quality of earnings with a 17% higher contribution of materials to its financial performance. We continue to support prudent capital allocation decisions that maximize flexibility to pursue additional growth opportunities, particularly in aggregates. Our strong balance sheet and manageable leverage profile prompted the recent credit rating upgrade to BB+ from S&P Global.

As a Board, we pride ourselves on upholding governance best practices. This includes:

We believe that operating a lower cost, lower emission business will translate into sustainable competitive advantage. We were recognized in that effort by receiving an ESG rating of “AAA” from MSCI for the second year in a row, placing Summit in the top 5% of global issuers. In addition to commending our use of alternative fuels and reduction in diesel consumption, the report noted, “Summit Materials leads most global peers in corporate governance practices.”

As Chairman of the Board, I sincerely appreciate the trust and faith you have instilled in us. Thank you for your continued support, and I hope you are as excited as I am about the opportunities ahead with the continued execution of our Elevate Strategy.

Sincerely,

 

Howard L. Lance

Chairman of the Board of Directors

Summit Materials, Inc.

 

We, the members of your Board, take seriously our jobs of overseeing Summit Materials on your behalf and on behalf of our employees, customers, suppliers and other stakeholders, all of whom uniquely matter to us.

The Board has nominated eleven directors to be elected at the Annual Meeting to each serve for one-year terms ending with the 2025 Annual Meeting of Stockholders and until a successor is duly elected and qualified, or until the earlier of the director’s death, resignation or removal. Each nominee is currently a director of the Company and has agreed to serve if elected. The age shown below for each director is as of May 21, 2024, which is the date of the Annual Meeting.

Good corporate governance at Summit Materials starts at the top—with how we, as the Board, are governed. We believe our board governance incorporates best-practice standards as appropriate for our Company:

At the Board’s recommendation, at the Company’s 2021 Annual Meeting, the Company’s stockholders approved and adopted the Declassification Amendment. Accordingly, all eleven directors will be elected at the 2024 Annual Meeting to serve for a term of one year, and all directors will be elected to serve for one year terms at all subsequent Annual Meetings.

Under our Corporate Governance Guidelines and the NYSE corporate governance rules for listed companies, a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries. In addition, the director must meet the bright-line test for independence set forth by the NYSE rules. Our Corporate Governance Guidelines define independence in accordance with the independence definition in the current NYSE rules. Our Corporate Governance Guidelines require the Board to review the independence of all directors at least annually. In the event a director has a relationship with the Company that is relevant to his or her independence and is not addressed by the objective tests set forth in the NYSE independence definition, the Board will determine, considering all relevant facts and circumstances, whether such relationship is material.

Our Board has affirmatively determined that each of Mss. Cooney, Ellerbusch, Moshouris, Oates-Forney, Wade, and Messrs. Calle, Cantie, Lance, Velásquez, and Wunning is independent, under the guidelines for director independence set forth in the Corporate Governance Guidelines and under all applicable NYSE rules, including with respect to applicable committee membership. Our Board also has determined that (i) each of the members of the Audit Committee, Mss. Ellerbusch, Moshouris, and Wade and Mr. Cantie, is “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “financially literate” as required by NYSE rules and (ii) each of Mr. Cantie and Ms. Moshouris qualify as a “financial expert” as defined by SEC regulations.

In making its independence and financial literacy determinations, the Board considered and reviewed all information known to it, including information identified through annual directors’ questionnaires.

The Board directs and oversees the management of the business and affairs of the Company in a manner consistent with the best interests of the Company. The Board’s responsibility is one of oversight, and in performing its oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with our stockholders.

In accordance with the Company’s belief that its long-term success includes being good stewards of the environment, the Board oversees and supports the Company’s initiatives in these areas. In addition, the Board takes pride in supporting the Company’s efforts to offer a safe work environment to its employees and being a good corporate citizen in its local communities.

In accordance with our Corporate Governance Guidelines, the Board selects the Company’s Chairman and the Company’s Chief Executive Officer in any way it considers in the best interests of the Company, and it does not have a policy on whether the roles of Chairman and Chief Executive Officer should be separate or combined and, if separate, whether the Chairman should be selected from the independent directors. We believe that the separation of the Chairman of the Board and Chief Executive Officer positions is appropriate corporate governance for us as this time. Accordingly, Mr. Lance serves as the Chairman of the Board while Ms. Noonan serves as our Chief Executive Officer. Our Board believes that this structure best encourages the free and open dialogue of differing views and provides for strong checks and balances.

Our investor relations website at investors.summit-materials.com/govdocs, “Governance Documents,” has additional information on our board governance and corporate governance, including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, our Whistleblower Policy, and the charters approved by the Board for the Audit Committee, the Human Capital and Compensation Committee, and the Governance and Sustainability Committee.

The Board meets regularly during the year and holds special meetings and acts by unanimous written consent when circumstances require. During 2023, there were 11 meetings of the Board. Each director attended at least 75% of the aggregate of the total number of meetings of the Board (held during the period for which he or she was a director) and the total number of meetings held by all committees on which he or she served (during the periods that he or she served) during 2023. In addition, directors are expected to make every effort to attend any meetings of stockholders. All of our directors who were serving at the time of the 2023 Annual Meeting of Stockholders attended the meeting.

The Board has established an Audit Committee, a Human Capital and Compensation Committee, and a Governance and Sustainability Committee (collectively, the “Committees”). The Committees keep the Board informed of their actions and assist the Board in fulfilling its oversight responsibility to stockholders. The table below provides current membership information as well as meeting information for the last fiscal year.

The functions performed by these Committees, which are set forth in more detail in their charters, are summarized below.

Our Audit Committee consists of Mss. Ellerbusch, Moshouris, and Wade and Mr. Cantie, with Mr. Cantie serving as chair.

Our Audit Committee is responsible for, among other things:

Our Human Capital and Compensation Committee consists of Messrs. Calle and Wunning and Mss. Cooney and Oates-Forney, with Mr. Wunning serving as chair.

Our Human Capital and Compensation Committee is responsible for, among other things:

Our Governance and Sustainability Committee consists of Mss. Cooney and Ellerbusch and Messrs. Velásquez, and Wunning, with Ms. Cooney serving as chair.

The Governance and Sustainability Committee identifies individuals believed to be qualified as candidates to serve on the Board and selects, or recommends that the Board select, the nominees for all directorships to be filled by the Board or by our stockholders at an annual or special meeting.

In identifying candidates for membership on the Board, the Committee takes into account all factors it considers appropriate, which may include:

In 2022, the Company amended its Corporate Governance Guidelines and Governance and Sustainability Committee’s charter and formally adopted a policy to require any candidate pool assembled to fill a vacancy of the Board to include candidates who are diverse in terms of ethnicity and/or gender. The Board is proud of the gender diversity it has been able to accomplish over the last few years, which has resulted in the Board being comprised of 55% females and 45% males. In addition, the Board made strides in other forms of diversity, including racial and ethnic diversity, in connection with the appointment of Ms. Oates-Forney, who identifies as African American in 2021 and the addition of Messrs. Esteban and Velásquez, each of whom identifies as Hispanic.

The Committee also may consider the extent to which the candidate would fill a present need on the Board. When evaluating whether to re-nominate existing directors, the Committee considers matters relating to the retirement of current directors, as well as the performance of such directors.

The Governance and Sustainability Committee evaluates director candidates recommended by stockholders on the same basis as it considers other nominees. Any recommendation submitted to the Chief Legal Officer and Secretary should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and the written consent of the candidate to serve as one of our directors, if elected. Stockholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Chief Legal Officer and Secretary, Summit Materials, Inc., 1801 California Street, Suite 3500, Denver, Colorado 80202. All recommendations for nomination received by the Chief Legal Officer and Secretary that satisfy the requirements of our Third Amended and Restated Bylaws (the “Bylaws”) relating to such director nominations will be presented to the Governance and Sustainability Committee for its consideration. Please see the section entitled “Future Shareholder Proposals and Nominations” for information regarding the advance notice provisions applicable to stockholder director nominations set forth in our Bylaws.

On January 12, 2024, the Company, consummated a transaction (the “Argos Transaction”) pursuant to that certain Transaction Agreement, dated as of September 7, 2023 with Argos North America Corp., a Delaware corporation (“Argos USA”), Cementos Argos S.A., a sociedad anónima incorporated in the Republic of Colombia (“Cementos Argos”), Argos SEM, LLC, a Delaware limited liability company (“Argos SEM”), and Valle Cement Investments, Inc., a sociedad anónima incorporated in the Republic of Panama (“Valle Cement” and, together with Argos SEM, the “Argos Parties”), pursuant to which, upon the terms and subject to the conditions set forth therein, the Company acquired all of the outstanding equity interests of Argos USA from the Argos Parties. Upon the consummation of the Argos Transaction, Cementos Argos, Argos SEM, Valle Cement, the Company and, solely for the purpose of specified sections of the Stockholder Agreement, Grupo Argos S.A., a sociedad anónima incorporated in the Republic of Colombia (“Grupo Argos”), entered into a Stockholder Agreement (the “Stockholder Agreement”). Pursuant to the Stockholder Agreement, the Company agreed to the following terms:

Cementos Argos’s right to designate Investor Nominees will cease to exist after Investor Anchor no longer beneficially owns more than 5.0% of the outstanding shares of Class A Common Stock, subject to the terms and conditions of the Stockholder Agreement.

The Board believes that the practices it follows and the guidelines it adopts governing how it operates set an important tone at the top. Among other things the Board:

The Board’s independent directors meet at regularly scheduled executive sessions without management present. Mr. Lance presides at executive sessions of independent directors.

Stockholders and other interested parties may communicate with the Board by writing to the Chief Legal Officer and Secretary, Summit Materials, Inc., 1801 California Street, Suite 3500, Denver, Colorado 80202. Written communications may be addressed to the Chairman of the Board, the chairperson of any of the Audit, Governance and Sustainability, and Human Capital and Compensation Committees, or to the non-management or independent directors as a group. The Chief Legal Officer will forward such communications to the party determined to be appropriate for delivery. Materials that may not be forwarded include junk mail and items that do not pertain to board matters.

The Board exercises direct oversight of strategic risks to the Company. The Audit Committee reviews guidelines and policies governing the process by which senior management assesses and manages the Company’s exposure to risk, including the Company’s major financial and operational risk exposures and the steps management takes to monitor and control such exposures. The Human Capital and Compensation Committee oversees risks relating to the Company’s compensation and human capital management policies and practices. Each committee charged with risk oversight reports to the Board on those matters.

As part of our enterprise risk management function, we have implemented processes to assess, identify and manage the material risks facing the Company, including from cyber threats. Our enterprise risk management function represents our overall risk management system. Our cybersecurity program is built upon recognized security frameworks. We believe that our processes provide us with a comprehensive assessment of potential cyber threats. We conduct regular scans, penetration tests, and vulnerability assessments to identify any potential threats or vulnerabilities in our systems. Our processes to assess, identify and manage the material risks from cyber threats include the risks arising from threats associated with third party service providers, including cloud-based platforms.

We have developed a cyber incident response plan which provides a documented framework for handling security incidents and facilitates coordination across multiple parts of the company. Dedicated members of our information security team, led by our Vice President, Infrastructure, constantly monitor threat intelligence feeds, handles vulnerability management and responds to incidents. In addition, we periodically perform simulations and drills at both a technical and management level.

Internally, we have a security awareness training platform which includes training that reinforces our information technology and security policies, standards and practices, and we require that our employees comply with these policies. The security awareness training platform offers training on how to identify potential cybersecurity risks and protect our resources and information. This training is mandatory for all employees on a periodic basis, and it is supplemented by testing initiatives, including periodic phishing tests.

From time to time, we engage third-party service providers to enhance our risk mitigation efforts. For instance, we have engaged an independent cybersecurity advisor to lead a cybersecurity crisis simulation exercise that has been used by our senior leaders to prepare for a possible cyber crisis. We have also partnered with an industry expert’s incident response group to help deconstruct, manage and mitigate impact from any cyber-related incident. We also purchase insurance to help protect us against the risk of cybersecurity breaches.

To date, we have not had a significant cybersecurity breach or attack that has had a material impact on our business or results of operations.

Our Board of Directors exercises direct oversight of our strategic risks through its oversight of our enterprise risk management function. The Audit Committee of the Board of Directors in particular is responsible for reviewing our IT security controls and the adequacy of our IT security program, compliance and controls with management. As part of such oversight, the Board of Directors, including members of the Audit Committee, receives periodic reports from our Chief Information Officer and Vice President, Infrastructure to assess the primary cybersecurity risks we face. Our Chief Accounting Officer reports directly to the Board of Directors on our company-wide enterprise risk management, which includes an evaluation of cyber risks and threats. Our Chief Information Officer, together with our Vice President, Infrastructure, is responsible for the day-to-day management of our cybersecurity risks.

The Company recognizes that ESG performance is essential to the Company’s long-term success and is an important issue to many of its stockholders. As a result, the Company has implemented the following oversight structure to ensure that the Company’s performance in these areas is monitored appropriately:

 

In light of the importance of environmental and climate change matters to the Company, its shareholders, communities, customers, and employees, and the associated risks the Company faces, the full Board oversees environmental risk factors and receives regular updates from management and the Company’s sustainability team on the Company’s environmental risk profile and key risk mitigating initiatives. The Company’s management functions involved in overseeing and managing climate risk include, but are not limited to, safety, sustainability, finance and internal audit, and legal. Furthermore, each of the Company’s operations has personnel responsible for maintaining compliance with environmental rules and regulations.

In addition, the Company views sustainability as one of its core values and takes its responsibilities to the lands it operates on seriously. The Company has a dedicated Enterprise Risk Committee (the “ERC”) that continually identifies and evaluates environmental and other risks, including the Company’s compliance with environmental rules and regulations. The ERC reports to the full Board. The ERC undertakes regular, systematized review of the environmental risks affecting the Company, including those associated with climate change, that may affect the Company’s businesses and also meets with key leaders in the Company’s operations to identify and address such risks.

The Company has an Environmental Management System (the “EMS”) called eVue to facilitate its ongoing compliance with environmental rules and regulations across many of its operations.

With respect to abnormal weather and other physical effects of climate change, to which, as an outdoor business, the Company is acutely attuned, the Company is seeking to monitor and reduce its contribution to climate change. The Company’s efforts include, but are not limited to, the following:

The Company also continues to comprehensively focus on its energy inputs, CO₂ and other pollutant emissions from its cement plants. From an energy use standpoint, the Company’s alternative fuel usage rate of 38.2% at its cement plants is notable in comparison to the average U.S. industry rate of 25% as reported by the U.S. Environmental Protection Agency in 2008. The Company has made advancements in recent years to (i) accept more diverse materials at its hazardous waste recycling business, (ii) increase its alternative fuel use, and (iii) divert thousands of pounds of waste from landfills. The Company has also developed a long-term strategy to address its CO₂ emissions from its cement operations that are fully discussed in its 2023 sustainability report.

With respect to emissions impacts, in 2021 the Company completed a comprehensive review of the Company’s greenhouse gas (“GHG”) emissions reporting capabilities across all of the Company’s operations for 2020. This assessment focused on Scope 1 and Scope 2 emissions, which represent emissions from direct operations and indirect electricity purchases, respectively. In addition, in 2022, the Company completed a climate physical and transition risk scenario analysis. This high level, qualitative climate risk assessment was informed by the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations and makes reference to third party scenarios, such as the International Energy Agency’s (“IEA”) Sustainability Development-Scenarios.

Now that the Company has implemented the appropriate reporting framework and controls, the Company has been able to establish goals related to emissions and other factors contributing to climate change. As the Company systematizes its approach to mitigating its climate impact, it will continue to pursue and expand upon the beneficial initiatives it is already implementing, such as the use of hybrid vehicles, a robust recycling and waste program, and sourcing alternative fuels to power its operations. In 2023, the Company conducted a company-wide fleet electrification study. This study analyzed the feasibility, costs and benefits of transitioning the fleet to electric vehicles. The findings of this study informed future decision-making around fleet electrification.

The Company also seeks to carry out progressive reclamation whenever possible, and it believes in the protection and restoration of areas of high biodiversity value. In 2014, the Company established a partnership with the Wildlife Habitat Council (“WHC”). We currently have eight sites certified by the WHC, covering approximately 2,300 acres across the country. As of 2023, Summit has been awarded 3 Gold Tier WHC certifications. We remain focused on exploring new, innovative ways in which the Company can meaningfully reduce the environmental impact where we operate and are wholly in support of achieving carbon neutrality by 2050.

Finally, the Company values the communities in which it operates and offers engagement through STEM education programs to enhance local education programs, encourage transparency and outreach.

The Company’s Code of Business Conduct and Ethics applies to all of its officers, directors and employees, including its principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions and is posted on our website. The Company’s Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Business Conduct and Ethics on its website.

The Company’s Securities Trading Policy prohibits directors, officers, and employees (“Summit Materials Personnel”), family members of Summit Materials Personnel and trusts, corporations and other entities controlled by any such persons (collectively, “Insiders”) from trading in options, warrants, puts and calls or similar instruments on the Company’s securities or selling such securities “short” (i.e., selling stock that is not owned and borrowing the shares to make delivery). In addition, Summit Materials Personnel are prohibited under the Securities Trading Policy from engaging in any transactions (including variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of the Company’s equity securities.

 

In 2023, our executive compensation structure consisted of four primary components: base salary; annual cash incentives; long-term equity incentives; and traditional health/welfare plans. We provide substantially no perquisites to our NEOs.

The Human Capital and Compensation Committee believes that a significant majority of both the Chief Executive Officer’s and other NEOs’ pay should be at risk and not guaranteed. Compensation is tied to challenging performance objectives and this is illustrated in our pay mix. A large percentage of total target compensation is at risk through long-term equity awards and annual cash incentive awards. These awards are linked to performance measures that correlate with long-term stockholder value creation. The amounts actually realized by our NEOs with respect to these awards depend on a variety of factors, including the level of attainment of the relevant performance goals and the extent of vesting of performance units and RSUs and the value of our stock when performance units and RSUs vest.

The target values of long-term equity incentive awards used in the charts below differ from the compensation reported in the Summary Compensation Table due to the use of the grant date fair value in the Summary Compensation Table which is calculated in accordance with ASC 718, utilizing the assumptions discussed in our audited consolidated financial statements included in the 2023 Annual Report. The mix of total direct compensation at target for 2023 for our Chief Executive Officer and the average of our other NEOs (excluding Mr. Harris) is shown in the charts below.

 

The Human Capital and Compensation Committee approved the following compensation targets for 2023:

The Human Capital and Compensation Committee determines base salaries for the NEOs and other executives based on a number of factors, including but not limited to, the Human Capital and Compensation Committee’s understanding of executive pay practices, individual performance, Company performance and management recommendations (except with respect to the Chief Executive Officer).

The base salary increases for Ms. Noonan was 4%, Mr. Anderson was 30%, Mr. Gaskill was 10%, and Mr. Ghelani was 3.5%. Ms. Anderson’s and Mr. Harris’ base salaries were unchanged from 2022.

The base salary increases for Ms. Noonan and Mr. Ghelani reflected our standard merit increase. Mr. Gaskill’s base salary was increased in order to reflect a competitive base salary for similar roles. Mr. Anderson’s base salary was increased in connection with his promotion to Executive Vice President and Chief Financial Officer. These base salaries reflect a thorough review of competitive market data, internal alignment of total compensation opportunity, and are consistent with competitive market data provided by the Independent Compensation Consultant.

At the start of each fiscal year, the Board approves annual incentive compensation targets, as a percentage of target base salary, based on competitive market data provided by the Independent Compensation Consultant for our direct competitors and overall peer group, management’s recommendations and other relevant factors. The 2023 annual incentive targets, as a percentage of target base salary, for our NEOs were unchanged from 2022 for Ms. Noonan, Mr. Ghelani, and Mr. Harris. Mr. Anderson whose first day of employment as Executive Vice President and Chief Financial Officer was March 1, 2023 increased from 60% to 75% in connection with his promotion and Ms. Anderson and Mr. Gaskill increased to 65% effective March 26, 2023.

The metrics underlying our annual incentive were selected as the strongest indicators of our success. Adjusted EBITDA and EBITDA Margin are among our most important financial measures, while safety goals ensure that we focus on sustainable performance. The Board has discretion to adjust the target financial metrics to reflect, among other things, mergers, acquisitions, divestitures and other non-routine activity both inside and outside of management’s control during the fiscal year.

For 2023, we modified our performance metrics to include certain Bedrock Milestones that are designed to drive and support the way the Company works by simplifying, standardizing, and automating critical processes to achieve the Elevate Summit Strategy. As a result, in 2023, our performance metrics and weightings were as follows for our NEOs:

The achievement factor for each of the performance metrics was determined by multiplying the weight attributed to each performance metric by the applicable payout percentage for each metric. For Adjusted EBITDA and EBITDA Margin payout percentages were determined by calculating actual achievement against the target amount based on a pre-established scale.

In 2023, each NEO had personal performance goals that were used to determine their 2023 personal performance modifier. The personal performance modifier was applied to their annual cash incentive earned as disclosed above, subject to the individual payout cap of 200% of target opportunity and the overall payout cap on the approved incentive pool funded by AEBITDA, EBITDA Margin, Safety (RIR and SRAR), and Bedrock Milestones. The personal performance modifier was recommended by the CEO for each NEO (other than the CEO) and approved by the Human Capital and Compensation Committee. For 2023, each NEO received a personal modifier of 100%.

In determining the appropriate individual personal performance modifier for an NEO, the CEO and the Human Capital and Compensation Committee, as applicable, reviewed the personal performance results made by each NEO for 2023. These personal performance results related to, among other things, how the NEO could drive the execution of the Company’s Elevate Summit vision and strategy, enhance organizational effectiveness, and enhance the effectiveness of their respective roles within the Company.

Our long-term equity incentives for NEOs in 2023 consisted of a balance of performance units (50%) and RSUs (50%). The Human Capital and Compensation Committee uses competitive market data from our annual total compensation study to assist with targeted long-term incentive value. In addition, the Human Capital and Compensation Committee considers individual performance, potential future contributions to our business, internal equity and management’s recommendations except in the case of the Chief Executive Officer.

The 2023 performance units focus our executives on the long term performance of the Company relative to industry peers and predetermined financial targets. The performance metrics are relative TSR and return on invested capital (“ROIC”).

The peer group for determining our relative TSR is separate and distinct from the peer group used to evaluate and set NEO compensation levels discussed under “—Compensation Decision Process—Role of Peer Companies and Competitive Market Data.” The Relative TSR peer group represents a broader array (typically near 65 to 70 companies) of industry peers competing for stockholders and investors.

ROIC is determined for the performance period by dividing (i) the arithmetic mean of the following for each fiscal year during the performance period: the Company’s Adjusted EBITDA (as reported on the Company’s audited financial statements) for each such fiscal year, reduced by depreciation, depletion and amortization charges for such fiscal year by (ii) the arithmetic mean of the following for each fiscal year during the performance period: the sum of the Company’s total outstanding long-term debt, stockholders’ equity, retained earnings and accumulated other comprehensive income, in each case, as reported on the Company’s audited financial statements for such fiscal year. The Compensation Committee believes that including ROIC as a performance metric incentivizes management to maximize efficiency of capital deployed for the benefit of the Company’s stockholders.

The performance period for the performance units granted in February 2023 began on January 1, 2023 and ends on December 31, 2025 and are earned based on performance against the target below. Beginning in 2021, the performance units are measured using the average three-year performance against one-year ROIC goals. The changes to the design of the performance units were the result of the following:

Earned amounts will be interpolated on a straight line basis for performance between threshold, target, and maximum performance requirements. Financial goals are established based on a review of historical and strategic forward-looking performance criteria and are established at reasonable but stretch performance requirements for threshold, target, and maximum payout opportunities. We will proactively disclose the ROIC performance requirements and performance attainment at the completion of the three-year performance period.

See “—Treatment of Long-Term Incentive Awards Upon Termination or Change in Control” for a description of the potential vesting of the NEOs’ equity awards that may occur in connection with certain termination events and a change in control.

For 2023, the Human Capital and Compensation Committee set the target pay levels and made the grants set forth in the table below.

Performance units were granted to our NEOs then employed by the Company that were subject to 50% Relative TSR performance and 50% ROIC performance for the three-year performance period beginning January 1, 2021 and ending December 31, 2023. The Relative TSR peer group was companies in the Materials Sector and Capital Goods Sector in the S&P 400 Midcap Index. Relative TSR performance was based on dividends plus beginning and ending stock prices based on the trailing 20-day average closing price. During the performance period, our Relative TSR ranked at the 74th percentile resulting in a payout of 195.65% of target. The ROIC performance goal achievement levels were as follows:

As a result of our Relative TSR performance and ROIC performance, the payout was equal to 160.7% of target.

Performance units were granted to our NEOs then employed by the Company that were subject to 50% Relative TSR performance and 50% ROIC performance for the three-year performance periods beginning January 1, 2022 and January 1, 2023. The Relative TSR peer group is companies in the Materials Sector and Capital Goods Sector in the S&P 400 Midcap Index. Relative TSR performance is based on dividends plus beginning and ending stock prices based on the trailing 20-day average closing price. ROIC performance is based upon a three-year average during the performance period.

The ROIC performance goal achievement levels for the performance units granted in 2022 and 2023 were as follows:

We have a tax-qualified contributory retirement plan established to qualify as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). The plan covers all U.S. employees, including our NEOs, who are limited to their annual tax deferred contribution limit as allowed by the Internal Revenue Service (the “IRS”). We provide for matching contributions to the plan, including 100% of pre-tax employee contributions, up to 4% of eligible compensation. Employer contributions vest immediately.

The Company also offers the members of a select group of management or highly compensated employees, including the NEOs, the opportunity to supplement their retirement savings through the Summit Materials Deferred Compensation Plan (the “DCP”). An eligible participant in the DCP may elect to defer up to 50% of such participant’s base salary compensation and up to 100% of such participant’s designated discretionary bonus award compensation and annual incentive award compensation. The DCP also permits Company-provided credits to participants’ accounts, but no such credits are currently being made. Additional information about the DCP is reflected in “—2023 Non-Qualified Deferred Compensation” below.

In alignment with a health and safety culture, the Company offers an Executive Health Program through the Mayo Clinic for the CEO and the executive team, including all the NEOs. The Human Capital and Compensation Committee approved this program in the Fall of 2021 and the use of this benefit is voluntary and not all executives will utilize it annually. The value of the program will not exceed $10,000 annually for each eligible executive.

Our executive compensation program is intended to attract, motivate and retain executive officers and to align the interests of our executive officers with stockholders’ interests.

The Board’s objectives for our program include, but are not limited to, the following:

 

In 2023, the Human Capital and Compensation Committee considered the outcome of the stockholder advisory vote on 2022 executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation program and policies. Our stockholders voted at our 2023 annual meeting, in a nonbinding advisory vote, on the 2021 compensation paid to our NEOs. Our stockholders overwhelmingly (99%) approved the compensation of our NEOs. Based on the level of support, the Human Capital and Compensation Committee determined that stockholders generally support our compensation practices. The Company has determined to hold this advisory, say-on-pay vote annually, consistent with the stated preferences of our stockholders and with the results of our 2023 Annual Meeting of Stockholders where the majority of the votes cast were in favor of an annual advisory vote.

In addition, the Company continued its efforts to reach out to investors for feedback in 2023. During the year, the Company’s investor relations department contacted many of the Company’s largest investors and engaged in conversations with a significant portion of the investor base. The feedback received in these conversations was generally positive in regard to the Company’s compensation programs. The Human Capital and Compensation Committee intends to continue to consider the views of our stockholders when designing, reviewing and administering the Company’s compensation programs and policies.

Changes from the prior year peer group include the removal of Boise Cascade Company (size and industry), Cornerstone Building Brands, Inc. (taken private), and U.S. Concrete Inc. (acquisition). Additions include Advanced Drainage Systems Inc. and MDU Resources Group, Inc. (size, industry, and use the Company as a peer) and Lennox International Inc. (size and industry).

Pay recommendations for our executives, including the NEOs, are made by the Human Capital and Compensation Committee, typically, at its first scheduled meeting of the fiscal year, which normally occurs in February around the same time we report our fourth quarter and year-end financial results for the preceding fiscal year and provide our financial guidance for the upcoming year (the “first meeting”). This timing allows the Human Capital and Compensation Committee to have a complete financial performance picture prior to making compensation decisions.

Decisions with respect to prior year performance, as well as annual equity awards, base salary increases and target performance levels for the current year are typically made at the first meeting. Any equity awards recommended by the Human Capital and Compensation Committee at this meeting are reviewed by the Board and, if approved, are dated on the date approved by the Board either at a subsequent board meeting or via written consent. As such, the Human Capital and Compensation Committee does not time the grants of equity incentives to the release of material non-public information.

The exceptions are grants to executives who are promoted or hired from outside the Company during the year, and discretionary grants made throughout the year for retention and extraordinary purposes. These executives may receive compensation changes or equity grants effective or dated, as applicable, as of the date of their promotion, hiring date, or other Board approval date.

Pay recommendations for our Chief Executive Officer are made by the Human Capital and Compensation Committee, in an executive session without the Chief Executive Officer present, typically, at its first scheduled meeting of the fiscal year. The Human Capital and Compensation Committee also reviews and evaluates Chief Executive Officer performance, and determines performance achievement levels, for the prior fiscal year. The Human Capital and Compensation Committee also reviews competitive compensation data from the peer group companies. The Human Capital and Compensation Committee typically approves, or presents, pay recommendations for the Chief Executive Officer to the Board, excluding the Chief Executive Officer, for approval. If applicable, during executive session, the Board conducts its own review and evaluation of the Chief Executive Officer’s performance taking into consideration the recommendations of the Human Capital and Compensation Committee.

The Company maintains the Omnibus Incentive Plan which allows for grants of equity-based awards in the form of stock options, stock appreciation rights, restricted stock and RSUs, performance units, undivided fractional limited partnership interests in Summit Holdings and other stock-based awards.

We have established stock ownership guidelines for our Chief Executive Officer, officers reporting to the Chief Executive Officer, and directors. The approved guidelines are as follows:

Participants are expected to comply with the ownership requirements within five years of an appointment to a qualified position. Once the ownership requirements have been satisfied, future declines in share price will not affect compliance so long as the participant holds the number of equity interests he or she had at the time he or she achieved the expected ownership level. The Company monitors each participant’s compliance with the guidelines on a quarterly basis, and as of February 16, 2024, the most recent date on which compliance was monitored, all of our executive officers were in compliance with the guidelines.

The following components satisfy the ownership guidelines: Equity interests owned directly or indirectly (e.g., by or with a spouse or held in trust for the individual or one or more family members of the individual), and equity interests, including unvested RSUs, held in qualified or nonqualified savings, profit sharing, or deferred compensation accounts. In 2023, the Company amended its stock ownership guidelines so that the value of in-the-money spread of shares underlying vested but unexercised stock options and value of in-the-money spread of shares underlying vested but unexercised warrants are no longer attributed towards satisfying compliance with the guidelines. At least quarterly, the Human Capital and Compensation Committee monitors participants’ compliance with these guidelines.

Our Board adopted the Summit Materials, Inc. Incentive Compensation Clawback Policy (the “Policy”) pursuant to NYSE rules and because it believes that it is in the best interests of the Company and its stockholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. This policy applies to any current and former “Executive Officer” of the Company, as such term is defined under the Policy. The Policy applies to certain incentive-based compensation (“Incentive Compensation”). Under the Policy, the Company is required to recover any “Erroneously Awarded Compensation” that is “Received” by a “Covered Executive” as such terms are defined in the Policy.

In addition, each of the RSU, stock option and performance unit award agreements under the Omnibus Incentive Plan generally provides that if a restrictive covenant violation occurs or the Company discovers after a termination of employment or services that grounds existed for “cause” (as defined in the Omnibus Incentive Plan) at the time thereof, then the participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten business days of the Company’s request to the participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the participant received upon the sale or other disposition of, or distributions in respect of, the equity award thereunder and any shares issued in respect thereof (minus, in the case of options, the aggregate cost (if any) of the shares). Without limiting the foregoing, all awards are subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with applicable law.

Mss. Anderson and Noonan and Messrs. Gaskill, Ghelani, and Anderson each has a signed offer of employment. The offers of employment and employment agreement provide for base salary subject to annual adjustment by the Board, an annual incentive award, participation in Company-sponsored broad-based and executive benefit plans and such other compensation as may be approved by the Board.

Pursuant to Mr. Anderson’s offer letter dated February 23, 2023, his annual base salary would be $566,800, and he would be eligible to participate in the Company’s Annual Cash Bonus with a target of 75% of his annual base salary and the Company’s Long-Term Equity Incentive with a grant date fair value of 125% of his annual base salary. The offer letter also entitled Mr. Anderson to receive assistance with certain relocation expenses.

On September 8, 2022, Mr. Harris informed the Company of his intention to retire from the Company. In order to provide for an orderly transition of Mr. Harris’ responsibilities and duties, the Company and Mr. Harris entered into a Transition and Consulting Agreement, dated as of September 8, 2022 (the “Transition Agreement”), which was approved by the Human Capital and Compensation Committee of the Board and superseded Mr. Harris’ existing employment agreement and participation notice and agreement under the Company’s Senior Personnel Severance Plan (the “Severance Plan”) (other than as described in the Transition Agreement).

The Transition Agreement provided that Mr. Harris would transition from the role of Executive Vice President and Chief Financial Officer on the date immediately prior to the date on which Mr. Harris’ successor as Chief Financial Officer is appointed and commences services (such date, the “Transition Date”). On the Transition Date, Mr. Harris became a Senior Advisor and served in such non-executive officer position until his employment ended on the later of (x) 30 days following the Transition Date and (y) October 16, 2023 (as applicable, the “Employment Termination Date”). During the period from the Transition Date through the Employment Termination Date, Mr. Harris assisted with the transition of his finance duties, continued performing his other operational responsibilities, assisted with specified strategic goals as the Company continued to execute its Elevate Summit Strategy, and performed such other duties and rendered such other services as were reasonably requested from time to time by his successor or the Company’s Chief Executive Officer (the “CEO”). In return for Mr. Harris’ services from September 8, 2022 through the Employment Termination Date, he (i) continued to receive his current base salary of $631,000 per year through the Employment Termination Date; (ii) was eligible to earn an annual cash performance bonus with a target of 75% of base salary, subject to applicable performance metrics, for fiscal year 2022 and/or 2023 (or the applicable portion thereof, subject to the “Bonus Condition” described below); (iii) was not be eligible to receive new equity awards; (iv) was entitled to participate in Company employee benefit plans; and (v) had his equity awards continue to vest pursuant to their terms. Additionally, Mr. Harris remained eligible to participate in the Executive Severance Plan (the “Severance Plan”) through the Employment Termination Date, after which his participation ended. If Mr. Harris’ employment was terminated prior to the Employment Termination Date, (i) he would only be entitled to payments pursuant to the Severance Plan upon a “Qualifying Change in Control Termination” or “Qualifying Termination” per the terms of the Severance Plan and (ii) his existing equity awards would be treated in accordance with the retirement or forfeiture provisions of the applicable award agreements.

Further, Mr. Harris agreed that he would remain available for consultation from the Employment Termination Date through December 31, 2024 (the “Consulting Period”). During the Consulting Period, Mr. Harris will provide such consulting services as may be reasonably requested from time to time by his successor or the CEO, which services are expected to include (a) advising on and assisting with quarterly, annual close and reporting, (b) assisting with annual budgeting and forecasting, (c) assisting with transitioning his operational responsibilities, (d) advising on the Company’s capital structure and financings, (e) advising on matters related to the Company’s “up-C” structure, including its Tax Receivable Agreement, and (f) performing such other duties and rendering such other services as are reasonably requested from time to time by his successor or the CEO. During the Consulting Period, and provided he signs and does not revoke a release (as described below), Mr. Harris will (i) continue to be paid by the Company at the monthly equivalent of his annual base salary; (ii) receive the fiscal 2023 annual bonus (pro-rated for the portion of such year prior to the Transition Date) based on actual performance (the “Bonus Condition”); (iii) receive cash payments equal to the amount of his monthly COBRA insurance premiums through the earlier of the end of the Consulting Period or when he obtains coverage through a third-party employer; and (iv) be eligible for an annual executive physical exam under the Company’s executive health program. In the event that the consulting services are terminated (A) due to Mr. Harris’ death or disability, (B) by the Company without cause prior to a change in control, or (C) by the Company following a change in control, Mr. Harris (or his beneficiary or estate, as applicable) will receive any remaining payments and benefits as if such termination had not occurred. In the event that the consulting services are terminated by the Company for cause or by Mr. Harris, Mr. Harris will not receive the remaining payments and benefits (other than accrued and unpaid consulting fees).