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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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To elect four nominees as directors;
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To amend the 2006 Omnibus Long-Term Incentive Plan;
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To vote on an advisory basis on the compensation of the executives set forth in this Proxy Statement;
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To vote on a proposal seeking an annual advisory vote on executive compensation;
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To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2011;
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To vote on two shareholder proposals; and
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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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GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
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1
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PROPOSAL 1. ELECTION OF DIRECTORS
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6
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PROPOSAL 2. AMENDMENT OF THE 2006 OMNIBUS LONG-TERM INCENTIVE PLAN
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14
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PROPOSAL 3. ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY ON PAY)
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18
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PROPOSAL 4. ADVISORY VOTE ON THE FREQUENCY OF HOLDING THE SAY ON PAY VOTE ON EXECUTIVE COMPENSATION
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19
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PROPOSAL 5. RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
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20
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PROPOSAL 6. SHAREHOLDER PROPOSAL — MAJORITY VOTE
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20
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PROPOSAL 7. SHAREHOLDER PROPOSAL — DECLASSIFICATION OF THE BOARD
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22
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CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
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25
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Director Independence
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25
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Director Nomination Process
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26
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Board Leadership Structure
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27
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Non-Management Executive Sessions and Presiding Director
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28
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Meetings and Attendance
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28
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Annual Meeting Policy
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28
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Committees of the Board of Directors
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29
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Risk Management
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31
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Compensation Committee Interlocks and Insider Participation
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32
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Transactions with Related Persons
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32
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Shareholder Communication with Our Board of Directors
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32
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Policy on Reporting of Concerns Regarding Accounting Matters
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33
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REPORT OF THE AUDIT COMMITTEE
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34
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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35
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Fees Paid to Independent Registered Public Accounting Firm
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35
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Pre-approval of Services Performed by Independent Registered Public Accounting Firm
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35
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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36
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SECURITY OWNERSHIP OF MANAGEMENT
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37
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EQUITY COMPENSATION PLANS
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38
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COMPENSATION COMMITTEE REPORT
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39
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COMPENSATION DISCUSSION AND ANALYSIS
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39
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EXECUTIVE COMPENSATION
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50
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DIRECTOR COMPENSATION
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63
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GENERAL INFORMATION
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65
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Section 16(a) Beneficial Ownership Reporting Compliance
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65
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Shareholder Proposals For 2012
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65
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APPENDIX A: AMENDED OMNIBUS PLAN
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Table of Contents
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§
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increases shareholder value and lowers our company’s printing and mailing costs
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§
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reduces environmental impact – saves trees and reduces fossil fuel consumption
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§
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allows faster notification of how to access materials in an easily searchable format.
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§
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view our proxy materials for the 2011 Annual Meeting of Shareholders on the Internet; and
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§
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instruct us to send our future proxy materials to you electronically.
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General Information about the Annual Meeting and Voting
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1
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§
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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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§
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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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General Information about the Annual Meeting and Voting
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2
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§
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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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§
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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, bank, 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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§
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election of four nominees as directors;
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§
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amendment of the Omnibus Plan;
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§
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advisory vote on executive compensation;
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§
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proposal regarding frequency of an advisory vote on executive compensation;
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§
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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, 2011;
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§
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a shareholder proposal regarding majority voting in director elections; and
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§
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a shareholder proposal regarding the declassification of the Board.
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§
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a vote FOR the election of each of the director nominees;
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General Information about the Annual Meeting and Voting
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3
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§
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a vote FOR the amendment of the Omnibus Plan;
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§
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a vote FOR approval of the executive compensation set forth in this proxy statement;
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§
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a vote FOR ANNUAL approval of executive compensation;
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§
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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, 2011;
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§
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a vote AGAINST the shareholder proposal regarding majority voting in director elections; and
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§
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a vote AGAINST the shareholder proposal regarding declassification of the Board.
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§
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by giving written notice of the revocation prior to the 2011 Annual Meeting of Shareholders to: Corporate Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242;
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§
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by executing and delivering another valid proxy with a later date;
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§
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by voting by telephone or Internet at a later date; or
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§
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by attending the 2011 Annual Meeting of Shareholders and voting in person by written ballot.
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General Information about the Annual Meeting and Voting
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4
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General Information about the Annual Meeting and Voting
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5
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DONALD M. JAMES
AGE: 62. Director since 1996.
Chairman and Chief Executive Officer of Vulcan since May 1997.
OTHER DIRECTORSHIPS:
The Southern Company; Wells Fargo & Company.
COMMITTEE MEMBERSHIPS:
Executive.
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ANN MCLAUGHLIN KOROLOGOS
AGE: 69. Director since 1990.(*)
Former U.S. Secretary of Labor from 1987 to 1989; 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.
OTHER DIRECTORSHIPS:
AMR Corporation; Harman International Industries, Inc.; Kellogg Company; Host Hotels & Resorts, Inc.
COMMITTEE MEMBERSHIPS:
Governance; Safety, Health and Environmental Affairs.
(*) Ms. Korologos was first elected a director in 1990 and served until May 13, 2004. She was
re-elected a director by our Board of Directors on July 13, 2007.
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Proposal 1
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6
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BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED ABOVE.
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Proposal 1
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7
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PHILIP J. CARROLL, JR.
AGE: 73. 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 until February 2002. President and Chief Executive Officer of Shell Oil Company, Houston, Texas (an energy and petrochemical company), from 1993 until 1998.
OTHER DIRECTORSHIPS:
BAE Systems; Texas Medical Center; Environfuels, LLC.
COMMITTEE MEMBERSHIPS:
Compensation; Executive; Governance.
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PHILLIP W. FARMER
AGE: 72. 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.
COMMITTEE MEMBERSHIPS:
Audit; Executive; Governance.
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H. ALLEN FRANKLIN
AGE: 66. 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.
COMMITTEE MEMBERSHIPS:
Compensation; Executive; Safety, Health and Environmental Affairs.
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Proposal 1
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8
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RICHARD T. O’BRIEN
AGE: 57. 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.
OTHER DIRECTORSHIPS:
Newmont Mining Corporation; Inergy, LP.
COMMITTEE MEMBERSHIPS:
Audit; Safety, Health and Environmental Affairs.
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DONALD B. RICE
AGE: 71. Director since 1986.(*)
Retired; President and Chief Executive Officer of Agensys, Inc., Santa Monica, California (a biotechnology company developing monoclonal antibody therapeutics for cancer) from 1996 until 2010; Former U.S. Secretary of the Air Force from 1989 to 1993.
OTHER DIRECTORSHIPS:
Chevron Corp.
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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DOUGLAS J. MCGREGOR
AGE: 70. 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.
COMMITTEE MEMBERSHIPS:
Audit; Executive; Finance and Pension Funds.
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Proposal 1
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9
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VINCENT J. TROSINO
AGE: 70. 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.
COMMITTEE MEMBERSHIPS:
Audit; Finance and Pension Funds.
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JAMES V. NAPIER
Age: 74. 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.
COMMITTEE MEMBERSHIPS:
Compensation; Finance and Pension Funds.
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Proposal 1
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10
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§
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high ethical standards
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§
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integrity
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§
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independence
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§
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experience
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§
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sound business judgment
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§
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ability to devote the time and effort necessary to fulfill his or her responsibilities to the Board.
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§
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financial and audit committee experience
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§
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knowledge of the company’s industry and related industries
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§
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relevant chief executive officer/president experience
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§
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government or political expertise
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§
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human resources experience
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§
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diversity of race, ethnicity or gender
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§
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Relevant chief executive officer/president experience.
Mr. Carroll served as Chairman and Chief Executive Officer of Fluor Corporation from 1998 to 2002, and President and Chief Executive Officer of Shell Oil Company for 5 years. These experiences provide him with valuable insight into the financial, organizational and operations management issues critical to a large public company.
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§
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Knowledge of the company’s industry and related industries.
Through his experience at Fluor and Shell, Mr. Carroll gained considerable construction, manufacturing and industrial knowledge.
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§
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Relevant chief executive officer/president experience.
Mr. Farmer served as Chief Executive Officer and then Chairman of Harris Corporation from 2000 to 2003. He brings valuable public company leadership and management expertise.
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§
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Financial and audit committee experience.
Mr. Farmer has served on the company’s Audit Committee as well as on the audit committee of another publicly traded company. He also received financial training in the General Electric Financial Management Program.
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Proposal 1
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11
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§
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Relevant chief executive officer/president experience
. Mr. Franklin served as Chairman, President and Chief Executive Officer of Southern Company from 2001 to 2004. As a result, Mr. Franklin provides the Board with valuable business, leadership, organizational and operational management skills as well as governance and compensation expertise.
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§
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Knowledge of the company’s industry and related industries.
At Southern Company, Mr. Franklin gained considerable management expertise with issues facing an industrial company, including governmental and regulatory issues and safety, health and environmental matters, which are important issues in our industry.
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§
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Relevant chief executive officer/president experience.
Mr. James has served as our Chief Executive Officer since 1997. He has extensive leadership, management, operating, financial and legal experience and knowledge of our company.
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§
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Knowledge of the company’s industry and related industries.
Mr. James served as President of our Southern and Gulf Coast Division giving him first-hand operational knowledge of our industry. Mr. James has also assumed leadership positions in aggregates industry trade groups exposing him to the important issues facing the aggregates industry. Mr. James also has experience serving on the boards of a number of other large public companies.
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§
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Government or political experience.
Ms. Korologos served as Secretary of Labor in the Reagan Administration from 1987 to 1989, giving her tremendous insight into regulatory and government affairs, including exceptional knowledge of OSHA, MSHA and EPA rules and regulations.
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§
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Human resources experience.
Ms. Korologos has served on a number of large public company boards where she gained considerable knowledge and experience in human resources and social responsibility issues.
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§
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Diversity of race, ethnicity or gender.
Female with professional experience and governmental service.
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§
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Relevant chief executive officer/president experience.
Mr. McGregor has served as Chief Executive Officer or President for two separate public companies, Burlington Industries and M.A. Hanna. He has over 40 years of management experience in major Fortune 1000 corporations, in several different industries, including mining, providing him with valuable business, leadership and management experience with issues facing large industrial and mining companies.
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§
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Financial and audit committee experience.
Mr. McGregor’s current position as Senior Advisor of Blue Point Capital Partners, a private equity firm, as well as his past management service have given him considerable financial and investment acumen. He serves on the company’s Audit and Finance and Pension Funds Committees.
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§
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Relevant chief executive officer/president experience.
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.
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Proposal 1
|
12
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§
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Relevant chief executive officer/president experience.
Mr. O’Brien has served as either President or Chief Executive Officer of Newmont since 2007, affording him experience in managing issues facing a Fortune 500 public company.
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§
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Knowledge of the company’s industry and related industries.
Most of Mr. O’Brien’s 25 years of management experience have been in the mining and natural resources industries. He also has extensive work experience in the utility and energy industries.
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§
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Financial and audit committee experience.
Mr. O’Brien has 25 years of financial background, including serving as chief financial officer of four different public companies, giving him extensive financial and accounting expertise.
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§
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Relevant chief executive officer/president experience.
Mr. Prokopanko has been Chief Executive Officer of Mosaic since 2007 and provides the Board with valuable business, leadership and management experience.
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§
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Knowledge of the company’s industry and related industries.
Mr. Prokopanko, from his experience at Mosaic, brings considerable knowledge of issues facing a company engaged in the mineral extraction industry.
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§
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Relevant chief executive officer/president experience.
Dr. Rice served as President and Chief Executive Officer of Agensys for 14 years, providing him with valuable business, leadership and management experience.
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§
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Government or political experience.
Dr. Rice served as Secretary of the Air Force from 1989 to 1993 and in other government positions where he gained experience in public policy, governmental affairs, management and strategy.
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§
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Financial and audit committee experience.
Dr. Rice has served as a director of a number of large public companies where he gained significant financial experience.
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§
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Relevant chief executive officer/president experience.
As a result of his tenure as the President and Chief Operating Officer of State Farm from 1998 until 2006, 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 in the company’s evaluation and mitigation of risk areas.
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§
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Financial and audit committee experience.
Mr. Trosino served on the investment committee of the board of State Farm Mutual Insurance Company and served on the audit committee of the Brookings Institute. He brings valuable financial and investment experience to our company’s Audit and Finance and Pension Funds Committees.
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§
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Human resources experience.
As a result of her service as Senior Vice-President in Human Resources at Walgreen and Kellogg, Ms. Wilson-Thompson brings to the Board valuable experience in managing personnel, human resource and organization issues that face a labor – intensive workforce.
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§
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Diversity of race, ethnicity or gender.
African American female with considerable professional experience in labor and employment and other legal areas.
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Proposal 1
|
13
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|
§
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attract and retain qualified employees and directors, and
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|
§
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align their interests with those of our shareholders.
|
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§
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shares not issued as a result of the net exercise of an SAR
|
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§
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shares tendered by the participant or retained by the company as full or partial payment for the purchase of an award or to satisfy tax withholding
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§
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shares repurchased on the open market with proceeds from the payment of the exercise price of an option.
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Proposal 2
|
14
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§
|
Stock Options and Stock Appreciation Rights.
A stock option entitles the holder to purchase a specified number of shares of common stock at a specified exercise price. Stock options, at the discretion of the Compensation Committee, may be nonqualified or incentive stock options (ISOs) that are intended to comply with the requirements of Section 422 of the Internal Revenue Code. The terms on which options, both ISOs and nonqualified stock options, may be exercised will be set by the Compensation Committee; provided, however, (1) that the exercise price for any option may not be less than the fair market value per share of the common stock on the date of grant, and (2) stock options and SOSARs must vest over no less than three years from the date of grant, and their terms may not exceed ten years from the date of grant.
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§
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Restricted Stock, Restricted Stock Units and Performance Share Units.
Restricted stock consists of shares of common stock that are subject to such restrictions as the Compensation Committee in its discretion may impose (including, without limitation, restrictions on transfer, voting rights and dividend rights). Restricted stock units represent unfunded obligations of the company that are denominated in shares of common stock. Restricted stock units may be settled in cash, shares of common stock, other securities, other awards or other property, either automatically or at the election of the holder, as the Compensation Committee shall determine.
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§
|
Other Stock-based Awards.
Other stock awards are awards that are valued in whole or in part, or that are otherwise based on, shares of our company’s common stock. This includes dividend equivalents or amounts which are equivalent to all or a portion of any federal, state, local, domestic, or foreign taxes relating to an award, which may be payable in shares, cash, other securities, or any other form of property as the Compensation Committee may determine. Dividend equivalents entitle the holder of an award to receive payments equivalent to dividends with respect to the number of shares of common stock or common stock equivalents comprising an award.
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Proposal 2
|
15
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|
§
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increase the number of shares of common stock available for awards under the Omnibus Plan or the maximum number of shares of common stock that can be the subject of award to any individual participant in any year
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§
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modify the eligibility criteria for participation in the Omnibus Plan
|
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§
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permit stock options or SOSARs to be granted with a grant, purchase or exercise price that is less than the fair market value per share of our common stock on the date of grant
|
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§
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amend the Omnibus Plan to permit the repricing of stock options or SOSARs
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§
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require the approval of the shareholders under any applicable laws, regulation or rule.
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Proposal 2
|
16
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT OF THE OMNIBUS PLAN.
|
Proposal 2
|
17
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§
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Conducted a market study of compensation practices among our comparison companies
|
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§
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Froze the base salary of the CEO for fiscal years 2009, 2010 and 2011
|
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§
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Paid no cash bonuses to the CEO and other NEOs for fiscal years 2008, 2009 and 2010
|
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§
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Made grants of long-term equity opportunities at approximately the median market levels in 2010 and 2011, in a continuing effort to provide competitive incentive opportunities while assuring alignment with shareholder interests over the long-term
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§
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Continued the policy of providing only limited perquisites
|
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§
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Utilized tally sheets in analyzing and determining total compensation paid to the CEO and other NEOs
|
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§
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Maintained and monitored stock ownership guidelines for management
|
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§
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Eliminated the use of common performance measures between the short-term and long-term incentive programs
|
|
§
|
Adjusted the mix of 2011 long-term awards to provide more emphasis on performance-based pay by granting approximately 78% of the target value of long-term grants in the form of performance share units (PSUs) and 22% of the value in the form of stock only stock appreciation rights (SOSARs). Previous grants were of approximately equal value between PSUs and SOSARs.
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Proposal 3
|
18
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR HOLDING THE SAY ON PAY VOTE EVERY YEAR.
|
Proposal 4
|
19
|
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 5 and 6
|
20
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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:
Vulcan Materials’ Board of Directors should establish a majority vote standard in director elections in order to provide shareholders a meaningful role in these important elections. The proposed majority vote standard requires that a director nominee receive a majority of the votes cast in an election in order to be formally elected. Under the company’s current plurality standard, a board nominee 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. We believe that a majority vote standard in board elections establishes a challenging vote standard for board nominees, enhances board accountability, and improves the performance of boards and individual directors.
Over the past five years, a significant majority of companies in the S&P 500 Index has adopted a majority vote standard in company bylaws, articles of incorporation, or charter. These companies have also adopted a director resignation policy that establishes a board-centered post-election process to determine the status of any director nominee that is not elected. This dramatic move to a majority vote standard is in direct response to strong shareholder demand for a meaningful role in director elections. However, Vulcan Materials 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.
Vulcan Materials’ Board of Directors has not acted to establish a majority vote standard, retaining its plurality vote standard. The Board should take this critical first step in establishing a meaningful majority vote standard. With a majority vote standard in place, the Board can then act to adapt its director resignation policy to address the status of unelected directors. A majority vote standard combined with a post-election director resignation policy would establish a meaningful right for shareholders to elect directors at Vulcan Materials, while reserving for the Board an important post-election role in determining the continued status of an unelected director. We urge the Board to join the mainstream of major U.S. companies and establish a majority vote standard.
|
Proposal 6
|
21
|
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 THIS SHAREHOLDER PROPOSAL.
|
Proposal 7
|
22
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RESOLUTION:
That the shareholders of VULCAN MATERIALS COMPANY request its Board of Directors to take the steps necessary to eliminate classification of terms of the Board of Directors to require that
all
Directors stand for election annually. The Board declassification shall be completed in a manner that does not affect the unexpired terms of the previously-elected Directors.
STATEMENT:
The current practice of electing only one-third of the directors for three-year terms is not in the best interest of the corporation or its shareholders. Eliminating this staggered system increases accountability and gives shareholders the opportunity to express their views on the performance of each director annually. The proponent believes the election of directors is the strongest way that shareholders influence the direction of any corporation and our corporation should be no exception.
As a professional investor, the proponent has introduced the proposal at several corporations which have adopted it. In others, opposed by the board or management, it has received votes in excess of 70% and is likely to be reconsidered favorably.
The proponent believes that increased accountability must be given our shareholders whose capital has been entrusted in the form of share investments especially during these times of great economic challenge.
Arthur Levitt, former Chairman of The Securities and Exchange Commission said, “In my view, it’s best for the investor if the entire board is elected once a year. Without annual election of each director, shareholders have far less control over who represents them.”
While management may argue that directors need and deserve continuity, management should become aware that continuity and tenure may be best assured when their performance as directors is exemplary and is deemed beneficial to the best interests of the corporation and its shareholders.
The proponent regards as unfounded the concern expressed by some that annual election of all directors could leave companies without experienced directors in the event that all incumbents are voted out by shareholders.
In the unlikely event that shareholders do vote to replace all directors, such a decision would express dissatisfaction with the incumbent directors and reflect the need for change.
If you agree that shareholders may benefit from greater accountability afforded by annual election of
all
directors, please vote “FOR” this proposal.
|
Proposal 7
|
23
|
The proponent states that several companies now elect directors annually because of his efforts. Each of those companies made the decision to conduct annual director elections based on their own circumstances. The Board does not believe that there is a single formula for corporate governance. A “one size fits all” view does not take into consideration differences among companies, their management and the industries and markets in which they operate. After careful consideration of the Company’s circumstances, the Board believes that a classified board structure remains in the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER PROPOSAL.
|
Proposal 7
|
24
|
DIRECTOR INDEPENDENCE CRITERIA
|
(a) has not been an employee of our company, or any of its consolidated subsidiaries, during the last three years;
|
(b) 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;
|
(c) has not during the last three years personally performed legal or professional services for our company in an amount more than $10,000;
|
(d) 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;
|
Corporate Governance
|
25
|
(e) 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;
|
(f) 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;
|
(g) has no immediate family member who is an executive officer of our company, or any of its consolidated subsidiaries;
|
(h) has no immediate family member meeting any of the criteria set forth in (b)–(f); except with respect to item (d) 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
|
(i) 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.
|
|
§
|
The name and address of the shareholder who intends to make the nomination(s) and of the person or persons to be nominated;
|
|
§
|
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;
|
|
§
|
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;
|
|
§
|
Such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed under the proxy rules of the SEC (whether or not such rules are
|
Corporate Governance
|
26
|
|
|
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
|
|
§
|
The written consent of each nominee to serve as a director if so elected.
|
|
§
|
Mr. James, with over 18 years experience with our company, including 14 years of experience as Chief Executive Officer, has lead the company through various economic cycles, has the knowledge, expertise and experience to understand the opportunities and challenges facing our company and is most capable of identifying strategic priorities and opportunities. He also has the leadership and management skills to promote and execute our values and strategy, particularly given the economic environment;
|
|
§
|
Consolidating the positions allows Mr. James to lead board discussions regarding our business and strategy, and provides decisive and effective leadership for our company eliminating the potential for confusion;
|
|
§
|
Combining the positions creates a firm link between management and the Board that promotes the development and implementation of our corporate strategy; and
|
|
§
|
Consolidating the positions allows timely communication with our Board on critical business matters.
|
Corporate Governance
|
27
|
Corporate Governance
|
28
|
DIRECTOR
|
EXECUTIVE COMMITTEE
|
AUDIT COMMITTEE
|
COMPENSATION COMMITTEE
|
GOVERNANCE COMMITTEE
|
SAFETY, HEALTH AND ENVIRONMENTAL AFFAIRS COMMITTEE
|
FINANCE AND PENSION FUNDS COMMITTEE
|
Philip J. Carroll, Jr.
|
•
|
•
|
•
|
|||
Phillip W. Farmer
|
•
|
•
|
•
|
|||
H. Allen Franklin
|
•
|
•
|
•
|
|||
Donald M. James
|
•
|
|||||
Ann McLaughlin Korologos
|
•
|
•
|
||||
Douglas J. McGregor
|
•
|
•
|
•
|
|||
James V. Napier
|
•
|
•
|
||||
Richard T. O’Brien
|
•
|
•
|
||||
James T. Prokopanko
|
•
|
•
|
||||
Donald B. Rice
|
•
|
•
|
•
|
|||
Vincent J. Trosino
|
•
|
•
|
||||
Kathleen Wilson-Thompson
|
•
|
•
|
|
§
|
Hiring, evaluating and, when appropriate, replacing the independent registered public accounting firm, whose duty it is to audit our books and accounts and our internal control over financial reporting 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 preapproving 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;
|
Corporate Governance
|
29
|
|
§
|
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.
|
|
§
|
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.
|
|
§
|
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.
|
Corporate Governance
|
30
|
Corporate Governance
|
31
|
|
§
|
Long-standing relationship between the firm and our company going back over 50 years
|
|
§
|
Mr. Carroll’s son joined the firm in 1988 and was made partner before his father joined the Board in 1999
|
|
§
|
Mr. Carroll’s son does not work directly on any Vulcan matters. His only remuneration from Vulcan is indirectly from his earnings as a partner of the firm
|
|
§
|
Vulcan's payments to the firm are less than 1% of the firm’s total revenues
|
|
§
|
Vulcan's payments to the firm are less than 5% of what we pay in total for our legal fees
|
|
§
|
Mr. Carroll meets all of the director independence standards set both by the SEC and the NYSE
|
|
§
|
Mr. Carroll is a highly respected Board member and he brings invaluable corporate experience as the past President of Shell Oil Company and CEO of Fluor Corp.
|
|
§
|
There is no actual conflict regarding Mr. Carroll's service on the Board and the selection of firms for legal work since the Board is not involved in the selection process and we would continue to use the firm’s services even absent the relationship
|
Corporate Governance
|
32
|
Corporate Governance
|
33
|
2010
|
2009
|
|
Audit Fees
(1)
|
$ 2,762,204
|
$5,033,618
|
Audit Related Fees
(2)
|
287,818
|
333,780
|
Tax Fees
(3)
|
108,500
|
123,003
|
All Other Fees
|
0
|
0
|
Total
|
$ 3,158,522
|
$5,490,401
|
(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)
|
Consists of fees for the audits of our employee benefit plans.
|
(3)
|
Consists of fees for services related to state tax audits, credits and refund claims.
|
Name and Address of
Beneficial Owner
|
Amount and Nature of
Beneficial Ownership
(# of shares)
|
Percent of
Class
|
State Farm Mutual Automobile Insurance
Company and Affiliates
One State Farm Plaza
Bloomington, Illinois 61710
|
12,069,409
(1)
|
9.4%
|
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, Maryland 21202
|
11,214,792
(2)
|
8.7%
|
PRIMECAP Management Company
255 South Lake Avenue # 400
Pasadena, California 91101
|
7,869,789
(3)
|
6.1%
|
(1)
|
Based on information contained in a Schedule 13G, dated January 20, 2011, filed with the SEC. According to the Schedule 13G, the listed entity has sole voting and dispositive power over 8,373,600 shares.
|
(2)
|
Based on information contained in a Schedule 13G, dated February 14, 2011, filed with the SEC. These securities are owned by various individuals and institutional investors which T. Rowe Price Associates, Inc. (Price Associates) serves as an investment adviser with power to direct investments and/or sole power to vote the securities. For the purposes of reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.
|
(3)
|
Based on information contained in a Schedule 13G, dated February 4, 2011, filed with the SEC.
|
Security Ownership of Certain Beneficial Owners and Management
|
36
|
Name of Beneficial Owner Amount and Nature of Beneficial Ownership (# of shares) |
|||||||
Non-employee Directors
(1)
|
Shares Owned
Directly or Indirectly
|
Restricted
Shares
|
Phantom
Shares Held
Pursuant to Plans
|
Total
|
Percent
of Class
|
||
Philip J. Carroll, Jr.
|
6,752
|
0
|
28,600
|
35,352
|
*
|
||
Phillip W. Farmer
|
6,120
(2)
|
0
|
28,504
|
34,624
|
*
|
||
H. Allen Franklin
|
0
|
4,000
|
25,358
|
29,358
|
*
|
||
Ann McLaughlin Korologos
|
3,896
|
0
|
25,169
|
29,065
|
*
|
||
Douglas J. McGregor
|
7,795
(3)
|
0
|
65,148
|
72,943
|
*
|
||
James V. Napier
|
8,334
|
0
|
20,457
|
28,791
|
*
|
||
Richard T. O’Brien
|
0
|
0
|
3,842
|
3,842
|
*
|
||
James T. Prokopanko
|
0
|
0
|
1,825
|
1,825
|
*
|
||
Donald B. Rice
|
48,395
|
0
|
19,286
|
67,681
|
*
|
||
Vincent J. Trosino
|
10,200
|
0
|
19,379
|
29,579
|
*
|
||
Kathleen Wilson-Thompson
|
0
|
0
|
1,825
|
1,825
|
*
|
||
Chief Executive Officer and other NEOs
(4)
|
Shares Owned
Directly or Indirectly
|
Exercisable
Options
|
Thrift
Plan
|
Deferred
Stock Units
|
Total
|
Percent
of Class
|
|
Don James
|
186,984
|
1,292,375
|
30,309
|
181,011
|
1,690,679
|
1.3%
|
|
Dan Sansone
|
27,311
|
201,302
|
21,521
|
23,240
|
273,374
|
*
|
|
Danny Shepherd
|
20,237
|
119,908
|
8,646
|
4,133
|
152,924
|
*
|
|
Ron McAbee
|
8,526
|
157,708
|
22,701
|
11,514
|
200,449
|
*
|
|
Bob Wason
|
34,077
|
113,859
|
8,306
|
9,014
|
165,256
|
*
|
|
All Directors and Executive Officers as a group (16 persons
)
|
2,945,443
|
2.3%
|
(1)
|
Beneficial ownership for the non-employee 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 Non-employee Directors, phantom shares settled in stock accrued under the Directors’ Deferred Compensation Plan,
and deferred stock units awarded under the Deferred Stock Plan for Non-employee Directors and the 2006 Omnibus
Long-Term Incentive Plan.
|
(2)
|
All shares are 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)
|
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, 2012, shares credited to the executives’ accounts under our Thrift Plan
for Salaried Employees and deferred stock units.
|
Security Ownership of Certain Beneficial Owners and Management
|
37
|
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
|
4,076,736
|
$53.36
|
|
Performance Share Units
|
0
|
||
Deferred Stock Units
|
120,237
|
||
Total 1996 Long-Term Incentive Plan
|
4,196,973
|
0
(2)
|
|
Deferred Stock Plan for Non-employee Directors
(2)
|
8,369
|
0
(2)
|
|
Restricted Stock Plan for Non-employee Directors
(2)
|
14,197
|
0
(2)
|
|
2000 Florida Rock Industries Amended
& Restated Stock Plan
(3)
|
|
||
Stock Only Stock Appreciation Rights
|
143,573
|
$45.72
|
|
Performance Share Units
|
68,750
|
||
Total 2000 Florida Rock Industries Stock Plan
|
212,323
|
0
(3)
|
|
2006 Omnibus Long-Term Incentive Plan
|
|||
Stock-Only Stock Appreciation Rights
|
2,258,984
|
$61.36
|
|
Performance Share Units
|
527,518
|
||
Restricted Stock Units
|
1,000
|
||
Deferred Stock Units for Non-employee Directors
|
69,328
|
||
Total 2006 Omnibus Plan
|
2,856,830
|
994,946
|
|
Equity compensation plans not
approved by security holders
|
NONE
|
NONE
|
|
Total of All Plans
|
7,288,692
|
994,946
|
(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 the 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, the Deferred Stock Plan for Non-employee Directors, the Restricted Stock Plan for Non-employee 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 shareholders of Florida Rock Industries, Inc. Shares available have been adjusted for the merger transaction. Units were only available for granting of awards until September 30, 2010. Future grants will not be made under this plan. The plan will be used only for the administration and payment of grants that are outstanding.
|
§
|
individual performance
|
§
|
recent and long-term company performance
|
§
|
competitive or market levels of performance
|
Compensation Discussion and Analysis
|
39
|
§
|
keeping our salaries and benefits competitive with industrial companies of similar size, enabling us 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 measurable performance and by increased use of PSUs over SOSARs, 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 to align the interests of our management and shareholders.
|
§
|
annually review and approve corporate goals and objectives relevant to the compensation of our Chief Executive Officer and then
|
Compensation Discussion and Analysis
|
40
|
§
|
determine and set base salary and awards made to NEOs 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 NEOs; and
|
§
|
make regular reports to the Board, including an annual report, explaining its determination of compensation levels for the Chief Executive Officer and the other NEOs.
|
Don James
|
Chairman and Chief Executive Officer
|
Dan Sansone
|
Executive Vice President and Chief Financial Officer
(1)
|
Danny Shepherd
|
Executive Vice President, Construction Materials
(2)
|
Ron McAbee
|
Senior Vice President, Construction Materials Group-West
(3)
|
Bob Wason
|
Senior Vice President and General Counsel
|
|
(1)
During 2010, Mr. Sansone held the title Senior Vice President and Chief Financial Officer. He was promoted as of February 1, 2011.
|
|
(2)
During 2010, Mr. Shepherd held the title Senior Vice President Construction Materials Group – East. He was promoted as of February 1, 2011.
|
(3)
|
Mr. McAbee retired effective as of February 1, 2011.
|
§
|
incentives realized in prior years or wealth accumulation through realized and unrealized equity gains and post-employment payments; or
|
§
|
potential payments to the NEOs that are contingent upon the occurrence of a corporate change-in-control (CIC).
|
§
|
conducts periodic comprehensive studies of executive compensation and makes recommendations regarding the components of executive compensation, including target levels for 1) base salary, 2) annual bonus, 3) long-term equity-based incentive awards, and 4) change-in-control protections;
|
§
|
advises the Compensation 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 compensation and makes recommendations to the Board of Directors.
|
Compensation Discussion and Analysis
|
41
|
§
|
provided the Compensation Committee with observations on the relative competitiveness of our compensation programs with comparable companies (based upon its review of the various components of market data set forth above)
|
§
|
provided its recommendations with respect to Board compensation, as well as its advice on regulatory compliance and development of new programs
|
§
|
conducted an executive market study to ensure that our compensation programs are reasonable and competitive.
|
§
|
individual performance;
|
§
|
recent and long-term company performance; and
|
§
|
competitive or market levels of performance.
|
§
Arch Coal Inc.
|
§
Jacobs Engineering Group Inc.
|
§
Peabody Energy Corporation
|
§
CONSOL Energy Inc.
|
§
Louisiana-Pacific Corporation
|
§
Shaw Group Inc.
|
§
Cummins Inc.
|
§
Martin Marietta Materials, Inc.
|
§
Sherwin-Williams Company
|
§
Danaher Corporation
|
§
Masco Corporation
|
§
Stanley Black & Decker, Inc.
|
§
Fluor Company
|
§
Massey Energy Company
|
§
Temple-Inland Inc.
|
§
Fortune Brands, Inc.
|
§
MeadWestvaco Corporation
|
§
Texas Industries, Inc.
|
§
Freeport-McMoran Copper & Gold
|
§
Newmont Mining Corporation
|
§
U.S. Steel Corporation
|
§
Granite Construction Inc.
|
§
Nucor Corporation
|
§
Weyerhauser Company
|
§
International Paper Company
|
§
PPG Industries, Inc.
|
Compensation Discussion and Analysis
|
42
|
§
|
Base salary
|
§
|
Short-term performance-based bonus
|
§
|
Long-term equity-based incentives
|
§
|
Benefits and perquisites
|
§
|
Change-in-control protections
|
§
|
Retirement and pension benefits.
|
§
|
The NEO’s
pattern of achievement
for performance relative to the pre-established goals and objectives in his area(s) of responsibility
|
§
|
The overall
managerial effectiveness
for planning, personnel development, communications, regulatory compliance and similar matters;
|
§
|
Competitive
pay levels for similarly situated executives
set forth in the compensation surveys and our comparison group, set forth in the table on page 41.
|
§
|
Marketplace
trends in salary increases
; and
|
§
|
The NEO’s
potential for future contributions to the organization
, retention risks, fairness in view of our overall salary increases, and the ability of our company to pay the increased salaries.
|
Compensation Discussion and Analysis
|
43
|
Compensation Discussion and Analysis
|
44
|
Amount of “Target Bonus” Expressed as a Percentage of Base Salary
|
Maximum Bonus
Per EIP
(1)
($)
|
Bonus Paid for
2010 Performance
($)
|
|
Don James
|
100%
|
5,000,000
|
0
|
Dan Sansone
|
70%
|
1,442,000
|
0
|
Danny Shepherd
|
65%
|
1,082,000
|
0
|
Ron McAbee
|
65%
|
1,082,000
|
0
|
Bob Wason
|
55%
|
860,000
|
0
|
(1)
|
Per EIP, no payment may exceed $7,000,000 in any year to any participant. The amounts in this column equal the lesser of $7,000,000 or 4 times the target bonus
|
§
|
help executive officers accumulate shares of our stock to ensure their interests are aligned with our shareholders’ interests
|
§
|
motivate financial performance over the long-term
|
§
|
recognize and reward superior financial performance of our company
|
§
|
provide a retention element to our compensation program
|
§
|
promote compliance with the stock ownership guidelines for executives.
|
Standard Long-Term Award Expressed as a
Percentage of Base Salary Midpoint for 2010 |
|
Don James
|
225%
|
Dan Sansone
|
100%
|
Danny Shepherd
|
100%
|
Ron McAbee
|
100%
|
Bob Wason
|
75%
|
§
|
stock options
|
§
|
stock only stock appreciation rights (SOSARs)
|
§
|
performance share units (PSUs)
|
§
|
restricted stock
|
Compensation Discussion and Analysis
|
45
|
|
§
|
3-year average EP, which was approximately 61.7% of target and
|
|
§
|
3-year average total shareholder return performance, which was at the 46th percentile relative to the S&P 500 Index.
|
Company 3-Year Average Economic
Profit as a Percent of Target |
Company 3-Year Average Total Shareholder Return Percentile Rank
Relative to the S & P 500 Index
|
||
Percent of Target
|
25
th
or Less
Percentile Rank
|
50
th
Percentile Rank
|
75
th
or Greater
Percentile Rank |
PERCENTAGE OF AWARD PAYABLE
|
|||
175% or greater
|
100%
|
150%
|
200%
|
150%
|
75%
|
125%
|
175%
|
100%
|
50%
|
100%
|
150%
|
50%
|
25%
|
75%
|
125%
|
25% or less
|
0%
|
50%
|
100%
|
Compensation Discussion and Analysis
|
46
|
§
|
performance targets for PSU grants and payments.
Establishing incentive compensation goals and granting equity-based awards have not been timed with the release of non-public material information.
|
§
|
goals and awards.
Typically, additional equity-based incentive grants have been made to executive officers at other times during the year only upon hire or promotion. All such equity-based awards are priced on the date of grant.
|
Name
|
Multiple of Base Salary
Ownership Guidelines
|
Don James
|
7x
|
Dan Sansone
|
3x
|
Danny Shepherd
|
3x
|
Ron McAbee
|
3x
|
Bob Wason
|
3x
|
§
|
direct holdings;
|
§
|
stock-based qualified retirement plan holdings;
|
§
|
stock-based holdings in the deferred compensation and nonqualified supplemental benefit plans; and
|
§
|
indirect holdings, such as shares owned by a family member, shares held in trust for the benefit of the NEO or a family member, or shares held in trust for which such officer is trustee.
|
|
§
|
medical and dental benefits
|
|
§
|
life, accidental death and disability insurance
|
|
§
|
pension and savings plans.
|
Compensation Discussion and Analysis
|
47
|
BENEFIT
|
BACKGROUND
|
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 and the 401(k) Plans 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 retirement benefit. After February 2011, no additional service years will be credited under his SERA.
|
§
|
performance of the business unit or function for which the executive officer is responsible
|
§
|
safety, health and environmental performance
|
§
|
effective management of our company’s natural resources
|
§
|
adherence to our company’s mission and values
|
Compensation Discussion and Analysis
|
48
|
§
|
base salary
|
§
|
annual performance-based bonus
|
§
|
long-term equity-based incentive awards.
|
Compensation Discussion and Analysis
|
49
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
(1)
($)
|
Option Awards
(1)
($)
|
Non-Equity Incentive Plan Compensation
(2)
($)
|
Change in Pension Value And Nonqualified Deferred Compensation Earnings
(3)
($)
|
All Other Compensation
(4)
($)
|
Total
($)
|
Donald M. James
Chairman and
Chief Executive Officer
|
2010
|
1,250,004
|
0
|
1,305,806
|
1,460,460
|
0
|
3,889,276
|
167,346
|
8,072,892
|
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
|
|
Daniel F. Sansone
Executive Vice President and
Chief Financial Officer
|
2010
|
512,504
|
0
|
263,420
|
303,660
|
0
|
548,007
|
33,445
|
1,661,036
|
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
|
|
Danny R. Shepherd
Executive Vice President,
Construction Materials
|
2010
|
413,338
|
0
|
243,250
|
281,970
|
0
|
297,065
|
30,490
|
1,266,113
|
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
|
|
Ronald G. McAbee
(5)
Senior Vice President, Construction Materials — West
|
2010
|
413,338
|
0
|
243,250
|
281,970
|
0
|
237,718
|
28,136
|
1,204,412
|
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
|
|
Robert A. Wason IV
Senior Vice President,
General Counsel
|
2010
|
389,174
|
0
|
156,116
|
179,545
|
0
|
399,882
|
28,126
|
1,152,843
|
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
|
(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 Executive Incentive Plan (EIP) were made in 2011, 2010 or 2009 for the previous year’s 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 balances. The year over year change in pension value is attributable to three primary factors which are change in accrued benefit, aging (one year closer to retirement) and actuarial assumptions. With respect to Mr. James, in 2010, the amount due to the increase in his accrued benefit is $1,561,000, to aging is $1,364,000 and to changes in actuarial assumptions (principally the discount rate) is $964,000.
|
(4)
|
Includes qualified defined contribution plans contributions, company-paid life insurance premiums, deferred stock unit dividend equivalents granted in 2010 and personal use of company automobile, as set forth in the following table. One of the NEOs used the company aircraft once for personal use in 2010.
|
(5)
|
Mr. McAbee retired from our company effective on February 1, 2011.
|
Executive Compensation
|
50
|
Name
|
Non-Qualified
Thrift Plan
Contributions
($)
|
Qualified
Thrift Plan
Contribution
($)
|
Company
Paid Life
Insurance
Premiums
($)
|
DSU
Dividend
Equivalents
($)
|
Personal
Use of
Company
Automobile
($)
|
Personal
Use of
Company
Aircraft
($)
|
Total
($)
|
Don James
|
40,200
|
9,800
|
1,440
|
111,151
|
4,755
|
0
|
167,346
|
Dan Sansone
|
10,700
|
9,800
|
1,440
|
11,505
|
0
|
0
|
33,445
|
Danny Shepherd
|
6,734
|
9,800
|
1,440
|
10,833
|
1,233
|
450
|
30,490
|
Ron McAbee
|
6,734
|
9,800
|
1,440
|
10,162
|
0
|
0
|
28,136
|
Bob Wason
|
5,767
|
9,800
|
1,440
|
10,162
|
957
|
0
|
28,126
|
Name
|
Grant Date
|
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 Units
(#)
|
All Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise or Base Price of Option Awards
(1)
($/Sh)
|
Grant Date Fair Value of Stock and Option Awards
(2)
($)
|
||||
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||
Don James
|
2/11/2010
|
0
|
1,250,000
|
5,000,000
|
0
|
32,370
|
64,740
|
0
|
121,200
|
43.05
|
2,766,266
|
Dan Sansone
|
2/11/2010
|
0
|
360,500
|
1,442,000
|
0
|
6,530
|
13,060
|
0
|
25,200
|
43.05
|
567,080
|
Danny Shepherd
|
2/11/2010
|
0
|
270,400
|
1,082,000
|
0
|
6,030
|
12,060
|
0
|
23,400
|
43.05
|
525,220
|
Ron McAbee
|
2/11/2010
|
0
|
270,400
|
1,082,000
|
0
|
6,030
|
12,060
|
0
|
23,400
|
43.05
|
525,220
|
Bob Wason
|
2/11/2010
|
0
|
215,050
|
860,000
|
0
|
3,870
|
7,740
|
0
|
14,900
|
43.05
|
335,611
|
(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 $12.05 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 27.58% (derived using the daily closing stock prices over a period consistent with the expected term, for the seven and one-half years ending12/31/2007, the past two years of extremely high volatility is not representative of management’s expectation of future volatility), a dividend yield of 2.00%, an interest rate of 3.15% (the rate of the U.S. constant maturity rates, as published on the federal reserve.gov site, for a period approximating the expected term) and an expected time of exercise of seven and one-half years from grant date. The grant date fair value of $40.34 for the PSUs was calculated using a Monte Carlo simulation model. Fair value was calculated on the standard grant.
|
Executive Compensation
|
51
|
Name
|
OPTION AWARDS
|
STOCK AWARDS
|
||
Number of Shares
Acquired on Exercise (#) |
Value Realized on
Exercise (1)
($)
|
Number of Shares
Acquired on Vesting (2)
(#)
|
Value Realized on
Vesting (3)
($)
|
|
Don James
|
126,650
|
324,520
|
36,540
|
1,570,631
|
Dan Sansone
|
4,500
|
11,034
|
4,836
|
207,704
|
Danny Shepherd
|
0
|
0
|
3,704
|
159,022
|
Ron McAbee
|
19,000
|
92,112
|
4,353
|
186,964
|
Bob Wason
|
0
|
0
|
3,468
|
149,060
|
(1)
|
Calculated by multiplying the difference between the fair market value of our common stock on the date of exercise
and the option exercise price by the number of options exercised.
|
(2)
|
Represents the Deferred Stock Units (DSUs) and the Performance Share Units (PSUs). Both DSUs and PSUs were paid 100% in stock.
|
(3)
|
Calculated by multiplying the number of units vested by the high/low average price of our common stock on the
vesting date for DSUs and by the closing price of our common stock for PSUs.
|
NONQUALIFIED DEFERRED COMPENSATION PLAN
|
|||||
Name
|
Executive Contributions in Last Fiscal Year
($)
|
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
|
1,696,288
|
0
|
(732,360)
|
0
|
9,360,417
|
Dan Sansone
|
107,568
|
0
|
81,285
|
(132,644)
|
2,257,177
|
Danny Shepherd
|
71,010
|
0
|
(45,897)
|
0
|
622,015
|
Ron McAbee
|
100,471
|
0
|
(6,458)
|
(115,971)
|
591,665
|
Bob Wason
|
97,805
|
0
|
123,403
|
0
|
1,837,302
|
(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.
|
Executive Compensation
|
53
|
Name
|
OPTION AWARDS
|
STOCK AWARDS
|
||||||||
Option
Grant
Date
|
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
|
2/9/2001
|
73,350
|
0
|
44.9000
|
2/9/2011
|
7,510
(4)
|
333,144
|
8,137
(8)
|
360,957
|
|
2/7/2002
|
200,000
|
0
|
45.9500
|
2/7/2012
|
14,616
(5)
|
648,366
|
59,780
(9)
|
2,651,841
|
||
2/13/2003
|
145,000
|
0
|
31.4650
|
2/13/2013
|
30,524
(6)
|
1,354,045
|
64,740
(10)
|
2,871,866
|
||
2/12/2004
|
130,000
|
0
|
46.7600
|
2/12/2014
|
||||||
2/10/2005
|
146,000
|
0
|
57.0950
|
2/10/2015
|
||||||
12/8/2005
|
118,000
|
0
|
68.6300
|
12/8/2015
|
||||||
1/24/2006
|
169,800
|
0
|
69.3100
|
1/24/2016
|
||||||
2/8/2007
|
111,250
|
0
|
109.200
|
2/8/2017
|
||||||
2/7/2008
|
50,000
(1)
|
25,000
|
70.6900
|
2/7/2018
|
||||||
2/12/2009
|
78,462
(2)
|
156,928
|
47.4700
|
2/12/2019
|
||||||
2/11/2010
|
0
(3)
|
121,200
|
43.0500
|
2/11/2020
|
||||||
Dan Sansone
|
2/9/2001
|
14,500
|
0
|
44.9000
|
2/9/2011
|
751
(4)
|
33,314
|
1,669
(8)
|
74,037
|
|
2/7/2002
|
19,000
|
0
|
45.9500
|
2/7/2012
|
1,461
(5)
|
64,810
|
12,440
(9)
|
551,838
|
||
2/13/2003
|
15,000
|
0
|
31.4650
|
2/13/2013
|
3,267
(6)
|
144,924
|
13,060
(10)
|
579,342
|
||
2/12/2004
|
12,000
|
0
|
46.7600
|
2/12/2014
|
||||||
2/10/2005
|
14,000
|
0
|
57.0950
|
2/10/2015
|
||||||
5/13/2005
|
12,000
|
0
|
54.8350
|
5/13/2015
|
||||||
12/8/2005
|
51,000
|
0
|
68.6300
|
12/8/2015
|
||||||
2/8/2007
|
22,040
|
0
|
109.200
|
2/8/2017
|
||||||
2/7/2008
|
10,393
(1)
|
5,197
|
70.6900
|
2/7/2018
|
||||||
2/12/2009
|
16,135
(2)
|
32,275
|
47.4700
|
2/12/2019
|
||||||
2/11/2010
|
0
(3)
|
25,200
|
43.0500
|
2/11/2020
|
||||||
Danny Shepherd
|
5/1/2002
|
3,000
|
0
|
46.2750
|
5/1/2012
|
2,557
(6)
|
113,429
|
1,544
(8)
|
68,492
|
|
2/13/2003
|
2,200
|
0
|
31.4650
|
2/13/2013
|
3,339
(7)
|
148,118
|
11,520
(9)
|
511,027
|
||
2/12/2004
|
10,000
|
0
|
46.7600
|
2/12/2014
|
12,060
(10)
|
534,982
|
||||
2/10/2005
|
11,000
|
0
|
57.0950
|
2/10/2015
|
||||||
12/8/2005
|
22,000
|
0
|
68.6300
|
12/8/2015
|
||||||
|
2/8/2007
|
19,560
|
0
|
109.200
|
2/8/2017
|
|||||
2/7/2008
|
9,633
(1)
|
4,817
|
70.6900
|
2/7/2018
|
||||||
2/12/2009
|
14,949
(2)
|
29,901
|
47.4700
|
2/12/2019
|
||||||
2/11/2010
|
0
(3)
|
23,400
|
43.0500
|
2/11/2020
|
||||||
Ron McAbee
|
2/9/2001
|
7,500
|
0
|
44.9000
|
2/9/2011
|
751
(4)
|
33,314
|
1,544
(8)
|
68,492
|
|
2/7/2002
|
15,000
|
0
|
45.9500
|
2/7/2012
|
1,461
(5)
|
68,810
|
11,520
(9)
|
511,027
|
||
2/13/2003
|
11,000
|
0
|
31.4650
|
2/13/2013
|
2,557
(6)
|
113,429
|
12,060
(10)
|
534,982
|
||
2/12/2004
|
15,000
|
0
|
46.7600
|
2/12/2014
|
||||||
2/10/2005
|
15,000
|
0
|
57.0950
|
2/10/2015
|
||||||
12/8/2005
|
30,000
|
0
|
68.6300
|
12/8/2015
|
||||||
2/8/2007
|
19,560
|
0
|
109.200
|
2/8/2017
|
||||||
2/7/2008
|
9,663
(1)
|
4,817
|
70.6900
|
2/7/2018
|
||||||
2/12/2009
|
14,949
(2)
|
29,901
|
47.4700
|
2/12/2019
|
||||||
2/11/2010
|
0
(3)
|
23,400
|
43.0500
|
2/11/2020
|
||||||
Bob Wason
|
2/9/2001
|
16,000
|
0
|
44.9000
|
2/9/2011
|
751
(4)
|
33,314
|
830
(8)
|
36,819
|
|
2/7/2002
|
16,000
|
0
|
45.9500
|
2/7/2012
|
1,461
(5)
|
64,810
|
7,360
(9)
|
326,490
|
||
2/13/2003
|
11,000
|
0
|
31.4650
|
2/13/2013
|
2,557
(6)
|
113,429
|
7,740
(10)
|
343,346
|
||
2/12/2004
|
10,000
|
0
|
46.7600
|
2/12/2014
|
||||||
2/10/2005
|
11,000
|
0
|
57.0950
|
2/10/2015
|
||||||
12/8/2005
|
22,000
|
0
|
68.6300
|
12/8/2015
|
||||||
|
2/8/2007
|
11,380
|
0
|
109.200
|
2/8/2017
|
|||||
2/7/2008
|
5,173
(1)
|
2,587
|
70.6900
|
2/7/2018
|
||||||
2/12/2009
|
9,875
(2)
|
19,755
|
47.4700
|
2/12/2019
|
||||||
2/11/2010
|
0
(3)
|
14,900
|
43.0500
|
2/11/2020
|
Executive Compensation
|
54
|
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
|
18
|
883,060
|
0
|
Supplemental Benefit Plan
|
18
|
12,881,347
|
0
|
|
Supp. Executive Retirement Agreement
|
21 7/12
|
16,358,316
|
0
|
|
Dan Sansone
|
Retirement Income Plan
|
22 10/12
|
871,462
|
0
|
Supplemental Benefit Plan
|
22 10/12
|
2,950,000
|
0
|
|
Danny Shepherd
|
Retirement Income Plan
|
27 8/12
|
1,037,532
|
0
|
Supplemental Benefit Plan
|
27 8/12
|
1,886,544
|
0
|
|
Ron McAbee
|
Retirement Income Plan
|
36 11/12
|
1,589,686
|
0
|
Supplemental Benefit Plan
|
36 11/12
|
4,118,370
|
0
|
|
Bob Wason
|
Retirement Income Plan
|
22 9/12
|
912,658
|
0
|
Supplemental Benefit Plan
|
22 9/12
|
1,855,424
|
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 12/31/2010 were used to determine the present values:
|
|
(i)
|
discount rate of 4.55%;
|
|
(ii)
|
mortality based on the RP-2000 Combined Healthy Mortality Table projected 13 years using Scale AA;
|
|
(iii)
|
present values for lump sums are based on projected segmented interest rates and the prescribed 2010 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.
|
Executive Compensation
|
55
|
Executive Compensation
|
56
|
§
|
Retirement or Retirement Eligible —
Termination of a NEO who is at least 55 years old and has at least one year of credited service.
|
§
|
Lay Off —
Termination by our company of a NEO who is not retirement eligible.
|
§
|
Resignation —
Voluntary termination by a NEO who is not retirement eligible.
|
§
|
Death or Disability —
Termination of a NEO due to death or disability.
|
§
|
Involuntary Termination —
Termination of a NEO for cause. Cause includes individual performance below minimum performance standards and misconduct.
|
Executive Compensation
|
57
|
§
|
A CIC occurs under our certain of 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; or
|
(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
|
Executive Compensation
|
58
|
|
(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 assets from our company 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 and certain of our other compensation plans, a CIC is defined as: (a) the acquisition by a person or group of 20% or more of the then outstanding common stock or voting securities of our company; or (b) a change in the majority of members 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.
|
Executive Compensation
|
59
|
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
|
5,622
|
Same as Retirement
|
3,654
|
0
|
Supplemental Plan
|
96,476
|
Same as Retirement
|
62,709
|
2,773,979
|
|
SERA
|
122,517
|
Same as Retirement
|
79,636
|
3,328,774
|
|
Defined Contribution
|
0
|
None
|
0
|
150,000
|
|
Dan Sansone
|
Retirement Plan
|
4,973
|
Same as Retirement
|
3,232
|
0
|
Supplemental Plan
|
19,375
|
Same as Retirement
|
12,594
|
1,878,345
|
|
Defined Contribution
|
0
|
None
|
0
|
61,500
|
|
Danny Shepherd
|
Retirement Plan
|
6,132
|
Same as Retirement
|
3,986
|
0
|
Supplemental Plan
|
12,922
|
Same as Retirement
|
8,399
|
1,216,878
|
|
Defined Contribution
|
0
|
None
|
0
|
49,602
|
|
Ron McAbee
|
Retirement Plan
|
10,640
|
Same as Retirement
|
6,916
|
0
|
Supplemental Plan
|
32,201
|
Same as Retirement
|
20,931
|
563,718
|
|
Defined Contribution
|
0
|
None
|
0
|
49,602
|
|
Bob Wason
|
Retirement Plan
|
5,386
|
Same as Retirement
|
3,501
|
0
|
Supplemental Plan
|
12,664
|
Same as Retirement
|
8,232
|
1,250,011
|
|
Defined Contribution
|
0
|
None
|
0
|
46,701
|
(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.
|
Executive Compensation
|
60
|
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
|
52,650
|
52,650
|
Dan Sansone
|
0
|
0
|
5,479
|
5,479
|
Danny Shepherd
|
0
|
0
|
5,896
|
5,896
|
Ron McAbee
|
4,769
|
4,769
|
4,769
|
4,769
|
Bob Wason
|
0
|
0
|
4,769
|
4,769
|
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
|
61,433
|
69,570
|
124,520
|
132,657
|
Dan Sansone
|
12,646
|
14,315
|
25,500
|
27,169
|
Danny Shepherd
|
11,700
|
13,244
|
23,580
|
25,124
|
Ron McAbee
|
23,580
|
25,124
|
23,580
|
25,124
|
Bob Wason
|
7,487
|
8,317
|
15,100
|
15,930
|
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
|
170,019
|
1,391,881
|
303,128
|
1,524,990
|
Dan Sansone
|
35,114
|
221,182
|
62,672
|
248,740
|
Danny Shepherd
|
32,551
|
124,893
|
58,118
|
150,460
|
Ron McAbee
|
58,118
|
195,760
|
58,118
|
195,760
|
Bob Wason
|
20,724
|
133,152
|
37,242
|
149,670
|
Executive Compensation
|
61
|
Name
|
Severance Amount ($)
|
Don James
|
15,601,250
|
Dan Sansone
|
4,412,000
|
Danny Shepherd
|
3,649,600
|
Ron McAbee
|
3,649,600
|
Bob Wason
|
2,876,950
|
Name
|
280G Tax Gross-Up
(1)
($)
|
Don James
|
0
(2)
|
Dan Sansone
|
2,863,710
|
Danny Shepherd
|
2,500,060
|
Ron McAbee
|
1,793,577
|
Bob Wason
|
1,851,763
|
(1)
|
Based on payment of equity components of compensation valued at $44.36 per share, the reported fair market value of our company’s common stock as of December 31, 2010.
|
(2)
|
No 280G tax gross-up is triggered as the estimated severance amount is not in excess of the IRS cap.
|
Executive Compensation
|
62
|
|
§
|
$ 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 meeting.
|
Director Compensation
|
63
|
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
|
104,000
|
89,771
|
0
|
0
|
0
|
6,923
|
200,694
|
Phillip W. Farmer
|
112,500
|
89,771
|
0
|
0
|
0
|
7,170
|
209,441
|
H. Allen Franklin
|
99,000
|
89,771
|
0
|
0
|
0
|
11,269
|
200,040
|
Ann McLaughlin Korologos
|
85,000
|
89,771
|
0
|
0
|
0
|
5,162
|
179,933
|
Douglas J. McGregor
|
103,500
|
89,771
|
0
|
0
|
0
|
16,552
|
209,823
|
James V. Napier
|
97,000
|
89,771
|
0
|
0
|
0
|
8,375
|
195,146
|
Richard T. O’Brien
|
92,500
|
89,771
|
0
|
0
|
0
|
2,900
|
185,171
|
James T. Prokopanko
|
84,500
|
89,771
|
0
|
0
|
0
|
904
|
175,175
|
Donald B. Rice
|
103,500
|
89,771
|
0
|
0
|
0
|
13,284
|
206,555
|
Vincent J. Trosino
|
95,500
|
89,771
|
0
|
0
|
0
|
8,880
|
194,151
|
Kathleen Wilson-Thompson
|
88,000
|
89,771
|
0
|
0
|
0
|
904
|
178,675
|
(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 on page 50.
|
(2)
|
This column represents the accounting expense for the awards granted in 2010; 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, 2010, 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
|
7,915
|
Phillip W. Farmer
|
7,587
|
H. Allen Franklin
|
12,327
|
Ann McLaughlin Korologos
|
6,026
|
Douglas J. McGregor
|
17,690
|
James V. Napier
|
8,929
|
Richard T. O’Brien
|
3,842
|
James T. Prokopanko
|
1,825
|
Donald B. Rice
|
11,093
|
Vincent J. Trosino
|
7,901
|
Kathleen Wilson-Thompson
|
1,825
|
(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 2010 by our directors for outstanding equity awards which earn dividend equivalents.
|
Director Compensation
|
64
|
General Information
|
65
|
|
(a)
|
“Affiliate” shall mean any entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company.
|
|
(b)
|
“Award” shall mean a grant of an Option, SAR, Restricted Stock Award, Performance Award, or Other Stock Award pursuant to the Plan, which may, as determined by the Committee, be in lieu of other compensation owed to a Participant.
|
|
(c)
|
“Award Agreement” shall mean an agreement, either in written or electronic format, in such form and with such terms and conditions as may be specified by the Committee, which evidences the terms and conditions of an Award.
|
|
(d)
|
“Board of Directors” or “Board” shall mean the board of directors of the Company.
|
|
(e)
|
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any references to a particular section of the Code shall be deemed to include any successor provision thereto.
|
|
(f)
|
“Committee” shall mean the Compensation Committee or such other committee of the Board of Directors, which shall consist solely of two or more directors who are (i) “outside directors” within the meaning of Section 162(m) of the Code and (ii) “non-employee directors” within the meaning of Securities and Exchange Commission Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, or any such successor provision thereto.
|
|
(g)
|
“Company” shall mean Vulcan Materials Company, a New Jersey corporation.
|
|
(h)
|
“Eligible Employee” shall mean an employee of the Company or any Affiliate.
|
|
(i)
|
“Exercise Price” shall mean, as determined by the Committee, the purchase price per share of Shares issuable upon the exercise of an Option or the value used to determine the amount payable upon the exercise of an SAR, which amount, except in the case of Substitute Awards, shall not be less than the Fair Market Value of a Share on the date such Award is granted.
|
|
(j)
|
“Fair Market Value” shall mean, unless otherwise determined by the Committee, the closing stock price for a Share as reported on a national securities exchange if the Shares are then being traded on such an exchange. If no closing price was reported for such date, the closing price on the last preceding day on which such a price was reported shall be used.
|
|
(k)
|
“Incentive Stock Option” shall mean an Option which is intended to meet the requirements set forth in Section 422 of the Code and which only Eligible Employees are eligible to receive.
|
|
(l)
|
“Maximum Share Amount” shall mean 300,000 Shares.
|
|
(m)
|
“Net Earnings” shall mean the Company’s earnings from continuing operations excluding unusual items and after taxes.
|
|
(n)
|
“Nonqualified Stock Option” shall mean an Option not intended to qualify as an Incentive Stock Option.
|
Amended and Restated Omnibus Long-Term Incentive Plan
|
A-1
|
|
(o)
|
“Option” shall mean the right to purchase a Share granted pursuant to Section 8, which may take the form of either an Incentive Stock Option or a Nonqualified Stock Option.
|
|
(p)
|
“Other Stock Award” shall mean an Award of Shares or Awards that are valued in whole or in part, or that are otherwise based on, Shares, including but not limited to dividend equivalents or amounts which are equivalent to all or a portion of any federal, state, local, domestic, or foreign taxes relating to an Award, which may be payable in Shares, cash, other securities, or any other form of property as the Committee shall determine, subject to the terms and conditions set forth by the Committee and granted pursuant to Section 12.
|
|
(q)
|
“Participant” shall mean an Eligible Employee or member of the Board selected by the Committee to receive Awards under the Plan.
|
|
(r)
|
“Performance Awards” shall mean Awards of Performance Shares or Performance Units.
|
|
(s)
|
“Performance Goal” shall mean Net Earnings of greater than zero during a Performance Award’s Performance Period as referenced in Section 7.
|
|
(t)
|
“Performance Period” shall mean a period of at least 12 months established by the Committee pursuant to Section 11.
|
|
(u)
|
“Performance Share” shall mean an Award denominated in Shares, which is earned during a specified period subject to the terms and conditions as determined by the Committee and granted pursuant to Section 11.
|
|
(v)
|
“Performance Unit” shall mean an Award denominated in units having a value in dollars or such other currency, as determined by the Committee, which is earned during a specified period subject to the terms and conditions as determined by the Committee and granted pursuant to Section 11.
|
|
(w)
|
“Plan” shall mean the Vulcan Materials Company 2006 Omnibus Long-Term Incentive Plan, as amended and restated from time to time.
|
|
(x)
|
“Restricted Stock” shall mean an Award of Shares, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 10.
|
|
(y)
|
“Restricted Stock Award” shall mean an Award consisting of Restricted Stock or Restricted Stock Units.
|
|
(z)
|
“Restricted Stock Unit” shall mean an Award consisting of a bookkeeping entry representing an amount equivalent to the Fair Market Value of one Share, payable in cash or Shares, and representing an unfunded and unsecured obligation of the Company, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 10.
|
|
(aa)
|
“Shares” shall mean shares of common stock, $1.00 par value, of the Company.
|
|
(bb)
|
“Stock Appreciation Right” or “SAR” shall mean an Award, which represents the right to receive the difference between the Fair Market Value of a Share on the date of exercise and an Exercise Price, payable in cash or Shares, subject to such terms and conditions as determined by the Committee and granted pursuant to Section 9.
|
|
(cc)
|
“Substitute Award” shall mean an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company acquired by the Company or with which the Company combines. No Substitute Award shall be granted that would cause an Award that is subject to or becomes subject to Section 409A to fail to satisfy the requirements of Section 409A.
|
Amended and Restated Omnibus Long-Term Incentive Plan
|
A-2
|
|
(a)
|
Subject to adjustment as provided in Section 5(g), the maximum number of Shares available for issuance under the Plan shall be 11,900,000.
|
|
(b)
|
For purposes of determining the number of Shares to be counted against the maximum Share limit set forth in Section 5(a), each Share subject to an Award of Options or SARs shall be counted against such limit as one (1) Share, and each Share subject to a Restricted Stock Award, Performance Share Award, or Other Stock Award shall be counted against such limit as one and eight-tenths (1.8) Shares.
|
|
(c)
|
If any Shares are subject to an Award that is forfeited, settled in cash, or expires, any such unissued Shares covered by such Award shall again be available for issuance under the Plan. Shares not issued as the result of the net exercise of an SAR, Shares tendered by the Participant or retained by the Company as full or partial payment to the Company for the purchase of an Award or to satisfy tax withholding obligations in connection with an Award, or Shares repurchased on the open market with the proceeds from the payment of an Exercise Price of an Option shall not again be available for issuance under the Plan.
|
|
(d)
|
Unless otherwise determined by the Committee, Awards that are designed to operate in tandem with other Awards shall not be counted against the maximum number of Shares available under Section 5(a) to the extent there otherwise would be double counting.
|
|
(e)
|
Notwithstanding the foregoing, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate number of Shares stated in Section 5(a), subject to adjustment as provided in Section 5(g) to the extent that such adjustment does not affect the ability to grant or the qualification of Incentive Stock Options under the Plan. The aggregate Fair Market Value (determined as of the date of grant) of the Shares for which all Incentive Stock Options granted to any one Participant may become exercisable for the first time in any one calendar year shall not exceed $100,000. If two or more Options designated as Incentive Stock Options first become exercisable in the same calendar year, the $100,000 limit shall be applied to the Options in the order in which they were granted, and any Shares whose value exceeds the limit shall be deemed to be covered by a Nonqualified Stock Option.
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(f)
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Any Shares issued under the Plan shall consist, in whole or in part, of authorized and unissued Shares, Shares purchased in the open market or otherwise, Shares in treasury, or any combination thereof, as the Committee or, as appropriate, the Board may determine.
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(g)
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In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, or similar corporate transaction, as determined by the Committee, the Committee shall, in such manner as it may deem equitable and to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, adjust the number and type of Shares available for Awards under the Plan, the number and type of Shares subject to outstanding Awards, and the Exercise Price with respect to any Award; provided, however, that any fractional Share resulting from an adjustment pursuant to this Section 5(g) shall be rounded to the nearest whole number. The Committee shall not make any adjustment pursuant to this Section 5(g) that would cause an Award that is subject to or becomes subject to Section 409A to fail to satisfy the requirements of Section 409A.
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(a)
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Notwithstanding any other provision of the Plan, if the Committee determines at the time an Award is made to a Participant that such Participant is or may be as of the end of the Company’s tax year in which the Company would claim a tax deduction in connection with the Award, a Covered Employee (as that term is defined in Section 162(m) of the Code), the Committee may provide, in writing, that this Section 7 is applicable to such Award under such terms and conditions as the Committee may specify.
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(b)
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Notwithstanding any other provision of the Plan other than Section 5(g), if the Committee provides that this Section 7 is applicable to a particular Award of Options or SARs, no Participant shall receive such an Award or Awards with respect to more than a number of Shares in the aggregate equal to the Maximum Share Amount multiplied by four (4) within any fiscal year of the Company, provided, however, that the limitations set forth in
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Amended and Restated Omnibus Long-Term Incentive Plan
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A-3
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this Section 7(b) shall be subject to adjustment under Section 5(g) of the Plan only to the extent that such adjustment does not affect the status of any Award intended under this Section 7(b) to qualify as “performance based compensation” under Section 162(m) of the Code. If an Option is granted in tandem with a SAR, such that exercise of the Option or SAR with respect to one Share cancels the tandem Option or SAR, respectively, with respect to such Share, the tandem Option and SAR with respect to such Share shall be counted as covering only one Share for purposes of applying the limitation set forth in this Section 7(b).
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(c)
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Notwithstanding any other provision of the Plan other than Section 5(g), if the Committee provides that this Section 7 is applicable to particular Performance Awards, upon the attainment of the Performance Goal for such Awards within any given fiscal year of the Company, each Participant shall be deemed to have earned a payment equal to the Maximum Share Amount or such lesser amount the Committee determines in its discretion, payable in cash or Shares (or a combination thereof), where the Maximum Share Amount shall equal the Fair Market Value of the such Shares as of the date of grant in the case of Awards of Performance Units; provided, however, that such Maximum Share Amount shall be multiplied by a number not to exceed four (4), as specified by the Committee at the time such Awards are granted, to adjust for the grant frequency of such Awards; provided further that the limitations set forth in this Section 7(c) shall be subject to adjustment under Section 5(g) of the Plan only to the extent that such adjustment does not affect the status of any Award intended under this Section 7(c) to qualify as “performance based compensation” under Section 162(m) of the Code.
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(d)
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Prior to the payment of any Award subject to this Section 7 (other than Options and SARs), the Committee shall verify in writing as prescribed by Section 162(m) of the Code or the regulations thereunder that the Performance Goal was achieved.
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(e)
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The Committee shall have the authority to impose such other restrictions on Awards subject to this Section 7 as it may deem necessary or appropriate to ensure that such Awards meet the requirements for “performance based compensation” under Section 162(m) of the Code; provided, however, that the Committee may provide in a particular Performance Award’s Award Agreement for the waiver of the achievement of the Performance Goal for certain events, including but not limited to death, disability, or a change in ownership or control of the Company.
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Amended and Restated Omnibus Long-Term Incentive Plan
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A-4
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Amended and Restated Omnibus Long-Term Incentive Plan
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A-5
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(a)
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Increase the maximum number of Shares that may be issued under the Plan, except as provided in Section 5(g);
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(b)
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Increase the limits applicable to Awards under the plan, except as provided in Sections 5(g), 7(b), and 7(c);
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(c)
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Allow for an Exercise Price below the Fair Market Value of Shares on the date of grant of an Option or SAR, except as provided in Section 3(i);
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(d)
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Amend Section 13 to permit the repricing of outstanding Options or SARs; or
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(e)
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Require approval of the Company’s shareholders under any applicable law, regulation, or rule, including the rules of any stock exchange on which the Shares are listed.
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Amended and Restated Omnibus Long-Term Incentive Plan
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A-6
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