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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 
 

    Filed by the Registrant

       Filed by a party other than the Registrant

 
 Check the
appropriate box:
  Preliminary Proxy Statement
  CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Vulcan Materials Company
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 
 Payment of filing
fee (Check the appropriate box):
  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to
which transaction applies:
 
  
(2) Aggregate number of securities to which
transaction applies:
 
  
(3) Per unit price or other underlying value
of transaction computed pursuant to Exchange Act  Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was  determined):
 
  
(4) Proposed maximum aggregate value of
transaction:
 
  
(5) Total
fee paid:
 
  
  Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule 240.0-11 and
identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
  statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
 
  
(2) Form, Schedule or Registration Statement
No.:
 
  
(3) Filing Party:
 
  
(4) Date
Filed:
 
  

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2017 PROXY STATEMENT & NOTICE OF 2017 ANNUAL MEETING OF SHAREHOLDERS

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Dear Fellow Shareholder,
I would like to
extend a personal invitation for you to join us at our Annual Meeting of Shareholders on Friday, May 12, 2017, at 9:00 a.m., local
time, at the Grand Bohemian Hotel, 2655 Lane Park Road, Birmingham, Alabama 35223. During the Annual Meeting, we
will discuss each item
of business described in the Notice of Annual Meeting and this proxy statement.
On or about March 27, 2017, we began mailing to many of
our shareholders a Notice of Internet Availability of Proxy Materials containing
instructions on how to access our proxy materials, including our 2016 Annual Report to Shareholders, via the Internet. Shareholders who did not
receive the Notice of
Internet Availability of Proxy Materials will receive a paper copy of the Notice of Annual Meeting, proxy statement, proxy
card and 2016 Annual Report to Shareholders, which we also began mailing on or about March 27, 2017. The Notice of
Internet Availability of
Proxy Materials also contains instructions on how to receive a paper copy of the proxy materials. Copies of our Notice of Annual Meeting, proxy
statement, proxy card and 2016 Annual Report to Shareholders are available at
www.proxyvote.com.
Your vote is important. Whether you own one share or many, your prompt vote is greatly appreciated. It is important that your shares of

common stock be represented at the Annual Meeting so that a quorum may be established. Even if you plan to attend the Annual Meeting in
person, please read the proxy materials carefully and then vote your proxy as soon as possible. You may vote over
the Internet, by telephone, or
by mailing a completed proxy card. Additional information is provided in the proxy materials. If you attend the Annual Meeting, you may revoke
your proxy and vote your shares in person.
Thank you for your ongoing support and continued interest in Vulcan, and I look forward to welcoming you to our Annual Meeting.
March 27, 2017

Sincerely yours,
 
 

J. THOMAS HILL
Chairman, President and Chief Executive Officer

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NOTICE OF ANNUAL
MEETING
Meeting Date:     Friday, May 12, 2017
Meeting Time:    9:00 a.m., local time
NOTICE IS HEREBY GIVEN that the
2017 Annual Meeting of Shareholders of Vulcan Materials Company will be held at the Grand Bohemian
Hotel, 2655 Lane Park Road, Birmingham, Alabama 35223, on Friday, May 12, 2017, at 9:00 a.m., local time, for the following purposes:
 

•   To elect four nominees as directors;
 

•   To approve, on an advisory basis, the compensation of our named executive officers;
 

•   To vote, on an advisory basis, on the frequency of future advisory votes on executive compensation;
 

•   To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017; and
 

•   To conduct such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Only shareholders of record as of the close of business on March 15, 2017 are entitled to receive notice of, to attend and to vote at the Annual
Meeting. Whether or
not you plan to attend, we urge you to review these materials carefully and to vote by Internet, or, if you have received a
paper copy of the proxy card, you may choose to vote by telephone or by mailing your proxy card.

March 27, 2017

By Order of the Board of Directors,
 

JERRY F. PERKINS JR.
General Counsel and Secretary

PROXY SUMMARY
PROPOSAL 1. ELECTION OF DIRECTORS

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners

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PROXY STATEMENT TABLE OF CONTENTS

 
PROXY SUMMARY
PROPOSAL 1. ELECTION OF DIRECTORS
PROPOSAL 2. ADVISORY VOTE ON COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
(SAY ON PAY)
PROPOSAL 3. ADVISORY VOTE ON THE
FREQUENCY OF FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION (SAY ON PAY
FREQUENCY)
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
CORPORATE GOVERNANCE OF OUR COMPANY
AND PRACTICES OF OUR BOARD OF DIRECTORS
Director Independence
Director Nomination Process
Board Leadership Structure
Non-Management Executive Sessions
Meetings and Attendance
Annual Meeting Policy
Committees of the Board of Directors
Risk Management
Compensation Committee Interlocks and Insider
Participation
Transactions with Related Persons
Shareholder Communication with Our Board of
Directors
Policy on Reporting of Concerns Regarding
Accounting Matters
REPORT OF THE AUDIT COMMITTEE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Fees Paid to Independent Registered Public
Accounting Firm
Pre-approval of Services Performed by Independent
Registered Public
Accounting Firm
 

 

 

 

 

 

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
Security Ownership of Management
EQUITY COMPENSATION PLANS
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION
Summary Compensation Table
Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year-End
Option Exercises and Stock Vested
Retirement and Pension Benefits
Payments Upon Termination or Change in Control
DIRECTOR COMPENSATION
Director Summary Compensation Table
ANNUAL MEETING AND VOTING INFORMATION
GENERAL INFORMATION
Section 16(a) Beneficial Ownership Reporting
Compliance
Shareholder Proposals For 2018
Forward-Looking Statements
ANNEX A: RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
 

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Vulcan 2017 Proxy Statement  
 

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PROXY SUMMARY
This summary highlights information contained elsewhere in this proxy statement and in our corporate governance documents on our website at

www.vulcanmaterials.com. This summary does not contain all of the information that you should consider, and you should read this entire proxy
statement before voting.

VOTING YOUR SHARES
Your vote is
important. You may vote if you were a shareholder at the close of business on March 15, 2017, the record date for the Annual
Meeting. You may vote in person at the Annual Meeting or submit a proxy over the Internet. If you have received a paper
copy of the proxy card
(or if you request a paper copy of the materials), you may submit a proxy by telephone or by mail.

 
 

BY MAIL
Complete, sign, date and
return your proxy card in the
  envelope provided

 

 

 

BY TELEPHONE
  Call the number located
on your proxy card

 

IN PERSON
  Attend the Annual Meeting
and vote by ballot

 

VIA THE INTERNET
www.proxyvote.com

If you submit your proxy by telephone or over the Internet, you do not need to return your proxy card by mail.

 
 

PROPOSALS
 
Proposal For Your Vote

PROPOSAL 1: Election of Directors
PROPOSAL 2: Approval, on an Advisory Basis, of the Compensation of Our
Named Executive Officers (Say on Pay)
PROPOSAL 3: Advisory Vote on the Frequency of Future Advisory Votes on
Executive Compensation (Say on Pay Frequency)
PROPOSAL 4: Ratification of Appointment of Deloitte & Touche

Board Voting
  Recommendation   

Vote Required

  

Page

  FOR each nominee  

Majority of Votes Cast   

5

 

FOR

  

Majority of Votes Cast   

12

 
 

1 YEAR
FOR

  
  

Majority of Votes Cast   
Majority of Votes Cast   

13
14

 
 

2016 PERFORMANCE RESULTS
 
The following key metrics reflect our continued improvement in
financial performance over the last three fiscal years. We manage and
measure our
business performance with a significant focus on
Adjusted EBITDA and Cash Gross Profit per Ton for Aggregates. We
emphasize these metrics because we believe they closely correlate to
long-term shareholder value. We also believe that Total Net
Earnings
and Gross Profit for Aggregates are important metrics in evaluating
the company’s operational and financial performance.

 

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Note: Adjusted EBITDA and Cash Gross Profit Per Ton for

Aggregates are non-GAAP financial measures. We provide a
reconciliation of each of these non-GAAP financial measures to the
most directly comparable GAAP financial
measures in Annex A to
this proxy statement.
 

 

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PROXY SUMMARY
 
 

 
 

2016 PERFORMANCE WAS STRONG IN 2016, OUR TOTAL NET EARNINGS GREW 90% WHILE ADJUSTED EBITDA GREW 16%, REFLECTING OUR FOCUS ON GROWING
CASH GROSS PROFIT PER TON FOR AGGREGATES. WHILE OUR BUSINESS IS BENEFITING FROM A GENERAL ECONOMIC AND CONSTRUCTION INDUSTRY RECOVERY, WE ARE LEVERAGING THIS TO PRODUCE MORE PROFIT PER TON.
Please see information relating to nominees standing for election at the Annual Meeting beginning on page 7 of this proxy statement

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BOARD REFRESHMENT AND DIVERSITY
The Board seeks a mix of directors with qualities that achieve the goal of a high-functioning, diverse Board. All of our directors, other than Tom
Hill, our Chairman,
President and CEO, are independent. Each of our directors has proven leadership, sound judgment, integrity and a
commitment to the success of our company. Since 2009, we have had a number of members retire from the Board and have sought as

replacements diverse leaders with skills in different areas important to oversee the management of our company.

 

 
 

2016 COMPENSATION HIGHLIGHTS
At
our 2016 Annual Meeting of Shareholders, over 98% of votes cast were in favor of the compensation of our named executive officers (NEOs).
During 2016, the Compensation Committee made a number of enhancements to our compensation program, including
(i) implementing a new
peer group to better reflect companies that generally are impacted by the same economic factors affecting Vulcan and (ii) adding a “doubletrigger” requirement for the vesting of long-term incentive awards
under our 2016 Omnibus Long-Term Incentive Plan (2016 Plan) upon a change
of control of the company.

 

We encourage you to read the more detailed description of our
compensation program in “Compensation Discussion and
Analysis” beginning on page 27 before voting on Proposal 2:
Advisory Vote on Compensation of Our
Named Executive
Officers.

    
 
Vulcan 2017 Proxy Statement
   

PROXY SUMMARY
 

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CEO COMPENSATION Compensation package at 41% of market and over 84% of compensation is performance-based Please see information
relating to nominees standing for election at the Annual Meeting beginning on page 6 of this proxy statement

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2016 COMPENSATION DECISIONS
Set forth below is the 2016 compensation for our NEOs. The table is not a substitute for, and should be read together with, the Summary
Compensation Table on
page 47, which presents 2016 NEO compensation in accordance with disclosure rules of the Securities and Exchange
Commission (SEC) and includes additional compensation elements and other important information.

 
Name and
Principal Position
Tom Hill
Chairman,
President and
Chief Executive Officer
John McPherson
Executive Vice President,
Chief Financial and Strategy Officer
Stan Bass
Chief Growth Officer
Michael Mills
Chief Administrative Officer
David Clement
President, Central Division

 

Stock Only
Stock
Performance
Total
Share Units(1) Appreciation
($)
($)
Rights(2)
($)   
 
  
  
2,264,000   
2,826,194   
937,320   6,969,184 

 

 
1,778,000   

 
2,124,034   

 
706,640   5,382,008 

 
 554,258(3)   
 
 
 530,508 
 
 
 
 330,504 
 
 
 

 
892,000   
 
898,000   
 
384,000   
 

 
816,261   
 
816,261   
 
245,756   
 

 
271,560   2,534,079 
 
271,560   2,516,329 
 
81,760   1,042,020 
 

Base
Salary
($)
 
 
 941,670 
 

 
 773,334 

 

 

Short-Term
Performance
Bonus
($)

 

(1)

Dollar value of 2016 Performance Share Units (PSUs) at “target.” Actual pay delivered or realized for PSUs will be determined in the first quarter of 2020 and may range from zero to 200%
of the target shares.
PSUs vest at the end of a four-year period to the extent that the company has met the required performance goals. See footnote (1) to the Summary Compensation
Table on page 47 for an explanation of determination of value for PSUs.
Dollar value of 2016 Stock Only Stock Appreciation Rights (SOSARs). SOSARs vest over 4 years beginning on the first anniversary of the grant date. See footnote (1) to the Summary
Compensation Table on page 47
for explanation of determination of value for SOSARs.
In 2016, Mr. Bass’ base salary included a regional supplement of $20,750.

(2)
(3)

 

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PROXY SUMMARY
 
 

 
 

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PROPOSAL 1. ELECTION OF DIRECTORS
Our constituent documents provide that our Board shall be divided into three classes, with the term of office of one class expiring each year. At
the Annual Meeting, one
individual will be elected to serve as a member of our Board for a two-year term expiring in 2019, and three individuals
will be elected for three-year terms expiring in 2020, or until their successors have
been duly elected and qualified. Our Board, upon the
recommendation of the Governance Committee, has nominated David P. Steiner as a director to serve a two-year term expiring in 2019, and
O.B. Grayson Hall,
Jr., James T. Prokopanko and Kathleen Wilson-Thompson as directors to serve three-year terms expiring in 2020.
Mr. Steiner was elected to the Board in February 2017 to fill a vacancy and, in accordance with New Jersey law, must stand for
election at the
Annual Meeting to continue his service. The terms of Douglas J. McGregor and Vincent J. Trosino will expire at the Annual Meeting and, in
accordance with the company’s director retirement policy in its bylaws and Corporate
Governance Guidelines, each will retire as a director of the
company and will not stand for re-election at the Annual Meeting. Each of the nominees has consented to be named in this proxy statement and
to
serve if elected, and our Board has no reason to believe that any of the persons nominated will be unable to serve as a director. The Board
believes that each of the four nominees is highly qualified and has experience, skills, backgrounds and
attributes that qualify each of them to
serve as a director of Vulcan.
In accordance with the bylaws of our company, our Board of Directors is required to be
composed of not fewer than nine nor more than 13
directors. The number of directors may be set by a resolution adopted by a majority of our Board of Directors, and our charter provides that any
vacancies on the Board, including vacancies resulting
from an increase in the number of directors, shall be filled by the affirmative vote of a
majority of the remaining directors.

DIRECTOR
QUALIFICATIONS
Directors are responsible for reviewing and approving corporate strategy and overseeing the management of our company to assure that the

long-term interests of the shareholders are being served. The Board believes that there are general skills and characteristics required for service
on the Board of Directors that are applicable to all directors. Additionally, the Board needs a
diverse skill set among its members to ensure that
the Board is able to respond to the needs of management and the company. The Governance Committee believes that each director nominee
has an established record of accomplishments and possesses the
general qualifications set forth below.

GENERAL QUALIFICATIONS
The Governance Committee, along with the Board, is responsible for reviewing on an annual basis the requisite skills and characteristics of Board
members and nominees to
the Board. The Governance Committee considers, among other factors:
 

•   high ethical standards
 

•   independence
 

•   experience
 

•   sound business judgment
 

•   ability to devote the time and effort necessary to fulfill responsibilities to the Board
The Board and the Governance
Committee require that each director be a person of high integrity with a proven record of success. The Board
does not have specific diversity quotas, but considers race, ethnicity, gender, age, education and professional experiences in evaluating

candidates for the Board.

INDIVIDUAL QUALIFICATIONS FOR DIRECTORS
The Board believes that a number of particular qualifications, attributes, skills and experiences are desirable for the Board as a whole. These
include:
 

•  financial and audit committee experience

•  human resources experience

 

 

•  knowledge of the company’s industry and related industries

•  safety, health and environment expertise

 

 

•  relevant chief executive officer/president experience

•  legal and risk management experience

 

 

•  public company experience

•  logistics and transportation expertise

 

 

•  government or political expertise

•  technology and IT experience

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•  diversity of race, ethnicity or gender
 
Vulcan 2017 Proxy Statement
   
   

 
 

PROPOSAL 1. ELECTION OF DIRECTORS
 
 

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Nominee for Election to the Board of Directors:
Two-Year Term Expiring in 2019

 
CAREER HIGHLIGHTS:
 

DAVID P. STEINER
 

Director since 2017
 

Age: 57
 

Committees:
Governance;
Safety, Health and
Environmental Affairs
 

Other Public Company

Directorships:
FedEx Corporation

•  Mr. Steiner earned his bachelor’s degree in
accounting from Louisiana State
University and
holds a Juris Doctorate from University of
California, Los Angeles, School of Law.

Retired; Former President and Chief Executive
Officer of Waste Management, Inc., Houston, Texas
(a leading provider of integrated waste management  
services in North
America) from March 2004 to
•  Mr. Steiner brings to our Board valuable insight
November 2016.
into business, leadership and management
issues facing
large industrial companies. His
 
experience as CEO of Waste Management, Inc.
SKILLS AND QUALIFICATIONS:
 
and as chair of the nominating and governance
•  Mr. Steiner served as Chief Executive
Officer of
committee of FedEx Corporation makes him well
Waste Management, Inc. from March 2004 to
qualified to serve on our Governance and Safety,
November 2016. Prior to being named CEO, he
Health and Environmental Affairs
Committees.
served in a variety of capacities with Waste
Additionally, he brings to our Board a strong legal
Management, Inc., including as Executive Vice
background with an exemplary record of
President and Chief Financial Officer from 2003 to
operational excellence and performance.
2004, and
as Senior Vice President, General
Counsel and Corporate Secretary from 2001 to
2003.
 

•  He serves on the Board of Directors of FedEx
Corporation, and formerly served on the boards of
TE Connectivity
Ltd. (previously known as Tyco
       Electronics, Ltd.) and Waste Management, Inc.
  

 

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PROPOSAL 1. ELECTION OF DIRECTORS
 
 

 
 

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Nominees for Election to the Board of Directors: Three-Year Term Expiring in 2020

 
  CAREER HIGHLIGHTS:

•  He is active in many civic and leadership
organizations, including the Economic
Development
Partnership of Alabama and the
Birmingham Business Alliance.

 

Chairman, President and Chief Executive Officer of
Regions Financial Corporation, Birmingham,
Alabama (one of the nation’s largest full-service
 
providers of consumer
and commercial banking,
•  He graduated from the University of the South
wealth management, mortgage and insurance
with a bachelor’s degree in economics. He also
products and services) and Regions Bank since
received a
Master of Business Administration
2013; President and Chief Executive Officer (2010—
from the University of Alabama and is a graduate
2013) and Vice Chairman (2008—2010).
of the Stonier Graduate School of Banking,
University of Pennsylvania.
 

O. B. GRAYSON
HALL, JR.

•  Mr. Hall brings extensive management and
business experience to our Board as well as a
deep understanding
of complex issues facing
public companies. As chief executive officer of
Regions, he provides our Board with valuable
experience in banking, finance and capital
markets.

 

•  Mr. Hall is Chairman, President and
Chief
Executive Officer of Regions Financial
Corporation, a leading commercial bank in the
United States. Since joining Regions in 1980, he
has served in roles of increasing responsibility,
including operations, technology, and commercial

banking.

 

Director since 2014
 

Age: 59
 

Committees:
Executive; Finance; Governance
 

Other Public Company
Directorships:
Regions Financial Corporation

 

SKILLS AND QUALIFICATIONS:

 

•  Mr. Hall serves on the
Board of Directors of
Regions Financial Corporation. In addition, he is a
Class A Director of the Federal Reserve Bank of
Atlanta and serves on the board of Alabama
Power Company, a wholly-owned subsidiary of
      Southern Company.
  

 
  CAREER HIGHLIGHTS:

•  Mr. Prokopanko has a bachelor’s degree in
computer science from the University of

Manitoba and a Master of Business
Administration from the University of Western
Ontario.

 

Retired; Senior Advisor of The Mosaic Company,
Plymouth, Minnesota (a leading producer and
marketer of concentrated phosphate and potash
crop nutrients for the global
agriculture industry)
 
from August 2015 to January 2016; President and
•  His experience serving as the principal interface
Chief Executive Officer from 2007 until August 2015.
between management and the board at a New
York Stock Exchange
(NYSE) company
 
facilitates his service as lead director of our
SKILLS AND QUALIFICATIONS:
 
company as well as our Board’s performance of
•  Mr. Prokopanko served as Senior Advisor of The
its oversight function. His executive management
Mosaic Company from August 2015 to January
experience provides our Board with valuable
2016. He joined
Mosaic in 2006 and served as
insight into business, leadership and
President and Chief Executive Officer from

management issues. Additionally, he brings to
January 2007 to August 2015, and as Executive
our Board considerable knowledge of issues
Vice President and Chief Operating Officer from
facing a company engaged in mineral extraction.
July 2006 to January 2007. Prior to that, he was
with Cargill, Inc., where he
served in a wide range
of leadership positions, including as Corporate
Vice President of Cargill Procurement, a leader of
Cargill’s Ag Producer Services Platform, and Vice
President of the North America crops inputs
business.

JAMES T.
PROKOPANKO
 

Director since 2009
 

Age: 63
 

Committees:
Compensation;
Executive;
Governance
 

Other Public Company

Directorships:
Regions Financial Corporation
Xcel Energy Inc.

     

  

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Vulcan 2017 Proxy Statement
   
   

 
 

PROPOSAL 1. ELECTION OF DIRECTORS
 
 

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Nominees for Election to the Board of Directors: Three-Year Term Expiring in 2020

 
  CAREER HIGHLIGHTS:

•  Ms. Wilson-Thompson earned a bachelor’s
degree in literature from the University of
Executive Vice President and Global Chief Human

Michigan and a Juris Doctorate and a master of
Resources Officer of Walgreens Boots Alliance, Inc.,
law from Wayne State University.
Deerfield, Illinois (a drugstore chain), since January  
2015. Senior
Vice President and Chief Human
•  She serves on the NAACP Foundation. She was
Resources Officer of Walgreen Co. from January
also named to Black Enterprise’s 2015 “50 Most
2010 to December 2014. Senior Vice President,
Powerful
Women in America.”
Global Human Resources of The Kellogg Company,  
•  As a result of
her senior leadership positions in
Battle Creek, Michigan (a retail food manufacturer
human resources at both Walgreens and
and distributor), from July
2005 to January 2010.
Kellogg, Ms. Wilson-Thompson brings to our
Vice President and Chief Labor and Employment
Board valuable experience in executive
Counsel of U.S. Business Portfolio from 2000 to
compensation and managing personnel, human
2005.
resource and organization issues that face a
 

labor-intensive industry.
 

KATHLEEN
WILSONTHOMPSON
 

Director since 2009

SKILLS AND QUALIFICATIONS:
 

 

•  Ms. Wilson-Thompson is responsible for strategy
and delivery of all human resources-related
Committees:
activities at
Walgreens, the nation’s largest drug
Compensation;
Executive; Safety,
store chain, and also is responsible for all strategy
Health and Environmental Affairs
and delivery of HR related activities globally for
Walgreens Boots Alliance, Inc., the global leader
in
pharmacy-led health and well-being retail with
      over 13,000 stores in 11 countries.
  
Age: 59
 

 
 

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PROPOSAL 1. ELECTION OF DIRECTORS
 
 

 
 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE.

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Vulcan 2017 Proxy Statement
 
 

   
   

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Table of Contents

Directors Continuing in Office: Terms Expiring in 2018

 
CAREER HIGHLIGHTS:
 

Chairman of the Board, President and Chief
Executive Officer of Southern Company, Atlanta,
Georgia (a leading U.S. producer of energy) since
2010.

 
SKILLS AND QUALIFICATIONS:

•  He currently serves as Chairman of the Federal
Reserve Bank of Atlanta and as Vice Chairman

of the Federal Reserve Bank of the U.S. Council
of Chairs. Mr. Fanning plays a national role in
leading efforts to prevent and respond to cyber
and physical terrorism for the U.S. electric
system.
 

 

•  He has undergraduate and masters degrees
from
•  Mr. Fanning is Chairman, President
and Chief
the Georgia Institute of Technology, and has
Executive Officer of Southern Company, one of
completed several executive education
America’s largest producers of electricity. He has
programs.
worked for Southern Company for more than 30
 
years and has held 15 different positions in eight
•  As CEO of a large public utility, Mr. Fanning
different business units, including
numerous officer
provides our Board with valuable business,
positions with a variety of Southern Company
leadership, and
management skills. His prior
subsidiaries in the areas of finance, strategy,
service as CFO of Southern Company and as a
international business development and
director of The St. Joe Company (2005—2011)
technology.
makes him well qualified to serve on our Audit
 
Committee. Additionally, he brings to our Board a
•  Mr. Fanning previously was Chief Financial Officer
deep understanding of key
issues facing an
of Southern Company, where he was responsible
industrial company, including governmental and
for the
accounting, finance, tax, investor relations,
regulatory issues, and safety, health and
treasury and risk management functions.
      
   environmental matters.

THOMAS A.
FANNING
 

Director since 2015
 

Age: 60
 

Committees:
Audit;
Compensation
 

Other Public Company
Directorships:
Southern Company

 
CAREER HIGHLIGHTS:

•  Mr. Hill has served in leadership positions in a
number of industry trade groups,
including the
Chairman of the Board of the company since January
Texas Concrete and Aggregates Association, the
2016 and President and Chief Executive Officer
Florida Concrete and Products Association, and
since July 2014.
the National Stone, Sand and Gravel
 
Association. In addition, he serves on the boards
SKILLS AND QUALIFICATIONS:
of the United Way of Central Alabama, the
 
Birmingham
Business Alliance, and the
•  Mr. Hill is Chairman, President and
Chief Executive
Economic Development Partnership of Alabama.
Officer of the company. He has been with the
 
company for more than 25 years, serving in a
•  He is a graduate of the University of Pittsburgh
variety of operations and general management
and the Wharton School of Business, Executive
assignments of increasing responsibility. Prior to
Management
Program.
being named Chairman, President and CEO, he
 

served as Executive Vice President and Chief
•  Mr. Hill has over 30
years experience in the
Operating Officer from January 2014 until July
aggregates industry, including extensive
2014, and Senior Vice President—South Region
experience with the company in operations and
from December 2011 to December 2013. He also
management over a wide variety of geographic
served as president of the company’s former
regions.
       Florida Rock
Division and its Southwest Division.   
 

J. THOMAS HILL
 

Director since 2014
 

Age: 58
 

Committees:
Executive

 
Vulcan 2017 Proxy Statement
   
   

 
 

PROPOSAL 1. ELECTION OF DIRECTORS
 
 

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Directors Continuing in Office: Terms Expiring in 2018

 
CAREER HIGHLIGHTS:

•  Ms. Hostetler began her career as a corporate
lawyer with Simpson Thatcher &
Bartlett in New
York.

 

Trustee of Aberdeen International Funds, New York,
New York (international mutual funds) since 2013.
 
Director of TriLinc Global Impact Fund, LLC, Los
•  Ms. Hostetler earned her bachelor’s degree from
Angeles, California
(international investment fund)
Southern Methodist University, and holds a Juris
since 2013. Trustee of Invesco Ltd., Atlanta, Georgia

Doctorate from the University of Virginia School
(international mutual funds) since 2017. Director of
of Law.
 
Artio Global Funds, New York, New York
•  Ms. Hostetler brings to our Board significant
(international mutual funds) from 2010 until 2013.
financial, investment and audit committee
Director of Edgen
Group Inc., Baton Rouge,
experience, and
has developed risk assessment
Louisiana (energy infrastructure) from 2012 to 2014.
skills through her bank, private equity and mutual
 
fund leadership. She is an experienced public
SKILLS AND
QUALIFICATIONS:
 
and investment company board member, having
•  Ms. Hostetler
has served as a trustee of Aberdeen
served on a number of public and private
International Funds and as a director of TriLinc
company boards, with committee
chairmanships
Global Impact Fund, LLC since 2013. She also
that include nominating and governance and
was elected as a trustee of Invesco Ltd. in 2017.
investment management.
She previously served as a director of Artio Global
Funds and Edgen
Group.

CYNTHIA L.
HOSTETLER
 

Director since 2014
 

Age: 54
 

Committees:
Audit; Executive;
Finance

 

•  She is the former head of
Private Equity and Vice
President of Investment Funds at the Overseas
Private Investment Corporation, and a former
president of a regional bank and bank holding
       company.
  

 
CAREER HIGHLIGHTS:

•  Mr. O’Brien previously served as a director of
Newmont Mining Corporation
(2007—2013) and
Inergy L.P. (2006—2012).

 

Former President and Chief Executive Officer of
Boart Longyear Limited, Salt Lake City, Utah (an
international provider of drilling services, drilling
equipment and
performance tooling for mining and
drilling companies) from April 2013 until October
2015. Chief Executive Officer of Newmont Mining
Corporation, Greenwood Village, Colorado (an
international gold production company) from 2007
until February
2013.

RICHARD T.
O’BRIEN

•  Mr. O’Brien earned his bachelor’s degree in
economics from the University of Chicago and
holds a
Juris Doctorate from Lewis and Clark
Law School.
 

•  Having served as CFO of four different public
companies, Mr. O’Brien provides the Board with

considerable experience and acumen in financial
reporting and accounting matters.

 
SKILLS AND QUALIFICATIONS:

 

 

 

•  Mr. O’Brien served as President
and CEO of Boart •  As a result of his tenure as CEO and CFO of
Newmont Mining, Mr. O’Brien brings to the Board
Longyear Limited from April 2013 to October 2015.

significant
experience and knowledge of the
He previously served as CEO of Newmont Mining
mining
and
mineral extraction industry. This
Corporation from July 2007 to February 2013, and
gives
him
insight
into the risks facing the
before that as its President and CFO.
 
company and provides him with the tools to
•  His work includes extensive experience
with
effectively assist in managing those risks.
NYSE-listed companies in finance and accounting,
operations and strategic business planning.

Director since 2008
 

Age: 63
 

Committees:
Audit; Executive;
Safety, Health
and Environmental Affairs
 

Other Public Company

Directorships:
Xcel Energy Inc.

 

      

  

 

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PROPOSAL 1. ELECTION OF DIRECTORS
 

 

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Vulcan 2017 Proxy Statement
 

   

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Director Continuing in Office: Term Expiring in 2019

 
CAREER HIGHLIGHTS:

•  He received his Bachelor of Arts from
Northwestern University and a Master of
Business
Administration from Harvard University.

 

Chairman and Chief Executive Officer of Altec, Inc.,
Birmingham, Alabama (a holding company for
businesses that design, manufacture and market
equipment for the electric
and telecommunications
industries globally) since 1997 (CEO) and 2011
(Chairman).

 

•  Mr. Styslinger brings to our Board a wealth of
management and business experience running a
large company
in today’s global market.
Additionally, his expertise in the heavy
equipment industry greatly benefits Vulcan,
which is a major purchaser of heavy machinery
and equipment.

 
SKILLS AND
QUALIFICATIONS:

LEE J.
STYSLINGER, III

 

Director since 2013

•  Mr. Styslinger serves as Chairman and CEO of
Altec, and has over 20 years’ experience leading

companies engaged in the heavy equipment
industry.

 

 

Age: 56

•  He serves on the boards of many educational, civic
and leadership organizations, including the
Harvard Business
School, the National Association
of Manufacturers and the Northwestern University
College of Arts and Sciences. He was appointed to
the President’s Export Council, advising the
President of the United States on international
trade policy from
2006 to 2008.

 

 

Committees:
Compensation;
Safety, Health and
Environmental Affairs
 

Other Public Company

Directorships:
Regions Financial Corporation
Workday, Inc.

      

  

 
Vulcan 2017 Proxy Statement
   
   

 
 

PROPOSAL 1. ELECTION OF DIRECTORS
 
 

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PROPOSAL 2. ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS (SAY ON PAY)
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (Exchange Act), we are asking shareholders to approve, on
an
advisory basis, the compensation paid to our named executive officers (NEOs) as disclosed in the Section entitled “Compensation Discussion
and Analysis,” and the compensation tables and narrative discussion contained in this proxy
statement. While this vote is advisory and not
binding on our company, it provides information to our Compensation Committee regarding investor sentiment about our executive compensation
philosophy, policies and practices, which the Compensation
Committee will consider when determining executive compensation in the future.
At our 2011 Annual Meeting of Shareholders, our shareholders indicated a preference
that the advisory vote on the compensation for our NEOs
occur on an annual basis. Therefore, our Board adopted a policy for annual “Say on Pay” advisory votes. In accordance with Section 14A of the
Exchange Act, Proposal 3 in this proxy
statement once again offers shareholders an opportunity to vote, on an advisory basis, on the frequency
of future advisory votes on executive compensation.
At our
2016 Annual Meeting of Shareholders, our shareholders voted over 98% in favor of our “Say on Pay” proposal. We believe this
demonstrated strong support for our compensation program and policies. In 2016, we continued to review and make
changes to our
compensation program, considering new compensation trends and best practices. Please read the “Compensation Discussion and Analysis”
Section on pages 27 to 45 for an in-depth look
at our compensation program and how it was applied to the performance of our NEOs in 2016.
Based on the foregoing, the Board recommends a vote FOR the following
resolution:

“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as

disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation
tables and narrative discussion contained in this proxy statement.”
As an advisory vote, this proposal is not binding on our company. However, our Board and Compensation Committee will
consider
the outcome of the advisory vote when making future compensation decisions.

 

 

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PROPOSAL 2. ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (SAY ON PAY)
 
 

 
 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS
CONTAINED IN THIS PROXY STATEMENT

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PROPOSAL 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY
VOTES ON EXECUTIVE COMPENSATION (SAY ON PAY FREQUENCY)
As described in Proposal 2, in accordance with the requirements of Section 14A of
the Exchange Act and the related rules of the SEC, our
shareholders have the opportunity to cast an advisory vote to approve the compensation of our named executive officers. This Proposal 3 affords
shareholders the opportunity to cast an advisory
vote on how often they believe the advisory vote on executive compensation should occur in the
future (a “Say on Pay” frequency proposal). Under this Proposal 3, shareholders may vote to have the “Say on Pay” vote every 1
year, 2 years,
or 3 years.
Our shareholders were last presented with a “Say on Pay” frequency proposal at our 2011 Annual Meeting of Shareholders, with the
majority of
shareholders voting to hold the “Say on Pay” vote every year. We continue to believe that “Say on Pay” votes should be conducted every year so
that our shareholders may annually express their views on our executive
compensation program. It is expected that the next vote on a “Say on
Pay” frequency proposal will occur at our 2023 Annual Meeting of Shareholders.
Shareholders may cast their vote, on an advisory basis, to conduct advisory votes on executive compensation every “1 year,” “2 years,” or “3

years,” or “abstain.” The frequency option that receives a majority of the votes cast (or the highest number of the votes cast if no frequency
option receives a majority) will be considered the shareholders’ preference for the
frequency of future advisory votes on executive compensation.

As an advisory vote, this proposal is not binding on the Board or the
Compensation Committee. However, the Board and the
Compensation Committee value the opinions expressed by shareholders in their votes on this proposal and will consider
the outcome of the vote when making future decisions regarding the frequency of
conducting a “Say on Pay” vote.

 
 
 

 
 
Vulcan 2017 Proxy Statement
   
   

 
 

PROPOSAL 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
(SAY ON PAY FREQUENCY) 
 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR “1 YEAR” ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION

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PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee, which is composed solely of independent directors, has appointed Deloitte & Touche LLP as the independent registered
public accounting firm for our company and its subsidiaries for the fiscal year ending December 31, 2017. The function of the independent
registered public accounting firm is to audit our accounts and records; to report on the consolidated balance sheet and the
related statements of
consolidated comprehensive income, consolidated shareholders’ equity and consolidated statements of cash flows of our company and its
subsidiaries; to audit our internal controls over financial reporting; and to perform
such other appropriate accounting services as may be required
and approved by the Audit Committee. Although shareholder ratification is not required, our Board is seeking shareholder ratification as a matter
of good corporate governance. Even if the
appointment of Deloitte & Touche LLP is ratified by a majority of the votes cast at the meeting, the
Audit Committee may, in its discretion, direct the appointment of another independent registered public accounting firm at any time during
the
year, if it believes such appointment is in the best interests of the company and the shareholders. If a majority of the votes cast at the meeting
fails to ratify the selection of Deloitte & Touche LLP as our independent registered
public accounting firm, the Audit Committee will consider the
selection of another independent registered public accounting firm for future years.
The firm of
Deloitte & Touche LLP, or its predecessors, has audited our financial statements since 1956. A representative of that firm is expected
to be present at the meeting, will be given an opportunity to make a statement and will be available to
respond to appropriate questions.

 

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PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 

 
 

Vulcan 2017 Proxy Statement
 
 

   
   

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017

We take our corporate governance responsibilities very seriously and
have adopted Corporate Governance Guidelines that
provide a
framework for the governance of our company. These Corporate
Governance Guidelines build on practices that we have followed for
many years and demonstrate our continuing commitment to
corporate governance excellence.
Our Board, with recommendations from our Governance Committee,
regularly reviews corporate governance developments and adopts
appropriate practices as warranted. We have
a Business Conduct
Policy that applies to all of our employees and directors and deals
with a variety of corporate compliance issues, including conflicts of
interest, compliance with laws, confidentiality of company
information, fair dealing and use
of company assets. All employees
and directors are required to fill out a questionnaire (biennially in the
case of employees and annually in the case of directors) regarding
their personal compliance with the Business Conduct Policy and are

encouraged to report any illegal or unethical behavior of which they
become aware.

DIRECTOR INDEPENDENCE
All of our directors, with the exception of Tom Hill, our Chairman,
President and CEO, are independent under the NYSE listing
standards, the Board’s Director
Independence Criteria, and the
applicable SEC rules and regulations. The NYSE listing standards
provide that a director does not qualify as independent unless our
Board affirmatively determines that the director has no material
relationship with our
company (either directly or as a partner,
shareholder or officer of an organization that has a relationship with
our company). The NYSE rules require a board to consider all of the
relevant facts and circumstances in determining the materiality of a

director’s relationship with our company and permit the Board to
adopt and disclose standards to assist the Board in making
determinations of independence. Accordingly, the Board has adopted
the Director Independence Criteria, as set forth on
the following
page, to assist it in determining whether a director has a material
relationship with our company.

Our Board has adopted a Code of Ethics for the Chief Executive
Officer and Senior
Financial Officers. The Code of Ethics defines
“Senior Financial Officers” to include the Chief Financial Officer,
Controller and Principal Accounting Officer. The Code of Ethics
covers such topics as financial reporting, conflicts of
interest and
compliance with laws. If we make any amendment to, or waiver of,
any provision of the Code of Ethics, we will disclose such information
on our website as promptly as practicable, as may be required under
applicable SEC and NYSE rules.
You can access our bylaws, Corporate Governance Guidelines,
Business Conduct Policy and Code of Ethics at our website
www.vulcanmaterials.com, or you can
obtain a printed copy free of
charge by writing to us at: Corporate Secretary, Vulcan Materials
Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
Please note that the information contained on our website is not
incorporated by reference
in, nor considered to be a part of, this

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CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES
OF OUR BOARD
OF DIRECTORS
 
We take our corporate governance responsibilities very seriously and
have adopted Corporate Governance Guidelines that
provide a
framework for the governance of our company. These Corporate
Governance Guidelines build on practices that we have followed for
many years and demonstrate our continuing commitment to
corporate governance excellence.
Our Board, with recommendations from our Governance Committee,
regularly reviews corporate governance developments and adopts
appropriate practices as warranted. We have
a Business Conduct
Policy that applies to all of our employees and directors and deals
with a variety of corporate compliance issues, including conflicts of
interest, compliance with laws, confidentiality of company
information, fair dealing and use
of company assets. All employees
and directors are required to fill out a questionnaire (biennially in the
case of employees and annually in the case of directors) regarding
their personal compliance with the Business Conduct Policy and are

encouraged to report any illegal or unethical behavior of which they
become aware.

DIRECTOR INDEPENDENCE
All of our directors, with the exception of Tom Hill, our Chairman,
President and CEO, are independent under the NYSE listing
standards, the Board’s Director
Independence Criteria, and the
applicable SEC rules and regulations. The NYSE listing standards
provide that a director does not qualify as independent unless our
Board affirmatively determines that the director has no material
relationship with our
company (either directly or as a partner,
shareholder or officer of an organization that has a relationship with
our company). The NYSE rules require a board to consider all of the
relevant facts and circumstances in determining the materiality of a

director’s relationship with our company and permit the Board to
adopt and disclose standards to assist the Board in making
determinations of independence. Accordingly, the Board has adopted
the Director Independence Criteria, as set forth on
the following
page, to assist it in determining whether a director has a material
relationship with our company.

Our Board has adopted a Code of Ethics for the Chief Executive
Officer and Senior
Financial Officers. The Code of Ethics defines
“Senior Financial Officers” to include the Chief Financial Officer,
Controller and Principal Accounting Officer. The Code of Ethics
covers such topics as financial reporting, conflicts of
interest and
compliance with laws. If we make any amendment to, or waiver of,
any provision of the Code of Ethics, we will disclose such information
on our website as promptly as practicable, as may be required under
applicable SEC and NYSE rules.
You can access our bylaws, Corporate Governance Guidelines,
Business Conduct Policy and Code of Ethics at our website
www.vulcanmaterials.com, or you can
obtain a printed copy free of
charge by writing to us at: Corporate Secretary, Vulcan Materials
Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
Please note that the information contained on our website is not
incorporated by reference
in, nor considered to be a part of, this
proxy statement.
 
Vulcan 2017 Proxy Statement
   
   

CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

Director Independence Criteria
The Director Independence Criteria provide that a director will be
considered independent if he or she:
 

(a) has not been an employee of our company, or any of its
consolidated subsidiaries, during the last three years;

 
 

 
 

15
 


incapacitated, are not taken into consideration when determining a
director’s independence. The Director Independence Criteria also
require our Board to consider all relevant facts and
circumstances,
including a director’s commercial, industrial, banking, consulting,
legal, accounting, familial and charitable relationships and such other
criteria as our Board may determine from time to time.

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Director Independence Criteria
The Director Independence Criteria provide that a director will be
considered independent if he or she:
 

(a) has not been an employee of our company, or any of its
consolidated subsidiaries, during the last three years;


incapacitated, are not taken into consideration when determining a
director’s independence. The Director Independence Criteria also
require our Board to consider all relevant facts and
circumstances,
including a director’s commercial, industrial, banking, consulting,
legal, accounting, familial and charitable relationships and such other
criteria as our Board may determine from time to time.

 

(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;
 

(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.
In determining director independence, “immediate family member” is
defined as a spouse,
parent, child, sibling, mother or father-in-law,
son or daughter-in-law, brother or sister-in-law, and anyone (other
than a domestic employee) who shares the director’s home.
Individuals who are no longer immediate family members as a result
of legal
separation or divorce, or those who have died or become

In early 2017, the Board conducted an evaluation of director
independence for each director, based on the Director Independence
Criteria, the NYSE listing standards and
applicable SEC rules and
regulations. In connection with this review, the Board evaluated
commercial, industrial, banking, consulting, legal, accounting and
charitable relationships with each director or immediate family
member and his or her
related interests and our company and its
subsidiaries.
As a result of this evaluation, the Board affirmatively determined that
all of the directors other than our
Chairman, President and CEO,
Tom Hill, are independent directors under our Board’s Director
Independence Criteria, the NYSE listing standards and the
applicable SEC rules and regulations.

DIRECTOR NOMINATION PROCESS
The Governance Committee considers director candidates
recommended by our shareholders. Any shareholder wishing to
recommend a candidate for election at the 2018 Annual
Meeting
must submit that recommendation in writing, addressed to the
Governance Committee, in care of our Corporate Secretary, at 1200
Urban Center Drive, Birmingham, Alabama 35242, in accordance
with the deadlines and procedures set forth in our
bylaws. The notice
should include the following:
 

•  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(s) 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
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.

 
CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS

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 DEF 14A
16
 

 
 

 
 

 
 

The Governance Committee will identify nominees by first evaluating
the current members of our Board willing to continue
service. Current
members of our Board with skills and experience that are relevant to
our business and who are willing to continue in service are
considered for nomination, balancing the value of continuity of
service by existing members of our
Board with the potential benefits
of obtaining new Board members. If any member of the Board does
not wish to continue in service or if the Governance Committee or the
Board decides not to nominate a current Board member for
re-election, the Governance Committee may identify the desired
skills and experience for a new nominee in light of the above criteria.
Directors and members of management also may suggest
candidates for Board
service. Timely recommendations by our
shareholders will receive equal consideration by the Governance
Committee. In some cases, the committee engages, for a fee, the
services of a third-party executive search firm to assist it in
identifying and
evaluating nominees for director.

BOARD LEADERSHIP STRUCTURE
Our Board understands the importance of evaluating and determining
the optimal leadership structure so as to provide independent
oversight of management. Our Board also
understands that there is
no single, generally accepted approach to providing Board
leadership and that given the dynamic and competitive environment
in which we operate, the right Board leadership structure may vary
from time to time. For this
reason, our Board does not have a policy
with respect to the separation of the offices of Chairman of the Board
and Chief Executive Officer. The Board has determined that our
company should have the flexibility to combine or separate these
functions
as circumstances deem appropriate. The Board believes
that it is in the best interests of our company and its shareholders to
have Tom Hill serve as our Chairman, President and CEO, at this
time.
In considering its leadership structure, our Board has taken a number
of additional factors into account. The Board, which consists
exclusively of independent directors,
other than Mr. Hill, and all of
whom are highly qualified and experienced, exercise a strong
independent oversight function. This oversight function is enhanced
by the fact that all of the Board’s committees, other than the
Executive
Committee, are comprised entirely of independent
directors.
Most significantly, our Corporate Governance Guidelines provide for
an independent lead director, a
position which is elected annually
from among the independent directors of our Board. Among other
things, the lead director is responsible for:

   
   

•  serving as liaison between the Chairman and the
non-management and independent directors;
 

•  approving Board meeting schedules to assure that there is
sufficient time for discussion of all agenda items, as well as
meeting agendas and information sent to the Board;
 

•  having authority to call meetings of the non-management and
independent directors; and
 

•  if requested by major shareholders, ensuring that he or she is
available for consultation and direct communication.
The
duties of the lead director are delineated in our Corporate
Governance Guidelines, which are available on our website at
www.vulcanmaterials.com. Mr. Prokopanko currently serves as the
lead director.
Our Board believes that these factors provide the appropriate balance
between the authority of those who oversee our company and those
who manage it on a day-to-day basis. For additional information
regarding how oversight is exercised and how the Board receives
information from our committees performing risk management and

oversight functions, see “Corporate Governance of our Company and
Practices of our Board of Directors—Risk Management” on page 20.

NON-MANAGEMENT EXECUTIVE SESSIONS
Our Board of Directors has
adopted a policy relating to
non-management executive sessions. Under this policy, the Board of
Directors meets at each regularly scheduled Board meeting in an
executive session in which Mr. Hill and
other members of
management are not present. During 2016, the non-management
directors met in executive session five times.

MEETINGS AND ATTENDANCE
In 2016, our Board held five in-person meetings, and each current
director who was a member of the Board in 2016 attended more
than
75% of the total number of meetings of the Board and meetings of
the committees during 2016 of which he or she was a member.


ANNUAL MEETING POLICY
Our directors are expected to attend the Annual Meeting of
Shareholders. In furtherance of this policy, our Board holds a
regularly scheduled Board meeting on the same day as the Annual
Meeting of Shareholders. All of the Board members attended the
2016 Annual Meeting in person except Mr. O’Brien, who attended by
teleconference.

 

•  presiding at all meetings or sessions of meetings of the Board at
which the Chairman is not present, including at executive
sessions of the non-management and independent
directors;
 
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CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 

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The Governance Committee will identify nominees by first evaluating
the current members of our Board willing to continue
service. Current
members of our Board with skills and experience that are relevant to
our business and who are willing to continue in service are
considered for nomination, balancing the value of continuity of
service by existing members of our
Board with the potential benefits
of obtaining new Board members. If any member of the Board does
not wish to continue in service or if the Governance Committee or the
Board decides not to nominate a current Board member for
re-election, the Governance Committee may identify the desired
skills and experience for a new nominee in light of the above criteria.
Directors and members of management also may suggest
candidates for Board
service. Timely recommendations by our
shareholders will receive equal consideration by the Governance
Committee. In some cases, the committee engages, for a fee, the
services of a third-party executive search firm to assist it in
identifying and
evaluating nominees for director.

BOARD LEADERSHIP STRUCTURE
Our Board understands the importance of evaluating and determining
the optimal leadership structure so as to provide independent
oversight of management. Our Board also
understands that there is
no single, generally accepted approach to providing Board
leadership and that given the dynamic and competitive environment
in which we operate, the right Board leadership structure may vary
from time to time. For this
reason, our Board does not have a policy
with respect to the separation of the offices of Chairman of the Board
and Chief Executive Officer. The Board has determined that our
company should have the flexibility to combine or separate these
functions
as circumstances deem appropriate. The Board believes
that it is in the best interests of our company and its shareholders to
have Tom Hill serve as our Chairman, President and CEO, at this
time.
In considering its leadership structure, our Board has taken a number
of additional factors into account. The Board, which consists
exclusively of independent directors,
other than Mr. Hill, and all of
whom are highly qualified and experienced, exercise a strong
independent oversight function. This oversight function is enhanced
by the fact that all of the Board’s committees, other than the
Executive
Committee, are comprised entirely of independent
directors.
Most significantly, our Corporate Governance Guidelines provide for
an independent lead director, a
position which is elected annually
from among the independent directors of our Board. Among other
things, the lead director is responsible for:

•  serving as liaison between the Chairman and the
non-management and independent directors;
 

•  approving Board meeting schedules to assure that there is
sufficient time for discussion of all agenda items, as well as
meeting agendas and information sent to the Board;
 

•  having authority to call meetings of the non-management and
independent directors; and
 

•  if requested by major shareholders, ensuring that he or she is
available for consultation and direct communication.
The
duties of the lead director are delineated in our Corporate
Governance Guidelines, which are available on our website at
www.vulcanmaterials.com. Mr. Prokopanko currently serves as the
lead director.
Our Board believes that these factors provide the appropriate balance
between the authority of those who oversee our company and those
who manage it on a day-to-day basis. For additional information
regarding how oversight is exercised and how the Board receives
information from our committees performing risk management and

oversight functions, see “Corporate Governance of our Company and
Practices of our Board of Directors—Risk Management” on page 20.

NON-MANAGEMENT EXECUTIVE SESSIONS
Our Board of Directors has
adopted a policy relating to
non-management executive sessions. Under this policy, the Board of
Directors meets at each regularly scheduled Board meeting in an
executive session in which Mr. Hill and
other members of
management are not present. During 2016, the non-management
directors met in executive session five times.

MEETINGS AND ATTENDANCE
In 2016, our Board held five in-person meetings, and each current
director who was a member of the Board in 2016 attended more
than
75% of the total number of meetings of the Board and meetings of
the committees during 2016 of which he or she was a member.


ANNUAL MEETING POLICY
Our directors are expected to attend the Annual Meeting of
Shareholders. In furtherance of this policy, our Board holds a
regularly scheduled Board meeting on the same day as the Annual
Meeting of Shareholders. All of the Board members attended the
2016 Annual Meeting in person except Mr. O’Brien, who attended by
teleconference.

 

•  presiding at all meetings or sessions of meetings of the Board at
which the Chairman is not present, including at executive
sessions of the non-management and independent
directors;
 
Vulcan 2017 Proxy Statement
   
   

CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

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COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors has established six standing committees as follows:

 
Director
Thomas A. Fanning
O. B. Grayson Hall, Jr.
J. Thomas Hill
Cynthia L. Hostetler
Douglas J. McGregor
Richard T. O’Brien
James T. Prokopanko
David P. Steiner
Lee J. Styslinger, III
Vincent J. Trosino
Kathleen Wilson-Thompson
Number of meetings held in 2016

Safety, Health and
Audit
Compensation Executive
Finance Governance
Environmental
Committee Committee Committee Committee Committee
 
 
 
 
 
  Affairs Committee
 
•
 
•
 
 
 
 
 
 
 
•
 
•
 
Chair
 
 
 
 
Chair  
 
 
 
•
 
 
•
 
Chair  
 
 
•
 
 
 
•
 
 
 
Chair  
 
•
 
 
 
•
 
 
Chair
 
•
 
 
•
 
 
 
 
 
 
•
 
•
 
 
•
 
 
 
 
•
 
•
 
 
 
 
•
 
 
 
•
 
•
 
 
 
Chair
 
7
 
4
 
0
 
3
 
4
 
3

 
The charters of the Audit, Compensation and Governance
Committees are available on our website at

www.vulcanmaterials.com. You can also obtain a printed copy free of
charge by writing to us at: Corporate Secretary, Vulcan Materials
Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
All of the Board committees, other than the Executive Committee, are
composed entirely of independent, non-management directors.
Audit Committee
The Audit Committee advises our Board and management from
time
to time with respect to internal controls, financial systems and
procedures, accounting policies and other significant aspects of our
company’s financial management. Pursuant to its charter, the Audit
Committee selects our company’s
independent registered public
accounting firm and oversees the arrangements for, and approves
the scope of, the audits to be performed by the independent
registered public accounting firm. The Audit Committee’s primary
responsibilities under
its written charter include the following:
 

•  Hiring, evaluating and, when appropriate, replacing the
independent registered public accounting firm, whose duty it is to
audit our books and accounts and our internal controls 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

pre-approving all auditing and non-auditing services of such firm,
other than certain de minimis non-audit services;

•  Reviewing and discussing with management, the independent
registered public accounting firm and internal auditors our internal
reporting, audit procedures and the adequacy and effectiveness
of our disclosure controls
and procedures;
 

•  Reviewing and discussing with management and the independent
registered public accounting firm the audited financial statements
to be included in our Annual Report on Form 10-K,
the quarterly
financial statements to be included in our Quarterly Reports on
Form 10-Q, our disclosures under “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations,” and
the selection, application and disclosure of accounting policies
used in our financial statements;
 

•  Reviewing and discussing with management quarterly earnings
press releases and financial information and earnings guidance
provided to analysts and rating agencies; and
 

•  Reviewing and reassessing the adequacy of the Audit Committee
Charter adopted by our Board, and recommending proposed
changes to our Board.
In addition, the Audit Committee is responsible for reviewing and
discussing with management our company’s policies with respect to
risk assessment and risk
management. Further information about the
role of the Audit Committee in risk assessment and risk management
are included in the Section entitled “Risk Management.”
The Audit Committee has established policies and procedures for the
pre-approval of all services by the independent registered
public
accounting firm. See “Pre-Approval of Services Performed by
Independent Registered Public Accounting Firm” on page 23 for
more information.

 

18
 

CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

 
 

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The Audit Committee has also established procedures for the receipt,
retention and treatment, on a confidential basis, of
complaints
received by our company regarding its accounting, internal controls
and auditing matters. See “Corporate Governance of our Company
and Practices of our Board of Directors—Policy on Reporting of
Concerns regarding Accounting
Matters” on page 21 for more
information.
The members of the Audit Committee are Messrs. O’Brien (Chair),
Fanning, McGregor and Trosino and
Ms. Hostetler. All members of
our Audit Committee are non-management directors. Our Board of
Directors has determined that each is “independent” and “financially
literate” within the
meaning of the listing standards of the NYSE, SEC
rules and regulations, and the Director Independence Criteria
adopted by our Board of Directors and posted on our website at
www.vulcanmaterials.com under “Investor Relations.” In
addition, our
Board has determined that Mr. O’Brien is an “audit committee
financial expert” as defined by rules adopted by the SEC. More
details about the role of the Audit Committee may be found in the
Report of the Audit
Committee on page 22 of this proxy statement.
Compensation Committee
The
Compensation Committee determines and oversees the
execution of our company’s executive compensation philosophy, and
oversees the administration of our company’s executive
compensation plans.
The Compensation Committee is responsible for, among other things:
 

•  determining and setting the amount of compensation paid to each
of our executive officers, including the CEO, senior corporate
officers and heads of our regional business units;
 

•  reviewing compensation plans relating to our officers;
 

•  interpreting and administering the Executive Incentive Plan (EIP),
the 2006 Omnibus Long-Term Incentive Plan (2006 Plan) and the
2016 Plan; and
 

•  making recommendations to the Board with respect to
compensation paid by our company to any director.
The Compensation
Committee also reviews and discusses with
management the Compensation Discussion and Analysis required by
SEC rules to be included in our proxy statement.
The
Compensation Committee has engaged Compensation
Strategies, Inc. as its independent compensation consultant. For a
description of the process undertaken by the Compensation
Committee to set compensation and the role of Compensation
Strategies in
that process, please refer to the Section entitled
“Compensation Discussion and Analysis” in this proxy statement.
The members of the Compensation
Committee are Mr. Prokopanko
(Chair), Ms. Wilson-Thompson and Messrs. Fanning and Styslinger.
The Compensation Committee is


composed solely of non-management directors who are
“independent” within the meaning of the listing standards of the
NYSE, SEC rules and
regulations and the Board’s Director
Independence Criteria. In addition, each Compensation Committee
member is a “nonemployee director” as defined in Rule 16b-3 under
the Exchange Act, and is an
“outside director” as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended
(Code).
Executive Committee
The Executive Committee has the same powers as our Board of
Directors, except as limited by the New Jersey Business Corporation
Act. Pursuant to its charter, the
Executive Committee’s primary
function is to exercise the powers of the Board of Directors on urgent
matters arising between regularly scheduled board meetings when a
quorum of the full Board is not available. Members of the Executive
Committee
are Messrs. Hill (Chair), Hall, O’Brien and Prokopanko,
and Mses. Hostetler and Wilson-Thompson.
Finance Committee
The Finance Committee has responsibility for overseeing our financial
policies. It recommends to our Board financial policies and actions to
accommodate our goals and
operating strategies while maintaining a
sound financial condition. Its functions include keeping informed
about our financial condition, recommending a dividend policy,
reviewing and recommending changes in the quarterly dividend
payments, and
evaluating and making recommendations concerning
the appropriate mix of debt and equity, incurrence of long-term debt,
and changes in the authorized limit of short-term debt. The Finance
Committee also is responsible for overseeing the funding and

management of assets for pension plans sponsored by our company.
To fulfill these functions, it establishes funding policies and methods
consistent with pension plan objectives and the Employee
Retirement Income Security Act of 1974, as amended,
selects and
removes investment managers, and appoints trustees for the
pension plans. Every member of this Committee is a
non-management director who is “independent” within the meaning
of the
listing standards of the NYSE, SEC rules and regulations and
the Board’s Director Independence Criteria. Members of the Finance
Committee are Ms. Hostetler (Chair) and Messrs. Hall and
McGregor.
Governance Committee
The Governance Committee is responsible for reviewing and

assessing our policies and practices relating to corporate
governance, including our Corporate Governance Guidelines. The
Governance Committee also plans for the succession of the CEO
and other senior executives. In addition, the Governance
Committee
serves as the nominating committee and is responsible for identifying
and assessing director candidates, including making
recommendations to our Board regarding such candidates. In
fulfilling its responsibilities, the Governance Committee,
among other
things:
 

•  identifies individuals qualified to become Board members
consistent with criteria established in its charter;
 

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CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

•  recommends director nominees to our Board for the next Annual
Meeting of Shareholders; and
 

•  evaluates individuals suggested by shareholders as director
nominees.
In recommending director nominees to the Board, the
Governance
Committee considers all of the factors listed under “Director
Qualifications” set forth in this proxy statement.
The Governance Committee
believes it appropriate for at least one
member of the Board to meet the criteria for an “audit committee
financial expert” as defined by the SEC rules, and for a substantial
majority of the members of the Board to meet the definition of

“independent” as defined by the listing standards of the NYSE, SEC
rules and regulations and the Board’s Director Independence
Criteria.
The
Governance Committee also reviews our Board’s committee
structure and recommends to our Board, for its approval, directors to
serve as members of each committee. The Governance Committee
also is responsible for overseeing the evaluations of the
Board and
its committees.
Members of the Governance Committee are Mr. Hall (Chair) and
Messrs. Prokopanko, Steiner and Trosino. The Governance
Committee is
composed solely of non-management directors who
are “independent” within the meaning of the listing standards of the
NYSE, SEC rules and regulations and the Board’s Director
Independence
Criteria.
Safety, Health and Environmental Affairs Committee
The Safety,
Health and Environmental Affairs Committee has the
responsibility for reviewing our policies, practices and programs with
respect to the management of safety, health and environmental
affairs. It also monitors our compliance with safety, health and

environmental laws and regulations and oversees operational risk.
Every member of this Committee is a non-management director who
is “independent” within the meaning of the listing standards of the

NYSE, SEC rules and regulations and the Board’s Director
Independence Criteria. Members of the Safety, Health and
Environmental Affairs Committee are Ms. Wilson-Thompson (Chair),
and Messrs. O’Brien, Steiner and Styslinger.

RISK MANAGEMENT
Although the Board has the ultimate oversight responsibility for the
risk management process, various committees of the Board assist
the Board in fulfilling its oversight
responsibilities in certain areas of
risk. In particular, the Audit Committee focuses on financial risk,
including internal controls, and discusses with management, the
internal auditors, and our independent registered public accounting
firm our
company’s policies with respect to risk assessment and risk
management. Our Audit Committee also assists the Board in fulfilling
its duties and oversight responsibilities relating to our company’s
compliance and ethics programs. In
addition, our Safety, Health and

 
 

19
 


with respect to monitoring operational risks and compliance with
safety, health and environmental laws and regulations and works
closely with our company’s legal and regulatory groups. The

Compensation Committee also assists the Board in fulfilling its
oversight responsibilities to create long-term value for our company,
while discouraging behavior that leads to excessive risk taking.
Finally, the Finance Committee assists the Board
in managing risk
relating to investment of the company’s pension fund assets and
debt/leverage risks. The Board is kept informed of its committees’
risk oversight and other activities through reports of the committees’
chairs to the
Board. These reports are presented at Board meetings
and include discussions of committee agenda topics. The Board also
considers specific risk topics, including risks associated with our
strategic plan, our capital structure, our development
activities and
other current risk topics.
Our company has a management risk committee comprised of senior
managers from diverse departments, including finance and

accounting, operations, safety and health, legal, risk management,
internal audit, community relations and human resources. The
management risk committee meets on a regular basis to discuss and
evaluate risks faced by the company. The committee
develops
mitigation plans in response to identified risks and monitors the
implementation of such plans. The management risk committee
makes regular reports to the Board and the Audit and Safety, Health
and Environmental Affairs Committees.
We believe the division of risk management responsibilities described
above is an effective approach for addressing the risks facing our
company and that our Board
structure supports this approach.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None.

TRANSACTIONS WITH RELATED
PERSONS
Transactions in which the company participates and in which any
related person of the company has a direct or indirect material
interest are
subject to our Business Conduct Policy and are subject
to review, approval or ratification, as appropriate under the
circumstances, by the company under the standards enumerated in
the Business Conduct Policy. Each director, executive officer, and

director nominee of the company receives and agrees to abide by
our Business Conduct Policy. We also require our directors and
executive officers to complete annually a director and officer
questionnaire that requires disclosure of any related
party
transactions.
In assessing the independence of its members, the Board considers
any interests a director may have in any transactions in which the
company
participates. The Board also considers other entities with
which the directors are affiliated and any business the company has
done with such entities.

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•  recommends director nominees to our Board for the next Annual
Meeting of Shareholders; and
 

•  evaluates individuals suggested by shareholders as director
nominees.
In recommending director nominees to the Board, the
Governance
Committee considers all of the factors listed under “Director
Qualifications” set forth in this proxy statement.
The Governance Committee
believes it appropriate for at least one
member of the Board to meet the criteria for an “audit committee
financial expert” as defined by the SEC rules, and for a substantial
majority of the members of the Board to meet the definition of

“independent” as defined by the listing standards of the NYSE, SEC
rules and regulations and the Board’s Director Independence
Criteria.
The
Governance Committee also reviews our Board’s committee
structure and recommends to our Board, for its approval, directors to
serve as members of each committee. The Governance Committee
also is responsible for overseeing the evaluations of the
Board and
its committees.
Members of the Governance Committee are Mr. Hall (Chair) and
Messrs. Prokopanko, Steiner and Trosino. The Governance
Committee is
composed solely of non-management directors who
are “independent” within the meaning of the listing standards of the
NYSE, SEC rules and regulations and the Board’s Director
Independence
Criteria.
Safety, Health and Environmental Affairs Committee
The Safety,
Health and Environmental Affairs Committee has the
responsibility for reviewing our policies, practices and programs with
respect to the management of safety, health and environmental
affairs. It also monitors our compliance with safety, health and

environmental laws and regulations and oversees operational risk.
Every member of this Committee is a non-management director who
is “independent” within the meaning of the listing standards of the

NYSE, SEC rules and regulations and the Board’s Director
Independence Criteria. Members of the Safety, Health and
Environmental Affairs Committee are Ms. Wilson-Thompson (Chair),
and Messrs. O’Brien, Steiner and Styslinger.

RISK MANAGEMENT
Although the Board has the ultimate oversight responsibility for the
risk management process, various committees of the Board assist
the Board in fulfilling its oversight
responsibilities in certain areas of
risk. In particular, the Audit Committee focuses on financial risk,
including internal controls, and discusses with management, the
internal auditors, and our independent registered public accounting
firm our
company’s policies with respect to risk assessment and risk
management. Our Audit Committee also assists the Board in fulfilling
its duties and oversight responsibilities relating to our company’s
compliance and ethics programs. In
addition, our Safety, Health and
Environmental Affairs Committee assists the Board in fulfilling its
responsibilities


with respect to monitoring operational risks and compliance with
safety, health and environmental laws and regulations and works
closely with our company’s legal and regulatory groups. The

Compensation Committee also assists the Board in fulfilling its
oversight responsibilities to create long-term value for our company,
while discouraging behavior that leads to excessive risk taking.
Finally, the Finance Committee assists the Board
in managing risk
relating to investment of the company’s pension fund assets and
debt/leverage risks. The Board is kept informed of its committees’
risk oversight and other activities through reports of the committees’
chairs to the
Board. These reports are presented at Board meetings
and include discussions of committee agenda topics. The Board also
considers specific risk topics, including risks associated with our
strategic plan, our capital structure, our development
activities and
other current risk topics.
Our company has a management risk committee comprised of senior
managers from diverse departments, including finance and

accounting, operations, safety and health, legal, risk management,
internal audit, community relations and human resources. The
management risk committee meets on a regular basis to discuss and
evaluate risks faced by the company. The committee
develops
mitigation plans in response to identified risks and monitors the
implementation of such plans. The management risk committee
makes regular reports to the Board and the Audit and Safety, Health
and Environmental Affairs Committees.
We believe the division of risk management responsibilities described
above is an effective approach for addressing the risks facing our
company and that our Board
structure supports this approach.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None.

TRANSACTIONS WITH RELATED
PERSONS
Transactions in which the company participates and in which any
related person of the company has a direct or indirect material
interest are
subject to our Business Conduct Policy and are subject
to review, approval or ratification, as appropriate under the
circumstances, by the company under the standards enumerated in
the Business Conduct Policy. Each director, executive officer, and

director nominee of the company receives and agrees to abide by
our Business Conduct Policy. We also require our directors and
executive officers to complete annually a director and officer
questionnaire that requires disclosure of any related
party
transactions.
In assessing the independence of its members, the Board considers
any interests a director may have in any transactions in which the
company
participates. The Board also considers other entities with
which the directors are affiliated and any business the company has
done with such entities.

 

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 DEF 14A
20
 

CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

 
 

Vulcan 2017 Proxy Statement
 
 

Except as discussed below, since the beginning of our last fiscal year,
no financial transactions, arrangements or
relationships, or any
series of them, were disclosed or proposed through our processes
for review, approval or ratification of transactions with related
persons in which (i) Vulcan was or is to be a participant, (ii) the
amount involved
exceeded $120,000, and (iii) any related person
had or will have a direct or indirect material interest. A related person
means any person who was a director, nominee for director,
executive officer or 5% owner of our common stock or an
immediate
family member of any such person.
Mr. Hall, a member of our Board of Directors, is the Chairman and
Chief Executive Officer of Regions Financial
Corporation (Regions
Financial), one of the nation’s largest full-service banking institutions.
Regions Bank, a subsidiary of Regions Financial, provides certain
lending (including as a lender in the company’s revolving credit
facility),
deposit and similar banking services to the company. Any
loans made by Regions Bank to the company during fiscal year 2016
were made in the ordinary course of business, were made on
substantially the same terms as those prevailing at the time for

comparable loans with persons not related to the company, and did
not involve more than the normal risk of collectability or present other
unfavorable features.
Additionally, in 2016, the company sold approximately $427,000
worth of product to Southern Company, which is less than 1% of
either company’s revenues for 2016.
Mr. Fanning, a member of our
Board of Directors, is the Chairman, President and CEO of Southern
Company.
During 2016, the company also purchased approximately
$1.0 million
worth of services from Waste Management, Inc. (WMI), and WMI
purchased approximately $1.2 million of product from the company,
each of which is less than 1% of either company’s revenues in 2016.
At times during 2016,
Mr. Steiner, a member of our Board of
Directors, served as President, Chief Executive Officer and as a
member of the board of directors of WMI.
In addition, the
company paid approximately $6.2 million in rent and
royalty payments to Florida Rock Properties, Inc. (FRP) in 2016 in
the ordinary course of its aggregates operations. Thompson S.
Baker, II, our Senior Vice President, was chief executive
officer of
FRP until he joined our company on March 13, 2017.

   
   

SHAREHOLDER COMMUNICATION WITH OUR
BOARD OF DIRECTORS
Our Board has established a process for shareholders and other
interested parties to communicate directly with the lead director or
with the non-management directors individually or as a group. Any
shareholder or other interested party who desires to contact one or
more of our non-management directors, including
our Board’s lead
director, may send correspondence to the following address:
Board of Directors
(or lead director or name of individual director)
c/o Corporate Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242
All such communications will be forwarded to the appropriate
director
or directors specified in such communications as soon as practicable
in accordance with the Policy on Shareholder Communications with
the Board, adopted by the independent directors in February 2004.

POLICY ON REPORTING OF CONCERNS
REGARDING ACCOUNTING MATTERS
Our Business Conduct Policy (available on our website at
www.vulcanmaterials.com under the heading “Investor Relations”
under the subheading “Corporate Governance”) sets forth our
policies regarding reporting of accounting-related concerns or
complaints (as well as reporting of other concerns or complaints) to
our Compliance Officer or the Audit Committee.
Any shareholder or interested party who has any concerns or
complaints relating to accounting, internal accounting controls or
auditing matters, may contact the Audit
Committee by writing to the
following address:
Vulcan Audit Committee
c/o
Corporate Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242

 
Vulcan 2017 Proxy Statement
   
   

CORPORATE GOVERNANCE OF OUR COMPANY AND PRACTICES OF OUR BOARD OF DIRECTORS
 
 

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21
 

 DEF 14A

Table of Contents

REPORT OF THE AUDIT COMMITTEE
 
The Audit Committee of the Board is responsible for, among other
things, reviewing our company’s financial statements
with
management and our company’s independent registered public
accounting firm. The Audit Committee acts under a written charter
which is available on our website at www.vulcanmaterials.com. Each
member of the Audit Committee is an
independent director as
determined by our Board, based on the requirements of the NYSE,
the SEC and our Board’s Director Independence Criteria.


accountant’s communications with the Audit Committee concerning
independence, and discussed with the independent accountant its
independence. The Audit Committee has also considered whether

the independent registered public accounting firm’s provision of any
non-audit services is compatible with the firm’s independence. The
Audit Committee has concluded that the independent registered

public accounting firm is independent from our company and
management.

Our
company’s management has the primary responsibility for our
company’s financial statements and financial reporting process,
including the system of internal controls. Deloitte & Touche LLP, our
independent registered public
accounting firm, is responsible for
expressing an opinion on the conformity of our company’s audited
financial statements with generally accepted accounting principles.
Our independent registered public accounting firm also audits, in

accordance with the standards of the Public Company Accounting
Oversight Board (PCAOB), the effectiveness of our company’s
internal control over financial reporting. The Audit Committee is
responsible for monitoring and overseeing these
processes.

Based on the reviews and discussions noted above, the Audit
Committee recommended to the Board
of Directors that the audited
financial statements be included in our company’s Annual Report on
Form 10-K for the year ended December 31, 2016, for filing with the
SEC.

In this context, the Audit Committee has reviewed and discussed our
company’s audited financial statements with management and the
independent
registered public accounting firm. The Audit Committee
has discussed with the independent registered public accounting firm
the matters required to be discussed by Auditing Standard 1301
“Communications with Audit Committees” issued by the
PCAOB. In
addition, the Audit Committee has received from the independent
registered public accounting firm the written disclosures and letter
required by the applicable requirements of the PCAOB regarding the
independent

Dated: February 21, 2017
AUDIT COMMITTEE

Richard T. O’Brien, Chair
Thomas A. Fanning
Cynthia L. Hostetler
Douglas J. McGregor
Vincent J. Trosino
The Report of the Audit
Committee does not constitute
soliciting material, and shall not be deemed to be filed or
incorporated by reference into any other company filing
under the Securities Act of 1933, as amended, or the
Exchange Act except to the extent that the company

specifically incorporates the Report of the Audit
Committee by reference therein.

 

22
 

REPORT OF THE AUDIT COMMITTEE
 
 

Vulcan 2017 Proxy Statement

 
 

 
Audit Fees(1)
Audit-Related Fees (2)
Tax Fees
All Other Fees

 
 

 
 
 
 
 

$
 
 
 

2016  
3,308,743  
176,512  
0  
0  

$
 
 
 

2015 
3,247,419 
234,146 
0 
0 

   
   

(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, comfort letters,
consents, and other services associated with other
SEC filings.
(2) Consists of fees for the audits of our employee benefit plans and accounting
consultations relating to various asset transactions.

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 DEF 14A

Table of Contents

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Aggregate fees billed to us for the fiscal years ended December 31, 2016 and 2015, by Deloitte & Touche LLP, and its affiliates (all of which are

subsidiaries of Deloitte, LLP, the United States member firm of Deloitte Touche Tohmatsu Limited) were as follows:

 
 
Audit Fees(1)
Audit-Related Fees (2)
Tax Fees
All Other Fees
Total

 
 
 
 
 
 

2016  
$ 3,308,743  
  176,512  
 
0  
 
0  
$ 3,485,255  

2015 
$ 3,247,419 
  234,146 
 
0 
 
0 
$ 3,481,565 

(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, comfort letters,
consents, and other services associated with other
SEC filings.
(2) Consists of fees for the audits of our employee benefit plans and accounting
consultations relating to various asset transactions.

 
PRE-APPROVAL OF SERVICES PERFORMED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

The Audit Committee has policies and procedures that require the
pre-approval by
the Audit Committee of all fees paid to, and all
services performed by, our company’s independent registered public
accounting firm. At the beginning of each year, the Audit Committee
approves the proposed services, including the nature, type
and
scope of services contemplated and the related fees, to be rendered
by the independent registered public accounting firm during the year.
During the year,
circumstances may arise when it may become
necessary to engage the independent registered public accounting
firm for additional services not contemplated in the original
pre-approval. In those instances, the
Audit Committee requires
specific pre-approval before engaging the independent registered


public accounting firm. The Audit Committee has delegated
pre-approval authority to the Chair of the Audit Committee for those
instances when pre-approval is needed prior to a scheduled Audit
Committee meeting. The Chair of the Audit Committee must report
on such approvals at the next scheduled Audit Committee meeting.
The Audit Committee or the Chair of
the Audit Committee
pre-approved all audit, audit-related, tax, and other services
performed by Deloitte & Touche LLP during the fiscal year ended
December 31, 2016.
No audit-related, tax or other services were rendered in 2016
pursuant to the de minimis exception to the pre-approval
requirement
set forth in the Regulation S-X Rule 2-01(c)(7)(i)(C).

 
Vulcan 2017 Proxy Statement
   
   

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 

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 DEF 14A

Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following is information regarding persons known to us to have beneficial ownership of more than 5% of the outstanding common stock of our
company, which is our only
outstanding class of voting securities, as of the dates indicated in the footnotes below.

 
Name and Address of
Beneficial Owner
State Farm Mutual Automobile Insurance
Company and Affiliates
One State Farm Plaza
Bloomington, IL 61710
The Vanguard Group, Inc.
100 Vanguard Blvd
Malvern, PA 19355
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055

  

Amount and Nature of
Beneficial Ownership
(# of shares) 

    

Percent of
Class
 

  

 

12,757,367(1) 

    

 

9.6% 

  

 

12,630,027(2) 

    

 

9.5% 

  

 

11,019,583(3) 

    

 

8.3% 

  

 

8,070,475(4) 

    

 

6.1% 

 
(1)

(2)

(3)

(4)

Based on information contained in a Schedule 13G, filed with the SEC on January 23, 2017, by State Farm Mutual Automobile Insurance Company and various affiliated entities (State
Farm). State Farm reports sole
power to vote (or direct the vote of) and dispose (or direct the disposition of) 12,680,600 shares. State Farm also reports shared power to vote (or direct the
vote of) and dispose (or direct the disposition of) 76,767 shares. State Farm reports an
aggregate amount of 12,757,367 beneficially owned shares. Each entity listed in the Schedule 13G
expressly disclaims beneficial ownership as to all shares as to which such entity has no right to receive the proceeds of the sale of the security and
disclaims that it is part of a group.
Based on information contained in a Schedule 13G/A, filed with the SEC on February 13, 2017. The Vanguard Group (Vanguard) reports sole power to vote (or direct the vote of) 207,940
shares and sole power to dispose
(or direct the disposition of) 12,405,772 shares. Vanguard also reports shared power to vote (or direct the vote of) 23,719 shares and shared power to
dispose (or direct the disposition of) 224,255 shares. Vanguard reports an aggregate amount of
12,630,027 shares beneficially owned.
Based on information contained in a Schedule 13G/A filed with the SEC on February 7, 2017. T. Rowe Price Associates, Inc. (Price Associates) reports sole power to vote (or direct the vote
of) 4,036,705 shares and
sole power to dispose (or direct the disposition of) 11,006,583 shares. Price Associates reports an aggregate amount of 11,019,583 beneficially owned shares.
These securities are owned by various individuals and institutional investors for which
Price Associates serves as an investment adviser with power to direct investments and/or sole power
to vote the securities. Price Associates declares that the filing of the Schedule 13G/A shall not be construed as an admission that Price Associates
is the beneficial owner of the securities
referred to, which beneficial ownership is expressly denied.
Based on information contained in a Schedule 13G/A, filed with the SEC on January 27, 2017. BlackRock, Inc. reports sole power to vote (or direct the vote of) 6,906,266 shares, the
shared power to vote (or direct
the vote of) 13,827 shares, sole power to dispose (or direct the disposition of) 8,056,648 shares, and the shared power to dispose (or direct the disposition
of) 13,827 shares. Various persons have the right to receive, or the power to direct, the
receipt of dividends from, the proceeds from the sale of the company’s common stock. No one
person’s interest in the company’s common stock is more than five percent of the total outstanding common shares.

 

24
 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 

 
 

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Vulcan 2017 Proxy Statement
 
 

   
   

 DEF 14A

Table of Contents

SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, unless otherwise indicated, as of March 1, 2017, regarding beneficial ownership of our company’s
common stock, our
only outstanding class of equity securities, by each of our directors, each of our NEOs identified in the Summary
Compensation Table on page 47 of this proxy statement, and our directors and executive officers as a group. We believe that, for each
of the
individuals set forth in the table below, such individual’s financial interest is aligned with the interests of our other shareholders because the value
of such individual’s total holdings will increase or decrease in line with the
price of our common stock.

 
Name of Beneficial Owner  

  

Non-employee Directors(1)
Thomas A. Fanning
O. B. Grayson Hall, Jr.
Cynthia L. Hostetler
Douglas J. McGregor
Richard T. O’Brien
James T. Prokopanko
David P. Steiner(4)
Lee J. Styslinger, III
Vincent J. Trosino
Kathleen Wilson-Thompson

  
  
  
  
  
  
  
  
  
  
  

Amount and Nature of Beneficial Ownership (# of shares)
Shares Owned
Phantom Shares
Percent of
Directly or
Held Pursuant
Class
(2)
Indirectly  
Total  
to Plans   
   
0        
 
  3,375    
   3,375   
 
  * 
   
0    
 
  4,744    
   4,744   
 
  * 
   
0    
 
  1,307    
   1,307   
 
  * 
 
 86,993    
  98,557   
 
  * 
    11,564(3)    
   
0    
 
 11,564    
  11,564   
 
  * 
   
0    
 
  9,470    
   9,470   
 
  * 
   
0    
 
 
0    
  
0   
 
  * 
    4,002    
 
  8,032    
  12,034   
 
  * 
 
 42,356    
  53,941   
 
  * 
    11,585(5)    
   
0    
 
  9,470    
   9,470   
 
  * 

 
CEO and
other NEOs(6)
J. Thomas Hill
John R. McPherson
Stanley G. Bass
Michael R. Mills
David P. Clement
All Directors and Executive Officers as a group
(24 persons)

  
   
   
   
   
   
   

Shares Owned Exercisable Deferred
Directly or
Options/
Percent of
LTI
Indirectly 
SOSARs   Payments  
Class
Total  
    
63,065      5,634      112,723      
* 
 44,024(7) 
     407,125      
0      443,544      
* 
 36,419(8) 
    
56,905      
0      91,427      
* 
 34,522(9) 
    
52,770      
0      84,580      
* 
 31,810(10) 
    
15,340      
0      23,522      
* 
  8,182(11) 
  

   

    1,185,051       0.89% 

 
 *
(1)

(2)

Less than 1% of issued and outstanding shares of our company’s common stock.
Beneficial ownership for our 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 non-forfeitable
phantom shares settled in stock accrued under the Directors’ Deferred Compensation Plan, and Deferred Stock Units (DSUs) awarded under the Deferred Stock Plan for
Non-employee
Directors, the 2006 Plan and the 2016 Plan.
Column does not include the following forfeitable shares (settled in stock under the Directors’ Deferred Compensation Plan) owned by the following non-employee directors:

 
                Name
Thomas A. Fanning
O. B. Grayson Hall, Jr.
Cynthia L. Hostetler
Richard T. O’Brien
James T. Prokopanko
Lee J. Styslinger, III
Kathleen Wilson-Thompson

  
  
  
  
  
  
  
  

 
 
 
 
 
 
 

DSUs 
1,734 
3,824 
1,734 
3,824 
3,824 
3,824 
3,824 

 

(3)
(4)
(5)
(6)

Includes 9,249 shares held in trusts of which Mr. McGregor is the trustee.
Mr. Steiner was elected to the Board in February 2017.
Includes 2,321 shares held in a trust of which Mr. Trosino is the trustee.
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, 2017, shares credited to the executives’ accounts under our 401(k) Plan and long-term incentive (LTI)
payments from Deferred Stock Units (DSUs), Performance Share Units (PSUs) and Restricted
Stock Units (RSUs) that have been deferred into the Executive Deferred Compensation
Plan.
(7) Includes 16,117 shares held in 401(k) plan and excess benefit plan.
(8) Includes 6,760 shares held in 401(k) plan and excess benefit plan.
(9) Includes 12,583 shares held in 401(k) plan and excess benefit plan.
(10) Includes 7,938 shares held in 401(k) plan and excess benefit plan.
(11) Includes 5,917 shares held in 401(k) plan and excess benefit plan.

 
Vulcan 2017 Proxy Statement
   

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 

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 DEF 14A
   

 

(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 Deferred Stock Plan for Non-employee Directors, the 2000 Florida Rock
Industries Amended and Restated Stock Plan, the 2006 Plan and the 2016 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 this plan. The plan will be used only for the
administration and payment of grants that were outstanding when the 2006 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.
(4) Future grants will not be made under this plan. The plan will be used only for the
administration and payment of grants that were outstanding when the 2016 Plan was
approved.

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 DEF 14A

Table of Contents

EQUITY COMPENSATION PLANS
The table below sets forth information regarding the number of shares of our common stock authorized for issuance under our equity
compensation plans as of
December 31, 2016.

 
EQUITY COMPENSATION PLAN INFORMATION

Plan Category

Equity compensation plans approved by security
holders(1):
Deferred Stock Plan for Non-employee Directors(2)
2000 Florida Rock Industries Amended & Restated Stock Plan(3)
Stock-Only Stock Appreciation Rights
Total 2000 Florida Rock Industries Stock Plan
2006 Omnibus Long-Term Incentive
Plan(4)
Stock-Only Stock Appreciation Rights
Performance Share Units
Restricted Stock Units
Deferred Stock Units for Non-employee
Directors
Total 2006 Omnibus Long-Term Incentive Plan
2016 Omnibus Long-Term Incentive Plan
Stock-Only Stock Appreciation Rights
Performance Share Units
Restricted Stock Units
Deferred Stock Units for Non-employee
Directors
Total 2016 Omnibus Long-Term Incentive Plan
Equity compensation plans not approved by security holders
Total of All Plans

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

Number of
securities
to be issued
upon exercise
of outstanding
options,
warrants
and
rights
(a)
 
 

2,547 

 
 

30,910 
30,910 

 
 
 
 
 

2,361,521 
954,180 
134,590 
127,761 
3,576,052 

 
 
 
 
 
 
 

0 
2,340 
840 
13,000 
16,180 
NONE 
3,625,689 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 
WeightedAverage
exercise
price of
outstanding
options,
warrants
and
rights
(b)
 

$

$

 

 
(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 Deferred Stock Plan for Non-employee Directors, the 2000 Florida Rock
Industries Amended and Restated Stock Plan, the 2006 Plan and the 2016 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 this plan. The plan will be used only for the
administration and payment of grants that were outstanding when the 2006 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.
(4) Future grants will not be made under this plan. The plan will be used only for the
administration and payment of grants that were outstanding when the 2016 Plan was
approved.

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45.55 

51.88 

$0 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

Number of
securities
remaining
available for
future issuance
under
equity
compensation
plans (excluding
securities
reflected in
column (a)) (c) 
 

0(2) 

 

0(3) 

 

2,052,987(4) 

 
 
 

7,970,876 
NONE 
10,023,863 

 DEF 14A
 

26
 

EQUITY COMPENSATION PLANS
 
 

Vulcan 2017 Proxy Statement

 
 

 
 

PLEASE READ THE COMPENSATION DISCUSSION AND ANALYSIS SECTION FOLLOWING FOR AN IN-DEPTH LOOK AT OUR COMPENSATION PROGRAM AND HOW IT WAS
APPLIED TO THE PERFORMANCE OF OUR NEOS IN 2016.

Vulcan’s unwavering commitment to reliability, quality and customer
service has long provided us with a competitive
edge. Now, as the
construction economy recovers, we are well-positioned as an
industry leader. Vulcan’s mission continues to drive every aspect of
our business.
Our 2016 results reflect the continuing recovery of our markets and
the benefits of our powerful earnings leverage. We experienced
volume and pricing growth across most
of our footprint in 2016. In
addition, our margins improved considerably. Throughout our
business, Vulcan is reaping the benefits of our coast-to-coast
geographical
footprint, intense operational discipline, and the spirited
performance of our people.

We believe that our improved fundamentals have resulted, in part,
from leveraging collaboration across the company’s
operating
divisions through our locally-led “One Vulcan” initiatives. These
initiatives involve the following five strategic areas: Commercial
Excellence, Operations Excellence, Market Strategy,
Financial
Excellence, and People and Values. By combining company-wide
performance improvement with strong local market leadership and
autonomy, we believe we can achieve better sales and service,
faster growth, increased profitability and higher
returns on capital.

 

 

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS
 
Table of Contents
Introduction
Executive Summary
Executive Compensation Program in Detail
Compensation Decision Process
Elements of Compensation
Considering Risk, Accounting and Tax Considerations

  

  
  
  
  
  
  

 27 
 27 
 32 
 35 
 39 
 45 

Introduction
The Compensation Discussion and Analysis describes the company’s executive compensation philosophy and programs for our named executive
officers (NEOs). The
company’s NEOs for 2016 were:

 
Name
 

J. Thomas Hill
John R. McPherson
Stanley G. Bass
Michael R. Mills
David P. Clement

  
  
  
  
  
  

Principal Position
Chairman, President and Chief Executive Officer
Executive Vice President and Chief Financial and Strategy Officer
Chief Growth Officer
Chief Administrative Officer
President, Central Division

Executive Summary
 

Vulcan’s unwavering commitment to reliability, quality and customer
service has long provided us with a competitive
edge. Now, as the
construction economy recovers, we are well-positioned as an
industry leader. Vulcan’s mission continues to drive every aspect of
our business.
Our 2016 results reflect the continuing recovery of our markets and
the benefits of our powerful earnings leverage. We experienced
volume and pricing growth across most
of our footprint in 2016. In
addition, our margins improved considerably. Throughout our
business, Vulcan is reaping the benefits of our coast-to-coast
geographical
footprint, intense operational discipline, and the spirited
performance of our people.

We believe that our improved fundamentals have resulted, in part,
from leveraging collaboration across the company’s
operating
divisions through our locally-led “One Vulcan” initiatives. These
initiatives involve the following five strategic areas: Commercial
Excellence, Operations Excellence, Market Strategy,
Financial
Excellence, and People and Values. By combining company-wide
performance improvement with strong local market leadership and
autonomy, we believe we can achieve better sales and service,
faster growth, increased profitability and higher
returns on capital.

 

 

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Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

OUR MISSION OUR MISSION IS TO PROVIDE QUALITY PRODUCTS AND SERVICES WHICH CONSISTENTLY MEET OUR CUSTOMERS’ EXPECTATIONS; TO BE
RESPONSIBLE STEWARDS WITH RESPECT TO THE SAFETY AND ENVIRONMENTAL IMPACT OF OUR OPERATIONS AND PRODUCTS; AND TO EARN SUPERIOR RETURNS FOR OUR SHAREHOLDERS.

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2016 PERFORMANCE RESULTS
The following key metrics reflect our strong financial performance over the last three fiscal years. We manage and measure our business
performance with a significant
focus on Adjusted EBITDA and Cash Gross Profit per Ton for Aggregates. We emphasize these metrics because
we believe they closely correlate to long-term shareholder value. We also believe that Total Net Earnings and Gross Profit for Aggregates are

important metrics in evaluating the company’s operational and financial performance.

 

Note: Adjusted EBITDA and Cash Gross Profit Per Ton for Aggregates are non-GAAP
financial measures. We provide a reconciliation of each of
these non-GAAP financial measures to the most directly comparable GAAP financial measures in Annex A to this proxy statement.

 

 
 

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COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 

2016 PERFORMANCE WAS STRONG IN 2016, OUR TOTAL NET EARNINGS GREW 90%, WHILE ADJUSTED EBITDA GREW 16%, REFLECTING OUR FOCUS ON GROWING
CASH GROSS PROFIT PER TON FOR AGGREGATES. WHILE OUR BUSINESS IS BENEFITING FROM A GENERAL ECONOMIC AND CONSTRUCTION INDUSTRY RECOVERY, WE ARE LEVERAGING THIS TO PRODUCE MORE PROFIT PER TON.

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CEO PAY-AT-A-GLANCE
Each year, the Compensation Committee assesses our CEO’s actual compensation relative
to the company’s performance. Our current
Chairman, President and CEO, Tom Hill, was named President and CEO in July of 2014 and Chairman as of January 1, 2016. Mr. Hill has been
with Vulcan for over 27 years, serving in a variety of
operations and general management assignments.
The Compensation Committee set Mr. Hill’s base salary and total compensation for 2016 below the median pay
of peer CEOs according to
benchmarking data provided by Compensation Strategies, Inc. (CSI), our Compensation Committee’s independent compensation consultant.
The percentile ranking of Mr. Hill’s compensation as compared to other CEOs
in our peer group is as follows:

 

The following graph shows the relationship of our CEO’s total compensation (as reflected in the Summary Compensation Table on page
47),
compared to our total shareholder return over the last three fiscal years. As illustrated, the compensation of our CEO has generally tracked total
shareholder return over this period.

 

 

(1)

Mr. Hill was named President and Chief Executive Officer as of July 14, 2014.

 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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COMPENSATION MIX
To ensure management’s interests are aligned with those of shareholders and the performance of our company, a substantial portion of our
NEOs’ compensation is at-risk and will vary above or below target levels depending on company performance. The chart below shows the
percentage of our NEOs’ 2016 target compensation that was performance-based and at-risk.

 

 
1
2

SOSARs means Stock-Only Stock Appreciation Rights calculated based on grant date fair value. See page 42 for more information.
Performance Shares refers to Performance Share Units (PSUs) calculated based on grant date fair value. See page 41 for more information.

SAY ON PAY RESULTS AND 2016 COMPENSATION DECISIONS
At our 2016 Annual Meeting of Shareholders, 98% of the votes cast were in favor of the advisory vote to approve compensation of our NEOs
(“Say on Pay”
vote). We believe the results of the 2016 Say on Pay vote demonstrate continued strong shareholder support for our current
compensation program.
In 2016, the
Compensation Committee continued to review the changing market conditions for executive compensation and benefits and made
the following compensation decisions:
 

•   Set the CEO compensation package at the 41st percentile of the market
 

•   Implemented a new peer group for 2016 compensation decisions to better reflect companies that generally are impacted by the same
economic factors affecting Vulcan
 

•   Added a “double-trigger” change of control requirement for all long-term incentive awards issued under the 2016 Plan. Specifically, the 2016
Plan provides that awards will not vest upon a change of control of
Vulcan unless: (i) awards are not assumed, substituted or continued by the
surviving company, or (ii) if such awards are assumed, substituted or continued by the surviving company, only upon a participant’s qualifying
termination of
employment.
 

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COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 

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SUMMARY OF EXECUTIVE COMPENSATION PRACTICES
The table below highlights certain of our executive compensation practices, including practices we have implemented that drive performance as
well as those not
implemented because we do not believe they would serve our shareholders’ interests.

 
 WHAT WE DO
 

•  Pay for performance. Tie pay to performance by ensuring that a
significant portion of NEO compensation is performance-based
and at-risk
 

•  Median compensation targets. All compensation elements of our executives are
generally targeted at the median (50th percentile)
of our peer group companies. In 2016, the Compensation Committee set our CEO’s total compensation at the 41st percentile of our
peer group
 

•  PSUs are substantial portion of LTI. PSU grants, tied to our relative performance
against the S&P 500, comprised approximately
75% of the total value of annual long-term incentive grants made to our NEOs in 2016. SOSARs comprised the remaining 25%
 

•  “Double-Trigger” change of control requirement for long-term incentive
awards. Our new 2016 Plan provides that long-term
incentive awards will not vest upon a change of control of Vulcan unless: (i) awards are not assumed, substituted or continued by
the surviving company, or (ii) if such awards are
assumed, substituted or continued by the surviving company, only upon a
participant’s qualifying termination of employment
 

•  Robust share ownership guidelines with an equity retention requirement. We have
stock ownership guidelines of 7 times base
salary for the CEO and 3 to 5 times base salary for our other NEOs and an equity retention requirement of 50% of net shares paid
as incentive compensation until ownership guidelines are met
 

•  Clawback
Policy. We have a compensation recovery (clawback) policy that requires officers to forfeit certain cash-based incentive
compensation and/or equity-based incentive compensation if the company restates its financial statements due to the
officer’s
misconduct
 

•  No pledging of shares. Our directors and officers are not permitted to pledge
Vulcan shares as collateral for loans or any other
purpose
 

•  No hedging. We prohibit directors and officers from engaging in short sales of
Vulcan stock or similar transactions intended to
hedge or offset the market value of Vulcan stock owned by them
 

•  Independent compensation consultant. The Compensation Committee uses an
independent compensation consultant that
provides no other services to the company
 

•  Minimal executive perquisites.

 
 WHAT WE DON’T DO
 

•  No employment contracts. None of our NEOs or other executive
officers have employment contracts that guarantee continued
employment
 

•  No dividends on unvested PSUs. Our PSUs require 4 years to vest and dividends are
neither paid nor accrued during such
vesting period
 

•  No repricing. Stock options and SOSAR exercise prices are set equal to the grant
date market price and may not be repriced
 

•  No excessive Change of Control Agreements. Neither our Change of Control Agreements nor our Change of Control Plan
provide for:
•  “Single-trigger” termination right
•  Inclusion of long-term incentive value in the calculation of cash severance
•  Excise tax gross-ups
 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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Executive Compensation Program in Detail
COMPENSATION PHILOSOPHY
The dedication and
performance of our employees, including our NEOs, enable us to accomplish our corporate goals. The compensation
program for our NEOs is intended to motivate them to achieve Vulcan’s strategic goals and operational plans while adhering to our
high ethical
business standards.
Vulcan’s executive compensation program is centered on a
pay-for-performance philosophy, which aligns executive compensation with
shareholder value and ultimately impacts our compensation program design.

 
OUR THREE COMPENSATION PRINCIPLES

  
  

 

Link a significant portion of compensation to performance.

Maintain competitive compensation levels.

 

 

We believe that compensation levels should reflect performance
—both the
performance of Vulcan and the performance of the
recipient. This is accomplished by:

We strive to offer programs and levels of compensation that
are competitive
with those offered by industrial companies of
similar size, value and complexity in order to attract, retain
and reward our NEOs.

 

•  Motivating, recognizing and rewarding individual excellence

 

 

Align management’s interests with those of shareholders.

•  Paying short-term
cash bonuses based upon company
financial performance and individual performance

 

We seek to implement programs that will encourage NEOs to
remain with us and
to increase long-term shareholder value by
providing competitive compensation and granting long-term
equity-based awards each year.

 

•  Linking long-term compensation to our company’s stock
performance through the use
of Performance Share Units
(PSUs) and Stock-Only Stock Appreciation Rights (SOSARs)
 

  

BENCHMARKING COMPENSATION AND PEER GROUP DEVELOPMENT
On an annual basis, the Compensation Committee conducts a benchmarking study and analysis of total compensation paid to our CEO and other
NEOs against a relevant
composite group of companies (our peer group).

 
General
Compensation data from
our peer group companies is adjusted to
eliminate distortions that may result from companies in the peer
group being of differing sizes. Adjustments are made through the use
of statistical regression analysis of total revenues for companies in
the
peer group, which is a common practice and used extensively in
the compensation consulting industry. This technique considers the
relationship between actual compensation and revenue levels for the
peer group companies and enables us to estimate
compensation
levels appropriate for an organization of our size.
Implementation of New Peer Group
For 2016, we implemented a revised peer group with input from our
independent compensation consultant. We believe the new peer
group more accurately represents
organizations that generally are
impacted by the same economic factors affecting Vulcan.
 
SELECTION OF PEERS WE SELECT PEERS EITHER BASED ON THEIR
SIZE OR THEIR INDUSTRY (CONSTRUCTION, MATERIALS AND MINING). IN THE EVENT THAT INDUSTRY PEERS ARE SIGNIFICANTLY LARGER OR SMALLER THAN OUR COMPANY, WE USE STATISTICAL REGRESSION ANALYSIS TO MAKE THEIR COMPENSATION DATA COMPARABLE TO OURS.

 

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Our new peer group is comprised of 28 companies from the following industries: Construction Materials, Building Products,
Construction
Equipment, Engineering and Construction, Forest Products, Coal Mining, Metals Mining, and Metals Producers/ Manufacturers. Our peer group
(whose median market capitalization at year end was $10.0 billion as compared to our market
capitalization at year end of $16.6 billion) consists
of the following companies:
 

•  Armstrong World Industries, Inc.

•  Masco Corporation

 

 

•  Compass Minerals International, Inc.

•  Newmont Mining Corporation

 

 

•  CONSOL Energy Inc.

•  Nucor Corporation

 

 

•  Cummins Inc.

•  Owens Corning

 

 

•  D.R. Horton, Inc.

•  PFG Industries, Inc.

 

 

•  Eagle Materials Inc.

•  PulteGroup, Inc.

 

 

•  Fortune Brands Home & Security, Inc.

•  The Sherwin-Williams Company

 

 

•  Freeport-McMoRan Inc.

•  Stanley Black & Decker, Inc.

 

 

•  Granite Construction Incorporated

•  Terex Corp.

 

 

•  Jacobs Engineering Group Inc.

•  The Mosaic Company

 

 

•  Joy Global Inc.

•  USG Corporation

 

 

•  Lennar Corporation

•  Waste Management, Inc.

 

 

•  Louisiana-Pacific Corporation

•  WestRock Company

 

 

•  Martin Marietta Materials, Inc.

•  Weyerhaeuser Company

 
 

The diagram below compares Vulcan’s previous peer
group of 18 companies to its new peer group of 28 companies:
 
 

Some peer companies were removed due to acquisitions. Others were removed because the Compensation Committee determined the peers
were
no longer a good match due to increased size, low market capitalization or concerns about industry fit. The Compensation Committee
decided to include additional companies whose operations were impacted by similar external factors as Vulcan or which
have similar operating
structures.

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PREVIOUS PEER GROUP REMOVED Arch Coal, Inc. Danaher Corp.
Peabody Energy Corp. U.S. Steel Corp. CONSOL Energy Inc. Cummins Inc. Freeport-McMoRan Inc. Granite Construction Inc. Jacobs Engineering Group Inc. Louisiana-Pacific Corp. Martin Marietta Materials, Inc. Masco Corp. Newmont Mining Corp. Nucor Corp.
PPG Industries, Inc. Sherwin-Williams Co. Stanley Black & Decker, Inc. Weyerhaeuser Co. ADDED Armstrong World Industries, Inc. Compass Minerals International, Inc. D.R. Horton, Inc. Eagle Materials, Inc. Fortune Brands Home & Security, Inc.
Joy Global, Inc. Lennar Corp. Owens Corning PulteGroup, Inc. Terex Corp. The Mosaic Company USG Corp. Waste management, Inc. WestRock Co. NEW PEER GROUP

 
Vulcan 2017 Proxy Statement
   
   

 
 

Use of Peer Group and Market Compensation Studies

COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 

33
 

The peer group compensation data, in combination with consideration
of each NEO’s experience and performance, assist the
Compensation Committee in making informed,
market-based
decisions regarding our executive pay program.

This analysis serves as a starting point for evaluating appropriate
levels of base salary. We generally target base
salaries at the 50th
percentile of the market as determined by our analysis, which we
believe is the appropriate level for ensuring the competitiveness of
our compensation.

In an effort to provide an additional reference point for competitive
pay, our compensation consultant
conducts an executive market
study (using survey data from Aon Hewitt and Willis Towers Watson,
two global consulting firms specializing in compensation practices)
that compares our NEOs’ total compensation to that of similarly
situated
executives among U.S. manufacturing companies with
revenues between $1 billion and $4.9 billion.

We set the target cash bonus opportunity for our NEOs at competitive
market levels consistent with similarly situated executives in our size
adjusted comparison group and
in the compensation surveys.
Corporate performance at target levels is intended to yield a bonus
for each NEO at a level approximately equal to the median level
indicated in the compensation study with respect to similarly situated
executive
officers.

Using the peer group analysis and the Aon Hewitt and Willis
Towers
Watson survey data, we seek to provide target compensation at a
competitive level for each of the three elements: base salary, shortterm cash bonus and long-term equity-based awards.

We establish a standard percentage of each NEO’s base salary to be
used as the targeted value of long-term awards to each NEO. The
Compensation
Committee sets the standard at approximately the
50th percentile of the awards made to individuals with similar
positions in the market as determined by our competitive market
analysis.

 
KEY PAY ELEMENTS
The following chart summarizes the key pay elements for our NEOs. Each element is described in detail beginning on page 39 in the

Section “Elements of Compensation.”

 

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Use of Peer Group and Market Compensation Studies
The peer group compensation data, in combination with consideration
of each NEO’s experience and performance, assist the
Compensation Committee in making informed,
market-based
decisions regarding our executive pay program.

This analysis serves as a starting point for evaluating appropriate
levels of base salary. We generally target base
salaries at the 50th
percentile of the market as determined by our analysis, which we
believe is the appropriate level for ensuring the competitiveness of
our compensation.

In an effort to provide an additional reference point for competitive
pay, our compensation consultant
conducts an executive market
study (using survey data from Aon Hewitt and Willis Towers Watson,
two global consulting firms specializing in compensation practices)
that compares our NEOs’ total compensation to that of similarly
situated
executives among U.S. manufacturing companies with
revenues between $1 billion and $4.9 billion.

We set the target cash bonus opportunity for our NEOs at competitive
market levels consistent with similarly situated executives in our size
adjusted comparison group and
in the compensation surveys.
Corporate performance at target levels is intended to yield a bonus
for each NEO at a level approximately equal to the median level
indicated in the compensation study with respect to similarly situated
executive
officers.

Using the peer group analysis and the Aon Hewitt and Willis
Towers
Watson survey data, we seek to provide target compensation at a
competitive level for each of the three elements: base salary, shortterm cash bonus and long-term equity-based awards.

We establish a standard percentage of each NEO’s base salary to be
used as the targeted value of long-term awards to each NEO. The
Compensation
Committee sets the standard at approximately the
50th percentile of the awards made to individuals with similar
positions in the market as determined by our competitive market
analysis.

 
KEY PAY ELEMENTS
The following chart summarizes the key pay elements for our NEOs. Each element is described in detail beginning on page 39 in the

Section “Elements of Compensation.”

 

(1) EBITDA EP is a non-GAAP financial measure. See Annex A for a reconciliation of non-GAAP financial measures to our results reported under GAAP.
 

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Compensation Element Form Purpose How it Links to
Performance FIXED Base Salary Cash To provide a stable, reliable source of income Reviewed annually in light of perfor-mance factors (company and individual) and market compensation practices AT-RISK Short-Term Performance-Based Bonus Cash To reward
the achievement of annual financial and other performance goals Variable and based on preestablished company performance goals as measured by EBITDA EP LoNg-Term Incentive (LTI) Awards Equity To reward long-term company performance Variable and
based on our corporate performance. PSUs comprise 75% of LTI award for 2016; only pay if the applicable performance goal, total shareholder ruturn over the four year performance period, is met SOSARs comprise 25% of LTI award for 2016; value is
determined by the increase in the value of the company’s stock

 

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Compensation Decision Process

 
 

 

Composed entirely of
independent directors

  COMPENSATION
COMMITTEE
 

  

 

 
•  Annually reviews and approves corporate goals and
objectives relevant to CEO’s compensation
 

•  Reviews CEO’s performance and independent compensation consultant’s recommendations and, accordingly, determines CEO’s
compensation
 

•  Presents CEO’s
overall compensation package to the entire Board of Directors for ratification
 

•  Determines and sets base salary and short- and long-term incentives for other
NEOs
 

•  Administers Executive Incentive Plan (EIP), 2006 Omnibus Long-Term Incentive Plan (2006
Plan), and 2016 Omnibus Long-Term
Incentive Plan (2016 Plan)
 

•  Makes regular reports to the Board, including an annual report and the approval or
disapproval of management’s recommendations
for material changes in NEOs’ existing retirement and benefit plans

  
 

COMPENSATION
COMMITTEE CHARTER
 

 

The Compensation Committee administers our
executive compensation program in accordance with our Compensation Committee Charter.
The current charter is available at www.vulcanmaterials.com. On our website, select “Investor Relations,” then “Corporate Governance.”
From
there, you can visit our “Committees” page, which lists the composition of our board committees as well as their respective charters.
 

 
 

Compensation Strategies, Inc.
(CSI)

 

  INDEPENDENT
COMPENSATION CONSULTANT

  

 

 
In 2016, CSI:
 

•  Provided the Compensation Committee with observations and recommendations on
compensation and benefits for our CEO and
other NEOs
 

•  Advised and assisted the Compensation Committee in the implementation of a new peer
group and a formal written evaluation
process for our CEO
 

•  Provided its recommendations with respect to Board compensation, as well as its advice
on regulatory compliance and
development of new programs
 

•  Conducted a benchmarking market study and analysis of executive compensation practices
to ensure that compensation programs
are reasonable and competitive
 

•  Representatives of CSI attended four meetings of the Compensation Committee in
2016
  
ABOUT CSI
 

CSI is engaged by and reports to the Compensation Committee, and occasionally meets with management to discuss compensation initiatives
and issues. CSI does not provide
any other services to the company. The Compensation Committee determined that CSI’s work as the
Compensation Committee’s compensation consultant does not present any conflicts of interest.
 

 

In 2016, the company paid CSI $332,226 for executive compensation consulting services.
 

 
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    MANAGEMENT

  

 

 

 

•  Supports the Compensation Committee by making
recommendations and providing analyses, and occasionally meets with CSI to
discuss compensation initiatives and competitive practices
 

•  The CEO is responsible for establishing annual performance goals for each of the other
NEOs
 

•  The
CEO is responsible for conducting an annual performance evaluation of each of the other NEOs against pre-established goals
 

•  Based on performance and competitive benchmarking reports, the CEO makes recommendations
to the Compensation Committee
for the compensation of the other NEOs

  
 

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THE ROLE OF INDIVIDUAL PERFORMANCE
Each NEO’s base salary and annual bonus is determined through thoughtful consideration of individual performance, company performance and
competitive market pay.
With respect to our CEO, the independent members of our Board of Directors use a formal process for evaluating his performance. Each Board
member provides a written
evaluation in the areas of leadership, strategic planning, financial performance, safety performance, customer
relations, personnel management, communications, board relations and overall performance. In its performance deliberations, the
Compensation
Committee has access to the input from the full Board and independently assesses the CEO’s performance achievements.
For our other NEOs, the
Compensation Committee reviews a performance report, as prepared by our CEO, for each NEO. Individual
performance is based primarily on the extent to which each NEO achieves a series of set goals throughout the period.
Together, Vulcan’s NEOs made impactful contributions to the continued success of the organization as evidenced through the following major
accomplishments:
 

•   Achieved total shareholder return of 32.7% in 2016
 

•   Achieved Net Earnings of $419 million and Adjusted EBITDA* of $966 million, a $198 million improvement in Net Earnings and a $131 million
improvement in Adjusted EBITDA* over the prior year
 

•   Expanded both aggregates gross profit margin and aggregates gross profit as a percentage of freight-adjusted revenues* by 230 basis points
from the prior year
 

•   Continued to actively pursue strategic bolt-on acquisitions in aggregates and associated downstream products in key markets along with
identification of greenfield aggregate sites
and distribution yards
 

* Adjusted EBITDA and aggregates gross profit as a percentage of freight-adjusted revenues are non-GAAP financial measures. See Annex A
for a reconciliation of non-GAAP financial measures to our results reported under GAAP.
Following are the notable accomplishments of each NEO
in 2016.

 
Mr. Hill’s accomplishments during the year included:
 

•  Providing thoughtful and proactive capital stewardship, as demonstrated by the company’s achieving

investment grade credit status and an all-time high company enterprise value
 

TOM HILL

•  Leading the improved performance of the company, achieving significant growth in revenues, EBITDA
and earnings
per share

 

Chairman, President and
Chief Executive Officer

 

•  Strengthening the
organization’s effectiveness through focus on “One Vulcan” process improvements
 

•  Reinforcing the strategic vision for the organization, focusing on building a leadership culture that
values
continuous improvement, talent development and winning “The Vulcan Way”

        
    

Mr. McPherson’s accomplishments during the year included:
 

•  Improving underlying profitability of the business and exceeding targets for gross margin, aggregates
gross
profit per ton and flow-through profit percentage

JOHN MCPHERSON

 

•  Continuing to improve the organization’s financial strength and flexibility; decreasing overall cost of

capital and further positioning the company to fund growth investment

 

Executive Vice President
and Chief Financial and
Strategy Officer

 

•  Securing the organization’s ability to deliver against expectations through the continued development of

key talent, execution of financial excellence initiatives and sustained focus on continuous improvement
 

      

•  Leading effective capital market communications efforts including the execution of a successful
Investors Day
and further cultivation of supportive market relationships

 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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Mr. Bass’ accomplishments during the year included:
 

•  Successfully organizing and integrating the teams of commercial excellence, business development and
land
managers to drive commercial excellence and strategic growth
 

STAN BASS

•  Leading our commercial excellence efforts to increase organic revenue growth, improve our competitive

advantages and our sales organization’s capabilities

 

 

Chief Growth Officer

•  Working with the senior management team to focus and execute the company’s growth strategy,
including
greenfield development projects and the acquisition of quarries and additional reserves in key
markets
 

      

•  Providing oversight for the development of Vulcan technology applications, focused on improving the
customer
experience and competitive differentiation

    
 

Mr. Mills’ accomplishments during the year included:
 

MICHAEL MILLS      

•  Continuing to build a “high
performance/high value” and “talent management” culture through the
development and support of initiatives focused on improving safety, enhancing diversity and inclusion
and performance management

 

 

Chief Administrative Officer

•  Further supporting efforts to build and
develop a pool of high potential talent for the organization
 

•  Enhancing the HR organization through development of key talent and capabilities
 

      

•  Providing leadership for the international
priorities of the company, including the company’s Mexican
quarry and shipping network

    
 

Mr. Clement’s accomplishments during the year included:
 

•  Exceeding the prior year Central Division
EBIT performance by 7.4 percent
 

DAVID CLEMENT

•  Reducing the Central Division’s overall recordable injury rate by 25 percent

 

 

President, Central Division

•  Continuing the prior year’s momentum
in price growth and implementing key market strategies to
improve overall Central Division market performance
 

      

•  Providing leadership among the Division Presidents to support execution of the company’s business
plan and
strategy

 

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COMPENSATION DISCUSSION AND ANALYSIS
 
 

Vulcan 2017 Proxy Statement

 
 

 
 

•  Base salary

•  Benefits and perquisites

 

 

•  Short-term performance-based bonus

•  Change of control protections and post-termination agreements

 

 

•  Long-term equity-based incentives

•  Retirement benefits

 
BASE SALARY

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Elements of Compensation
Our elements of compensation, all of which are discussed in greater detail below, include:
 

•  Base salary

•  Benefits and perquisites

 

 

•  Short-term performance-based bonus

•  Change of control protections and post-termination agreements

 

 

•  Long-term equity-based incentives

•  Retirement benefits

 
BASE SALARY
The base salary element of our compensation program is designed to be competitive with compensation paid to similarly-situated,
competent,
and skilled executives.
The Compensation Committee uses the information and procedures described below to set base salaries tied to individual
performance,
contribution to business results, and market compensation comparisons. The Compensation Committee determines if base salary adjustments
are appropriate for our NEOs after considering all of the following factors:
 

•   NEO’s performance relative to the pre-established goals and objectives in his areas of responsibility
 

•   NEO’s overall managerial effectiveness with respect to planning, personnel development, communications, regulatory compliance and similar
matters
 

•   Competitive pay levels for similarly situated executives set forth in compensation surveys and our peer group
 

•   Marketplace trends in salary increases
 

•   NEO’s potential for future contributions to the company, retention risks, fairness in view of our overall salary increases, and the ability of our
company to pay the increased salaries
 

•   Economic environment and its impact on the company
We review annually the base salaries of the NEOs, and also at the time
of a promotion or change in responsibilities. The following table sets forth
the base salary of each NEO at December 31, 2016:

 
NAME
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

 
 
 
 
 
 

POSITION
Chairman, President and Chief Executive Officer
Executive Vice President and Chief Financial and Strategy Officer
Chief Growth Officer
Chief Administrative Officer
President, Central Division

 
OUR NEOS FOR 2016 AND THEIR TENURES WITH VULCAN
 

Tom Hill
 

John McPherson
 

Stan Bass
 

Michael Mills
 

David Clement
 

 

 
 
 
 
 

27 years
 

5 years
 

20 years
 

26 years
 

25 years
 

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2016 SALARY 
 
$950,000 
 
$780,000 
 
$550,000 
 
$550,000 
 
$332,000 

 DEF 14A

 
PAY FOR PERFORMANCE To further our goal of aligning the
executives’ interests with those of our shareholders, we generally reward superior performance through our short-term cash bonus program and long-term equity-based incentives rather than through base salary.

 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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SHORT-TERM PERFORMANCE-BASED BONUS
Our short-term cash bonus incentive program is designed to motivate our executives, including the NEOs, and reward them with cash payments
for achieving quantifiable, pre-established business results. We pay short-term incentives to our NEOs under the shareholder-approved
Executive Incentive Plan (EIP), which is intended to yield cash bonus payments that constitute qualified
performance-based compensation under
Section 162(m) of the Code.
Meeting the Minimum Performance Threshold under the Executive Incentive Plan (EIP)
In order for the NEOs to be eligible to receive a cash bonus, the company must attain a minimum performance threshold for the year, as
established by the Compensation
Committee. The minimum performance threshold is used only to determine a NEO’s eligibility for a bonus
payment under the EIP. If the minimum performance threshold is met, the actual amount of bonus payable is calculated in accordance with the

process described in “Determining Bonus Payable.” For 2016, the minimum threshold was either: (1) cash earnings in the amount of
$300 million; or (2) EBITDA in the amount of $500 million. Company performance exceeded
each of these established minimum thresholds.
If the Compensation Committee determines that either of the minimum performance thresholds are met, our NEOs may
receive a bonus under
the EIP, subject to the Compensation Committee’s discretion to adjust the bonus downward from the maximum bonus amount set under the EIP.
The Compensation Committee cannot exercise upward discretion.
Determining Bonus Payable
We use EBITDA Economic Profit (EBITDA EP), which
incorporates Return on Capital Employed (ROCE), as our short-term incentive metric. We
believe this metric provides an incentive for management to carefully consider deployment of capital as the company increases capital
expenditures during the
current construction up cycle.
EBITDA EP measures the extent to which Adjusted EBITDA exceeds an operating capital charge. Adjusted EBITDA EP is based on Adjusted

EBITDA, but includes other performance adjustments, such as business acquisition performance versus planned performance. The operating
capital charge is based on our company’s average assets and liabilities associated with Adjusted EBITDA EP
multiplied by the estimated pretax
cost of capital. We believe that changes in EBITDA EP positively correlate with changes in shareholder value better than other commonly used
financial performance measures.
The 2016 EBITDA EP target of $223 million was based on performance during the preceding three years, weighted most heavily on the most
recent fiscal year, less
certain gains on sales of property or assets. The Compensation Committee determined to pay cash bonuses for 2016
financial performance (as reflected in the table below) based on EBITDA EP of $476 million, which was $253 million above the
target.
Note: EBITDA EP is a non-GAAP measure. See Annex A for a reconciliation of
non-GAAP financial measures to our results reported under
GAAP.
Target and Actual Bonus
The table below shows for each NEO the target bonus, the maximum bonus payable under the EIP, and the actual cash bonus paid to each NEO
based on 2016 financial
performance. The maximum bonuses payable, referenced in the table below, are established under the shareholderapproved EIP. The EIP permits the payment of bonuses based on financial performance of up to 4 times a NEO’s target bonus, but not to
exceed
$7 million. In 2016, the Compensation Committee took action to limit the maximum cash bonuses for 2016 financial performance to 2.5 times
each NEO’s target bonus as set in February 2016.

 
Name

Base Salary

Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

 
 
 
 
 
 

$
$
$
$
$

 
950,000 
780,000 
550,000 
550,000 
332,000 

 
 
 
 
 
 

“Target Bonus”
as a Percentage
of Base Salary 
 
115% 
 
110% 
 
80% 
 
80% 
 
60% 

 
 
 
 
 
 

Target Bonus
Amount

Maximum Bonus
Per EIP(1)

   
$ 1,092,500    $
   $ 858,000    $
   $ 440,000    $
   $ 440,000    $
   $ 199,200    $

 
2,731,000 
2,145,000 
1,100,000 
1,100,000 
498,000 

 
 
 
 
 
 

Cash Bonus Paid Based
on 2016 Performance
 
$
2,264,000 
$
1,778,000 
$
   892,000 
$
   898,000 
$
   384,000 

 

(1)

The amounts in this column equal 2.5 times the target bonus, which is the maximum bonus as set by the Compensation Committee.

 

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COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 

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Vulcan 2017 Proxy Statement
 
 

   
   

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LONG-TERM EQUITY INCENTIVES
Our long-term equity incentive compensation program rewards the
NEOs based on the future performance of our company, by providing
awards for creating value for our
shareholders. The goals of the longterm incentive program are to:
 

•  Ensure NEOs’ financial interests are aligned with our
shareholders’ interests
 

•  Motivate decision-making that improves financial performance
over the long-term

In recent years, the Compensation Committee has used PSUs,
SOSARs or a combination of both for annual equity incentive
grants
through each of the 2006 Plan, which expired on May 12, 2016, and
the 2016 Plan.
2016 Long-Term Incentive Grants
Annually at its February meeting, the Compensation Committee
grants long-term incentive awards. All such equity-based awards are
priced on the date of grant. Typically,
any additional equity-based
incentive grants are made to NEOs during the year only upon hire or
promotion.

 

•  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
Based principally on data and analysis from its
independent
compensation consultant, the Compensation Committee establishes
a “standard” long-term equity incentive opportunity, expressed as a
percentage of each NEO’s base salary, to be used when making
long-term equity awards. The
table below shows the applicable 2016
percentages for each of our NEOs when long-term awards were
granted in February 2016.
 

Standard Long-Term Award Expressed
as a Percentage of Base Salary for 2016
Tom Hill
  
John McPherson
  
Stan Bass
  
Michael Mills
  
David Clement
  

 
 300% 
 275% 
 150% 
 150% 
  75% 

The Compensation Committee retains the discretion to deviate from
these percentages in determining actual
long-term incentive grants it
makes each year to reflect our company’s past performance, based
on total shareholder return (TSR) or other quantifiable financial
measures deemed appropriate.
Our 2016 Omnibus Long-Term Incentive Plan (the 2016 Plan)
provides a variety of alternative types of awards that the
Compensation Committee may use, at its discretion,
for granting
long-term incentives. The 2016 Plan became effective on May 13,
2016, after it was approved by our shareholders at the company’s
2016 Annual Meeting. The types of awards authorized under the
2016 Plan include:
 

•  stock options
 

•  stock-only stock appreciation rights (SOSARs)
 

•  performance share units (PSUs)
 

•  restricted stock units (RSUs)

In 2016, the Compensation Committee made the annual
long-term
incentive grant to the NEOs in the form of a combination of SOSARs
and PSUs. PSU grants comprised approximately 75% of the total
value of the annual long-term incentive grants made to each NEO,
while SOSARs comprised the remaining 25%. The
number of equitybased awards granted is determined by valuing SOSARs and PSUs
under valuation principles similar to generally accepted accounting
principles (in the case of SOSARs, a Black-Scholes option pricing
model and in the case of PSUs, a
Monte Carlo simulation model).
The Compensation Committee normally grants a number of equitybased awards that produces an award value on the date of the grant
that approximates the 50th percentile level of awards made to
similarly-situated
executives determined by our competitive market
analysis. However, the Compensation Committee may make
adjustments each year to the number of units granted.
A
summary of all long-term incentive (LTI) grants made to NEOs in
2016 is as follows:
 

Name
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

  2016 ANNUAL GRANTS     Total LTI
SOSARs   
PSUs    Grants 
 
  
32,100      32,200      64,300 
  
24,200      24,200      48,400 
  
  9,300        9,300      18,600 
  
  9,300        9,300      18,600 
  
  2,800        2,800        5,600 
 

 

These awards are also reflected in the Summary Compensation
Table on page 47 and the Grants of
Plan-Based Awards table on
page 48.
Performance Share Units (PSUs)
PSUs vest at the end of a four-year period to the extent that the
company has met the performance goals established by the
Compensation Committee. Vested PSUs are paid in
Vulcan common
stock. Unvested PSUs do not earn dividends. For PSUs granted in
2016, the performance measurement is the company’s total
shareholder return (TSR) percentile rank relative to the TSR of the
S&P 500 for the four-year period
ending December 31, 2019. The
Compensation Committee chose the S&P 500 as the comparison
group for relative TSR performance because it is a broad and stable
index group that represents investors’ alternative capital investment

opportunities. Vulcan is also

 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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 DEF 14A

The table below shows the guidelines for the NEOs, expressed as a
multiple of base salary:

 
Name
Tom Hill

Multiple of Base
Salary Ownership  
  Guidelines
  7x


fuel for such vehicles. Executives reimburse our company for a
portion of the expense associated with personal use of these
vehicles. In addition, the value of personal mileage is charged to the

NEO as imputed income.
We also make the company-owned aircraft available to the CEO and
other senior executives for business travel. The aircraft is available to
the
CEO and the other NEOs for personal use at the expense of the

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a member of the S&P 500. The following table shows the payout percentage of 2016 PSUs that will vest over the four-year period based on
levels of performance achieved.

 
PERFORMANCE SHARE UNIT PAYMENT TABLE (1)

 

 

Grant Value
50th percentile level
of awards made to similar executives,
based upon a market analysis

  
  
  
  

4-Year Average
TSR Percentile Rank
Relative to S&P 500 Index 
 
75th or more
 
50th
 
25th or less

 % of PSUs
 Payable(2)
 
 
200 
 
100 
 
0 

 

(1)

(2)

The 2016 grant amount was set at a level that approximated the 50th percentile level of awards made to similarly situated executives. Therefore, if the company’s
4-year average TSR
relative to the S&P 500 Index is at the 50th percentile, the full award is paid. The payout is adjusted incrementally for performance
above and below the 50th percentile and can range from
0% to 200%.
Payouts interpolated for returns between 25th and 50th percentile and 50th and 75th percentile.

Stock-Only Stock
Appreciation Rights (SOSARs)
SOSARs entitle the recipient to receive, at the time of exercise, shares of Vulcan stock with a market value equal to the
difference between the
exercise price (the closing price of Vulcan stock on the date of grant) and the market price of Vulcan stock on the date the SOSARs are
exercised. SOSARs have a ten-year term and vest at
a rate of 25% annually over the first four years of their term.
2016 Long-Term Incentive Payments of Prior Grants
In February 2016, our NEOs received payment for PSUs that were granted in 2012 which vested on December 31, 2015 because the applicable
performance criteria were
satisfied. These PSUs were paid out at 152.1% of the amount of the original grant made in 2012. The PSU payment
percentage of 152.1% was based on TSR performance of our common stock relative to the TSR performance of the companies that comprise
the
S&P 500 Index.
 
 

Payment Calculation for PSUs Granted in 2012
Paid February 16, 2016
Units Granted Percentage
Units
Executive
 
in 2012
 
Payable   Payable
Tom
Hill
 
10,200
 
152.1%   15,515
John
McPherson
 
13,200
 
152.1%   20,078
Stan
Bass
 
10,200
 
152.1%   15,515
Michael
Mills
 
10,200
 
152.1%   15,515
David Clement
 
  1,780
 
152.1%     2,708

STOCK OWNERSHIP GUIDELINES
In order to align the interests of the NEOs with our shareholders’ interests and to promote a long-term focus for these officers, our company has
executive stock
ownership guidelines for the officers of our company. The guidelines are based on management’s and the compensation
consultant’s assessment of market practice. The stock ownership requirements are higher for the CEO than for the other
NEOs.
 

42
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

Vulcan 2017 Proxy Statement

 
 

 
 

The table below shows the guidelines for the NEOs, expressed as a
multiple of base salary:

 
Name
Tom Hill
John McPherson

Multiple of Base
Salary Ownership  
  Guidelines
  7x
  5x

   
   


fuel for such vehicles. Executives reimburse our company for a
portion of the expense associated with personal use of these
vehicles. In addition, the value of personal mileage is charged to the

NEO as imputed income.
We also make the company-owned aircraft available to the CEO and
other senior executives for business travel. The aircraft is available to
the
CEO and the other NEOs for personal use at the expense of the
NEO. In 2016, John McPherson used the company-owned aircraft for

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The table below shows the guidelines for the NEOs, expressed as a
multiple of base salary:

 
Name
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

 
 
 
 
 
 

Multiple of Base
Salary Ownership  
Guidelines
7x
5x
4x
4x
3x

What Counts Toward the Guideline
 

•  shares owned personally
 

•  shares in the Vulcan 401(k) savings plan or other qualified
retirement plans
 

•  shares in the company’s deferred compensation and nonqualified
supplemental benefit plans
 

•  grants of restricted stock units (RSUs)
 

•  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
What Does Not Count Toward the Guideline
 


fuel for such vehicles. Executives reimburse our company for a
portion of the expense associated with personal use of these
vehicles. In addition, the value of personal mileage is charged to the

NEO as imputed income.
We also make the company-owned aircraft available to the CEO and
other senior executives for business travel. The aircraft is available to
the
CEO and the other NEOs for personal use at the expense of the
NEO. In 2016, John McPherson used the company-owned aircraft for
commuting use on nine occasions and the amount attributable to that
use was included in his taxable income for the year.
Depending on
availability, Mr. McPherson also is permitted to ride along on the
corporate aircraft when it is already scheduled to fly to a specific
destination for a business purpose. This use has no incremental cost
to Vulcan. During 2016,
Mr. McPherson rode along on 11 such trips
on the corporate aircraft when it already was scheduled to fly from
Texas to our corporate headquarters in Birmingham, Alabama. The
amounts attributable to these ride-alongs were included in his
taxable
income for the year. In 2016, Stan Bass also used the
company-owned aircraft for a personal reason on a single occasion
and the amount attributable to that use was included in his taxable
income for the year. Except as set forth above, none of the
other
NEOs received a personal benefit from use of company-owned
aircraft.
We do not provide other perquisites, such as country club
memberships, to the NEOs.

•  unvested performance share units (PSUs)

The Compensation Committee reviews our policies and determines
whether and to what extent perquisites should be modified or
continued.

Annually, our CEO reviews compliance with the ownership guidelines
and reports
the results to the Compensation Committee. All of the
NEOs meet or exceed our ownership guidelines.

CHANGE OF CONTROL PROTECTION AND POST
TERMINATION AGREEMENTS

•  “in the money” value of vested SOSARs
 

Share Retention Requirements
Pursuant to the equity retention policy in our stock ownership
guidelines, all NEOs are required to retain 50% of net shares paid as
incentive compensation until such
officer meets or exceeds the
applicable ownership guidelines.

BENEFITS AND PERQUISITES
NEOs participate in each of the benefit plans or arrangements that
generally are made available to all salaried employees including:
 

•  medical and dental benefits;
 

•  life, accidental death and disability insurance; and
 

•  retirement plans.
Our company pays 100% of the premiums for individual long-term
disability policies that insure base salary and target bonus in excess
of that insured under the group contract up to a limit of $700,000
covered compensation.

Effective as of January 1, 2016, Vulcan entered into new Change of
Control Employment Agreements (COC Agreements) with Messrs.
Hill, McPherson, Bass and Mills to
replace prior change of control
severance agreements. Each of the COC Agreements covers a term
of three years and will be automatically extended annually for
subsequent three-year terms unless Vulcan gives prior notice of
non-extension. In the event of a change of control, said COC
Agreements entitle the executives to continue employment with
Vulcan for two years following the change of control, during which
time period the executive
will continue to hold a position and duties,
and receive compensation and benefits, commensurate with the
practices in effect during the four-month period prior to the change of
control. Severance benefits under each COC Agreement will be
payable
following a qualifying termination (termination by the
executive for good reason or by Vulcan without cause) that occurs
within two years following (or prior to, but in connection with) a
change of control. A change of control is defined to include:
(a) the
acquisition of 30%, or more of the outstanding Vulcan stock or voting
power by an individual, entity or group; (b) a

We provide company-owned cars to the NEOs
for their use.
Additionally, we pay for the insurance, maintenance and
 

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Vulcan 2017 Proxy Statement
   
   

COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 


change in the majority of the board of directors of Vulcan that is not
endorsed by the incumbent board of directors; and (c) consummation
of a reorganization, merger, consolidation or
similar corporate
transaction that results in a new group holding at least 50% of the
beneficial ownership of the outstanding Vulcan stock or voting power.
The COC
Agreements provide for a payment of 3 times the sum of
base salary and average bonus upon a change of control.
Mr. Clement is subject to the Change of Control Severance Plan for
Senior Officers (COC Plan), effective as

 
 

43
 


of January 1, 2016, that provides for a payment of 2.5 times the sum
of base salary and average bonus upon a change of control. Other
than the payout amount, the terms of the COC Plan are
consistent
with the COC Agreements.
We provide change of control protections to provide for retention and
continuity in order to minimize disruptions during a
pending or
anticipated change of control. For a detailed description of these
change of control benefits, refer to “NEO Change of Control
Agreements and Related Cash Severance Benefits” on page 53.

 
RETIREMENT BENEFITS
Our company provides the following retirement benefits to our NEOs:

 
Benefit
Retirement Plan*
Supplemental Plan*

  
  

  
401(k) Plan
  

Background
This pension plan covers all salaried employees of our company hired prior to July 15, 2007.
The Unfunded Supplemental Benefit Plan provides for benefits that are curtailed under the
Retirement Plan and the 401(k) Plan due to Internal Revenue Service pay and benefit limitations
for qualified plans. This Plan is designed to
provide retirement income benefits, as a percentage of
pay, which are similar for all employees regardless of compensation levels. The Unfunded
Supplemental Benefit Plan eliminates the effect of tax limitations on the payment of retirement
benefits,
except to the extent that it is an unfunded plan and a general obligation of our company.
This plan has two components: (1) an employee contribution feature with company matching, and
(2) a profit-sharing feature.

*A discussion of all retirement benefits provided to the NEOs is set forth under the heading
“Retirement and Pension Benefits” beginning on page 51.

 

 
* IMPORTANT PENSION INFORMATION AS OF DECEMBER 31, 2013,
BENEFITS UNDER THE RETIREMENT PLAN AND THE SUPPLEMENTAL PLAN WERE FROZEN. These plans were amended to freeze service accruals effective December 31, 2013 and pay accruals effective December 31, 2015

 

44
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

 
 

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Table of Contents

Considering Risk, Accounting and Tax Considerations
Our compensation programs are balanced, focused and give considerable weight to the long-term performance of our company. Under this
structure, the highest amount of
compensation can only be achieved through consistent superior performance over sustained periods of time.
Goals and objectives reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single

performance measure. Likewise, the elements of compensation are balanced among current cash payments and long-term equity-based
incentive awards. The Compensation Committee retains the discretion to adjust compensation for quality of performance and
adherence to our
company’s values.
Based on the foregoing features of our compensation programs, the Compensation Committee has concluded that risks arising
from
compensation policies and practices for employees of the company and its affiliates are not reasonably likely to have a material adverse effect
on the company as a whole.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
In administering the
compensation program for NEOs, the Compensation Committee considers the applicability of Section 162(m) of the Code,
the consequences under financial accounting standards, the tax consequences in our analysis of total compensation and the mix
of
compensation elements, base salary, bonus and long-term incentives. Section 162(m) prohibits public companies from taking a tax deduction for
compensation that is paid to any one of certain employees in excess of $1,000,000, unless the
compensation qualifies as performance-based
compensation within the meaning of the Code. To preserve the deductibility of compensation, we intend that bonus payments made according to
the EIP and grants of long-term incentives under our 2016 Plan
are intended to qualify as “qualified performance-based compensation.” The
Compensation Committee has the discretion to design and implement compensation elements that may not be deductible under Section 162(m)
if the
Compensation Committee determines that, despite the tax consequences, those elements are in our company’s best interest to adopt. For
example, we do not issue incentive stock options (ISOs), even though ISOs provide potential tax advantages to
the recipient, because of the
negative tax and accounting consequences to our company.

 

 
TAX & ACCOUNTING IMPLICATIONS WE CONSIDER THE TAX AND FINANCIAL ACCOUNTING IMPLICATIONS TO OUR COMPANY IN ALLOCATING AWARDS AMONG VARIOUS COMPENSATION VEHICLES AND SEEK TO PRESERVE THE TAX DEDUCTION FOR COMPENSATORY AWARDS.

 
Vulcan 2017 Proxy Statement
   
   

 
 

COMPENSATION DISCUSSION AND ANALYSIS
 
 

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 DEF 14A

Table of Contents

COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as set forth above with management
and, based on such review and
discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in this proxy statement.
Dated: February 9, 2017
COMPENSATION COMMITTEE
James T. Prokopanko, Chair
Thomas A. Fanning
Lee J. Styslinger, III
Kathleen Wilson-Thompson
 

46
 

COMPENSATION COMMITTEE REPORT
 
 

 
 

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Vulcan 2017 Proxy Statement
 
 

   
   

 DEF 14A

Table of Contents

EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the three most recently completed fiscal years, information concerning the compensation of our NEOs employed
as of December 31,
2016:

 
Change in
Pension
Non-Equity
Value 
And All
Other
Stock
Option
Total
Salary
Bonus
Incentive
Plan
Nonqualified CompenYear
Awards(1) Awards(1)
($)
($)
($)
Compensation(2)
Deferred sation(4)
($)
($)
($) Compensation
($)
Earnings(3)
($)  
  
  
 
 
  
   
  
  
  
0  2,826,194 
2016  941,670 
937,320 
2,264,000 
289,682  272,587  7,531,453 
0    2,312,865    775,236   
  2015    891,668 
1,923,000   
2,195,294    163,523    8,261,586 
0    792,750   274,250  
  2014   668,917     
1,590,000  
805,186   74,358   4,205,461 
0  2,124,034 
0  288,256  5,670,264 
2016  773,334 
706,640 
1,778,000 
0    1,901,190    639,318   
0    286,743    5,141,319 
  2015    733,338 
1,581,000 
0    792,750   274,250  
0    118,646   3,094,454 
  2014   598,808     
1,310,000    
0 
816,261 
271,560 
892,000 
157,618  408,898  3,100,595 
2016    554,258(5) 
0    1,511,970    156,054   
665,000   
501,706    98,711    3,496,241 
  2015  562,800(5) 
0    443,940   153,580  
567,000  
653,327   96,175   2,459,156 
  2014   545,134(5)     
0 
2016  530,508 
816,261 
271,560 
898,000 
178,516  110,257  2,805,102 
0    531,435    178,707   
  2015    429,508 
601,000   
522,763    78,028    2,341,441 
0    456,624   157,968  
  2014   410,008     
573,000  
581,778   61,314   2,240,692 
0 
384,000 
130,558  168,575  1,341,153 
245,756 
81,760 
2016    330,504 
0    247,005    83,061   
507,000   
506,675    85,252    1,800,881 
  2015  371,888(6) 
0    228,312  
78,984  
542,000  
374,968   37,324   1,619,512 
  2014   357,924(6)     

Name and
Principal Position

J. Thomas Hill
Chairman, President &
Chief Executive Officer
John R. McPherson
EVP and Chief Financial and
Strategy Officer
Stanley G. Bass
Chief Growth Officer
Michael R. Mills
Chief Administrative Officer
David P. Clement
President, Central Division

 
(1)

(2)

Pursuant to the rules of the SEC, 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 adjusted for current
expectations of future 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. 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. For the highest performance level the maximum number of shares
payable and the estimated grant date value are 64,400 shares ($5,652,388) for Mr. Hill; 48,400 shares ($4,248,068) for
Mr. McPherson; 18,600 shares ($1,632,522) for Mr. Bass; 18,600
shares ($1,632,522) for Mr. Mills; and 5,600 shares ($491,512) for Mr. Clement. 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.
The Executive Incentive Plan (EIP) payments were made on March 13, 2017 for the previous year’s performance. See discussion of the EIP under heading “Compensation Discussion and
Analysis” above.
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 was attributable to three
primary factors which were: (i) aging (one year closer to retirement), (ii) shift in the accrued benefit (from nonqualified plan to qualified plan), and
(iii) change in actuarial assumptions (change in interest rate from 3.84% to 3.66%,
and mortality table to RP-2014 Health Employee & Annuitant Mortality White Collar Table, adjusted to
2006 base rates, with generational improvements projected using Scale MP-2016).

(3)

 
    

FOOTNOTE 3 Breakout detail of change in pension value shown in table below:

 

Name
    
    
    
    
    
    

Tom Hill
John McPherson(a)
Stan Bass
Michael Mills
David Clement

Aging (one year
closer to
retirement)
($) 
 
202,184 
 
0 
 
104,090 
 
119,849 
 
87,967 

    
    
    
    
    
    

Shift
in Accrued
Benefit
($) 
 
6,291 
 
0 
 
4,491 
 
5,904 
 
5,534 

    
    
    
    
    
    

Change in
Assumptions
($)
 
 
81,207 
 
0 
 
49,037 
 
52,763 
 
37,057 

    
    
    
    
    
    

Total
Change
($)
 
  289,682 
 
0 
  157,618 
  178,516 
  130,558 

 

 

(a)

Mr. McPherson was hired after 2007 and is not eligible to participate in the company’s defined benefit plan.

 
Vulcan 2017 Proxy Statement
   
   

EXECUTIVE COMPENSATION
 
 

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47
 

 DEF 14A

Table of Contents
(4)

 

Includes qualified defined contribution plan contributions, company-paid life insurance premiums, commuting expenses, relocation expenses and personal use of company
automobile, as set forth in the following table.

 
    

FOOTNOTE 4 Breakout detail of all other compensation shown in table below:

 

    Name
 
 
 
 
 
 

    Tom Hill
    John McPherson
    Stan Bass
    Michael Mills
    David Clement

Non-Qualified
SERP
Contributions
($)
  
 
244,647  
 
196,494  
 
91,847  
 
81,491  
 
60,306  

Qualified
401(k)
Contributions
($)
  
 
26,500  
 
26,500  
 
26,500  
 
26,500  
 
26,500  

Company
Paid Life
Insurance
Premiums
($)  
 
1,440  
 
1,440  
 
1,440  
 
1,440  
 
1,440  

Personal
Use of
Company
Automobile
($)  
 
0  
 
4,458  
 
4,257  
 
826  
 
1,028  

Commuting
Expenses
($)
  
 
0  
 
59,364  
 
0  
 
0  
 
0  

Personal
Use of
Company
Aircraft
($)  
 
0  
 
0  
 
1,950  
 
0  
 
0  

Relocation
Expenses
($)
  
 
0  
 
0  
  282,904  
 
0  
 
79,301  

Total
($)
 
  272,587 
  288,256 
  408,898 
  110,257 
  168,575 

 

 
 

(5)
(6)

Includes a regional supplement in the amount of $20,750 for 2016, $114,000 for 2015, and $109,500 for 2014.
Includes a regional supplement in the amount of $51,000 for 2015 and $51,000 for 2014.


GRANTS OF PLAN-BASED AWARDS
The following table sets forth the grants of plan-based awards in 2016 to our NEOs:
 

ESTIMATED
FUTURE
PAYOUTS
UNDER NON-EQUITY
INCENTIVE
PLAN AWARDS

ESTIMATED
FUTURE
PAYOUTS UNDER
EQUITY INCENTIVE
PLAN AWARDS
(# OF SHARES)

All
Other
All Other
 
 
Grant
Option
Stock
Exercise
Date Fair
Awards:
Awards:
or Base
 
 
  
  Value of
  
  Number  
Number of
Price of
Stock and
of
Shares of
Option
Option
Securi(1)
Stock
Awards
Grant Date Threshold
Target Maximum Threshold Target Maximum
Awards(2)
ties Un   Name
($/Sh)
or Units
($)
($)
($)
(#)
(#)
(#)
($)
derlying
(#)
Options
 
(#)   
 
 
 
  
  
  
  
  
  
  
  
   Tom Hill
  2/12/2016   
0    1,092,500    2,731,250    
0     32,200     64,400    
0     32,100    
92.02    3,763,514 
0     24,200    
92.02    2,830,674 
   John McPherson   2/12/2016   
0     858,000    2,145,000    
0     24,200     48,400    
   Stan Bass
  2/12/2016   
0     440,000    1,100,000    
0     9,300     18,600    
0     9,300    
92.02    1,087,821 
   Michael Mills
  2/12/2016   
0     440,000    1,100,000    
0     9,300     18,600    
0     9,300    
92.02    1,087,821 
   David Clement
  2/12/2016   
0     199,200     498,000    
0     2,800    
5,600    
0     2,800    
92.02     327,516 

 

 

 

 

 

 

 

 

(1)
(2)

Exercise price was determined using the closing price of our common stock on the grant date as required under the 2006 Plan.
Amount represents the grant date fair values calculated in accordance with FASB ASC Topic 718. The grant date fair value of $87.77 for the PSUs granted on 2/12/2016 was calculated
using a Monte Carlo simulation model.
The grant date fair value of $29.20 for the SOSARs granted on 2/12/2016 was calculated using a Black-Scholes option pricing model. Fair value was
calculated on the number of units granted.

 

48
 

EXECUTIVE COMPENSATION
 
 

 
 

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 DEF 14A

Table of Contents

OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
Certain information concerning unexercised options, stock awards that have not vested and equity
incentive plan awards for each of the NEOs
outstanding as of December 31, 2016, is set forth in the table below:

 
OPTION AWARDS

 

 Name

Grant
Date

Tom
Hill

John
McPherson

Stan
Bass

Michael
Mills

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Number of
Securities
Underlying
Unexercised
Exercisable
Options
(#)

  

Number of
Securities
Underlying
Unexercised
Unexercisable
Options
(#)

  

  

2/7/2008     

2,280     

0   

  2/12/2009     

9,285     

0   

  2/12/2010     

6,200     

0   

 

3/1/2011     

4,900     

0   

 

2/9/2012     

0(1)     

0   

 

2/7/2013     

5,250(2)     

1,750   

 

  12/20/2013   
  2/13/2014     
  2/12/2015     
  2/12/2016     
  11/9/2011     
  11/9/2011     
 

2/9/2012     

 

2/7/2013     

  12/20/2013   
  2/13/2014     
  2/12/2015     
  2/12/2016     
 

2/7/2008     

  2/12/2009     
  2/11/2010     
 

3/1/2011     

 

2/9/2012     

 

2/7/2013     

  2/13/2014     
  2/12/2015     
  2/12/2016     
 

2/7/2008     

  2/12/2009     
  2/11/2010     
 

3/1/2011     

 

2/9/2012     

 

2/7/2013     

  12/20/2013   
  2/13/2014     
  2/12/2015     
  2/12/2016     

 
6,250(3)   
7,700(4)   
0(5)   
355,600   
15,300   
0(1)   
6,075(2)   
 
6,250(3)   
6.350(4)   
0(5)   
5,760   
18,570   
9,300   
5,600   
0(1)   
5,250(2)   
3,500(3)   
1,550(4)   
0(5)   
4,425   
20,970   
3,500   
5,600   
0(1)   
5,250(2)   
 
3,600(3)   
1,755(4)   
0(5)   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
6,250   
23,100   
32,100   
0   
0   
0   
2,025   
 
6,250   
19,050   
24,200   
0   
0   
0   
0   
0   
1,750   
3,500   
4,650   
9,300   
0   
0   
0   
0   
0   
1,750   
 
3,600   
5,325   
9,300   

  

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)

Option
Exercise
Price
($)

  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  

  
 
47.47   
43.05   
43.63   
0   
55.41   
 
66.00   
79.41   
92.02   
29.05   
29.05   
0   
55.41   
 
66.00   
79.41   
92.02   
70.69   
47.47   
43.05   
43.63   
0   
55.41   
66.00   
79.41   
92.02   
70.69   
47.47   
43.05   
43.63   
0   
55.41   
 
66.00   
79.41   
92.02   
70.69 

Option
Expiration
Date

  
  2/7/2018   
  2/12/2019   
  2/11/2020   
  3/1/2021   
 

n/a   

  2/7/2023   

 
  2/13/2024   
  2/12/2025   
  2/12/2026   
  11/9/2021   
  11/9/2021   
 
n/a   
  2/7/2023   
 
  2/13/2024   
  2/12/2025   
  2/12/2026   
  2/7/2018   
  2/12/2019   
  2/11/2020   
  3/1/2021   
 
n/a   
  2/7/2023   
  2/13/2024   
  2/12/2025   
  2/12/2026   
  2/7/2018   
  2/12/2019   
  2/11/2020   
  3/1/2021   
 
n/a   
  2/7/2023   
 
  2/13/2024   
  2/12/2025   
  2/12/2026   

STOCK AWARDS

 

 

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)

  
 
 
 
 
 
 
  20,000(10)   
 
 
 
 
 
 
 
  20,000(10)   
 
 
 
 
 
 
 
 
 
 
  14,000(11)   
 
 
 
 
 
 
 
  20,000(10)   
 
 
 

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(13)
($)

 

 

 

 

  
 
 
 
 
 
 
2,503,000   
 
 
 
 
 
 
 
2,503,000   
 
 
 
 
 
 
 
 
 
 
1,752,100   
 
 
 
 
 
 
 
2,503,000   
 
 
 

Equity
Incentive
Equity
Incentive Plan Awards:
Market or
Plan Awards:
Payout
Number of
Value of
Unearned
Unearned
Shares,
Shares,
Units
or
Units or
Other
Other
Rights That
Rights That
Have Not
Have
Not
Vested(12)
Vested(13)
(#)
($) 
  

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 

 
 
 
 
 
10,507(6)     
 
12,500(7)     
30,900(8)     
32,200(9)     
 
 
 
12,158(6)     
 
12,500(7)     
25,400(8)     
24,200(9)     
 
 
 
 
 
10,507(6)     
7,000(7)     
6,200(8)     
9,300(9)     
 
 
 
 
 
10,507(6)     
 
7,200(7)     
7,100(8)     
9,300(9)     

1,314,951 
1,564,375 
3,867,135 
4,029,830 

1,521,574 
1,564,375 
3,178,810 
3,028,630 

1,314,951 
876,050 
775,930 
1,163,895 

1,314,951 
901,080 
888,565 
1,163,895 

 
Vulcan 2017 Proxy Statement
   
   

EXECUTIVE COMPENSATION
 
 

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Table of Contents
OPTION AWARDS

 

STOCK AWARDS

  

 
 

 Name

Grant
Date

David
Clement

 
 
 
 
 
 
 
 
 
 

Number
of
Securities
Underlying
Unexercised
Exercisable
Options
(#)

  

Number
of
Securities
Underlying
Unexercised
Unexercisable
Options
(#)

  

Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)

  

  2/7/2008   

 

1,890   

 

0   

  2/12/2009   

 

4,520   

 

0   

  2/11/2010   

 

1,430   

 

0   

  3/1/2011   

 

1,370   

 

0   

  2/9/2012   

 

0(1)   

 

0   

  2/7/2013   

 

810(2)   

 

270   

  2/13/2014   

 

1,800(3)   

 

1,800   

  2/12/2015   

 

825(4)   

 

2,475   

  2/12/2016   

 

0(5)   

 

2,800   

Option
Exercise
Price
($)

  
  
  
  
  
  
  
  
  
  

   
 
47.47   
43.05   
43.63   
0   
55.41   
66.00   
79.41   
92.02   
70.69 

Option
Expiration
Date

  
  2/7/2018   
  2/12/2019   
  2/11/2020   
  3/1/2021   
 

n/a   

  2/7/2023   
  2/13/2024   
  2/12/2025   
  2/12/2026   

Number of
Shares
or
Units of
Stock
That
Have Not
Vested
(#)

  
 
 
 
 
 
 
 
 
 

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units
or
Other
Rights That
Have Not
Vested(12)
(#)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(13)

($)
  
 
 
 
 
 
 
 
 
 

 
 
 
 

Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested(13)
($) 

  
 
 
 
 
 
1,636(6)     
3,600(7)     
3,300(8)     
2,800(9)     

204,745 
450,540 
412,995 
350,420 

Options in footnotes 2, 3, 4, and 5 vest at a rate of 25% per year in years 1 – 4.
 

(1)
(2)
(3)
(4)
(5)

No Options (SOSARs) were granted in 2012.
Options (SOSARs) with vesting dates 2/7/2014, 2/7/2015, 2/7/2016, and 2/7/2017.
Options (SOSARs) with vesting dates 2/13/2015, 2/13/2016, 2/13/2017, and 2/13/2018.
Options (SOSARs) with vesting dates 2/12/2016, 2/12/2017, 2/12/2018, and 2/12/2019.
Options (SOSARs) with vesting dates 2/12/2017, 2/12/2018, 2/12/2019, and 2/12/2020.

PSUs in
footnotes 6, 7, 8 and 9 cliff vest 100% after a four-year performance period.
 

(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)

PSUs with vesting date of 12/31/2016.
PSUs with vesting date of 12/31/2017.
PSUs with vesting date of 12/31/2018.
PSUs with vesting date of 12/31/2019.
Restricted Stock Units (RSUs) cliff vest 100% after a four-year period, with a vesting date of 12/20/2017.
RSUs cliff vest 100% after a four-year period, with a vesting date of 2/12/2019.
Vested PSUs adjusted for company performance through 12/31/2016. Unvested PSUs reported at target.
Based on closing price of our common stock on the NYSE on 12/30/2016, $125.15.

Deferred Compensation Plan
Our Executive Deferred Compensation Plan was established in 1998 to allow executives to defer a portion of their current year’s compensation in
a tax-efficient manner. We believe that providing a tax deferral plan gives our executives flexibility in tax and financial planning and provides an
additional benefit at little cost to our shareholders. Our company
does not make any contributions to the plan on behalf of the participants.
Because our company purchases assets that mirror, to the extent possible, participants’ deemed investment elections under the plan, the only
costs to our company related
to the plan are administrative costs and any contributions that may be necessary to true-up account balances with
deemed investment results. The plan allows executives with annual compensation (base salary and target annual short-term bonus) of $200,000
or more to defer receipt of up to 50% of base salary, up to 100% of annual cash bonus and up to 100% (net of FICA and any applicable local
taxes) of long-term incentive awards, which are not excluded from deferral eligibility by the Code (or regulations thereunder), until a date selected
by the participant. The amounts deferred are deemed invested as designated by participants in our company’s common stock (a “phantom stock”
account) or in dollar-denominated accounts that mirror the gains or losses of the various investment options available under our company’s
401(k) plan. The plan does not offer any guaranteed return to participants.
The plan is funded by a “rabbi trust” arrangement owned by our company, which holds assets that correspond to the deemed investments of the
plan participants
and pays benefits at the times elected by the participants. Participants have an unsecured contractual commitment from our
company for payment when the amounts accrue. Upon the death or disability of a participant or upon a change of control of our
company, all
deferred amounts and all earnings related thereto will be paid to the participant or participant’s beneficiaries in a single lump sum cash payment.
Effective for deferrals made after January 1, 2007, the plan permits executives to defer payouts of PSUs and DSUs into the plan, which would,
absent such deferral,
be distributed to the executives and immediately taxable. The PSU and DSU deferrals generally will be credited to the plan
participant accounts in the form of phantom stock and an equal number of
 

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shares of our common stock will be deposited by our company into the rabbi trust. Deferrals of long-term incentive compensation payments are
also invested in phantom stock of our company and may
not be reallocated to an alternative investment option while in the plan.
The following table shows the contributions, earnings, distributions and year-end account values for the NEOs under the plan:

 
NONQUALIFIED DEFERRED COMPENSATION PLAN
    
      
      

 

     

 
 

    

Executive
Registrant
Aggregate
Aggregate
Aggregate
Contributions Contributions
Withdrawals/
Balance at
Earnings in Last
in Last Fiscal in Last Fiscal
Distributions
Last Fiscal
Fiscal Year ($)
Year ($)    
Year ($)    
($)    Year End(1) ($) 
  
    
    
0      
0      
413,057     
0    
1,167,382 
    
0      
0      
0     
0    
0 
    
0      
0      
0     
0    
0 
    
0      
0      
0     
0    
0 
    
50,700      
0      
31,855     
0    
141,542 

Name
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement
 

(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.

OPTION EXERCISES AND STOCK VESTED
Certain information concerning each exercise of stock options and each vesting of stock during the fiscal year ended December 31, 2016, for
each of the NEOs on an
aggregate basis is set forth in the table below:

 
  
 

  
  
  
  
  
  

Number of Shares
Acquired on
Exercise (#) 
 
24,875 
 
0 
 
8,910 
 
10,995 
 
3,790 

Name

Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

OPTION AWARDS

  

 

 

  

 

  

 

  
  
  
  
  
  

Number of Shares
Acquired on
Vesting(2) 
(#) 
 
15,515 
 
20,078 
 
15,515 
 
15,515 
 
2,708 

  

 

  
  
  
  
  
  

Value Realized on
Exercise(1) 
($)
 
 
1,302,662 
 
0 
 
99,436 
 
187,165 
 
142,070 

STOCK AWARDS
 

 

  

 

 

  
  
  
  
  
  

Value Realized
on Vesting(3)
($) 
 
1,396,195 
 
1,806,819 
 
1,396,195 
 
1,396,195 
 
243,693 

 

(1)
(2)
(3)

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.
Represents the payment of Performance Share Units (PSUs). PSUs were paid 100% in stock.
Calculated by multiplying the number of units vested by the closing price of our common stock for PSUs on the vesting date (2/11/2016).

RETIREMENT AND PENSION BENEFITS
Generally, most full-time salaried employees of our company that were hired prior to July 15, 2007, including all of the NEOs except
Mr. McPherson, participate
in our company’s pension plans. Our NEOs are also eligible for supplemental retirement programs, as described on
the following page. Retirement benefits become payable as early as the date on which participants both attain age 55 and complete
one year of
service.
 
Vulcan 2017 Proxy Statement
   
   

EXECUTIVE COMPENSATION
 
 

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The following table provides for each NEO the number of years of credited service and the present value of accumulated
benefits as of
December 31, 2016, under each plan in which the NEO participates. The narrative that follows this table provides a description of the material
features of each plan.

 
PENSION BENEFITS

Name
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

 
Number of Years Present Value of
Payments
of Credited
Accumulated During Last
Plan Name
Service
Benefit (1) Fiscal Year
($)   
(#)   
($) 
 
 
 Retirement Income Plan   
23 3/12    
1,151,255    
0 
 Supplemental Benefit Plan  
23 3/12    
4,001,965    
0 
 Retirement Income Plan   
n/a    
n/a    
0 
 Supplemental Benefit Plan  
n/a    
n/a    
0 
 Retirement Income Plan   
17 7/12    
819,849    
0 
 Supplemental Benefit Plan  
17 7/12    
1,748,808    
0 
 Retirement Income Plan   
22 9/12    
1,073,727    
0 
 Supplemental Benefit Plan  
22 9/12    
1,841,478    
0 
 Retirement Income Plan   
21 9/12    
1,018,345    
0 
 Supplemental Benefit Plan  
21 9/12    
1,023,749    
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” assumptions as of December 31, 2016, were used to determine the present values:
(i)
discount rate of 3.66%;
(ii) mortality based on the RP-2014 Healthy Employee & Annuitant Mortality White Collar Table, and generational improvements projected using Scale MP-2016;
(iii) present values for lump sums are based on projected segmented interest rates and the prescribed 2016 IRS Mortality Table;
(iv) Supplemental Benefit Plan benefits assumed to be paid as a 10 Year Term Certain Annuity; and
(v) for the Retirement Income Plan, 40% of the benefit accrued before December 31, 2000, is assumed to be paid as a lump sum, with the remainder of the accrued benefit assumed to
be paid as a single life annuity.

 

Retirement Income Plan
The
Retirement Income Plan for Salaried Employees (Retirement
Plan) provides benefits under a funded noncontributory defined
benefit plan and covers most salaried employees, including all
executive officers, hired prior to July 15, 2007. In 2013,
the
Retirement Plan was amended to freeze service accruals effective
December 31, 2013, and pay accruals effective December 31, 2015.
The normal retirement
date is defined in the Retirement Plan as the
first day of the calendar month immediately following a participant’s
65th birthday. The amount of benefit is based on earnings, service
and the age at which a participant commences receiving a
benefit.
Eligible earnings under the Retirement Plan, or “Final Average
Earnings,” is the average of a participant’s highest 36 consecutive
months of earnings and includes base monthly salary and any
awards under the EIP, as reflected
in the “Salary” and “Non-equity
Incentive Plan Compensation” columns of the Summary
Compensation Table. Under Section 415 of the Code, the maximum
annual benefit allowable under the
Retirement Plan for an employee
retiring at age 65 in 2016 is $210,000. In addition, Section 401 of the
Code limits the amount of a participant’s compensation that may be
taken into account under the Plan to $265,000. These dollar limits

are subject to cost of living adjustments.

The Retirement Plan formula provides a monthly benefit equal to
0.9% of final average earnings per year of service accrued
prior to
age 45, plus 1.2% of final average earnings per year of service
accrued after age 44, plus .5% of Final Average Earnings in excess
of 50% of the Social Security Wage Base applied to all years of
service. A vested participant may commence
receiving early
retirement benefits under the Retirement Plan as early as age 55.
The amount of early retirement reduction depends on the age of a
participant when active employment ceases. If active employment
ceases after age 55 and retirement
income commences at age 62, or
later, the monthly benefit is not reduced. However, if the benefit
commences prior to age 62, the monthly benefit is reduced at a rate
of 7% per year for commencement between ages 55 and 62. If active
employment
ceases prior to age 55, the monthly benefit is actuarially
reduced for commencement between ages 55 and 65.
The normal form of retirement benefit under the
Retirement Plan for
an unmarried participant is a single life annuity, which is a monthly
payment for life. The normal form of retirement benefit under the
Retirement Plan for a married participant is a 75% joint and survivor
annuity, which is a
monthly payment for the life of the participant, and
thereafter 75% of that amount to the surviving spouse payable for his
or her lifetime. The Retirement Plan also permits the participant to
elect, with spousal consent, other

 

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EXECUTIVE COMPENSATION
 
 

 
 

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annuity options and a lump sum payment for benefits accrued prior
to 2001. The optional forms of payment are subject to actuarial
adjustment.


is the closing market price as of December 30, 2016 (the last trading
day of the fiscal year).

Unfunded Supplemental Benefit Plan

The following charts
list different types of termination and COC
events that can affect the treatment of payments under our
company’s compensation and benefit programs. These events also
affect payments to Messrs. Hill, McPherson, Bass and Mills under
their COC
Agreements, and to Mr. Clement under the COC Plan.
None of the COC Agreements provide for a “single-trigger”;
therefore, no payments are made under the COC Agreements
unless, within two years of the COC, the officer is involuntarily

terminated or he voluntarily terminates for good reason (as described
below).

The Unfunded Supplemental Benefit Plan for
Salaried Employees
(Supplemental Plan) enables our company to pay any person whose
pension under the Retirement Plan has been reduced as a result of
the limitations imposed by Sections 401 and 415 of the Code, an
amount equal to the difference
between the amount the person
would have received under the Retirement Plan had there been no
limitations and the amount the person will receive under the
Retirement Plan after giving effect to the limitations. In 2013, the
Supplemental Plan was
also amended to freeze future service and
pay accruals in the same manner as described above for the
qualified Retirement Plan.
The Supplemental Plan is unfunded and amounts payable to the
employees covered thereby are considered to be general obligations
of our company; however, the Supplemental Plan contains provisions
that allow for the funding of a rabbi trust to improve the security of
the benefit, to some
extent, upon the occurrence of a change of
control event (as defined in the Supplemental Plan).
The determination of the benefit amount and the payment options
under
the Supplemental Plan are the same as the Retirement Plan,
except as follows. Effective January 1, 2007, the Supplemental Plan
was amended to allow existing participants to make an election to
receive supplemental pension benefits in the form
of installment
payments over a period of 10 years, thereby accelerating payout
somewhat and minimizing to some extent the risk of future
non-payment. The installment payments are actuarially equivalent to
the
various annuity options available under the Retirement Plan. New
participants in the Supplemental Benefit Plan on or after January 1,
2007 automatically receive their supplemental pension benefits in the
form of installment payments over a
period of 10 years and have no
other payment options.
Eligibility for Early Retirement
As of February 1, 2017, Messrs. Hill, Bass, Mills and Clement were
eligible for early retirement under the Retirement Plan and the
Supplemental Plan.

PAYMENTS UPON TERMINATION OR CHANGE OF
CONTROL
This Section describes and estimates payments that could be made
to the NEOs under different termination and change of control (COC)
events. The estimated payments
would be made under the terms of
our company’s compensation and benefits programs or the COC
Agreements with Messrs. Hill, McPherson, Bass and Mills and the
COC Plan with respect to Mr. Clement. The amount of potential
payments is
calculated as if the different events occurred as of
December 31, 2016, and assumes that the price of our company’s
common stock

Description of Termination and Change of Control Events

Termination Events
 

•  Retirement or Retirement Eligible—Termination of a NEO who
is at least 55 years old and has at least one year of credited
service.
 

•  Involuntary Termination without Cause—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 for Cause—Termination of a NEO for
cause. Cause includes individual performance below minimum
performance standards and misconduct.
NEO Change of Control Agreements and Related Cash
Severance Benefits
Our
company entered into the COC Agreements, effective as of
January 1, 2016, with each of our NEOs, except for Mr. Clement,
who is a participant in our COC Plan. In addition to the treatment of
the benefits described above, our NEOs are
entitled to a cash
severance benefit if, within two years of a COC, their employment is
involuntarily terminated without cause, or they voluntarily resign for
good reason. These claims are subject to standard release and
waiver of claims
requirements.
The COC severance payment is three times (or, in the case of
Mr. Clement, 2.5 times) each NEO’s annual base salary and shortterm bonus, as
defined in their COC Agreements or the COC Plan, as
applicable. Also, such severance payments include the continuation
of health, medical and other fringe benefits for a period of three (or,
in the case of Mr. Clement, 2.5) years following
termination. All of our
COC Agreements and our COC Plan have a “double-trigger”
termination right (requiring both a COC and a qualifying termination
of employment in order to receive COC severance payments), and
do not include the
long-term incentive value in the severance
calculation or have tax gross-ups. In addition, each COC Agreement
and our COC Plan provides for the payment of a pro-rata
short-term
bonus for the year of termination.

 

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The table below reflects an estimate of the severance payments that would be made to our NEOs if they were terminated as of
December 31,
2016, in connection with a COC:

 
2016
Base Salary
($)
  
 
   
950,000 
   
780,000 
   
550,000 
   
550,000 
   
332,000 

Severance
Multiple

  Name
  
   
   
   
   
   

  Tom Hill
  John McPherson
  Stan Bass
  Michael Mills
  David Clement

 
3 
3 
3 
3 
2.5 

Greater of
Total Cash
3-Year Avg
Severance
or Target
Payments
Bonus
($)
($)    
  
 
    1,301,000      6,753,000 
    1,072,000      5,556,000 
   
600,000      3,450,000 
   
508,667      3,176,001 
   
402,667      1,836,668 
 

  
   
   
   
   
   

Pro-rata
Bonus
($)
 
1,301,000 
1,072,000 
600,000 
508,667 
402,667 

  
   
   
   
   
   

Cash
Severance
Amount(1)
($)
 
8,054,000 
6,628,000 
4,050,000 
3,684,668 
2,239,335 

 

(1)

These amounts represent cash severance payments to be paid to the NEOs under the COC Agreements (and, in the case of Mr. Clement, under the COC Plan) in the event of a COC and
do not include the value of other COC
benefits.

Termination Pay and Benefits Programs
The
following chart describes the treatment of different pay and benefit elements in connection with these employment termination events for
NEOs:

 
  Program

Retirement/
Retirement
  Eligible

  Pension:
  • Retirement Plan
  • Supplemental Plan

Participant may
commence benefit
payment

 
  Executive Deferred
  Compensation

  EIP
  Stock Options/
  SOSARs

  PSUs

Involuntary
Termination
  Not For Cause

 

 

 

Payout made the year
following the year of
termination in a lump
  sum
 

Eligible to receive
  prorated payment

 

No payment

Full term to exercise
vested options; if 62 or
older, non-vested
options continue to
vest; noncompetition
agreement may be
required for exercising
  vested options
 

No payment

If age 62 or older,
Non-vested units are
vesting is accelerated, forfeited
otherwise pro-rata
  vesting
 

Participant may
commence benefit
payment or will be
Terminated Vested(1)
depending on age
Payout made the year
following the year of
termination in a lump
sum
No payment

 

Vesting accelerated.
Under death, estate
has one year to
exercise. Under
disability, have full
remaining term to
exercise.
 

Non-vested units are
forfeited
 

Payment commences
the year after death or
disability in the form
elected
 

Eligible to receive
  prorated payment

Non-vested options
forfeited; 30 days to
exercise vested
options

 

Involuntary
Termination
  For Cause

In death, spouse may
commence survivor
benefit on or after the
date that the
Participant would have
  attained age 55
 

Payout made the year
following the year of
termination in a lump
sum
 

 
Non-vested options
forfeited; 30 days to
exercise vested
options

Death Or Disability
 

Participant is
considered
Terminated Vested(1)

Participant is
considered
Terminated Vested(1)

 
Payment made in
accordance with
deferral election

Resignation

Forfeit all, vested and
non-vested

 
Vesting is accelerated

 

Forfeit all, vested and
non-vested
 

 

(1)

“Terminated Vested” means the participant is no longer employed with our company but continues to have a vested interest in the applicable plan.

 

54
 

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 Program
 RSUs

Retirement/
Retirement
  Eligible

Involuntary
Termination
  Not For Cause

 

 

Non-vested units are
  forfeited

Non-vested units are
  forfeited

Non-vested units
  are
forfeited

 

May take payment or
defer until age 70 1⁄2

May take payment or
defer until age 70 1⁄2

 401(k) Plan
 
 Supplemental Plan
 (Defined Contribution)

 

Resignation

Vesting is accelerated

Involuntary
Termination
  For Cause
Non-vested units are
  forfeited

May take payment or
defer until age 70 1⁄2

Beneficiary may take
May take payment or
payment or defer until
defer until age 70 1⁄2
  age 70 1⁄2
 

May take payment or
defer until age 70 1⁄2

 
May take payment or
defer until age 70 1⁄2

Death or Disability

 

 

 

Account distributed by May take payment or
March 1 of the
defer until age 70 1⁄2
  following year
 

 Severance Benefits

  None

  None

  None

  None

 Health Benefits

May continue to age 65 if Coverage ceases;
eligibility rules are met
eligible for coverage
extension under
COBRA
 
 

May take payment or
defer until age 70 1⁄2

Coverage ceases;
eligible for coverage
extension under
COBRA
 

  None

3 months spousal
extension, then
COBRA; if eligibility
rules are met may
  continue up to age 65  

3 months spousal
extension, then
COBRA; if eligibility
rules are met may
continue up to age 65

COC-Related Events
 

•   A COC occurs under certain of our company’s award agreements executed in connection with the grant of equity awards under the 2006 Plan
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

 

 

    

(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 COC Agreements, the COC Plan and the 2016 Plan, a COC is defined as: (i) the acquisition by a person or group of 30%
or more of the then outstanding common stock or voting securities of our
company; or (ii) a change in the majority of members of the Board of
Directors; or (iii) 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 50% of the outstanding
common stock following the business combination or sale; or (iv) approval by the shareholders of the company of a complete liquidation
or
dissolution of the company.
 

•   Involuntary COC Termination or Voluntary COC Termination for Good Reason—Employment is terminated within two years of a COC, other
than for cause, or the employee voluntarily terminates for Good Reason.
“Good Reason” would generally be considered to have occurred if there were a reduction in certain types of compensation, a relocation under

certain circumstances or a diminution in duties and responsibilities.
 
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EXECUTIVE COMPENSATION
 
 

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COC Pay and Benefits Programs
The
following table describes treatment of payments under pay and benefit programs upon a COC, and upon an employment termination
(voluntary or involuntary) upon a COC:
 

Plan or Program
Pension:
• Retirement Plan
• Supplemental Plan
Executive Deferred
Compensation Plan
EIP

 

COC
No payment to NEOs solely upon the COC

 
 

 
SOSARs(1)
 
PSUs(1)
 
RSUs(1)
 
401(k) Plan

 
Accelerate all deferred amounts and pay lump sum
within 10 business days
 
The amount paid will be equal to the greater of (i) the
average bonus during the three preceding years, (ii) the
target bonus, or (iii) the bonus determined under the
Plan for the year in which the COC occurs
 
Immediately deemed fully vested and exercisable;
remaining term to exercise
 
Vesting is accelerated; pay within 2 1/2 months after end
of the
year in which the COC occurs
 
All immediately deemed non-forfeitable; pay within 90
days following the COC
 
No payment to the NEOs solely upon the COC

 
Supplemental Plan
(Defined Contribution)
Severance Benefits

No payment to the NEOs solely upon the COC
 
No payment to the NEOs solely upon the COC

 
Health Benefits

COC with Termination
  (other than cause)
No payment to NEOs solely upon the COC

No payment to the NEOs solely upon the COC
 

Accelerate all deferred amounts and pay lump sum
within 10 business days
The amount paid will be equal to the greater of (i) the
average bonus during the three preceding years, (ii) the
target bonus, or (iii) the bonus determined under the
Plan for the year in which the COC
occurs
Immediately deemed fully vested and exercisable;
remaining term to exercise
Vesting is accelerated; pay within 2 1/2 months after end
of the
year in which the COC occurs
All immediately deemed non-forfeitable; pay within 90
days following the COC
Service ceases except to the extent that additional
service is provided under the terms of the COC
  Agreements; participant is entitled to distribution
Participant is entitled to distribution
 
For NEOs with COC Agreements, payment is 3 times
the NEO’s annual base salary and short-term bonus.
For NEOs under the COC Plan, payment is 2.5 times
  the NEO’s annual base salary and short-term bonus.
3 year coverage extension provided under the terms of
the COC Agreements and 2.5 year coverage extension
  provided under the terms of the COC Plan

 

(1)

The accelerated vesting and payment benefits shown in this table relate to awards of SOSARs, PSUs and RSUs granted under the 2006 Plan. Effective May 13, 2016, all long-term
incentive awards are granted under the new
2016 Plan, which contains a “double-trigger” change of control requirement for all awards issued under the 2016 Plan. Specifically, the 2016
Plan provides that awards will not vest upon a change of control of Vulcan unless: (i) awards are
not assumed, substituted or continued by the surviving company, or (ii) if such awards are
assumed, substituted or continued by the surviving company, only upon a participant’s qualifying termination of employment.

Potential Payments
This section describes and estimates payments that
would have become payable to the NEOs upon a termination or COC as of December 31,
2016.
Pension Benefits
The monthly amounts that would have become payable to our NEOs if the termination event occurred as of December 31, 2016, under the
Retirement Plan and the
Supplemental Plan are itemized in the chart set forth on the following page. The amounts shown in the chart are
monthly benefit amounts (other than with respect to the accrued benefits payable upon a COC, which would be paid in a lump sum) whereas
the
pension values shown in the Summary Compensation and Pension Benefits Tables are present values of all the monthly values anticipated to be
paid over the lifetimes of our NEOs and their spouses in the event of their death while actively
employed. These plans are described in the notes
following the Pension Benefits Table. Messrs. Hill, Bass, Mills and Clement were retirement eligible on December 31, 2016. The benefits were
determined using the same assumptions used to
compute benefit values in the Pension Benefit Table with three exceptions. First, the benefit
payments were assumed to commence as soon as possible following December 31, 2016, instead of at normal retirement. Second, approximate
early
retirement reductions were applied. Finally, the benefits were not adjusted to reflect optional forms of payment. All benefits are the amounts
that would be paid monthly over the NEO’s life, except for the value of COC-enhanced benefits which would be paid in a lump sum.
 

56
 

EXECUTIVE COMPENSATION
 
 

 
 

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 DEF 14A

Table of Contents
Pension Benefits Table
 

Name

 

Retirement
(Monthly
Payments)
($)
 
  

Retirement Plan
Supplemental Plan
Defined Contribution
Retirement Plan
Supplemental Plan
Defined Contribution
Retirement Plan
Supplemental Plan
Defined Contribution
Retirement Plan
Supplemental Plan
Defined Contribution
Retirement Plan
Supplemental Plan
Defined Contribution

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Tom Hill

John McPherson

Stan Bass

Michael Mills

David Clement

(1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
7,118  
 
33,639  
 
0  
 
n/a  
 
n/a  
 
0  
 
5,403  
 
15,795  
 
0  
 
6,908  
       16,093  
 
0  
 
6,597  
 
9,109  
 
0  

Resignation
Death (monthly COC (Value of
or Involuntary
payments to a
Enhanced
Retirement
spouse)
Benefits)(1)
(monthly payments)
($)
($)
($) 
 
  
Terminated Vested(2) 
Terminated Vested(2) 
None 
n/a(3) 
n/a(3) 
None 
Terminated Vested(2) 
Terminated Vested(2) 
None 
Terminated Vested(2) 
Terminated Vested(2) 
None 
Terminated Vested(2) 
Terminated Vested(2) 
None 

 
n/a    
 
n/a    
 
0    
 
n/a    
 
n/a    
 
0    
 
4,803    
               14,042    
 
0    
 
6,107    
 
14,226    
 
0    
 
5,832    
 
8,052    
 
0    

0 
0 
607,770 
n/a 
n/a 
500,040 
0 
0 
310,502 
0 
0 
       285,842 
0 
0 
165,300 

(2)
(3)

Value of defined contribution enhancement is payable in a lump sum in the event of a COC. The defined contribution amounts represent either 2.5 or 3 years, depending on the NEO, of
company matching contributions for
each executive.
Eligible for reduced payments as early as age 55 and unreduced payments at age 62.
Participation in the Retirement Plan was frozen in 2007. Therefore, Mr. McPherson is not eligible to participate in that Plan.

Performance Share Units (PSUs)
The chart below shows the number of PSUs for
which vesting would be accelerated under certain events. Unvested PSUs were adjusted to the
maximum allowed under the agreements because the performance was unknown at December 31, 2016.

 
 
 

 
 

Name
 
 
 
 
 
 

Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

  
  
Total Number of
Performance Share
Units Following
Accelerated Vesting  
 
76,257  
 
12,158  
 
31,857  
 
33,057  
 
11,736  

RETIREMENT

 

  
Number of
Performance Share
Units with
Accelerated Vesting  
 
65,750  
 
0  
 
21,350  
 
22,550  
 
10,100  

 

 
 
Total Number of
Performance Share
Units Following
Accelerated Vesting 
 
161,707 
 
136,358 
 
55,507 
 
57,707 
 
21,036 

COC (WITH OR WITHOUT TERMINATION)

 

  
Number of
Performance Share
Units with
Accelerated Vesting  
 
151,200  
 
124,200  
 
45,000  
 
47,200  
 
19,400  

 

 
Vulcan 2017 Proxy Statement
   
   

EXECUTIVE COMPENSATION
 
 

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Table of Contents
Stock Only Stock Appreciation Rights (SOSARs)
The chart below shows the number of SOSARs for which vesting would be accelerated under certain events:

 
 
 

 
   

Name
 
 
 
 
 
 

Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

  
  
Total Number
of SOSARs Following
Accelerated Vesting  
 
63,065  
 
389,575  
 
56,905  
 
52,770  
 
15,340  

RETIREMENT

  
Number of
SOSARs with
Accelerated Vesting  
 
20,600  
 
0  
 
7,375  
 
7,650  
 
2,695  

 
 
Total Number
of SOSARs Following
Accelerated Vesting 
 
105,665 
 
441,100 
 
68,730 
 
65,095 
 
19,990 

COC (WITH OR WITHOUT TERMINATION)

 

 

  
Number of
SOSARs with
Accelerated Vesting  
 
63,200  
 
51,525  
 
19,200  
 
19,975  
 
7,345  

 

Restricted Stock Units (RSUs)
The chart below
shows the number of RSUs for which vesting would be accelerated under certain events.

 
 
 

 
   

Name
Tom Hill
John McPherson
Stan Bass
Michael Mills
David Clement

 
 
 
 
 
 

RETIREMENT
    

Number of Restricted
Stock Units with
Accelerated Vesting
 
 
 
 
 

  
0  
0  
0  
0  
0  

  
  
Total Number of
Restricted Stock Units
Following Accelerated
Vesting  
 
0  
 
0  
 
0  
 
0  
 
0  

COC (WITH OR WITHOUT TERMINATION)  
    
 
Total Number of
Number of Restricted
Restricted Stock Units
Stock Units with
Following Accelerated
Accelerated Vesting
Vesting 
  
 
20,000    
20,000 
 
20,000    
20,000 
 
14,000    
14,000 
 
20,000    
20,000 
 
0    
0 

 

Executive Deferred Compensation Plan
The
aggregate balances reported in the Nonqualified Deferred Compensation Plan Table would be payable to the NEOs as described in the
termination events and COC-Related Events chart above. There is no enhancement
or acceleration of payments under these plans associated
with termination or COC events, other than the lump sum payment opportunity described in the above charts. The lump sums that would be
payable are those that are reported in the Nonqualified
Deferred Compensation Plan Table.
Health Benefits
Because Messrs. Hill,
Bass, Mills and Clement met the age and service eligibility requirement for health care benefits provided to early retirees,
there is no incremental payment associated with the termination or COC events. Mr. McPherson did not meet the
eligibility requirement;
therefore, his incremental cost for health benefits would be approximately $72,547.
 

58
 

EXECUTIVE COMPENSATION
 
 

Vulcan 2017 Proxy Statement

 
 

We use a combination of cash and stock-based compensation to
attract and retain qualified candidates to serve on our Board
of
Directors. In setting director compensation, our Board considers the

 
 

   
   


Compensation Plan is terminated; or (iii) our company’s capital
structure is changed materially. The Directors’ Deferred
Compensation Plan was approved by our company’s
shareholders in

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 DEF 14A

Table of Contents

DIRECTOR COMPENSATION
 
We use a combination of cash and stock-based compensation to
attract and retain qualified candidates to serve on our Board
of
Directors. In setting director compensation, our Board considers the
significant amount of time that directors expend on fulfilling their
duties to our company, as well as the limited pool of, and competition
among public companies for,
well-qualified Board members.
Additional amounts are paid to committee chairs in recognition of the
substantial responsibilities of the chair. Annually, the Compensation
Committee’s independent compensation consultant evaluates the

competitiveness of the company’s non-employee director
compensation program relative to peer companies and recommends
any changes to the Compensation Committee and full Board for
approval.
Directors are subject to a minimum share ownership requirement.
Within five years of becoming a director, each director is required to
own at least 5,000 shares of our
company’s common stock. Shares
or units held by a director under a deferred compensation plan are
included in calculating the director’s ownership.
CASH
COMPENSATION PAID TO BOARD MEMBERS. Members of
the Board who are not employees of our company are paid a retainer
of $110,000 per year, plus the following fees:
 

•  $25,000 Lead Director retainer fee;
 

•  $20,000 Audit Committee chair retainer fee;
 

•  $15,000 Compensation Committee chair retainer fee; and
 

•  $10,000 Retainer fee for all other committee chairs.
DEFERRED COMPENSATION PLAN. We maintain a Deferred

Compensation Plan for directors who are not employees of our
company (Directors’ Deferred Compensation Plan), under which
such directors are permitted to defer the cash compensation to which
they are entitled for specified periods or until they
cease to be
directors. The deferred amounts, at the election of the director, are
either (i) credited with interest at prescribed rates; or (ii) converted
into a number of stock equivalents equal to the number of shares of
our
company’s common stock (based on the market price at the time
of deferral) that could be purchased with the amount deferred.
Whenever a dividend is paid on our common stock, the stock
equivalent accounts are credited with an additional number
of stock
units corresponding to the amount of the dividend. At the end of the
deferral period, the stock equivalents are settled in shares of our
company’s common stock, and interest-based deferrals are settled in
cash. The Directors’
Deferred Compensation Plan also provides for a
lump-sum settlement of a director’s deferred compensation account
in stock or cash, as applicable, if following a Change in Control (as
defined in the
Directors’ Deferred Compensation Plan): (i) the
participating director ceases to be a member of the Board; (ii) the
Directors’ Deferred


Compensation Plan is terminated; or (iii) our company’s capital
structure is changed materially. The Directors’ Deferred
Compensation Plan was approved by our company’s
shareholders in
1993.
DEFERRED STOCK UNITS. Equity-based grants are awarded to our
non-management directors on an
annual basis. These grants
represent a significant portion of their compensation package. We
believe that equity grants promote a greater alignment of interests
between our directors and our shareholders through increasing their
ownership of our
common stock. Further, we believe that equity
grants support our ability to attract and retain qualified individuals to
serve as directors of our company by affording them an opportunity
to share in our future success.
In May 2016, 1,300 DSUs were granted to each non-management
director pursuant to the 2016 Plan, which was approved by our

shareholders in 2016. These units were fully non-forfeitable on the
date of the grant; however, payment is deferred until the director
ceases to serve on the Board or a COC occurs. The DSUs are an
unfunded,
unsecured obligation of our company, and no shares have
been set aside for these grants. The non-management directors
have no right to receive the DSUs until the restrictions imposed
either lapse or are
waived. Generally, the restrictions expire when
the non-management director ceases to be a director because of
retirement (age 70 or above), death, disability or a COC. However,
the Compensation Committee,
subject to Board approval, may waive
restrictions in the event the non-management director fails to remain
a director for any reason other than retirement at the mandatory age,
death or disability. During the
period the shares are restricted, the
non-management directors have no right to vote the shares.
Dividend equivalents are credited as additional DSUs quarterly when
dividends are paid on our stock. The DSUs
are settled in shares of
our common stock when the restrictions expire.

 
Vulcan 2017 Proxy Statement
   

DIRECTOR COMPENSATION
 

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 DEF 14A

Table of Contents

DIRECTOR SUMMARY COMPENSATION TABLE
The table below summarizes the compensation paid by our company to non-employee directors for the fiscal year ended
December 31, 2016:

 

Name

Change
in
Non-Equity Pension Value
Incentive
and All Other
Fees Earned
Stock Option
Plan
Nonqualified Compenor Paid in Awards(4) Awards
CompenDeferred sation(5)
($)
($)
Cash ($)
($)
sation Compensation
($)
Earnings
($)   
  
  
  
  
  
  

Elaine L. Chao(1)
Thomas A. Fanning
O. B. Grayson Hall, Jr.
Cynthia L. Hostetler
Douglas J. McGregor(2)
Richard T. O’Brien
James T. Prokopanko
Donald B. Rice(3)
Lee J. Styslinger, III
Vincent J. Trosino(2)
Kathleen Wilson-Thompson

    
    
    
    
    
    
    
    
    
    
    

110,000    
110,000    
120,000    
120,000    
110,000    
130,000    
150,000    
55,000    
110,000    
110,000    
120,000    

150,982    
150,982    
150,982    
150,982    
150,982    
150,982    
150,982    
0    
150,982    
150,982    
150,982    

0    
0    
0    
0    
0    
0    
0    
0    
0    
0    
0    

0    
0    
0    
0    
0    
0    
0    
0    
0    
0    
0    

0    
0    
0    
0    
0    
0    
0    
0    
0    
0    
0    

Total
($)

 

2,163     263,145 
2,163     263,145 
3,828     274,810 
2,163     273,145 
16,939     277,921 
11,999     292,981 
10,330     311,312 
15,321     70,321 
5,162     266,144 
15,095     276,077 
10,330     281,312 

 

(1)
(2)
(3)
(4)

Ms. Chao resigned from the Board effective as of January 31, 2017, upon her confirmation as Secretary of the United States Department of Transportation.
The terms of Mr. McGregor and Mr. Trosino will expire at the Annual Meeting.
Dr. Rice’s term expired at the 2016 Annual Meeting.
This column represents the accounting expense for the awards granted in 2016; therefore, the values shown are not representative of the amounts that may eventually be realized by a
director. Pursuant to SEC rules, 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 ($116.14) on the grant date
(May 16, 2016). At December 31, 2016, the aggregate number of DSUs accumulated on
account for all years of service, including dividend equivalent units, were:

AGGREGATE ACCUMULATED DSUs
 

Name
Elaine L. Chao
Thomas A. Fanning
O. B. Grayson Hall, Jr.
Cynthia L. Hostetler
Douglas J. McGregor
Richard T. O’Brien
James T. Prokopanko
Donald B. Rice
Lee J. Styslinger, III
Vincent J. Trosino
Kathleen Wilson-Thompson

  
  
  
  
  
  
  
  
  
  
  
  

 
 
 
 
 
 
 
 
 
 
 

Units 
3,041 
3,041 
5,131 
3,041 
21,591 
15,388 
13,294 
17,969 
6,806 
19,275 
13,294 

 
(5)

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 2016 by our
directors for deferred stock and DSUs which earn dividend equivalents.

 

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DIRECTOR COMPENSATION
 
 

 
 

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Vulcan 2017 Proxy Statement
 
 

   
   

 DEF 14A

Table of Contents

ANNUAL MEETING AND VOTING INFORMATION
 
Why am I receiving these materials?
 

This proxy statement is furnished in connection with the solicitation by our
Board of Directors of proxies to be voted at the 2017 Annual Meeting of
Shareholders for the
purposes set forth in the accompanying notice, and
at any adjournments or postponements thereof. This proxy statement is
being made available to all shareholders of record as of the close of
business on March 15, 2017, for use at the Annual
Meeting. This proxy
statement, the accompanying proxy card and our 2016 Annual Report to
Shareholders are being first mailed or made available to our shareholders
on or about March 27, 2017. The meeting will be held at the Grand
Bohemian Hotel,
2655 Lane Park Road, Birmingham, Alabama 35223 on
Friday, May 12, 2017, at 9:00 a.m., local time.
 

Why did I receive a Notice of Internet Availability of Proxy Materials
in the mail instead of a paper copy of the proxy materials?
 

We are using the SEC’s rule that allows companies to furnish their proxy
materials over the
Internet. As a result, we are mailing to many of our
shareholders a Notice of Internet Availability of Proxy Materials instead of
a paper copy of the proxy materials. All shareholders receiving such
notice will have the ability to access the proxy
materials over the Internet
and may request to receive a paper copy of the proxy materials by mail.
 

How can I access the proxy materials over the Internet or obtain a
paper copy?
 

Your Notice of Internet Availability of Proxy Materials, proxy card or voting
instruction card will contain instructions on how to:
 

•  view our proxy materials for the Annual
Meeting on the Internet; and
 

•  obtain a
paper copy of the proxy materials by mail.
 

Your Notice of Internet Availability of Proxy
Materials will also provide
instructions on how to receive your future proxy materials in printed form
by mail or electronically. If you choose to receive future proxy materials
electronically, we will provide instructions, containing a link to the
website
where those materials are available and a link to the proxy voting
website. Your election to receive proxy materials electronically will remain
in effect until you revoke it.
 

What should I do if I receive more than one Notice of Internet
Availability of Proxy Materials or
more than one paper copy of the
proxy materials?
 

You may receive more than one notice of this
proxy statement and
multiple proxy cards or voting instruction cards. For example, if you hold
your shares in more than one brokerage account, you may receive a
separate notice or a separate voting instruction card for each brokerage
account in
which you hold shares. If you are a shareholder of record and
your shares are registered in more than one name, you may receive more
than one notice or more than one proxy card. To vote all of your shares
by proxy, you must either
(i) complete, date, sign and return each proxy
card and voting instruction card that you

 
 

receive or (ii) vote over the Internet or telephone the shares
represented by each notice that you receive (unless you have
requested and received a proxy card or
voting instruction card for
the shares represented by one or more of the notices).
 

What
proposals are to be presented at the Annual Meeting?
 

The purpose of the Annual Meeting is to
(i) elect four nominees as
directors, (ii) approve, on an advisory basis, the compensation of
our named executive officers, (iii) vote, on an advisory basis, on the
frequency of future advisory votes on executive compensation,

(iv) ratify the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for 2017, and (v)
conduct such other business as may properly come before the
Annual Meeting or any adjournments or
postponements thereof.
 

Who can attend the Annual Meeting?
 

Only shareholders as of the close of business on March 15, 2017
(the record date for the Annual
Meeting), their authorized
representatives and invited guests of our company will be permitted
to attend the Annual Meeting. Proof of ownership of Vulcan
common stock as of the record date, along with personal
identification (such as a driver’s
license or passport), must be
presented in order to be admitted to the Annual Meeting. If your
shares are held in the name of a bank, broker, trustee or nominee
and you plan to attend the Annual Meeting in person, you must
bring a brokerage
statement, and a legal proxy from your bank,
broker, trustee or nominee entitling you to vote the shares held as
of the record date at the Annual Meeting, along with personal
identification, to be admitted to the Annual Meeting.
 

No cameras, recording equipment, electronic devices, large bags,
   briefcases or packages will be
permitted in the Annual Meeting.

 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 12, 2017 THE NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, PROXY STATEMENT, FORM OF PROXY AND 2016 ANNUAL REPORT TO SHAREHOLDERS ARE AVAILABLE AT WWW.PROXYVOTE.COM

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 DEF 14A
 
Vulcan 2017 Proxy Statement
   
   

ANNUAL MEETING AND VOTING INFORMATION
 
 

 
 

Who is entitled to vote?
All of
our shareholders as of the record date, March 15, 2017, will be
entitled to vote at the Annual Meeting. As of the close of business on
that date, approximately 132,636,842 shares were outstanding and
entitled to vote. Each share of common stock
is entitled to one vote
on each matter properly brought before the meeting.
What is the difference between a shareholder of record and a
beneficial holder of
shares?
If your common stock is held directly in your name with our transfer
agent, Computershare Shareowner Services, you are considered a
“shareholder of record” with respect to those shares. If this is the
case, the notice or proxy materials have been sent or provided
directly to you.
If your common stock is
held in a stock brokerage account or by a
bank or other nominee, you are considered the “beneficial holder” of
the shares held for you in what is known as “street name.” If this is
the case, the notice card or proxy materials
should have been
forwarded to you by your brokerage firm, bank or other nominee, or
their agent, which is considered the shareholder of record with
respect to these shares. As a beneficial holder, you have the right to
direct your bank, broker,
trustee or nominee on how to vote the
shares by using the voting instruction card or by following their
instructions for voting by telephone or internet.
How do I
vote?
Proxies are solicited to give all shareholders who are entitled to vote
on the matters that come before the meeting the opportunity to vote
their shares
whether or not they attend the meeting in person. You
can vote by one of the following manners:
 

•  By Internet—Shareholders of record may submit proxies over the
Internet by following the instructions on the Notice of Internet
Availability of Proxy Materials or the proxy card (if received by
mail).
Shareholders who are beneficial holders may vote by
Internet by following the instructions on the voting instruction card
sent to them by their bank, broker, trustee or nominee.

 

 
 

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completing, signing and dating their proxy card and mailing it in
the accompanying pre-addressed envelope. Shareholders who
  are beneficial holders who have
received a voting instruction card
from their bank, broker or nominee may return the voting
instruction card by mail as set forth on the card.

 

•  In Person—Shareholders of record may vote shares held in their
name in person at the Annual Meeting. You also may be
represented by another person at the Annual Meeting by
executing a proper proxy
designating that person. 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 bank, broker 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 holder on the record date.
Shareholders are encouraged to vote their proxies by Internet,
telephone or completing, signing, dating and returning a proxy card
or voting instruction card, but not by
more than one method. If you
vote by more than one method, or vote multiple times using the same
method, only the last-dated vote that is received by the inspector of
election will be counted, and each previous vote will be disregarded.
If you receive more than one set of proxy materials or more than one
proxy card or voting instruction card, it may mean that you hold
shares of Vulcan stock in more than
one account. You must return a
proxy or voting instruction card or vote using one of the methods
described above for EACH account in which you own shares.
What
constitutes a quorum for the Annual Meeting?
A majority of the issued and outstanding shares of the common stock
entitled to vote, represented in person or by
proxy, is required to
constitute a quorum.
How many votes are required to pass each of the proposals?
The votes required to approve each matter to be considered by
Vulcan’s shareholders at the Annual Meeting are set forth below:

 

•  By Telephone—Shareholders of record who live in the United
States or Canada may submit proxies by telephone by calling the
toll-free number on your proxy card (if received by mail) and
following the
instructions. Shareholders of record will need to
have the control number that appears on their proxy card
available when voting. In addition, shareholders who are
beneficial holders living in the United States or Canada and who
have received a
voting instruction card by mail from their bank,
broker, trustee or nominee may vote by phone by calling the
number specified on the voting instruction card. Those
shareholders should check the voting instruction card for
telephone voting
availability.
 

•  By Mail—Shareholders of record who have received a paper copy
of a proxy card by mail may submit proxies by

Proposal 1—Election of Directors: Each Vulcan shareholder has
the right to vote each share of stock owned by such shareholder on
the record date for four
director nominees. Cumulative voting is not
permitted. To be elected, a director-nominee must receive a majority
of the votes cast at the Annual Meeting. Abstentions and broker
non-votes will not be counted as
votes cast for such purposes and,
therefore, will have no effect on the results of the election.
Proposal 2—Advisory Vote on Compensation of our Named

Executive Officers: The affirmative vote of a majority of the votes
cast on this proposal is required to approve, on an advisory basis,
the compensation of the named executive officers set forth in this
proxy statement. Abstentions and broker non-votes will have no
effect on the results of this vote.

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Who is entitled to vote?
All of
our shareholders as of the record date, March 15, 2017, will be
entitled to vote at the Annual Meeting. As of the close of business on
that date, approximately 132,636,842 shares were outstanding and
entitled to vote. Each share of common stock
is entitled to one vote
on each matter properly brought before the meeting.
What is the difference between a shareholder of record and a
beneficial holder of
shares?
If your common stock is held directly in your name with our transfer
agent, Computershare Shareowner Services, you are considered a
“shareholder of record” with respect to those shares. If this is the
case, the notice or proxy materials have been sent or provided
directly to you.
If your common stock is
held in a stock brokerage account or by a
bank or other nominee, you are considered the “beneficial holder” of
the shares held for you in what is known as “street name.” If this is
the case, the notice card or proxy materials
should have been
forwarded to you by your brokerage firm, bank or other nominee, or
their agent, which is considered the shareholder of record with
respect to these shares. As a beneficial holder, you have the right to
direct your bank, broker,
trustee or nominee on how to vote the
shares by using the voting instruction card or by following their
instructions for voting by telephone or internet.
How do I
vote?
Proxies are solicited to give all shareholders who are entitled to vote
on the matters that come before the meeting the opportunity to vote
their shares
whether or not they attend the meeting in person. You
can vote by one of the following manners:
 

•  By Internet—Shareholders of record may submit proxies over the
Internet by following the instructions on the Notice of Internet
Availability of Proxy Materials or the proxy card (if received by
mail).
Shareholders who are beneficial holders may vote by
Internet by following the instructions on the voting instruction card
sent to them by their bank, broker, trustee or nominee.

 


completing, signing and dating their proxy card and mailing it in
the accompanying pre-addressed envelope. Shareholders who
  are beneficial holders who have
received a voting instruction card
from their bank, broker or nominee may return the voting
instruction card by mail as set forth on the card.

 

•  In Person—Shareholders of record may vote shares held in their
name in person at the Annual Meeting. You also may be
represented by another person at the Annual Meeting by
executing a proper proxy
designating that person. 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 bank, broker 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 holder on the record date.
Shareholders are encouraged to vote their proxies by Internet,
telephone or completing, signing, dating and returning a proxy card
or voting instruction card, but not by
more than one method. If you
vote by more than one method, or vote multiple times using the same
method, only the last-dated vote that is received by the inspector of
election will be counted, and each previous vote will be disregarded.
If you receive more than one set of proxy materials or more than one
proxy card or voting instruction card, it may mean that you hold
shares of Vulcan stock in more than
one account. You must return a
proxy or voting instruction card or vote using one of the methods
described above for EACH account in which you own shares.
What
constitutes a quorum for the Annual Meeting?
A majority of the issued and outstanding shares of the common stock
entitled to vote, represented in person or by
proxy, is required to
constitute a quorum.
How many votes are required to pass each of the proposals?
The votes required to approve each matter to be considered by
Vulcan’s shareholders at the Annual Meeting are set forth below:

 

•  By Telephone—Shareholders of record who live in the United
States or Canada may submit proxies by telephone by calling the
toll-free number on your proxy card (if received by mail) and
following the
instructions. Shareholders of record will need to
have the control number that appears on their proxy card
available when voting. In addition, shareholders who are
beneficial holders living in the United States or Canada and who
have received a
voting instruction card by mail from their bank,
broker, trustee or nominee may vote by phone by calling the
number specified on the voting instruction card. Those
shareholders should check the voting instruction card for
telephone voting
availability.
 

•  By Mail—Shareholders of record who have received a paper copy
of a proxy card by mail may submit proxies by

Proposal 1—Election of Directors: Each Vulcan shareholder has
the right to vote each share of stock owned by such shareholder on
the record date for four
director nominees. Cumulative voting is not
permitted. To be elected, a director-nominee must receive a majority
of the votes cast at the Annual Meeting. Abstentions and broker
non-votes will not be counted as
votes cast for such purposes and,
therefore, will have no effect on the results of the election.
Proposal 2—Advisory Vote on Compensation of our Named

Executive Officers: The affirmative vote of a majority of the votes
cast on this proposal is required to approve, on an advisory basis,
the compensation of the named executive officers set forth in this
proxy statement. Abstentions and broker non-votes will have no
effect on the results of this vote.

 

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ANNUAL MEETING AND VOTING INFORMATION
 
 

 
 

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Proposal 3—Advisory Vote on the Frequency of Future Advisory
Votes on Executive Compensation: The affirmative
vote of a
majority of the votes cast on this proposal is required to approve, on
an advisory basis, the frequency of future advisory votes on
executive compensation. If no frequency option receives a majority of
the votes cast, the frequency option
that receives the highest number
of the votes cast will be considered the shareholders’ preference for
the frequency of future advisory votes on executive compensation.
Abstentions and broker non-votes
will have no effect on the results of
this vote.


entity that you must follow in order to have your shares voted. You
must instruct the broker how to vote your shares. If you do not
provide voting instructions, your shares will not be voted on
any
proposal on which the broker, bank or other nominee does not have
discretionary authority to vote. This is called a “broker non-vote.” In
these cases, the broker, bank or nominee can register your shares
as being present at the Annual Meeting for purposes of determining
the presence of a quorum but will not be able to vote on those
matters for which specific authorization is required under the rules of
the NYSE.

Proposal 4—Ratification of Appointment of Deloitte & Touche
LLP: The affirmative
vote of a majority of the votes cast on this
proposal is required to ratify the appointment of Deloitte & Touche
LLP as our independent registered public accounting firm for 2017.
Abstentions and broker
non-votes will have no effect on the results of
this vote.

If you are a beneficial holder whose shares are held of record by a
broker, bank or nominee, then your broker, bank or nominee has
discretionary voting authority under
NYSE rules to vote your shares
on the ratification of the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for 2017, even if the
broker, bank or nominee does not receive voting instructions from
you.
However, your broker, bank or nominee does not have
discretionary authority to vote on (i) the election of the four nominees
as directors, (ii) the advisory approval of compensation of our NEOs,
or (iii) the advisory vote on the
frequency of future advisory votes on
executive compensation.

Who is soliciting my vote?
Our Board of Directors is soliciting your vote for matters being
submitted for shareholder approval at the Annual Meeting.
Giving us your proxy means that you authorize the proxy holders
identified on the proxy card to vote your shares at the meeting in the
manner you direct. If you sign and
return the enclosed proxy card but
do not specify how your shares are to be voted, your shares will be
voted in accordance with the recommendations of the Board. If any
other matters are properly presented at the Annual Meeting for
consideration,
the persons named as proxies in the proxy card will
vote as recommended by the Board or, if no recommendation is
given, in their own discretion.

How can I revoke my proxy?
If you are a shareholder of record, you may revoke your proxy at any
time before it is voted at the meeting by taking one of the following
actions:
 

How does the
Board recommend shareholders vote?

•  by giving written notice of the revocation prior to the
commencement of the Annual Meeting to: Corporate Secretary,
Vulcan Materials Company, 1200 Urban Center Drive,
Birmingham, Alabama 35242;

The Board recommends that you vote:

•  by executing and delivering another valid proxy with a later date;

 

 

•  FOR the election of the following three individuals nominated by
the Board as directors for three-year terms: O.B. Grayson Hall,
Jr., James T. Prokopanko and Kathleen Wilson-Thompson, and
one individual nominated
by the Board for a two-year term: David
P. Steiner.

•  by voting by telephone or Internet at a later date; or

 

•  FOR the approval, on an advisory basis, of the compensation of
our named executive officers;
 

•  for 1 YEAR, on an advisory basis, on the frequency of future
advisory votes on executive compensation; and
 

•  FOR the ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm for 2017.
Will my shares be voted if I do nothing?
If you are a shareholder of record,
you must sign and return a proxy
card, submit your proxy by telephone or Internet, or attend the
Annual Meeting in person, in order for your shares to be voted.
If
your common stock is held through a broker, bank or other
nominee, you will receive instructions from such

 

 

•  by attending the Annual Meeting and voting in person by written
ballot, if you are a shareholder of record or, if you are a beneficial
holder of your shares, with a legal proxy from the entity that holds
your shares
giving you the right to vote the shares.
If you are a beneficial holder of your shares and you vote by proxy,
you may change your vote by submitting
new voting instructions to
your bank, broker or nominee in accordance with that entity’s
procedures.
If you vote the same shares by more than one method or vote

multiple times with respect to the same shares using the same
method, only the last-dated vote that is received will be counted, and
each previous vote will be disregarded.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations
that identify
individual shareholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed either within our
company or to third parties, except: (1) as necessary to meet
applicable legal requirements;

 

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Proposal 3—Advisory Vote on the Frequency of Future Advisory
Votes on Executive Compensation: The affirmative
vote of a
majority of the votes cast on this proposal is required to approve, on
an advisory basis, the frequency of future advisory votes on
executive compensation. If no frequency option receives a majority of
the votes cast, the frequency option
that receives the highest number
of the votes cast will be considered the shareholders’ preference for
the frequency of future advisory votes on executive compensation.
Abstentions and broker non-votes
will have no effect on the results of
this vote.


entity that you must follow in order to have your shares voted. You
must instruct the broker how to vote your shares. If you do not
provide voting instructions, your shares will not be voted on
any
proposal on which the broker, bank or other nominee does not have
discretionary authority to vote. This is called a “broker non-vote.” In
these cases, the broker, bank or nominee can register your shares
as being present at the Annual Meeting for purposes of determining
the presence of a quorum but will not be able to vote on those
matters for which specific authorization is required under the rules of
the NYSE.

Proposal 4—Ratification of Appointment of Deloitte & Touche
LLP: The affirmative
vote of a majority of the votes cast on this
proposal is required to ratify the appointment of Deloitte & Touche
LLP as our independent registered public accounting firm for 2017.
Abstentions and broker
non-votes will have no effect on the results of
this vote.

If you are a beneficial holder whose shares are held of record by a
broker, bank or nominee, then your broker, bank or nominee has
discretionary voting authority under
NYSE rules to vote your shares
on the ratification of the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for 2017, even if the
broker, bank or nominee does not receive voting instructions from
you.
However, your broker, bank or nominee does not have
discretionary authority to vote on (i) the election of the four nominees
as directors, (ii) the advisory approval of compensation of our NEOs,
or (iii) the advisory vote on the
frequency of future advisory votes on
executive compensation.

Who is soliciting my vote?
Our Board of Directors is soliciting your vote for matters being
submitted for shareholder approval at the Annual Meeting.
Giving us your proxy means that you authorize the proxy holders
identified on the proxy card to vote your shares at the meeting in the
manner you direct. If you sign and
return the enclosed proxy card but
do not specify how your shares are to be voted, your shares will be
voted in accordance with the recommendations of the Board. If any
other matters are properly presented at the Annual Meeting for
consideration,
the persons named as proxies in the proxy card will
vote as recommended by the Board or, if no recommendation is
given, in their own discretion.

How can I revoke my proxy?
If you are a shareholder of record, you may revoke your proxy at any
time before it is voted at the meeting by taking one of the following
actions:
 

How does the
Board recommend shareholders vote?

•  by giving written notice of the revocation prior to the
commencement of the Annual Meeting to: Corporate Secretary,
Vulcan Materials Company, 1200 Urban Center Drive,
Birmingham, Alabama 35242;

The Board recommends that you vote:

•  by executing and delivering another valid proxy with a later date;

 

 

•  FOR the election of the following three individuals nominated by
the Board as directors for three-year terms: O.B. Grayson Hall,
Jr., James T. Prokopanko and Kathleen Wilson-Thompson, and
one individual nominated
by the Board for a two-year term: David
P. Steiner.

•  by voting by telephone or Internet at a later date; or

 

•  FOR the approval, on an advisory basis, of the compensation of
our named executive officers;
 

•  for 1 YEAR, on an advisory basis, on the frequency of future
advisory votes on executive compensation; and
 

•  FOR the ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm for 2017.
Will my shares be voted if I do nothing?
If you are a shareholder of record,
you must sign and return a proxy
card, submit your proxy by telephone or Internet, or attend the
Annual Meeting in person, in order for your shares to be voted.
If
your common stock is held through a broker, bank or other
nominee, you will receive instructions from such

 

 

•  by attending the Annual Meeting and voting in person by written
ballot, if you are a shareholder of record or, if you are a beneficial
holder of your shares, with a legal proxy from the entity that holds
your shares
giving you the right to vote the shares.
If you are a beneficial holder of your shares and you vote by proxy,
you may change your vote by submitting
new voting instructions to
your bank, broker or nominee in accordance with that entity’s
procedures.
If you vote the same shares by more than one method or vote

multiple times with respect to the same shares using the same
method, only the last-dated vote that is received will be counted, and
each previous vote will be disregarded.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations
that identify
individual shareholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed either within our
company or to third parties, except: (1) as necessary to meet
applicable legal requirements;

 

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63
 


(2) to allow for the tabulation of votes and certification of the vote;
and (3) to facilitate a successful proxy solicitation.

If you are a beneficial holder, you can request information about
householding from your broker, bank or other holder of
record.

Who will pay for the costs involved in the solicitation of proxies?

Could other matters be decided at the Annual Meeting?

The company
is making this solicitation and will pay the entire cost of
preparing, assembling, printing, mailing and distributing the notices
and these proxy materials and soliciting votes. In addition to the
mailing of notices and these proxy materials, the
solicitation of
proxies or votes may be made in person or by telephone or email by
directors, officers, or regular employees of the company. In addition,
the company has engaged MacKenzie Partners, Inc. to act as its
proxy solicitor and has agreed
to pay it approximately $9,500 plus
reasonable fees and expenses for such services.

As of the
mailing date of this proxy statement, we did not know of any
matters to be raised at the Annual Meeting other than those referred
to in this proxy statement.

What is “householding” and how does it affect me?

The preliminary
voting results will be announced at the Annual
Meeting. The final voting results will be reported in a Current Report
on Form 8-K filed with the SEC within four business days of the
Annual Meeting and posted
on our website.

We have adopted a procedure, approved by SEC, called
“householding.” Under this procedure, shareholders of record who
have the same address and last name and do
not participate in
electronic delivery of proxy materials or in “notice and access” will
receive only one copy of this Notice of Annual Meeting and proxy
statement and the 2016 Annual Report to Shareholders, unless we
are notified that one
or more of these shareholders wishes to
continue receiving individual copies. If you and other Vulcan
shareholders living in your household do not have the same last
name, you also may request to receive only one copy of future proxy
statements and
annual reports to shareholders.
Householding reduces our printing costs and postage fees and
conserves natural resources. Shareholders who participate in

householding will continue to receive separate proxy cards.
If you are eligible for householding but you and other shareholders of
record with whom you share an
address currently receive multiple
copies of this Notice of Annual Meeting and proxy statement and any
accompanying documents, or if you hold Vulcan stock in more than
one account, and in either case you wish to receive only a single
copy of each
document for your household, please obtain
instructions by contacting us at the following address or phone
number: Vulcan Materials Company, 1200 Urban Center Drive,
Birmingham, Alabama 35242, Attention: Mark D. Warren, Director,
Investor Relations,
phone: (205) 298-3200.

If you
return your signed and completed proxy card or vote by
telephone or Internet and other matters are properly presented at the
Annual Meeting for consideration, your shares will be voted as the
Board of Directors recommends.
Where can I find the voting results of the Annual Meeting?

Whom should I call if I have questions about the Annual
Meeting?
If you have any questions or need any assistance in voting your
shares, please contact our proxy solicitor, whose information is listed
below:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Telephone:
(212) 929-5500 (Call Collect) or
Call Toll-Free (800) 322-2885
proxy@MacKenziePartners.com

 

If you participate in householding and wish to receive a separate copy
of this Notice of Annual
Meeting and proxy statement and any
accompanying documents, please contact us at the address or
phone number indicated above and a separate copy will be sent to
you promptly. If you do not wish to continue to participate in
householding and prefer
to receive separate copies of these
documents in the future, please contact us at the address or phone
number indicated above.

 
OUR ANNUAL REPORT A COPY OF OUR ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2016 WILL BE PROVIDED TO YOU WITHOUT CHARGE UPON WRITTEN REQUEST TO: MARK D. WARREN, DIRECTOR, INVESTOR RELATIONS, VULCAN MATERIALS COMPANY, 1200 URBAN CENTER DRIVE, BIRMINGHAM, ALABAMA 35242.

 

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(2) to allow for the tabulation of votes and certification of the vote;
and (3) to facilitate a successful proxy solicitation.

If you are a beneficial holder, you can request information about
householding from your broker, bank or other holder of
record.

Who will pay for the costs involved in the solicitation of proxies?

Could other matters be decided at the Annual Meeting?

The company
is making this solicitation and will pay the entire cost of
preparing, assembling, printing, mailing and distributing the notices
and these proxy materials and soliciting votes. In addition to the
mailing of notices and these proxy materials, the
solicitation of
proxies or votes may be made in person or by telephone or email by
directors, officers, or regular employees of the company. In addition,
the company has engaged MacKenzie Partners, Inc. to act as its
proxy solicitor and has agreed
to pay it approximately $9,500 plus
reasonable fees and expenses for such services.

As of the
mailing date of this proxy statement, we did not know of any
matters to be raised at the Annual Meeting other than those referred
to in this proxy statement.

What is “householding” and how does it affect me?

The preliminary
voting results will be announced at the Annual
Meeting. The final voting results will be reported in a Current Report
on Form 8-K filed with the SEC within four business days of the
Annual Meeting and posted
on our website.

We have adopted a procedure, approved by SEC, called
“householding.” Under this procedure, shareholders of record who
have the same address and last name and do
not participate in
electronic delivery of proxy materials or in “notice and access” will
receive only one copy of this Notice of Annual Meeting and proxy
statement and the 2016 Annual Report to Shareholders, unless we
are notified that one
or more of these shareholders wishes to
continue receiving individual copies. If you and other Vulcan
shareholders living in your household do not have the same last
name, you also may request to receive only one copy of future proxy
statements and
annual reports to shareholders.
Householding reduces our printing costs and postage fees and
conserves natural resources. Shareholders who participate in

householding will continue to receive separate proxy cards.
If you are eligible for householding but you and other shareholders of
record with whom you share an
address currently receive multiple
copies of this Notice of Annual Meeting and proxy statement and any
accompanying documents, or if you hold Vulcan stock in more than
one account, and in either case you wish to receive only a single
copy of each
document for your household, please obtain
instructions by contacting us at the following address or phone
number: Vulcan Materials Company, 1200 Urban Center Drive,
Birmingham, Alabama 35242, Attention: Mark D. Warren, Director,
Investor Relations,
phone: (205) 298-3200.

If you
return your signed and completed proxy card or vote by
telephone or Internet and other matters are properly presented at the
Annual Meeting for consideration, your shares will be voted as the
Board of Directors recommends.
Where can I find the voting results of the Annual Meeting?

Whom should I call if I have questions about the Annual
Meeting?
If you have any questions or need any assistance in voting your
shares, please contact our proxy solicitor, whose information is listed
below:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Telephone:
(212) 929-5500 (Call Collect) or
Call Toll-Free (800) 322-2885
proxy@MacKenziePartners.com

 

If you participate in householding and wish to receive a separate copy
of this Notice of Annual
Meeting and proxy statement and any
accompanying documents, please contact us at the address or
phone number indicated above and a separate copy will be sent to
you promptly. If you do not wish to continue to participate in
householding and prefer
to receive separate copies of these
documents in the future, please contact us at the address or phone
number indicated above.

 
OUR ANNUAL REPORT A COPY OF OUR ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2016 WILL BE PROVIDED TO YOU WITHOUT CHARGE UPON WRITTEN REQUEST TO: MARK D. WARREN, DIRECTOR, INVESTOR RELATIONS, VULCAN MATERIALS COMPANY, 1200 URBAN CENTER DRIVE, BIRMINGHAM, ALABAMA 35242.

 

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GENERAL INFORMATION
 
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, each of our directors,
executive officers, and any beneficial owner of more than 10% of our
common stock, is required to file with the SEC initial reports of
beneficial ownership of our common stock and reports of changes in
beneficial ownership of our common stock. Such persons also are
required by SEC regulations to furnish us with copies of all such

reports. Based solely on our review of the copies of such reports
furnished to us for the year ended December 31, 2016, and on the
written representations made by our directors and executive officers
that no other reports were required, we
believe that during the year
ended December 31, 2016, all reports were filed in a timely manner,
except that a Form 4 reporting certain gifts of our common stock for
Michael R. Mills was filed on March 20, 2017.

SHAREHOLDER PROPOSALS FOR 2018
To be eligible for consideration for inclusion in our proxy statement
and form of proxy for our 2018 Annual Meeting, a shareholder’s
proposal must be received by us
at our principal office no later than
November 27, 2017. Proposals should be addressed to Jerry F.
Perkins Jr., General Counsel and Secretary, 1200 Urban Center
Drive, Birmingham, Alabama 35242. Proposals received after that
date will be
considered untimely and will not be eligible for inclusion
in the 2018 proxy statement. If a shareholder desires to bring a
matter before our annual meeting and the matter is submitted outside
the process of Exchange Act Rule 14a-8, including with respect to
nominations for election as directors, the shareholder must follow the
procedures set forth in our bylaws. Our bylaws provide generally that
shareholder proposals and director
nominations to be considered at
an annual meeting may be made by a shareholder only if (1) the
shareholder is a shareholder of record and is entitled to vote at the
meeting, and (2) the shareholder gives timely written notice of the
matter
to our corporate secretary. To be timely, a shareholder’s
notice must be received at our principal executive offices not earlier
than the close of business on the 120th day and not later than the
close of business on the 90th day prior to the
first anniversary of the
preceding year’s annual meeting, or between January 12, 2018 and
February 11, 2018. However, in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after such

anniversary date, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 120th day prior
to the date of such annual meeting and not later than the close of
business on the later of the 90th day
prior to the date of such annual
meeting or, if the first public announcement of the date of such
annual meeting is less than 100 days prior to the date of such annual
meeting, the 10th day following the day on which public
announcement of the date
of such


meeting is first made by our company. The notice must set forth the
information required by the provisions of our bylaws dealing with
shareholder proposals and nominations of directors.

FORWARD-LOOKING STATEMENTS
Certain matters discussed in this proxy statement, including
expectations regarding future performance, contain forward-looking
statements. Statements that are not
historical fact, including
statements about Vulcan’s beliefs and expectations, are forwardlooking statements. Generally, these statements relate to future
financial performance, results of operations, business plans or
strategies, projected or
anticipated revenues, expenses, earnings
(including EBITDA and other measures), dividend policy, shipment
volumes, pricing, levels of capital expenditures, intended cost
reductions and cost savings, anticipated profit improvements and/or
planned
divestitures and asset sales. These forward-looking
statements are sometimes identified by the use of terms and phrases
such as “believe,” “should,” “would,” “expect,” “project,”
“estimate,”
“anticipate,” “intend,” “plan,” “will,” “can,” “may” or similar expressions
elsewhere in this document. These statements are subject to
numerous risks, uncertainties,
and assumptions, including but not
limited to general business conditions, competitive factors, pricing,
energy costs, and other risks and uncertainties discussed in the
reports Vulcan periodically files with the SEC.
Forward-looking statements are not guarantees of future performance
and actual results, developments, and business decisions may vary
significantly from those expressed
in or implied by the forwardlooking statements. The following risks related to Vulcan’s business,
among others, could cause actual results to differ materially from
those described in the forward-looking statements: those associated
with
general economic and business conditions; the timing and
amount of federal, state and local funding for infrastructure; risks that
changes in Vulcan’s effective tax rate can adversely impact results;
risks associated with Vulcan’s reliance
on information technology
infrastructure for its ticketing, procurement, financial statements and
other processes that could adversely affect operations in the event
that the infrastructure does not work as intended or experiences
technical
difficulties or is subjected to cyber attacks; the impact of the
state of the global economy on Vulcan’s business and financial
condition and access to capital markets; changes in the level of
spending for private residential and private
nonresidential
construction; the highly competitive nature of the construction
materials industry; the impact of future regulatory or legislative
actions, including those relating to climate change, greenhouse gas
emissions, the definition of
minerals or international trade; the
outcome of pending legal proceedings; pricing of Vulcan’s products;
weather and other natural phenomena; energy costs; costs of
hydrocarbon-based raw materials; healthcare costs; the

 
Vulcan 2017 Proxy Statement
   
   

GENERAL INFORMATION
 
 

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65
 

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amount of long-term debt and interest expense incurred by Vulcan;
changes in interest rates; volatility in pension plan asset values and
liabilities which may require cash contributions to the
pension plans;
the impact of environmental clean up costs and other liabilities
relating to existing and/or divested businesses; Vulcan’s ability to
secure and permit aggregates reserves in strategically located areas;
Vulcan’s ability to
manage and successfully integrate acquisitions;
the potential of goodwill or long-lived asset impairment; and other
assumptions, risks and uncertainties detailed from time to time in the
reports filed by Vulcan with the SEC. All forward-looking
statements
in this communication are qualified in their entirety by this cautionary
statement. Vulcan disclaims and does not


undertake any obligation to update or revise any forward-looking
statement in this document except as required by law.
VULCAN MATERIALS COMPANY
 

JERRY F. PERKINS JR.

General Counsel and
Secretary
1200 Urban Center Drive
Birmingham, Alabama 35242
March 27, 2017

 

66
 

GENERAL INFORMATION
 
 

 
 

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Table of Contents

ANNEX A: RECONCILIATION OF
NON-GAAP
FINANCIAL MEASURES
Generally Accepted Accounting Principles (GAAP) does not define “Earnings
Before Interest, Taxes, Depreciation and Amortization” (EBITDA)
and it should not be considered as an alternative to earnings measures defined by GAAP. We present this metric for the convenience of
investment professionals who use such metrics
in their analyses and for shareholders who need to understand the metrics we use to assess
performance. We use this metric to assess the operating performance of our business and for a basis of strategic planning and forecasting. We
do not use this
metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of
earnings from period to period. Reconciliations of this metric to its nearest GAAP measure are presented below:

EBITDA AND ADJUSTED EBITDA
EBITDA is an acronym
for Earnings Before Interest, Taxes, Depreciation and Amortization and excludes discontinued operations.

 
IN MILLIONS
Net earnings
Income tax expense
Interest expense, net of interest income
Loss on discontinued operations, net of tax
Depreciation, depletion, accretion and amortization
EBITDA
Gain on sale of real estate and businesses
Business interruption claims recovery, net of incentives
Charges associated with divested operations
Fair market value adjustments for acquired inventory
Asset impairment
Restructuring charges
Adjusted EBITDA

    
    
    
    
    
    
    
    
    
    
    
    
    
    

 
 
 
 
 
 
 
 
 
 
 
 
 

2016 
$419.5 
124.9 
133.3 
2.9 
284.9 
$965.5 
(16.2) 
(11.0) 
16.9 
0.0 
10.5 
0.3 
$966.0 

    
    
    
    
    
    
    
    
    
    
    
    
    
    

2015      
  $221.2      
 
94.9      
  220.3      
 
11.7      
  274.8      
  $822.9      
 
(6.3)      
 
0.0      
 
7.1      
 
1.0      
 
5.2      
 
5.0      
  $834.9      

 
 
 
 
 
 
 
 
 
 
 
 
 

2014 
$204.9 
91.7 
242.4 
2.2 
279.5 
$820.7 
(238.5) 
0.0 
11.9 
1.6 
3.1 
1.3 
$600.1 

Adjusted EBITDA for 2015 and 2014 has been revised to conform with the 2016 presentation which no longer includes an adjustment for

amortization of deferred revenue and charges associated with business development. Adjusting for amortization of deferred revenue is no longer
meaningful as all periods presented include amortization of deferred revenue at amounts that are
substantially equivalent.
Unlike many of our competitors, we do not exclude share-based compensation from our Adjusted EBITDA earnings metric, as we view it as a

recurring operating expense. Refer to our statements of cash flows for the expense incurred related to our share-based compensation plans.

EBITDA EP CALCULATION
EBITDA EP is Adjusted
EBITDA less capital charge (average operating capital employed x pretax cost of capital).

 
IN MILLIONS
Adjusted EBITDA
Performance adjustments
EP Adjusted EBITDA
Average operating capital employed
Pretax cost of capital
Capital charge
EBITDA EP

    
    
    
    
    
    
    
    

 
 
 
 
 
 
 

2016 
$966.0 
(1.7) 
$964.3 
3,694.4 
13.2% 
(488.2) 
$476.1 

 
Vulcan 2017 Proxy Statement
   
   

ANNEX A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
 

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GAAP does not define “cash gross profit” and it should not be considered as an alternative to earnings measures
defined by GAAP. We present
this metric for the convenience of investment professionals who use such metrics in their analyses and for shareholders who need to understand
the metrics we use to assess performance. We and the investment community use
this metric to assess the operating performance of our
business. We do not use this metric as a measure to allocate resources. Reconciliation of this metric to its nearest GAAP measure is presented
below.

CASH GROSS PROFIT
Cash gross profit adds back
noncash charges for depreciation, depletion, accretion and amortization to gross profit.

 
IN MILLIONS, EXCEPT PER TON DATA
Aggregates segment
Gross profit
Depreciation, depletion, accretion and amortization
Aggregates segment cash gross profit
Unit shipments—tons
Aggregates segment cash gross profit per ton

  
  
  
  
  
  
  

 
 
 
 
 

2016    
  
$873.1    
$236.5    
$1,109.6    
181.4    
$6.12    

 
 
 
 
 

2015    
  
$755.7    
$228.5    
$984.2    
178.3    
$5.52    

2014 
  $544.1 
  $227.0 
  $771.1 
  162.4 
  $4.75 

We present Aggregates segment gross profit margin as a percentage of freight-adjusted revenues as it is consistent with the basis by
which we
review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes
freight, delivery and transportation revenues, which are pass-through activities. It also
excludes immaterial other revenues related to services,
such as landfill tipping fees, that are derived from our aggregates business. Reconciliation of this metric to its nearest GAAP measure is
presented below.

AGGREGATES SEGMENT GROSS PROFIT MARGIN AS A PERCENTAGE OF FREIGHT-ADJUSTED
REVENUES
Freight-adjusted revenues excludes pass-through freight, delivery and transportation revenues as well as immaterial other revenues related to
services, such as landfill
tipping fees.

 
IN MILLIONS
Aggregates segment gross profit
Segment sales
Excluding
Freight, delivery and transportation revenues
Other revenues
Freight-adjusted revenues
Gross profit as a percentage of freight-adjusted revenues

  
  
  
  
  
  
  
  

 
 
 
 
 
 

2016    
2015    
$873.1      
$755.7    
2,961.8       2,777.8    
  
  
651.9      
644.7    
15.7      
20.6    
$2,294.2       $2,112.5    
38%      
36%    

 
 

2014 
$544.1 
2,346.4 

 
532.2 
 
20.2 
  $1,794.0 
 
30% 

 

68
 

ANNEX A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
 

 
 

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 DEF 14A

Table of Contents

 
   VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 p.m. Eastern Time the day
before the
cut-off date or meeting date. Have your proxy card in hand when you access
the web site and follow the instructions to obtain your records and to create
an electronic voting instruction form.
    
   ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via
e-mail or the Internet. To
sign up for electronic delivery, please follow the instructions above to vote
using the Internet and, when prompted, indicate that you agree to receive or
   access proxy materials
electronically in future years.
 
   VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 p.m. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call
and then follow the
   instructions.
 
   VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge,
   51 Mercedes Way, Edgewood, NY 11717.

VULCAN MATERIALS COMPANY
1200 URBAN CENTER DR
BIRMINGHAM, AL 35242

 
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

 
 
VULCAN MATERIALS COMPANY

E19948-P88273            KEEP THIS PORTION FOR
YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

   

   

 

 
 

  

 

 

 

   

 

 

 

1.

Election of Directors
 

 

 

1b.    James T. Prokopanko

 

  

 

 

 
 

3.     Advisory vote on the frequency of
 
 
 
future advisory votes on executive
  For   Against  Abstain    

compensation.
 

 

 

 

 

 
 

 

 

 

 

 
 

 
 

   
 

 
 

   
 

1c.    David P. Steiner
 

  1d.    Kathleen Wilson-Thompson

 
 

 

   

   

 

The Board of Directors recommends you  
 
 
 
    vote for 1 YEAR on proposal
3.
  1 Year   2 Years   3 Years   Abstain  
 

 

  Nominees:
  1a.    O. B. Grayson Hall, Jr.

 
  

 

 

The Board of Directors recommends you vote FOR the
  
director nominees listed in proposal 1.
 

 

 

 

 

 

 

 

 

 

 
 

The Board of Directors recommends you vote
FOR proposal 4.

 

 

 
 

 
 
For

 

 

 
 

 
  

Against Abstain  

 
 

4.     Ratification of the appointment of Deloitte &
Touche LLP as our independent
registered
   
 
public accounting firm for 2017.

 

 

 
 

 

 
 

 

 

 
 

 

 

NOTE: Such other business as may properly come
before
the meeting or any adjournment thereof.

The Board of Directors recommends you vote FOR proposal

2.
 

 
 

2.     Approval, on an advisory basis, of the compensation of our
  
named executive
officers.

  

  

   

 

 

 

 
 

 
 
 

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as such.
Joint owners
should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name by authorized officer.
  

   

 

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 DEF 14A
 

 

 

 

    

   

 

 

 

     

   

 

    Signature [PLEASE SIGN WITHIN BOX]

  Date

  

  

  

      Signature (Joint Owners)

  Date    

  

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V.1.1

 DEF 14A

Table of Contents

 

Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com.

 
 
 
 
 

 

E19949-P88273
 

 
 
VULCAN MATERIALS COMPANY
Annual Meeting of Shareholders
May 12, 2017
This
proxy is solicited by the Board of Directors

 

  
The undersigned hereby appoints Cynthia L. Hostetler, Richard T. O’Brien and Lee J. Styslinger, III, each of them, with power to act
 
without the other and with power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as
provided on
the other side, all the shares of Vulcan Materials Company common stock which the undersigned is entitled to vote, and,
in their discretion, to vote upon such other business as may properly come before the 2017 Annual Meeting of Shareholders of the

Company to be held on Friday, May 12, 2017, at 9:00 a.m., local time, at the Grand Bohemian Hotel, 2655 Lane Park Road,
Birmingham, Alabama 35223, or at any adjournment or postponement thereof, with all powers which the undersigned would
possess if
present at the Annual Meeting.

 
Shares represented
by this proxy will be voted as directed by the undersigned. If this proxy is signed and no such directions are
indicated, the proxies have authority to vote “FOR” election of all director nominees, “FOR” approval, on an advisory
basis, of
the compensation of our named executive officers, for “1 YEAR” on the advisory vote on the frequency of future advisory
votes on executive compensation, and “FOR” ratification of the appointment of Deloitte &
Touche LLP as our independent
registered public accounting firm for 2017.
 
  

 
 

 
Continued and to be signed on reverse side
  
V.1.1

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