Vulcan Materials Company
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement. |
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Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)). |
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Definitive Proxy Statement. |
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Definitive Additional Materials. |
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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):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the date of its filing. |
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Date Filed:
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1200 Urban Center Drive
Birmingham Alabama 35242
March 28, 2008
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders of Vulcan Materials
Company, which will be held at the Hilton Garden Inn, 2090 Urban Center Parkway, Birmingham,
Alabama 35242, on May 9, 2008, at 9:00 a.m., Central Daylight Time.
We hope that you will attend the meeting. However, whether or not you plan to attend the meeting,
we encourage you to vote by proxy. This year, we are pleased to be taking advantage of the
Securities and Exchange Commission rule that allows companies to furnish their proxy materials over
the Internet. As a result, we are mailing to many of our shareholders a notice instead of a paper
copy of this proxy statement and our 2007 Annual Report to Shareholders. The notice contains
instructions on how each of our shareholders may receive a paper copy of our proxy materials,
including this proxy statement, our 2007 Annual Report to Shareholders and proxy card. All
shareholders who do not receive a notice will receive a paper copy of the proxy materials by mail.
We believe that this new process will provide shareholders with the information they need, while
conserving our natural resources and reducing the costs of printing and distributing our proxy
materials.
For your convenience, you can vote your proxy in one of the following ways:
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Use the Internet at the web address shown on your proxy card; |
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Use the telephone number shown on your proxy card; or |
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Complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. |
Instructions regarding each method of voting are contained in the proxy statement and on the
enclosed proxy card. If you attend the Annual Meeting and desire to vote your shares personally
rather than by proxy, you may withdraw your proxy at any time before it is exercised. Your vote is
important. Whether you own one share or many, your prompt vote is greatly appreciated.
Thank you for your ongoing support and continued interest in our company.
Sincerely yours,
DONALD M. JAMES
Chairman and
Chief Executive Officer
1200 Urban Center Drive
Birmingham, Alabama 35242
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 9, 2008
To our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Vulcan Materials Company will be
held at the Hilton Garden Inn, 2090 Urban Center Parkway, Birmingham, Alabama 35242, on Friday, May
9, 2008, at 9:00 a.m., Central Daylight Time, for the following purposes:
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To elect four nominees as directors; |
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To ratify the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for 2008; |
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Adoption of the Amendment to the Legacy Vulcan Corp. Certificate of
Incorporation; and |
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To conduct such other business as may properly come before the meeting or any
adjournments or postponements thereof. |
Only shareholders of record as of the close of business on March 14, 2008 are entitled to receive
notice of, to attend and vote at the meeting.
By Order of the Board of Directors,
JERRY F. PERKINS, JR.
Secretary
Birmingham, Alabama
March 28, 2008
NOTE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, TO ASSURE THE PRESENCE OF A QUORUM,
PLEASE VOTE YOUR PROXY BY INTERNET, TELEPHONE OR BY COMPLETING, DATING, SIGNING AND MAILING THE
ENCLOSED PROXY AS SOON AS POSSIBLE.
TABLE OF CONTENTS
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VULCAN MATERIALS COMPANY
1200 URBAN CENTER DRIVE, BIRMINGHAM, ALABAMA 35242
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 2008
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why am I receiving these materials?
This proxy statement is furnished in connection with the solicitation by our Board of Directors of
proxies to be voted at the 2008 Annual Meeting of Shareholders for the purposes set forth in the
accompanying notice, and at any adjournments or postponements thereof. This proxy statement is
being sent to all shareholders of record as of the close of business on March 14, 2008 for use at
the Annual Meeting of Shareholders. This proxy statement, the enclosed proxy card and Vulcans
2007 Annual Report to Shareholders are being first mailed or delivered to our shareholders on or
about March 28, 2008. The meeting will be held at the Hilton Garden Inn, 2090 Urban Center
Parkway, Birmingham, Alabama 35242 on Friday, May 9, 2008, at 9:00 a.m., Central Daylight Time.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials
this year instead of a paper copy of the proxy materials?
This year, we are pleased to be using the Securities and Exchange Commissions rule that allows
companies to furnish their proxy materials over the Internet. As a result, we are mailing to many
of our shareholders, primarily our large institutional shareholders, a notice about the Internet
availability of proxy materials instead of a paper copy of the proxy materials. All shareholders
receiving the notice will have the ability to access the proxy materials over the Internet and
request to receive a paper copy of the proxy materials by mail. Instructions on how to access the
proxy materials over the Internet or to request a paper copy may be found in the notice. In
addition, the notice contains instructions on how shareholders may request to receive proxy
materials in printed form by mail or electronically by e-mail on an ongoing basis.
Why did I not receive a notice about the Internet availability of the proxy materials?
For those shareholders who did not receive a notice regarding Internet availability, our company
has determined to send paper copies of the proxy materials instead of a notice about the Internet
availability of the proxy materials.
How can I access the proxy materials over the Internet?
Your notice about the Internet availability of the proxy materials, proxy card or voting
instruction card will contain instructions on how to:
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View our proxy materials for the Annual Meeting of Shareholders on the Internet;
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Instruct us to send our future proxy materials to you electronically by e-mail. |
Choosing to receive your future proxy materials by e-mail will help us conserve natural resources
and reduce the costs of printing and distributing our proxy materials. If you choose to receive
future proxy materials by e-mail, 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 by e-mail will remain in effect until you terminate it.
How may I obtain a paper copy of the proxy materials?
Shareholders receiving a notice about the Internet availability of the proxy materials will find
instructions about how to obtain a paper copy of the proxy materials on their notice. All
shareholders who do not receive the notice will receive a paper copy of the proxy materials by
mail.
What should I do if I receive more than one notice about the Internet availability of the proxy
materials or more than one paper copy of the proxy materials?
You may receive more than one notice or more than one paper copy of the proxy materials, including
multiple paper copies of this proxy statement and multiple proxy cards or voter instruction cards.
For example, if you hold your shares in more than one brokerage account, you may receive a separate
notice or a separate voting instruction card for each brokerage account in which you hold shares.
If you are a shareholder of record and your shares are registered in more than one name, you may
receive more than one notice or more than one proxy card. To vote all of your shares by proxy, you
must complete, date, sign and return each proxy card and voting instruction card that you receive
and vote over the Internet the shares represented by each notice that you receive (unless you have
requested and received a proxy card or voting instruction card for the shares represented by one or
more of the notices).
Who can attend the Annual Meeting?
Only shareholders of our company as of the record date, March 14, 2008, their authorized
representatives and invited guests of our company will be able to attend the annual meeting.
Who is entitled to vote?
All of our shareholders as of the record date, March 14, 2008, will be entitled to vote at the 2008
Annual Meeting of Shareholders. As of the close of business on such date, we had [ ]
authorized shares of common stock, of which [ ] shares were outstanding and entitled to
vote. Each share of common stock is entitled to one vote on each matter properly brought before
the meeting. Our by-laws do not provide for cumulative voting and, accordingly, the shareholders
do not have cumulative voting rights with respect to the election of directors.
What is the difference between a registered shareholder and a beneficial holder of shares?
If your common stock is registered directly in your name with our transfer agent, Broadridge Investor Communication Solutions, Inc., you are considered a registered shareholder
with respect to those shares. If this is the
case, the proxy materials, or the notice of Internet availability of proxy materials, have been
sent or provided directly to you.
If your common stock is held in a stock brokerage account or by a bank or other nominee, you are
considered the beneficial holder of the shares held for you in what is known as street name.
If this is the case, the proxy materials, or the notice of Internet availability of proxy
materials, have been forwarded to you by your brokerage firm, bank or other nominee, or their agent
which is considered the shareholder of record with respect to these shares. As a beneficial holder,
you have the right to direct your bank, broker or nominee on how to vote the shares.
How do I vote?
Proxies are solicited to give all shareholders who are entitled to vote on the matters that come
before the meeting the opportunity to vote their shares whether or not they attend the meeting in
person. You can vote in one of the following manners:
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By Internet Shareholders who received a notice about the Internet availability of the
proxy materials may submit proxies over the Internet by following the instructions on the
notice. Shareholders who have received a paper copy of a proxy card or voting instructions
card by mail may submit proxies over the Internet by following the instructions on the
proxy card or the voter instruction card; |
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By Telephone Shareholders of record who live in the United States or Canada may submit
proxies by telephone by calling 1-800-690-6903 and following the instructions.
Shareholders of record who have received a notice about the Internet availability of the
proxy materials will need to have the control number that appears on their notice available
when voting. Shareholders of record who have received a proxy card by mail will need to
have the control number that appears on their proxy card available when voting. Most
shareholders who are beneficial owners of their shares living in the United States or
Canada and who have received a voting instruction card by mail may vote by phone by calling
the number specified on the voter instructions card provided by their broker, trustee or
nominee. Those shareholders should check the voting instruction card for telephone voting
availability. Telephone and Internet voting facilities for shareholders will be available
24 hours a day and will close at 11:59 p.m. Central Daylight Time on May 8, 2008. |
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By Mail Shareholders who have received a paper copy of a proxy card or voting
instruction card by mail may submit proxies by completing, signing and dating their proxy
card or voting instruction card and mailing it in the accompanying pre-addressed envelope. |
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In Person Shareholders of record may vote shares held in their name in person at the
Annual Meeting. Shares for which a shareholder is the beneficial holder but not the
shareholder of record may be voted in person at the Annual Meeting only if such shareholder
is able to obtain a legal proxy from the broker, trustee or nominee that holds the
shareholders shares, indicating that the shareholder was the beneficial holder as of the
record date and the number of shares for which the shareholder was the beneficial owner on
the record date. |
Shareholders are encouraged to vote their proxies by Internet, telephone or completing, signing,
dating and returning the enclosed proxy card, but not by more than one method. Choosing to vote
via the Internet or calling the toll-free number listed on the proxy card will save our company
expense. If you vote via the Internet or by telephone, please do not return a signed proxy card,
unless you change your vote. If you vote by more than one method, only the last vote that is
submitted will be counted, and each previous vote will be disregarded.
How do I specify how I want my shares voted?
You can specify how you want your shares voted on each proposal by marking the appropriate boxes on
the proxy card or submitting your vote on each proposal via the telephone or Internet. Please
review the voting instructions on the proxy card and read the entire text concerning the proposals
in this proxy statement prior to voting.
If a proxy is properly given and not revoked, it will be voted in accordance with the instructions,
if any, given by the shareholder. If your signed proxy card or your telephone or Internet
instructions do not specify how your shares are to be voted on a proposal, your shares will be
voted: (a) FOR the election of the nominees for directors described in the proxy statement; (b) FOR
ratification of the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm; (c) FOR the adoption of the amendment to the Legacy Vulcan Corp. Certificate of
Incorporation; and (d) in accordance with the recommendation of our Board of Directors on any other
proposal that may properly come before the meeting or any postponement or adjournment thereof.
How are my shares voted if I am a beneficial holder and I do not return voting instructions?
Your shares may be voted if they are held in the name of a brokerage firm, even if you do not
provide the brokerage firm with voting instructions. Brokerage firms have the authority, under the
listing standards of the New York Stock Exchange, to vote shares on certain routine matters for
which their clients do not provide voting instructions by the tenth day before the meeting. The
election of directors, the ratification of the independent registered public accounting firm and
the adoption of the amendment to the Legacy Vulcan Corp. Certificate of Incorporation are
considered routine matters.
What items will be voted upon at the Annual Meeting?
There are three proposals that will be presented at the meeting:
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election of four nominees for directors; |
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ratification of the appointment of Deloitte & Touche LLP as our independent registered
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adoption of the amendment to the Legacy Vulcan Corp. Certificate of Incorporation. |
These proposals have been submitted on behalf of our Board of Directors. We know of no other
matters that may be brought before the meeting. However, if any other matters are properly
presented for action, it is the intention of the proxies named on the proxy card to vote on them
consistent with the recommendations of the Board of Directors.
What are the Board of Directors voting recommendations?
For the reasons set forth in more detail later in this proxy statement, the Board recommends a vote
FOR the election of each of the director nominees, FOR the ratification of the appointment of
Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year
ended December 31, 2008 and FOR the adoption of the amendment to the Legacy Vulcan Corp.
Certificate of Incorporation.
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What constitutes a quorum for the Annual Meeting?
A majority of the shares of common stock entitled to vote, represented in person or by proxy, is
required to constitute a quorum. If a quorum is not present at the time of the Annual Meeting of
Shareholders, the shareholders entitled to vote, present in person or by proxy, shall have the
power to adjourn the Annual Meeting until a quorum shall be present or represented by proxy.
How many votes are needed to have the proposals pass?
The affirmative vote of a majority of the votes cast is required to elect each of the director
nominees and to ratify the appointment of Deloitte & Touche LLP. The affirmative vote of 80% of
the shares outstanding is required to adopt the proposed amendment to the Legacy Vulcan Corp.
Certificate of Incorporation.
How are the votes counted?
For purposes of determining the number of votes cast with respect to a particular matter, only
those cast For or Against and, with respect to the election of directors, Withheld are
included. Abstentions and broker non-votes are counted only for purposes of determining whether a
quorum is present at the meeting, are not considered votes cast, and thus will not affect the
outcome of the vote to elect each of the director nominees and to ratify the appointment of
Deloitte & Touche LLP. Abstentions and broker non-votes will have the effect of a vote against the
proposal to amend the Legacy Vulcan Corp. Certificate of Incorporation, as that proposal requires
the affirmative vote of at least 80% of the shares outstanding.
How can I revoke my Proxy?
You may revoke your proxy at any time before it is voted at the meeting by taking one of the
following actions:
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by giving timely written notice of the revocation to: Corporate Secretary, Vulcan
Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242, prior to the Annual
Meeting of Shareholders; |
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by executing and delivering another valid proxy with a later date; |
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by voting by telephone or Internet at a later date; or |
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by attending the Annual Meeting of Shareholders and voting in person by written ballot. |
If you vote by more than one method, only the last vote that is submitted will be counted, and each
previous vote will be disregarded.
Who counts the votes?
Tabulation of the votes cast at the meeting is conducted by Broadridge Investor Communication
Solutions, Inc., independent inspectors of election.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are
handled in a manner that protects your voting privacy. Your vote will not be disclosed either
within Vulcan or third parties, except: (1) as necessary to meet applicable legal requirements; (2)
to allow for the tabulation of votes and certification of the vote; and (3) to facilitate a
successful proxy solicitation.
Who will pay for the costs involved in the solicitation of proxies?
Vulcan is making this solicitation and will pay the entire cost of preparing, assembling, printing,
mailing and distributing the notices and these proxy materials and soliciting votes. In addition
to the mailing of notices and these proxy materials, the solicitation of proxies or votes may be
made in person or by telephone.
What is householding and how does it affect me?
Some banks and brokers may be participating in the practice of householding proxy statements and
annual reports. This means that only one copy of this proxy statement or our Annual Report to
Shareholders may have been sent to multiple shareholders in your household. We will promptly
deliver a separate copy of either or both documents to you if you write
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or call us at the following address or phone number: Vulcan Materials Company, P.O. Box 385014,
Birmingham, Alabama 35238-5014, Attention: Mark D. Warren, Director, Investor Relations, phone:
(205) 298-3220. If you want to receive separate copies of our Annual Report to Shareholders and
proxy statement in the future, or if you are receiving multiple copies and would like to receive
only one copy for your household, you should contact your bank or broker, or you may contact us at
the above address and phone number.
Can I view the Proxy Statement and Annual Report over the Internet instead of receiving them in the
mail?
You may access our companys proxy statement and Annual Report on Form 10-K for the year ended
December 31, 2007, which includes our 2007 Annual Report to Shareholders, via the Internet at
www.vulcanmaterials.com under the heading Investor Relations. For next years shareholders
meeting, you can help us save significant printing and mailing expenses by consenting to access the
proxy statement, proxy card and Annual Report to Shareholders electronically over the Internet. If
you hold your shares in your own name (instead of through a bank, broker or other nominee), you can
choose this option by following the instructions at the Internet voting website at
https://www.proxypush.com/vmc, which has been established for you to vote your shares for the
meeting. If you choose to receive your proxy materials and Annual Report to Shareholders
electronically, then prior to next years shareholders meeting you will receive an e-mail
notification when the proxy materials and Annual Report to Shareholders are available for on-line
review over the Internet, as well as the instructions for voting electronically over the Internet.
Your choice for electronic distribution will remain in effect for subsequent meetings unless you
revoke it prior to future meetings by sending a written request to: Corporate Secretary, Vulcan
Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242, or revoking your request
online.
A copy of our Annual Report on Form 10-K for the year ended December 31, 2007 will be provided to
you without charge (except for exhibits) upon written request to Mark D. Warren, Director, Investor
Relations, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
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PROPOSAL 1. ELECTION OF DIRECTORS
In accordance with the by-laws of our company, the Board of Directors shall be comprised of not
fewer than nine nor more than 12 directors. Our by-laws further provide that the number of
directors may be set by a resolution of our Board of Directors and the Board of Directors has
determined that the size of the Board shall be currently fixed at 11. Pursuant to our companys
by-laws, the Board is divided into three classes, with the term of office of one class expiring
each year. One class is elected at each annual meeting to serve a three-year term. Our by-laws
provide that a director shall retire from the Board at the annual meeting following his or her 72nd
birthday, provided that the Board may waive the mandatory retirement age and nominate such director
for an additional term of one or more years if the Board determines that such an extension is in
the best interests of our company and its shareholders.
The Board has nominated Donald M. James and Ann McLaughlin Korologos for re-election as directors
to serve three-year terms expiring in 2011. In addition, the Board has nominated Philip J. Carroll
for re-election as a director to serve a two-year term. Mr. Carroll is being nominated to serve a
two-year term because of the Boards policy of mandatory retirement at age 72. Finally, the Board
has nominated Orin R. Smith for re-election as a director to serve a one-year term. The Board has
determined that the continued service of Mr. Smith is in the best interests of the company and the
shareholders. Unless otherwise directed, proxies will be voted in favor of these four nominees.
Should any of the nominees be unable to accept election, the proxies will be voted for the election
of such other person or persons nominated by the Board on the recommendation of the Governance
Committee. Each of the nominees has consented to serve if elected, and the Board has no reason to
believe that any of the persons nominated will be unable to serve as a director.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERMS EXPIRING IN 2011
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Donald M. James
Age: 59. Director since 1996.
Chairman and Chief Executive Officer of Vulcan since May 1997.
Other directorships: The Southern Company; Wachovia Corporation.
Committee memberships: Executive. |
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Ann McLaughlin Korologos
Age: 66. Director since 1990.(*)
A former U.S. Secretary of Labor; Chairman of the RAND Corporation Board of Trustees since April
2004 (RAND is a nonprofit institution that helps improve policy and decision making through
research and analysis); Senior Advisor to Benedetto, Gartland & Company, Inc. (an investment
banking firm in New York) from October 1996 until December 2005.
Other directorships: AMR Corporation; Harman International Industries,
Inc.; Kellogg Company; Host Hotels & Resorts, Inc.
Committee memberships: Finance and Pension Funds; Governance.
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(*) Ms. Korologos was first elected a director in 1990 and served until
May 14, 2004. She was reelected a director of Vulcan by the Board of
Directors on July 13, 2007.
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TERM EXPIRING IN 2010
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Philip J. Carroll, Jr.
Age: 70. Director since 1999.
Retired Chairman and Chief Executive Officer of Fluor Corporation, Aliso Viejo, California (an
engineering, construction and diversified services company), from July 1998 to February 2002.
Other directorships: BAE Systems; Texas Medical Center; Environfuels, LLC. Committee memberships: Compensation; Executive; Governance; Safety, Health and Environmental
Affairs. |
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TERM EXPIRING IN 2009 |
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Orin R. Smith
Age: 72. Director since 1983.
Retired Chairman and Chief Executive Officer of Engelhard Corporation, Iselin, New Jersey (provider
of environmental technologies, performance products, engineered materials and related services),
from January 1995 to December 2000.
Other directorships: Ingersoll-Rand Company.
Committee memberships: Compensation; Executive; Governance; Safety, Health and Environmental
Affairs. |
The Board of Directors recommends a vote FOR
each of the nominees named above.
7
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2009
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John D. Baker II
Age: 59. Director since 2007.
Chief Executive Officer and President of Patriot Transportation Holding, Inc. since February 2008;
Former President and Chief Executive Officer of Florida Rock Industries, Inc., Jacksonville,
Florida (an aggregates, ready mix concrete and cement company), from 1996 to November 2007.
Other directorships: Patriot Transportation Holding, Inc.; Wachovia Corporation.
Committee memberships: Finance and Pension Funds; Safety, Health and Environmental Affairs. |
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Phillip W. Farmer
Age: 69. Director since 1999.
Retired Chairman of the Board of Harris Corporation, Melbourne, Florida (an international
communications equipment company) from February 2003 until June 2003; Chairman, President and Chief
Executive Officer from June 2000 to February 2003.
Other directorships: George Weston, Limited
Committee memberships: Audit; Finance and Pension Funds; Governance. |
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H. Allen Franklin
Age: 63. Director since 2001.
Retired Chairman and Chief Executive Officer of Southern Company, Atlanta, Georgia (a
super-regional energy company in the Southeast and a leading U.S. producer of energy) from April
2004 until July 2004; Chairman, President and Chief Executive Officer from April 2001 to April
2004.
Committee memberships: Audit; Compensation; Safety, Health and
Environmental Affairs. |
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James V. Napier
Age: 71. Director since 1983.
Retired Chairman of the Board of Scientific-Atlanta, Inc., Atlanta, Georgia (a manufacturer and
designer of telecommunication systems, satellite-based communications networks, and instrumentation
for industrial, telecommunications and government applications) from 1992 to 2000.
Other directorships: Intelligent Systems, Inc.; McKesson Corporation; WABTEC, Inc.
Committee memberships: Audit; Compensation; Executive; Finance and Pension Funds.
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TERMS EXPIRING IN 2010
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Douglas J. McGregor
Age: 67. Director since 1992.
Blue Point Capital Partners, Cleveland, Ohio (a national private equity firm), since January 2003
Committee memberships: Audit; Executive; Finance and Pension Funds;
Safety, Health and Environmental Affairs. |
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Donald B. Rice
Age: 68. Director since 1986.(*)
President and Chief Executive Officer of Agensys, Inc. (a Santa Monica, California based operating
subsidiary of Astellas Pharma, Inc.) (a biotechnology company developing monoclonal antibody
therapeutics for cancer), since 2007; Chairman, President and Chief Executive Officer of Agensys,
Inc. (a privately held company) from 2002 to 2007.
Other directorships: Chevron Corp.; Wells Fargo & Company.
Committee memberships: Compensation; Executive; Finance and Pension Funds; Governance.
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Vincent J. Trosino
Age: 67. Director since 2003.
Retired President, Vice Chairman of the Board and Chief Operating Officer
of State Farm Mutual Automobile Insurance Company, Bloomington, Illinois
(a mutual insurance company), from 1998 until December 2006.
Committee memberships: Audit; Finance and Pension Funds; Safety, Health
and Environmental Affairs. |
(*)Dr. Rice was first elected a director in 1986, and served until May 1989, when he was
appointed Secretary of the Air Force. He was reelected a director of Vulcan by the Board of
Directors on February 12, 1993.
9
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee, which is comprised solely of independent directors, has appointed Deloitte &
Touche LLP, as the independent registered public accounting firm for our company and its
subsidiaries for the fiscal year ended December 31, 2008. The function of the independent
registered public accounting firm is to audit our accounts and records; to report on the
consolidated balance sheet, the related statements of consolidated earnings, consolidated
shareholders equity and consolidated statements of cash flows of our company and its subsidiaries;
and to perform such other appropriate accounting services as may be required by the Audit
Committee. Although shareholder ratification is not required, the Board has determined that it
would be desirable to request an expression from the shareholders as to whether or not they concur
with this appointment. If a majority of the votes cast at the meeting fails to ratify the
selection of Deloitte & Touche LLP as an independent registered public accounting firm, the Audit
Committee will consider the selection of another independent registered public accounting firm.
The firm of Deloitte & Touche LLP, or its predecessors, has audited our financial statements since
1956. A representative of that firm is expected to be present at the meeting, will be given an
opportunity to make a statement and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR
the proposal to ratify the appointment of Deloitte & Touche LLP as our companys
independent registered public accounting firm.
10
PROPOSAL 3. ADOPTION OF THE AMENDMENT TO THE
LEGACY VULCAN CORP. CERTIFICATE OF INCORPORATION
Our merger with Florida Rock Industries, Inc. was effected using an acquisition structure in which
a new holding company was formed to own all of the shares of Florida Rock and Legacy Vulcan Corp.
Under New Jersey law, in order to use this acquisition structure, the certificate of incorporation
of Legacy Vulcan Corp., our wholly-owned subsidiary, immediately following the closing was
required: (i) to be substantially identical to the certificate of incorporation of Vulcan Materials
Company; and (ii) provide that amendment of Legacy Vulcan Corp.s certificate of incorporation
would require approval by the shareholders of Vulcan Materials Company.
In addition, because Legacy Vulcan Corp.s predecessor in interest was a public company immediately
prior to the transaction, its certificate of incorporation is currently in a form that is more
administratively burdensome and costly to maintain than the standard form used by our companys
other wholly-owned subsidiaries.
The Board has determined that it would be desirable to amend Legacy Vulcan Corp.s certificate of
incorporation to eliminate the provision requiring approval by the shareholders of Vulcan Materials
Company for subsidiary-level actions and to otherwise conform the governance and administration of
Legacy Vulcan Corp. to that of the companys other wholly-owned subsidiaries. If the shareholders
approve this amendment, then future changes to Legacy Vulcan Corp.s certificate of incorporation
will not need to be submitted to our shareholders. The affirmative vote of 80% of the outstanding shares is required to adopt the amendment. The form of the proposed amended certificate of
incorporation is attached to this Proxy Statement as Appendix A.
The Board of Directors recommends a vote FOR
the proposal to amend the Legacy Vulcan Corp. Certificate of Incorporation
11
CORPORATE GOVERNANCE OF OUR COMPANY AND
PRACTICES OF THE BOARD OF DIRECTORS
Our company takes its corporate governance responsibilities very seriously and has adopted
Corporate Governance Guidelines which provide a framework for the governance of our company. The
Guidelines build on practices which we have followed for many years and, we believe, demonstrate
our continuing commitment to corporate governance excellence.
In addition, we have a Business Conduct Policy that applies to all of our employees and 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 are
required to fill out a questionnaire annually regarding their personal compliance with the Business
Conduct Policy and are encouraged to report any illegal or unethical behavior of which they become
aware.
The Board has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial
Officers. The Code of Ethics defines Senior Financial Officers to include the Chief Financial
Officer, Controller and Principal Accounting Officer. The Code of Ethics covers such topics as
financial reporting, conflicts of interest and compliance with laws. If we make any amendment to,
or waiver of, any provision of the Code of Ethics, we will disclose such information on our
website. As discussed in this proxy statement, our Governance Committee regularly reviews
corporate governance developments and adopts appropriate practices as warranted. You can access
our by-laws, Corporate Governance Guidelines, Business Conduct Policy and Code of Ethics at our
website www.vulcanmaterials.com or you can obtain a printed copy free of charge by writing to us
at: Corporate Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama
35242. Please note that the information contained on our website is not incorporated by reference
in, nor considered to be a part of, this proxy statement.
Director Independence
The Board believes that all of the directors, with the exception of Messrs. Donald M. James and
John D. Baker II, are independent under the New York Stock Exchange listing standards, the Boards
Director Independence Criteria, and the applicable SEC rules and regulations. The New York Stock
Exchange listing standards provide that a director does not qualify as independent unless the Board
affirmatively determines that the director has no material relationship with our company (either
directly or as a partner, shareholder or officer of an organization that has a relationship with
our company). The New York Stock Exchange rules require a board to consider all of the relevant
facts and circumstances in determining the materiality of a directors relationship with our
company and permit the Board to adopt and disclose standards to assist the Board in making
determinations of independence. Accordingly, the Board has adopted the Director Independence
Criteria to assist it in determining whether a director has a material relationship with our
company. The Director Independence Criteria provide that a director will be considered independent
if he or she:
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has not been an employee of our company, or any of its consolidated
subsidiaries, nor has any immediate family member of such director
been employed in an executive officer position, during the last three years; |
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has not received, nor has any member of his or her immediate family
received, more than $100,000 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 during
any twelve-month period within the last three years; |
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(1) does not have an immediate family member who is a current partner
of our companys external auditor; |
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(2) does not have an immediate family member that is a current employee of
our companys external auditor and who participates in the firms audit,
assurance or tax compliance (but not tax planning) practice; |
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(3) has not, and has no immediate family members that have, been a partner
or employee of our companys external auditor and personally worked on our
companys audit during the past three years. |
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during the last three years, has not, and has no immediate family
members that have, been employed as an executive officer of another company
where any of our companys present executives during that time served on that
companys compensation committee; |
12
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during the past three years, has not served as an employee or had a
member of his or her immediate family serve as an executive officer of any
company 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 of the last three fiscal years, exceeds the greater of $1,000,000 or 2%
of the consolidated gross revenues of such other company; |
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during the past three years, has not served, nor has a member of his or
her immediate family served, as a director, trustee, advisory board member,
executive officer or other similar position of any charitable organization that
received contributions any year from our company in excess of $1,000,000, or 2%
of such charitable organizations consolidated gross revenues; |
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has no other relationship not described above between the director or
an immediate family member (directly or as partner, shareholder, director or
officer of any entity or organization which has a relationship with our
company) and our company, or any of its consolidated subsidiaries or the
management of our company which could affect the directors independence; and |
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with respect to the Audit Committee members only, did not receive
during the last fiscal year any compensation from our company other than
directors fees (including committee fees). |
Further, the Director Independence Criteria requires the Board to consider all relevant facts and
circumstances, including the directors commercial, industrial, banking, consulting, legal,
accounting, and charitable relationships and such other criteria as the Board may determine from
time to time.
In February 2008, the Board conducted an evaluation of director independence, based on the Director
Independence Criteria, the New York Stock Exchange listing standards and applicable SEC rules and
regulations. In connection with this review, the Board evaluated commercial, charitable,
consulting, familial or other relationships with each director or immediate family member and their
related interests and Vulcan and its subsidiaries, including those relationships described under
Other Matters Relating to Executive Officers and Directors.
As a result of this evaluation, the Board affirmatively determined that Messrs. Carroll, Farmer,
Franklin, McGregor, Napier, Rice, Smith, Trosino and Ms. Korologos are independent directors under
the Boards Director Independence Criteria, the New York Stock Exchange listing standards and the
applicable SEC rules and regulations.
Director Nomination Process
The Governance Committee considers director candidates recommended by shareholders. Any
shareholder wishing to recommend a candidate for election at the 2009 Annual Meeting must submit
that recommendation in writing, addressed to the Governance Committee, in care of our Corporate
Secretary, at 1200 Urban Center Drive, Birmingham, Alabama 35242, by November 25, 2008. The notice
should include the following:
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The name and address of the shareholder who intends to make the nomination(s) and of the
person or persons to be nominated; |
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A representation that the shareholder is a holder of record or a beneficial holder of
stock entitled to vote at the meeting (including the number of shares the shareholder owns)
and intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; |
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A description of all arrangements and understandings between the shareholder and each
nominee and any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; |
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Such other information regarding each nominee proposed by such shareholder as would have
been required to be included in a proxy statement filed pursuant to the proxy rules of the
SEC (whether or not such rules are applicable) had each nominee been nominated, or intended
to be nominated, by the Board of Directors, including the candidates name, biographical
information, and qualifications; and |
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The written consent of each nominee to serve as a director if so elected, with such
written consent attached thereto. |
The Governance Committee will identify nominees by first evaluating the current members of the
Board willing to continue service. Current members of the 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 the
13
Board with that
of obtaining new Board members. If any member of the Board does not wish to continue in service or
if the Governance Committee or the Board decides not to nominate a current Board member for
reelection, the Governance Committee may identify the desired skills and experience for a new
nominee in light of the above criteria. Directors and members of management may also suggest
candidates for Board service. Timely recommendations by 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.
Meetings and Attendance
Our Board held 8 meetings in 2007. In 2007, each director attended more than 75% of the total
number of meetings of the Board and meetings of the committees of which he or she was a member,
except for John D. Baker II, who joined the Board in November 2007.
Annual Meeting Policy
Our directors are expected to attend the Annual Meeting of Shareholders. In furtherance of this
policy, our Board holds a regularly scheduled Board meeting on the same day as the Annual Meeting
of Shareholders. In 2007, all of the Board members attended the Annual Meeting.
Non-Management Executive Sessions and Presiding Director
Our Board of Directors has adopted a policy relating to non-management executive sessions. Under
this policy, the Board of Directors must meet at each regularly scheduled Board meeting in an
executive session in which management directors and other members of management do not participate.
During 2007, the non-management directors met in executive session 8 times.
Each year at the May Board meeting, the Board designates a non-management presiding director, a
position which is filled by rotation among the chairs of the Board committees. The duties of the
presiding director are delineated in our Corporate Governance Guidelines, which are available on
our website at www.vulcanmaterials.com. The Chairman of the Audit Committee, Mr. Napier, served as
the presiding director at the executive sessions after the annual meeting in 2007. Mr. Carroll,
incoming Chairman of the Compensation Committee, will serve as the presiding director following the
2008 Annual Meeting.
Committees of the Board of Directors
Our Board of Directors has established six standing committees as follows:
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Executive Committee; |
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Audit Committee; |
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Compensation Committee; |
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Governance Committee; |
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Safety, Health and Environmental Affairs Committee; and |
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Finance and Pension Funds Committee. |
The charters of the Audit, Compensation and Governance Committees are available on our website at
www.vulcanmaterials.com, or you can obtain a printed copy free of charge by writing to us at:
Corporate Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.
The Audit, Compensation and Governance Committees are comprised entirely of independent,
non-management directors.
Executive Committee
The Executive Committee has the same powers as our Board of Directors, except as limited by the New
Jersey Business Corporation Act. In practice, the powers of the Executive Committee are exercised
only for matters that arise between meetings of the Board. Members of the Executive Committee are
Messrs. James (Chair), Carroll, McGregor, Napier, Rice and Smith. The Executive Committee did not
meet in 2007.
14
Audit Committee
The Audit Committee advises the Board and management from time to time with respect to internal
controls, financial systems and procedures, accounting policies and other significant aspects of
our companys financial management. Pursuant to its charter, the Audit Committee selects our
companys 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 Committees primary responsibilities under its written charter include the
following:
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Hiring, evaluating and, when appropriate, replacing the independent registered public
accounting firm, whose duty it is to audit our books and accounts for the fiscal year in
which it is appointed; |
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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; |
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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; |
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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 Managements Discussion and Analysis of Financial
Condition and Results of Operations, and the selection, application and disclosure of
accounting policies used in our financial statements; |
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Reviewing and discussing with management quarterly earnings press releases and financial
information and earnings guidance provided to analysts and rating agencies; and |
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Reviewing and reassessing the adequacy of the Audit Committee Charter adopted by the
Board of Directors, and recommending proposed changes to the Board of Directors. |
The members of the Audit Committee are Messrs. Napier (Chair), Farmer, Franklin, McGregor and
Trosino. All members of our Audit Committee are non-management directors. Our Board of Directors
has determined that each is independent and financially literate within the meaning of the
listing standards of the New York Stock Exchange, SEC rules and regulations, and the Director
Independence Criteria adopted by our Board of Directors and posted on our website at
www.vulcanmaterials.com under Investor Relations. In addition, our Board has determined that
Mr. Napier is an audit committee financial expert as defined by rules adopted by the SEC. He has
served on our Board since 1983 and on our Audit Committee since 1987. The Audit Committee met 7
times during 2007. Further detail about the role of the Audit Committee may be found in the Report
of the Audit Committee on page 19 of this Proxy Statement.
Compensation Committee
The Compensation Committee is responsible for, among other things:
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determining and setting the amount of compensation paid to each of our executive
officers, including the Chief Executive Officer, senior officers and division presidents; |
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reviewing compensation plans relating to officers; |
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interpreting and administering the Executive Incentive Plan, Management Incentive Plan,
and the 2006 Omnibus Long-Term Incentive Plan; and |
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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 statements.
The Compensation Committee has engaged Compensation Strategies, Inc. as its independent
compensation consultant. The Compensation Committee obtains specific data and reports from
Compensation Strategies, Inc. at times upon request. The Compensation Committee invites
representatives of Compensation Strategies, Inc. to attend meetings of the Compensation Committee
from time to time. The Compensation Committee also meets with the Chief Executive Officer to
consider recommendations for the compensation arrangements for executives other than the Chief
Executive Officer. For a
15
description of the process undertaken by the Compensation Committee to
set compensation, please refer to the section entitled Compensation Discussion and Analysis in
this Proxy Statement.
The members of the Compensation Committee are Messrs. Smith (Chair), Carroll, Franklin, Napier and
Rice. The Committee is comprised solely of non-management directors who are independent within
the meaning of the listing standards of the New York Stock Exchange and the Boards Director
Independence Criteria. The Compensation Committee met four times during 2007.
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 committee
also plans for the succession of the Chief Executive Officer and other senior executives. In
addition, the committee serves as the nominating committee and as such it is responsible for
identifying and assessing candidates, including making recommendations to the Board regarding such
candidates. In fulfilling its responsibilities, the Governance Committee, among other things:
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identifies individuals qualified to become Board members consistent with criteria
established in its charter; |
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recommends to the Board director nominees for the next annual meeting of shareholders;
and |
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evaluates individuals suggested by shareholders as director nominees. |
In recommending director candidates to the Board, the Governance Committee Charter requires the
committee to select individuals who, at a minimum, possess high ethical standards, integrity and
sound business judgment. In its assessment of each potential candidate, the Governance Committee
will review the candidates experience, potential conflicts of interest, understanding of our
companys industry or related industries, financial acumen and such other factors the Committee
determines are pertinent in light of the current needs of the Board. The committee also may take
into account the contribution of the candidate to the diversity of the Board, the ability of a
candidate if elected a director to devote the time and effort necessary to fulfill his or her
responsibilities as a Board member, and the needs of our company given the range of talent and
experience represented on the Board. The Governance Committee believes it appropriate for at least
one member of the Board to meet the criteria for an audit committee financial expert as defined
by the SEC rules, and that a substantial majority of the members of the Board meet the definition
of independence as defined by the listing standards of the New York Stock Exchange and the
Boards Director Independence Criteria.
The Governance Committee also reviews the Boards committee structure and recommends to the Board,
for its approval, directors to serve as members of each committee. The Committee also is
responsible for overseeing the evaluations of the Board and its committees.
Members of the Governance Committee are Dr. Rice (Chair), Ms. Korologos, Messrs. Carroll, Farmer
and Smith. This Committee is comprised solely of non-management directors who are independent
within the meaning of the listing standards of the New York Stock Exchange and the Boards Director
Independence Criteria. The Governance Committee met three times during 2007.
Safety, Health and Environmental Affairs Committee
The Safety, Health and Environmental Affairs Committee has the responsibility for reviewing our
policies, practices and programs with respect to the management of safety, health and environmental
affairs and monitoring our compliance with safety, health and environmental laws and regulations.
Members of the Safety, Health and Environmental Affairs Committee are Messrs. Carroll (Chair),
Baker, Franklin, McGregor, Smith and Trosino. The Committee met two times during 2007.
Finance and Pension Funds Committee
The Finance and Pension Funds Committee has responsibility for overseeing our financial policies
and recommending to the Board financial policies and actions to accommodate our goals and operating
strategies while maintaining a sound financial condition. Its functions include keeping informed
about our financial condition, recommending a dividend policy, reviewing and recommending changes
in the quarterly dividend payments, and evaluating and making recommendations concerning the
appropriate mix of debt and equity, incurrence of long-term debt, and changes in the authorized
limit of short-term debt. The Finance and Pension Funds Committee also is responsible for
overseeing the funding and
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management of assets for pension plans sponsored by our company. To fulfill these functions, it
establishes funding policies and methods consistent with pension plan objectives and the Employee
Retirement Income Security Act of 1974, selects and removes investment managers, and appoints
trustees for the pension plans. Members of the Finance and Pension Funds Committee are Mr.
McGregor (Chair), Ms. Korologos and Messrs. Baker, Farmer, Napier, Rice and Trosino. The Finance
and Pension Funds Committee met two times in 2007.
Compensation Committee Interlocks and Insider Participation
None.
Transactions with Related Persons
The brother-in-law of Mr. Donald James, Chairman and Chief Executive Officer, and the son of Mr.
Philip Carroll, Jr., a member of the Board of Directors, are both partners in a large law firm
which provides legal services to our company. In determining that this is not a material
relationship involving Mr. James or Mr. Carroll, the Board determined that payments made by our
company to the firm represented less than 2% of the firms consolidated gross revenues, and the
revenues from our company received by Mr. James brother-in-law and Mr. Carrolls son as a result
of their status as partners were not material. Additionally the Board made the assessment that Mr.
Carroll was independent and that this was not a material relationship. Neither Mr. James
brother-in-law nor Mr. Carrolls son were directly involved in providing significant legal services
to Vulcan.
Patriot Transportation Holding, Inc.
Mr. Baker serves as Chief Executive Officer and President and is a director of Patriot
Transportation Holding, Inc. (hereinafter referred to as Patriot Transportation). Prior to its
merger with our company, Florida Rock entered into a joint venture agreement with a subsidiary of
Patriot Transportation called Florida Rock Properties (hereinafter referred to as FRP). The joint
venture agreement establishes a real estate joint venture to develop land located in Florida. Under
the terms of the joint venture, FRP contributed land that Florida Rock leased from FRP under a
long-term mining lease. Vulcan will continue to mine the property and pay royalties to FRP for as
long as mining does not interfere with the development of the property. Florida Rock contributed a
parcel of land that it owned as well as its leasehold interest to land it was mining. It also
contributed another land parcel. Now, Vulcan will jointly control the joint venture with FRP, and
we will each have a mandatory obligation to fund additional capital contributions of up to $2
million. Distributions also will be made on a 50-50 basis.
The property does not yet have the necessary entitlements for real estate development. Approval to
develop real property in Florida entails an extensive entitlement process involving multiple and
overlapping regulatory jurisdictions, and the outcome is inherently uncertain. We expect that the
entitlement process may take several years to complete.
Transportation and Leasing Services
Patriot Transportation hauls petroleum products, cement, construction aggregates and other products
for our company. Patriot Transportation has numerous hauling competitors at all terminal and plant
sites and the rates charged are, accordingly, established by competitive conditions.
Our company also leases from FRP certain construction aggregates mining sites and other properties.
Our company paid rents, royalties and transportation services to subsidiaries of Patriot
Transportation totaling $8,530,242 in 2007.
Shareholder Communication with the Board of Directors
The Board has established a process for shareholders and other interested parties to communicate
directly with the presiding director or with the non-management directors individually or as a
group. Any shareholder or other interested party who desires to contact one or more of our
non-management directors, including the Boards presiding director, may send correspondence to the
following address:
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Board of Directors (or presiding director or name of individual director)
c/o Corporate Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242
All such communications will be forwarded to the appropriate director or directors specified in
such communications as soon as practicable in accordance with the Policy on Shareholder
Communications with the Board, adopted by the independent directors in February 2004.
Policy on Reporting of Concerns Regarding Accounting Matters
As provided on our website at www.vulcanmaterials.com under the heading Investor Relations under
the subheading Corporate Governance Contact the Board of Directors, any shareholder or
interested party who has any concerns or complaints relating to accounting, internal accounting
controls or auditing matters, may contact the Audit Committee by writing to the following address:
Vulcan Audit Committee
c/o Corporate Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for, among other things, reviewing our companys
financial statements with management and our companys independent registered public accounting
firm. The Audit Committee acts under a written charter which is available on our website at
www.vulcanmaterials.com. Each member of the Audit Committee is an independent director as
determined by our Board, based on the requirements of the New York Stock Exchange, the SEC and our
Boards Director Independence Criteria.
Our companys management has the primary responsibility for our companys financial statements and
financial reporting process, including the system of internal controls. Our independent registered
public accounting firm is responsible for expressing an opinion on the conformity of our companys
audited financial statements with generally accepted accounting principles. Our independent
registered public accounting firm also audits, in accordance with the standards of the Public
Company Accounting Oversight Board (the PCAOB), the effectiveness of our companys internal
control over financial reporting. The Audit Committee is responsible for monitoring and overseeing
these processes.
In this context, the Audit Committee has reviewed and discussed our companys audited financial
statements with management and the independent registered public accounting firm. The Audit
Committee has discussed with the independent registered public accounting firm the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees) as
amended. The Audit Committee reviewed and discussed with the independent registered public
accounting firm the auditors independence from our company and management. As part of that
review, the Audit Committee has received from the independent registered public accounting firm the
written disclosures required by Independence Standards Board Standard No. 1 (Independence
Discussions with the Audit Committees) and discussed with the independent registered public
accounting firm the auditors independence and considered whether the auditors provision of any
non-audit services is compatible with the auditors independence. The Audit Committee has
concluded that the independent registered public accounting firm is independent from our company
and management.
Based on the reviews and discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in our companys Annual Report on Form
10-K for the year ended December 31, 2007, for filing with the SEC.
Audit Committee
James V. Napier, Chair
Phillip W. Farmer
H. Allen Franklin
Douglas J. McGregor
Vincent J. Trosino
Dated: February 25, 2008
The Report of the Audit Committee does not constitute soliciting
material, and shall not be deemed to be filed or incorporated by
reference into any other company filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the company specifically incorporates the
Report of the Audit Committee by reference therein.
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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, 2007 and 2006, by Deloitte &
Touche LLP, and its affiliates, all of which are subsidiaries of Deloitte, LLP, the United States
member firm of Deloitte Touche Tohmatsu, are as follows:
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2007 |
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2006 |
|
Audit Fees(1) |
|
$ |
4,272,373 |
|
|
$ |
2,467,082 |
|
Audit Related Fees(2) |
|
|
500,067 |
|
|
|
732,618 |
|
Tax Fees(3) |
|
|
727,798 |
|
|
|
423,777 |
|
All Other Fees |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
Total |
|
$ |
5,500,238 |
|
|
$ |
3,623,477 |
|
|
|
|
(1) |
|
Consists of fees for the audit of our financial statements, including the audit of
the effectiveness of our internal control over financial reporting, reviews of our quarterly
financial statements, services associated with other Securities and Exchange Commission
filings, and services associated with public debt offerings. |
|
(2) |
|
Includes fees for the audits of our employee benefit plans and for due diligence
services related to our acquisition of Florida Rock. |
|
(3) |
|
Consists of tax fees for services related to tax integration resulting from our
acquisition of Florida Rock and for tax consulting services. |
Pre-Approval of Services Performed by Independent Registered Public Accounting Firm
The Audit Committee has policies and procedures that require the pre-approval by the Audit
Committee of all fees paid to, and all services performed by, our companys independent registered
public accounting firm. At the beginning of each year, the Audit Committee approves the proposed
services, including the nature, type and scope of services contemplated and the related fees, to be
rendered by the independent registered public accounting firm during the year.
During the year, circumstances may arise when it may become necessary to engage the independent
registered public accounting firm for additional services not contemplated in the original
pre-approval. In those instances, the Audit Committee requires specific pre-approval before
engaging the independent registered public accounting firm. The Audit Committee has delegated
pre-approval authority to the Chair of the Audit Committee for those instances when pre-approval is
needed prior to a scheduled Audit Committee meeting. The Chair of the Audit Committee must report
on such approvals at the next scheduled Audit Committee meeting. The Audit Committee pre-approved
all audit, audit-related tax and other services performed by Deloitte & Touche LLP, during the
fiscal year ended December 31, 2007.
No audit-related, tax or other services were rendered in 2007 pursuant to the de minimis exception
to the pre-approval requirement set forth in Exchange Act Rule 2-01(c)(7)(i)(C).
20
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 |
|
Amount and Nature of |
|
Percent of |
Beneficial Owner |
|
Beneficial Ownership |
|
Class |
State Farm
Mutual Automobile Insurance Company and Affiliates |
|
11,672,485 shares(1) |
|
|
10.78 |
% |
One State Farm Plaza
Bloomington, Illinois 61710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davis Selected Advisors, L.P.
|
|
8,049,300 shares(2) |
|
|
8.42 |
% |
2949 East Elvira Road, Suite 101
|
|
|
|
|
|
|
|
|
Tucson, Arizona 85706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regions Financial Corporation and Affiliate
|
|
5,389,764 shares(3) |
|
|
5.64 |
% |
1900 Fifth Avenue North
|
|
|
|
|
|
|
|
|
Birmingham, Alabama 35203 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on information contained in the Schedule 13G/A, dated January 30, 2008,
filed with the SEC. According to this Schedule 13G/A, the total includes the following shares
over which the listed entities have sole or share either or both voting and dispositive power: |
|
|
|
|
|
Affiliate |
|
Shares |
|
State Farm Mutual Automobile Insurance Company |
|
|
8,400,998 |
|
State Farm Life Insurance Company |
|
|
6,535 |
|
State Farm Fire and Casualty Company |
|
|
3,516 |
|
State Farm Investment Management Corp. |
|
|
1,204,328 |
|
State Farm Insurance Companies Employee Retirement Trust |
|
|
597,908 |
|
State Farm Insurance Companies Savings and Thrift Plan for U.S. Employees |
|
|
1,459,200 |
|
|
|
|
(2) |
|
Based on information contained in a Schedule 13G/A, dated February 12, 2008, filed
with the SEC, of the total number of shares beneficially owned, the listed entity has sole
voting and dispositive power over 7,542,511 shares, and sole dispositive power over an
additional 506,789 shares. |
|
(3) |
|
Based on information contained in a Schedule 13G, dated February 14, 2008, filed with
the SEC, of the total number of shares beneficially owned, Regions Financial Corporation has
shared voting power over 4,645,607 shares and shared dispositive power over 4,810,012 shares.
Regions Bank, an affiliate of Regions Financial Corporation, has sole voting power over
4,645,607 shares, sole dispositive power over 2,453,817 shares and shared dispositive power
over 2,356,195 shares. |
21
Security Ownership of Management
The following table sets forth information, unless otherwise indicated, as of March 1, 2008,
regarding beneficial ownership of our companys common stock, the companys only outstanding class
of equity securities, by each of our directors, each of our named executive officers identified in
the Summary Compensation Table on page 35 of this Proxy Statement, and the directors and executive
officers as a group. We believe that each individuals financial interest is aligned with the
interests of our shareholders, because the value of the individuals total holdings will increase
or decrease in line with the price of our common stock.
|
|
|
|
|
|
|
|
|
|
|
Amount and |
|
|
|
|
Nature of |
|
|
|
|
Stock-Based |
|
Percent of |
Name |
|
Ownership |
|
Class |
Nonemployee Directors(1) |
|
|
|
|
|
|
|
|
John D. Baker II(2) |
|
|
3,621,316 |
|
|
|
3.3 |
% |
Philip J. Carroll, Jr. |
|
|
22,176 |
|
|
|
* |
|
Phillip W. Farmer(3) |
|
|
24,195 |
|
|
|
* |
|
H. Allen Franklin |
|
|
16,491 |
|
|
|
* |
|
Ann McLaughlin Korologos |
|
|
25,485 |
|
|
|
|
|
Douglas J. McGregor(4) |
|
|
56,641 |
|
|
|
* |
|
James V. Napier |
|
|
23,792 |
|
|
|
* |
|
Donald B. Rice |
|
|
50,803 |
|
|
|
* |
|
Orin R. Smith |
|
|
66,904 |
|
|
|
* |
|
Vincent J. Trosino |
|
|
15,218 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer and other
Named Executive Officers(5) |
|
|
|
|
|
|
|
|
Donald M. James |
|
|
1,732,105 |
|
|
|
1.3 |
% |
Guy M. Badgett, III |
|
|
279,966 |
|
|
|
* |
|
Daniel F. Sansone |
|
|
238,758 |
|
|
|
* |
|
William F. Denson, III |
|
|
135,032 |
|
|
|
* |
|
Ronald G. McAbee |
|
|
164,510 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers
as a group (18 persons) |
|
|
6,832,212 |
|
|
|
6.3 |
% |
|
|
|
* |
|
Less than 1% of issued and outstanding shares of our companys common stock. |
|
(1) |
|
Beneficial ownership for the nonemployee directors includes all shares held of
record or in street name, and, if noted, by trusts or family members. The amounts also
include restricted shares granted under our Restricted Stock Plan for Nonemployee Directors,
phantom shares settled in stock accrued under the Directors Deferred Compensation Plan, and
the Deferred Stock Plan for Nonemployee Directors, as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Owned |
|
|
|
|
|
Phantom Shares Held |
|
|
Directly or Indirectly |
|
Restricted Shares |
|
Pursuant to Plans |
John D. Baker II |
|
|
3,621,045 |
|
|
|
0 |
|
|
|
271 |
|
Philip J. Carroll, Jr. |
|
|
0 |
|
|
|
5,950 |
|
|
|
16,226 |
|
Phillip W. Farmer |
|
|
1,000 |
|
|
|
5,550 |
|
|
|
15,597 |
|
H. Allen Franklin |
|
|
0 |
|
|
|
4,000 |
|
|
|
12,491 |
|
Ann McLaughlin Korologos |
|
|
7,643 |
|
|
|
0 |
|
|
|
17,842 |
|
Douglas J. McGregor |
|
|
1,350 |
|
|
|
6,445 |
|
|
|
48,856 |
|
James V. Napier |
|
|
3,550 |
|
|
|
6,445 |
|
|
|
13,797 |
|
Donald B. Rice |
|
|
31,950 |
|
|
|
6,445 |
|
|
|
12,408 |
|
Orin R. Smith |
|
|
3,150 |
|
|
|
6,445 |
|
|
|
57,309 |
|
Vincent J. Trosino |
|
|
5,500 |
|
|
|
2,000 |
|
|
|
7,718 |
|
22
|
|
|
(2) |
|
Includes 431,117 shares held by John D. Baker II Living Trust for which Mr. Baker
serves as trustee; 14,451 shares held by separate trust created under the Cynthia L. Baker
Trust, U/A/D April 30, 1965, of which Mr. Baker is a trustee and an income beneficiary;
2,758,037 shares held by Baker Holdings, L.P. over which Mr. Baker shares voting and
dispositive power and in which he has a pecuniary interest in a portion of the shares; 8,730
shares held by Edward L. Baker II Irrevocable Trust, which trust is administered by Mr. Bakers brother as trustee and is for the benefit of Mr. Bakers son, Edward L. Baker II; 15,420
shares held by John D. Baker III Irrevocable Trust, which trust is administered by Mr. Bakers
brother as trustee and is for the benefit of Mr. Bakers son, John D. Baker III; 15,420 shares
held by Susan Anne Baker Irrevocable Trust, which trust is administered by Mr. Bakers brother
as trustee and is for the benefit of Mr. Bakers daughter, Susan Anne Baker; 15,606 shares
held by John D. Baker II Irrevocable Trust #1, which trust is administered by an independent
trustee for the benefit of Mr. Bakers spouse and children; 7,634 shares held by John D. Baker
Irrevocable Trust #2, which trust is administered by an independent trustee for the benefit of
Mr. Bakers son, Edward L. Baker II; 311,856 shares held by the Crusher Run Partners, LP
Charitable Remainder Unitrust, which trust is administered by John D. Baker II, as trustee;
182 shares held by Mr. Bakers wife, Anne Doris Baker; and 16,180 shares held by Mr. Bakers
wifes living trust. Mr. Baker disclaims beneficial interest in all of these shares except to
the extent of his pecuniary interest therein. |
|
(3) |
|
Held in a trust of which Mr. Farmer is the trustee. |
|
(4) |
|
Includes 1,350 shares held in a trust of which Mr. McGregor is the trustee. |
|
(5) |
|
Beneficial ownership for the executive officers includes shares held of record or in
street name. The amounts also include shares that may be acquired upon the exercise of
options which are presently exercisable or that will become exercisable on or before April 30,
2008, and shares credited to the executives accounts under our Thrift Plan for Salaried
Employees (Thrift Plan) as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Owned |
|
|
|
|
|
|
Directly or |
|
Exercisable |
|
|
|
|
Indirectly |
|
Options |
|
Thrift Plan |
Donald M. James |
|
|
157,156 |
|
|
|
1,476,484 |
|
|
|
22,306 |
|
Guy M. Badgett, III |
|
|
19,943 |
|
|
|
251,589 |
|
|
|
7,328 |
|
Daniel F. Sansone |
|
|
25,884 |
|
|
|
183,322 |
|
|
|
17,688 |
|
William F. Denson, III |
|
|
5,311 |
|
|
|
100,747 |
|
|
|
20,102 |
|
Ronald G. McAbee |
|
|
5,054 |
|
|
|
133,370 |
|
|
|
23,420 |
|
23
EQUITY COMPENSATION PLANS
The table below sets forth information regarding the number of shares of our common stock
authorized for issuance under all of our equity compensation plans as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Number of |
|
Weighted- |
|
securities remaining |
|
|
securities to |
|
average |
|
available for future |
|
|
be issued upon |
|
exercise price of |
|
issuance under |
|
|
exercise |
|
outstanding |
|
equity compensation |
|
|
of outstanding |
|
options, |
|
plans (excluding |
|
|
options, warrants |
|
warrants and |
|
securities reflected |
|
|
and rights |
|
rights |
|
in column (a)) |
Plan Category |
|
(a) |
|
(b) |
|
(c) |
Equity compensation plans
approved by security holders(1): |
|
|
|
|
|
|
|
|
|
|
|
|
1996 Long Term Incentive
Plan (For Employees) |
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
5,874,105 |
|
|
$ |
50.17 |
|
|
|
|
|
Performance Share Units |
|
|
247,931 |
|
|
|
|
|
|
|
|
|
Deferred Stock Units |
|
|
289,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
6,411,213 |
|
|
|
|
|
|
|
0 |
(2) |
Deferred Stock Plan for
Non-employee Directors |
|
|
10,863 |
|
|
|
|
|
|
|
0 |
(2) |
Restricted Stock Plan for
Non-employee Directors |
|
|
48,172 |
|
|
|
|
|
|
|
0 |
(2) |
2006 Long-Term Incentive
Plan Omnibus |
|
|
|
|
|
|
|
|
|
|
4,622,463 |
|
Stock Only Stock
Appreciation Rights |
|
|
407,210 |
|
|
$ |
109.23 |
|
|
|
|
|
PSUs |
|
|
338,976 |
|
|
|
|
|
|
|
|
|
Deferred Stock Units for
Non-employee Directors |
|
|
31,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
777,537 |
|
|
|
|
|
|
|
4,622,463 |
|
Equity compensation plans not
approved by security holders |
|
NONE |
|
|
|
|
|
NONE |
Total |
|
|
7,247,785 |
|
|
|
|
|
|
|
4,622,463 |
|
|
|
|
1) |
|
All of our companys equity compensation plans have been approved by
the shareholders of our company. Column (a) sets forth the number of
shares of common stock issuable upon the exercise of options,
warrants or rights outstanding under the 2006 Omnibus Long-Term
Incentive Plan (2006 LTIP), the 1996 Long-Term Incentive Plan (1996
LTIP), the Deferred Stock Plan for Nonemployee Directors and the
Restricted Stock Plan for Nonemployee Directors. 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 2006 LTIP
are shown in Column (c). |
|
2) |
|
Future grants will not be made under these plans. The plans will be
used only for the administration and payment of grants that were
outstanding when the 2006 LTIP was approved. |
24
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as
set forth below with management and, based on such review and discussions, recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee
Orin R. Smith, Chair
Philip J. Carroll, Jr.
H. Allen Franklin
James V. Napier
Donald B. Rice
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Philosophy and Program
Our Corporate Mission Statement provides that our success is dependent upon the talent, dedication
and performance of all employees. Without the dedication and performance of our employees,
including our named executive officers, we will be unable to accomplish our corporate goals. Our
compensation program for our named executive officers is intended to motivate them to achieve our
strategic goals and operational plans by:
|
|
|
Keeping our salary and benefits for the named executive officers competitive with
industrial companies of similar size so that we are able to hire and retain individuals of
the highest caliber and to discourage our named executive officers from seeking other
employment opportunities; |
|
|
|
|
Linking a meaningful portion of the named executive officers compensation to the
companys performance, thereby encouraging them to create shareholder value over the short-
and long-term; |
|
|
|
|
Motivating, recognizing and rewarding individual excellence; and |
|
|
|
|
Paying a meaningful portion of named executive officers total compensation in our
companys common stock to facilitate the accumulation of significant ownership of our stock
by the named executive officers in order to align the interests of management with the
interests of our shareholders. |
The Compensation Committee, which is comprised entirely of independent directors, as defined by the
listing standards of the New York Stock Exchange, administers our executive compensation program in
accordance with the Compensation Committee Charter. The current charter is available on our website
at www.vulcanmaterials.com. In performing its duties, the Compensation Committee is guided by its
charter. The role of the Committee is to:
|
|
|
Annually review and approve corporate goals and objectives relevant to the compensation
of our Chief Executive Officer and then evaluate the Chief Executive Officers performance
in light of these goals and objectives and set the Chief Executive Officers compensation
levels based on this evaluation and report to the full Board of Directors; |
|
|
|
|
Determine and fix the amount of monthly salary for each named executive officer; |
|
|
|
|
Determine and fix awards made to named executive officers under the incentive
compensation plans and equity-based plans of the Company; |
|
|
|
|
Interpret and administer the Companys Executive Incentive Plan, Management Incentive
Plan and Long-Term Incentive Plan; |
|
|
|
|
Report to the Board its approval or disapproval of recommendations of the Chief
Executive Officer for material changes in existing retirement and benefit plans applicable
to the named executive officers; and |
|
|
|
|
Make regular reports to the Board, including an annual report regarding its
determination of compensation levels for the Chief Executive Officer and the other named
executive officers. |
25
Our elements of compensation for the named executive officers, all of which are discussed in
greater detail below, include:
|
|
|
base salary; |
|
|
|
|
short-term cash bonus; |
|
|
|
|
long-term equity-based incentives; |
|
|
|
|
retirement and pension benefits; |
|
|
|
|
health and welfare benefits, perquisites; and |
|
|
|
|
change-in-control protections. |
The Compensation Committee engages Compensation Strategies, Inc. as its independent compensation
consultant. In connection with this engagement, Compensation Strategies, Inc. provides the
following services:
|
|
|
Prepares an annual study of, and provides recommendations for compensation of the Board
of Directors; |
|
|
|
|
Advises the Compensation Committee regarding competitive practice, the design of new
programs, and new laws, rules and regulations relating to executive compensation; and |
|
|
|
|
Conducts periodic comprehensive studies of executive compensation and makes
recommendations regarding the components of executive compensation, including base salary,
annual bonus, long-term equity based incentive awards and change in control protections. |
The Compensation Committee reviews compensation schedules that show the total compensation of the
Chief Executive Officer and each of the other named executive officers when making executive
compensation decisions. The schedules are prepared by our internal corporate compensation group.
Each of these schedules presents the dollar amount of the named executive officers compensation,
broken out into base salary, annual bonus and long-term equity based incentive awards.
The Compensation Committee also considers information from compensation data bases that are
maintained by Hewitt Associates, Inc., a global human resources consulting firm, and Towers Perrin,
a global professional services firm, which information is consolidated, reviewed and analyzed by
our internal corporate compensation group and made available to the Compensation Committee and
their consultant. Based upon the foregoing, the Compensation Committees consultant conducts an
analysis of compensation paid to executives with comparable duties and responsibilities in
comparable companies with which our company competes for executive talent. This analysis includes
a comparison of base salary, annual bonus and long-term equity based incentive awards for
comparative companies. As discussed below, companies are selected for comparison based on their
market capitalization and revenues, among other factors.
In performing its services in 2007, Compensation Strategies, Inc. interacted collaboratively with
our Compensation Committee and members of senior management. Compensation Strategies, Inc.
provided the Compensation Committee with its observations as to our relative competitiveness with
other companies based upon its review of the various components of market data set forth above. In
addition, Compensation Strategies, Inc. provided its recommendations with respect to Board
compensation, as well as its advice on regulatory compliance and development of new programs.
Measuring Performance Economic Profit
We are committed to excellence in our performance, both financially and operationally, and to
earning superior returns for our shareholders. To encourage and reward superior performance, we
have linked a substantial portion of the named executive officers compensation to company
performance as measured by a standard referred to as Economic Profit or EP.
In 1996, we adopted EP as the quantifiable performance measurement against which company
performance is measured for short-term and some long-term incentives. EP essentially measures the
extent to which our operating earnings exceed the operating capital charges. For purposes of
determining EP, two components are needed: operating earnings, and the operating capital charge.
Operating earnings are based on net earnings, but exclude interest income and expense, gains and
losses on investments, deferred income taxes, and results of certain discontinued operations. The
operating capital charge is based on our companys average assets and liabilities associated with
operating earnings, as defined above, multiplied by the estimated cost of capital. We believe that
changes in EP correlate with changes in shareholder value better than other commonly used financial
performance measures.
EP is used not only as a measure for incentive compensation; it pervades every aspect of the
management process, including planning, capital budgeting, evaluating investment projects,
including acquisitions and other growth initiatives. It also is used by management to measure the
financial performance of our company and its business units. We believe EP is
26
the best standard for setting financial goals for our executive compensation. A description of our
2007 EP performance targets, an analysis of our companys 2007 EP performance as compared to 2007
EP performance targets, and a summary of how the 2007 EP performance affected certain elements of
compensation of our named executive officers is set forth in the section entitled Elements of
Compensation.
Benchmarking Total Compensation
To ensure that our compensation program is competitive, our total direct compensation paid to our
Chief Executive Officer and other named executive officers has been benchmarked against a composite
group of general industrial companies. This composite group of companies have revenues between two
and eight billion dollars and market capitalization similar to that of Vulcan. The composite group
from which we obtained data from Hewitt Associates, Inc. and Towers Perrin included approximately
100 companies. This benchmarking data is useful in setting a market-based midpoint for our
elements of compensation. With the assistance of Compensation Strategies, Inc., the Compensation
Committee reviews the compilation of the composite group annually to insure that included companies
continue to be relevant for comparative purposes.
The total direct compensation for each named executive is reviewed annually to ensure it is
appropriate based on:
|
|
|
individual performance; |
|
|
|
|
recent and long-term company performance; and |
|
|
|
|
competitive or market levels of performance. |
Tax and Accounting Considerations
Compliance with Internal Revenue Code Section 162(m)
.
In administering the compensation program for executive officers, the Compensation Committee
considers the applicability of Section 162(m) of the Internal Revenue Code, the financial
consequences under accounting standards and the tax consequences in our analysis of total
compensation and the mix of compensation among individual elements. Section 162(m) prohibits
public companies from taking a tax deduction for compensation that is paid to any one of certain
employees in excess of one million dollars, unless the compensation qualifies as performance-based
compensation within the meaning of the Internal Revenue Code. To preserve the deductibility of
compensation, we intend that bonus payments made pursuant to the Executive Incentive Plan and,
generally, grants of long-term incentives under our 2006 Omnibus Plan, qualify as qualified
performance-based compensation. The Compensation Committee has the discretion to design and
implement compensation elements that may not be deductible under Section 162(m) if the Compensation
Committee determines that, despite the tax consequences, those elements are in our best interest to
adopt.
Expensing of Stock Options. When appropriate, we have modified the type
of incentive compensation paid to our named executive officers due to changes in accounting
standards. We consider the tax and accounting implications to our company in allocating awards
among various compensation vehicles and seek to preserve the tax deduction for compensatory awards.
For example, we do not issue incentive stock options (ISOs), even though ISOs provide potential
tax advantages to the recipient, due to the negative tax and accounting consequences to the
Company.
Compensation Determination Process and Role of the Named Executive Officers in Process
The Chief Executive Officer is responsible for conducting an annual performance evaluation of each
executive officer, including the other named executive officers. The evaluations take into account
such items as the performance of the business unit or function for which the executive officer is
responsible, safety, health and environmental performance and effective management of our companys
natural resources, among other items. In addition, the Chief Executive Officer has the opportunity
to request input from Compensation Strategies, Inc. Based on the foregoing and the results of the
competitive benchmarking report, the Chief Executive Officer makes a recommendation to the
Compensation Committee for the compensation of each of the other named executive officers, broken
out into base salary, annual bonus and long-term equity based incentive awards. The Compensation
Committee meets annually to discuss and set the compensation of the named executive officers based
upon the recommendations of the Chief Executive Officer and its review of the materials mentioned
above, and the Chief Executive Officer participates in the meeting to discuss the results of his
report. The Compensation Committee relies heavily on the recommendations presented by the Chief
Executive Officer when setting compensation for the other named executive officers; however, it has
discretion to adjust the recommendations based on its review of the individual evaluations of the
other named executive officers, the report prepared by the Chief Executive Officer and any other
information that the Compensation Committee deems relevant.
27
The Compensation Committee is responsible for setting the Chief Executive Officers compensation
and annually reviews his base salary, annual bonus and potential long-term equity based incentive
awards. In setting such compensation, the Compensation Committee reviews reports from and takes
account of recommendations made by Compensation Strategies, Inc. After the Compensation Committee
has determined the compensation package for the Chief Executive Officer, the Chairman of the
Compensation Committee presents the overall compensation package to the entire Board of Directors
for ratification.
Overall Compensation Goals
In creating and administering our compensation program, we seek to reward employees for:
|
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|
Superior performance in generating increasing levels of EP; |
|
|
|
|
Behavior that compliments our strategic goals and operational plans; and |
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|
Adherence to our high ethical business standards. |
As discussed in more detail below, the overall compensation program strives to achieve a balance
among the following:
|
|
|
Cash compensation in the form of base salary and annual short-term bonuses pursuant to
the Executive Incentive Plan (EIP); and |
|
|
|
|
Long-term equity awards pursuant to the 2006 Long-Term Incentive Plan, including
performance share units (PSUs) and stock options in the form of Stock Only Stock
Appreciation Rights (SOSARS). |
The program also strives to achieve a balance between the goals of rewarding the achievement of
short-term goals and providing an employee retention element to the compensation program through
the use of long-term equity awards. Each element of our compensation program is set forth below,
with an explanation of the factors considered in making awards of each element.
We have not targeted a specified percentage of total compensation for cash compensation, short-term
or long-term equity based incentive awards. Rather, based on the results of the competitive
benchmarking, we have established incentive target levels for each of the named executive officers.
These levels are expressed as a percentage of base salary for both short-term and long-term
incentives. Base pay, and short-term and long-term incentives are targeted at the competitive
median. The target award percentages vary by position and level of responsibility. In our view,
as the responsibility increases, so should the percentage of total compensation at risk. This is
achieved through higher target levels of short-term bonus and long-term equity awards, the
magnitude of which vary with performance. The amounts realized in prior years, including wealth
accumulation through realized and unrealized equity gains and post-employment earn outs, did not
impact decisions to increase or decrease 2007 compensation amounts. In 2007, we also did not
factor in the amount of potential change-in-control payouts each named executive officer is
entitled to receive in determining other elements of their total compensation.
We do not have employment agreements with executives, but instead have agreements with our named
executive officers that provide for severance payments upon certain change-in-control events.
We apply the same policies and methodology in setting the principal elements of compensation for
our Chief Executive Officer as we apply for our other named executive officers. The primary
difference between the award amounts granted to the Chief Executive Officer as compared to the
other named executive officers is a reflection of differences in the level and scope of
responsibility of their respective positions, the markets pattern of providing progressive award
opportunities at higher levels, and individual performance. As a result, our Chief Executive
Officers base salary, annual bonus and long-term equity based incentive awards are greater than
those of the other named executive officers.
Elements of Compensation
The base salary element of our compensation program is designed to be competitive in the market for
compensation paid to similarly-situated, competent and skilled executives, as set forth in the
surveys utilized by the Company. The
28
Compensation Committee sets base salary in reference to each individuals performance, contribution
to business results, and market compensation. The Compensation Committee determined the amounts of
base salary increases for our named executive officers after consideration of:
|
|
|
The named executive officers pattern of achievement with respect to the budget and
business plan performance in his/her area(s) of responsibility and overall managerial
effectiveness with respect to planning, personnel development, communications, regulatory
compliance and similar matters; |
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|
|
Competitive pay levels for similarly situated executives set forth in the compensation
surveys; |
|
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|
Marketplace trends in salary increases; and |
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|
|
|
Affordability, retention risks, fairness in view of our overall salary increases and the
named executive officers potential for future contributions to the organization. |
Salaries of the named executive officers are reviewed on an annual basis, as well as at the time of
a promotion or change in responsibilities. To ensure the salaries paid to our named executive
officers are competitive relative to the marketplace, the Committee reviews the compensation
analysis and data from Hewitt Associates, Inc. and Towers Perrin, as discussed in the Overview
above. This analysis serves as a starting point for evaluating appropriate levels of base pay. We
generally target the midpoint of the range, approximately the 50th percentile, of the
market because we believe this is generally the appropriate level for evaluating the
competitiveness of our compensation. As mentioned earlier, because of Mr. James experience,
performance and tenure in his position, his base salary is set at a higher level in the range.
Increases in salaries are discretionary based on the nature and responsibilities of the position,
individual performance, changes in the market compensation levels and the other factors set forth
above. The salaries paid to our named executive officers for 2007 and 2006 are set forth in the
Summary Compensation Table in the Salary column.
To further our goal of aligning the executives interests to those of our shareholders, we
generally reward superior performance through our bonus program and long-term equity-based
incentives rather than base pay.
Our short-term incentive program is designed to motivate our executives, including the named
executive officers, and reward them with cash payments for achieving quantifiable near term
business results. The goal of this program is to directly link performance and payment, and reward
behaviors that create value for our shareholders, by comparing financial results to pre-established
objective performance targets. Payment of the bonus is based on both the performance of our
company, specific divisions or business units or a combination of these, as applicable, and the
performance of the named executive officer individually.
As described in more detail below, we set the target levels for average annual bonuses at
competitive market levels consistent with similarly-situated executives in the compensation
surveys. Average performance yields a bonus that is average with the compensation surveys. We
then provide significant upside opportunity and downside risk to actual bonus payments based on
actual financial performance of our company or the relevant business unit, as appropriate. Our
evaluation of the companys annual financial performance results from our analysis of how our EP
measures against targeted EP for the year. Our method for establishing the EP goal each year is
discussed below.
Economic Profit Methodology
The Compensation Committee establishes EP goals annually at its February meeting based on the
average of the previous years actual EP and the previous years EP goal for our company and for
each of its divisions. Goals are then adjusted to reflect the short-term impact of significant
strategic and growth initiatives. These adjustments are applied in order to provide appropriate
incentives and rewards for pursuing such initiatives. An EP goal represents the amount of EP that
must be earned in order for an Average Annual Bonus (average bonus or bonus) to be paid. The
average bonus is expressed as a percentage of base salary and established for each named executive
officer based on the comparison group set forth in the compensation surveys. A chart reflecting the
named executive officers and the average bonuses expressed as a percentage of base salary and the
percentage of average bonus paid appears on the following page. In the case of the Chief Executive
Officer, the average bonus is equal to 100% of base salary. To illustrate how the average bonus
works, if the corporate EP goal is met, the Chief Executive Officer would be eligible to receive a
cash bonus of 100% of his base salary. The bonus paid for performance above or below the EP goal is
calculated according to a scale that is determined each year. The scale is not a pro rata increase
or decrease in the percentage of the goal that is achieved. Instead, the bonus is increased to
reward stretch performance when the EP goal is exceeded. The bonus is reduced for performance below
the EP goal, and can be reduced to $0 for poor performance. Regardless of performance under the EP
analysis, however, the payments to EIP
29
participants cannot exceed the bonus pool established by the terms of EIP. The Compensation
Committee also uses EP to determine how to exercise its discretion to reduce the maximum bonus
payable to EIP participants.
With respect to our 2007 fiscal year, the EP target was set at $140,542,000. For our 2007 fiscal
year, the companys results under the EP formula (described above) exceeded the EP performance goal
by $121,852,000. This resulted in bonus payments that were greater than average annual bonus
targets.
Annually at its February meeting, the Compensation Committee establishes the identity of
participants for the EIP and their percentage allocation of a bonus pool established under the EIP.
The EIP was approved by our shareholders in 2001 and is structured so that cash bonus payments will
satisfy the requirements for performance-based compensation under Section 162(m) of the Internal
Revenue Code. The bonus pool under the EIP is calculated as 4% of our consolidated net earnings in
excess of 6% of the net capital for the prior year. This is a maximum bonus potential. Each year,
the Compensation Committee analyzes the EP results and, if warranted, reduces the actual payments
made under the EIP.
For 2007, all of the named executive officers participated in the EIP and the Compensation
Committee allocated 40% of the EIP bonus pool to the Chief Executive Officer and 15% to each of the
other participants. Under the formula in the EIP, a bonus pool of $12.6 million was earned.
However, the Compensation Committee compared this performance to the results under EP and exercised
its discretion to reduce this amount to provide an actual bonus pool of $5,268,000, or 41.7% of the
maximum amount that was payable under the EIP.
For 2007, the short-term bonuses paid to the named executive officers, as expressed as a percentage
of their average annual bonus were as follows:
|
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|
|
|
|
|
|
|
|
|
Amount of |
|
|
|
|
Average Annual |
|
|
|
|
Bonus Expressed |
|
% of Average |
|
|
as a Percentage of |
|
Annual Bonus |
|
|
Base Salary |
|
Paid |
Donald M. James |
|
|
100 |
% |
|
|
242 |
% |
Guy M. Badgett |
|
|
60 |
% |
|
|
232 |
% |
Daniel F. Sansone |
|
|
60 |
% |
|
|
232 |
% |
William F. Denson, III |
|
|
55 |
% |
|
|
232 |
% |
Ronald G. McAbee |
|
|
60 |
% |
|
|
269 |
% |
For actual short-term bonus amounts paid to each named executive officer for 2007, refer to the
column headed Non-Equity Incentive Plan Compensation in the Summary Compensation Table.
|
Ø |
|
Long-Term Equity Based Incentives |
Our long-term equity-based incentive compensation program is designed to reward the named executive
officers based on the performance of our company over a period of years, by providing potentially
significant payments based on the creation of value for our shareholders and by improving EP
performance. The goals of the long-term incentive program are to:
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motivate financial performance over the long-term; |
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recognize and reward superior financial performance of the company; |
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provide a retention element to our compensation program; |
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help executive officers accumulate shares of Vulcan stock to ensure congruence with our
shareholders interest; and |
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|
promote compliance with the stock ownership guidelines for executives. |
2007 Long-Term Incentive Grants. The Compensation Committee has established a
standard percentage of base salary that it uses when making a long-term award to each named
executive officer. The standard percentage is based principally upon the compensation analysis
described in the Overview above. The Committee sets the standard at approximately the
50th percentile of the awards made to individuals with similar positions. The award
value of the long-term incentive grant for each of the named executive officers is determined by
multiplying the applicable standard percentage by the base salary
30
of each named executive officer. The standard percentages for each of our named executive officers
is set forth in the table below.
|
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|
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|
Standard Long-Term |
|
|
Award Expressed as a |
|
|
Percentage of Base Salary |
Donald M. James |
|
|
225 |
% |
Guy M. Badgett |
|
|
100 |
% |
Daniel F. Sansone |
|
|
100 |
% |
William F. Denson, III |
|
|
75 |
% |
Ronald G. McAbee |
|
|
100 |
% |
The 2006 Omnibus Long-Term Incentive Plan (the Omnibus Plan) provides that the Compensation
Committee, in its discretion, may grant long-term awards in the form of a variety of instruments,
including, among others, stock options, SOSARS (Stock Only Stock Appreciation Rights), PSUs
(Performance Share Units) and restricted stock. Subject to the limitations under the Omnibus Plan,
the Compensation Committee may adjust the amount awarded to reflect our companys past performance,
based on total shareholder return or other quantifiable financial measures deemed appropriate by
the Compensation Committee. Total shareholder return is computed as the average annual rate of
return using both stock price appreciation or depreciation and quarterly dividend reinvestment.
Stock price appreciation or depreciation is based on a point-to-point calculation, using
end-of-year data.
In 2007, the Committee granted a combination of SOSARS and PSUs to each of the named executive
officers, based on the award value that is described above. The number of units to be granted is
determined by valuing SOSARS and PSUs under valuation principles that are similar to Financial
Accounting Standard No. 123(R), Share-Based Payment. While the standard award value has been
adopted by the Committee, the Committee retains the discretion to make adjustments each year to the
number of units granted. In 2007, the Committee determined that it was appropriate to raise the
value of grants of SOSARS and PSUs by approximately 50% over the standard value due to the strong
financial performance of the Company for the 5-year period ending December 31, 2006. Expressed in terms of
their value, approximately two-thirds of the grant consisted of SOSARS and one-third consisted of
PSUs. No such increase in above the standard value was made in the awards granted in 2008, based on the financial performance for the five-year period ended December 31, 2007.
2007 Long-Term Incentive Payments. In February 2007, the Committee
authorized payment of the PSUs that were granted in 2004 and vested on December 31, 2006. Payout
was based on the companys 3-year average EP which was approximately 184% of target and its 3-year
average total shareholder return performance which was at the 77th percentile relative
to a comparison group that included the following companies:
|
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|
|
|
3M Company
|
|
Georgia Gulf Corporation
|
|
MeadWestvaco Corporation |
Ameron International Corporation
|
|
Georgia-Pacific Corporation
|
|
Northrop Grumman Corporation |
Armstrong Holdings Inc.
|
|
W. R. Grace & Co.
|
|
Olin Corporation |
Ahland Inc.
|
|
Granite Construction Incorporated
|
|
Pentair, Inc. |
Calgon Carbon Corporation
|
|
Great Lakes Chemical Corporation
|
|
Potlatch Corporation |
The Dow Chemical Company
|
|
Harris Corporation
|
|
PPG Industries, Inc. |
E.I. du Pont De Nemours & Co.
|
|
Harsco Corporation
|
|
Rohm and Haas Company |
Emerson Electric Co.
|
|
Hercules Incorporated
|
|
The Sherwin-Williams Company |
Engelhard Corporation
|
|
International Paper Corporation
|
|
The Southern Company |
Florida Rock Industries, Inc.
|
|
Lafarge North America, Inc.
|
|
The Stanley Works |
Fluor Corporation
|
|
Louisiana-Pacific Corporation
|
|
Temple-Inland Inc. |
FMC Corp.
|
|
Martin Marietta Materials, Inc.
|
|
Textron Inc. |
General Electric Company
|
|
Masco Corporation
|
|
Weyerhaeuser Company |
The following table reflects the goals against which performance was measured for payment of the
PSUs granted in 2004. The percentage payable is determined by the interpolation of each
performance factor. The Compensation Committee has the authority to exercise downward discretion
in determining payments.
31
|
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Three-year average |
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Economic |
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|
Profit |
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|
(As a percent |
|
Percentage of Performance Share Units |
|
of EP Goal) |
|
Payable |
|
175% or > |
|
|
100 |
|
|
|
150 |
|
|
|
200 |
|
150% |
|
|
75 |
|
|
|
125 |
|
|
|
175 |
|
100% |
|
|
50 |
|
|
|
100 |
|
|
|
150 |
|
50% |
|
|
25 |
|
|
|
75 |
|
|
|
125 |
|
25% or < |
|
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0 |
|
|
|
50 |
|
|
|
100 |
|
|
|
Three-year average Total Shareholder Return percentile rank
|
|
|
25th or < |
|
50th |
|
75th or > |
Timing of Equity-Based Incentive Compensation. In most years, including
2007, the Compensation Committee sets performance targets for long-term incentive grants for the
year at its February meeting. Payments, if any, pursuant to previously set performance targets are
also authorized at the February meeting. The establishment of incentive compensation goals and the
granting of equity-based awards have not been timed with the release of non-public material
information. Instead, goals and awards typically have been established at the February meeting.
Additional equity based incentive grants have been made to executive officers only upon hire or
promotion at various times throughout the year.
Stock Ownership Guidelines. In order to align the interests of the named executive
officers with our shareholders, and to promote a long-term focus for these officers, our company
has executive stock ownership guidelines for the officers of our company and its subsidiaries. The
guidelines are based on Compensation Strategies, Inc.s assessment of market practice. The stock
ownership requirements are higher for the Chief Executive Officer than the other named executive
officers for the reasons discussed previously under the section Overall Compensation Goals. All
of the named executive officers currently meet or exceed our ownership guidelines.
The guidelines for the named executive officers are expressed as a multiple of base salary as per
the table below:
|
|
|
|
|
|
|
Multiple of Salary |
Name |
|
Ownership Guidelines (1) |
Donald M. James |
|
|
7x |
|
Guy M. Badgett |
|
|
3x |
|
Daniel F. Sansone |
|
|
3x |
|
William F. Denson, III |
|
|
3x |
|
Ronald G. McAbee |
|
|
3x |
|
|
|
|
(1) |
|
Types of ownership counted toward the guidelines include the following: |
|
|
|
Stock-based thrift plan holdings; |
|
|
|
|
Direct holdings; |
|
|
|
|
Indirect holdings, such as shares owned by a family member, shares held in trust for the
benefit of the named executive officer or family member, or shares for which such officer
is trustee; |
|
|
|
|
Stock-based holdings in the deferred compensation and excess benefit plans; and, |
|
|
|
|
Vested in-the-money options represented by the spread between the exercise price and the
fair market value of options. |
Newly elected officers have five years to meet the applicable ownership requirement. Compliance
with the ownership guidelines is reviewed yearly by the Chief Executive Officer.
32
|
Ø |
|
Benefits and Perquisites |
Named executive officers participate in each of the benefit plans or arrangements that are made
available to all salaried employees generally, including medical and dental benefits, life,
accidental death and disability insurance, and pension and savings plans. With respect to
disability benefits, our company pays 100% of the premiums for individual long-term disability
policies that insure base pay and target bonus in excess of that insured under the group contract
up to $500,000 in total. In addition, the named executive officers participate in the Unfunded
Supplemental Benefit Plan and have change-in-control agreements (as described below). The Chief
Executive Officer also has a Supplemental Executive Retirement Agreement which is discussed in more
detail below.
We provide these perquisites as a means of providing additional compensation to our Chief Executive
Officer and the other named executive officers through benefits that are convenient for them in
light of the demands of their positions. The Compensation Committee reviews our policies and
determines whether and to what extent these perquisites should be continued.
We provide company-owned cars to the named executives for their use. Additionally, we pay for the
insurance, maintenance and fuel for such vehicles. Executives reimburse us for personal use. We
also make the company-owned aircraft available to the Chief Executive Officer and senior executives
for business travel. The aircraft is available to the Chief Executive Officer and the other named
executive officers for personal use at the expense of the named executive officer. The amount
reported for use of the aircraft represents the incremental cost and not the total cost of
providing the benefit and not the value of the benefit to the Chief Executive Officer. With
respect to the personal use of corporate aircraft, we have calculated the value of the flight to
the passenger based on Internal Revenue Service regulations. In 2007, our Chief Executive Officer
used company-owned aircraft for personal use at a calculated value of $2,399. None of the other
named executive officers used the aircraft for personal use.
We do not provide other perquisites to the named executive officers such as club memberships or
financial planning services.
|
Ø |
|
Change in Control Protection |
Each of our named executive officers has change in control protection that provides for severance
payments and accelerated vesting or payment of equity-based incentive awards. We provide such
protections upon a change in control in order to minimize disruptions during a pending or
anticipated change in control. In 2007, we did not factor in the amount of severance payments or
the number of incentive awards subject to acceleration of vesting under the change in control
agreements with respect to the other compensation elements to which the named executive officers
are entitled.
33
|
Ø |
|
Retirement and Pension Benefits |
Our company provides the following retirement and pension benefits to its named executive officers:
|
|
|
Benefit |
|
Reason for Providing Benefit |
Retirement Income Plan
|
|
This pension plan is available to all
salaried employees of our company hired
prior to July 15, 2007. |
|
|
|
Unfunded Supplemental Benefit Plan
|
|
The Unfunded Supplemental Benefit Plan
provides for benefits that are not permitted under the Pension Plan and the 401(k)
plan due to Internal Revenue pay and benefit limitations for qualified plans.
This plan is designed to provide
retirement income benefits, as a
percentage of pay, which are similar
for all employees regardless of
compensation levels. The Unfunded
Supplemental Benefit Plan eliminates
the effect of tax limitations on the
payment of retirement benefits, except
to the extent that it is an unfunded
plan and a general obligation of our
company. |
|
|
|
Supplemental Executive
Retirement Agreement
|
|
Only Mr. James has a SERA. The effect
of the SERA is to give Mr. James 1.2
years of service credit for every year
he participates in the Retirement
Income Plan. The purpose of the SERA is
to provide an incentive and retention
device. The Plan will provide Mr.
James with a full career pension in the
event that he works until age 65. |
A discussion of all retirement benefits provided to the named executive officers is set forth under
the heading Retirement and Pension Benefits on page 41.
|
Ø |
|
Compensation Consultant |
In 2007, our company engaged Compensation Strategies, Inc. (Compensation Strategies) to provide
independent compensation consultation to the Committee. The Committee is specifically authorized
in its charter to retain external advisors and consultants at our companys expense. The Committee
has elected to engage Compensation Strategies directly in 2008 and going forward.
In 2007, Compensation Strategies provided research, market data, survey information and
compensation program design expertise to the Committee. Compensation Strategies provided advice to
the Committee on all major aspects of executive compensation, including the competitiveness of our
companys compensation program compared to similarly-sized companies. Last year representatives
from Compensation Strategies attended three meetings of the Committee, and participated in one
executive session of the Committee without members of management in attendance.
Compensation Strategies reports to the Committee, although they meet with management from time to
time to discuss compensation initiatives. The Committee has not requested, and does not intended
to request, that Compensation Strategies provide any non-compensation related services to our
company. Compensation Strategies does not have any business relationships with our company beyond
the services provided as the independent consultant to the Committee.
34
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation of our principal executive
officer, principal financial officer, and our three other most highly compensated executive
officers employed as of December 31, 2007, determined on the basis of their total compensation for
2007.
In accordance with SEC rules, this table reflects compensation of the named executive officers only
for the two most recently completed fiscal years. Information for years prior to 2006 presented
under previous SEC rules is available in our previous filings, which can be obtained from the SECs
website at www.sec.gov under Legacy Vulcan Corp.
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Change in |
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Pension Value |
|
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Non-Equity |
|
And |
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Incentive Plan |
|
Nonqualified |
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|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Compensation |
|
Deferred |
|
All Other |
|
|
Name and |
|
|
|
|
|
Salary |
|
Bonus |
|
Awards (1) |
|
Awards (1) |
|
(2) |
|
Compensation |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
Earnings ($)(3) |
|
($)(4) |
|
($) |
Donald M. James |
|
|
2007 |
|
|
$ |
1,187,500 |
|
|
$ |
0 |
|
|
$ |
1,532,011 |
|
|
$ |
2,165,457 |
|
|
$ |
2,900,000 |
|
|
$ |
4,461,801 |
|
|
$ |
418,376 |
|
|
$ |
12,665,145 |
|
Chairman and Chief
Executive Officer |
|
|
2006 |
|
|
|
1,114,168 |
|
|
|
0 |
|
|
|
3,406,064 |
|
|
|
4,366,486 |
|
|
|
3,100,000 |
|
|
|
3,703,312 |
|
|
|
332,457 |
|
|
|
16,022,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guy M. Badgett, III |
|
|
2007 |
|
|
$ |
470,008 |
|
|
$ |
0 |
|
|
$ |
233,855 |
|
|
$ |
398,851 |
|
|
$ |
660,000 |
|
|
$ |
1,065,078 |
|
|
$ |
96,652 |
|
|
$ |
2,924,444 |
|
Senior Vice
President,
Construction
Materials Group |
|
|
2006 |
|
|
|
441,674 |
|
|
|
0 |
|
|
|
538,936 |
|
|
|
268,281 |
|
|
|
725,000 |
|
|
|
287,749 |
|
|
|
73,296 |
|
|
|
2,334,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel F. Sansone |
|
|
2007 |
|
|
$ |
470,008 |
|
|
$ |
0 |
|
|
$ |
211,274 |
|
|
$ |
361,739 |
|
|
$ |
660,000 |
|
|
$ |
451,941 |
|
|
$ |
86,328 |
|
|
$ |
2,241,290 |
|
Senior Vice
President and Chief
Financial Officer |
|
|
2006 |
|
|
|
442,508 |
|
|
|
0 |
|
|
|
353,528 |
|
|
|
184,008 |
|
|
|
690,000 |
|
|
|
360,514 |
|
|
|
67,137 |
|
|
|
2,097,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William F. Denson, |
|
|
2007 |
|
|
$ |
376,670 |
|
|
$ |
0 |
|
|
$ |
289,075 |
|
|
$ |
536,482 |
|
|
$ |
484,000 |
|
|
$ |
128,299 |
|
|
$ |
72,390 |
|
|
$ |
1,886,916 |
|
III, Senior Vice
President, General
Counsel |
|
|
2006 |
|
|
|
357,500 |
|
|
|
0 |
|
|
|
343,164 |
|
|
|
178,919 |
|
|
|
510,000 |
|
|
|
607,864 |
|
|
|
55,495 |
|
|
|
2,052,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. McAbee |
|
|
2007 |
|
|
$ |
370,833 |
|
|
$ |
0 |
|
|
$ |
165,197 |
|
|
$ |
302,976 |
|
|
$ |
564,000 |
|
|
$ |
1,130,219 |
|
|
$ |
155,663 |
|
|
$ |
2,688,888 |
|
Senior Vice
President,
Construction
Materials West |
|
|
2006 |
|
|
|
409,376 |
|
|
|
0 |
|
|
|
309,339 |
|
|
|
140,689 |
|
|
|
645,000 |
|
|
|
539,357 |
|
|
|
57,205 |
|
|
|
2,100,966 |
|
|
|
|
(1) |
|
Pursuant to the rules of the Securities and Exchange Commission, we have provided a
grant date fair value for Stock Awards and Option Awards in accordance with the provisions of
Statement of Financial Accounting Standards No. 123(R), Share-based Payments. For Option
Awards, 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 options expected term. The dividend yield assumption is based on our
historical dividend payouts. The volatility assumption is based on the historical volatility
of our common stock over a period equal to the options expected term and the market-based
implied volatility derived from options trading on our common stock. The expected term of
options granted is based on historical experience and expectations about future exercises and
represents the period of time that options granted are expected to be outstanding. |
|
|
|
For Performance Share Awards, the fair value is estimated on the date of grant using a Monte Carlo
simulation model. For Deferred Stock Units, the fair value is estimated on the date of grant
based on the market price of our stock on the grant date. We do not believe that the fair values
estimated on the grant date, either by the Black-Scholes model or any other model, are necessarily
indicative of the values that might eventually be realized by an executive. |
|
(2) |
|
The Executive Incentive Plan (EIP) payments were made on March 13, 2008. See
discussion of EIP plan under heading Compensation Discussion and Analysis above. Messrs.
Sansone, Denson and McAbee have deferral elections in place for their 2007 EIP payments made
in 2008. |
|
(3) |
|
Includes only the amount of change in pension value since our company does not
provide any above market earnings on deferred compensation. |
35
|
|
|
(4) |
|
Includes personal use of company auto and aircraft, nonqualified thrift plan
contributions, company-paid life insurance premiums, taxable relocation expense and deferred
stock unit dividend equivalents granted in 2007, as set forth in the following table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
Personal |
|
Personal |
|
|
|
|
|
|
Non-Qualified |
|
Qualified |
|
Paid Life |
|
DSU |
|
Use |
|
Use |
|
|
|
|
|
|
Thrift Plan |
|
Thrift Plan |
|
Insurance |
|
Dividend |
|
of Company |
|
of Company |
|
Relocation |
|
|
Name |
|
Contributions |
|
Contributions |
|
Premiums |
|
Equivalents |
|
Auto |
|
Aircraft |
|
Expense |
|
Total |
D.M. James |
|
$ |
234,383 |
|
|
$ |
13,400 |
|
|
$ |
1,440 |
|
|
$ |
164,307 |
|
|
$ |
2,447 |
|
|
$ |
2,399 |
|
|
$ |
0 |
|
|
$ |
418,376 |
|
G.M. Badgett |
|
|
51,234 |
|
|
|
13,400 |
|
|
|
1,440 |
|
|
|
28,840 |
|
|
|
1,738 |
|
|
|
0 |
|
|
|
0 |
|
|
|
96,652 |
|
D.F. Sansone |
|
|
53,110 |
|
|
|
13,400 |
|
|
|
1,440 |
|
|
|
16,890 |
|
|
|
1,488 |
|
|
|
0 |
|
|
|
0 |
|
|
|
86,328 |
|
W.F. Denson |
|
|
33,967 |
|
|
|
13,400 |
|
|
|
1,440 |
|
|
|
21,601 |
|
|
|
1,982 |
|
|
|
0 |
|
|
|
0 |
|
|
|
72,390 |
|
R.G. McAbee |
|
|
43,336 |
|
|
|
13,400 |
|
|
|
1,440 |
|
|
|
15,397 |
|
|
|
260 |
|
|
|
0 |
|
|
|
81,830 |
|
|
|
155,663 |
|
The following table sets forth the grants of plan-based awards in 2007 to the named executive
officers:
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
Awards: |
|
Exercise |
|
Closing |
|
Grant Date |
|
|
|
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts |
|
of |
|
Number of |
|
or Base |
|
Market |
|
Fair Value |
|
|
|
|
|
|
Under Non-Equity Incentive Plan |
|
Under Equity Incentive Plan |
|
Stock |
|
Securities |
|
Price of |
|
Price of |
|
of Stock |
|
|
|
|
|
|
Awards |
|
Awards |
|
or |
|
Underlying |
|
Option |
|
Underlying |
|
and Option |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units |
|
Options |
|
Awards |
|
Security |
|
Awards |
Name |
|
Grant Date |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($/Sh)(1) |
|
($/Sh) |
|
($)(2) |
D.M. James |
|
|
2/8/2007 |
|
|
|
0 |
|
|
|
1,200,000 |
|
|
|
5,051,000 |
|
|
|
0 |
|
|
|
15,000 |
|
|
|
30,000 |
|
|
|
0 |
|
|
|
111,250 |
|
|
|
109.20 |
|
|
$ |
109.20 |
|
|
|
5,389,763 |
|
G.M. Badgett |
|
|
2/8/2007 |
|
|
|
0 |
|
|
|
285,005 |
|
|
|
1,893,000 |
|
|
|
0 |
|
|
|
2,720 |
|
|
|
5,440 |
|
|
|
0 |
|
|
|
20,290 |
|
|
|
109.20 |
|
|
|
109.20 |
|
|
|
981,330 |
|
D.F. Sansone |
|
|
2/8/2007 |
|
|
|
0 |
|
|
|
285,005 |
|
|
|
1,893,000 |
|
|
|
0 |
|
|
|
2,940 |
|
|
|
5,880 |
|
|
|
0 |
|
|
|
22,040 |
|
|
|
109.20 |
|
|
|
109.20 |
|
|
|
1,064,424 |
|
W.F. Denson |
|
|
2/8/2007 |
|
|
|
0 |
|
|
|
209,002 |
|
|
|
1,893,000 |
|
|
|
0 |
|
|
|
1,770 |
|
|
|
3,540 |
|
|
|
0 |
|
|
|
13,640 |
|
|
|
109.20 |
|
|
|
109.20 |
|
|
|
653,504 |
|
R.G. McAbee |
|
|
2/8/2007 |
|
|
|
0 |
|
|
|
210,000 |
|
|
|
1,893,000 |
|
|
|
0 |
|
|
|
2,620 |
|
|
|
5,240 |
|
|
|
0 |
|
|
|
19,560 |
|
|
|
109.20 |
|
|
|
109.20 |
|
|
|
945,797 |
|
|
|
|
(1) |
|
Exercise price was determined using the closing price of the common stock on the
grant date as per the 2006 Omnibus Long-Term Incentive Plan (2006 LTIP). |
|
(2) |
|
Amount represents the grant date fair values for the SOSARs and PSUs calculated in
accordance with SFAS 123(R). The grant date fair value of $34.17 for the SOSARs was
calculated using a Black-Scholes pricing model. The assumptions used to determine the value
of the options include: an expected volatility of 27.46% (derived using the daily closing
stock prices for the seven years preceding the grant date), a dividend yield of 2.04%, and
interest rate of 4.73% (the rate of a U.S. Treasury note with a maturity date on seven years
from the grant date), and an expected time of exercise of seven years from grant date. The
grant date fair value of $105.89 for the PSUs was calculated using a Monte Carlo simulation
model. |
36
Certain information concerning each exercise of stock option and each vesting of stock during the
fiscal year ended December 31, 2007, for each of the named executive officers on an aggregate basis
is set forth in the table below.
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
Number of |
|
Value |
|
Shares |
|
Value |
|
|
Shares |
|
Realized on |
|
Acquired on |
|
Realized |
|
|
Acquired on |
|
Exercise ($) |
|
Vesting (#) |
|
on Vesting |
Name |
|
Exercise (#) |
|
(1) |
|
(2) |
|
($) (3) |
D.M. James |
|
|
60,000 |
|
|
|
5,278,698 |
|
|
|
66,719 |
|
|
|
7,271,213 |
|
G.M. Badgett |
|
|
21,225 |
|
|
|
1,807,918 |
|
|
|
10,939 |
|
|
|
1,119,275 |
|
D.F. Sansone |
|
|
23,025 |
|
|
|
1,585,059 |
|
|
|
6,672 |
|
|
|
727,133 |
|
W.F. Denson |
|
|
24,000 |
|
|
|
1,862,400 |
|
|
|
6,895 |
|
|
|
752,756 |
|
R.G. McAbee |
|
|
11,175 |
|
|
|
810,138 |
|
|
|
6,564 |
|
|
|
715,434 |
|
|
|
|
(1) |
|
Calculated by multiplying the difference between the fair market value of the common
stock on the date of exercise and the option exercise price by the number of options
exercised. |
|
(2) |
|
Represents the Deferred Stock Units (DSUs) and the common stock portion of
Performance Share Units (PSUs) earned under the 1996 LTIP. DSUs were paid out in 100% stock
and PSUs were paid out in 50% cash and in 50% stock. |
|
(3) |
|
Calculated by multiplying the number of units vested by the high/low average price
of the common stock on the vesting date. |
|
Ø |
|
Deferred Compensation Plan |
Our Executive Deferred Compensation Plan was established in 1998 to allow executives to defer a
portion of their current years 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. Vulcan 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 which may be necessary
to true-up account balances with deemed investment results. The plan allows executives with annual
compensation (base salary and average annual short-term bonus) of $180,000 or more, to defer
receipt of up to 50% of salary, up to 100% of annual cash bonus and beginning in 2007, up to 100%
(net of taxes) of long-term incentive awards which are not excluded from deferral eligibility by
the Internal Revenue Code (or regulations thereunder), as described below, until a date selected by
the participant. The amounts deferred are deemed invested as designated by participants in our
company 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 companys 401(k) plan. The
Plan does not offer any guaranteed return to participants.
The Plan is funded by a rabbi trust arrangement owned by our company which holds assets that
correspond to the deemed investments of the Plan participants. Participants have an unsecured
contractual commitment from our company to pay when due the amounts to which the participants are
entitled. Upon the death or disability of a participant or upon a change in control of our company
(as defined on page 43 of this Proxy Statement), all deferred amounts and all earnings related
thereto will be paid to the participant in a single lump sum cash payment.
Effective for deferrals made after January 1, 2007, the Plan permits executives to defer
Performance Share Units (PSU) and Deferred Stock Units (DSU) into the Plan which would, absent such
deferral, be distributed to the executives. The PSU and DSU deferrals, other than described below,
will be credited to the Plan participant accounts in the form of phantom stock and an equal number
of shares of Vulcan common stock would be deposited by Vulcan in the rabbi trust. The only
exceptions are the PSU distributions that were paid in 2007 which were distributed one-half in cash
and one-half in stock, and accordingly, deferrals were proportionately allocated between the cash
account and the stock account. Deferrals of long-term incentive compensation payments are invested
in phantom stock of our company and may not be reallocated to an alternative investment option.
37
The following table shows the contributions, earnings, distributions and year-end account values
for the named executives under the Plan.
|
|
|
|
|
|
|
|
|
|
Nonqualified Deferred Compensation Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant |
|
|
|
|
|
|
|
|
|
Aggregate |
|
|
Executive |
|
Contributions in |
|
Aggregate |
|
Aggregate |
|
Balance at |
|
|
Contributions in |
|
last Fiscal |
|
Earnings in last |
|
Withdrawals/ |
|
Last Fiscal |
|
|
Last Fiscal Year |
|
Year(1) |
|
Fiscal Year(1) |
|
Distributions |
|
Year End(2) |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
D.M. James |
|
|
957,500 |
|
|
|
0 |
|
|
|
(312,068 |
) |
|
|
0 |
|
|
|
2,739,763 |
|
G.M. Badgett |
|
|
127,110 |
|
|
|
0 |
|
|
|
(40,299 |
) |
|
|
0 |
|
|
|
121,672 |
|
D.F. Sansone |
|
|
702,703 |
|
|
|
0 |
|
|
|
12,225 |
|
|
|
0 |
|
|
|
1,758,100 |
|
W.F. Denson |
|
|
1,030,089 |
|
|
|
0 |
|
|
|
11,132 |
|
|
|
0 |
|
|
|
2,095,745 |
|
R.G. McAbee |
|
|
438,893 |
|
|
|
0 |
|
|
|
(37,033 |
) |
|
|
0 |
|
|
|
401,860 |
|
|
|
|
(1) |
|
These amounts are not reported in the Summary Compensation Table. |
|
(2) |
|
Includes both the executive contributions and the earnings on those contributions.
The amounts contributed by the executives are included in the amounts reported in the Summary
Compensation Table in the year of deferral. The earnings are not reported as our company does
not provide for above market earnings on deferred compensation. |
38
Outstanding Equity Awards at Fiscal Year-End
Certain information concerning unexercised options, stock that has not vested and equity incentive
plan awards for each of the named executive officers outstanding as of the end of the fiscal year
ended December 31, 2007 is set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
Payout |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
Value of |
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
Number |
|
Market |
|
Number of |
|
Unearned |
|
|
Number of |
|
Number of |
|
Awards: |
|
|
|
|
|
|
|
|
|
of Shares |
|
Value of |
|
Unearned Shares, |
|
Shares, |
|
|
Securities |
|
Securities |
|
Number of |
|
|
|
|
|
|
|
|
|
or Units |
|
Shares or |
|
Units or |
|
Units or |
|
|
Underlying |
|
Underlying |
|
Securities |
|
|
|
|
|
|
|
|
|
of Stock |
|
Units of |
|
Other |
|
Other |
|
|
Unexercised |
|
Unexercised |
|
Underlying |
|
|
|
|
|
|
|
|
|
That Have |
|
Stock That |
|
Rights That |
|
Rights That |
|
|
Options |
|
Options |
|
Unexercised |
|
Option |
|
Option |
|
Not |
|
Have Not |
|
Have Not |
|
Have Not |
|
|
(#) |
|
(#) |
|
Unearned |
|
Exercise |
|
Expiration |
|
Vested (#) |
|
Vested ($) |
|
Vested (#) |
|
Vested ($) |
Name |
|
(Exercisable) |
|
(Unexerciseable) |
|
Options (#) |
|
Price ($) |
|
Date |
|
(11) |
|
(13) |
|
(12) |
|
(13) |
D.M. James |
|
|
75,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
32.9467 |
|
|
|
2/12/2008 |
|
|
|
26,880 |
(6) |
|
$ |
2,125,939 |
|
|
|
71,568 |
(9) |
|
$ |
5,660,313 |
|
|
|
|
195,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.1667 |
|
|
|
2/11/2009 |
|
|
|
32,976 |
(7) |
|
$ |
2,608,072 |
|
|
|
30,000 |
(10) |
|
$ |
2,372,700 |
|
|
|
|
220,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
42.3438 |
|
|
|
2/10/2010 |
|
|
|
45,912 |
(8) |
|
$ |
3,631,180 |
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
44.9000 |
|
|
|
2/9/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.9500 |
|
|
|
2/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,000 |
(1) |
|
|
29,000 |
|
|
|
|
|
|
$ |
31.4650 |
|
|
|
2/13/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,000 |
(2) |
|
|
52,000 |
|
|
|
|
|
|
$ |
46.7600 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,600 |
(3) |
|
|
58,400 |
|
|
|
|
|
|
$ |
57.0950 |
|
|
|
2/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,000 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
68.6300 |
|
|
|
12/8/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,800 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
69.3100 |
|
|
|
1/24/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
111,250 |
|
|
|
|
|
|
$ |
109.200 |
|
|
|
2/8/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.M. Badgett |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
32.9467 |
|
|
|
2/12/2008 |
|
|
|
4,480 |
(6) |
|
$ |
354,323 |
|
|
|
8,548 |
(9) |
|
$ |
676,061 |
|
|
|
|
30,225 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.1667 |
|
|
|
2/11/2009 |
|
|
|
5,496 |
(7) |
|
$ |
434,679 |
|
|
|
5,440 |
(10) |
|
$ |
430,250 |
|
|
|
|
38,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
42.3438 |
|
|
|
2/10/2010 |
|
|
|
8,649 |
(8) |
|
$ |
684,049 |
|
|
|
|
|
|
|
|
|
|
|
|
31,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
44.9000 |
|
|
|
2/9/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.9500 |
|
|
|
2/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,400 |
(1) |
|
|
5,600 |
|
|
|
|
|
|
$ |
31.4650 |
|
|
|
2/13/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(2) |
|
|
10,000 |
|
|
|
|
|
|
$ |
46.7600 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,600 |
(3) |
|
|
10,400 |
|
|
|
|
|
|
$ |
57.0950 |
|
|
|
2/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,000 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
68.6300 |
|
|
|
12/8/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
|
20,290 |
|
|
|
|
|
|
$ |
109.200 |
|
|
|
2/8/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.F. Sansone |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
32.9467 |
|
|
|
2/12/2008 |
|
|
|
2,689 |
(6) |
|
$ |
212,673 |
|
|
|
4,572 |
(9) |
|
$ |
361,599 |
|
|
|
|
17,775 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.1667 |
|
|
|
2/11/2009 |
|
|
|
3,298 |
(7) |
|
$ |
260,839 |
|
|
|
3,976 |
(9) |
|
$ |
314,462 |
|
|
|
|
29,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
42.3438 |
|
|
|
2/10/2010 |
|
|
|
4,912 |
(8) |
|
$ |
388,490 |
|
|
|
5,880 |
(10) |
|
$ |
465,049 |
|
|
|
|
19,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
44.9000 |
|
|
|
2/9/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.9500 |
|
|
|
2/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
(1) |
|
|
3,000 |
|
|
|
|
|
|
$ |
31.4650 |
|
|
|
2/13/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200 |
(2) |
|
|
4,800 |
|
|
|
|
|
|
$ |
46.7600 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,400 |
(3) |
|
|
5,600 |
|
|
|
|
|
|
$ |
57.0950 |
|
|
|
2/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200 |
(3) |
|
|
4,800 |
|
|
|
|
|
|
$ |
54.8350 |
|
|
|
5/13/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,000 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
68.6300 |
|
|
|
12/8/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
|
22,040 |
|
|
|
|
|
|
$ |
109.200 |
|
|
|
2/8/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Payout |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number of |
|
Value of |
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
Number |
|
Market |
|
|
|
Unearned |
|
|
Number of |
|
Number of |
|
Awards: |
|
|
|
|
|
|
|
|
|
of Shares |
|
Value of |
|
Unearned Shares, |
|
Shares, |
|
|
Securities |
|
Securities |
|
Number of |
|
|
|
|
|
|
|
|
|
or Units |
|
Shares or |
|
Units or |
|
Units or |
|
|
Underlying |
|
Underlying |
|
Securities |
|
|
|
|
|
|
|
|
|
of Stock |
|
Units of |
|
Other |
|
Other |
|
|
Unexercised |
|
Unexercised |
|
Underlying |
|
|
|
|
|
|
|
|
|
That Have |
|
Stock That |
|
Rights That |
|
Rights That |
|
|
Options |
|
Options |
|
Unexercised |
|
Option |
|
Option |
|
Not |
|
Have Not |
|
Have Not |
|
Have Not |
|
|
(#) |
|
(#) |
|
Unearned |
|
Exercise |
|
Expiration |
|
Vested (#) |
|
Vested ($) |
|
Vested (#) |
|
Vested ($) |
Name |
|
(Exercisable) |
|
(Unexerciseable) |
|
Options (#) |
|
Price ($) |
|
Date |
|
(11) |
|
(13) |
|
(12) |
|
(13) |
W.F. Denson |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
32.9467 |
|
|
|
2/12/2008 |
|
|
|
3,584 |
(6) |
|
$ |
283,458 |
|
|
|
5,169 |
(9) |
|
$ |
408,816 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.1667 |
|
|
|
2/11/2009 |
|
|
|
4,398 |
(7) |
|
$ |
347,838 |
|
|
|
3,540 |
(10) |
|
$ |
279,979 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
42.3438 |
|
|
|
2/10/2010 |
|
|
|
5,873 |
(8) |
|
$ |
464,496 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
44.9000 |
|
|
|
2/9/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.9500 |
|
|
|
2/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,600 |
(1) |
|
|
3,400 |
|
|
|
|
|
|
$ |
31.4650 |
|
|
|
2/13/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
(2) |
|
|
6,000 |
|
|
|
|
|
|
$ |
46.7600 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,200 |
(3) |
|
|
6,800 |
|
|
|
|
|
|
$ |
57.0950 |
|
|
|
2/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
68.6300 |
|
|
|
12/8/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
13,640 |
|
|
|
|
|
|
$ |
109.200 |
|
|
|
2/8/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.G. McAbee |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
32.9467 |
|
|
|
2/12/2008 |
|
|
|
2,689 |
(6) |
|
$ |
212,673 |
|
|
|
4,970 |
(9) |
|
$ |
393,077 |
|
|
|
|
11,850 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.1667 |
|
|
|
2/11/2009 |
|
|
|
3,298 |
(7) |
|
$ |
260,839 |
|
|
|
5,240 |
(10) |
|
$ |
414,432 |
|
|
|
|
23,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
42.3438 |
|
|
|
2/10/2010 |
|
|
|
3,844 |
(8) |
|
$ |
304,022 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
44.9000 |
|
|
|
2/9/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
0 |
|
|
|
|
|
|
$ |
45.9500 |
|
|
|
2/7/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,800 |
(1) |
|
|
2,200 |
|
|
|
|
|
|
$ |
31.4650 |
|
|
|
2/13/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
(2) |
|
|
6,000 |
|
|
|
|
|
|
$ |
46.7600 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
(3) |
|
|
6,000 |
|
|
|
|
|
|
$ |
57.0950 |
|
|
|
2/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
(4) |
|
|
0 |
|
|
|
|
|
|
$ |
68.6300 |
|
|
|
12/8/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
(5) |
|
19,560 |
|
|
|
|
|
|
$ |
109.200 |
|
|
|
2/8/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options in footnotes 1 through 3 vest at a rate of 20% per year in years 1 5.
|
(1) |
|
Options with vesting dates of 1/1/04, 1/1/05, 1/1/06, 1/1/07, and 1/1/08. |
|
|
(2) |
|
Options with vesting dates of 1/1/05, 1/1/06, 1/1/07, 1/1/08, and 1/1/09. |
|
|
(3) |
|
Options with vesting dates of 12/31/05, 12/31/06, 12/31/07, 12/31/08, and 12/31/09. |
|
|
(4) |
|
Options fully vested at grant date, with a three-year resale restriction. |
Options in footnote 5 vest at a rate of 33 1/3% per year in years 1 3.
|
(5) |
|
Options with vesting dates of 2/8/08, 2/8/09, and 2/8/10. |
Deferred Stock Units DSUs in footnotes 6 through 8 vest at the rate of 20% per year in years 6 -
10.
|
(6) |
|
DSUs with vesting dates of 3/1/07, 3/1/08, 31/09, 3/1/10, and 3/1/11. |
|
|
(7) |
|
DSUs with vesting dates of 3/1/08, 3/1/09, 31/10, 3/1/11, and 3/1/12. |
|
|
(8) |
|
DSUs with vesting dates of 3/1/09, 3/1/10, 31/11, 3/1/12, and 3/1/13. |
Performance Share Units PSUs in footnotes 9 10 cliff vest 100% after a three-year performance
period.
|
(9) |
|
PSUs with vesting date of 12/31/07. |
|
|
(10) |
|
PSUs with vesting date of 12/31/09. |
|
|
(11) |
|
DSUs include dividend equivalents through 12/31/07. |
|
|
(12) |
|
Vested PSUs adjusted for company performance through 12/31/07. Unvested PSUs adjusted
to maximum allowed under the agreements. |
|
|
(13) |
|
Used year end closing price of the common stock on the New York Stock Exchange on
December 31, 2007 to determine the market or payment value. |
40
Retirement and Pension Benefits
Generally all full-time, salaried employees of our company, including the named executive officers
that were hired prior to July 15, 2007, participate in our companys funded pension plan after
completing one year of service. Retirement benefits become payable as early as the date on which
participants both attain age 55 and complete one year of service.
The following table provides for each named executive the number of years of credit service and
present value of accumulated benefits as of December 31, 2007, under each plan in which the
executive participates. The narrative that follows this table provides a description of the
material features of each plan.
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Present |
|
|
|
|
|
|
|
|
Years of |
|
Value of |
|
Payments |
|
|
|
|
|
|
Credited |
|
Accumulated |
|
During Last |
|
|
|
|
|
|
Service |
|
Benefit |
|
Fiscal Year |
Name |
|
Plan Name |
|
(#) |
|
($) |
|
($) |
D.M. James |
|
Retirement Income Plan |
|
|
15 |
|
|
$ |
479,349 |
|
|
|
0 |
|
|
|
|
|
Supplemental Benefit Plan |
|
|
15 |
|
|
$ |
7,010,661 |
|
|
|
0 |
|
|
|
|
|
Supp. Executive Retirement Agreement |
|
|
15 |
|
|
$ |
8,932,597 |
|
|
|
0 |
|
G.M. Badgett |
|
Retirement Income Plan |
|
|
37 1/12 |
|
|
$ |
1,119,234 |
|
|
|
0 |
|
|
|
|
|
Supplemental Benefit Plan |
|
|
37 1/12 |
|
|
$ |
3,460,081 |
|
|
|
0 |
|
D. F. Sansone |
|
Retirement Income Plan |
|
|
19 10/12 |
|
|
$ |
463,520 |
|
|
|
0 |
|
|
|
|
|
Supplemental Benefit Plan |
|
|
19 10/12 |
|
|
$ |
1,470,108 |
|
|
|
0 |
|
W.F. Denson |
|
Retirement Income Plan |
|
|
34 11/12 |
|
|
$ |
1,219,660 |
|
|
|
0 |
|
|
|
|
|
Supplemental Benefit Plan |
|
|
34 11/12 |
|
|
$ |
2,502,419 |
|
|
|
0 |
|
R.G. McAbee |
|
Retirement Income Plan |
|
|
34 |
|
|
$ |
1,115,821 |
|
|
|
0 |
|
|
|
|
|
Supplemental Benefit Plan |
|
|
34 |
|
|
$ |
2,964,782 |
|
|
|
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. |
|
2. |
|
The following FAS 87 assumptions as of 12/31/2007 were used to determine the above present
values: |
|
|
|
Discount rate of 6.45% |
|
|
|
|
Mortality based on the 2000RP combined healthy table |
|
|
|
|
Lump sum payments after 2007 are based on estimated PPA provisions |
|
|
|
|
SERP and SERA benefits assumed to be paid as a 10 Year Certain Annuity |
|
|
|
|
For the Qualified Plan, 50% of the 12/31/2000 benefit 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 |
The Retirement Income Plan for Salaried Employees (the Retirement Plan) provides benefits under a
funded noncontributory defined benefit plan and covers most salaried employees, including all
executive officers hired prior to July 15, 2007. Employees hired after July 15, 2007, are covered
under a 401(k) Plan that includes company matching of employee contributions and an annual
discretionary profit sharing contribution to all eligible participants. In order to attract and
retain high quality employees, we believe that it is necessary for our company to provide an
attractive employee benefits package that includes a competitive retirement program.
The normal retirement date is defined in the Plan as the first day of the calendar month
immediately following a participants 65th birthday; however, service continues to
accrue under the Plan if the participant works beyond age 65 (subject to a maximum service cap of
40 years). The amount of benefit is based on earnings, service and the age at which a participant
commences receiving a benefit. Eligible earnings under the Plan, or Final Average Earnings, is
the average of a participants highest 36 consecutive months of earnings and includes base monthly
salary and any awards under the EIP and MIP, as reflected in the Salary and Non-equity Incentive
Plan Compensation columns of the Summary Compensation Table. Under Section 415 of the Internal
Revenue Code, the maximum annual benefit allowable under the Plan for an employee retiring at age
65 in 2007 is $180,000, an amount which may change in subsequent years as determined by the
Internal Revenue Service. In addition, Section 401 of the Code limits the amount of a
participants compensation which may be taken into account under the Plan to $225,000, an amount
which is also subject to change by the Internal Revenue Service.
41
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 Plan as early as age 55. The amount of early retirement reduction
depends on the age of a participant when active employment ceases. If active employment ceases
after age 55 and retirement income commences at age 62, or later, the monthly benefit is not
reduced. However, if the benefit commences prior to age 62 the monthly benefit is reduced at a
rate of 7% per year for commencement between ages 55 and 62. If active employment ceases prior to
age 55, the monthly benefit is actuarially reduced for commencement between ages 55 and 65.
A participant must have either five years of vesting service, as defined in the Plan, or be at
least age 55 with one year of vesting service to be vested and eligible for a benefit. The normal
form of retirement benefit under the 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 Plan for a
married participant is a 75% Joint and Survivor Annuity, which is a monthly payment for the life of
the participant, and thereafter 75% of that amount to the surviving spouse payable for their
lifetime. The 75% Joint and Survivor Annuity is actuarially adjusted to account for two life
expectancies. The Plan also provides that the participant may elect to choose among three
additional Joint and Survivor options, three Period Certain Options, a Social Security Option and a
Lump Sum Option (only for benefits accrued prior to 2001). The optional forms of payment are
subject to actuarial adjustment. An election by a married participant of an option other than the
normal form requires spousal consent.
|
Ø |
|
Unfunded Supplemental Benefit Plan |
The Unfunded Supplemental Benefit Plan for Salaried Employees (the Supplemental Plan) enables our
company to pay, to any person whose pension under the Retirement Plan has been reduced as a result
of the limitations imposed by Sections 401 and 415 of the Internal Revenue Code, an amount equal to
the difference between the amount the person would have received under the Retirement Plan had
there been no limitations and the amount the person will receive under the Retirement Plan after
giving effect to the limitations.
The Supplemental Plan is unfunded and amounts due the employees covered thereby are considered to
be general obligations of our company; however, the Supplemental Plan contains provisions which
allow for the funding of a rabbi trust to improve the security of the benefit, to some extent, upon
the occurrence of a Change in Control (as defined in the Supplemental Plan).
The determination of the benefit amount and the payment options under the Supplemental Plan are the
same as the Retirement Plan except as follows. Effective January 1, 2007 the Supplemental Plan was
amended to allow existing participants to make an election to receive supplemental pension benefits
in the form of installment payments over a period of ten 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 Plan. New
participants in the Supplemental Benefit Plan on or after January 1, 2007 automatically will
receive their supplemental pension benefits in the form of installment payments over a period of
ten years and have no other payment options.
|
Ø |
|
Supplemental Executive Retirement Agreement |
Mr. James is entitled to benefits under a Supplemental Executive Retirement Agreement (SERA) which
provides for additional retirement benefits based on the formula in the Retirement Plan using his
actual years of service multiplied by 1.2. The maximum benefit service provided by the combination
of the SERA and the Retirement Plan is 40 years. Under the SERA, Mr. James was credited as of
December 31, 2007, with additional service years. The SERA is an unfunded, noncontributory defined
benefit plan.
The SERA was established in 2001 as an additional retention incentive for the Chief Executive
Officer. This program enhances the amount of monthly retirement benefit to address the fact that
Mr. James was a mid-career hire by Vulcan and is otherwise unable to accrue a full benefit under
the current qualified and excess benefit plans.
The following named executives are currently eligible for early retirement under the following
plans. Eligible under the Retirement Income Plan and the Unfunded Supplemental Benefit Plan are
Donald M. James (age 59), Guy M. Badgett III (age 59), Daniel F. Sansone (age 55), William F.
Denson, III (age 64) and Ronald G. McAbee (age 60). Mr. James is also currently eligible for early
retirement under the SERA.
42
Payments upon Termination or Change in Control
This section describes and estimates payments that could be made to the named executive officers
under different termination and change in control events. The estimated payments would be made
under the terms of our company compensation and benefits programs or the change in control
severance agreements with each of the named executive officers. The amount of potential payments
is calculated as if the different events occurred as of December 31, 2007 and assumes that the
price of our companys common stock is the closing market price as of December 31, 2007.
|
Ø |
|
Description of Termination and Change in Control Events |
The following charts list different types of termination and change in control, or CIC, events
that can affect the treatment of payments under our companys compensation and benefit programs.
These events also affect payments to the named executive officers under their CIC employment
agreements. Except for Messrs. James, Denson and Sansone, no payments are made under the CIC
agreements unless, within two years of the change in control, the named executive officer is
involuntarily terminated or he voluntarily terminates for good reason (as described below). The
agreements with Messrs. James, Denson and Sansone provide for a 30-day window immediately following
the first anniversary of the CIC during which they may elect to terminate their employment and
receive the benefits provided under the CIC agreement.
|
§ |
|
Retirement or Retirement Eligible Termination of a named executive officer who is at
least 55 years old and has at least one year of credited service. |
|
|
§ |
|
Lay Off Termination by Vulcan of a named executive officer who is not retirement
eligible. |
|
|
§ |
|
Resignation Voluntary termination of a named executive officer who is not retirement
eligible. |
|
|
§ |
|
Death or Disability Termination of a named executive officer due to death or
disability. |
|
|
§ |
|
Involuntary Termination Termination of a named executive officer for cause. Cause
includes individual performance below minimum performance standards and misconduct. |
43
The following chart describes the treatment of different pay and benefit elements in connection
with the non-CIC termination events shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lay Off (Involuntary |
|
|
|
|
|
Involuntary |
|
|
Retirement/Retirement |
|
Termination Not For |
|
|
|
|
|
Termination |
Program |
|
Eligible |
|
Cause) |
|
Resignation |
|
Death or Disability |
|
(For Cause) |
Pension:§ Qualified
Plan
§
Non-Qualified Plan
§Sera
|
|
Participant may commence benefit
payment
|
|
Participant is considered
Terminated Vested
|
|
Participant is considered
Terminated Vested
|
|
Spouse may commence survivor benefit on
or after the date that the
Participant would
have attained age
55
|
|
Participant may commence benefit
payment or will be Terminated Vested
depending on age |
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred
Compensation
|
|
Payment commences
the year after
retirement in the
form elected
|
|
Payout made the
year following the
year of termination
in a lump sum
|
|
Payout made the
year following the
year of termination
in a lump sum
|
|
Payment commences
the year after
death or disability
in the form elected
|
|
Payout made the
year following the
year of termination
in a lump sum |
|
|
|
|
|
|
|
|
|
|
|
MIP and EIP
|
|
Eligible to receive
full payment
|
|
Eligible to receive
full payment
|
|
Eligible to receive
full payment
|
|
Eligible to receive
full payment
|
|
No payment |
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Full term to
exercise vested
options; non-vested
options continue to
vest; Noncompetition
agreement required
for exercising
vested options
|
|
Non-vested options
forfeited; 30 days
to exercise vested
options
|
|
Non-vested options
forfeited; 30 days
to exercise vested
options
|
|
Vesting
accelerated. Under
death, estate has
one year to
exercise. Under
disability, have
full remaining term
to exercise
|
|
Forfeit all, vested
and non-vested |
|
|
|
|
|
|
|
|
|
|
|
DSUs
|
|
If age 62 or older,
deemed fully vested;
otherwise forfeit
non-vested DSUs
|
|
Non-vested are
forfeited
|
|
Non-vested are
forfeited
|
|
Vesting is
accelerated on a
pro-rata basis
|
|
Non-vested are
forfeited |
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
Deemed fully vested
|
|
Non-vested are
forfeited
|
|
Non-vested are
forfeited
|
|
Vesting is
accelerated on a
pro-rata basis
|
|
Forfeit all, vested
and non-vested |
|
|
|
|
|
|
|
|
|
|
|
Thrift Plan
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
Account distributed
by March 1 of the
following year
|
|
May take payment or
defer until age 701/2 |
|
|
|
|
|
|
|
|
|
|
|
401(k) and
Profit Sharing
Retirement Plan
(eff. 7/15/07)
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
Account distributed
by March 1 of the
following year
|
|
May take payment or
defer until age 701/2 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Thrift
Plan
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
May take payment or
defer until age 701/2
|
|
Account distributed
by March 1 of the
following year
|
|
May take payment or
defer until age 701/2 |
|
|
|
|
|
|
|
|
|
|
|
Severance Benefits
|
|
None
|
|
None
|
|
None
|
|
None
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
Health Benefits
|
|
May continue to age
65 if age + service
at least 70
|
|
Coverage ceases;
eligible for
coverage extension
under COBRA
|
|
Coverage ceases;
eligible for
coverage extension
under COBRA
|
|
Under age 55, 3
months spousal
extension, then
COBRA; over age 55,
same as retiree
|
|
Under age 55, same
as resignation;
over age 55, same
as retiree |
44
|
Ø |
|
CIC-Related Events |
|
|
§ |
|
Acquisition by another entity of 20% or more of our common stock, or following a merger
with another entity our shareholders own 65% or less of the company surviving the merger. |
|
|
§ |
|
Involuntary CIC Termination or Voluntary CIC Termination for Good Reason Employment is
terminated within two years of a CIC, other than for cause, or the employee voluntarily
terminates for Good Reason. |
Good reason for voluntary termination within two years of a CIC is generally satisfied when there
is a reduction in salary, incentive compensation opportunity or benefits, relocation of over 35
miles or a diminution in duties and responsibilities.
The following table describes treatment of payments under pay and benefit programs upon a change in
control, and upon a termination (voluntary or involuntary) upon a CIC.
|
|
|
|
|
Plan or Program |
|
CIC |
|
CIC with Termination |
Pension:
|
|
No impact
|
|
Service ceases except to the extent |
Qualified Plan
Non-Qualified
SERA
|
|
|
|
that additional service is provided
under the terms of the CIC
agreements |
|
|
|
|
|
Executive Deferred
Compensation Plan
|
|
Accelerate all
deferred amounts
and pay lump sum
within 10 business
days
|
|
Accelerate all deferred amounts and
pay lump sum within 10 business days |
|
|
|
|
|
EIP
|
|
The amount paid
will be equal to
the greater of (A)
the average bonus
during the three
preceding years,
(B) the target
bonus, or (C) the
bonus determined
under the Plan for
the year in which
the CIC occurs.
|
|
The amount paid will be equal to the
greater of (A) the average bonus
during the three preceding years,
(B) the target bonus, or (C) the
bonus determined under the Plan for
the year in which the CIC occurs. |
|
|
|
|
|
MIP
|
|
The amount paid
will be equal to
the greater of (A)
the target bonus,
or (B) the bonus as
determined under
the Plan based upon
our companys
actual performance.
|
|
The amount paid will be equal to the
greater of (A) the target bonus, or
(B) the bonus as determined under
the Plan based upon our companys
actual performance; shall be paid
within 90 days of CIC. |
|
|
|
|
|
Stock Options
|
|
Immediately deemed
fully vested and
exercisable;
remaining term to
exercise
|
|
Immediately deemed fully vested and
exercisable; remaining term to
exercise |
|
|
|
|
|
DSUs
|
|
All immediately
deemed
non-forfeitable;
pay on 90th day
following a Change
in Control
|
|
All immediately deemed
non-forfeitable; pay on 90th day
following a Change in Control |
|
|
|
|
|
PSUs
|
|
All immediately
deemed
non-forfeitable;
pay no later that 21/2 months after end
of award period
|
|
All immediately deemed
non-forfeitable; pay no later that
21/2 months after end of award period |
|
|
|
|
|
Thrift Plan
|
|
No impact
|
|
Service ceases except to the extent
that additional service is provided
under the terms of the CIC
agreements. Participant entitled to
distribution. |
|
|
|
|
|
401(k) and Profit
Sharing Retirement Plan
(eff. 7/15/07)
|
|
No impact
|
|
Service ceases except to the extent
that additional service is provided
under the terms of the CIC
Agreements. Participant is entitled
to distribution. |
|
|
|
|
|
Supplemental Thrift Plan
|
|
No impact
|
|
Participant entitled to distribution. |
|
|
|
|
|
Severance Benefits
|
|
No Impact
|
|
Payment is 3 times the named
executives annual base salary,
short-term bonus and LTI amount. |
|
|
|
|
|
Health Benefits
|
|
No impact
|
|
3 year coverage extension |
45
This section describes and estimates payments that would become payable to the named executive
officers upon a termination or change in control as of December 31, 2007.
Pension Benefits
The monthly amounts that would have become payable to the named executive officers if the
termination events occurred as of December 31, 2007 under the Tax-Qualified Plan and the SERA are
itemized in the chart below. The amounts shown in the chart are monthly benefit amounts whereas
the pension values shown in the Summary Compensation and Pension Benefits Tables are present values
of all the monthly values anticipated to be paid over the lifetimes of the named executive officers
and their spouses. These plans are described in the notes following the Pension Benefits Table.
All the named executive officers were retirement eligible on December 31, 2007. The benefits were
determined using the same assumptions used to compute benefit values in the Pension Benefit Table
with three exceptions. First, the benefit payments were assumed to commence as soon as possible
instead of at normal retirement. Second, approximate early retirement reductions were applied.
Finally, the benefits were not adjusted to reflect optional forms of payment. All benefits are the
amounts that would be paid monthly over the named executive officers life, except for the value of
CIC enhanced benefits which would be paid in a lump sum.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation or |
|
|
(monthly |
|
|
CIC (Value of |
|
|
|
|
|
Retirement |
|
|
Involuntary Retirement |
|
|
payments to a |
|
|
Enhanced |
|
|
|
|
|
(Monthly Payments) |
|
|
(monthly payments) |
|
spouse) |
|
Benefits)(1) |
Name |
|
|
($) |
|
($) |
|
($) |
|
|
($) |
D.M. James |
|
Tax-Qualified |
|
|
3,353 |
|
|
Same as Retirement |
|
|
2,779 |
|
|
|
0 |
|
|
|
|
|
Non-Qualified |
|
|
54,271 |
|
|
Same as Retirement |
|
|
44,985 |
|
|
|
0 |
|
|
|
|
|
SERA |
|
|
69,149 |
|
|
Same as Retirement |
|
|
57,318 |
|
|
|
11,130,472 |
|
|
|
|
|
Defined Contribution |
|
|
0 |
|
|
None |
|
|
0 |
|
|
|
743,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.M. Badgett |
|
Tax-Qualified |
|
|
7,942 |
|
|
Same as Retirement |
|
|
6,170 |
|
|
|
0 |
|
|
|
|
|
Non-Qualified |
|
|
27,270 |
|
|
Same as Retirement |
|
|
21,185 |
|
|
|
1,736,740 |
|
|
|
|
|
Defined Contribution |
|
|
0 |
|
|
None |
|
|
0 |
|
|
|
193,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.F. Sansone |
|
Tax-Qualified |
|
|
2,783 |
|
|
Same as Retirement |
|
|
3,392 |
|
|
|
0 |
|
|
|
|
|
Non-Qualified |
|
|
9,683 |
|
|
Same as Retirement |
|
|
11,801 |
|
|
|
1,391,747 |
|
|
|
|
|
Defined Contribution |
|
|
0 |
|
|
None |
|
|
0 |
|
|
|
199,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.F. Denson |
|
Tax-Qualified |
|
|
9,245 |
|
|
Same as Retirement |
|
|
6,009 |
|
|
|
0 |
|
|
|
|
|
Non-Qualified |
|
|
21,567 |
|
|
Same as Retirement |
|
|
14,019 |
|
|
|
414,009 |
|
|
|
|
|
Defined Contribution |
|
|
0 |
|
|
None |
|
|
0 |
|
|
|
142,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.G. McAbee |
|
Tax-Qualified |
|
|
8,039 |
|
|
Same as Retirement |
|
|
5,727 |
|
|
|
0 |
|
|
|
|
|
Non-Qualified |
|
|
23,815 |
|
|
Same as Retirement |
|
|
16,964 |
|
|
|
1,031,960 |
|
|
|
|
|
Defined Contribution |
|
|
0 |
|
|
None |
|
|
0 |
|
|
|
170,208 |
|
|
|
|
(1) |
|
Value of retirement and defined contribution enhancements are payable in lump sum in
the event of a CIC.
|
|
|
|
In accordance with CIC Employment Agreements, lump sum values for non-qualified and SERA pension
benefits are based upon the granting of three years of service for each named executive, except
for Mr. James, who would receive credit for 6.6 years of service. The defined contribution
amounts represent three years of company matching contributions for each executive. |
46
Long-Term Incentives
Deferred Stock Units (DSUs)
The chart below shows the number of DSUs for which vesting would be accelerated under certain
events.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC |
|
|
Retirement |
|
(With or Without Termination) |
|
|
Number of |
|
Total Number of |
|
Number of |
|
Total Number of |
|
|
Deferred Stock |
|
Deferred Stock |
|
Deferred Stock |
|
Deferred Stock |
|
|
Units with |
|
Units Following |
|
Units with |
|
Units Following |
|
|
Accelerated |
|
Accelerated |
|
Accelerated |
|
Accelerated |
|
|
Vesting |
|
Vesting |
|
Vesting |
|
Vesting |
Name |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
D.M. James |
|
|
0 |
|
|
|
0 |
|
|
|
105,768 |
|
|
|
105,768 |
|
G.M. Badgett |
|
|
0 |
|
|
|
0 |
|
|
|
18,625 |
|
|
|
18,625 |
|
D.F. Sansone |
|
|
0 |
|
|
|
0 |
|
|
|
10,899 |
|
|
|
10,899 |
|
W.F. Denson |
|
|
13,855 |
|
|
|
13,855 |
|
|
|
13,855 |
|
|
|
13,855 |
|
R.G. McAbee |
|
|
0 |
|
|
|
0 |
|
|
|
9,831 |
|
|
|
9,831 |
|
Performance Share Units (PSUs)
The chart below shows the number of PSUs for which vesting would be accelerated under certain
events.(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC |
|
|
Retirement |
|
(With or Without Termination) |
|
|
Number of |
|
Total Number of |
|
|
|
|
|
Total Number of |
|
|
Performance |
|
Performance Share |
|
Number of |
|
Performance Share |
|
|
Share Units with |
|
Units Following |
|
Performance |
|
Units Following |
|
|
Accelerated |
|
Accelerated |
|
Share Units with |
|
Accelerated |
|
|
Vesting |
|
Vesting |
|
Accelerated Vesting |
|
Vesting |
Name |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
D.M. James |
|
|
10,000 |
|
|
|
81,568 |
|
|
|
30,000 |
|
|
|
101,568 |
|
G.M. Badgett |
|
|
1,813 |
|
|
|
10,361 |
|
|
|
5,440 |
|
|
|
13,988 |
|
D.F. Sansone |
|
|
1,960 |
|
|
|
10,508 |
|
|
|
5,880 |
|
|
|
14,428 |
|
W.F. Denson |
|
|
3,540 |
|
|
|
8,709 |
|
|
|
3,540 |
|
|
|
8,709 |
|
R.G. McAbee |
|
|
1,747 |
|
|
|
6,717 |
|
|
|
5,240 |
|
|
|
10,210 |
|
|
|
|
(1) |
|
Vested PSUs were adjusted for performance as of December 31, 2007. Unvested PSUs
were adjusted to maximum allowed under the agreements since the performance was unknown at
December 31, 2007. |
47
Stock Options
Stock Options would be treated as described in the termination and CIC charts above. The chart
below shows the number of stock options for which vesting would be accelerated under certain
events.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC |
|
|
Retirement |
|
(With or Without Termination) |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Options with |
|
Total Number of |
|
Options with |
|
Total Number of |
|
|
Accelerated |
|
Options Following |
|
Accelerated |
|
Options Following |
|
|
Vesting |
|
Accelerated Vesting |
|
Vesting |
|
Accelerated Vesting |
Name |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
D.M. James |
|
|
139,400 |
|
|
|
1,635,884 |
|
|
|
250,650 |
|
|
|
1,710,050 |
|
G.M. Badgett |
|
|
26,000 |
|
|
|
266,989 |
|
|
|
46,290 |
|
|
|
280,515 |
|
D.F. Sansone |
|
|
18,200 |
|
|
|
196,122 |
|
|
|
40,240 |
|
|
|
210,815 |
|
W.F. Denson |
|
|
29,840 |
|
|
|
119,640 |
|
|
|
29,840 |
|
|
|
119,640 |
|
R.G. McAbee |
|
|
14,200 |
|
|
|
142,370 |
|
|
|
33,760 |
|
|
|
155,410 |
|
Executive Deferred Compensation Plan
The aggregate balances reported in the Nonqualified Deferred Compensation Table would be payable to
the named executive officers as described in the termination events and CIC-Related Events chart
above. There is no enhancement or acceleration of payments under these plans associated with
termination of CIC events, other than the lump sum payment opportunity described in the above
charts. The lump sums that would be payable are those that are reported in the Nonqualified
Deferred Compensation Table.
Health Benefits
Because Messrs. James, Badgett, Sansone, Denson and McAbee are eligible for early retirement and
health care benefits are provided to early retirees, there is no incremental payment associated
with the termination or CIC events.
Severance Benefits
Our company has entered into individual CIC Employment Agreements with each of the named executive
officers. In addition to the treatment of the benefits described above the named executive
officers are entitled to a severance benefit, if within two years of a CIC they are involuntarily
terminated, not for cause, or they voluntarily terminate for Good Reason. Further, Messrs. James,
Denson and Sansone may elect to voluntarily terminate their employment during the 30 days following
the first anniversary of a CIC, and receive severance benefits. In any case, benefits are not paid
unless the named executive officer releases us from any claims he may have against us.
The CIC severance payment is three times the named executive officers base annual salary,
short-term bonus, and LTI amount, as each is defined in the CIC agreements. If any portion of the
severance payment is an excess parachute payment, as defined under Internal Revenue Code Section
280G, we will pay on behalf of the named executive officer an additional amount to cover the taxes
that would be due on the excess parachute payment a 280G tax gross-up.
48
The table below reflects an estimate of the severance payments that would be made to the named
executive officers if they were terminated as of December 31, 2007 in connection with a CIC.
|
|
|
|
|
|
|
Severance Amount |
Name |
|
($) |
D.M. James |
|
|
21,300,000 |
|
G.M. Badgett |
|
|
4,723,333 |
|
D.F. Sansone |
|
|
4,814,000 |
|
W.F. Denson |
|
|
3,641,667 |
|
R.G. McAbee |
|
|
3,752,000 |
|
The table below reflects an estimate of the value of 280G tax gross-up amounts due and payable to
the Internal Revenue Service in connection with a CIC that results in several payments.
|
|
|
|
|
|
|
280G Tax Gross-Up |
Name |
|
($) (1) |
D.M. James |
|
|
14,629,044 |
|
G.M. Badgett |
|
|
3,080,842 |
|
D.F. Sansone |
|
|
3,667,195 |
|
W.F. Denson |
|
|
0 |
|
R.G. McAbee |
|
|
2,679,849 |
|
|
|
|
(1) |
|
Based on payment of equity components of compensation valued at $79.09 per share,
the value of our companys common stock as of December 31, 2007. |
49
DIRECTOR COMPENSATION
We use a combination of cash and stock-based compensation to attract and retain qualified
candidates to serve on the Board. In setting director compensation, our company considers the
significant amount of time that directors expend on fulfilling their duties to our company, as well
as the limited pool of, and competition among public companies for, well-qualified Board members.
Additional amounts are paid to committee chairs in recognition of the substantial responsibilities
of the chair. Directors are subject to a minimum share ownership requirement. Within five years
of becoming a director, each director is required to own at least 5,000 shares of our companys
common stock. Shares or units held by a director under a deferred compensation plan are included
in calculating the directors ownership.
Cash Compensation Paid to Board Members. Members of the Board who are not employees of our company
are paid a retainer of $45,000 per year, plus the following fees:
|
§ |
|
$ 5,000 Board meeting fee for in-person attendance; |
|
|
§ |
|
$ 3,000 Committee meeting fee for in-person attendance; |
|
|
§ |
|
$ 1,500 Board and committee fees for telephonic meetings or actions by written consent; |
|
|
§ |
|
$10,000 Audit Committee chair retainer fee; |
|
|
§ |
|
$ 5,000 Retainer fee for all other committee chairs; and |
|
|
§ |
|
$ 1,500 Presiding Director fee per quarter. |
Deferred Compensation Plan. We maintain a Deferred Compensation Plan for directors who are not
employees of our company (Directors Deferred Compensation Plan) under which non-management
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, either: (i) are credited with interest at prescribed rates; or (ii) are converted into a
number of DSUs equivalent to the number of shares of our companys 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 Vulcans common stock, the DSU accounts are credited with an additional number
of stock units corresponding to the amount of the dividend. At the end of the deferral period, the
DSUs are settled in shares of our companys common stock, and interest-based deferrals are settled
in cash. The Directors Deferred Compensation Plan also provides for a lump-sum settlement of the
directors deferred compensation account in stock or cash, as applicable, if following a Change of
Control (as defined in the Directors Deferred Compensation Plan): (i) the participating director
ceases to be a member of the Board; (ii) the Directors Deferred Compensation Plan is terminated;
or (iii) our companys capital structure is changed materially. The Directors Deferred
Compensation Plan was approved by our companys shareholders in 1993.
Deferred Stock Units. Equity 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.
On June 1, 2007, 1,000 DSUs were granted to each non-management director serving on that date
pursuant to the 2006 Omnibus Long-Term Incentive Plan (2006 LTIP), which was approved by our
shareholders in 2006. These units vest on the third anniversary of the grant; however, payment may
be deferred beyond that date. The DSUs are an unfunded, unsecured obligation of our company and no
shares have been set aside for these grants. The non-management directors have no right to receive
the DSUs until the restrictions imposed either lapse or are waived. Generally, the restrictions
expire at the earliest of vesting or when the non-management director reaches age 72 (or the then
current mandatory retirement age for directors), or the non-management director ceases to be a
director because of death, disability, or change in control. 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 Vulcan shares when the restrictions expire.
In prior years, grants to our directors were made under the Restricted Stock Plan or the Deferred
Stock Plan. No further grants will be made under either of these Plans.
50
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, 2007.
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|
Change in |
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|
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Fees |
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|
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|
|
|
|
|
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Pension Value |
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|
|
Earned |
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|
|
|
|
|
|
|
|
Non-Equity |
|
and Deferred |
|
All Other |
|
|
|
|
or Paid |
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
Compensation |
|
|
Name(1) |
|
in Cash |
|
Awards(4) |
|
Awards |
|
Compensation |
|
Earnings |
|
(5) |
|
Total |
John D. Baker(2) |
|
$ |
11,250 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
11,250 |
|
Philip J. Carroll |
|
$ |
113,000 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
234,530 |
|
Phillip W. Farmer |
|
$ |
106,500 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
228,030 |
|
H. Allen Franklin |
|
$ |
109,500 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
231,030 |
|
Ann McLaughlin
Korologos(3) |
|
$ |
54,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
54,500 |
|
Douglas J. McGregor |
|
$ |
107,000 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
228,530 |
|
James V. Napier |
|
$ |
124,000 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
245,530 |
|
Donald B. Rice |
|
$ |
108,500 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
230,030 |
|
Orin R. Smith |
|
$ |
110,000 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
231,530 |
|
Vincent J. Trosino |
|
$ |
96,000 |
|
|
$ |
121,530 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
217,530 |
|
|
|
|
(1) |
|
Donald M. James, Chief Executive Officer and Chairman of the Board, is not included
in this table as he is an employee of our company and receives no additional compensation for
his service as director. Mr. James compensation is shown in the Summary Compensation Table. |
|
(2) |
|
Mr. Baker was elected director in November 2007. |
|
(3) |
|
Ms. Korologos was elected a director in July 2007. |
|
(4) |
|
This column represents the dollar amount of the 2007 accounting expense recognized
for these awards granted in 2007 and prior years. Therefore, the values shown here are not
representative of the amounts that may eventually be realized by a director. Pursuant to the
rules of the SEC, we have provided a grant date fair value for Stock Awards in accordance with
the provisions of Statement of Financial Accounting Standards No. 123(R), Share-based
Payments. For DSUs and Restricted Stock, the fair value is estimated on the date of grant
based on the market price of our stock on the grant date. At December 31, 2007, the aggregate
number of restricted stock units and DSUs accumulated on their account for all years of
service, including dividend equivalent units were: |
|
|
|
|
|
Name |
|
Units |
John D. Baker |
|
|
0 |
|
Philip J. Carroll |
|
|
8,978 |
|
Phillip W. Farmer |
|
|
8,199 |
|
H. Allen Franklin |
|
|
6,401 |
|
Ann McLaughlin Korologos |
|
|
1,231 |
|
Douglas J. McGregor |
|
|
11,327 |
|
James V. Napier |
|
|
11,327 |
|
Donald B. Rice |
|
|
11,327 |
|
Orin R. Smith |
|
|
11,327 |
|
Vincent J. Trosino |
|
|
4,174 |
|
|
|
|
(5) |
|
None of the directors received perquisites or other personal benefits in excess of
$10,000. |
51
GENERAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, each of our directors and
executive officers, and any beneficial owner of more than 10% of our common stock, is required to
file with the SEC initial reports of beneficial ownership of our common stock and reports of
changes in beneficial ownership of the 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, 2007, 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, 2007 all reports were filed in a timely manner
except the Form 3 filed upon Ms. Korologos rejoining the Board was filed late.
Shareholder Proposals For 2009
To be eligible for consideration for inclusion in our proxy statement and form of proxy for our
2009 annual meeting, a shareholders proposal must be received by us at our principal office no
later than November 25, 2008. Proposals should be addressed to Jerry F. Perkins, Jr., Secretary,
P. O. Box 385014, Birmingham, Alabama 35238-5014. Proposals received after that date will be
considered untimely and will not be eligible for inclusion in the 2009 proxy statement. If a
shareholder intending to introduce a resolution for a vote at the 2009 Annual Meeting does not
provide notice of that intention to the Secretary before February 8, 2009, the persons named in
Vulcans 2008 proxy material will have the discretionary authority to vote on the matter in
accordance with their best judgment without disclosure in the proxy statement of such matter or of
how the proxy holders intend to exercise their discretionary authority to vote on the matter.
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VULCAN MATERIALS COMPANY
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JERRY F. PERKINS, JR. |
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Secretary |
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|
1200 Urban Center Drive
Birmingham, Alabama 35242
March 28, 2008
52
APPENDIX A
RESTATED
CERTIFICATE OF INCORPORATION
OF
LEGACY VULCAN CORP.
Pursuant to Sections 14A:9-4 and 14A:9-5 of the New Jersey Business Corporation Act (the
Act), the undersigned corporation certifies that it has adopted this restated certificate
of incorporation.
ARTICLE I
Corporate Name
The name of the corporation is Legacy Vulcan Corp.
ARTICLE II
Purpose
The purpose for which this corporation is organized is to engage in any activity within the
purposes for which corporations may be organized under the Act.
ARTICLE III
Capital Stock
The corporation is authorized to issue 100 shares of common stock, $0.01 par value
(Common Stock).
ARTICLE IV
Registered Office and Agent
The address of the corporations registered office is 830 Bear Tavern Road, West Trenton, New
Jersey 08628. The name of the corporations initial registered agent at that address is
Corporation Service Company.
ARTICLE V
Initial Board of Directors
The board of directors will consist of three (3) persons whose names and addresses are as
follows:
53
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Name |
|
Address |
William F. Denson, III
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1200 Urban Center Drive |
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Birmingham, Al 35242 |
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Daniel F. Sansone
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1200 Urban Center Drive |
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Birmingham, Al 35242 |
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|
|
Ejaz A. Khan
|
|
1200 Urban Center Drive |
|
|
Birmingham, Al 35242 |
ARTICLE VI
Indemnification
The corporation shall, to the fullest extent permitted by Section 14A:3-5 of the Act, as the
same may be amended and supplemented, indemnify any and all directors whom it shall have power to
indemnify under said section from and against any and all of the expenses, liabilities, or other
matters referred to in or covered by said Section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of shareholders, or otherwise, and shall continue as to a person who
has ceased to be a director and shall inure to the benefit of the heirs, executors, administrators,
and personal representatives of directors.
ARTICLE VII
Personal Liability
The personal liability of the directors of the corporation is hereby eliminated to the fullest
extent permitted by subsection 14A:2-7(3) of the Act, as the same may be amended and supplemented.
ARTICLE VIII
Approval
Shareholder approval of the restated certificate of incorporation was given without a meeting
by written consent of the sole shareholder dated , 2008, pursuant to N.J.S. 14A:5-6. The
number of shares represented by the consent was 100 shares of Common Stock.
IN WITNESS WHEREOF, the undersigned has signed this restated certificate of incorporation on
behalf of the Corporation this day of , 2008.
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LEGACY VULCAN CORP. |
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By: |
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Name: |
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Title: |
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54
Vulcan Materials Company C/O PROXY SERVICES P.O. BOX 9142 FARMINGDALE, NY 11735 VOTE BY INTERNET
www.proxvvote.com
Use the Internet to
transmit your
voting instructions
and for electronic
delivery of
information up
until 11:59 P.M.
Central Daylight
Time on May 8,
2008. 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
SHAREHOLDER
COMMUNICATIONS If
you would like to
reduce the costs
incurred by Vulcan
Materials Company
in mailing proxy
materials, you can
consent to
receiving all
future proxy
statements, proxy
cards and annual
reports
electronically via
email 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
shareholder
communications
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.
Central Daylight
Time on May 8,
2008. 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 Vulcan |
Materials Company,
c/o Broadridge, 51
Mercedes Way,
Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2 AND 3. |
1. ELECTION OF DIRECTORS Nominees: For Withhold For All To withhold
01) Donald M. James 02 Ann McLaughlin Korologos 03) Phillip J. All All Except authority to vote
Carrol, Jr. 04) Orin R. Smith for any individual
nominee(s), mark
For All Except
and write the
number(s) of the
nominee(s) on the
line below. |
2. Proposal to ratify the appointment of Deloitte & Touche LLP as Vulcan Material Companys independent registered For Against Abstain
public accounting firm for the year 2008. |
3. Proposal to amend the Legacy Vulcan Corp. Certificate of Incorporation. For Against Abstain |
4. In their discretion, upon such other matters that may properly come before the meeting or any adjournment or
adjournments thereof. |
The shares represented by this proxy when properly executed will be voted in the manner directed herein by the
undersigned Shareholder(s). If no direction is made, this proxy will be voted FOR items 1, 2 and 3. If any other
matters properly come before the meeting, the person named in this proxy will vote in their discretion. |
For address changes and/or comments, please check this Please sign your name exactly as it appears
box and write them on the back where indicated. Yes No Please hereon. When signing as attorney, executor,
indicate if you plan to attend this meeting. administrator, trustee or guardian, please
add your title as such. When signing as
joint tenants, all parties in the joint
tenancy must sign. If a signer is a
corporation, please sign in full corporate
name by duly authorized officer. |
Signature [PLEASE Date Signature (Joint Owners) Date
SIGN WITHIN BOX] |
VULCAN MATERIALS COMPANY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 2008 The undersigned hereby appoints Phillip W. Farmer, Douglas J. McGregor and Donald B. Rice, and each of them, as proxies, each with
the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all
of the shares of Common Stock of Vulcan Materials Company that the shareholder is entitled to vote at the Annual Meeting of Shareholders to be
held at 9:00 a.m., Central Daylight Time, on May 9, 2008, at the Hilton Garden Inn, 2090 Urban Center Parkway, Birmingham, Alabama 35242, and
any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO SUCH
DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR
EACH PROPOSAL. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE Address Changes/Comments:
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE |