We perform a thorough annual review of our compensation program structure and all compensation programs, which are also reviewed in detail with the Committee. We believe our executive pay is appropriate and provides necessary incentives to our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. Our compensation structure does not include features that are reasonably likely to have a material adverse effect on the Company. Compensation program features that mitigate against risks include the following:
| • | Our annual incentive compensation plan does not provide payment for poor individual or corporate performance, regardless of whether the failure to achieve target was outside management’s control. |
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| • | There are caps on annual incentives and the long-term equity awards, even if the required performance-related criteria are exceeded. |
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| • | A majority of the NEOs’ compensation is long-term, with equity grants vesting over three to five years, depending on the award. |
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| • | Our compensation is not based on highly leveraged short-term incentives that encourage high risk investments at the expense of long-term value. |
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| • | Long-term compensation to executive officers is based on specific performance measures that balance long-term growth and returns. |
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| • | The Committee uses benchmarking data and the advice of its independent compensation consultant to keep compensation in line with typical market practices and appropriate to Martin Marietta’s needs. |
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| • | We use a balanced portfolio of long-term incentive programs. |
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| • | The Committee’s governance process requires review and approval of all compensation over a certain amount. |
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COMPENSATION DISCUSSION AND ANALYSIS◆ STOCK-BASED AWARDS GENERALLY
