Edgar Filing: Vulcan Materials CO

GRANT VALUE

THREE-YEAR AVERAGE TSR PERCENTILE

RANK RELATIVE TO S&P 500 INDEX

% OF PSUs

PAYABLE⁽²⁾

Value of awards made to similarly-situated executives

at the 50^th percentile, based upon a market analysis

75th or more

25th or less

DEF 14A

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LOGO


		ONE VULCAN, LOCALLY LED
		ONE VULCAN, LOCALLY LED

Dear fellow shareholders,

I am pleased to invite you to attend our 2019 Annual Meeting of Shareholders on Friday, May 10, 2019, at 9 a.m. Central Daylight Time. The meeting will be held at Vulcan Materials Company’s corporate headquarters, 1200 Urban Center Drive, Birmingham, Alabama 35242. During the Annual Meeting, we will discuss each item of business described in the Notice of Annual Meeting and this proxy statement.

It is our culture to do the right thing, the right way, at the right time. We call this The Vulcan Way.

STRATEGIC FOCUS & PERFORMANCE EXCELLENCE PRODUCING STRONG RESULTS

Since our inception, Vulcan’s leadership has taken a decades-long view of the business, an approach that has rewarded us today with the most valuable construction materials assets in the United States, if not the world. This deliberate strategy has led to irreplaceable operations in 19 of the 25 fastest growing metropolitan areas of our nation, along with strategic positions in the Caribbean and a vast and well-run logistics network to supply growing markets. The leaders who came before us took a long-term view of the business, and so do we—even as we work to enhance the performance of the business day by day.

In 2018, we delivered revenues of $4.4 billion, net earnings of $515.8 million and adjusted earnings from continuing operations* of $4.05 per diluted share. While net earnings were lower in 2018 than 2017 due to the inclusion of certain discrete income tax benefits in 2017, including benefits arising from the enactment of the Tax Cuts and Jobs Act, revenues and adjusted earnings from continuing operations per diluted share in 2018 were 13 and 33 percent higher, respectively, than in 2017. We realized these gains despite significant challenges to our sales and operations that included hurricanes, tropical storms and devastating wildfires, as well as rapidly rising energy costs that increased operating costs in the near term. We also improved on our world-class safety record.

OUR CULTURE DEFINES US

Throughout 2018 and into 2019, our senior leadership team has held numerous meetings with our employees and shareholders discussing our vision and our goals. We aim high, we are intent on continuing improvements in all areas of the business, and our people are all in. We have outstanding leaders at Vulcan. They are thriving in a culture that is built on integrity and that fosters innovation, creativity and mutual support.

With our “One Vulcan, Locally Led” approach to the business, we leverage the strengths and resources of a large company, while also placing great emphasis on the actions and energies of our local leadership teams—the men and women of our company who make the daily decisions that ultimately reward our shareholders, our communities, and our own people.

I am proud of them. We benefit from a High Values, High Performance culture, and we emphasize that every day. Our High Values culture is evidenced by the outstanding scores we received through the Organizational Health Index survey conducted by McKinsey & Company. We rank in the top decile out of more than 1,700 participating companies across a variety of metrics that address employee satisfaction and engagement. Our High Performance culture is perhaps best exemplified by our world-class safety performance. It’s also demonstrated by our industry-leading aggregates gross profit margins. Our operational disciplines and focus on operational excellence have made us the industry leader, but we are still improving. For us, that means staying focused on fundamentals while employing the flexibility to initiate and embrace change wherever and whenever that is needed.

To this end, throughout 2018, we:

•

Continued our leadership in proactive capital stewardship, reaffirming our capital allocation priorities and adhering to those priorities throughout the year. We maintained excellent liquidity, reinvested in our core operations, maintained our investment grade credit rating, pursued profitable growth opportunities, and returned $282 million to shareholders through dividends and share repurchases.

LOGO

*	Adjusted earnings from continuing operations is a non-GAAP financial measure. We provide a reconciliation of adjusted earnings from continuing operations to the most directly comparable GAAP financial measure in Annex A to this proxy statement.


		ONE VULCAN, LOCALLY LED
		ONE VULCAN, LOCALLY LED

•

Further enhanced our One Vulcan, Locally Led competitive position, through reinforcement of the company’s continuous improvement culture. We placed particular emphasis in 2018 on key disciplines including sales and operations, logistics, and other support functions. Continuous improvement in these functions directly supports the organization’s long-term growth, and we will continue this focus throughout 2019.

•

Achieved the best safety record in the company’s history—further reducing the injury incident rate by 5% from the previous year’s world-class record—by continuing to engage our employees, and through a variety of safety process initiatives including “near-miss” reporting. We drove our MSHA reportable and OSHA recordable injury rate to 0.92 per 200,000 employee hours worked, and we intend to improve on that record in 2019.

•

Continued our work to ensure a more diverse workforce through the company’s Diversity and Inclusion Council, by increasing diversity in the hiring of external candidates and recruiting diverse candidates to serve in leadership positions.

•

Continued our strong emphasis on superior environmental performance. We brought into service two new Panamax-class ships that are among the most energy efficient of their kind in the world. We reported to the Carbon Disclosure Project that we have continued to reduce our greenhouse gas emissions (GHG). Although we are not listed by the U.S. EPA as a significant source of GHG emissions, we have nonetheless reduced them by 49 percent over the last five years, and continue to make reductions that protect the environment and create new energy efficiencies and cost savings at our operations. Approximately 98.5% of all environmental inspections at our operations in 2018 resulted in no citation by either state or federal agencies.

For an organization to be great, it also must be good. From our company’s beginning, we have focused on being good corporate citizens and looking out for our employees, our communities and our shareholders. These are mutually reinforcing and supporting commitments. It is our culture to do the right thing, the right way, at the right time. We call this The Vulcan Way. It continually challenges us, and it defines us.

A STRONG AND ENGAGED BOARD

We have a strong, balanced and independent Board. The members of our Board of Directors have diverse backgrounds, perspectives and experiences that add value for our shareholders and are of tremendous value to our management team. We have received national recognition from the 2020 Women on Boards campaign for the diversity of our Board and will continue to seek candidates who are diverse in gender, race, background and professional experiences. Our Board refreshment process is robust, with five of our eight independent directors having served five years or less. Our Board plays a vital role in oversight and counsel concerning the long-term strategic direction of our company and in the effective governance of a company that is committed to do the right thing, the right way, at the right time.

YOUR VIEWS ARE IMPORTANT TO US

The dialogue we have with our shareholders and many other stakeholders is vital to the well-being and growth of our company. We believe that candid, transparent and open channels of communication are keys to good governance

The dialogue we have with

our shareholders is vital to the well-being and growth of our company.

and to maintaining a healthy organization. We value your interactions with us, we listen to you, and we respond. We have numerous interactions with our shareholders throughout the year concerning the earnings performance of the business, as well as fundamental Environmental, Social and Governance (ESG) matters that are important to our shareholders and other stakeholders. These communications are helpful to us. We intend to continue them and to continue being responsive to the questions and concerns of our stakeholders. That makes our business better, and it helps us improve our performance.

YOUR VOTE IS IMPORTANT

On or about March 25, 2019, we began mailing to many of our shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our 2018 Annual Report to Shareholders, via the internet. Shareholders who do not receive the Notice of Internet Availability of Proxy Materials will receive a paper copy of the Notice of Annual Meeting, proxy statement, proxy card and 2018 Annual Report to Shareholders, which we also began mailing on or about March 25, 2019. The Notice of Internet Availability of Proxy Materials also contains instructions on how to receive a paper copy of the proxy materials. Copies of our Notice of Annual Meeting, proxy statement, proxy card and 2018 Annual Report to Shareholders are available at www.proxyvote.com.

Whether you own one share or many, your prompt vote is appreciated. It is important that your shares of common stock be represented at the Annual Meeting so that a quorum may be established. Even if you plan to attend the Annual Meeting in person, please read the proxy materials carefully and then vote your proxy as soon as possible. You may vote online, by telephone, or by mailing a completed proxy card. Additional information is provided in the proxy materials. If you attend the Annual Meeting, you may revoke your proxy and vote your shares in person.

Thank you for your ongoing support and continued interest in Vulcan Materials Company. I look forward to welcoming you to our Annual Meeting.

Sincerely yours,

LOGO

J. THOMAS HILL

Chairman, President and Chief Executive Officer

March 25, 2019

Notice of Annual Meeting

NOTICE IS HEREBY GIVEN that the 2019 Annual Meeting of Shareholders of Vulcan Materials Company will be held at the corporate headquarters of Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242, on Friday, May 10, 2019, at 9:00 a.m., local time.




Date & time: Friday May 10, 2019 9:00 a.m., local time	Place: Vulcan Materials Company 1200 Urban Center Drive Birmingham, AL 35242	Record Date: March 13, 2019


How to Vote
	online	by phone	by mail
	Vote online at www.proxyvote.com.	Vote by phone by calling the number located on your proxy card.	If you received a printed version of these proxy materials, you may vote by mail.
Only shareholders of record as of the close of business on March 13, 2019, are entitled to receive notice of, to attend and to vote at the Annual Meeting. Whether or not you plan to attend, we urge you to review these materials carefully and to vote online or by telephone, or, if you have received a paper copy of the proxy card, you may instead choose to vote by mailing your proxy card.

Voting Matters


PROPOSAL	BOARD VOTE RECOMMENDATION	PAGE REFERENCE (for more detail)
Proposal 1: Election of Directors	FOR each director nominee	5
Proposal 2: Advisory Vote on Compensation of our Named Executive Officers (Say On Pay)	FOR	11
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm	FOR	12

Table of Contents


PROXY SUMMARY			2

PROPOSAL 1. ELECTION OF DIRECTORS			5

PROPOSAL 2. ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (SAY ON PAY)			11

PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			12

CORPORATE GOVERNANCE			13

Policies			13

Shareholder Engagement			13

Director Independence			13

Director Nomination Process			14

Board Leadership Structure			15

Non-Management Executive Sessions			15

Meetings and Attendance			16

Committees of the Board of Directors			16

Enterprise Risk Management			19

Compensation Committee Interlocks and Insider Participation			19

Transactions with Related Persons			19

Shareholder Communication with Our Board of Directors			20

Policy on Reporting of Concerns Regarding Accounting Matters			20

REPORT OF THE AUDIT COMMITTEE			21

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			22

Fees Paid to Independent Registered Public Accounting Firm			22

Pre-Approval of Services Performed by Independent Registered Public Accounting Firm			22

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			23

Security Ownership of Certain Beneficial Owners			23

Security Ownership of Management			24


EQUITY COMPENSATION PLANS			25


COMPENSATION DISCUSSION AND ANALYSIS			26

Introduction			26

Executive Summary			26

Executive Compensation Program in Detail			30

Compensation Decision Process			33

Elements of Compensation			37

Stock Ownership Guidelines			43

Risk, Accounting and Tax Considerations			44

COMPENSATION COMMITTEE REPORT			45

EXECUTIVE COMPENSATION			46

Summary Compensation Table			46

Grants of Plan-Based Awards			47

Outstanding Equity Awards at Fiscal Year-End			48

Option Exercises and Stock Vested			50

Retirement and Pension Benefits			51

Payments Upon Termination or Change of Control			52

CEO Pay Ratio Disclosure			59

DIRECTOR COMPENSATION			60

Director Summary Compensation Table			61

ANNUAL MEETING AND VOTING INFORMATION			62

GENERAL INFORMATION			67

Section 16(a) Beneficial Ownership Reporting Compliance			67

Shareholder Proposals for 2020			67

Forward-Looking Statements			67

ANNEX A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES			69

2019 PROXY STATEMENT

Proxy Summary

2018 BUSINESS HIGHLIGHTS

We achieved a number of significant milestones during the course of the year, in large part due to the continuing dedication of our employees, the leadership of our executive officers and our Board of Directors, and the culture of our company, which binds us all together.

Highlights of 2018 included:

• Achieving total revenues of $4.38 billion, net earnings¹ of $516 million and Adjusted EBITDA² of $1.13 billion, a $493 million improvement in total revenues and a $150 million improvement in Adjusted EBITDA over the prior year, despite a challenging operating environment resulting from extreme weather events and significantly higher energy costs;

• Maintaining excellent liquidity, reinvesting in our core operations, maintaining our investment grade credit rating, pursuing profitable growth opportunities and returning $282 million to shareholders through dividends and share repurchases;

• Reducing our combined Mine Safety and Health Administration (MSHA) Reportable and Occupational Safety and Health Administration (OSHA) Recordable Injury Rate from 0.97 in 2017 to 0.92 in 2018, representing world-class performance and the safest year in our company’s history;

• Strengthening company-wide understanding of “The Vulcan Way,” the embodiment of the company’s culture, as evidenced by increased organizational engagement and appreciation of Vulcan’s mission and values. Vulcan ranked in the top decile of surveyed organizations in McKinsey & Company’s Organizational Health Index.

11.7% compounded annual improvement in gross profit per ton of aggregates since 2013.

LOGO

⁽¹⁾ 2017 net earnings include discrete income tax benefits of $297.0 million, including benefits arising from the enactment of the Tax Cuts and Jobs Act.

⁽²⁾ Adjusted EBITDA is a non-GAAP financial measure. We provide a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure in Annex A to this proxy statement.

2019 PROXY STATEMENT

PROXY SUMMARY

BOARD COMPOSITION

LOGO

The Board seeks a mix of directors with qualities that, together, create a high-functioning, diverse Board. All of our directors, other than Tom Hill, our Chairman, President and CEO, are independent. Each of our directors has proven leadership, sound judgment and a commitment to the success of our company. In recent years, we have had a number of members retire from the Board, and in December 2018, Kathleen Wilson-Thompson resigned from the Board due to other commitments. We have sought, and will continue to seek, as replacements diverse and experienced leaders with appropriate skills to oversee the management of our company.

LOGO

Our Board of Directors

GOVERNANCE HIGHLIGHTS

SHAREHOLDER ENGAGEMENT

We continued our corporate governance outreach efforts and held dialogues with shareholders representing more than 60% of our outstanding shares in order to foster and deepen relationships with the governance teams of our largest shareholders. Our discussions centered on the company’s ESG efforts, including sustainability, carbon reduction, diversity and inclusion, culture, executive compensation and corporate governance matters.

CORPORATE GOVERNANCE PRACTICES

We are committed to strong corporate governance policies and practices and believe that this commitment is a critical element in achieving long-term shareholder value. The following table summarizes certain highlights of our governance policies and practices:

•

Majority voting for uncontested director elections

•

Independent lead director with defined duties

•

8 of 9 directors are independent

•

Clawback policy

•

Annual board and committee evaluations and self-assessments

•

Risk oversight by full board and committees with annual enterprise risk management review

•

Comprehensive new director orientation

•

Mandatory director retirement age

•

Policies prohibiting hedging and pledging of our shares

•

Active shareholder engagement on ESG matters

•

Board participation in executive succession planning

•

Executive sessions of independent directors at every regular board meeting

•

Board review of safety and environmental performance at every regular board meeting

•

No shareholder rights plan

•

Diverse board in terms of gender, experience, skills and tenure

2019 PROXY STATEMENT

PROXY SUMMARY

2018 COMPENSATION HIGHLIGHTS

We believe that the results of the 2018 Say on Pay vote demonstrate continued strong shareholder support for our current compensation program. Furthermore, in the course of our shareholder outreach efforts, shareholders were generally supportive of our executive compensation program and the accompanying disclosures.

In order to align our executives’ interests with those of our shareholders, a substantial portion of our NEOs’ compensation is at-risk and will vary above or below target levels depending on company performance. As shown in the graphic below, in 2018, 84% of the compensation of our Chief Executive Officer (CEO) and an average of 75% of the compensation of our other NEOs was at risk and subject to performance factors.

LOGO

We encourage you to read the more detailed description of our compensation program in “Compensation Discussion and Analysis” beginning on page 26 before voting on Proposal 2: Advisory Vote on Compensation of Our Named Executive Officers.

At our 2018 Annual Meeting of Shareholders, over 98% of votes cast were in favor of the compensation of our named executive officers (NEOs).

2019 PROXY STATEMENT

Proposal 1

ELECTION OF DIRECTORS

Our constituent documents provide that our Board shall be divided into three classes, with the term of office of one class expiring each year and the number of directors in each class being as nearly equal as possible. At the Annual Meeting, three individuals will be elected to serve for three-year terms expiring in 2022 or until their successors have been duly elected and qualified. In accordance with the bylaws of our company, our Board of Directors is required to be composed of not fewer than nine nor more than 13 directors.

BOARD COMPOSITION AND DIRECTOR QUALIFICATIONS

Directors are responsible for reviewing and approving corporate strategy and overseeing the management of our company to assure that the long-term interests of the shareholders are being served. The Board believes that it needs a diverse skill set among its members to be able to respond to the needs of management and the company. The Governance Committee and full Board review annually the overall composition of the Board in order to ensure that Board members have the appropriate mix of skills and experience to best serve the company and its shareholders. The

Governance Committee and the Board use a director skills matrix in conducting this review.

The Governance Committee is also responsible for evaluating each director’s individual performance and contributions to the Board, as well as each director’s qualifications, skills, independence and competence, prior to recommending an existing director to the Board for re-nomination. The Board does not have specific diversity quotas, but considers race, ethnicity, gender, age, education and professional experiences in evaluating candidates for the Board.

The following pages list the three directors nominated for re-election at the 2019 Annual Meeting and the six directors with continuing terms that expire in subsequent years, as well as biographical information for all directors.

Your Board of Directors recommends a vote “FOR” the election of Kathleen L. Quirk, David P. Steiner and Lee J. Styslinger, III, as directors for three-year terms expiring in 2022.

LOGO

2019 PROXY STATEMENT

PROPOSALS REQUIRING YOUR VOTE

NOMINEES FOR 3-YEAR TERM EXPIRING IN 2022

LOGO

Kathleen L.

Quirk

AGE: 55

DIRECTOR SINCE: 2017

COMMITTEES:

Audit; Finance

CAREER HIGHLIGHTS:

Executive Vice President and Chief Financial Officer of Freeport-McMoRan Inc., Phoenix, Arizona (a leading international mining company and the world’s largest publicly traded copper producer) since 2007.

SKILLS AND QUALIFICATIONS:

•

Prior to being named its Executive Vice President in 2007 and Chief Financial Officer in 2003, Ms. Quirk served in a variety of capacities with Freeport-McMoRan, including as Treasurer and Vice President, Finance and Business Development.

•

She received her bachelor’s degree in accounting from Louisiana State University.

•

Ms. Quirk’s strong finance and accounting background, including her status as an “audit committee financial expert,” makes her well qualified to serve as a member of our Audit and Finance Committees. She also brings to our Board extensive experience in working with debt and equity markets along with a deep knowledge of tax, investor relations, corporate development and treasury management.

•

With over 30 years’ experience in the mining industry, Ms. Quirk has a keen understanding of the operational, governmental and regulatory issues facing our industry.

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David P.

Steiner

AGE: 59

DIRECTOR SINCE: 2017

COMMITTEES:

Executive; Governance; Safety,

Health and Environmental Affairs

CAREER HIGHLIGHTS:

Retired; Former President and Chief Executive Officer of Waste Management, Inc., Houston, Texas (a leading provider of integrated waste management services in North America) from March 2004 to November 2016.

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

FedEx Corporation

SKILLS AND QUALIFICATIONS:

•

Prior to being named Chief Executive Officer of Waste Management, Inc., Mr. Steiner served in various capacities with Waste Management, including as Executive Vice President and Chief Financial Officer from 2003 to 2004, and as Senior Vice President, General Counsel and Corporate Secretary from 2001 to 2003.

•

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

•

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

•

Mr. Steiner brings to our Board valuable insight into business, leadership and management issues facing large industrial companies. His experience as CEO of Waste Management, Inc. and as chair of the nominating and governance committee of FedEx Corporation makes him well qualified to serve on our Governance and Safety, Health and Environmental Affairs Committees.

•

Additionally, he brings to our Board a keen understanding of issues involving trucking and logistics management, a key component of our business.

2019 PROXY STATEMENT

PROPOSALS REQUIRING YOUR VOTE

NOMINEE FOR 3-YEAR TERM EXPIRING IN 2022

LOGO

Lee J.

Styslinger, III

AGE: 58

DIRECTOR SINCE: 2013

COMMITTEES:

Executive; Compensation; Safety, Health and Environmental Affairs

CAREER HIGHLIGHTS:

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

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

Regions Financial Corporation

•

Workday, Inc.

SKILLS AND QUALIFICATIONS:

•

Mr. Styslinger serves as Chairman and CEO of Altec and has over 20 years’ experience leading companies engaged in the heavy equipment industry.

•

He serves on the boards of many educational, civic and leadership organizations, including the Harvard Business School and the National Association of Manufacturers. He was appointed to the President’s Export Council, advising the President of the United States on international trade policy from 2006 to 2008. In 2017, Mr. Styslinger served on the President’s Manufacturing Council, and he currently serves on the President’s Trade Council.

•

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

•

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

LOGO

Your Board of Directors recommends a vote “FOR” election of the foregoing nominees as directors.

2019 PROXY STATEMENT

PROPOSALS REQUIRING YOUR VOTE

CONTINUING IN OFFICE: TERM EXPIRING IN 2020

LOGO

O. B. Grayson

Hall, Jr.

AGE: 61

DIRECTOR SINCE: 2014

COMMITTEES:

Executive; Finance; Governance

CAREER HIGHLIGHTS:

Retired; Former Executive Chairman of Regions Financial Corporation, Birmingham, Alabama (one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, mortgage and insurance products and services) and Regions Bank from July 2018 to December 2018; Chairman and Chief Executive Officer from December 2017 to July 2018; Chairman, President and Chief Executive Officer from 2013 to 2017; President and Chief Executive Officer from 2010 to 2013.

SKILLS AND QUALIFICATIONS:

•

Mr. Hall is the former Chairman and Chief Executive Officer of Regions Financial Corporation. Since he joined Regions in 1980, he served in roles of increasing responsibility, including operations, technology and commercial banking.

•

He is a Class A Director of the Federal Reserve Bank of Atlanta, and he is active in many civic and leadership organizations, including the Economic Development Partnership of Alabama and the Birmingham Business Alliance.

•

He graduated from the University of the South with a bachelor’s degree in economics. He also received a Master of Business Administration from the University of Alabama and is a graduate of the Stonier Graduate School of Banking, University of Pennsylvania.

•

Mr. Hall brings extensive management and business experience to our Board as well as a deep understanding of complex issues facing public companies. He further provides our Board with valuable experience in banking, finance and capital markets. In addition, as the former Chief Operating Officer of Regions, he has a substantial background in issues related to cybersecurity.

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James T.

Prokopanko

AGE: 65

DIRECTOR SINCE: 2009

COMMITTEES:

Compensation; Governance

CAREER HIGHLIGHTS:

Retired; Former President and Chief Executive Officer of The Mosaic Company, Plymouth, Minnesota (a leading producer and marketer of concentrated phosphate and potash crop nutrients for the global agriculture industry) from January 2007 to August 2015; Senior Advisor from August 2015 until his retirement in January 2016.

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

Regions Financial Corporation

•

Xcel Energy Inc.

SKILLS AND QUALIFICATIONS:

•

Mr. Prokopanko joined The Mosaic Company in 2006 and served in various capacities, including as President and Chief Executive Officer, and Executive Vice President and Chief Operating Officer. Prior to joining Mosaic, he was with Cargill, Inc., where he served in a wide range of leadership positions, including as Corporate Vice President of Cargill Procurement, a leader of Cargill’s Ag Producer Services Platform, and Vice President of the North America crops inputs business.

•

Mr. Prokopanko has a bachelor’s degree in computer science from the University of Manitoba and a Master of Business Administration from the University of Western Ontario.

•

His experience having served as the principal interface between management and the board at a New York Stock Exchange (NYSE)-listed company facilitates his service as lead director of our company as well as our Board’s performance of its oversight function.

•

Mr. Prokopanko’s executive management experience provides our Board with valuable insight into business, leadership and management issues. Additionally, he brings to our Board considerable knowledge of issues facing a company engaged in mineral extraction.

2019 PROXY STATEMENT

PROPOSALS REQUIRING YOUR VOTE

CONTINUING IN OFFICE: TERM EXPIRING IN 2021

LOGO

Thomas A.

Fanning

AGE: 62

DIRECTOR SINCE: 2015

COMMITTEES:

Executive; Audit; Compensation

CAREER HIGHLIGHTS:

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

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

Southern Company

SKILLS AND QUALIFICATIONS:

•

Mr. Fanning is Chairman, President and Chief Executive Officer of Southern Company. He has worked for Southern Company for more than 35 years and has held 15 different positions in eight different business units, including numerous officer positions with a variety of Southern Company subsidiaries in the areas of finance, strategy, international business development and technology.

•

Mr. Fanning previously was Chief Financial Officer of Southern Company, where he was responsible for the accounting, finance, tax, investor relations, treasury and risk management functions.

•

As Chairman of both the Electricity Subsector Coordinating Council (ESCC) and Strategic Infrastructure Coordinating Council (SICC), Mr. Fanning plays a leading role in national efforts to prevent and respond to cyber and physical terrorism for the U.S. electric system.

•

He has an undergraduate and master’s degree from the Georgia Institute of Technology and has completed several executive education programs.

•

As CEO of a large public utility, Mr. Fanning provides our Board with valuable business, leadership and management skills. His prior service as CFO of Southern Company and Chairman of the Federal Reserve Bank of Atlanta makes him well qualified to serve on our Audit Committee. Additionally, he brings to our Board a deep understanding of key issues facing an industrial company, including governmental and regulatory issues, and safety, health and environmental matters.

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J. Thomas

Hill

AGE: 60

DIRECTOR SINCE: 2014

COMMITTEES:

Executive

CAREER HIGHLIGHTS:

Chairman of the Board of the company since January 2016 and President and Chief Executive Officer since July 2014.

SKILLS AND QUALIFICATIONS:

•

Mr. Hill is Chairman, President and Chief Executive Officer of the company. He has been with the company for 29 years, serving in a variety of operations and general management assignments of increasing responsibility. Prior to being named Chairman, President and Chief Executive Officer, he served as Executive Vice President and Chief Operating Officer from January 2014 until July 2014, and Senior Vice President—South Region from December 2011 to December 2013. He also served as President of the company’s former Florida Rock Division and its Southwest Division.

•

Mr. Hill has served in leadership positions in a number of industry trade groups, including the Texas Concrete and Aggregates Association, the Florida Concrete and Products Association, and the National Stone, Sand and Gravel Association. In addition, he serves on the boards of the U.S. Chamber of Commerce, the United Way of Central Alabama, the Birmingham Business Alliance, and the Economic Development Partnership of Alabama.

•

He is a graduate of the University of Pittsburgh and the Wharton School of Business, Executive Management Program.

•

Mr. Hill has over 30 years’ experience in the aggregates industry, including extensive experience with the company in operations and management over a wide variety of geographic regions.

2019 PROXY STATEMENT

PROPOSALS REQUIRING YOUR VOTE

CONTINUING IN OFFICE: TERM EXPIRING IN 2021

LOGO

Cynthia L.

Hostetler

AGE: 56

DIRECTOR SINCE: 2014

COMMITTEES:

Finance; Governance

CAREER HIGHLIGHTS:

Trustee of Invesco Ltd., Atlanta, Georgia (international mutual funds) since 2017; Director of TriLinc Global Impact Fund, LLC, Los Angeles, California (international investment fund) since 2013; Trustee of Aberdeen International Funds, New York, New York (international mutual funds) from 2013 to 2017; Director of Artio Global Funds, New York, New York (international mutual funds) from 2010 to 2013; Director of Edgen Group Inc., Baton Rouge, Louisiana (energy infrastructure) from 2012 to 2014.

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

Genesee & Wyoming Inc.

SKILLS AND QUALIFICATIONS:

•

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

•

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

•

Ms. Hostetler earned her bachelor’s degree from Southern Methodist University and holds a Juris Doctor from the University of Virginia School of Law.

•

Ms. Hostetler brings to our Board significant financial, investment and audit committee experience, and has developed risk assessment skills through her bank, private equity and mutual fund leadership. She is an experienced public and investment company board member, having served on a number of public and private company boards, with committee chair positions that include audit, nominating and governance and investment management.

LOGO

Richard T.

O’Brien

AGE: 65

DIRECTOR SINCE: 2008

COMMITTEES:

Executive; Audit; Safety, Health and Environmental Affairs

CAREER HIGHLIGHTS:

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

OTHER PUBLIC COMPANY DIRECTORSHIPS:

•

Xcel Energy Inc.

SKILLS AND QUALIFICATIONS:

•

Mr. O’Brien became a director of Ma’aden (a Saudi Arabian mining company) in December 2017 and is a member of its executive committee. Mr. O’Brien previously served as a director of Newmont Mining Corporation from 2007 to 2013 and Inergy L.P. from 2006 to 2012.

•

His work includes extensive experience with NYSE-listed companies in finance and accounting, operations and strategic business planning.

•

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

•

Having served as CFO of four different public companies and as an “audit committee financial expert,” Mr. O’Brien provides the Board with considerable experience and acumen in financial reporting and accounting matters.

•

As a result of his tenure as CEO and CFO of Newmont Mining, Mr. O’Brien brings to the Board significant experience and knowledge of the mining and mineral extraction industry. This gives him insight into the risks facing the company, particularly with respect to safety, health and environmental issues, and provides him with the tools to effectively assist in overseeing those risks.

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PROPOSALS REQUIRING YOUR VOTE

Proposal 2

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

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking shareholders to approve, on an advisory basis, the compensation paid to our named executive officers (NEOs) as disclosed in the Section entitled “Compensation Discussion and Analysis,” and in the compensation tables and narrative discussion contained in this proxy statement. While this vote is advisory and not binding on our company, it provides information to our Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will consider when determining executive compensation in the future.

At our 2017 Annual Meeting of Shareholders, our shareholders once again indicated a preference that the advisory vote on the compensation for our NEOs occur on an annual basis. Subsequently, our Board determined to continue its policy for annual “Say on Pay” advisory votes. It is expected that the next shareholder vote on the frequency of “Say on Pay” advisory votes will occur at our 2023 Annual Meeting of Shareholders.

At our 2018 Annual Meeting of Shareholders, our shareholders voted over 98% in favor of our “Say on Pay” proposal. We believe this demonstrated strong support for our compensation program and policies. In 2018, we continued to analyze and make changes to our compensation program, considering new compensation trends and best practices, which led us to add our annual average growth rate of Aggregates Cash Gross Profit per ton (versus a pre-determined target) as an additional metric, together with Total Shareholder Return, for determining payouts for PSUs granted in 2019. We also participated in dialogues regarding our executive compensation program with most of our largest shareholders through our corporate governance shareholder engagement program. Please read the “Compensation Discussion and Analysis” Section on pages 26 to 44 for an in-depth look at our compensation program and how it was applied to the performance of our NEOs in 2018.

Based on the foregoing, the Board recommends a vote FOR the following resolution:

“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion contained in this proxy statement.”

As an advisory vote, this proposal is not binding on our company. However, our Board and Compensation Committee will consider the outcome of the advisory vote when making future compensation decisions.


				Your Board of Directors recommends a vote “FOR” the compensation of our named executive officers as contained in this proxy statement.

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PROPOSALS REQUIRING YOUR VOTE

Proposal 3

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee, which is composed solely of independent directors, has appointed Deloitte & Touche LLP as the independent registered public accounting firm for our company and its subsidiaries for the fiscal year ending December 31, 2019. The function of the independent registered public accounting firm is to audit our accounts and records; to report on the consolidated balance sheet and the related statements of consolidated comprehensive income, consolidated shareholders’ equity and consolidated statements of cash flows of our company and its subsidiaries; to audit our internal controls over financial reporting; and to perform such other appropriate accounting services as may be required and approved by the Audit Committee. Although shareholder ratification is not required, our Board is seeking shareholder ratification as a matter of good corporate governance. Even if the appointment of Deloitte & Touche LLP is ratified by a majority of the votes cast at the Annual Meeting, the Audit Committee may, in its discretion, direct the appointment of another independent registered public accounting firm at any time during the year if it believes such appointment is in the best interests of the company and the shareholders. If a majority of the votes cast at the meeting fails to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm, the Audit Committee will consider the selection of another independent registered public accounting firm for future years.

The firm of Deloitte & Touche LLP, or its predecessors, has audited our financial statements since 1956. A representative of that firm is expected to be present at the Annual Meeting, will be given an opportunity to make a statement and will be available to respond to appropriate questions.

Your Board of Directors recommends a vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2019.


				Your Board of Directors recommends a vote “FOR” the ratification of the appointment of Deloitte & Touche LLP.

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Corporate Governance


POLICIES
POLICIES

We take our corporate governance responsibilities very seriously and have adopted Corporate Governance Guidelines that provide a framework for the governance of our company. These Corporate Governance Guidelines build on practices that we have followed for many years and demonstrate our continuing commitment to corporate governance excellence.

Our Board, with recommendations from our Governance Committee, regularly reviews corporate governance developments and adopts appropriate practices as warranted. We have a Business Conduct Policy that applies to all of our employees and directors and deals with a variety of corporate compliance issues, including conflicts of interest, harassment, compliance with laws, confidentiality of company information, fair dealing and use of company assets. All employees and directors are required to fill out a questionnaire (biennially in the case of employees and annually in the case of directors) regarding their personal compliance with the Business Conduct Policy and are encouraged to report any illegal or unethical behavior of which they become aware.

Our Board has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers. The Code of Ethics defines “Senior Financial Officers” to include the Chief Financial Officer, Controller and Principal Accounting Officer. The Code of Ethics covers such topics as financial reporting, conflicts of interest and compliance with laws. If we make any amendment to, or waiver of, any provision of the Code of Ethics, we will disclose such information on our website as promptly as practicable, as may be required under applicable Securities and Exchange Commission (SEC) and NYSE rules.

You can access our bylaws, Corporate Governance Guidelines, Business Conduct Policy and Code of Ethics at our website www.vulcanmaterials.com, or you can obtain a printed copy free of charge by writing to us at: Corporate Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242. Please note that the information contained on our website is not incorporated by reference in, nor considered to be a part of, this proxy statement.


SHAREHOLDER ENGAGEMENT
SHAREHOLDER ENGAGEMENT

We believe that regular, transparent communication with our shareholders is important to our long-term success. In 2018, we continued our corporate governance engagement program and held dialogues with shareholders representing more than 60% of our outstanding shares in order to foster and deepen relationships with the governance teams of our largest

shareholders. Our discussions centered on the company’s ESG efforts, including sustainability, carbon reduction, diversity and inclusion, culture, executive compensation and corporate governance matters. Shareholder feedback from the meetings was shared with the Compensation Committee and the Governance Committee, as well as with the full Board.


DIRECTOR INDEPENDENCE
DIRECTOR INDEPENDENCE

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

it in determining whether a director has a material relationship with our company.

DIRECTOR INDEPENDENCE CRITERIA

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

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

(b)

has not received more than $120,000 per year in direct compensation from our company, or any of its consolidated subsidiaries, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued

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CORPORATE GOVERNANCE

service) during any twelve-month period within the last three years;

(c)	has not during the last three years personally performed legal or professional services for our company in an amount more than $10,000;

(d)	is not a current partner or employee of our company’s independent auditor and has not been employed by the present or former independent auditor of our company and personally worked on our company’s audit during the last three years;

(e)	during the last three years, has not been part of an interlocking directorate in which an executive officer of our company, or any of its consolidated subsidiaries, served on the compensation committee of another company that concurrently employs the director;

(f)

is not, and has not been in the past three years, an executive officer or an employee of another company (exclusive of charitable organizations) that makes payments to, or receives payments from, our company, or any of its consolidated subsidiaries, for property or services in an amount which, in any single fiscal year, exceeds the greater of $1,000,000 or 2% of the consolidated gross revenues of such other company;

(g)	has no immediate family member who is, or has been within the last three years, an executive officer of our company, or any of its consolidated subsidiaries;

(h)	has no immediate family member meeting any of the criteria set forth in (b) - (f); except with respect to item (d), in which case an immediate family member may be an employee (not a partner) of the independent auditor

so long as such family member does not personally work on our company’s audit; and

(i)	has no other material relationship with our company, or any of its consolidated subsidiaries, either directly or as a partner, shareholder, director or officer of an organization that has a material relationship with our company or any of its consolidated subsidiaries.

In determining director independence, “immediate family member” is defined as a spouse, parent, child, sibling, mother or father-in-law, son or daughter-in-law, brother or sister-in-law, and anyone (other than a domestic employee) who shares the director’s home. Individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated, are not taken into consideration when determining a director’s independence. The Director Independence Criteria also require our Board to consider all relevant facts and circumstances, including a director’s commercial, industrial, banking, consulting, legal, accounting, familial and charitable relationships and such other criteria as our Board may determine from time to time.

In early 2019, the Board conducted an evaluation of director independence for each director, based on the Director Independence Criteria, the NYSE listing standards and applicable SEC rules and regulations. As a result of this evaluation, the Board affirmatively determined that all of the directors other than our Chairman, President and CEO, Tom Hill, are independent directors under our Board’s Director Independence Criteria, the NYSE listing standards and the applicable SEC rules and regulations.


DIRECTOR NOMINATION PROCESS
DIRECTOR NOMINATION PROCESS

The Governance Committee considers director candidates recommended by our shareholders. Any shareholder wishing to recommend a candidate for election at the 2020 Annual Meeting of Shareholders must submit that recommendation in writing, addressed to the Governance Committee, in care of our Corporate Secretary, at 1200 Urban Center Drive, Birmingham, Alabama 35242, in accordance with the deadlines and procedures set forth in our bylaws. The notice should include the following:

•

The name and address of the shareholder who intends to make the nomination(s) and of the person or persons to be nominated;

•

A representation that the shareholder is a holder of record or a beneficial holder of stock entitled to vote at the meeting (including the number of shares the shareholder owns) and

intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;

•

A description of all arrangements and understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination(s) are to be made by the shareholder;

•

Such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed under the proxy rules of the SEC (whether or not such rules are applicable) had each nominee been nominated, or intended to be nominated, by our Board, including the candidate’s name, biographical information, and qualifications; and

•

The written consent of each nominee to serve as a director if so elected.

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CORPORATE GOVERNANCE

The Governance Committee will identify nominees by first evaluating the current members of our Board willing to continue in service. Current members of our Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for nomination, balancing the value of continuity of service by existing members of our Board with the potential benefits of obtaining new Board members. If any member of the Board does not

wish to continue in service or if the Governance Committee or the Board decides not to nominate a current Board member for re-election, the Governance Committee may identify the desired skills and experience for a new nominee in light of the above criteria. Directors and members of management also may suggest candidates for Board service. Timely recommendations by our shareholders will receive equal consideration by the Governance Committee.


BOARD LEADERSHIP STRUCTURE
BOARD LEADERSHIP STRUCTURE

Our Board understands the importance of evaluating and determining the optimal leadership structure so as to provide independent oversight of management. Our Board also understands that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary from time to time. For this reason, our Board does not have a policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer. The Board has determined that our company should have the flexibility to combine or separate these functions as circumstances deem appropriate. The Board believes that it is in the best interests of our company and its shareholders to have Tom Hill serve as our Chairman, President and CEO, at this time.

In considering its leadership structure, our Board has taken a number of additional factors into account. The Board, which consists exclusively of independent directors, other than Mr. Hill, and all of whom are highly qualified and experienced, exercises a strong independent oversight function. This oversight function is enhanced by the fact that all of the Board’s committees, other than the Executive Committee, are comprised entirely of independent directors.

Most significantly, our Corporate Governance Guidelines provide for an independent lead director, a position that is elected annually from among the independent directors of our Board.

Among other things, the lead director is responsible for:

•

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

•

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

•

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

•

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

•

if requested by major shareholders, ensuring that he or she is available for consultation and direct communication.

The duties of the lead director are delineated in our Corporate Governance Guidelines, which are available on our website at www.vulcanmaterials.com. Mr. Prokopanko currently serves as the lead director, and Mr. Hall will become lead director on May 10, 2019.

Our Board believes that these factors provide the appropriate balance between the authority of those who oversee our company and those who manage it on a day-to-day basis. For additional information regarding how oversight is exercised and how the Board receives information from our committees performing risk management and oversight functions, see “Corporate Governance—Enterprise Risk Management” on page 19.


NON-MANAGEMENT EXECUTIVE SESSIONS
NON-MANAGEMENT EXECUTIVE SESSIONS

Our Board has adopted a policy relating to non-management executive sessions. Under this policy, the Board meets at each regularly scheduled Board meeting in an executive

session in which Mr. Hill and other members of management are not present. During 2018, the non-management directors met in executive session five times.

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MEETINGS AND ATTENDANCE
MEETINGS AND ATTENDANCE

In 2018, our Board held five in-person meetings, and each current director who was a member of the Board in 2018 attended more than 95% of the total number of meetings of the Board and meetings of the committees during 2018 of which he or she was a member.

Our directors are expected to attend the Annual Meeting of Shareholders. In furtherance of this policy, our Board holds a regularly scheduled Board meeting on the same day as the Annual Meeting of Shareholders. All of our Board members attended the 2018 Annual Meeting of Shareholders in person.


COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors has established six standing committees as follows:

DIRECTOR

AUDIT
COMMITTEE

COMPENSATION
COMMITTEE

EXECUTIVE
COMMITTEE

FINANCE
COMMITTEE

GOVERNANCE
COMMITTEE

SAFETY, HEALTH AND
ENVIRONMENTAL
AFFAIRS COMMITTEE

Thomas A. Fanning

•

Chair

•

O. B. Grayson Hall, Jr.

•

Chair

•

J. Thomas Hill

Chair

Cynthia L. Hostetler

•

Richard T. O’Brien

Chair

•

James T. Prokopanko

•

Kathleen L. Quirk

•

David P. Steiner

•

Chair

•

Lee J. Styslinger, III

•

Chair

Number of meetings held in 2018

The charters of the Audit, Compensation and Governance Committees are available on our website at www.vulcanmaterials.com. You can also obtain a printed copy free of charge by writing to us at: Corporate Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

All of the Board committees, other than the Executive Committee, are composed entirely of independent, non-management directors.

AUDIT COMMITTEE

The Audit Committee advises our Board and management from time to time with respect to internal controls, financial systems and procedures, accounting policies and other significant aspects of our company’s financial management. Pursuant to its charter, the Audit Committee selects our company’s independent registered public accounting firm and oversees the arrangements for, and approves the scope of, the audits to be performed by the independent registered

public accounting firm. The Audit Committee’s primary responsibilities under its written charter include the following:

•

Hiring, evaluating and, when appropriate, replacing the independent registered public accounting firm, whose duty it is to audit our books and accounts and our internal controls over financial reporting for the fiscal year in which it is appointed;

•

Determining the compensation to be paid to the independent registered public accounting firm and, in its sole discretion, approving all audit and engagement fees and terms and pre-approving all auditing and non-auditing services of such firm, other than certain de minimis non-audit services;

•

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

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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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the selection, application and disclosure of accounting policies used in our financial statements;

•

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

•

Reviewing and reassessing the adequacy of the Audit Committee Charter adopted by our Board, and recommending proposed changes to our Board.

In addition, the Audit Committee is responsible for reviewing and discussing with management our company’s policies with respect to risk assessment and risk management. Further information about the role of the Audit Committee in risk assessment and risk management are included in the Section entitled “Enterprise Risk Management” on page 19.

The Audit Committee has established policies and procedures for the pre-approval of all services by the independent registered public accounting firm. See “Independent Registered Public Accounting Firm—Pre-Approval of Services Performed by Independent Registered Public Accounting Firm” on page 22 for more information.

The Audit Committee has also established procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by our company regarding its accounting, internal controls and auditing matters. See “Corporate Governance—Policy on Reporting of Concerns Regarding Accounting Matters” on page 20 for more information.

The members of the Audit Committee are Messrs. O’Brien (Chair) and Fanning, and Ms. Quirk. All members of our Audit Committee are non-management directors. Our Board of Directors has determined that each is “independent” and “financially literate” within the meaning of the listing standards of the NYSE, SEC rules and regulations, and the Director Independence Criteria adopted by our Board of Directors and posted on our website at www.vulcanmaterials.com under “Investor Relations” under the subheading “Corporate Governance.” In addition, our Board has determined that both Mr. O’Brien and Ms. Quirk are “audit committee financial experts” as defined by rules adopted by the SEC. More details about the role of the Audit Committee may be found in the Report of the Audit Committee on page 21 of this proxy statement.

COMPENSATION COMMITTEE

The Compensation Committee determines and oversees the execution of our company’s executive compensation philosophy, and oversees the administration of our company’s executive compensation plans.

The Compensation Committee is responsible for, among other things:

•

determining and setting the amount of compensation paid to our CEO and other senior officers;

•

reviewing compensation plans relating to our officers;

•

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

•

making recommendations to the Board with respect to compensation paid by our company to any director.

The Compensation Committee also reviews and discusses with management the Compensation Discussion and Analysis required by SEC rules to be included in our proxy statement.

The Compensation Committee retains Meridian Compensation Partners, LLC as its independent compensation consultant. For a description of the process undertaken by the Compensation Committee to set compensation and the role of our independent compensation consultant in that process, please refer to the Section entitled “Compensation Discussion and Analysis” in this proxy statement.

The members of the Compensation Committee are Messrs. Fanning (Chair), Prokopanko and Styslinger. The Compensation Committee is composed solely of non-management directors who are “independent” within the meaning of the listing standards of the NYSE, SEC rules and regulations and the Director Independence Criteria. In addition, each Compensation Committee member is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act, and is an “outside director” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (Code).

EXECUTIVE COMMITTEE

The Executive Committee has the same powers as our Board, except as limited by the New Jersey Business Corporation Act. Pursuant to its charter, the Executive Committee’s primary function is to exercise the powers of the Board on urgent matters arising between regularly scheduled board meetings when a quorum of the full Board is not available. Members of the Executive Committee are Messrs. Hill (Chair), Fanning, Hall, O’Brien, Steiner and Styslinger.

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FINANCE COMMITTEE

The Finance Committee assists the Board in its oversight of the company’s actual and projected financial performance, capital structure and capital allocation, pension plans and 401(k) plans, and other matters of financial significance (e.g., acquisitions). The Finance Committee’s primary responsibilities under its written charter are:

•

reviewing the company’s actual year-to-date financial performance, estimated full year financial performance and projected long-term financial performance;

•

reviewing the company’s capital structure, liquidity, credit metrics and credit ratings relative to its objectives, capital allocation plans and strategies, and projected near-term financing requirements;

•

reviewing and recommending to the Board, the company’s proposals for dividend policy and dividend payments; and

•

ensuring that the pension plans’ and 401(k) plans’ assets are managed in compliance with all applicable laws and regulations (e.g., ERISA), and reviewing the funded status of the pension plans to ensure compliance with minimum funding requirements under all applicable laws and regulations.

Every member of the Finance Committee is a non-management director who is “independent” within the meaning of the listing standards of the NYSE, SEC rules and regulations and the Director Independence Criteria. Members of the Finance Committee are Mr. Hall (Chair) and Mses. Hostetler and Quirk.

GOVERNANCE COMMITTEE

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

•

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

•

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

•

evaluates individuals suggested by shareholders as director nominees.

In recommending director nominees to the Board, the Governance Committee considers all of the factors listed under “Board Composition and Director Qualifications” set forth in this proxy statement.

The Governance Committee believes it appropriate for at least one member of the Board to meet the criteria for an “audit committee financial expert” as defined by the SEC rules, and for a substantial majority of the members of the Board to meet the definition of “independent” as defined by the listing standards of the NYSE, SEC rules and regulations and the Director Independence Criteria.

The Governance Committee also reviews our Board’s committee structure and recommends to our Board, for its approval, directors to serve as members of each committee. The Governance Committee is also responsible for overseeing the evaluations of the Board and its committees.

Members of the Governance Committee are Messrs. Steiner (Chair), Hall and Prokopanko, and Ms. Hostetler. The Governance Committee is composed solely of non-management directors who are “independent” within the meaning of the listing standards of the NYSE, SEC rules and regulations and the Director Independence Criteria.

SAFETY, HEALTH AND ENVIRONMENTAL AFFAIRS COMMITTEE

The Safety, Health and Environmental Affairs Committee has the responsibility for reviewing our policies, practices and programs with respect to the management of safety, health and environmental affairs. It also monitors our compliance with safety, health and environmental laws and regulations and oversees operational risk. Every member of this Committee is a non-management director who is “independent” within the meaning of the listing standards of the NYSE, SEC rules and regulations and the Director Independence Criteria. Members of the Safety, Health and Environmental Affairs Committee are Messrs. Styslinger (Chair), O’Brien and Steiner.

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ENTERPRISE RISK MANAGEMENT
ENTERPRISE RISK MANAGEMENT

MANAGEMENT

Our company has a management risk committee that is led by senior corporate officers and draws on the subject matter expertise of senior managers from various functional departments and from line operations management. The management risk committee meets on a regular basis to discuss and evaluate enterprise risks facing the company. The committee develops mitigation plans in response to identified risks and monitors the implementation of such plans. The management risk committee makes regular reports to the Board and the Audit and Safety, Health and Environmental Affairs Committees.

BOARD OF DIRECTORS

Although the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board assist the Board in fulfilling its oversight responsibilities in certain areas of risk. In particular, our Audit Committee focuses on financial risk, including internal controls and cybersecurity risks. Our Audit Committee also assists the Board in fulfilling its duties and oversight responsibilities relating to our company’s compliance and ethics programs. In addition, our Safety, Health and Environmental Affairs Committee assists the Board in fulfilling its responsibilities with respect to monitoring operational risks and compliance with safety, health and environmental laws and regulations and works closely with our company’s legal and regulatory groups. Our Compensation Committee also assists the Board in

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

We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing our company and that our Board structure supports this approach. To further illustrate our approach, the Board devotes significant time and attention to the oversight of cybersecurity and information security risks, and benefits from the technical expertise of certain of its members, namely Messrs. Fanning and Hall. In particular, the Board and Audit Committee each receives regular reporting on cybersecurity and information security risks. The company’s management risk committee is also focused on the issue. This collaboration between the Board, the Audit Committee and members of management ensures broad oversight of the evolving nature of cybersecurity and information security risks.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None.


TRANSACTIONS WITH RELATED PERSONS
TRANSACTIONS WITH RELATED PERSONS

Transactions in which the company participates and in which any related person of the company has a direct or indirect material interest are subject to our Business Conduct Policy and are subject to review, approval or ratification, as appropriate under the circumstances, by the company under the standards enumerated in the Business Conduct Policy. Each director, executive officer and director nominee of the company receives and agrees to abide by our Business Conduct Policy. We also require our directors and executive officers to complete a director and officer questionnaire annually that requires disclosure of any related party transactions.

In assessing the independence of its members, the Board considers any interests a director may have in any transactions in which the company participates. The Board

also considers other entities with which the directors are affiliated and any business the company has done with such entities.

Except as discussed below, since the beginning of our last fiscal year, no financial transactions, arrangements or relationships, or any series of them, were disclosed or proposed through our processes for review, approval or ratification of transactions with related persons in which (i) Vulcan was or is to be a participant, (ii) the amount involved exceeded $120,000, and (iii) any related person had or will have a direct or indirect material interest. A related person means any director, nominee for director, executive officer or 5% owner of our common stock or an immediate family member of any such person.

2019 PROXY STATEMENT

CORPORATE GOVERNANCE

The company paid approximately $6.7 million in rent and royalty payments to Florida Rock Properties, Inc. (FRP) in 2018 in the ordinary course of its aggregates operations. Mr. Baker, our Senior Vice President, is a significant shareholder of FRP Holdings, Inc., the parent company of FRP.

With respect to the transactions involving Messrs. Hall and Fanning described below, we do not believe that either individual had a direct or indirect material interest that would impair his independence or status as a “non-employee director” or “outside director” under applicable rules of the NYSE, SEC or the Code.

Mr. Hall, a member of our Board of Directors, served as Executive Chairman (through December 2018) and Chairman and Chief Executive Officer (through July 2018) of Regions Financial Corporation (Regions Financial), one of the nation’s

largest full-service banking institutions. Regions Bank, a subsidiary of Regions Financial, provides lending, trustee and investment banking services to the company. Any loans made by Regions Bank to the company during fiscal year 2018 were made in the ordinary course of business, were made on substantially the same terms as those prevailing at the time for comparable loans with persons not related to the company, and did not involve more than the normal risk of collectability or present other unfavorable features.

Additionally, in 2018, the company sold approximately $718,000 worth of product to Southern Company, which is less than 1% of either company’s revenues for 2018. Mr. Fanning, a member of our Board of Directors, is the Chairman, President and CEO of Southern Company.


SHAREHOLDER COMMUNICATION WITH OUR BOARD OF DIRECTORS
SHAREHOLDER COMMUNICATION WITH OUR BOARD OF DIRECTORS

Our Board has established a process for shareholders and other interested parties to communicate directly with the lead director or with the non-management directors individually or as a group. Any shareholder or other interested party who desires to contact one or more of our non-management directors, including our Board’s lead director, may send correspondence to the following address:

Board of Directors

(or lead director or name of individual director)

c/o Corporate Secretary

Vulcan Materials Company

1200 Urban Center Drive

Birmingham, Alabama 35242

All such communications will be forwarded to the appropriate director or directors specified in such communications as soon as practicable in accordance with the Policy on Shareholder Communications with the Board, adopted by the independent directors in February 2004.


POLICY ON REPORTING OF CONCERNS REGARDING ACCOUNTING


MATTERS
MATTERS

Our Business Conduct Policy (available on our website at www.vulcanmaterials.com under the heading “Investor Relations” under the subheading “Corporate Governance”) sets forth our policies regarding reporting of accounting-related concerns or complaints (as well as reporting of other concerns or complaints) to our Compliance Officer or the Audit Committee.

Any shareholder or interested party who has any concerns or complaints relating to accounting, internal accounting controls or auditing matters, may contact the Audit Committee by writing to the following address:

Vulcan Audit Committee

c/o Corporate Secretary

Vulcan Materials Company

1200 Urban Center Drive

Birmingham, Alabama 35242

2019 PROXY STATEMENT

Report of the Audit Committee

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

Our company’s management has the primary responsibility for our company’s financial statements and financial reporting process, including the system of internal controls. Deloitte & Touche LLP, our independent registered public accounting firm, is responsible for expressing an opinion on the conformity of our company’s audited financial statements with generally accepted accounting principles. Our independent registered public accounting firm also audits, in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), the effectiveness of our company’s internal controls 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 company’s audited financial statements with management and the independent registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard 1301 “Communications with Audit Committees” issued by the PCAOB. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by the applicable requirements

of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with the independent accountant its independence. The Audit Committee has also considered whether the independent registered public accounting firm’s provision of any non-audit services is compatible with the firm’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from our company and management.

Based on the reviews and discussions noted above, the Audit Committee recommended to the Board that the audited financial statements be included in our company’s Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the SEC.

Dated: February 21, 2019

AUDIT COMMITTEE

Richard T. O’Brien, Chair

Thomas A. Fanning

Kathleen L. Quirk

The Report of the Audit Committee does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other company filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that the company specifically incorporates the Report of the Audit Committee by reference therein.

2019 PROXY STATEMENT

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, 2018 and 2017, by Deloitte & Touche LLP and its affiliates (all of which are subsidiaries of Deloitte, LLP, the United States member firm of Deloitte Touche Tohmatsu Limited) were as follows:



	2018		2017
Audit Fees⁽¹⁾	$	2,799,260	$	3,134,945
Audit-Related Fees⁽²⁾		148,500		161,790
Tax Fees		0		0
All Other Fees⁽³⁾		0		59,620
Total	$	2,947,760	$	3,356,355

(1)	Consists of fees for the audit of our financial statements, including the audit of the effectiveness of our internal controls over financial reporting, reviews of our quarterly financial statements, comfort letters, consents, and other services associated with other SEC filings.

(2)	Consists of fees for the audits of our employee benefit plans and accounting consultations relating to various asset transactions.

(3)	Consists of fees for services related to an internal audit quality assessment project.

PRE-APPROVAL OF SERVICES PERFORMED BY INDEPENDENT REGISTERED


PUBLIC ACCOUNTING FIRM
PUBLIC ACCOUNTING FIRM

The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, our company’s independent registered public accounting firm. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated and the related fees, to be rendered by the independent registered public accounting firm during the year.

During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm. The Audit

Committee has delegated pre-approval authority to the Chair of the Audit Committee for those instances when pre-approval is needed prior to a scheduled Audit Committee meeting. The Chair of the Audit Committee must report on such approvals at the next scheduled Audit Committee meeting. The Audit Committee or the Chair of the Audit Committee pre-approved all audit, audit-related, tax and other services performed by Deloitte & Touche LLP during the fiscal year ended December 31, 2018.

No audit-related, tax or other services were rendered in 2018 pursuant to the de minimis exception to the pre-approval requirement set forth in Regulation S-X Rule 2-01(c)(7)(i)(C).

2019 PROXY STATEMENT

Security Ownership of Certain Beneficial Owners and Management


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

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



NAME AND ADDRESS OF BENEFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (# OF SHARES)			PERCENT OF CLASS
The Vanguard Group, Inc. 100 Vanguard Blvd Malvern, PA 19355		14,138,360	⁽¹⁾		10.7	%
State Farm Mutual Automobile Insurance Company and Affiliates One State Farm Plaza Bloomington, IL 61710		12,733,571	⁽²⁾		9.7	%
BlackRock, Inc. 55 East 52nd Street New York, NY 10055		8,540,962	⁽³⁾		6.5	%

(1)

Based on information contained in a Schedule 13G/A, filed with the SEC on February 11, 2019. The Vanguard Group (Vanguard) reports sole power to vote (or direct the vote of) 161,362 shares and sole power to dispose (or direct the disposition of) 13,951,357 shares. Vanguard also reports shared power to vote (or direct the vote of) 30,135 shares and shared power to dispose (or direct the disposition of) 187,003 shares. Vanguard reports an aggregate amount of 14,138,360 shares beneficially owned.

(2)

Based on information contained in a Schedule 13G, filed with the SEC on February 5, 2019, by State Farm Mutual Automobile Insurance Company and various affiliated entities (State Farm). State Farm reports sole power to vote (or direct the vote of) and dispose (or direct the disposition of) 12,680,600 shares and the shared power to vote (or direct the vote of) and dispose (or direct the disposition of) 52,971 shares. State Farm reports an aggregate amount of 12,733,571 beneficially owned shares. Each entity listed in the Schedule 13G expressly disclaims beneficial ownership as to all shares as to which such entity has no right to receive the proceeds of the sale of the security and disclaims that it is part of a group.

(3)

Based on information contained in a Schedule 13G/A, filed with the SEC on February 6, 2019. BlackRock, Inc. (BlackRock) reports sole power to vote (or direct the vote of) 7,475,157 shares and sole power to dispose (or direct the disposition of) 8,540,962 shares. BlackRock reports an aggregate amount of 8,540,962 shares beneficially owned. Various persons have the right to receive, or the power to direct the receipt of, dividends and the proceeds from the sale of the company’s common stock. No one person’s interest in the company’s common stock is more than five percent of the total outstanding common shares.

2019 PROXY STATEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


SECURITY OWNERSHIP OF MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information, unless otherwise indicated, as of March 1, 2019, regarding beneficial ownership of our company’s common stock, our only outstanding class of equity securities, by each of our directors, each of our NEOs identified in the Summary Compensation Table on page 46 of this proxy statement, and our directors and executive officers as a group. We believe that, for each of the individuals set forth in the table below, such individual’s financial interest is aligned with the interests of our other shareholders because the value of such individual’s total holdings will increase or decrease in line with the price of our common stock.


NAME OF BENEFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (# OF SHARES)

NON-EMPLOYEE DIRECTORS⁽¹⁾	SHARES OWNED DIRECTLY OR INDIRECTLY		PHANTOM SHARES HELD PURSUANT TO PLANS		TOTAL		PERCENT OF CLASS
Thomas A. Fanning		0		9,413		9,413		*
O. B. Grayson Hall, Jr.		0		12,065		12,065		*
Cynthia L. Hostetler		0		5,461		5,461		*
Richard T. O’Brien		0		18,030		18,030		*
James T. Prokopanko		0		15,898		15,898		*
Kathleen L. Quirk		0		2,597		2,597		*
David P. Steiner		0		4,212		4,212		*
Lee J. Styslinger, III		4,002		16,281		20,283		*



CEO AND OTHER NEOS⁽²⁾	SHARES OWNED DIRECTLY OR INDIRECTLY			EXERCISABLE OPTIONS/ SOSARS		DEFERRED LTI PAYMENTS		TOTAL		PERCENT OF CLASS
Tom Hill		110,483	⁽³⁾		110,476		8,455		229,414		*
John McPherson		63,014	⁽⁴⁾		350,184		0		413,198		*
Suzanne Wood⁽⁵⁾		0			0		0		0		*
Stan Bass		43,047	⁽⁶⁾		48,875		22,427		114,349		*
Michael Mills		58,312	⁽⁷⁾		44,175		0		102,487		*
Tom Baker		15,848	⁽⁸⁾		4,034		0		19,882		*
All Directors and Executive Officers as a group (18 persons)									1,042,713		0.79	%

*	Less than 1% of issued and outstanding shares of our company’s common stock.

(1)

Beneficial ownership for our non-employee directors includes all shares held of record or in street name and, if noted, by trusts or family members. The amounts also include non-forfeitable phantom shares settled in stock accrued under the Directors’ Deferred Compensation Plan and Deferred Stock Units (DSUs) awarded under the 2006 Plan and the 2016 Plan.

(2)

Beneficial ownership for the executive officers includes shares held of record or in street name and, if noted, by trusts or family members. 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, 2019, shares credited to the executives’ accounts under our 401(k) Plan and any long-term incentive (LTI) payments from DSUs, Performance Share Units (PSUs) and Restricted Stock Units (RSUs) that may have been deferred into the Executive Deferred Compensation Plan.

(3)	Includes 21,879 shares held in 401(k) plan and excess benefit plan.

(4)	Includes 10,404 shares held in 401(k) plan and excess benefit plan.

(5)	Ms. Wood joined the company in September of 2018.

(6)	Includes 14,784 shares held in 401(k) plan and excess benefit plan.

(7)	Includes 10,099 shares held in 401(k) plan and excess benefit plan.

(8)	Includes 1,113 shares held in 401(k) plan and excess benefit plan and 14,735 shares held indirectly in trusts.

2019 PROXY STATEMENT

Equity Compensation Plans

The table below sets forth information regarding the number of shares of our common stock authorized for issuance under our equity compensation plans as of December 31, 2018.

EQUITY COMPENSATION PLAN INFORMATION

PLAN CATEGORY

NUMBER OF
SECURITIES
TO BE ISSUED
UPON EXERCISE
OF OUTSTANDING
OPTIONS,
WARRANTS AND
RIGHTS

(A)

WEIGHTED-
AVERAGE
EXERCISE
PRICE OF
OUTSTANDING
OPTIONS,
WARRANTS
AND RIGHTS
(B)

NUMBER OF
SECURITIES
REMAINING
AVAILABLE FOR
FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION
PLANS (EXCLUDING
SECURITIES
REFLECTED IN
COLUMN (A))

(C)

Equity compensation plans approved by security holders⁽¹⁾:

2000 Florida Rock Industries Amended & Restated Stock Plan⁽²⁾

Stock-Only Stock Appreciation Rights

24,213

$45.36

Total 2000 Florida Rock Industries Amended & Restated Stock Plan

24,213

0⁽²⁾

2006 Omnibus Long-Term Incentive Plan⁽³⁾

Stock-Only Stock Appreciation Rights

1,555,370

$52.25

Performance Share Units

374,174

Restricted Stock Units

60,019

Deferred Stock Units for Non-employee Directors

62,293

Total 2006 Omnibus Long-Term Incentive Plan

2,051,856

2,570,042⁽³⁾

2016 Omnibus Long-Term Incentive Plan

Stock-Only Stock Appreciation Rights

162,000

$122.03

Performance Share Units

248,639

Restricted Stock Units

85,360

Deferred Stock Units for Non-employee Directors

29,436

Total 2016 Omnibus Long-Term Incentive Plan

525,435

7,166,793

Equity compensation plans not approved by security holders

NONE

Total of All Plans

2,601,504

9,736,835

(1)

All of our company’s equity compensation plans have been approved by the shareholders of our company or, in the case of the 2000 Florida Rock Industries Amended & Restated Stock Plan, by the shareholders of Florida Rock Industries, Inc. prior to our acquisition of that company. Column (A) sets forth the number of shares of common stock issuable upon the exercise of options, warrants or rights outstanding under the 2000 Florida Rock Industries Amended & Restated Stock Plan, the 2006 Plan and the 2016 Plan. The weighted-average exercise price of outstanding stock options is shown in Column (B). The remaining number of shares that may be issued under the equity compensation plans are shown in Column (C).

(2)

This plan was approved by the shareholders of Florida Rock Industries, Inc. Shares available have been adjusted for the merger transaction. Units were only available for granting of awards until September 30, 2010. Future grants will not be made under this plan. The plan will be used only for the administration and payment of grants that are outstanding.

(3)	Future grants will not be made under this plan. The plan will be used only for the administration and payment of grants that were outstanding when the 2016 Plan was approved.

2019 PROXY STATEMENT

Compensation Discussion and Analysis



TABLE OF CONTENTS
Introduction			26
Executive Summary			26
Executive Compensation Program in Detail			30
Compensation Decision Process			33
Elements of Compensation			37
Stock Ownership Guidelines			43
Risk, Accounting and Tax Considerations			44

Introduction

The Compensation Discussion and Analysis describes the company’s executive compensation philosophy and programs for our named executive officers (NEOs). The company’s NEOs for 2018 were:



NAME		PRINCIPAL POSITION
J. Thomas Hill		Chairman, President and Chief Executive Officer
John R. McPherson⁽¹⁾		Former Executive Vice President and Chief Financial and Strategy Officer
Suzanne H. Wood⁽²⁾		Senior Vice President and Chief Financial Officer
Stanley G. Bass		Chief Growth Officer
Michael R. Mills		Chief Administrative Officer
Thompson S. Baker, II		Senior Vice President

⁽¹⁾	Mr. McPherson served as our Chief Financial Officer through August 31, 2018, and as our Executive Vice President, Chief Strategy Officer through December 31, 2018.

⁽²⁾	Ms. Wood began serving as our Senior Vice President and Chief Financial Officer on September 1, 2018.

Executive Summary

Vulcan’s unwavering commitment to reliability, quality and customer service has long provided us with a competitive edge, and we remain well-positioned as an industry leader. Vulcan’s mission drives every aspect of our business, including the pay-for-performance philosophy of our executive

compensation program. We believe that our approach to executive compensation appropriately aligns management’s interests with those of our shareholders and encourages a focus on producing long-term, sustainable shareholder value.

LOGO

Our mission is to provide quality products and service; to foster the safety, skills and development of our people; to protect the environment; and to create superior, sustainable value for our shareholders.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


COMPENSATION MIX
COMPENSATION MIX

To ensure management’s interests are aligned with those of shareholders and the performance of our company, a substantial portion of our NEOs’ compensation is at-risk and will vary above or below target levels depending on company performance. Additionally, in order to align our executives’ interests with those of our shareholders, we have historically paid a majority of NEO compensation through long-term

performance-based equity awards. In recent years, the Compensation Committee has awarded PSUs and SOSARs in order to tie executive compensation more closely to company performance, including stock price growth. Of total cash compensation paid, roughly half is performance-based. The diagrams below show the percentage of our NEOs’ 2018 target compensation that was performance-based and at-risk.

LOGO

Our compensation program is intended to motivate our NEOs to achieve Vulcan’s strategic goals and operational plans while adhering to our high ethical business standards.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


2018 PERFORMANCE
2018 PERFORMANCE

FINANCIAL PERFORMANCE

Our operating disciplines, like our world-class safety performance, remained strong in 2018. Despite weather disruptions and a 25% increase in the cost of diesel fuel during the year, the company delivered strong top and bottom line growth—a testament to our operating discipline and the talent of our people. For the year, the company increased total revenues and Adjusted EBITDA compared to the prior year.

We performed well in 2018 and are confident in our ability to deliver even stronger results in the future, as we benefit from the operational strength of our business and improving market trends. Notable in this regard is the marked increase in state and local highway funding that is now translating into increased aggregates shipments, thanks to state legislative initiatives and successful local ballot measures.

⁽¹⁾	2017 net earnings include discrete income tax benefits of $297.0 million, including benefits arising from the enactment of the Tax Cuts and Jobs Act.

⁽²⁾	Adjusted EBITDA is a non-GAAP financial measure. We provide a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure in Annex A to this proxy statement.

SAFETY PERFORMANCE

Our collective safety performance in 2018 was the best in our company’s history. We achieved a world-class level of 0.92 injury incidents per 200,000 hours worked, and our MSHA citation rate was 0.70 compared to an industry average of 2.06. Our safety performance underscores our strong culture, which is bolstered by an engaged workforce that believes in employee ownership of safety and operational performance. We believe that the more engaged our managers are with their teams and the more engaged our employees are with each other, the safer and more effective our operations will become.

In addition, each NEO’s short-term performance-based bonus is dependent on the company’s safety performance and may be adjusted as much as 25% of target based on measurable performance in safety. This bonus metric reflects the importance of safety at the highest levels of our management team.

LOGO

We believe that safety culture is a leading indicator of a well-run company, and we are committed to continuous improvement on our world-class performance.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


SHAREHOLDER ENGAGEMENT AND SAY ON PAY RESULTS
SHAREHOLDER ENGAGEMENT AND SAY ON PAY RESULTS

At our 2018 Annual Meeting of Shareholders, over 98% of the votes cast were in favor of the advisory vote to approve the compensation of our NEOs (“Say on Pay” vote). We believe the results of the 2018 Say on Pay vote demonstrate continued strong shareholder support for our current compensation program. Furthermore, during our shareholder engagement discussions over the course of 2018, shareholders were generally supportive of our executive compensation program and the accompanying disclosures.

We recognize, however, that we must always strive for continuous improvement. To that end, acting on some of the advice and guidance that we received in the course of our shareholder outreach efforts, we added our annual average growth rate of Aggregates Cash Gross Profit per ton (versus a pre-determined target) as an additional metric, together with Total Shareholder Return, for determining payouts for PSUs granted in 2019.


EXECUTIVE COMPENSATION PRACTICES
EXECUTIVE COMPENSATION PRACTICES

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

LOGO

WHAT WE DO

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

Median compensation targets. All compensation elements of our executives are generally targeted at the market median (50th percentile), subject to individual variation based on the Compensation Committee’s assessment of each executive’s performance, experience and responsibilities as well as internal equity considerations.

PSUs are a substantial portion of long-term incentive awards. PSU grants, tied to our relative performance against the S&P 500, comprised approximately 73% of the total value of annual long-term incentive grants made to our NEOs in 2018. SOSARs comprised the remaining 27%.

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

Robust share ownership guidelines with an equity retention requirement. We have stock ownership guidelines of 7 times base salary for the CEO and 3 to 4 times base salary for our other NEOs and an equity retention requirement of 50% of net shares paid as incentive compensation until ownership guidelines are met.

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

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

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

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

LOGO

WHAT WE DON’T DO

Employment contracts. None of our NEOs have employment contracts that guarantee continued employment or a certain level of compensation.

Dividends on unvested PSUs. Our PSUs require 3 or 4 years to vest and dividends are neither paid nor accrued during such vesting period.

Repricing. Stock options and SOSAR exercise prices are set equal to the grant date market price and may not be repriced.

Excessive Change of Control Agreements. Our Change of Control Agreements do not provide for:

• “Single-trigger” termination right;

• Inclusion of long-term incentive value in the calculation of cash severance; or

• Excise tax gross-ups.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Executive Compensation Program in Detail


COMPENSATION PHILOSOPHY
COMPENSATION PHILOSOPHY

The dedication and performance of our employees, including our NEOs, enable us to accomplish our corporate goals. The compensation program for our NEOs is intended to motivate them to achieve Vulcan’s strategic goals and operational plans while adhering to our high ethical business standards.

Vulcan’s executive compensation program is centered on a pay-for-performance philosophy, which aligns executive compensation with shareholder value and ultimately impacts our compensation program design.


OUR THREE COMPENSATION PRINCIPLES

Link a significant portion of compensation to performance. We believe that compensation levels should reflect performance—both the performance of Vulcan and the performance of the recipient. This is accomplished by: • Motivating, recognizing and rewarding individual excellence • Paying short-term cash bonuses based upon company financial performance and individual performance • Linking long-term compensation to our company’s stock performance through the use of PSUs and SOSARs		Maintain competitive compensation levels. We strive to offer programs and levels of compensation that are competitive with those offered by industrial companies of similar size, value and complexity in order to attract, retain and reward our NEOs. Align management’s interests with those of shareholders. Our program encourages NEOs to remain with us and to increase long-term shareholder value by granting long-term equity-based awards each year and tying short-term cash bonuses to the achievement of economic profit targets closely aligned with the creation of shareholder value.


BENCHMARKING COMPENSATION AND PEER GROUP DEVELOPMENT
BENCHMARKING COMPENSATION AND PEER GROUP DEVELOPMENT

On an annual basis, the Compensation Committee reviews a benchmarking analysis of total compensation for our CEO and other NEOs relative to market data. Our compensation consultant develops market data appropriate for a company of our size using a combination of peer group data and market surveys.

IMPLEMENTATION OF NEW PEER GROUP

We revised our peer group for 2018 in order to provide more relevant comparisons of pay level and pay practices, by including companies more comparable to Vulcan in terms of industry, size, margins and capital intensity. We implemented a systematic process that began with a list of all U.S. public companies, and we refined the potential list of peers using these and other selection criteria filters, resulting in the final list of 29 companies. When the peer group was approved by the Compensation Committee, our revenues approximated the median of the peer group and our market capitalization was above the 75^th percentile.

LOGO

We select peers based on their industry (construction, materials and mining) and then based on their size (revenues, capital intensity and operating margins).

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

PEER GROUP

Our peer group for 2018 compensation decisions was comprised of 29 companies from the construction, materials and mining industries. Our peer group consisted of the following companies:

•

Air Products and Chemicals, Inc.

•

Allison Transmission Holdings, Inc.

•

Armstrong World Industries, Inc.

•

Ball Corporation

•

Cabot Corporation

•

Celanese Corporation

•

CF Industries Holdings, Inc.

•

Cleveland-Cliffs Inc.

•

Dover Corporation

•

Eagle Materials Inc.

•

Eastman Chemical Company

•

Ecolab Inc.

•

Fortune Brands Home & Security, Inc.

•

Lennox International Inc.

•

Martin Marietta Materials, Inc.

•

Masco Corporation

•

Minerals Technologies Inc.

•

NewMarket Corporation

•

Newmont Mining Corporation

•

Owens Corning

•

Packaging Corporation of America

•

Praxair, Inc.

•

Summit Materials, Inc.

•

The Mosaic Company

•

The Timken Company

•

U.S. Concrete, Inc.

•

USG Corporation

•

W. R. Grace & Co.

•

Westlake Chemical Corporation

The diagram below compares Vulcan’s previous peer group of 28 companies to its new peer group of 29 companies.

LOGO

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

USE OF PEER GROUP AND MARKET COMPENSATION STUDIES

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

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

Using the peer group analysis and the Aon and Willis Towers Watson survey data, we seek to provide target compensation at a competitive level for each of the three elements: base salary, short-term cash bonus and long-term equity-based awards. We generally target each element at the 50th percentile of the market as determined by the analysis, subject to individual variation based on the

Compensation Committee’s assessment of each executive’s performance, experience and responsibilities as well as internal equity considerations.

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

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

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


KEY PAY ELEMENTS
KEY PAY ELEMENTS

The following chart summarizes the key pay elements for our NEOs. Each element is described in detail beginning on page 37 in the Section “Elements of Compensation.”

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Decision Process


COMPENSATION COMMITTEE		COMPOSED ENTIRELY OF INDEPENDENT DIRECTORS

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

In accordance with our Compensation Committee Charter, the Compensation Committee:

•

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

•

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

•

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

•

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

•

Monitors market practices and reviews and approves any modifications to the company’s executive compensation program

•

Interprets and administers Executive Incentive Plan (EIP), 2006 Omnibus Long-Term Incentive Plan (2006 Plan) and 2016 Omnibus Long-Term Incentive Plan (2016 Plan)


INDEPENDENT COMPENSATION CONSULTANT		MERIDIAN COMPENSATION PARTNERS, LLC (MERIDIAN)

Meridian is engaged by and reports to the Compensation Committee, and occasionally meets with management to discuss compensation initiatives and issues. Meridian does not provide any other services to the company. The Compensation Committee determined that Meridian’s work as the Compensation Committee’s compensation consultant did not present any conflicts of interest in 2018.

In 2018, Meridian:

•

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

•

Advised and assisted the Compensation Committee in the implementation of a new peer group for 2018 compensation decisions

•

Advised and assisted the Compensation Committee in a review of the company’s long-term incentive program and the addition of an internal financial metric in determining the payout of PSUs awarded in 2019

•

Conducted a benchmarking market study and analysis of executive compensation practices to ensure that our compensation program is reasonable and competitive

•

Had representatives attend four meetings of the Compensation Committee in 2018

MANAGEMENT

•

Management supports the Compensation Committee by providing information and analyses, and occasionally meets with our independent compensation consultant to discuss compensation initiatives and competitive practices

•

The CEO is responsible for establishing annual performance goals for each of the other NEOs and for conducting annual performance evaluations against such pre-established goals

•

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


THE ROLE OF INDIVIDUAL PERFORMANCE
THE ROLE OF INDIVIDUAL PERFORMANCE

Each NEO’s base salary and annual bonus is determined through thoughtful consideration of individual performance, company performance, competitive market pay as well as individual responsibilities and experience.

CEO EVALUATION

With respect to our CEO, the independent members of our Board use a formal process for evaluating his performance. Each Board member provides a written evaluation in the areas of leadership, strategic planning, financial performance, safety performance, customer relations, personnel management, communications, board relations and overall performance. In its performance deliberations, the Compensation Committee has access to the input from the full Board and independently assesses the CEO’s performance.

OTHER NEOS EVALUATION

For our NEOs other than our CEO, the Compensation Committee reviews performance reports, as prepared by our CEO. Individual performance is based primarily on the extent to which each NEO achieves a series of set goals throughout the period.

The following are notable individual accomplishments of each NEO in 2018:

Tom Hill CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

MR. HILL’S ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Leading the organization to achieve its second consecutive year of world-class, record low safety incident rates—the best in the company’s history—further reducing the injury incident rate by 5% through meaningful employee engagement and safety process initiatives

•

Providing leadership and proactive capital stewardship, reaffirming our capital allocation priorities and adhering to those priorities throughout the year. Under Mr. Hill’s leadership, the company maintained excellent liquidity, reinvested in its core franchises, maintained an investment grade credit rating, pursued profitable growth opportunities and returned excess cash to shareholders through dividends and share repurchases

•

Enhancing the organization’s “One Vulcan, Locally Led” competitive position, through reinforcement of the company’s continuous improvement culture, with particular emphasis on key disciplines including sales and operations, logistics and other support functions. Continuing improvement in these functions directly supports the organization’s long-term growth

•

Expanding the organization’s efforts to ensure a more diverse workforce through support of the initiatives of the company’s Diversity and Inclusion Council, by increasing diversity in the hiring of external candidates and by recruiting diverse candidates to serve in leadership positions

John McPherson FORMER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL AND STRATEGY OFFICER

MR. MCPHERSON’S ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Demonstrating thoughtful, proactive capital stewardship through reinvestment in the asset base and driving improvements in capital project approval and execution, maintaining financial strength and flexibility, supporting pursuit and acquisition of strategic opportunities and maintaining a balanced return of capital to shareholders through dividend and share repurchases

•

Maintaining strong capital market relationships through cultivation of shareholders focused on long-term growth; maintaining investor attention on Vulcan’s lasting, long-term value

•

Strengthening the organization’s ability to deliver against intermediate-term growth expectations through logistics innovation and sourcing improvements

•

Further improving profitability of the business through increased aggregates gross profit per ton and flow through on incremental aggregates revenue to gross profit, as well as reducing SAG as a percent of sales revenues

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Suzanne Wood SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

MS. WOOD’S ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Developing organizational knowledge regarding the industry, markets serviced, business model, corporate strategic direction and competitive strengths, while engaging local management teams

•

Meeting with our top 20 shareholders and participating in other investor forums to establish and strengthen shareholder relationships and to ensure a smooth transition from John McPherson as CFO

•

Evaluating enterprise risk management and information security initiatives, as well as implementing improvements in processes and engagement

•

Assessing balance sheet structure, leverage ratio target and capital allocation priorities to ensure continued, proactive capital stewardship while driving improvements in project approval and execution

Stan Bass CHIEF GROWTH OFFICER

MR. BASS’ ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Executing strategic acquisitions, greenfield expansion, blue water distribution agreements and reserve development activities to support the company’s total growth strategy

•

Guiding the implementation of strategic commercial excellence sales initiatives and go-to-market strategies to further establish our competitive market advantage and sales execution throughout the enterprise

•

Leading the development and implementation of company-wide land management strategies, enhancing revenue through alternative sources including rental income, recycled materials, landfills, mitigation properties and water recharge pits

•

Partnering with local division leadership to develop market-specific growth strategies in alignment with overall enterprise-wide strategy

Michael Mills CHIEF ADMINISTRATIVE OFFICER

MR. MILLS’ ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Providing leadership to safety initiatives, resulting in achievement of record low safety incident rate

•

Further strengthening our culture through focus on diversity and inclusion practices, performance management processes and talent management capabilities

•

Driving review of long-term incentive plans, resulting in adoption of an internal financial metric better aligning employee performance with the interests of the company’s shareholders

•

Continuing to lead the company’s international priorities, including management of Mexican business objectives and acquisition of new ships enhancing blue water capabilities

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Tom Baker SENIOR VICE PRESIDENT

MR. BAKER’S ACCOMPLISHMENTS DURING THE YEAR INCLUDED:

•

Providing executive leadership to reporting divisions, achieving the second consecutive year of a record low safety incident rate through emphasis on employee engagement

•

Establishing baseline operating targets and implementing detailed game plans to balance inventories and minimize capped material production, as well as improving EBITDA and variable production costs

•

Leading succession planning and talent development efforts in each of the divisions, ensuring a pipeline of talent to achieve organizational goals

•

Continuing emphasis on strategic commercial excellence through enhancement of our go-to-market approach and sales capabilities; routinely engaging with sales teams across the enterprise to ensure achievement of strategic objectives

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Elements of Compensation

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

•

Base salary

•

Short-term performance-based bonus

•

Long-term equity incentives

•

Benefits and perquisites

•

Change of control agreements

•

Retirement benefits


BASE SALARY
BASE SALARY

The base salary element of our compensation program is designed to be competitive with compensation paid to similarly-situated, competent and skilled executives.

The Compensation Committee uses the information and procedures described below to set base salaries tied to individual performance, contribution to business results and market compensation comparisons. The Compensation Committee determines if base salary adjustments are appropriate for our NEOs after considering all of the following factors:

•

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

•

NEO’s overall managerial effectiveness with respect to leadership planning, personnel development, communications, strategy execution and similar matters

•

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

•

Changes in NEO’s responsibilities

•

NEO’s level of expertise and potential for future contributions to the company, retention risks and fairness in view of our overall salary increases

•

Economic environment and its impact on the company

We review the base salaries of the NEOs annually, and also at the time of any promotion or change in responsibilities. The following table sets forth the annual base salary of each NEO at December 31, 2018:

NAME

POSITION

2018 SALARY

Tom Hill

Chairman, President and Chief Executive Officer

1,100,000

John McPherson

Former Executive Vice President and Chief Financial and Strategy Officer

828,000

Suzanne Wood

Senior Vice President and Chief Financial Officer

650,000

Stan Bass

Chief Growth Officer

608,000

Michael Mills

Chief Administrative Officer

608,000

Tom Baker

Senior Vice President

608,000

LOGO

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


SHORT-TERM PERFORMANCE-BASED BONUS
SHORT-TERM PERFORMANCE-BASED BONUS

Our short-term cash bonus incentive program is designed to motivate our executives, including the NEOs, and reward them with cash payments for achieving quantifiable, pre-established business results as well as for individual performance. We pay short-term incentives to our NEOs under the shareholder-approved Executive Incentive Plan (EIP).

In order for the NEOs to be eligible to receive a cash bonus, the company must attain a minimum performance threshold for the year, as established by the Compensation Committee. The minimum performance threshold is only used to determine a NEO’s eligibility for a bonus payment under the EIP. For 2018, the minimum threshold was either: (1) cash earnings in the amount of $300 million; or (2) EBITDA in the amount of $400 million. If the Compensation Committee determines that either of the minimum performance thresholds are met, our NEOs may receive a bonus under the EIP. In 2018, Company performance exceeded each of these established minimum thresholds.

At the beginning of the plan year, the Compensation Committee determined the target bonus as well as the maximum bonus payable under the EIP for each NEO. After considering 2018 company and individual performance, the Compensation Committee exercised downward discretion from the maximum bonus amount to determine each NEO’s actual bonus amount under the EIP.

The Compensation Committee used EBITDA Economic Profit (EBITDA EP*), which incorporates Return on Capital Employed (ROCE), as its short-term financial incentive metric in determining actual bonus payable to each NEO. We believe this metric provides an incentive for management to carefully consider deployment of capital as the company increases capital expenditures during the current construction up cycle.

EBITDA EP measures the extent to which Adjusted EBITDA exceeds an operating capital charge. Adjusted EBITDA EP is based on Adjusted EBITDA, but includes other performance adjustments, such as business acquisition performance versus planned performance. The operating capital charge is based on our company’s average assets and liabilities associated with Adjusted EBITDA EP multiplied by the estimated pretax cost of capital. We believe that changes in EBITDA EP positively correlate with changes in shareholder value better than other commonly used financial performance measures.

The 2018 EBITDA EP target of $503.8 million was based on performance during the preceding three years, weighted most heavily on the most recent fiscal year, less certain gains on sales of property or assets. The Compensation Committee determined actual cash bonuses for 2018 based on EBITDA EP of $580.4 million, which was $76.6 million above the target.

The Compensation Committee also considered the company’s safety performance when determining actual bonuses payable to our NEOs. The company’s actual safety performance is measured against pre-established goals set by the Compensation Committee and can result in an increase in each NEO’s bonus multiple by up to 20 points or a decrease by up to 25 points. A bonus multiple point is equal to 1% of the NEO’s target bonus. For 2018, the company achieved a world-class safety record with a total incident injury rate of 0.92 for every 200,000 employee hours worked. World-class performance is generally recognized as an injury rate of less than 1.0 per 200,000 employee hours worked. As a result, each NEO received an increase of 15 points to the performance bonus multiple used to calculate his or her bonus for 2018.

The table below shows the target bonus, the maximum bonus payable under the EIP and the actual cash bonus paid to each NEO based on 2018 company and individual performance.

NAME

BASE SALARY

“TARGET BONUS”
AS A PERCENTAGE
OF BASE SALARY

TARGET BONUS
AMOUNT

MAXIMUM

BONUS⁽¹⁾

CASH BONUS PAID BASED
ON 2018 PERFORMANCE

Tom Hill

$1,100,000

125%

$1,375,000

$3,437,500

$2,021,300

John McPherson

$ 828,000

110%

$ 910,800

$2,277,000

$1,338,900

Suzanne Wood⁽²⁾

$ 650,000

85%

$ 184,167

$ 460,417

$ 270,700

Stan Bass

$ 608,000

80%

$ 486,400

$1,216,000

$ 965,000

Michael Mills

$ 608,000

80%

$ 486,400

$1,216,000

$ 715,000

Tom Baker

$ 608,000

80%

$ 486,400

$1,216,000

$ 715,000

(1)	The EIP permits the payment of bonuses up to 4 times a NEO’s target amount (but not to exceed $7 million). However the amounts in this column equal 2.5 times the NEO’s target bonus, which is the maximum allowed by the Compensation Committee.

(2)	Ms. Wood joined the company in September of 2018; her bonus was prorated in accordance with the number of months she was employed in 2018.

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


LONG-TERM EQUITY INCENTIVES
LONG-TERM EQUITY INCENTIVES

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

•

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

•

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

•

Recognize and reward superior financial performance of our company

•

Provide a retention element to our compensation program

•

Promote compliance with the stock ownership guidelines for executives

Based principally on data and analysis from its independent compensation consultant, the Compensation Committee establishes a “standard” long-term equity incentive opportunity, expressed as a percentage of each NEO’s base salary, to be used when making long-term equity awards.

Our 2016 Plan provides a variety of alternative types of awards that the Compensation Committee may use, at its discretion, for granting long-term incentives. The 2016 Plan became effective on May 13, 2016, after it was approved by our shareholders at our 2016 Annual Meeting of Shareholders. The types of awards authorized under the 2016 Plan include:

•

stock options

•

stock-only stock appreciation rights (SOSARs)

•

performance share units (PSUs)

•

restricted stock units (RSUs)

In recent years, the Compensation Committee has used PSUs, SOSARs or a combination of both for annual equity incentive grants to our NEOs.

2018 LONG-TERM INCENTIVE GRANTS

Annually at its February meeting, the Compensation Committee grants long-term incentive awards. All such equity-based awards are priced on the date of grant. Typically, any additional equity-based incentive grants are made to NEOs during the year only upon hire or promotion.

In 2018, the Compensation Committee made the annual long-term incentive grant to the NEOs in the form of a combination of SOSARs and PSUs. PSU grants comprised approximately 73% of the total value of the annual long-term incentive grants made to each NEO, while SOSARs comprised the remaining 27%. The number of equity-based awards granted is determined by valuing SOSARs and PSUs under valuation principles similar to generally accepted accounting principles (in the case of SOSARs, a Black-Scholes option pricing model, and in the case of PSUs, a Monte Carlo simulation model). The Compensation Committee normally grants a number of equity-based awards that produce an award value on the date of the grant that approximates the 50th percentile level of awards made to similarly-situated executives determined by our competitive market analysis. However, the Compensation Committee may make adjustments each year to the number of units granted.

Additionally, Ms. Wood joined the company in September of 2018 and received a hiring grant of 3,500 RSUs.

A summary of all long-term incentive (LTI) grants made to NEOs in 2018 is as follows:

NAME

2018 ANNUAL GRANTS

TOTAL LTI

GRANTS

SOSARs

PSUs

RSUs

Tom Hill

27,200

54,400

John McPherson

14,000

28,000

Suzanne Wood

3,500

Stan Bass

6,600

13,200

Michael Mills

6,600

13,200

Tom Baker

6,600

13,200

These awards are also reflected in the Summary Compensation Table on page 46 and the Grants of Plan-Based Awards table on page 47.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Performance Share Units (PSUs)

PSUs granted in 2018 will vest at the end of a three-year period to the extent that the company has met the performance goals established by the Compensation Committee. Vested PSUs are paid in Vulcan common stock. Unvested PSUs do not earn dividends. For PSUs granted in 2018, the performance measurement is the company’s total shareholder return (TSR) percentile rank relative to the TSR of the S&P 500, averaged over the three-year period ending December 31, 2020. The Compensation Committee chose the S&P 500 as the comparison group for relative TSR performance because it is a broad and stable index group that represents investors’ alternative capital investment opportunities. Vulcan is also a member of the S&P 500.

The following table shows the payout percentage of 2018 PSUs that will vest over the three-year period based on potential levels of performance:

PERFORMANCE SHARE UNIT PAYMENT TABLE⁽¹⁾

(1)	If the company’s three-year average TSR relative to the S&P 500 Index is at the 50th percentile, the full award is paid. The payout is adjusted incrementally for performance above and below the 50th percentile and can range from 0% to 200%.

(2)	Payouts interpolated for returns between 25th and 50th percentile and 50th and 75th percentile.

LOGO

In 2019, based on input from our shareholders, the Compensation Committee elected to add our annual average growth rate of Aggregates Cash Gross Profit per ton as an additional metric for determining payouts of PSUs granted in 2019.

Stock-Only Stock Appreciation Rights (SOSARs)

SOSARs entitle the recipient to receive, at the time of exercise, shares of Vulcan stock with a market value equal to the difference between the exercise price (the closing price of Vulcan stock on the date of grant) and the market price of Vulcan stock on the date the SOSARs are exercised. SOSARs have a ten-year term and vest at a rate of one-third annually over the first three years of their term.

Restricted Stock Units (RSUs)

RSUs vest on the third anniversary of their grant date. Once RSUs vest, payment will be made in the form of Vulcan common stock. Taxes are withheld when the net shares are distributed.

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

PAYMENTS OF PRIOR GRANTS

In February 2018, our NEOs received payment for PSUs that were granted in 2014, which vested on December 31, 2017, because the applicable performance criteria were satisfied. These PSUs were paid out at 160% of the amount of the original grant made in 2014. The PSU payment percentage of 160% was based on TSR performance of our common stock relative to the TSR performance of the companies that comprise the S&P 500 Index during the four-year performance period.

PAYMENT CALCULATION FOR PSUs GRANTED IN 2014 PAID FEBRUARY 9, 2018

NAME

UNITS GRANTED
IN 2014

PERCENTAGE
PAYABLE

UNITS
PAYABLE

Tom Hill

12,500

160

20,000

John McPherson

12,500

160

20,000

Suzanne Wood⁽¹⁾

—

Stan Bass

7,000

160

11,200

Michael Mills

7,200

160

11,520

Tom Baker⁽²⁾

—

(1)	Ms. Wood joined Vulcan in 2018 and therefore did not receive PSUs in 2014.

(2)	Mr. Baker rejoined Vulcan in 2017 and therefore did not receive PSUs in 2014.


BENEFITS AND PERQUISITES
BENEFITS AND PERQUISITES

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

•

medical and dental benefits;

•

life, accidental death and disability insurance; and

•

retirement plans.

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

We revised our company car policy in 2018 and no longer provide company-owned cars to the NEOs for their use. Instead, we now reimburse NEOs for qualified expenses incurred while using personal vehicles for company purposes based on a fixed and variable rate reimbursement program.

We also make the company-owned aircraft available to the CEO and other senior executives for business travel. In addition, the aircraft is available to the CEO for personal use, subject to the policy described below. In certain limited circumstances, such as when a particular use is incidental to company business or is otherwise extraordinary (e.g., a medical emergency), an NEO may use the aircraft for personal travel without reimbursement to the company, provided, that such use is considered for inclusion in the applicable NEO’s taxable income for the year.

In 2018, at the recommendation of our Compensation Committee, the Board approved a policy allowing the CEO to

use the company’s corporate aircraft for personal travel outside of the aforementioned limited circumstances, without reimbursement to the company, up to a maximum value of $100,000 per year. Tom Hill used the company-owned aircraft for such personal reasons in 2018 on 4 occasions, and the cumulative amount attributable to those uses was less than $100,000.

In addition, in 2018, John McPherson used the company-owned aircraft for commuting on 16 occasions and for personal use on 1 occasion. Stan Bass used the aircraft for personal use on 6 occasions. Depending on availability, Mr. McPherson was also permitted to ride along on the corporate aircraft when it was already scheduled to fly to a specific destination for a business purpose. This use has no incremental cost to Vulcan. During 2018, Mr. McPherson rode along on 9 such trips on the corporate aircraft when it was already scheduled to fly between Texas and our corporate headquarters in Birmingham, Alabama.

In accordance with the company’s policy, none of the flights mentioned above required reimbursement to the company, and each was considered for inclusion in the applicable NEO’s taxable income for the year. Except as set forth above, none of the other NEOs received a personal benefit from the use of company-owned aircraft.

We do not provide other significant perquisites to the NEOs.

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS


CHANGE OF CONTROL AGREEMENTS
CHANGE OF CONTROL AGREEMENTS

Effective as of January 1, 2016, Vulcan entered into new Change of Control Employment Agreements (COC Agreements) with Messrs. Hill, McPherson, Bass and Mills to replace prior change of control severance agreements. In 2018, Vulcan entered into the same form of COC Agreement with each of Mr. Baker and Ms. Wood. Each of the COC Agreements covers a term of three years and will be automatically extended annually for subsequent three-year terms unless Vulcan gives prior notice of non-extension. In the event of a change of control, said COC Agreements entitle the executives to continue employment with Vulcan for two years following the change of control, during which time period the executive will continue to hold a position and duties, and receive compensation and benefits, commensurate with the practices in effect during the four-month period prior to the change of control. Severance benefits under each COC Agreement will be payable following a qualifying termination (termination by the executive for good reason or by Vulcan without cause) that occurs within two years following (or prior to, but in connection with) a change of control. A change of

control is defined to include: (a) the acquisition of 30% or more of the outstanding Vulcan stock or voting power by an individual, entity or group; (b) a change in the majority of the board of directors of Vulcan that is not endorsed by the incumbent board of directors; (c) consummation of a reorganization, merger, consolidation or similar corporate transaction that results in a new group holding at least 50% of the beneficial ownership of the outstanding Vulcan stock or voting power; and (d) approval by Vulcan shareholders of a complete liquidation or dissolution of the company.

The COC Agreements provide for a payment of three times the sum of base salary and average bonus upon a change of control.

We enter into COC Agreements with the NEOs to provide for retention and continuity in order to minimize disruptions during a pending or anticipated change of control. For a detailed description of these change of control benefits, refer to “Change of Control Agreements and Related Cash Severance Benefits” on page 54.


RETIREMENT BENEFITS
RETIREMENT BENEFITS

Our company provides the following retirement benefits to our NEOs:

BENEFIT

BACKGROUND

Retirement Plan*

This pension plan covers all salaried employees of our company hired prior to July 15, 2007. As of December 31, 2013, benefits under the Retirement Plan were frozen. The plan was amended to freeze service accruals effective December 31, 2013, and pay accruals effective December 31, 2015.

Supplemental Plan*

The Unfunded Supplemental Benefit Plan provides for benefits that are curtailed under the Retirement Plan and the 401(k) Plan due to Internal Revenue Service pay and benefit limitations for qualified plans. This Plan is designed to provide retirement income benefits, as a percentage of pay, which are similar for all employees regardless of compensation levels. The Unfunded Supplemental Benefit Plan eliminates the effect of tax limitations on the payment of retirement benefits, except to the extent that it is an unfunded plan and a general obligation of our company. As of December 31, 2013, pension plan benefits under the Supplemental Retirement Plan were frozen. The plan was amended to freeze service accruals effective December 31, 2013, and pay accruals effective December 31, 2015. Supplemental 401(k) benefits continue to accrue under this plan.

401(k) Plan

This plan has two components: (1) an employee contribution feature with company matching and (2) an annual employer contribution.

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Stock Ownership Guidelines

In order to align the interests of the NEOs with our shareholders’ interests and to promote a long-term focus for these officers, our company has executive stock ownership guidelines for the officers of our company. The guidelines are based on the Compensation Committee’s and the compensation consultant’s assessment of market practices. The stock ownership requirements are higher for the CEO than for the other NEOs. The following table shows the guidelines for the NEOs, expressed as a multiple of base salary:

NAME

MULTIPLE OF BASE SALARY

OWNERSHIP GUIDELINES

Tom Hill

John McPherson

Suzanne Wood

Stan Bass

Michael Mills

Tom Baker

WHAT COUNTS TOWARD THE GUIDELINE

•

shares owned personally

•

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

•

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

•

grants of RSUs

•

shares owned by a family member, shares held in trust for the benefit of the NEO or a family member, or shares held in trust for which such officer is trustee

WHAT DOES NOT COUNT TOWARD THE GUIDELINE

•

“in the money” value of vested SOSARs

•

unvested PSUs

The Compensation Committee reviews compliance with the ownership guidelines on an annual basis. As of February 1, 2019, all of the NEOs met or exceeded our ownership guidelines except Ms. Wood, who joined Vulcan in September 2018, and Mr. Baker, who rejoined Vulcan in March 2017. Ms. Wood and Mr. Baker have five years from the date each joined or rejoined the company, respectively, to meet such guidelines.

SHARE RETENTION REQUIREMENTS

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

2019 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Risk, Accounting and Tax Considerations

Our compensation program is balanced, focused and gives considerable weight to the long-term performance of our company. Under this structure, the highest amount of compensation can only be achieved through consistent superior performance over sustained periods of time. Goals and objectives reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single performance measure. Likewise, the elements of compensation are balanced among current cash payments and long-term equity-based incentive awards. The Compensation Committee retains the discretion to adjust compensation for quality of performance and adherence to our company’s values.

Based on the foregoing features of our compensation program, the Compensation Committee has concluded that risks arising from compensation policies and practices for employees of the company and its affiliates are not reasonably likely to have a material adverse effect on the company as a whole.

In administering the compensation program for NEOs, the Compensation Committee considers the applicability of Section 162(m) of the Code, the consequences under financial accounting standards, the tax consequences in our analysis of total compensation and the mix of compensation elements, base salary, bonus and long-term incentives. Section 162(m)

generally prohibits public companies from taking a tax deduction for compensation that is paid to any one of certain employees (generally, our Chief Executive Officer and other NEOs, excluding our Chief Financial Officer in the case of tax years commencing before 2018) in excess of $1,000,000. For tax years prior to January 1, 2018, Section 162(m) allowed us to deduct certain qualified performance-based compensation. Historically, we therefore intended that bonus payments under the EIP and grants of long-term incentives under our 2016 Plan would qualify as qualified performance-based compensation; however, we have always maintained the flexibility to grant awards that may not be tax-deductible. Section 162(m) was amended in December 2017, and for taxable years beginning January 1, 2018, the qualified performance-based compensation deduction is no longer available, except in limited situations that are eligible for transition relief. We are therefore not currently eligible to take a deduction under Section 162(m) for qualified performance-based compensation except in limited grandfathered situations, for which we may not qualify. The Compensation Committee maintains (and has maintained) the discretion to modify compensation that was initially intended to be exempt from Section 162(m), to the extent permitted by applicable law and the relevant governing documents, if it determines that such modifications are consistent with Vulcan’s business needs.

2019 PROXY STATEMENT

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as set forth above with management and, based on such review and discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Dated: February 7, 2019

COMPENSATION COMMITTEE

James T. Prokopanko, Chair (through February 8, 2019)

Thomas A. Fanning

Lee J. Styslinger, III

2019 PROXY STATEMENT

Executive Compensation


SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE

The following table sets forth, for the three most recently completed fiscal years, information concerning the compensation of our NEOs employed as of December 31, 2018:



NAME AND PRINCIPAL POSITION	YEAR		SALARY ($)			BONUS ($)		STOCK AWARDS⁽¹⁾($)		OPTION AWARDS⁽¹⁾($)		NON-EQUITY INCENTIVE PLAN COMPENSATION⁽²⁾ ($)		CHANGE IN PENSION VALUE & NONQUALIFIED DEFERRED COMPENSATION EARNINGS⁽³⁾ ($)			ALL OTHER COMPENSATION⁽⁴⁾ ($)		TOTAL ($)
J. Thomas Hill
Chairman,		2018		1,086,667			—		3,187,840		1,189,184		2,021,300		(121,005	)		317,423		7,681,409
President and Chief		2017		1,008,334			—		2,808,011		1,027,939		1,722,000		342,036			290,918		7,199,238
Executive Officer		2016		941,670			—		2,826,194		937,320		2,264,000		289,682			272,587		7,531,453
John R. McPherson
Former EVP and Chief		2018		824,000			—		1,640,800		612,080		1,338,900		—			297,393		4,713,173
Financial and		2017		800,000			—		1,844,593		675,257		1,298,300		—			289,430		4,907,580
Strategy Officer		2016		773,334			—		2,124,034		706,640		1,778,000		—			288,256		5,670,264
Suzanne H. Wood⁽⁵⁾		2018		216,667			—		410,200		—		270,700		—			108,008		1,005,575
Senior Vice President
and Chief Financial
Officer
Stanley G. Bass		2018		605,000			—		773,520		288,552		965,000		(107,065	)		137,435		2,662,442
Chief Growth		2017		583,335			—		810,681		296,769		692,900		190,271			137,490		2,711,446
Officer		2016		554,258	⁽⁶⁾		—		816,261		271,560		892,000		157,618			408,898		3,100,595
Michael R. Mills		2018		605,000			—		773,520		288,552		715,000		(109,142	)		129,342		2,402,272
Chief Administrative		2017		583,335			—		810,681		296,769		692,900		212,111			124,842		2,720,638
Officer		2016		530,508			—		816,261		271,560		898,000		178,516			110,257		2,805,102
Thompson S. Baker⁽⁷⁾		2018		598,333			—		773,520		288,552		715,000		—			85,202		2,460,607
Senior Vice President		2017		444,384			—		646,195		236,555		577,400		—			25,950		1,930,484

(1)

Pursuant to the rules of the SEC, we have provided a grant date fair value for Stock Awards and Option Awards in accordance with the provisions of FASB ASC Topic 718. For Option Awards (including SOSARs), the fair value is estimated as of the date of grant using the Black-Scholes option pricing model, which requires the use of certain assumptions, including the risk-free interest rate, dividend yield, volatility and expected term. The risk-free interest rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period equal to or approximating the option’s expected term. The dividend yield assumption is based on our historical dividend payouts adjusted for current expectations of future dividend payouts. The volatility assumption is based on the historical volatility, and expectations regarding future volatility, of our common stock over a period equal to the option’s expected term. The expected term of options granted is based on historical experience and expectations about future exercises and represents the period of time that options granted are expected to be outstanding. For Performance Share Awards, the fair value is estimated on the date of grant using a Monte Carlo simulation model. For the highest performance level, the maximum number of shares payable and the estimated grant date value are 54,400 shares ($6,375,680) for Mr. Hill; 28,000 shares ($3,281,600) for Mr. McPherson; 13,200 shares ($1,547,040) for Mr. Bass; 13,200 shares ($1,547,040) for Mr. Mills; and 13,200 shares ($1,547,040) for Mr. Baker. 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 14, 2019, for the previous year’s performance. See discussion of the EIP under heading “Compensation Discussion and Analysis” above.

(3)

Includes only the amount of change in pension value because our company does not provide any above market earnings on deferred compensation balances. The year over year change in pension value was attributable to two primary factors, which were: (i) aging (one year closer to retirement) and (ii) change in actuarial assumptions (change in interest rate from 3.35% to 4.02%, and mortality table to RP-2014 Health Employee & Annuitant Mortality White Collar Table, adjusted to 2006 base rates, with generational improvements projected using Scale MP-2018).



NAME	AGING (one year closer to retirement) ($)		CHANGE IN ASSUMPTIONS ($)			TOTAL CHANGE ($)
Tom Hill		184,091		(305,096	)		(121,005	)
John McPherson^(a)		—		—			—
Suzanne Wood^(a)		—		—			—
Stan Bass		92,522		(199,587	)		(107,065	)
Michael Mills		107,097		(216,239	)		(109,142	)
Tom Baker^(a)		—		—			—

(a)

Ms. Wood and Messrs. McPherson and Baker were hired after 2007 and are not eligible to participate in the company’s defined benefit plan.

2019 PROXY STATEMENT

EXECUTIVE COMPENSATION

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

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



NAME	NON-QUALIFIED SERP CONTRIBUTIONS ($)		QUALIFIED 401(K) CONTRIBUTIONS ($)		COMPANY PAID LIFE INSURANCE PREMIUMS ($)		PERSONAL USE OF COMPANY AUTOMOBILE ($)		RELOCATION EXPENSES ($)		COMMUTING EXPENSES ($)		PERSONAL USE OF COMPANY AIRCRAFT ($)		TOTAL ($)
Tom Hill		242,090		24,600		1,326		5,991		0		0		43,416		317,423

John McPherson		180,078		24,600		1,326		4,517		0		84,088		2,784		297,393

Suzanne Wood		0		6,500		442		0		101,066		0		0		108,008

Stan Bass		97,534		24,600		1,326		5,764		0		0		8,211		137,435

Michael Mills		97,714		24,600		1,326		5,702		0		0		0		129,342

Tom Baker		59,276		24,600		1,326		0		0		0		0		85,202

(5)	Ms. Wood joined Vulcan in September 2018.

(6)	Includes a regional supplement in the amount of $20,750 for 2016.

(7)	Mr. Baker was rehired by Vulcan on March 10, 2017.


GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS

The following table sets forth the grants of plan-based awards in 2018 to our NEOs:



			ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS						ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS (# OF SHARES)						ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#)		ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#)		EXERCISE OR BASE PRICE OF OPTION AWARDS⁽¹⁾ ($/SH)		GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS⁽²⁾ ($)
NAME	GRANT DATE		THRESHOLD ($)		TARGET ($)		MAXIMUM ($)		THRESHOLD (#)		TARGET (#)		MAXIMUM (#)						EXERCISE OR BASE PRICE OF OPTION AWARDS⁽¹⁾ ($/SH)
Tom Hill		2/23/2018		0		1,375,000		3,437,500		0		27,200		54,400		0		27,200		121.69		4,377,024
John McPherson		2/23/2018		0		910,800		2,277,000		0		14,000		28,000		0		14,000		121.69		2,252,880
Suzanne Wood⁽³⁾		9/04/2018		0		184,167		460,417		0		0		0		3,500		0		0		410,200
Stan Bass		2/23/2018		0		486,400		1,216,000		0		6,600		13,200		0		6,600		121.69		1,062,072
Michael Mills		2/23/2018		0		486,400		1,216,000		0		6,600		13,200		0		6,600		121.69		1,062,072
Tom Baker		2/23/2018		0		486,400		1,216,000		0		6,600		13,200		0		6,600		121.69		1,062,072

(1)	Exercise price was determined using the closing price of our common stock on the grant date as required under the 2016 Plan.

(2)

Amount represents the grant date fair values calculated in accordance with FASB ASC Topic 718. The grant date fair value of $117.20 for the PSUs granted on February 23, 2018, was calculated using a Monte Carlo simulation model. The grant date fair value of $43.72 for the SOSARs granted on February 23, 2018, was calculated using a Black-Scholes option pricing model. Fair value was calculated on the number of units granted.

(3)	Ms. Wood joined the company in September of 2018; her bonus was prorated in accordance with the number of months she was employed in 2018.

2019 PROXY STATEMENT

EXECUTIVE COMPENSATION


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Certain information concerning unexercised options and stock awards that have not vested for each of the NEOs outstanding as of December 31, 2018, is set forth in the table below:


			OPTION AWARDS									STOCK AWARDS
NAME	GRANT DATE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE		EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXER- CISED UNEARNED OPTIONS (#)	OPTION EXER- CISE PRICE ($)		OPTION EXPIRATION DATE		NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)	MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED⁽¹³⁾ ($)	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED⁽¹⁴⁾ (#)		EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED⁽¹³⁾ ($)
Tom Hill		2/12/2009		9,285		0			47.47		2/12/2019
		2/11/2010		6,200		0			43.05		2/11/2020
		3/1/2011		4,900		0			43.63		3/1/2021
		2/9/2012		0⁽¹⁾		0			0		n/a
		2/7/2013		7,000		0			55.41		2/7/2023
		2/13/2014		12,500		0			66.00		2/13/2024
		2/12/2015		23,100⁽²⁾		7,700			79.41		2/12/2025				46,041⁽⁷⁾		4,548,851
		2/12/2016		16,050⁽³⁾		16,050			92.02		2/12/2026				32,200⁽⁸⁾		3,181,360
		2/10/2017		7,967⁽⁴⁾		15,933			122.60		2/10/2027				23,900⁽⁹⁾		2,361,320
		2/23/2018		0⁽⁶⁾		27,200			121.69		2/23/2028				27,200⁽¹⁰⁾		2,687,360
John McPherson		11/9/2011		255,600		0			29.05		11/9/2021
		11/9/2011		15,300		0			29.05		11/9/2021
		2/9/2012		0⁽¹⁾		0			0		n/a
		2/7/2013		8,100		0			55.41		2/7/2023
		2/13/2014		12,500		0			66.00		2/13/2024