DEF 14A of Granite Construction Inc
Filed Apr 25, 2024 · FY20230000861459-24-000012
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS The Board of Directors is divided into three classes. We keep the classes as equal in number as reasonably possible; however, the number of directors in a class depends on the total number of directors at any given time. Each director serves for a term of three years. The classes are arranged so that the terms of the directors in each class expire at successive annual meetings. Typically, this means that shareholders annually elect approximately one-third of the members of the Board. The Board currently consists of nine directors. The terms of Molly C. Campbell, Michael F. McNally and Laura M. Mullen will expire at the Annual Meeting. The Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated Molly C. Campbell, Michael F. McNally and Laura M. Mullen for new terms. All nominees serve as directors. If elected, each of the nominees will serve as a director until the 2027 annual meeting and until his or her successor is elected and qualified or he or she resigns or until his or her death, retirement or removal. Management knows of no reason why any of these nominees would be unable or unwilling to serve. All nominees have accepted the nomination and agreed to serve as a director if elected by the shareholders.
BOARD OF DIRECTORS’ RECOMMENDATION
BOARD OF DIRECTORS’ RECOMMENDATION The Board of Directors unanimously recommends a vote “FOR” each of the above-named nominees.
Director Qualifications
Director Qualifications The tables below highlight the qualifications, competency, experience and other information of each director, including each nominee for election to our Board, that contributed to the Board’s determination that each individual is qualified to serve on the Board. This high-level summary is not intended to be an exhaustive list of each director’s skills or contributions.
Director Qualifications
| | Competency / Experience | | | | | | | | | | | | | | Name of Director | Financial Expertise & Literacy | Capital Structuring/ Project Finance/M&A | Strategic Planning Experience | Human Capital/Executive Compensation | Enterprise Risk Management | Project Execution Risk Management | Legal/Claims Management | Public Sector Contracting | Industry Experience | Operating Experience | Environmental and Social Factors | Cyber-Security | Politics/Public Policy | | Darnell | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | • | • | ⬤ | ⬤ | • | ⬤ | | Krusi | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | | McNally | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | | Caldera | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | • | ⬤ | ⬤ | ⬤ | | Galloway | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | | Mullen | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | • | • | • | ⬤ | ⬤ | • | | Campbell | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | | Mastin | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | • | • | • | ⬤ | ⬤ | • | • | | Larkin | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | ⬤ | • | • | | ⬤ | Highly Experienced | | | ⬤ | General Experience | | | • | Limited Experience or Expertise | | | | |
Director Qualifications
| | Location | Gender | Age Range | | | | Tenure on Board | | | Race & Ethnicity | | Name of Director | Location | Gender | 59 and under | 60-64 | 65-69 | 70 + | 0-5 | 6-10 | 11 + | Race & Ethnicity | | Darnell | FL | M | | | | ✓ | | ✓ | | W | | Krusi | WA | M | | | ✓ | | | ✓ | | W | | McNally | RI | M | | | ✓ | | | ✓ | | W | | Caldera | MD | M | | | ✓ | | ✓ | | | H | | Galloway | WA | F | | | ✓ | | | ✓ | | W | | Mullen | CA | F | | ✓ | | | ✓ | | | W | | Campbell | CA | F | | ✓ | | | ✓ | | | B | | Mastin | TX | F | ✓ | | | | | ✓ | | W | | Larkin | CA | M | ✓ | | | | ✓ | | | W | | A American Native or Alaskan Native | | | | B Black or African American | | | | H Hispanic or Latino | | | | P Pacific Islander including Native Hawaiian | | | | S Asian | | | | W White | | |
Director Qualifications
In addition to the tables above, the following paragraphs provide further information as of the date of this proxy statement about each director and director nominee. The information presented includes information each director or director nominee has given us about his or her age, all positions he or she holds with Granite, his or her principal occupation and business experience for the past five years, and the names of other publicly held companies of which he or she currently serves as a director or has served as a director during the past five years. In addition to the information in the tables above and included below regarding each director's and director nominee's specific experience, qualifications, attributes, and skills that led our Board to the conclusion the he or she should serve as a director, the Board also believes that all of our directors and director nominees have a reputation for integrity, honesty and adherence to high ethical standards. The Board also believes that all of our directors have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Granite and our Board.
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
| | Molly C. Campbell | Director since 2019 | | | Ms. Campbell has served as Infrastructure Advisor with the US Treasury, Office of Technical Assistance since May 2020. She has also served as a non-executive advisor for Boston Consulting Group since March 2022. Ms. Campbell was also a 2019 Fellow at Harvard University’s Advanced Leadership Initiative Program. Prior to that, she served as the Director of the Port of New York and New Jersey from 2015 to 2018, the Director of Financial Management Systems for Los Angeles World Airport in 2015, Deputy Executive Director from 2007 to 2015 and Chief Financial Officer from 2000 to 2007 of the Harbor Department of the Port of Los Angeles and is currently a member of the board of directors of East West Bank Additionally, Ms. Campbell was a fellow of Stanford University's Distinguished Career Institute, DCI, for 2023. We believe Ms. Campbell’s executive leadership experience, expertise in finance, multi-modal logistics, the maritime industry and transportation and infrastructure project experience qualify her to serve on our Board. Ms. Campbell holds a B.A. degree in Political Science from the University of California, Los Angeles and an M.A. degree in Public Policy from Georgetown University. Age 63. | | | | Michael F. McNally | Director since 2016 | | | Mr. McNally retired in 2014 as President and Chief Executive Officer of Skanska USA Inc., a subsidiary of Skanska AB, one of the world’s largest construction companies, a position he had held since 2008. During that time, he also served as one of nine members of Skanska AB’s senior executive team. Prior to his tenure at Skanska, Mr. McNally held various management positions over a 38 year career with Fluor, Marshall Contractors, Mobil Oil and J. Ray McDermott. Mr. McNally is also currently a member of the board of directors of Limbach Holdings Inc. From 2020 to 2023, he was Vice Chair of the Board of Trustees for the University of Rhode Island. Mr. McNally also served on the board of directors of Terracon from 2016 to 2022 and from 2016 to 2019, he served as the Chairman of the U.S. Green Building Council (“USGBC”) Board. In 2013 he was presented with the USGBC Leadership in the Private Sector Award. In 2014, he organized and chaired the construction industry's first Safety Week bringing together more than 30 major construction companies to advance safety in the industry. We believe that Mr. McNally’s past experience as an executive with a major multi-national construction firm and his knowledge and understanding of the construction industry and Granite’s customers qualify him to serve on our Board. Mr. McNally is also a National Association of Corporate Directors (“NACD”) Board Leadership Fellow and is NACD Directorship Certified. Mr. McNally holds a B.S. degree in Civil Engineering from the University of Notre Dame and an M.B.A. from the University of Rhode Island. Age 69. | | | | Laura M. Mullen | Director since 2021 | | | Ms. Mullen currently serves as a part-time, independent consultant for KPMG International. From July 1996 to September 30, 2020, she served as an audit partner with KPMG LLP. In her 37-year tenure with KPMG, Ms. Mullen served in various roles, including Global Lead Audit Engagement Partner, SEC Reviewing Partner, West Regional Professional Practice Partner and National Office Partner. She is a certified public accountant in California and a member of the American Institute of Certified Public Accountants. We believe that Ms. Mullen’s experience as a senior audit partner of a Big Four accounting firm, as well as her in-depth knowledge and understanding of generally accepted accounting principles, experience in preparing, auditing and analyzing financial statements, understanding of internal control over financial reporting, and her understanding of audit committee functions qualify her to serve on our Board. Ms. Mullen holds a B.S. degree in Business Administration from the California State University, Long Beach. She is a certified public accountant in California and a member of the American Institute of Certified Public Accountants and California Society of Certified Public Accountants. Age 63. | |
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
| | Patricia D. Galloway | Director since 2017 | | | Dr. Galloway has served as Chairman of Pegasus Global Holdings, Inc., a global firm that performs risk management, management consulting and strategic consulting business services to the heavy construction and energy sectors, since February 2018. From 2008 to 2018, Dr. Galloway served as Chief Executive Officer of Pegasus Global Holdings. Dr. Galloway served in various positions at The Nielsen-Wurster Group, Inc., a global consulting firm providing expert witness, construction management and risk management services to the engineering, construction and energy sectors, including Chief Executive Officer and Principal, and President and Chief Financial Officer from 1981-2008. Dr. Galloway was the first woman President of the American Society of Civil Engineers and served from November 2003 to 2004 and in 2005 was elected to the National Academy of Construction. Dr. Galloway also serves as an arbitrator on construction and energy litigation cases. Since May 2020, Dr. Galloway has served as a director of Stantec Inc. From July 2018 to December 2018, Dr. Galloway served on the Board of SCANA Corporation as Chair of the Special Litigation Committee and her service ended with the merger of SCANA and Dominion Energy, Inc. She also served as a director on the American Arbitration Board from 2010 to May 2020 and on the National Science Board from 2006 to 2012. We believe that Dr. Galloway’s experience in corporate risk management, combined with her knowledge of the construction industry and her executive-level and dispute resolution experiences, qualify her to serve on our Board. Dr. Galloway has further demonstrated her commitment to outstanding modern leadership and ESG excellence by completing the Diligent Climate Leadership Certification and her commitment to cyber-security by completing the Diligent Cyber Risk and Strategy Certification, both presented by the Diligent Institute. Dr. Galloway is also NACD directorship certified. Dr. Galloway holds a Ph.D. in Infrastructure Systems Engineering (Civil) from Kochi University of Technology in Japan, an M.B.A. from the NY Institute of Technology and a Bachelor’s degree in Civil Engineering from Purdue University. Age 66. | | | | Alan P. Krusi | Director since 2018 | | | Mr. Krusi served as President, Strategic Development of AECOM Technology Corporation, a New York Stock Exchange (“NYSE”)-listed company, from 2008 through 2015, where he led the firm’s M&A activities among other responsibilities. From 2003 until 2008, Mr. Krusi served as CEO and President of Earth Tech, Inc., a global engineering and construction firm, which primarily specialized in the design, construction, financing and operations of water treatment facilities, but also provided engineering and management services to the transportation and environmental markets. Prior to that, and over a period of twenty-six years, Mr. Krusi held a number of technical and management positions within the engineering and construction industries. From 1994 to 2003, Mr. Krusi was president of Obrien Kreitzberg, a company which specialized in providing construction management services to the transportation markets. We believe that Mr. Krusi’s extensive managerial experience attained from serving as the president and CEO of various companies in the engineering and construction services industry qualify him to serve on our Board. Mr. Krusi currently serves on the board of directors of SSR Mining Inc. (formerly Alacer Gold Corp.). He also served on the board of directors of Boxwood Merger Corp. from 2018 to 2020. Additionally, in 2022, Mr. Krusi completed the NACD Cyber-Risk Oversight Program. Mr. Krusi holds a B.A. in Geological Sciences from the University of California, Santa Barbara. Age 69. | |
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
| | Louis E. Caldera | Director since 2021 | | | Mr. Caldera has been a Senior Lecturer at Harvard Business School teaching in the MBA program since July 2023. He has also served as a Senior Advisor to Belay Associates, LLC, a private equity firm, and its Everest Consolidator Acquisition Corp. since March 2021. Prior to that he served as Distinguished Adjunct Professor of Law and as a Senior Fellow in the Program on Law and Government at American University Washington College of Law from 2018 to 2021. He also served as a Professor of Leadership and a Senior Fellow of the George Washington University Cisneros Hispanic Leadership Institute from 2016 – 2018. From January 2009 to May 2009, he served in the Obama Administration as an Assistant to the President and Director of the White House Military Office. From August 2003 to February 2006, he served as President of The University of New Mexico, where he was also was a tenured member of the law school faculty from August 2003 to December 2010. Previously Mr. Caldera served as a California state legislator and as Secretary of the Army in the Clinton Administration. Mr. Caldera is the co-founder and co-chair of the Presidents’ Alliance on Higher Education and Immigration. He is also a member of the Board of Directors of DallasNews Corp., Meritage Homes Corporation and the Latino Corporate Directors Association. We believe that Mr. Caldera's knowledge and experience in the leadership of large public organizations, regulatory and governmental affairs, together with his legal training and business and public company board experience, qualify him to serve on our board. Mr. Caldera holds a B.S. degree from the U.S. Military Academy, a M.B.A. from Harvard Business School and a J.D. from Harvard Law School. Age 68. | |
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS EXPIRING AT THE 2027 ANNUAL MEETING
| | David C. Darnell | Director since 2017 | | | Mr. Darnell served as Vice Chairman of Global Wealth & Investment Management at Bank of America Corporation from September 2014 to December 2015 and served as its Co-Chief Operating Officer from September 2011 to September 2014. From July 2005 to September 2011, he served as the President of Global Commercial Banking at Bank of America Corporation. Prior to that, Mr. Darnell held various leadership positions at Bank of America since joining the company in 1979, including Middle Market Banking group president; Central Banking group president; and Midwest Region president. He also served as an Executive Vice President and Commercial Division Executive for Bank of America in Florida. We believe that Mr. Darnell’s significant operational, acquisition, governmental, financial, leadership-development capabilities and technology execution skills qualify him to serve on our board. Mr. Darnell currently serves as a director of the United Services Automobile Association board and United Services Automobile Association Federal Savings Bank board. Mr. Darnell holds an undergraduate degree from Wake Forest University and an M.B.A. from the University of North Carolina at Chapel Hill. Age 71. | | | | Celeste B. Mastin | Director since 2017 | | | Ms. Mastin has served as the President and Chief Executive officer of H.B. Fuller Company since December 2022, and served as Executive Vice President and Chief Operating Officer of H.B. Fuller Company from March 2022 to December 2022. H.B. Fuller Company manufactures, develops, and sells adhesives around the world and is headquartered in St Paul, Minnesota. From March 2018 to March 2022, Ms. Mastin served as Chief Executive Officer of PetroChoice Lubrication Solutions. PetroChoice is one of the largest petroleum-based lubricant distributors in the United States for passenger and commercial vehicles and industrial applications. Prior to joining PetroChoice, Ms. Mastin was the Chief Executive Officer of Distribution International, Inc., a supplier of commercial and industrial insulation from 2013 to 2017. From 2007 to 2011, she served as Chief Executive Officer and as Chief Operating Officer of MMI Products, Inc., a manufacturer and distributor of building materials. From 2004 to 2007, Ms. Mastin held the role of Vice President of color and glass performance materials and Vice President of growth and development at Ferro Corporation. Ms. Mastin started her career in sales at Shell Chemical. She held European and later global sales management positions as well as management positions at Bostik, Inc. We believe that Ms. Mastin’s global chemicals and building materials sectors experience, as well as her operating experience and proven leadership ability qualify her to serve on our Board. Ms. Mastin holds a B.S. in Chemical Engineering from Washington State University and a M.B.A. from the University of Houston. Age 55. | | | | Kyle T. Larkin | Director since 2021 | | | Mr. Larkin joined Granite in 1996 and has served as President since September 2020 and as Chief Executive Officer since June 2021. He also served as Executive Vice President and Chief Operating Officer from February 2020 to September 2020, Senior Vice President and Manager of Construction and Materials Operations from 2019 to 2020, Senior Vice President and Group Manager from 2017 to 2019, Vice President and Regional Manager in Nevada from 2014 to 2017 and President of Granite’s wholly-owned subsidiary, Intermountain Slurry Seal, Inc. from 2011 to 2014. He served as Manager of Construction at the Reno area office from 2008 to 2011, Chief Estimator from 2004 to 2008 and Project Manager, Project Engineer and Estimator at Granite’s Nevada Branch between 1996 and 2003. We believe that Mr. Larkin’s knowledge of the construction industry, as well as his intimate knowledge of our business, employees, culture, and competitors, his understanding of the challenges and issues facing the Company and his insider’s perspective of the Company’s day-to-day operations and the strategic direction of the Company, qualify him to serve on our Board. Mr. Larkin holds a B.S. in Construction Management from California Polytechnic State University, San Luis Obispo and an M.B.A. from the University of Massachusetts, Amherst. Age 52. | |
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Evaluation Criteria and Procedures
Evaluation Criteria and Procedures Members of the Board of Directors of Granite are divided into three classes and are nominated for election for staggered three-year terms. The Board, its members, its committee structure and its performance are reviewed on an annual basis. Evaluations for director nominees are conducted annually by the Nominating and Corporate Governance Committee and are generally made on the basis of observations responses to surveys, questionnaires and evaluation forms circulated to directors annually. Also included in this review is a careful evaluation of the diversity of skills and experience of Board members weighed against Granite's current and emerging operating and strategic challenges and opportunities. The Board of Directors makes every effort to nominate individuals who bring a variety of complementary skills and, as a group, possess the appropriate skills and experience to oversee our business. The Company intends to recruit and select director candidates whose capabilities, including their educational background, their work and life experiences, their diversity of experiences and perspectives, including gender and/or racial/ethnic diversity and their demonstrated records of performance will have the balance of expertise and judgment required for the Company’s long-term performance and growth. The Nominating and Corporate Governance Committee considers diversity in its broadest sense, including diversity in professional and life experiences, education, skills, perspectives and leadership, as well as other individual qualities and attributes that contribute to Board heterogeneity, such as race, ethnicity, sexual orientation, gender and national origin. The Company believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the Company's goal of creating a Board of Directors that best serves our needs and those of our shareholders. As of March 31, 2024, 44% of our directors are women, 22% are racially or ethnically diverse and two of our four committees are chaired by a woman. Further, four out of the 10 new directors who have been added to the Board since 2016 are women and two out of the 10 are racially/ethnically diverse. Current Board members whose performance, capabilities, and experience meet Granite's expectations and needs are nominated for re-election in the year of their respective term's completion. In accordance with Granite's Corporate Governance Guidelines and Policies, Board members who became a director during or after 2021 will not be re-nominated and no proposed candidate will be nominated if the nominee’s 75th birthday occurs prior to the annual meeting of shareholders in the year of re- nomination or nomination. Moreover, Directors who became a director during or after 2021 will retire no later than the first annual meeting of shareholders immediately following their 75th birthday. Board members who became a director before 2021 will not be re-nominated if the nominee’s 72nd birthday occurs prior to the annual meeting of shareholders in the year of re-nomination. Moreover, for any individual who became a director before 2021, such individual will retire no later than the first annual meeting of shareholders immediately following their 72nd birthday. Additionally, the Board believes having a term limit of 15 years for independent directors who join the Board after January 1, 2024 is a prudent way to ensure that fresh ideas, skills and perspectives are represented on the Board. As a result, no individual who joined the Board after January 1, 2024 will be re-nominated if the nominee has served on the Board for more than 15 years in the year of re-nomination. Moreover, a director who joined the Board after January 1, 2024 will retire no later than the first annual meeting of shareholders immediately following their 15th anniversary of being on the Board. The mandatory retirement age and term limit will not apply to an employee director who continues to serve as an employee of Granite. Each member of the Board of Directors must meet a set of core criteria, referred to as the “three C's”: Character, Capability and Commitment. Granite was founded by persons of outstanding character, and it is Granite's intention to ensure that it continues to be governed by persons of high integrity and worthy of the trust of its shareholders. Further, Granite intends to recruit and select persons whose capabilities, including their educational background, their work and life experiences, their diversity of experiences and perspectives, including gender and/or racial/ethnic diversity and their demonstrated records of performance will have the balance of expertise and judgment required for its long-term performance and growth. Finally, Granite will recruit and select only those persons who demonstrate they have the commitment to devote the time necessary to appropriately discharge their responsibilities and to prepare for and, to the extent possible, attend and participate in all meetings of the Board and Committees on which they serve. In addition to the three C's, the Board recruitment and selection process assures that the Board composition meets all of the relevant standards for independence and specific expertise. For each new recruitment process, a set of specific criteria is determined by the Nominating and Corporate Governance Committee with the assistance of the Board Chair and in certain circumstances a search firm. These criteria may specify, for example, the type of industry or geographic experience that would be useful to maintain and improve the balance of skills and knowledge on the Board. After the search criteria are established, appropriate candidates are sought out, including through the contacts of the current directors and officers and in certain circumstances those of a search firm. The credentials of a set of qualified candidates provided by the search process are submitted for screening by the Nominating and Corporate Governance Committee, the Board Chair and the Chief Executive Officer. Based on this review, the Nominating and Corporate Governance Committee invites the top candidates for personal interviews with the Nominating and Corporate Governance Committee and others as appropriate. Normally, the search, review and interview process results in a single nominee to fill a specific vacancy. However, a given search may be aimed at producing more than one nominee, or the search for a single nominee may result in multiple candidates of such capability and character that multiple candidates might be nominated and the Board may be expanded accordingly. It is Granite's intention that this search and nomination process consider qualified candidates referred by a wide variety of sources, including all of Granite's constituents - its customers, employees and shareholders and members of the communities in which it operates. The Nominating and Corporate Governance Committee is responsible for assuring that relevant sources of potential candidates have been appropriately canvassed. The Board used the evaluation criteria and procedures listed in this section to nominate Ms. Campbell, Mr. McNally and Ms. Mullen for election at the Annual Meeting.
Key Terms of the 2024 Equity Plan at a Glance
| Director Compensation Limitation: | The aggregate dollar value of equity-based awards and cash compensation granted to a non-employee director during any fiscal year may not exceed $700,000. | | Vesting: | Time-based or performance-based, as determined by the Committee. | | Not Permitted: | (1) No repricing. The following is not permitted without stockholder approval: repricing or reducing the exercise price of a stock option or stock appreciation right; settling, canceling or exchanging any outstanding stock option or stock appreciation right in consideration for the grant of a new award with a lower exercise price or for a cash payment when the exercise price of the stock option exceeds the fair market value of the underlying stock (except in connection with a change in control); or taking any other action with respect to a stock option or stock appreciation right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which Granite’s shares are listed. (2) No dividends are paid on unvested awards. Any dividends or dividend equivalents applicable to shares subject to an award will be subject to the same vesting or performance conditions as the underlying award and will not be paid until and unless the underlying award vests. (3) No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights must have an exercise price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted. |
EXECUTIVE AND DIRECTOR COMPENSATION AND OTHER MATTERS
EXECUTIVE AND DIRECTOR COMPENSATION AND OTHER MATTERS
Role of the Compensation Consultant
Role of the Compensation Consultant The Compensation Committee retained the services of FW Cook as its compensation consultant to provide advice and recommendations on executive officer and Board of Director compensation programs. The compensation consultant attended Compensation Committee meetings and provided guidance and expertise on competitive pay practices and plan designs that are consistent with the key objectives of the compensation program. For a detailed explanation, please refer to “Information About the Board of Directors and Corporate Governance — Role of the Compensation Consultant.”
Market Data Considered in Determining Executive Compensation for 2023
Market Data Considered in Determining Executive Compensation for 2023 Each year the Compensation Committee reviews available industry compensation data to establish competitive compensation levels which will reward our executive officers if performance targets are achieved. Benchmark data from 2022 was obtained from a peer group consisting of eighteen public companies representing the construction, engineering, and/or construction materials industries. The Compensation Committee believes that industry- specific companies are the most appropriate source of benchmark data as they are most representative of Granite’s market for talent. The data from the peer group of eighteen public companies is used by the Compensation Committee to establish base salary, target total cash and long-term incentive compensation levels. As an additional market reference point, the Compensation Committee reviews national, general industry survey data based on each executive’s functional role and revenue responsibility.
Peer Group of Public Companies
Peer Group of Public Companies The eighteen public companies selected for the peer group to inform 2023 target total direct compensation levels are in the construction, engineering, and/or construction materials industries and compete for executive talent in the same market as Granite. For 2023, the Compensation Committee approved the removal of Aegion Corporation and US Concrete due to their being acquired and the addition of Arcosa, IES Holdings and Infrastructure & Energy Alternatives. At the time the peer group was approved, Granite’s trailing 4-quarter revenues were at the 52nd percentile of the peer group and the Company’s 12-month average market capitalization was at the 37th percentile of the peer group. The trailing 4 quarter median revenue of the approved peer group was $2.9 billion (versus $3.1 billion for Granite) and the median 12-month average market capitalization was $2.5 billion (versus $1.7 billion for Granite). The table below names each of the companies in the peer group that informed 2023 target compensation levels.
Peer Group of Public Companies
| Arcosa | EMCOR Group Inc. | MasTec, Inc. | Tetra Tech | | Comfort Systems USA, Inc. | Great Lakes Dredging and Docks | MYR Group, Inc. | Tutor Perini Corporation | | Cornerstore Building Brands | IES Holdings | Primoris Services Corporation | Valmont Industries, Inc. | | Dycom Industries, Inc. | Infrastructure & Energy Alternatives | Sterling Construction | | | Eagle Materials | KBR, Inc. | Summit Materials | |
Base Salary
Base Salary Base salaries are essential to attract and retain our leadership and provide our Named Executive Officers a stable level of wages as the other components of their compensation are not guaranteed and are based on Company or operating group performance. Annually, the CEO reviews compensation for the executive officers (other than for himself) and makes recommendations to the Compensation Committee based on responsibility, tenure, individual leadership and operating group performance. The Compensation Committee considers these recommendations, as well as benchmarking comparisons prepared by the compensation consultant and sets the base salaries with reference to the peer group market median for the executive officers, including the CEO. Following this review for 2023, the Compensation Committee increased base salaries based on performance and to bring them into closer alignment with market median rates. The Named Executive Officer base salaries for 2023 were slightly below the peer median data in the aggregate for our Named Executive Officers. Outside of its normal course review, the Compensation Committee reviews executive officer compensation in connection with promotions, or other significant events. Base salaries for 2023 for the Named Executive Officers were as follows:
2023 Annual Incentive Plan Compensation
2023 Annual Incentive Plan Compensation Annual incentive awards are an integral component of our executive compensation program. The Named Executive Officers participate in the AIP pursuant to which annual incentive compensation is determined by overall company performance and/or applicable operating group performance to incentivize and reward annual financial and safety performance. Annual profitability and cash flow forecasts were determined at the beginning of the year and used to establish the target performance goals. Threshold and maximum goals were also established, and payouts were determined based on achievement versus the goals. As in prior years, performance against Company and/or operating group safety objectives served as a modifier to the calculated bonus based on financial performance.
Annual Incentive Opportunity
Annual Incentive Opportunity As presented in detail below, each Named Executive Officer's targeted annual incentive opportunity is based on external benchmark data for similar positions and is expressed as a percentage of base salary. The target is set by the Compensation Committee after a review of market median annual incentive target awards of Granite’s peer group and survey data which is the basis for establishing the threshold and maximum annual incentive. Pursuant to the terms of the AIP, maximum cash payouts cannot exceed two times the target opportunity. The aggregate AIP target opportunities were 7% below peer group median data for our Named Executive Officers for 2023. Mr. Larkin’s target bonus percentage increased from 100% to 110% of salary while other NEO target bonus percentages remained the same. Outside of its normal course review, the Compensation Committee reviews executive officer compensation in connection with promotions or other significant events. The 2023 AIP opportunities for the Named Executive Officers are presented below.
Annual Incentive Opportunity
Annual Incentive Opportunity
Annual Incentive Opportunity
| Named Executive Officer | Target as % of Base Salary | Threshold | Target | Maximum | | Kyle T. Larkin | 110% | $508,750 | $1,017,500 | $2,035,000 | | Elizabeth L. Curtis | 80% | $210,000 | $420,000 | $840,000 | | James A. Radich | 80% | $210,000 | $420,000 | $840,000 | | Michael G. Tatusko | 65% | $146,250 | $292,500 | $585,000 | | Staci M. Woolsey | 60% | $120,000 | $240,000 | $480,000 |
2023 AIP Performance Measures and Results
2023 AIP Performance Measures and Results At the beginning of the annual performance period (January 1st – December 31st), the Compensation Committee approved the 2023 AIP weighting and financial performance goals. The Compensation Committee determined that 2023 AIP payouts for Messrs. Larkin and Radich and Mses. Curtis and Woolsey were to be determined based on Company financial performance and a Company safety multiplier. For Mr. Tatusko (the operating group Named Executive Officer), the Committee established measures for the AIP to be paid out based on a blend of Company and operating group financial and safety performance. The following table illustrates the weighting for each AIP financial metric for each of our Named Executive Officers:
2023 AIP Performance Measures and Results
| 2023 Performance Measure | Kyle T. Larkin | Elizabeth L. Curtis | James A. Radich | Michael G. Tatusko | Staci M. Woolsey | | Company EBIT | 80% | 80% | 80% | 32% | 80% | | Company Cash Flow from Operations (as % of Revenue) | 20% | 20% | 20% | 20% | 20% | | Group Operating Income | 0% | 0% | 0% | 48% | 0% |
Performance Measures for 2023
Performance Measures for 2023 Our annual incentive metrics include EBIT, OCF and group operating income. These metrics are important to our overall success in achieving strategic financial goals. The performance goal setting process included reviewing peer data and historical performance with assistance from the Compensation Committee’s executive compensation consultant, FW Cook. Safety is one of our core values, and we use safety as a metric in our AIP to align our executive officers with our safety strategy. The Safety performance multiplier includes a severity metric of Days Away, Restricted or Transferred (“DART”) and a frequency metric of OSHA Recordable Incident Rate (“ORIR”). DART and ORIR are weighted 50/50% and applied to the Company EBIT and OCF payout results. The Operating Group safety results are calculated in the same manner with the weighted safety multiplier applied to each group’s operating income results. For 2023, Company EBIT, Company OCF, Group Operating Income and safety metrics exclude the impact of our acquisitions of Coast Mountain Resources (2020) Ltd., Lehman-Roberts Company and Memphis Stone & Gravel Company. Company EBIT. Company EBIT is defined as actual consolidated EBIT attributable to Granite Construction Incorporated, adjusted for items pre-approved by the Compensation Committee. For 2023, Company EBIT excluded items that are not related to the Company’s ongoing core business operations such as non-cash impairment charges related to the wind down of our international mineral services operations, acquisition expenses, investigation-related legal fees, loss on debt extinguishment and any adjustments attributable to claim recovery related to a certain legacy project. Company OCF. Company OCF is defined as actual operating cash flow attributable to Granite Construction Incorporated calculated in accordance with U.S. GAAP and adjusted for items pre-approved by the Compensation Committee as a percentage of revenue. For 2023, Company OCF excluded cash impact items that are not related to the Company’s ongoing core business operations such as acquisition expenses and investigation-related legal fees. Group Operating Income. Group Operating Income is defined as actual operating income for the applicable operating group calculated in accordance with U.S. GAAP and adjusted for items pre-approved by the Compensation Committee. For 2023, Group Operating Income excluded items that are not related to the Group’s ongoing core business operations such as non-cash impairment charges related to the wind down of our international mineral services operations. Safety. Granite uses two metrics to measure safety within the incentive program: (1) ORIR and (2) DART, which are nationally recognized metrics, to benchmark its safety performance against the construction industry. ORIR tracks all injuries which require OSHA documentation (i.e., those that result in medical treatment, restricted duty or lost time) and represents the number of events per 100 full-time employees. It is calculated by multiplying the number of OSHA recordable injuries (total injuries or lost time injuries) by 200,000 (2,000 hours per employee per year x 100 employees) and dividing by the total number of hours of employee exposure. The DART rate is designed to track OSHA recordable workplace injuries or illnesses that results in time away from work, restricted job roles, or an employee's permanent transfer to a new position. The DART rate is calculated by taking the number of OSHA Recordable injuries and illnesses that resulted in Days Away; Restricted; Transferred x 200,000 (2,000 hours per employee per year x 100 employees) and dividing by the total number of hours of employee exposure. A 50/50% weighting of these two metrics is calculated to determine the performance and payout multiplier. A safety multiplier ranging from 90% to 115% based on Company and/or operating group safety performance, as applicable, is applied to the financial metric payouts for company and/or operating group results. The Compensation Committee considered the Company's annual operating plan for the year in setting threshold, target and maximum performance goals for the AIP performance metrics. The payout based on Company and/or operating group financial performance is zero if Company and/or applicable operating group performance, respectively, is below the financial performance threshold. Once threshold requirements are met for each metric, Named Executive Officers can earn between 50% and 200% of their annual target opportunity depending on the level of achievement for each metric of the Company and/or operating group financial performance. Linear interpolation applies for performance between threshold/target and target/maximum performance levels. The calculated bonus under Company and/or operating group performance components is subject to a safety multiplier ranging from 90% to 115% based on Company and/or operating group safety performance, as applicable. The target and maximum payouts have been set at levels our Compensation Committee believes will provide a meaningful incentive to achieve Company and individual goals and contribute to the Company’s financial performance. The following were the AIP financial performance measures set for 2023 (in millions):
2023 AIP Financial Performance Goals
2023 AIP Financial Performance Goals
2023 AIP Financial Performance Goals
| Performance Metric | Threshold | Target | Maximum | Actual Performance | Actual Performance as a % of Target | | Company EBIT | $144.5 | $180.6 | $216.7 | $198.2 | 149% | | Company OCF | 2.5% | 5.0% | 7.5% | 6.2% | 148% | | Mountain Group Operating Income | $78.5 | $98.2 | $117.8 | $132.7 | 200% |
2023 AIP Financial Performance Goals
The following table outlines the safety performance goals and results. Linear interpolation is used to determine the multiplier when actual performance attained falls between threshold/target and target/maximum performance levels:
2023 AIP Safety Multiplier Goals
2023 AIP Safety Multiplier Goals
2023 AIP Safety Multiplier Goals
| | ORIR Performance and Multiplier | | | | DART Performance and Multiplier | | | | | | Performance Level | Threshold 90% | Target 110% | Maximum 115% | ORIR Safety Results | Threshold 90% | Target 110% | Maximum 115% | DART Safety Results | Actual Safety Multiplier(1) | | Company | 0.92 | 0.70 | 0.49 | 0.67 | 0.47 | 0.35 | 0.25 | 0.31 | 111% | | Mountain Operating Group | 0.92 | 0.70 | 0.49 | 0.76 | 0.47 | 0.35 | 0.25 | 0.32 | 108% |
2023 AIP Safety Multiplier Goals
(1) ORIR & DART actual performance weighted 50/50 to determine safety multiplier. Based on actual performance, individual incentives earned by the Named Executive Officers were as follows:
Summary of Actual 2023 AIP Total Bonus Payouts
Summary of Actual 2023 AIP Total Bonus Payouts
Summary of Actual 2023 AIP Total Bonus Payouts
| Named Executive Officer | AIP Target Opportunity | Actual Company Bonus Payout(1) | Actual Operating Group Bonus Payout(1) | Total Payout(2) | Payout as a % of Target | | Kyle T. Larkin | $1,017,500 | $1,680,584 | n/a | $1,680,584 | 165% | | Elizabeth L. Curtis | $420,000 | $693,706 | n/a | $693,706 | 165% | | James A. Radich | $420,000 | $693,706 | n/a | $693,706 | 165% | | Michael G. Tatusko | $292,500 | $250,909 | $280,800 | $531,709 | 182% | | Staci M. Woolsey | $240,000 | $396,403 | n/a | $396,403 | 165% |
Summary of Actual 2023 AIP Total Bonus Payouts
(1) Actual company payouts and operating group payouts include safety multiplier, other than for Mr. Tatusko, who received maximum group payout. (2) Represents the sum of 2023 Company and operating group bonus payouts.
Long Term Incentive Compensation
Long Term Incentive Compensation Equity incentive awards are a critical component of the Company’s compensation program and are used to attract and retain talented, highly qualified employees to reward and incentivize the long-term growth and success of the Company. Our program includes time-based service awards (25%) and performance-based awards (75%) subject to 3-year performance measures, relative Total Shareholder Return (“TSR”) and a capital efficiency metric, RONA. As presented in detail below, each Named Executive Officer's target long-term incentive opportunity is based on external benchmark data prepared in the last quarter of the prior year for similar positions and is expressed as a percentage of base salary. The targets are set at the beginning of the year by the Compensation Committee after a review of market median long-term incentive target awards of Granite’s peer group and survey data. Outside of its normal course review, the Compensation Committee reviews executive officer compensation in connection with promotions or other significant events. The LTIP target opportunity was conservatively positioned at 22% below the median data in the aggregate for our Named Executive Officers and varied by each Named Executive Officer and their role. The LTIP incentive target opportunities for the Named Executive Officers under the 2023 LTIP are presented below:
Long Term Incentive Compensation
| Named Executive Officer | LTIP Incentive Target Opportunity | | Kyle T. Larkin | $2,800,000 | | Elizabeth L. Curtis | $900,000 | | James A. Radich | $725,000 | | Michael G. Tatusko | $450,000 | | Staci M. Woolsey | $310,000 |
Long Term Incentive Compensation
Each Named Executive Officer’s target award is divided into two components – Performance Awards and Time-Based Service Awards. The table below reflects the weighting of the two components:
LTIP Components Weighting
LTIP Components Weighting
LTIP Components Weighting
| LTIP Component | Weighting | | 3-Year Relative TSR Performance Award | 50% | | 3-Year RONA Performance Award | 25% | | Time-Based Service Award | 25% | | Total | 100% |
LTIP Components Weighting
To emphasize and reward sustained long term performance, all Named Executive Officers participated in the 2023 LTIP. For awards granted after January 1, 2020, the Board of Directors approved the following changes to the LTIP for the benefit of the Company's Named Executive Officers and other executive officers: •In the event of a change in control, LTIP awards convert to RSUs, based on target or actual performance through the effective date of the change in control, depending on the timing of the change in control within the performance period, and such RSUs are subject to time-based vesting through the end of the performance period; •Double-trigger vesting of any converted RSUs, requiring both a change in control and termination of employment without cause or for good reason; and •Proration of LTIP awards on termination of employment due to death, disability or retirement based on actual performance through the end of the applicable performance period.
Performance Awards
Performance Awards The 2023 LTIP is focused on creating long term value for our shareholder’s benefit. The performance incentive is based on relative TSR and a capital efficiency metric, RONA, where both are measured over a 3-year performance period, and the incentive payout is earned based on achievement of performance targets, and settled in Restricted Stock Units (“RSUs”) at the end of the performance period. Pursuant to the terms of the LTIP, maximum payouts cannot exceed two times the target performance opportunity. However, the Compensation Committee has the ability to reduce the payout percentage for the performance period in its sole discretion.
RONA Performance Metric
RONA Performance Metric The Compensation Committee considered the Company's strategic plan, weighted average cost of capital, peer benchmarking data and historical performance in setting threshold, target and maximum performance goals for the 2023 RONA performance metric. At the time the performance goals for each year are set, they are believed by the Committee to be rigorous, yet achievable. Performance will be measured annually over a 3-year period and is defined as adjusted consolidated GAAP net income (which excludes tax effected cost of debt) divided by average adjusted net assets (which excludes unpermitted land held for future use, deferred tax and interest bearing debt). RONA performance is calculated annually and the 3-year average RONA result will be compared to the 3-year average performance goal to determine performance achievement. Once threshold requirements are met, Named Executive Officers can earn between 50% and 200% of their annual target opportunity depending on the level of performance achieved. If Company performance is below the financial performance threshold, there is no payout. Linear interpolation applies for performance between threshold/target and target/maximum performance levels. Adjustments to GAAP net income and net assets for each year are pre-approved by the Compensation Committee and are necessary to exclude the impact of items that are not related to the Company’s ongoing core business operations. 2023 adjusted GAAP net income excluded items such as the loss on debt extinguishment, investigation-related legal fees, settlement charges and the change in the estimated amount of probable recovery on an outstanding claim related to a certain legacy project. The net assets and net loss associated with the newly acquired businesses were also excluded from the 2023 calculation due to the timing of the acquisitions and not having full year results. 2022 adjusted GAAP net income excluded items such as the tax effect of businesses no longer held for sale, investigation-related legal fees and settlement charges.
TSR Performance Metric
| Relative TSR Percentile Rank | Payout (% of Target)(1) | | 75th Percentile or better | 200% | | 50th Percentile | 100% | | 25th Percentile | 35% | | Below 25th Percentile | 0% |
TSR Performance Metric
| TSR Performance Period | Award Opportunity | Payout Timing (if award earned based on performance) | | January 1, 2020 – December 31, 2022 | 0% – 200% of 2020 Performance Award | Q1 2023 - Completed | | January 1, 2021 – December 31, 2023 | 0% – 200% of 2021 Performance Award | Q1 2024 - Completed | | January 1, 2022 – December 31, 2024 | 0% – 200% of 2022 Performance Award | Q1 2025 | | January 1, 2023 – December 31, 2025 | 0% – 200% of 2023 Performance Award | Q1 2026 |
Payouts for 2020 - 2022 Total Shareholder Return Awards Paid in 2023
Payouts for 2020 - 2022 Total Shareholder Return Awards Paid in 2023 TSR performance was calculated based on Granite’s TSR rank relative to the 28 Russell 3000 companies in the Construction and Engineering or Construction Materials GICS Sub-Industry classification for the three-year performance period beginning January 1, 2020 through December 31, 2022. Granite’s three-year TSR performance as of December 31, 2022 for this performance period was at the 46th percentile, reflecting an earnout of 88% of the target. This 2020 - 2022 TSR performance award is reflected in the 2023 Summary Compensation Table and the 2023 Grants of Plan Based Award Table.
2020 - 2022 TSR Payout Curve
2020 - 2022 TSR Payout Curve (Utilizes a Relative Percentile Ranking System to determine payout as a percentage of Target.)
2020 - 2022 TSR Payout Curve
| Relative Percentile Ranking | Payout (% of Target)(1) | | 80th Percentile or better | 200% | | 50th Percentile | 100% | | 35th Percentile | 50% | | Below 35th Percentile | 0% |
2020 - 2022 TSR Payout Curve
(1) Linear interpolation applies between performance levels.
TSR Performance Period January 1, 2020 - December 31, 2022
| Named Executive Officer | Target TSR Incentive | Actual TSR Incentive | Restricted Stock Units Awarded(2) | | Kyle T. Larkin | $640,000 | $563,200 | 20,645 | | Elizabeth L. Curtis(1) | n/a | n/a | n/a | | James A. Radich | $280,000 | $246,400 | 9,032 | | Michael G. Tatusko | $280,000 | $246,400 | 9,032 | | Staci M. Woolsey(1) | n/a | n/a | n/a |
TSR Performance Period January 1, 2020 - December 31, 2022
(1) Due to the performance period beginning prior to becoming an executive officer, Mses. Curtis and Woolsey were not eligible to participate in the 2020 - 2022 LTIP. (2) Awards are denominated as a cash value until earned based on performance. The number of RSUs awarded was calculated by dividing the actual long-term incentive value by $27.28, which was the average stock price over the first 30 days of January 2020.
Payouts for 2021 - 2023 Total Shareholder Return Awards Paid in 2024
Payouts for 2021 - 2023 Total Shareholder Return Awards Paid in 2024 TSR performance was calculated based on Granite’s TSR rank relative to the 32 Russell 3000 companies in the Construction and Engineering or Construction Materials GICS Sub-Industry classification for the three-year performance period beginning January 1, 2021 through December 31, 2023. Granite’s three-year TSR performance ranked at the 65th percentile which was above the target performance goal resulting in an 150% of target payout. See “2021 - 2023 TSR Payout Curve” below. This 2021-2023 TSR performance award will be reflected in the next year’s 2024 Summary Compensation Table and 2024 Grants of Plan Based Award Table. (Utilizes a Relative Percentile Ranking System to determine payout as a percentage of Target.)
Payouts for 2021 - 2023 Total Shareholder Return Awards Paid in 2024
| Relative Percentile Ranking | Payout (% of Target)(1) | | 80th Percentile or better | 200% | | 50th Percentile | 100% | | 35th Percentile | 50% | | Below 35th Percentile | 0% |
Payouts for 2021 - 2023 Total Shareholder Return Awards Paid in 2024
(1) Linear interpolation applies between performance levels.
TSR Performance Period January 1, 2021 – December 31, 2023
| Named Executive Officer | Target TSR Incentive | Actual TSR Incentive | Restricted Stock Units Awarded(2) | | Kyle T. Larkin | $1,760,000 | $2,640,000 | 81,657 | | Elizabeth L. Curtis | $360,000 | $540,000 | 16,702 | | James A. Radich | $480,000 | $720,000 | 22,270 | | Michael G. Tatusko | $300,000 | $450,000 | 13,918 | | Staci M. Woolsey(1) | n/a | n/a | n/a |
TSR Performance Period January 1, 2021 – December 31, 2023
(1) Due to the performance period beginning prior to becoming an executive officer, Ms. Woolsey was not eligible to participate in the 2021 - 2023 LTIP. (2) Awards are denominated as a cash value until earned based on performance. The number of RSUs awarded was calculated by dividing the actual long-term incentive value by $32.33, which was the average stock price over the first 30 days of January 2021.
2023 Time-Based Service Awards
| Named Executive Officer | Time-Based Service Award(1) | RSUs Awarded(1) | | Kyle T. Larkin | $700,000 | 17,144 | | Elizabeth L. Curtis | $225,000 | 5,510 | | James A. Radich | $181,250 | 4,439 | | Michael G. Tatusko | $112,500 | 2,755 | | Staci M. Woolsey | $77,500 | 1,898 |
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation Granite offers its Named Executive Officers, Board of Directors, and other key executives, participation in the NQDC, which: •Allows executive officers to defer up to 50% of their base salary and up to 100% of their incentive compensation (cash and equity); •Allows non-employee directors to defer receipt of their annual cash retainer and RSU awards; •Allows participants to choose from a menu of investment options. Granite determines the investment options for the NQDC menu and may add or remove investment options based on a review of the performance of the particular investment; •Allows distribution options of in-service payments for executives and/or upon retirement or termination for all participants; •Includes a Rabbi Trust, which provides participants a measure of added security that benefit obligations will be satisfied; and •Includes an option under which eligible participants can voluntarily direct Granite to purchase life insurance on their behalf and are eligible for a survivor benefit equal to one year's base salary payable in the event of death. The survivor benefit is payable only while the participant is employed with Granite.
Flexible Bonus Policy
Flexible Bonus Policy The Compensation Committee has the authority to award discretionary bonuses to employees of the Company. In 2013, our Compensation Committee determined that it would be beneficial to define and limit its authority to award discretionary bonuses and adopted the Flexible Bonus Policy pursuant to which employees of the Company, including our Named Executive Officers, are eligible to receive a discretionary bonus, which may be based on Company performance, individual performance or such other factors as our Compensation Committee may consider appropriate. In determining Company performance, our Compensation Committee may consider the achievement of corporate financial, strategic and operational objectives including, but not limited to, revenue, income, and backlog. In determining individual performance, our Compensation Committee may consider the achievement of personal objectives including, but not limited to, business targets, budgetary targets, succession planning, and safety targets. It is our intention that the discretionary bonuses be fixed and determinable as of year-end; this would require approval prior to year-end. The aggregate amount of any bonus or bonuses payable under the Flexible Bonus Policy to any one participant in any calendar year may not exceed $250,000. Our Compensation Committee believes that the flexible design of this policy is necessary to consider the effects of unanticipated events and circumstances on the Company’s business or on a participant’s performance. In 2023, no discretionary bonuses were awarded under the Flexible Bonus Policy.
Change-in-Control
Change-in-Control All of our Named Executive Officers are participants in the Executive Retention and Severance Plan III (“ERSP III”) which provides additional payments and other benefits if the Named Executive Officer is terminated without cause or if the Named Executive Officer terminates employment for “good reason” (as defined further below) following a “change in control” (as defined further below). The ERSP III provides that if a participant’s employment with Granite is terminated by the Company within two years after a change in control of Granite other than for cause, or if the participant resigns from such employment within two years after a change in control of Granite for good reason, the participant would be entitled to the following benefits: •A lump sum payment equal to 2 times the participant’s annual base salary rate in effect immediately prior to the participant’s termination; •A lump sum payment equal to 2 times the average of the aggregate of all annual incentive bonuses earned by the participant for the three fiscal years immediately preceding the fiscal year of the change in control; •A lump sum payment equal to 2 times the average of the aggregate annual employer contribution (the “employer contribution”) made on behalf of the participant for the three fiscal years preceding the fiscal year of the change in control to the 401(k) Plan, and any other retirement plan in effect immediately prior to the change in control; •A lump sum payment equal to 2 times the average annual premium cost for group health, life, and long-term disability benefits, provided for the three fiscal years preceding the fiscal year of termination; •Accelerated vesting of equity awards in accordance with the provisions contained in the equity incentive plans (double trigger) (If an equity award is performance-based and a change-in-control occurs in the first year of the performance period, the equity awards will be paid out at target, and if a change-in-control occurs in the second or third year of the performance period, the equity award will be paid out at actual performance through the change-in-control date); and •Insurance and reasonable professional outplacement services for the participant until the earlier of two years following the date of termination or the date on which the participant obtains employment. Payments made to the terminated participant do not include tax gross-ups and are capped. The amount of the payment will not exceed and will be reduced if required in order not to exceed the “safe harbor” amount allowable under Section 4999 of the Internal Revenue Code, but only if the reduction would increase the net after-tax amount received by the participant. The ERSP III includes a non-disparagement provision in favor of the Company. Change in control and good reason have the following meanings under the ERSP III: •A “change-in-control” is defined as (i) a merger, consolidation or acquisition of Granite where our shareholders do not retain more than 50% of our voting stock or the voting stock in the surviving entity; (ii) the sale or disposition of all or substantially all of our assets to a corporation (other than to one or more subsidiaries of Granite); (iii) the acquisition by affiliated persons of more than 30% of our voting stock; or (iv) a change in the composition of our Board of Directors in any consecutive 12-month period as a result of which fewer than a majority of the directors are “incumbent directors;” and •“Good reason” means (i) a material diminution in the participant's authority, duties or responsibilities, causing the participant's position to be of materially lesser rank or responsibility within Granite or an equivalent business unit of its parent; (ii) a decrease in the participant's base salary rate (except as part of a broad-based reduction plan applicable to substantially all Company group employees); (iii) a geographical relocation of the participant's principal office location by more than 30 miles (one way); or (iv) any material breach of the ERSP III by Granite with respect to the participant.
Summary Compensation Table
Summary Compensation Table 2023 The following table summarizes, for the fiscal years specified, the compensation for our President and CEO, our CFO, and other Named Executive Officers.
Summary Compensation Table
| Name | | | | Stock | Non-Equity Incentive Plan | All Other | | | and Principal Position | Year | Salary | Bonus | Awards(1) | Compensation(2) | Compensation(3) | Total | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | Kyle T. Larkin President & Chief Executive Officer | 2023 | $925,000 | $— | $1,542,925 | $1,680,584 | $75,847 | $4,224,356 | | | 2022 | $900,000 | $— | $599,980 | $545,112 | $77,385 | $2,122,477 | | | 2021 | $854,615 | $— | $1,439,992 | $— | $68,972 | $2,363,579 | | Elizabeth L. Curtis Executive Vice President & Chief Financial Officer | 2023 | $525,000 | $— | $224,973 | $693,706 | $54,764 | $1,498,443 | | | 2022 | $500,000 | $— | $199,993 | $242,272 | $51,364 | $993,629 | | | 2021 | $437,500 | $— | $89,995 | $— | $47,072 | $574,567 | | James A. Radich Executive Vice President and Chief Operating Officer | 2023 | $525,000 | $— | $550,021 | $693,706 | $48,933 | $1,817,660 | | | 2022 | $500,000 | $— | $162,497 | $242,272 | $47,542 | $952,311 | | | 2021 | $500,000 | $— | $119,979 | $— | $45,359 | $665,338 | | Michael G. Tatusko Senior Vice President and Mountain Group Manager | 2023 | $450,000 | $— | $481,264 | $531,709 | $54,251 | $1,517,224 | | | 2022 | $425,000 | $— | $99,981 | $267,419 | $52,695 | $845,095 | | | 2021 | $400,000 | $— | $74,962 | $254,748 | $173,958 | $903,668 | | Staci M. Woolsey Chief Accounting Officer | 2023 | $400,000 | $— | $77,495 | $396,403 | $53,300 | $927,198 | | | 2022 | $380,000 | $— | $73,120 | $138,095 | $345,262 | $936,477 |
Summary Compensation Table
(1) The awards in column (e) reflect the grant date fair value of stock awards granted pursuant to the time-based service award feature of the LTIP and the Performance Award feature of the LTIP. For a detailed explanation, regarding RSUs granted during 2023 to the Named Executive Officers, please refer to the Grants of Plan-Based Awards table. The grant date fair value is determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718, without regard to potential forfeitures and is determined using the fair value of the Company’s common stock based on the market price at the date of grant. For additional information about the assumptions used in these calculations, see Note 17 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. For a detailed explanation, please refer to the “Compensation Discussion and Analysis — Compensation Elements — Long Term Incentive Compensation.” (2) The amounts in column (f) reflect the cash awards earned for performance. For a detailed explanation of cash awards earned for performance in 2023 and paid in March 2024, please refer to “Compensation Discussion & Analysis – Compensation Elements – Annual Incentive Compensation.” (3) Please refer to the "All Other Compensation Table" below for details with respect to all other compensation.
Grants of Plan-Based Awards Table
Grants of Plan-Based Awards Table The following table provides additional information about plan-based awards granted to our Named Executive Officers during the year ended December 31, 2023.
Grants of Plan-Based Awards Table
| | | | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares or Stock Units | Grant Date Fair Value of Stock Awards(3) | | Named Executive Officer | Committee Approval Date | Grant Date | | | | | | | | | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | | Kyle T. Larkin | | | $508,750 | $1,017,500 | $2,035,000 | - | - | - | - | - | | | | | - | - | - | $1,050,000 | $2,100,000 | $4,200,000 | - | - | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 17,144(4) | $699,990 | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 20,645(5) | $842,935 | | Elizabeth L. Curtis | | | $210,000 | $420,000 | $840,000 | - | - | - | - | - | | | | | - | - | - | $337,500 | $675,000 | $1,350,000 | - | - | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 5,510(4) | $224,973 | | James A. Radich | | | $210,000 | $420,000 | $840,000 | - | - | - | - | - | | | | | - | - | - | $271,875 | $543,750 | $1,087,500 | - | - | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 4,439(4) | $181,244 | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 9,032(5) | $368,777 | | Michael G. Tatusko | | | $146,250 | $292,500 | $585,000 | - | - | - | - | - | | | | | - | - | - | $168,750 | $337,500 | $675,000 | - | - | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 2,755(4) | $112,487 | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 9,032(5) | $368,777 | | Staci M. Woolsey | | | $120,000 | $240,000 | $480,000 | - | - | - | - | - | | | | | - | - | - | $116,250 | $232,500 | $465,000 | - | - | | | 3/1/23 | 3/14/23 | - | - | - | - | - | - | 1,898(4) | $77,495 |
Grants of Plan-Based Awards Table
(1) Amounts in columns (d) through (f) reflect threshold, target and maximum incentives, as applicable, under the 2023 AIP. For a detailed discussion of annual incentive compensation and the payout actually received by each Named Executive Officer under the 2023 AIP, please refer to “Compensation Discussion and Analysis — Compensation Elements — 2023 Annual Incentive Plan Compensation,” “2023 AIP Performance Measures and Results” and the 2023 Summary Compensation Table. (2) Amounts in columns (g) through (i) reflect the threshold, target and maximum award amounts applicable to the performance based (TSR and RONA) components of our 2023 LTIP. Each of our Named Executive Officers has the ability to earn from 0% to 200% of the TSR and RONA components of the LTIP target opportunity. Any payouts under the LTIP are made in the form of RSUs. Payouts on the TSR and RONA components of the LTIP are made after the end of the performance period. (3) Amounts in column (k) reflect RSU awards granted on March 14, 2023. The grant date fair market value was calculated by multiplying the number of RSUs awarded by the closing price of our common stock on the date of the grant, $40.83 for March 14, 2023. (4) The RSUs granted on March 14, 2023 reflect the time-based service awards granted under the 2021 Equity Plan. The number of RSUs granted for the time-based service award was calculated by dividing the time-based service award by the closing price of our common stock of $40.83 on the date of the grant. The granted time-based service award RSUs vest in three equal annual installments beginning on March 14, 2023, subject to continued service; unless retirement eligibility per the 2021 Equity Plan is met, in which case vesting is accelerated. The holders of RSUs are entitled to receive dividend equivalent units in lieu of cash dividends declared by the Board of Directors on the outstanding common stock of the Company. (5) The RSUs granted on March 14, 2023 reflect the performance awards granted under the 2021 Equity Plan. The number of RSUs granted for the 2020 – 2022 Total Shareholder Return performance award was calculated by dividing the performance award by the average stock price over the first 30 days of January 2020 of $27.28. The RSUs granted as performance awards fully vested 10 days following the date of grant. The holders of RSUs are entitled to receive dividend equivalent units in lieu of cash dividends declared by the Board on the outstanding common stock of the Company.
Outstanding Equity Awards at Fiscal Year-End Table
Outstanding Equity Awards at Fiscal Year-End Table The following table summarizes equity awards made to the Named Executive Officers that were outstanding as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End Table
| | Stock Awards | | | Named Executive Officer (a) | Number of Shares or RSUs That Have Not Vested(1)(2) (b) | Market Value of Shares or RSUs That Have Not Vested(3) (c) | | Kyle T. Larkin | 42,560 | $2,164,602 | | Elizabeth L. Curtis | 10,642 | $541,252 | | James A. Radich(4) | — | — | | Michael G. Tatusko | 5,575 | $283,545 | | Staci M. Woolsey | 3,758 | $191,132 |
Outstanding Equity Awards at Fiscal Year-End Table
(1) Upon death, disability, or achieving retirement eligibility, all equity awards of a Named Executive Officer vest immediately. (2) Vesting dates for outstanding RSU awards for the Named Executive Officers are set forth in the table below. (3) The amounts shown in column (c) are based on the December 29, 2023 closing price of the Company’s common stock of $50.86. (4) Pursuant to the 2021 Equity Plan, Mr. Radich qualifies as retirement eligible and all of his equity awards vest immediately.
Stock Vested Table
Stock Vested Table 2023 The following table summarizes the number of shares our Named Executive Officers acquired upon the vesting of stock awards during 2023 and the value realized before payment of any applicable withholding tax.
Stock Vested Table
| | Stock Awards | | | Named Executive Officer (a) | Number of Shares Acquired on Vesting (b) | Value Realized Upon Vesting(1) (c) | | Kyle T. Larkin | 46,481 | $1,854,724 | | Elizabeth L. Curtis | 3,427 | $139,712 | | James A. Radich | 13,471 | $537,493 | | Michael G. Tatusko | 12,673 | $508,237 | | Staci M. Woolsey | 1,044 | $41,683 |
Stock Vested Table
(1) The amounts in column (c) are based on the fair market value of our common stock on the applicable vesting date.
Nonqualified Deferred Compensation Table
Nonqualified Deferred Compensation Table The following table summarizes our Named Executive Officers' participation in our NQDC plan for the year ended December 31, 2023.
Nonqualified Deferred Compensation Table
| Named Executive Officer | Executive Contribution in Last Fiscal Year(1)(2) | Registrant Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year(3) | Aggregate Withdrawals/Distributions(4) | Aggregate Balance at Last Fiscal Year End(5) | | (a) | (b) | (c) | (d) | (e) | (f) | | Kyle T. Larkin | $5,451 | $0 | $748 | $0 | $6,199 | | Elizabeth L. Curtis | $50,429 | $0 | $18,021 | $0 | $149,235 | | James A. Radich | $78,606 | $0 | $10,273 | ($61,904) | $84,562 | | Michael G. Tatusko(6) | n/a | n/a | n/a | n/a | n/a | | Staci M. Woolsey(6) | n/a | n/a | n/a | n/a | n/a |
Nonqualified Deferred Compensation Table
(1) The NQDC plan allows Named Executive Officers to defer base salary and incentive compensation, which includes equity and cash awards. Participants are required to make an election each plan year with respect to the amount to be deferred, future distribution date, and form of distribution. Distributions may be in-service distributions while participants are actively employed or a future retirement election. A distribution election is irrevocable on the first day of each plan year. For a detailed explanation of the NQDC, please refer to “Compensation Discussion and Analysis — Non-Qualified Deferred Compensation”. (2) The amounts in column (b) include: (i) Mr. Larkin’s deferral of 1% or $5,451 of his 2022 cash bonus performance award paid in March 2023, (ii) Ms. Curtis’ base salary deferral of $26,202 and the deferral of 10% or $24,227 of her 2022 cash bonus performance award paid in March 2023; and (iii) Mr. Radich’s base salary deferral of $78,606. The base salary deferral reported in this column (b) is included within the amount reported as salary for Mr. Radich and Ms. Curtis in the 2023 Summary Compensation Table. The cash bonus deferral reported in column (b) is included within the amount reported as non-equity incentive plan compensation for Mr. Larkin and Ms. Curtis in the 2023 Summary Compensation Table. (3) The amounts in column (d) do not include above market or preferential earnings (of which there were none) and, accordingly, such amounts are not reported in the Summary Compensation Table as above market or preferential earnings. (4) Pursuant to the terms of the NQDC Plan, and in accordance with his previous in-service account elections, Mr. Radich received a cash distribution of $61,904. (5) Amounts reported in this column (f) for each Named Executive Officer include amounts previously reported in the Summary Compensation Table in previous years when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary and incentive compensation. (6) Mr. Tatusko and Ms. Woolsey elected to not participate in the NQDC Plan in 2023.
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control Except in the case of a change-in-control, Granite is not obligated to pay severance or other enhanced benefits to any of the Named Executive Officers in connection with a termination of their employment. Under the terms of Granite’s equity plans and award agreements, upon death or disability, or becoming retirement eligible, all equity awards of a Named Executive Officer would vest immediately. The amount of equity awards that would vest upon each Named Executive Officer's death, disability, or retirement eligibility (if eligibility was met as of December 31, 2023) is set forth in column (e) below. Under the Company’s ERSP III, each Named Executive Officer is subject to a two-year non-solicitation requirement, and a non-disparagement requirement following termination of employment. The following table sets forth an example of the potential payments and benefits under Granite's compensation and benefit plans and arrangements to which the Named Executive Officers would be entitled upon a termination of employment without cause or for “good reason” (as defined above under “Change-in-Control Arrangements”) within two years following a change-in-control of Granite.
Potential Payments Upon Termination or Change-in-Control
| Named Executive Officer (a) | Cash Severance Payment (1) (b) | Insurance Benefits (2) (c) | Other Compensation (3) (d) | Accelerated Equity Awards(4) (e) | Total (f) | Section 280G Safe Harbor Provision(5) (g) | Adjusted Total (h) | | Kyle T. Larkin | $2,213,408 | $37,968 | $35,200 | $12,126,804 | $14,413,380 | - | $14,413,380 | | Elizbeth L. Curtis | $1,211,515 | $32,992 | $35,200 | $3,293,846 | $4,573,553 | - | $4,573,553 | | James A. Radich | $1,371,688 | $32,718 | $35,200 | $2,672,693 | $4,112,299 | - | $4,112,299 | | Michael G. Tatusko | $1,329,193 | $36,340 | $35,200 | $1,942,954 | $3,343,687 | - | $3,343,687 | | Staci Woolsey | $1,003,095 | $28,150 | $36,600 | $868,078 | $1,935,923 | - | $1,935,923 |
Potential Payments Upon Termination or Change-in-Control
(1) The amount in column (b) for Mses. Curtis and Woolsey and Messrs. Larkin, Radich and Tatusko reflect a lump sum payment equal to (i) two times the annual average of the aggregate annual incentive bonuses earned for the three fiscal years preceding the fiscal year of the change-in-control plus (ii) two times the annual base salary rate in effect immediately prior to the termination. For a detailed explanation, please refer to “Change-in-Control Arrangements.” (2) The amount in column (c) for Mses. Curtis and Woolsey and Messrs. Larkin, Radich and Tatusko reflect a lump sum payment equal to two times the average annual cost to Granite of the Named Executive Officer's group insurance benefits, such as life, health and long-term disability, for the three fiscal years ending before the date of termination. For a detailed explanation, please refer to “Change-in-Control Arrangements.” (3) The amount in column (d) for Mses. Curtis and Woolsey and Messrs. Larkin, Radich and Tatusko reflect a lump sum payment equal to two times the annual average cash equivalent of contributions which were made on behalf of the Named Executive Officer for the three fiscal years ending before the date of termination to the 401(k) Plan and any other retirement plan provided by Granite and in effect as of the date of termination. For a detailed explanation, please refer to “Change-in-Control Arrangements.” (4) Under the terms of Granite’s equity plans, in the event of a change-in-control, if the acquiring person does not assume or replace outstanding equity awards, all non-exercisable, unvested or unpaid portions of the outstanding equity awards would become immediately exercisable and fully vested. If an equity award is performance-based and a change-in-control occurs in the first year of the performance period, the equity awards will be paid out at target, and if it occurs in the second or third year of the performance period, the equity award will be paid out at actual performance through the change-in-control date. The amounts in column (e) reflect the outstanding equity awards valued at the December 29, 2023 closing price of our common stock of $50.86. Pursuant to the terms of Granite’s equity plans, Mr. Radich qualifies as retirement eligible and all of his equity awards vest immediately. (5) Payments under the ERSP III are subject to reduction to the extent necessary not to exceed the “safe harbor” amount under Section 4999 of the Internal Revenue Code, but only if the reduction would increase the net after-tax amount received by the participant.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Director Compensation Table
Director Compensation Table The following table presents the compensation provided by Granite to our directors for the year ended December 31, 2023.
Director Compensation Table
| Director (a) | Fees Earned or Paid in Cash(1) (b) | Stock Award(2) (c) | All Other Compensation(3) (d) | Total (e) | | Louis E. Caldera(4) | $105,000 | $135,000 | $3,189 | $243,189 | | Molly C. Campbell(4) | $108,500 | $135,000 | $1,793 | $245,293 | | David C. Darnell(4) | $117,000 | $135,000 | $1,793 | $253,793 | | Patricia D. Galloway(4) | $113,079 | $135,000 | $8,686 | $256,765 | | David H. Kelsey(4)(5) | $51,587 | — | $13,857 | $65,444 | | Alan P. Krusi(4) | $115,000 | $135,000 | $1,793 | $251,793 | | Jeffrey J. Lyash(4)(5) | $73,457 | $135,000 | $904 | $209,361 | | Celeste B. Mastin(4) | $106,000 | $135,000 | $1,793 | $242,793 | | Michael F. McNally(4) | $175,000 | $200,000 | $12,420 | $387,420 | | Laura M. Mullen(4) | $113,605 | $135,000 | $3,189 | $251,794 | | Gaddi H. Vasquez(4)(5) | $46,539 | — | $12,672 | $59,211 |
Director Compensation Table
(1) The amounts in column (b) reflect the annual cash retainer paid to non-employee directors for the year ended December 31, 2023. In 2023, each non-employee director was paid an annual retainer as a member of the Board of Directors and additional retainers for service as a member of a Board committee. The cash retainer was paid quarterly in equal payments; no meeting fees were paid. (2) The amounts in column (c) reflect the grant date fair value of the 2023 RSU awards. The grant date fair value is determined in accordance with FASB ASC Topic 718, without regard to potential forfeitures and is determined using the fair value of the Company’s common stock based on market price at the date of grant. For additional information about the assumptions used in these calculations, see Note 17 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. On June 9, 2023, Dr. Galloway, Mses. Campbell, Mastin and Mullen and Messrs. Caldera, Darnell, Krusi and Lyash received an annual grant of 3,403 RSUs with a grant date fair value of $39.67 per share. As Board Chair, Mr. McNally received a grant of 5,041 RSUs with a grant date fair value of $39.67 per share. The RSUs granted to the non-employee directors vest on May 20, 2024. As of December 31, 2023: Mr. Caldera had 3,426 unvested RSUs; Ms. Campbell had 3,426 unvested RSUs; Mr. Darnell had 3,426 unvested RSUs; Dr. Galloway had 14,215 deferred units and 3,426 unvested RSUs; Mr. Kelsey had 29,661 deferred units; Mr. Krusi had 3,426 unvested RSUs; Ms. Mastin had 3,426 unvested RSUs; Mr. McNally had 20,192 deferred units and 5,075 unvested RSUs; Ms. Mullen had 3,426 unvested RSUs; and Mr. Vasquez had 23,598 deferred units. (3) The amounts in column (d) include the cash value of dividend equivalents from deferred units and unvested RSUs. (4) Mr. Caldera deferred 5% of his annual cash retainer and 100% of his RSU award into the NQDC plan, Ms. Campbell deferred 15% of her annual cash retainer into the NQDC plan, Dr. Galloway deferred 100% of her RSU award into the NQDC plan, Mr. Kelsey deferred 100% of his RSU award into the NQDC plan, Mr. McNally deferred 100% of his RSU award into the NQDC plan, Ms. Mullen deferred 100% of her annual cash retainer and 100% of her annual RSU award into the NQDC plan, and Mr. Vasquez deferred 25% of his annual cash retainer into the NQDC Plan. Ms. Mastin and Messrs. Darnell, Krusi and Lyash elected not to participate in the deferral of their annual cash retainers or RSU awards into the NQDC Plan in 2023. For a detailed explanation of the NQDC Plan, please refer to “Non-Qualified Deferred Compensation.” (5) Messrs. Kelsey and Vasquez retired from the Board of Directors effective June 8, 2023 and their Board fees were prorated accordingly. Mr. Lyash resigned effective September 14, 2023. His Board fees were prorated accordingly and his outstanding RSUs forfeited upon separation.
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires we disclose the ratio of our CEO's total annual compensation to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries other than our CEO. To determine our median employee (excluding the CEO), we made a direct determination from our total employee population. Using a consistently applied compensation measure, which included base pay, overtime, and short-term incentives, we ranked our employees from the highest paid to the lowest paid. We selected a determination date of October 17, 2022. There have been no changes in our employee population or compensation arrangements that we believe would significantly impact our pay ratio disclosure, except for the acquisitions of Coast Mountain Resources (2020) Ltd., (“CMR”) and Lehman-Roberts Company (“LRC”) and Memphis Stone & Gravel Company (“MSG”), which are discussed further below. As a result, we are using the same median employee for purposes of this disclosure. Based on the above determination, the total annual compensation of our median employee (excluding the CEO) (calculated in accordance with Item 402(c)(2)(x) of Regulation S-K) was $100,966. Our CEO's total annual compensation (calculated in accordance with Item 402(c)(2)(x) of Regulation S-K and as reported in the Summary Compensation Table) was $4,224,356. The resulting ratio was 42:1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized above. On April 24, 2023, we completed an acquisition of CMR, a construction aggregate producer based in British Columbia, Canada on Malahat First Nation land. As of December 31, 2023, CMR had 17 employees, who we did not include in our determination of the median employee as permitted by SEC rules. Also, on November 30, 2023, the Company completed the acquisition of LRC and MSG, longstanding asphalt paving and asphalt and aggregates producers and suppliers. As of December 31, 2023, LRC and MSG had 284 employees, who we did not include in our determination of the median employee as permitted by SEC rules. The Dodd-Frank Act rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. Our pay ratio is not an element that the Compensation Committee considers in setting the compensation of our CEO, nor is our CEO’s compensation a material element that management considers in making compensation decisions for non-officer employees. However, the compensation of our employees is periodically reviewed to ensure alignment with our compensation philosophy of paying at the market median.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
Pay versus Performance Table
Pay versus Performance Table Below is the tabular disclosure which shows the total compensation for our Principal Executive Officers (“PEOs”) and the average of our non-PEO Named Executive Officers (“NEOs”) (as set forth in the Summary Compensation Table (“SCT”)), the CAP to our PEOs and the average for our non-PEO NEOs, our absolute TSR, the TSR of our peer group over the same period, our net income, and our Adjusted EBIT for fiscal years 2023, 2022, 2021, and 2020.
Granite 2023 Pay Versus Performance
Granite 2023 Pay Versus Performance
Granite 2023 Pay Versus Performance
| | Current CEO(1) | | Former CEO(1) | | Non-PEO NEOs(2) | | Value of Initial Fixed $100 Investment Based on(4) | | | Company Selected Measure ($ mil) | | Fiscal Year (a) | SCT Total for PEO (Larkin) (b) | Comp Actually Paid to PEO(3) (Larkin) (c) | SCT Total For PEO (Roberts) (d) | Comp Actually Paid to PEO(3) (Roberts) (e) | Average SCT Total (f) | Average Comp Actually Paid(3) (g) | Total Shareholder Return (h) | Peer Group Total Shareholder Return(5) (i) | GAAP Net Income(6) ($ mil) (j) | Adjusted EBIT(7) (k) | | 2023 | $4,224,256 | $4,925,501 | n/a | n/a | $1,440,131 | $1,512,609 | $197 | $252 | $43.6 | $198 | | 2022 | $2,122,477 | $1,971,387 | n/a | n/a | $984,871 | $904,514 | $134 | $209 | $83.3 | $111 | | 2021 | $2,363,579 | $2,606,656 | n/a | n/a | $853,298 | $834,197 | $146 | $182 | $10.1 | $62 | | 2020 | $904,545 | $1,182,867 | $1,541,652 | $1,540,379 | $710,274 | $794,768 | $99 | $121 | ($145.1) | $27 |
Granite 2023 Pay Versus Performance
(1) For fiscal years 2021 to 2023, Mr. Larkin was the PEO for the company. In fiscal year 2020, Mr. Larkin served as EVP, COO and President and PEO for a portion of the year. Mr. Roberts served as PEO for a portion of the 2020 fiscal year. (2) Each of the four fiscal years presented include the average SCT totals of the Non-PEO NEOs as applicable in each reporting year. Fiscal year 2023 includes: Ms. Curtis, Mr. Radich, Mr. Tatusko, and Ms. Woolsey. Fiscal year 2022 includes: Ms. Curtis, Mr. Radich, Mr. Tatusko, Ms. Woolsey and Mr. Richards (former Operating Group SVP); fiscal year 2021 includes: Ms. Curtis, Mr. Radich, Mr. Tatusko, Mr. Dowd and Ms. Desai (former CFO); and fiscal year 2020 includes: Ms. Desai, Mr. Radich, Mr. Richards (Operating Group SVP) and Mr. Tatusko. (3) SEC rules require certain adjustments be made to the SCT values to determine CAP, as reported in the PVP table above. For purposes of the pension valuation adjustments, NEOs do not participate in any defined benefit plan and as such no adjustments are included in the table below. The following table details the applicable adjustments that were made to determine CAP.