Vulcan Materials COVMC
Vulcan Materials CO Stock Compensation Disclosure
INCENTIVE PLANS
Share-Based Compensation Plans
Our 2025 Omnibus Long-Term Incentive Plan (Plan), which became effective in May 2025 and replaced our 2016 Omnibus Long-Term Incentive Plan, authorizes the granting of performance shares, restricted shares, Stock-Only Stock Appreciation Rights (SOSARs) and other types of share-based awards to key salaried employees and nonemployee directors. The maximum number of shares that may be issued under the Plan is 8,200,000, of which 8,165,125 shares remain under this authorization as of December 31, 2025.
PERFORMANCE SHARES — Each performance share unit is equal to and paid in one share of our common stock but carries no voting rights. The number of units ultimately paid for performance share awards may range from 0% to 200% of the number of units awarded on the date of grant. Payment is based upon the outcome of performance and/or market conditions. Awards vest on December 31 of the third year after date of grant. Vesting is accelerated upon death, disability, or change of control and the awards become non-forfeitable upon reaching retirement age — all as defined in the award agreement. Nonvested units are forfeited upon termination for any other reason. Expense provisions referable to performance share awards amounted to $34.7 million, $30.4 million and $40.1 million in 2025, 2024 and 2023, respectively.
The fair value of performance shares is estimated as of the date of grant using a Monte Carlo simulation model. The following table summarizes the activity for nonvested performance share units during the year ended December 31, 2025:
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||
| Performance Shares | |||||||||||||||||
| Nonvested at January 1, 2025 | 223,546 | $ | 209.62 | ||||||||||||||
| Granted | 118,260 | 251.88 | |||||||||||||||
| Vested | (118,015) | 176.92 | |||||||||||||||
| Canceled/forfeited | (6,214) | 235.66 | |||||||||||||||
| Nonvested at December 31, 2025 | 217,577 | $ | 249.58 | ||||||||||||||
During 2024 and 2023, the weighted-average grant date fair value of performance shares granted was $247.00 and $175.46, respectively.
The aggregate values for distributed performance share awards are based on the closing price of our common stock as of the distribution date. The aggregate values of distributed performance shares for the years ended December 31 are as follows:
| in millions | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Aggregate value of distributed performance shares | $ | 53.9 | $ | 45.3 | $ | 24.8 | |||||||||||||||||
RESTRICTED SHARES — Each restricted share unit is equal to and paid in one share of our common stock but carries no voting rights. Awards vest on the third anniversary of the grant date. Vesting is accelerated upon reaching retirement age, death, disability, or change of control, all as defined in the award agreement. Nonvested units are forfeited upon termination for any other reason. Expense provisions referable to restricted share awards amounted to $20.4 million, $15.1 million and $16.5 million in 2025, 2024 and 2023, respectively.
The fair value of restricted shares is estimated as of the date of grant based on the stock price adjusted for dividends foregone. The following table summarizes the activity for nonvested restricted share units during the year ended December 31, 2025:
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||
| Restricted Stock Units | |||||||||||||||||
| Nonvested at January 1, 2025 | 235,576 | $ | 198.08 | ||||||||||||||
| Granted | 99,266 | 251.88 | |||||||||||||||
| Vested | (75,018) | 186.16 | |||||||||||||||
| Canceled/forfeited | (7,141) | 233.58 | |||||||||||||||
| Nonvested at December 31, 2025 | 252,683 | $ | 221.75 | ||||||||||||||
During 2024 and 2023, the weighted-average grant date fair value of restricted shares granted was $247.00 and $175.46, respectively.
The aggregate values for distributed restricted share awards are based on the closing price of our common stock as of the distribution date. The aggregate values of distributed restricted shares for the years ended December 31 are as follows:
| in millions | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Aggregate value of distributed restricted shares | $ | 20.6 | $ | 15.6 | $ | 11.1 | |||||||||||||||||
STOCK-ONLY STOCK APPRECIATION RIGHTS (SOSARs) — SOSARs granted have an exercise price equal to the market value of our underlying common stock on the date of grant. The SOSARs vest ratably over 3 years and expire 10 years subsequent to the date of grant. Vesting is accelerated upon reaching retirement age, death, disability, or change of control, all as defined in the award agreement. Nonvested awards are forfeited upon termination for any other reason.
The fair value of SOSARs is estimated as of the date of grant using the Black-Scholes option pricing model. Compensation cost for SOSARs is based on this grant date fair value and is recognized for awards that ultimately vest. The following table presents the weighted-average fair value and the weighted-average assumptions used in estimating the fair value of grants during the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||||||||
| SOSARs | |||||||||||||||||||||||
| Fair value | $ | 105.01 | $ | 86.32 | $ | 72.39 | |||||||||||||||||
| Risk-free interest rate | 4.50 | % | 1.94 | % | 3.90 | % | |||||||||||||||||
| Dividend yield | 0.88 | % | 0.84 | % | 0.79 | % | |||||||||||||||||
| Volatility | 28.06 | % | 28.81 | % | 28.88 | % | |||||||||||||||||
| Expected term (years) | 9.0 | 9.0 | 9.0 | ||||||||||||||||||||
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 approximating the SOSARs expected term. The dividend yield assumption is based on our historical dividend payouts adjusted for current expectations of future payouts. The volatility assumption is based on the historical volatility and expectations about future volatility of our common stock over a period equal to the SOSARs expected term. The expected term is based on historical experience and expectations about future exercises and represents the period of time that SOSARs granted are expected to be outstanding.
A summary of our SOSAR activity as of December 31, 2025 and changes during the year are presented below:
| Number of Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (in millions) | |||||||||||||||||||||||
| SOSARs | ||||||||||||||||||||||||||
| Outstanding at January 1, 2025 | 425,767 | $ | 162.38 | |||||||||||||||||||||||
| Granted | 53,530 | 258.59 | ||||||||||||||||||||||||
| Exercised | (116,543) | 125.73 | ||||||||||||||||||||||||
| Forfeited or expired | 0 | 0.00 | ||||||||||||||||||||||||
| Outstanding at December 31, 2025 | 362,754 | $ | 188.35 | 6.25 | $ | 35.8 | ||||||||||||||||||||
| Exercisable at December 31, 2025 | 251,037 | $ | 163.87 | 5.28 | $ | 30.9 | ||||||||||||||||||||
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between our stock price on the last trading day of 2025 and the exercise price, multiplied by the number of in-the-money SOSARs) that would have been received by the option holders had all SOSARs been exercised on December 31, 2025. These values change based on the fair market value of our common stock. The aggregate intrinsic values of SOSARs exercised for the years ended December 31 are as follows:
| in millions | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Aggregate intrinsic value of SOSARs exercised | $ | 18.1 | $ | 27.9 | $ | 25.1 | |||||||||||||||||
The following table presents cash received and tax benefit realized from SOSAR exercises and compensation cost recorded referable to SOSARs for the years ended December 31:
| in millions | 2025 | 2024 | 2023 | ||||||||||||||||||||
| SOSARs | |||||||||||||||||||||||
| Cash received from exercises | $ | 0.0 | $ | 0.0 | $ | 0.0 | |||||||||||||||||
| Tax benefit from exercises | 2.3 | 5.7 | 6.0 | ||||||||||||||||||||
| Compensation cost | 5.1 | 5.1 | 4.0 | ||||||||||||||||||||
NONEMPLOYEE DIRECTOR AWARDS — In addition to the share-based compensation plans for employees discussed above, we issue a limited number of stock units to our nonemployee directors annually. Expense provisions referable to nonemployee director stock units amounted to $2.9 million, $2.8 million and $2.6 million in 2025, 2024 and 2023, respectively.
Cash-Based Compensation Plans
We have incentive plans under which cash awards may be made annually. Expense provisions under these plans referable to awards to officers and certain employees amounted to $65.6 million, $58.8 million and $77.3 million in 2025, 2024 and 2023, respectively.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.