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GRANITE CONSTRUCTION INCORPORATED
585 West Beach Street
Watsonville, California 95076

Notice of Annual Meeting of Shareholders
April 26, 2016

Date:	Thursday, June 9, 2016
Time:	10:30 a.m., Pacific Time
Place:	Quail Lodge
	8205 Valley Greens Drive
	Carmel, CA 93923

Purposes of the Meeting:

●	To elect three (3) directors for the ensuing three-year term and to ratify the directorship of one (1) director appointed by the Board on February 10, 2016;
●	To hold an advisory vote on executive compensation for the Named Executive Officers;
●	To ratify the appointment by the Audit/Compliance Committee of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm for the fiscal year ending December 31, 2016; and
●	To consider any other matters properly brought before the meeting.

Who May Attend the Meeting:

Only shareholders, persons holding proxies from shareholders and invited representatives of the media and financial community may attend the meeting.

What to Bring:

If you received a Notice of Internet Availability of Proxy Materials, please bring that Notice with you. If your shares are held in the name of a broker, trust, bank, or other nominee, you will need to bring a proxy or letter from that broker, trust, bank, or other nominee that confirms you are the beneficial owner of those shares. If you hold shares through the Granite Construction Profit Sharing and 401(k) Plan, you will need to bring proof of ownership of the shares.

Record Date:

The record date for the 2016 Annual Meeting of Shareholders is April 12, 2016. This means that if you own Granite stock at the close of business on that date, you are entitled to receive notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.

Annual Report:

We have included a copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 with the proxy materials on Granite's website.

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Shareholder List:

For 10 days prior to the meeting, a complete list of shareholders entitled to vote at the meeting will be available for examination by any shareholder for any purpose relative to the meeting during regular business hours at Granite's headquarters located at 585 West Beach Street, Watsonville, CA 95076. The shareholder list will also be available at the annual meeting.

Information about the Notice of Internet Availability of Proxy Materials:

Instead of mailing a printed copy of our proxy materials, including our annual report, to each shareholder of record, we will provide access to these materials online a faster and more efficient manner. This reduces the amount of paper necessary to produce these materials, as well as the costs associated with mailing these materials to all shareholders. Accordingly, on or about April 26, 2016, we will begin mailing a Notice of Internet Availability of Proxy Materials to all shareholders of record as of April 12, 2016, other than persons who hold shares in the Granite Construction Profit Sharing and 401(k) Plan (such persons, the "401(k) Participants" and such plan, the "401(k) Plan"). We will also post our proxy materials on the website referenced in the notice (https://www.proxyvote.com). All 401(k) Participants will receive a package in the mail that includes all proxy materials. The proxy materials will be mailed to all 401(k) Participants on or about April 26, 2016.

All shareholders may choose to access our proxy materials online or may request to receive a printed set of our proxy materials. In addition, the notice and website provide information regarding how you may request to receive proxy materials in printed form by mail on an ongoing basis.

Proxy Voting:

Your vote is important. Please vote your proxy promptly so your shares can be represented at the annual meeting even if you plan to attend the meeting. Shareholders, including 401(k) Participants, can vote by Internet, telephone or mail. Shareholders, other than 401(k) Participants, may revoke a proxy and vote in person if attending the meeting.

To get directions to the 2016 Annual Meeting of Shareholders, call our Investor Relations Department at 831.724.1011 or visit our website at www.graniteconstruction.com at the "Investors" site.

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TABLE OF CONTENTS

			Page
PROXY STATEMENT			1
VOTING INFORMATION			1
	Who Pays for This Solicitation?		1
	Who Can Vote?		1
	How Do I Vote and What Is the Deadline for Voting My Shares?		1
	What Is the Voting Requirement To Approve the Proposals?		2
	How Are Votes Counted?		2
	After I Vote by Proxy Can I Change or Revoke My Proxy?		3
	Can I Vote at the Annual Meeting Instead of Voting by Proxy?		3
	What Constitutes a Quorum?		3
	Who Supervises the Voting at the Meeting?		3
	How Can I Find Out the Voting Results?		4
PROPOSAL 1: ELECTION AND RATIFICATION OF DIRECTORS			4
	Director Qualifications		4
	Nominees for Director with Terms Expiring at the 2019 Annual Meeting		5
	Continuing Directors with Terms Expiring at the 2017 Annual Meeting		6
	Continuing Directors with Terms Expiring at the 2018 Annual Meeting		7
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE			9
	Committees of the Board		9
	Audit/Compliance Committee		9
	Compensation Committee		10
	Nominating and Corporate Governance Committee		10
	Executive Committee		10
	Role of the Compensation Consultant		10
	The Lead Director and Executive Sessions		12
	Board Leadership Structure and Its Role in Risk Oversight		12
	Board of Directors' Nomination Policy		12
	Evaluation Criteria and Procedures		12
	Shareholder Recommendation and Direct Nomination of Board Candidates		13
	Director Independence		14
	Board and Annual Shareholder Meeting Attendance		14
	Communications with the Board		15
	Corporate Governance Guidelines and Policies		15
	Code of Conduct		15
	Granite Website		15
EXECUTIVE AND DIRECTOR COMPENSATION AND OTHER MATTERS			16
	COMPENSATION DISCUSSION AND ANALYSIS		16
	Objective of the Compensation Program		16
	Executive Officer Compensation Program		16
	Role of the Compensation Committee and Chief Executive Officer in Determining Executive Compensation		17
	Role of the Compensation Consultant		17
	Annual Risk Assessment		17
	Market Data Considered in Determining Executive Compensation		17
	Peer Group of Public Companies		18

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		Page
Compensation Elements		18
Base Salaries		18
Annual Incentive Compensation		19
2015 Annual Incentive Plan		19
2015 Annual Incentive Plan Performance Measure Definitions		20
2015 Annual Incentive Plan Company and Group Funding Ratios		20
Safety Multiplier		21
2015 Annual Incentive Plan Company and Group Performance Results and Bonus Payouts		22
Long Term Incentive Compensation		23
Performance Awards		24
Total Shareholder Return Performance Calculation		26
2015 Performance Award Payouts		26
Total Shareholder Return Awards Earned in 2013 – 2015 and Paid in 2016		26
Service Awards		27
Policy Regarding Recovery of Award if Basis Changes Because of Restatement		27
Stock Ownership Guidelines		27
Non-Qualified Deferred Compensation		28
Flexible Bonus Policy		29
Other Compensation		29
Impact of Accounting and Tax Treatments of a Particular Form of Compensation		29
Change-in-Control Arrangements		29
Compensation Committee Report		31
Potential Payments Upon Change-in-Control		37
Director Compensation		38
Stock Ownership		38
Cash and Equity Compensation Policy		38
STOCK OWNERSHIP OF BENEFICIAL OWNERS AND CERTAIN MANAGEMENT		40
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE		41
EQUITY COMPENSATION PLAN INFORMATION		42
TRANSACTIONS WITH RELATED PERSONS		42
REPORT OF THE AUDIT/COMPLIANCE COMMITTEE		43
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS		45
Principal Accountant Fees and Services		45
Audit/Compliance Committee Pre-Approval Policies and Procedures		45
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION		46
PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		47
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE 2017 ANNUAL MEETING OF SHAREHOLDERS		47
HOUSEHOLDING		48
FORM 10-K		48
OTHER MATTERS		48

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GRANITE CONSTRUCTION INCORPORATED
585 West Beach Street
Watsonville, California 95076

PROXY STATEMENT

As more fully described in the Notice of Internet Availability of Proxy Materials, Granite Construction Incorporated, a Delaware corporation (referred to herein as "we," "us," "our," "Granite" or the "Company"), on behalf of its Board of Directors, has made its proxy materials available to you on the Internet in connection with Granite's 2015 Annual Meeting of Shareholders, which will take place on June 9, 2016 at 10:30 a.m., Pacific Time, at the Quail Lodge, 8205 Valley Greens Drive, Carmel, California. The Notice of Internet Availability of Proxy Materials was mailed to all Granite shareholders of record, except 401(k) Participants, on or about April 26, 2016, and our proxy materials were posted on the website referenced in the Notice of Internet Availability of Proxy Materials and made available to shareholders on April 26, 2016. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. The proxy materials were mailed to all 401(k) Participants on or about April 26, 2016.

Granite, on behalf of its Board of Directors, is soliciting your proxy to vote your shares at the 2016 Annual Meeting of Shareholders or any subsequent adjournment or postponement. We solicit proxies to give all shareholders of record an opportunity to vote on the matters listed in the accompanying notice and/or any other matters that may be presented at the annual meeting. In this proxy statement you will find information on these matters, which is provided to assist you in voting your shares.

Granite was incorporated in Delaware in January 1990 as the holding company for Granite Construction Company, which was incorporated in California in 1922. All dates in this proxy statement referring to service with Granite also include periods of service with Granite Construction Company, if applicable.

VOTING INFORMATION

Who Pays for This Solicitation?

Granite pays for the cost of this proxy solicitation. We will request brokers, trusts, banks and other nominees to solicit their customers who own our stock. We will reimburse their reasonable, out-of-pocket expenses for doing this. Our directors, officers and employees may also solicit proxies by mail, telephone, personal contact, or through online methods without additional compensation.

Who Can Vote?

You will have received notice of the annual meeting and can vote if you were a shareholder of record of Granite's common stock as of the close of business on April 12, 2016. You are entitled to one vote for each share of Granite common stock that you own. You may vote all shares owned by you as of the record date, including shares held directly in your name as the shareholder of record and shares held for you as the beneficial owner through a broker, trust, bank or other nominee. As of the close of business on April 12, 2016, there were 39,572,832 shares of common stock issued and outstanding.

How Do I Vote and What Is the Deadline for Voting My Shares?

Shareholders, other than 401(k) Participants, have the option to vote by proxy in the following three ways:

●	By Internet: You can vote by Internet by following the instructions in the Notice of Internet Availability of Proxy Materials or by accessing the Internet at https://www.proxyvote.com and following the instructions at that website at any time prior to 11:59 p.m., Eastern Time, on June 8, 2016;
●	By telephone: In the United States and Canada you can vote by telephone using a touch-tone phone by following the instructions in the Notice of Internet Availability of Proxy Materials or by calling 1.800.690.6903 (toll free) and following the instructions at any time prior to 11:59 p.m., Eastern Time, on June 8, 2016; or

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By mail: If you have received a paper copy of the proxy card by mail you may submit your proxy by completing, signing and dating your proxy card and mailing it in the accompanying pre-addressed envelope. Instructions are also on the proxy card. Your proxy card must be received prior to 11:59 p.m., Eastern Time, on June 8, 2016.

Please refer to the Notice of Internet Availability of Proxy Materials or the information your broker, trust, bank or other nominee provides you for more information on the above options. If you vote your shares over the Internet or by telephone, you should not return a proxy card by mail (unless you are revoking your previous proxy).

All 401(k) Participants have the option to vote by proxy in the following three ways:

●	By Internet: You can vote by Internet by following the instructions on your proxy card or by accessing the Internet at https://www.proxyvote.com and following the instructions at that website at any time prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016;
●	By telephone: In the United States and Canada you can vote by telephone using a touch-tone phone by following the instructions on your proxy card or by calling 1.800.690.6903 (toll free) and following the instructions at any time prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016; or
●	By mail: You can submit your proxy by completing, signing and dating your proxy card and mailing it in the accompanying pre-addressed envelope. Instructions are also on the proxy card. Your proxy card must be received prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016.

If you vote your shares over the Internet or telephone, you should not return a proxy card by mail (unless you are revoking your previous proxy).

What Is the Voting Requirement To Approve the Proposals?

If there is a quorum, nominees for election to the Board who receive the affirmative vote of a majority of the votes cast will be elected as members of our Board of Directors for the upcoming three-year term and until his successor is elected and qualified or he resigns or until his death, retirement or removal, or other cause identified in Granite's bylaws. This means that a majority of votes cast "for" the election of a nominee must exceed the number of votes cast "against" the nominee's election. Each of the other matters identified in the Notice of Meeting will be approved if it receives the affirmative vote of a majority of the votes cast on such matter. Any other matters properly proposed at the meeting, including a motion to adjourn the annual meeting to another time or place (including for the purpose of soliciting additional proxies), will also be determined by a majority of the votes cast, except as otherwise required by law or by Granite's Certificate of Incorporation, as amended, or bylaws.

If you hold shares through a broker, trust, bank or other nominee (i.e., in "street name"), and you do not provide your broker, trust, bank or other nominee with voting instructions, "broker non-votes" may occur. Generally, a broker non-vote occurs when a broker, trust, bank or other nominee who holds shares for a beneficial owner does not vote on a particular matter (i.e., a non-routine matter) because the broker, trust, bank or other nominee does not have discretionary voting power with respect to that matter and has not received instructions on such matter from the beneficial owner. Among our proposals, a broker, trust, bank or other nominee will have discretionary voting power only with respect to the proposal to ratify the appointment by the Audit/Compliance Committee of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm for the fiscal year ending December 31, 2016.

How Are Votes Counted?

In the election of directors and all proposals you may vote "For," "Against" or "Abstain" with respect to each of the nominees and proposals. If you elect to abstain in the election of directors or any of the other matters identified in the Notice of Meeting, the abstention will not impact the outcome of these matters. In tabulating the voting results for the election of directors and such other matters, only "For" and "Against" votes are counted for purposes of determining whether a majority has been obtained. Abstentions and broker non-votes are not considered to be votes cast and therefore will have no effect on the outcome of the vote on any of these matters.

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If you vote by proxy card, telephone or the Internet, your shares will be voted at the annual meeting in the manner you indicated. James H. Roberts and Laurel J. Krzeminski are officers of the Company and were named by our Board of Directors as proxy holders. They will vote all proxies, or record an abstention, in accordance with the directions on the proxy. If no contrary direction is given, the shares will be voted as recommended by the Board of Directors. This proxy statement contains a description of each item that you are to vote on along with our Board's recommendations. Below is a summary of our Board's recommendations:

●	For election of each of the three (3) director nominees and For the ratification of the directorship of one (1) director appointed by the Board on February 10, 2016;
●	For the approval of the compensation of the Named Executive Officers as disclosed in this proxy statement;
●	For the ratification of the appointment by the Audit/Compliance Committee of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm for the fiscal year ending December 31, 2016.

As to any other matter that may be properly proposed at the annual meeting, including a motion to adjourn the annual meeting to another time or place, the shares will be voted in the discretion of the persons named on your proxy card.

After I Vote by Proxy Can I Change or Revoke My Proxy?

You can change your vote or revoke your proxy at any time before the annual meeting. Shareholders, other than 401(k) Participants, may change their vote by: (i) voting again by telephone at any time prior to 11:59 p.m., Eastern Time, on June 8, 2016, if you originally voted by telephone, (ii) voting again by Internet at any time prior to 11:59 p.m., Eastern Time, on June 8, 2016, if you originally voted by Internet, or (iii) returning a later dated proxy card such that it is received prior to 11:59 p.m., Eastern Time, on June 8, 2016, if you voted by mail. Shareholders, other than 401(k) Participants, may revoke their proxy by filing with our Secretary a written revocation that is received by us before the polls close at the annual meeting. All 401(k) Participants may change their vote by: (i) voting again by telephone at any time prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016, if you originally voted by telephone, (ii) voting again by Internet at any time prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016, if you originally voted by Internet, or (iii) returning a later dated proxy card such that it is received prior to 12:00 p.m. (noon), Eastern Time, on June 7, 2016, if you voted by mail. Except for 401(k) Participants, shareholders may also change their vote or revoke their proxy by attending the annual meeting and voting in person if they are a shareholder of record.

If you hold your shares through a broker, bank, trust or other nominee, please refer to the information forwarded by your broker, bank, trust or other nominee for procedures on revoking your proxy.

Can I Vote at the Annual Meeting Instead of Voting by Proxy?

You may attend the annual meeting and, except for 401(k) Participants, vote in person instead of voting by proxy. However, even if you intend to attend the meeting we strongly encourage you to vote by Internet, telephone or mail prior to the meeting to ensure that your shares are voted. Although Granite's 401(k) Participants may attend the meeting, they cannot vote in person at the meeting.

What Constitutes a Quorum?

Granite's bylaws require a quorum to be present in order to transact business at the meeting. A quorum consists of a majority of the shares entitled to vote, either in person or represented by proxy. In determining a quorum, we count shares voted for or against, abstentions and broker non-votes as being present.

Who Supervises the Voting at the Meeting?

Granite's bylaws and policies specify that prior to the annual meeting, management will appoint an independent Inspector of Elections to supervise the voting at the meeting and count the votes for each proposal following the closing of the polls at the annual meeting. The Inspector decides all questions as to the qualification of voters, the validity of proxy cards and the acceptance or rejection of votes. Before assuming his or her duties, the Inspector will take and sign an oath that he or she will faithfully perform his or her duties both impartially and to the best of his or her ability.

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How Can I Find Out the Voting Results?

We will announce preliminary voting results at the annual meeting, and final results will be published on a Form 8-K to be filed with the Securities and Exchange Commission (the "SEC") within four business days following the annual meeting. If the final results are not available at that time, we will provide preliminary results in the Form 8-K, and we will provide the final results in an amendment to the Form 8-K as soon as they become available.

PROPOSAL 1: ELECTION AND RATIFICATION 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. 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 William G. Dorey, William H. Powell and Claes G. Bjork will expire at the 2016 Annual Meeting. The Board has nominated William G. Dorey, William H. Powell and Claes G. Bjork for new terms. If elected, each of the nominees will serve as a director until the 2019 Annual Meeting and until his successor is elected and qualified or he resigns or until his death, retirement or removal, or other cause identified in Granite's bylaws.

Following the resignation of Rebecca A. McDonald on July 13, 2015, Michael F. McNally was appointed to the Board of Directors effective February 10, 2016. The Board requests that shareholders ratify his appointment and service as a director for a term expiring at the 2018 Annual Meeting.

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. However, if any nominee should for any reason become unable or unwilling to serve between the date of the proxy statement and the annual meeting, the Board may designate a new nominee and the persons named as proxies will vote for that substitute nominee.

BOARD OF DIRECTORS RECOMMENDATION

The Board of Directors unanimously recommends a vote "FOR" each of the above-named nominees.

Director Qualifications

The following paragraphs provide 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 age, all positions he holds with Granite, his principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he currently serves as a director or has served as a director during the past five years. In addition to the information presented below regarding each director's and nominee's specific experience, qualifications, attributes and skills that led our Board to the conclusion the he should serve as a director, the Board also believes that all of our directors and 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.

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NOMINEES FOR DIRECTOR WITH TERMS EXPIRING AT THE 2019 ANNUAL MEETING

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CONTINUING DIRECTORS WITH TERMS EXPIRING AT THE 2017 ANNUAL MEETING

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CONTINUING DIRECTORS WITH TERMS EXPIRING AT THE 2018 ANNUAL MEETING

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Retiring Director

Mr. Cusumano has served as a director since 2005 and will be retiring at our 2016 Annual Meeting of Shareholders. Mr. Cusumano retired in 2006 as Chairman of The Newhall Land and Farming Company, a developer of new towns and master-planned communities in North Los Angeles County, in which capacity he served after The Newhall Land and Farming Company was acquired by Lennar and LNR Properties in 2004. Prior to the acquisition, he served as Chief Executive Officer and a director of the Newhall Land and Farming Company, which was traded on the NYSE. He is currently also a member of the boards of directors of Forest Lawn Memorial Parks and Mortuaries, Simpson Manufacturing Co. and the J.G. Boswell Co. We believe that Mr. Cusumano’s experience as chief executive officer and his expertise in the real estate development business qualifies him to serve on our Board. Mr. Cusumano holds a B.S. degree in Economics from the University of California, Davis and is a graduate of the Sloan Program at the Stanford University Business School. Age 72.

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INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Committees of the Board

The following chart shows the standing committees of the Board of Directors, the current membership of the committees and the number of meetings held by each committee in 2015.

		Audit / Compliance(1)		Compensation(2)		Nominating and Corporate Governance		Executive(3)
Claes G. Bjork (4)				✓		Chair		✓
James W. Bradford, Jr. (4)		✓		Chair				✓
Gary M. Cusumano								✓
William G. Dorey (4)		✓				✓		✓
David H. Kelsey (4)		Chair				✓
Michael F. McNally (4)		✓		✓				✓
William H. Powell (4)(5)				✓		✓		Chair
James H. Roberts								✓
Gaddi H. Vasquez (4)				✓		✓
Number of Meetings in 2015		9		6		5		9

(1)	Effective July 13, 2015, Ms. McDonald resigned from the Board of Directors and the Audit/Compliance Committee was reconstituted to consist of Messrs. Kelsey, Bradford and Vasquez. Mr. McNally was appointed to the Board of Directors on February 10, 2016. Effective February 11, 2016, the Audit/Compliance Committee was reconstituted to consist of Messrs. Kelsey, Bradford, Dorey and McNally.
(2)	Effective July 13, 2015, Ms. McDonald resigned from the Board of Directors and the Compensation Committee was reconstituted to consist of Messrs. Bradford, Powell, Bjork, and Vasquez, with Mr. Bradford appointed as Committee Chair. Mr. McNally was appointed to the Board of Directors on February 10, 2016. Effective February 11, 2016, the Compensation Committee was reconstituted to consist of Messrs. Bradford, Bjork, McNally Powell and Vasquez
(3)	Effective July 13, 2015, Ms. McDonald resigned from the Board of Directors and the Executive Committee was reconstituted to consist of Messrs. Powell, Bjork, Bradford, Cusumano, Dorey and Roberts. Mr. McNally was appointed to the Board of Directors on February 10, 2016. Effective February 11, 2016, the Executive Committee was reconstituted to consist of Messrs. Powell, Bjork, Bradford, Cusumano, Dorey, McNally and Roberts.
(4)	Independent directors pursuant to the listing standards of the NYSE.
(5)	Chairman of the Board.

Audit/Compliance Committee

All members of the Audit/Compliance Committee are non-employee directors who are determined by the Board to be independent under the listing standards of the NYSE. Each member also satisfies the independence requirements for audit committee members of public companies established by the SEC. The Board has determined that Mr. Kelsey meets the criteria as an audit committee financial expert as defined by the SEC rules. The Board of Directors has also determined that all members of the Audit/Compliance Committee are financially literate as required by the listing standards of the NYSE. The Audit/Compliance Committee has direct responsibility for risk oversight related to accounting matters, financial reporting, and enterprise, legal and compliance risks. A more complete description of the risk responsibility, functions and activities of the Audit/Compliance Committee can be found under "Board Leadership Structure and its Role in Risk Oversight" on page 12 of this proxy statement and in "Report of the Audit/Compliance Committee" on page 43 as well as in the Audit/Compliance Committee charter. You can view and print the Audit/Compliance Committee charter on Granite's website. See "Granite Website" on page 15.

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Compensation Committee

All members of the Compensation Committee are non-employee directors who are determined by the Board to be independent under the listing standards of the NYSE. The Compensation Committee reviews and approves all aspects of compensation for our directors, our Chief Executive Officer and our other executive officers. In addition, the Compensation Committee is responsible for risks related to employment policies and our compensation and benefit systems, including consideration of whether any risks associated with such policies and systems are likely to have a material adverse effect on Granite. The Compensation Committee also reviews our overall compensation plans and strategies and makes recommendations to the Board for their consideration and approval. The Chief Executive Officer attends Compensation Committee meetings and recommends annual salary levels, incentive compensation and payouts for other executive officers for the Compensation Committee's approval. The Compensation Committee also administers the 2012 Equity Incentive Plan and the Amended and Restated 1999 Equity Incentive Plan, as amended (the "1999 Equity Plan"), with respect to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the case of awards intended to qualify for the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the Annual Incentive Plan, the Long Term Incentive Plan, the 2012 Equity Incentive Plan and the 1999 Equity Plan are administered only by the Compensation Committee, which includes at least two "outside directors" within the meaning of Section 162(m). If you desire additional information concerning the Compensation Committee, you can read the Compensation Committee charter on Granite's website. See "Granite Website" on page 15.

Nominating and Corporate Governance Committee

All members of the Nominating and Corporate Governance Committee are non-employee directors who are determined by the Board to be independent under the listing standards of the NYSE. The Nominating and Corporate Governance Committee recommends and nominates persons to serve on the Board. The Nominating and Corporate Governance Committee also develops and recommends corporate governance principles and practices to the Board and oversees the annual evaluations of the Board and certain senior executive officers of the Company. Additionally, the Nominating and Corporate Governance Committee oversees risks associated with our Corporate Governance Guidelines and Policies and Code of Conduct. The Nominating and Corporate Governance Committee's policy for considering director candidates, including shareholder recommendations, is discussed in more detail below under the heading "Board of Directors' Nomination Policy." This policy and the Nominating and Corporate Governance Committee charter are available on Granite's website. See "Granite Website" on page 15.

Executive Committee

The Executive Committee's responsibility is to carry out the powers and authority of the Board in the management of Granite's business within limits set by the Board. The Executive Committee also meets regularly to consider the approval of certain large project bidding decisions, as well as to assess and monitor ongoing risks and contingencies related to large projects. The scope of the Executive Committee's authority is determined in accordance with the "Delegation of Authority and Policy" as adopted and revised from time to time by the Board.

Role of the Compensation Consultant

During 2015, the Compensation Committee directly retained the services of Mercer (US) Inc. ("Mercer"), a wholly owned subsidiary of Marsh & McLennan Companies, Inc., to provide advice and recommendations to the Compensation Committee on executive officer and Board of Director compensation programs. Mercer's fees for executive compensation consulting to the Committee in 2015 were $201,986.

During 2015, Mercer provided the following services to the Compensation Committee related to executive officer compensation:

●	Attended meetings of the Compensation Committee as the Committee’s advisor;
●	Evaluated the competitive positioning of Granite’s executive officers' base salaries, annual incentive and long-term incentive compensation relative to our peer companies;

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●	Advised on target award levels within the annual and long-term incentive program and, as needed, on actual compensation actions;
●	Assessed the alignment of executive officer compensation levels relative to our performance against Granite's peer companies and relative to the Compensation Committee's articulated compensation philosophy;
●	Provided advice on the design of Granite's annual and long-term incentive plans;

●	Advised on the performance measures and performance targets for the annual and long-term incentive programs;
●	Assisted with the preparation of the "Compensation Discussion and Analysis" for this proxy statement;
●	Assessed the potential for material risk within Granite's compensation policies and practices for all employees, including executive officers.

During 2015, management retained the services of Mercer to provide compensation consulting, employee communications consulting, and the management, recordkeeping and trustee services for its 401(k) Plan and Employee Stock Ownership Plan (ESOP). The aggregate fees paid for these other services in 2015 were $484,254, of which Granite paid $167,733. The remaining fees were paid by 401(k) Participants or funds that serve the 401(k) Plan.

Based in part on the policies and procedures Mercer and the Compensation Committee have in place, the Compensation Committee believes that the advice it receives from the executive compensation consultant, a Mercer representative, is objective and not influenced by Mercer's or its affiliates' relationships with Granite. These policies and procedures include:

●	The executive compensation consultant receives no incentive or other compensation based on the fees charged to Granite for other services provided by Mercer or any of its affiliates;
●	The executive compensation consultant is not responsible for selling other Mercer or affiliate services to Granite;
●	Mercer's professional standards prohibit the executive compensation consultant from considering any other relationships Mercer or any of its affiliates may have with Granite in rendering his or her advice and recommendations;

●	The Compensation Committee has the sole authority to retain and terminate the executive compensation consultant;
●	The executive compensation consultant has direct access to the Compensation Committee without management intervention;
●	The Compensation Committee evaluates the quality and objectivity of the services provided by the executive compensation consultant each year and determines whether to continue to retain the consultant; and

●	The protocols for the engagement (described below) limit how the executive compensation consultant may interact with management.

In retaining Mercer, the Compensation Committee considered the six factors set forth in Section 10C-1(b)(4)(i) through (v) of the Exchange Act, and concluded that no conflict of interest exists that would prevent Mercer from serving as an independent compensation consultant to the Compensation Committee.

While it is necessary for the executive compensation consultant to interact with management to gather information, the Compensation Committee has adopted protocols governing if and when the executive compensation consultant's advice and recommendations can be shared with management. These protocols are included in the Compensation Committee’s engagement letter with Mercer. The Compensation Committee also determines the appropriate forum for receiving the executive compensation consultant's recommendations. Where appropriate, management invitees are present to provide context for the recommendations.

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The Lead Director and Executive Sessions

Our bylaws provide that in the event the Chairman of the Board does not meet the independence requirements of the rules and regulations of the SEC and the listing standards of the NYSE, the directors shall elect a Lead Director to serve for a two-year term or until such time, if earlier, at which an independent Chairman is elected. Because William H. Powell, the current Chairman of the Board, is an independent director, we currently do not have a Lead Director. In his capacity as Chairman, Mr. Powell chairs all Board meetings and presides over all executive sessions of the non-employee members of the Board.

Board Leadership Structure and Its Role in Risk Oversight

The Board of Directors has determined that having an independent director serve as the Chairman of the Board is in the best interest of Granite and its shareholders at this time. The Board believes that having a strong independent director serve as Chairman promotes greater oversight of Granite by the independent directors and provides for greater management accountability going forward. The structure ensures more active participation by the independent directors in setting the Board's agenda and establishing the Board's priorities. However, the Board, in accordance with its Corporate Governance Guidelines and Policies, retains the flexibility to decide, as new circumstances arise, whether or not to combine or separate the position of Chairman and Chief Executive Officer.

As with all companies, we face a variety of risks in our business. Our Board of Directors is responsible for oversight of our Company's risks and effective risk management is a top priority of the Board and management. The Board believes that having a system in place for risk management and implementing strategies responsive to our risk profile and exposures will adequately identify in a timely manner our material risks. In order to more efficiently manage these risks, the Board has delegated certain risk management oversight responsibilities to relevant Board committees, as follows below.

The Audit/Compliance Committee has the direct responsibility for risk oversight relating to accounting matters, financial reporting and enterprise, legal and compliance risks. Our Chief Financial Officer (who is responsible for managing the risk management function), General Counsel (who serves as our Corporate Compliance Officer), Director of Internal Audit, management and independent registered public accounting firm, PricewaterhouseCoopers LLP, all report directly to, and meet with, the Audit/Compliance Committee on a regular basis. The Audit/Compliance Committee and the Board also meet periodically with management to review Granite's major financial risk exposures and the steps that management has taken to monitor and control such exposures, which include Granite's risk assessment and risk management policies.

The Executive Committee is responsible for overseeing management's efforts to assess risks related to the decision to bid on large projects and monitor ongoing risks and contingencies related to those projects. The Compensation Committee is responsible for overseeing risks related to employment policies and our compensation and benefits systems, and the Nominating and Corporate Governance Committee oversees risks associated with our Corporate Governance Guidelines and Policies and Code of Conduct, including compliance with listing standards for independent directors and committee assignments. The committee chairs report on risk related matters to the full Board from time to time as appropriate.

BOARD OF DIRECTORS' NOMINATION POLICY

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, its governance performance and its overall performance are continuously reviewed. 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. Accordingly, although diversity is a consideration in the nominating and evaluation process, the Nominating and Corporate Governance Committee and the Board of Directors do not have a formal policy with respect to the consideration of diversity. Evaluations are made on the basis of observations and interviews with management and with Board members conducted annually by the Nominating and Corporate Governance Committee.

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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 will not stand for re-nomination and no proposed candidate will be re-nominated if the nominee’s 72^nd birthday occurs prior to the annual meeting of shareholders in the year of re-nomination or nomination. Moreover Directors will retire no later than the first annual meeting of shareholders immediately following their 72^nd birthday. Mr. Cusumano is retiring at the 2016 Annual Meeting as required by Granite’s bylaws.

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, and their demonstrated records of performance will ensure that Granite's Board 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, energy, and effort required to guarantee Granite will have the highest possible level of leadership and governance.

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 Chairman of the Board and an executive search firm, if the Committee deems engagement of such a firm appropriate. 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, an executive search firm is typically engaged to use its professional skills and its data sources and contacts, including current Granite Board members and officers, to seek appropriate candidates. The credentials of a set of qualified candidates provided by the search process are submitted for review by the Nominating and Corporate Governance Committee, the Chairman of the Board and senior officers. 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 Granite's executive management team.

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 and the search for a single nominee may result in multiple candidates of such capability and character that 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.

Shareholder Recommendation and Direct Nomination of Board Candidates

Consistent with our bylaws and the Nominating and Corporate Governance Committee charter, Granite will review and consider for nomination any candidate for membership to the Board recommended by a shareholder, utilizing the same evaluation criteria and selection process described above. The Committee will consider nominees to the Board recommended by shareholders so long as the shareholder gives timely notice in writing of his or her recommendation. To be timely, a shareholder recommendation for a director to be elected at the 2017 Annual Meeting of Shareholders must be received at Granite's principal office, addressed to the Corporate Secretary, on or before December 27, 2016.

In addition, Granite's bylaws provide that any shareholder entitled to vote in the election of directors may directly nominate a candidate or candidates for election at a meeting provided that timely notice of his or her intention to make such nomination is given. To be timely, a shareholder nomination for a director to be elected at an annual meeting must be received at Granite's principal office, addressed to the Corporate Secretary, not less than 120 days prior to the first anniversary of the date the proxy statement for the preceding year's annual meeting of shareholders was released to shareholders and must contain the information specified in our bylaws. If no meeting was held in the previous year, the date of the annual meeting is changed by more than 30 calendar days from the previous year, or in the event of a special meeting, to be on time, the notice must be delivered by the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public announcement of the date of the meeting was made.

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To be timely, a shareholder nomination for a director to be elected at the 2017 Annual Meeting of Shareholders must be received at Granite's principal office, addressed to the Corporate Secretary, on or before December 27, 2016. For further information, see "Shareholder Proposals to be Presented at the 2017 Annual Meeting of Shareholders" on page 47.

Director Independence

Under the listing standards of the NYSE, a director is considered independent if the Board determines that the director has no material relationship with Granite. In determining independence, the Board considers pertinent facts and circumstances including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. The Board follows these guidelines, established by the NYSE, when assessing the independence of a director:

●	A director who, within the last three years is, or has been, an employee of Granite or whose immediate family member is, or has been within the last three years, an executive officer of Granite, may not be deemed independent until three years after the end of such employment relationship. Employment as an interim Chairman or Chief Executive Officer or other executive officer shall not disqualify a director from being considered independent following that employment.
●	A director who has received, or has an immediate family member who has received, during any twelve-month period within the last three years more than $120,000 in direct compensation from Granite, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), may not be deemed independent. Compensation received by a director for former service as an interim Chairman or Chief Executive Officer or other management and compensation received by an immediate family member for service as an employee of Granite (other than an executive officer) will not be considered in determining independence under this test.
●	The following directors may not be deemed independent: (A) a director who is a current partner or employee of a firm that is Granite's internal or external auditor; (B) a director who has an immediate family member who is a current partner of such a firm; (C) a director who has an immediate family member who is a current employee of such a firm and who personally works on Granite's audit; or (D) a director or immediate family member who was within the last three years a partner or employee of such a firm and personally worked on Granite's audit within that time.

●

A director who or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of Granite's present executive officers at the same time serves or served on that company's compensation committee may not be deemed independent.

●

A director who is a current employee or whose immediate family member is a current executive officer of a company that has made payments to, or received payments from, Granite for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues for that fiscal year may not be deemed independent.

The Board reviews the independence of all non-employee directors every year. For the review, the Board relies on information from responses to questionnaires completed by directors and other sources. Directors are required to immediately inform the Nominating and Corporate Governance Committee of any material changes in their or their immediate family members' relationships or circumstances that could impact or change their independence status.

The following non-employee directors are independent under the listing standards of the NYSE: Claes G. Bjork, James W. Bradford, Jr., William G Dorey, David H. Kelsey, Michael F. McNally, William H. Powell and Gaddi H. Vasquez. Ms. McDonald resigned from the Board of Directors effective July 13, 2015.

Board and Annual Shareholder Meeting Attendance

During 2015, the Board of Directors held six regular meetings. Each of the directors attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of any committee(s) on which he or she served. Except for irreconcilable conflicts, directors are expected to attend the annual meeting of shareholders.

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The annual meeting attendance policy is a part of Granite's Board of Directors Corporate Governance Guidelines and Policies and is posted on Granite's website. See "Granite Website" below. All nine directors then in office attended Granite's 2015 Annual Meeting of Shareholders.

Communications with the Board

Any shareholder or other interested party wishing to communicate with the Board of Directors, or any particular director, including the Chairman of the Board or the Lead Director, if there is one, can do so by following the process described in the Communications with the Board of Directors Policy. The policy is posted on Granite's website. See "Granite Website" below.

Corporate Governance Guidelines and Policies

Granite's Board of Directors is subject to the Board of Directors Corporate Governance Guidelines and Policies. The Board of Directors Corporate Governance Guidelines and Policies is available on our website. See "Granite Website" below.

Code of Conduct

Granite's Code of Conduct applies to all Granite employees, including the Chief Executive Officer and the Chief Financial Officer, and to all directors, including the Chairman of the Board. The Code of Conduct is available on Granite's website. We will also post any amendments to the Code of Conduct, or waivers of the application of provisions of the Code of Conduct to any of our directors or executive officers, on our website. See "Granite Website" below.

Granite Website

The following charters and policies are available on Granite's website at www.graniteconstruction.com at the "Investors" site, then under "Corporate Governance": the Audit/Compliance Committee Charter, the Nominating and Corporate Governance Committee Charter, the Compensation Committee Charter, the Board of Directors Corporate Governance Guidelines and Policies, the Board of Directors' Nomination Policy, and the Communication with the Board of Directors Policy. You can also obtain copies of these charters and policies, without charge, by contacting Granite's Investor Relations Department at 831.724.1011. The Code of Conduct is available on Granite's website at www.graniteconstruction.com at the "Our Company" site under "Code of Conduct." You can obtain a copy of the Code of Conduct and any amendments to the Code of Conduct, without charge, by contacting Granite's Human Resources Department at 831.724.1011.

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EXECUTIVE AND DIRECTOR COMPENSATION AND OTHER MATTERS

COMPENSATION DISCUSSION AND ANALYSIS

Objective of the Compensation Program

The market for executive talent is highly competitive and the objective of our executive compensation program is to attract and retain talented, creative, and experienced executives with the skills and leadership qualities necessary to compete in the marketplace, deliver consistent financial performance and grow shareholder value. The Compensation Committee believes that an effective way to enhance Granite's performance is through variable compensation structured to align our executives’ interests with the Company’s short and long-term performance objectives. Key elements of the program are as follows:

●	Market competitive base salaries at the 50th percentile of comparable positions in the market as the goal;
●	Actual pay levels reflecting market data, individual experience, tenure and ability to impact business and financial results;
●	Short-term and long-term goals aligned with the best interests of shareholders, with cash and stock-based incentives earned upon the attainment of pre-established financial and safety goals;

●	A comprehensive benefits program which is available to all salaried employees and includes: medical, dental, vision, life, accidental death and dismemberment insurance, short-term and long-term disability insurance, paid vacation, holiday pay; and
●	Eligibility, along with other management employees, to participate in our Non-Qualified Deferred Compensation Program.

Executive Officer Compensation Program

During fiscal year 2015, we conducted our annual “Say on Pay” shareholder advisory vote, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Securities Exchange Commission (“SEC”) rules. This resulted in the approval of our 2014 compensation of the Named Executive Officers by approximately 97% of the votes cast. The Compensation Committee considers these voting results when planning compensation for subsequent years and believes the results affirm shareholder approval of the Company’s executive compensation program. Accordingly, the Compensation Committee did not adopt any changes to this program as a result of this vote, although the Compensation Committee is continually evaluating our executive compensation to further align the program with shareholders’ interests. In addition to this endorsement by our shareholders of our executive compensation programs and practices, management values the views of our largest institutional shareholders and proxy advisory firms on our compensation practices and disclosures.

The key components of the 2015 program for compensating our Named Executive Officers are as follows:

●	Adjustments to align total direct compensation closer with market median levels if deemed necessary by the Compensation Committee;
●	An Annual Incentive Plan (“AIP”) with Net Income, Operating Income and Safety as the key performance measures;
●	A Long-Term Incentive Plan (“LTIP”) that includes a performance-based component and a service-based component. The LTIP performance measure is Relative Total Shareholder Return (“TSR”); and

●	Stock ownership guidelines.

The specific provisions of the compensation opportunity, plan design, and performance objectives are described in greater detail in the remainder of this Compensation Discussion and Analysis.

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Role of the Compensation Committee and Chief Executive Officer in Determining Executive Compensation

The Compensation Committee is actively engaged in the design and approval of all elements of the compensation program for our executive officers. Compensation and potential payouts are determined with assistance and recommendations from the compensation consultant as discussed below. The Compensation Committee determines the compensation of the Chief Executive Officer. The annual salary levels, incentive compensation targets and potential payouts of the other executive officers are reviewed and approved by the Compensation Committee based on recommendations of the Chief Executive Officer and the compensation consultant. See "Information About the Board of Directors and Corporate Governance — Committees of the Board — Compensation Committee" on page 10.

Role of the Compensation Consultant

The Compensation Committee has retained Mercer as its compensation consultant to provide information, analysis, and advice with regard to executive officer compensation. Representatives of the compensation consultant attend Compensation Committee meetings and provide guidance and expertise on competitive pay practices and plan designs that are consistent with the key objectives of the compensation program. See "Information About the Board of Directors and Corporate Governance — Role of the Compensation Consultant" on page 10.

Annual Risk Assessment

The Compensation Committee annually reviews the balance between risk and reward in the design of the Executive Officer and employee incentive compensation programs. The AIP and LTIP utilize a portfolio of performance metrics across the company designed to balance short and long-term financial objectives and generate shareholder value. Performance goals are set as a range for each objective with a maximum payout opportunity assigned to each performance goal. The Compensation Committee carefully reviews incentive plan goals to ensure the appropriate levels of difficulty, and reviews Granite and its peer groups’ financial performance to ensure performance goals and payout opportunities are appropriately calibrated. The performance measures, maximum payout opportunities and the calibration of achievability of incentive plan goals are all designed to help ensure that the incentive plans appropriately balance risk and reward, limiting excessive risk-taking and the potential for windfall payouts.

Market Data Considered in Determining Executive Compensation

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 is obtained from a single peer group consisting of thirteen (13) public companies representing the construction, engineering and 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 thirteen (13) public companies is used by the Compensation Committee to establish base salary, target total cash and long-term incentive compensation levels and as the comparative group for measuring relative Total Shareholder Return performance. See “Long Term Incentive Compensation – Performance Awards” on page 24.

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Peer Group of Public Companies

The thirteen (13) public companies selected for the peer group are in the construction, engineering and/or construction materials industries and compete for executive talent in the same market as Granite. The table below names each of the companies and its respective annual revenues and total assets for its 2015 fiscal year. Following the acquisition of URS by AECOM in October 2014, both URS and AECOM were removed from the peer group during 2015.

		Revenues		Total Assets
Company Name		($ Millions)		($ Millions)
URS Corporation (1)		$10,991		$8,718
AECOM Technology Corporation (2)		$8,357		$6,123
Quanta Services, Inc.		$7,572		$5,214
EMCOR Group, Inc.		$6,719		$3,546
Tutor Perini Corporation		$4,920		$4,042
MasTec, Inc.		$4,208		$2,940
Martin Marietta Materials, Inc.		$3,540		$6,962
Vulcan Materials Company		$3,422		$8,302
Dycom Industries, Inc.		$2,022		$1,359
Primoris Services Corporation		$1,929		$1,132
Aegion Corporation		$1,334		$1,258
MYR Group, Inc.		$1,062		$525
Layne Christensen Company		$798		$546

(1)	Financial data shown for URS is from its 2013 fiscal year, prior to its acquisition.
(2)	Financial data shown for AECOM is from its 2014 fiscal year (the last full year prior to its acquisition of URS in October 2014), as compensation data used from AECOM prior to its acquisition of URS.

Granite's fiscal 2015 revenues and total assets at December 31, 2015 were $2,371,029 and $1,627,860 respectively.

COMPENSATION ELEMENTS

Base Salaries

Effective January 1, 2015, Ms. Krzeminski’s base salary increased from $450,000 to $475,000, and Mr. Matheson’s base salary increased from $350,000 to $375,000. Both increases were supported by market data from Granite’s peer group as shown in the table above and in the 2015 peer group median below, and reflect Ms. Krzeminski’s and Mr. Matheson’s increased tenure and performance in their respective positions. No other changes to the base salaries of our Named Executive Officers were made for 2015.

For amounts paid as base salary during 2015, see the Summary Compensation Table appearing on page 32.

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Base Salary Positioning Chart

							2015(1)
					2015		Peer
	Named				Base		Group
	Executive Officer		Title During 2015		Salary		Median		% Variance
	James H. Roberts		President & Chief Executive Officer (CEO)		$750,000		$979,000		(31%)
	Laurel J. Krzeminski		Executive Vice President & Chief Financial Officer (CFO)		$475,000		$510,000		(7%)
	Christopher S. Miller		Executive Vice President & Chief Operating Officer (COO)		$500,000		$573,000		(15%)
	Michael F. Donnino		Senior Vice President & Large Projects Group Manager		$475,000		$477,000		0%
	Martin P. Matheson		Senior Vice President & California Group Manager		$375,000		$477,000		(27%)

(1)

Peer Group median compensation data as reported in 2014.

Annual Incentive Compensation

The Named Executive Officers participate in the Annual Incentive Plan (“AIP”) pursuant to which annual incentive compensation is determined by overall company performance and/or applicable group performance. As described in more detail below, each Named Executive Officer's targeted annual incentive opportunity is expressed as a percentage of base salary. Maximum cash payouts cannot exceed the lesser of three times the target opportunity or $2,500,000.

Annual Incentive Opportunity

					Annual Incentive Opportunity(1)
			2015		% of Base Salary
	Named Executive Officer		Base Salary		Target		Target		Maximum
	James H. Roberts		$750,000		115%		$862,500		$2,500,000
	Laurel J. Krzeminski		$475,000		75%		$356,250		$1,068,750
	Christopher S. Miller		$500,000		75%		$375,000		$1,125,000
	Michael F. Donnino		$475,000		75%		$356,250		$1,068,750
	Martin P. Matheson		$375,000		75%		$281,250		$843,750

(1)

The “target” annual incentive opportunity is competitive with those offered by peer group companies, and is the basis for establishing the maximum annual incentive.

2015 Annual Incentive Plan

Individual awards under the AIP are paid out/determined based on a pre-determined percentage (funding ratio) of Company Net Income and/or Group Operating Income.

Named Executive Officer AIP awards incorporate two funding ratio levels. The initial funding ratio applies once Company Net Income and/or Group Operating Income achieve “threshold” performance levels. A higher funding ratio level is applied once financial performance is at or above “expectations” performance levels for Company Net Income and/or Group Operating Income. The “expectations” performance levels of Company Net Income and Group Operating Income are typically greater than budgeted amounts and are intended to encourage plan participants to deliver superior financial performance. No funding of individual bonuses will occur if the performance of the Company and/or Group is below the specified “threshold” level of performance.

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2015 Annual Incentive Plan Performance Measure Definitions

●	Company Net Income Company Net Income is actual consolidated net income for Granite Construction Incorporated calculated in accordance with Generally Accepted Accounting Principles (“GAAP”);
●	Company Pre-Bonus Net Income Company Pre-Bonus Net Income is defined as Company Net Income before the cost of annual incentive plan cash bonuses which are calculated based on Company performance;
●	Operating Income Operating Income is actual operating income for the applicable Group calculated in accordance with GAAP, excluding allocated Selling, General & Administrative Expense (“SG&A”);
●	Operating Profit Operating Profit is defined as Operating Income after the cost of pre-bonus allocated SG&A and before the cost of annual incentive plan cash bonuses which are calculated based on the performance of the applicable Group;
●	Safety Granite uses the OSHA Recordable Incident Rate (“ORIR”), a nationally recognized metric, to benchmark its safety performance against the construction industry. ORIR tracks all injuries serious enough to 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 ORIR target and payout levels are reviewed and approved annually by the Compensation Committee.

2015 Annual Incentive Plan Company and Group Funding Ratios

Funding ratios are individualized to account for the Named Executive Officer’s respective roles and responsibilities. Mr. Roberts, Ms. Krzeminski, and Mr. Miller’s bonus opportunities are based on Company financial performance. Mr. Donnino and Mr. Matheson have two funding ratios with a larger ratio tied to their Group’s performance and a smaller ratio tied to overall Company performance. This is intended to relate bonus opportunities for Mr. Donnino and Mr. Matheson to both their Group’s performance, as well as the overall results of the Company. Bonuses are adjusted based on a safety multiplier from -10% to +10%, with safety at target performance resulting in no adjustment.

Company Bonus Funding Ratios
(Percentage of Company Pre-Bonus Net Income)

			Company Net Income		Company Net Income
	Named Executive Officer		At or Above Threshold		At or Above Expectations
	James H. Roberts		1.100%		1.650%
	Laurel J. Krzeminski		0.440%		0.660%
	Christopher S. Miller		0.520%		0.780%
	Michael F. Donnino		0.100%		0.150%
	Martin P. Matheson		0.100%		0.150%

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Group Bonus Funding Ratios
(Percentage of Group Operating Profit)

			Group Operating Income		Group Operating Income
	Named Executive Officer		At or Above Threshold		At or Above Expectations
	Michael F. Donnino		0.600%		0.900%
	Martin P. Matheson		0.600%		0.900%

2015 Annual Incentive Plan Performance Objectives

At the beginning of the annual performance period (January 1^st – December 31^st), the Compensation Committee approved the 2015 AIP financial performance goals. Named Executive Officer annual incentive bonuses are funded once threshold performance levels are achieved. Higher funding levels are applied once performance is at or above expectations. Bonus payouts are calculated as a percentage of Company pre-bonus net income and Group operating profit.

Company Performance

			Net Income		Net Income
			Threshold		Expectations
	Granite Construction Incorporated		$22.6M		$55.0M
Group Performance
			Group		Group
			Operating Income		Operating Income
			Threshold		Expectations
	Large Projects Group		$40.9M		$68.0M
	California Group		$34.1M		$50.0M

Safety Multiplier

2015 Annual Incentive Plan bonus awards are subject to adjustment by a safety multiplier, which is calculated based on year-end safety results. Awards for Mr. Roberts, Ms. Krzeminski, and Mr. Miller are subject to adjustment based on the overall safety results of the Company. Awards for Mr. Donnino, and Mr. Matheson are subject to adjustment based upon both the overall safety results of the Company and of their assigned Groups.

The values of the 2015 AIP awards are subject to adjustment based on safety results as follows:

●	If Safety ORIR is 2.2 or more, or if an employee fatality occurred, the annual incentive performance award is multiplied by 90% and reduced accordingly.
●	If Safety ORIR is at the 1.5 target level, no adjustment is made.
●	If Safety ORIR is 1.3 or less, the annual incentive performance award is multiplied by 110% and increased accordingly.
●	Linear interpolation is used to determine the magnitude of the adjustment for Safety ORIR falling between 2.2 and 1.3.

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2015 Company and Group Safety Goals

	Threshold	Target	Maximum
Safety ORIR	2.2	1.5	1.3
Multiplier	90%	100%	110%

2015 ANNUAL INCENTIVE PLAN COMPANY AND GROUP PERFORMANCE RESULTS AND BONUS PAYOUTS

2015 year-end Company and Group safety performance results were as follows:

2015 Safety Performance Results

			Company		Company		Group		Group
			Safety ORIR		Safety		Safety ORIR		Safety
			Results		Multiplier(1)		Results		Multiplier(1)
	James H. Roberts		1.1		90%		-		-
	Laurel J. Krzeminski		1.1		90%		-		-
	Christopher S. Miller		1.1		90%		-		-
	Michael F. Donnino		1.1		90%		1.5		90%
	Martin P. Matheson		1.1		90%		1.0		90%

(1)

Due to a fatality, the Company and Group Safety Multipliers were reduced accordingly to 90%.

Based on actual performance, individual incentives earned by the Named Executive Officers were as follows:

2015 AIP Company Bonus Payouts

							Company
			Company		Company		Bonus
			Bonus		Bonus		Payout		Company		Actual
			Payout at		Payout at		(before Safety		Safety		Company
	Named Executive Officer		Threshold		Expectations		Multiplier)		Multiplier		Payout
	James H. Roberts		$263,445		$987,917		$1,089,358		90%		$980,422
	Laurel J. Krzeminski		$105,378		$395,167		$435,743		90%		$392,169
	Christopher S. Miller		$124,537		$467,015		$514,969		90%		$463,472
	Michael F. Donnino		$23,950		$89,811		$99,033		90%		$89,129
	Martin P. Matheson		$23,950		$89,811		$99,033		90%		$89,129

2015 AIP Group Bonus Payouts

Group Bonus

Group Bonus

Group Bonus

Payout

Group

Actual

Payout at

Payout at

(before Safety

Safety

Group

Named Executive Officer

Threshold

Expectations

Multiplier)

Multiplier

Payout

Michael F. Donnino

$116,900

$438,375

$0

90%

$0

Martin P. Matheson

$67,957

$254,837

$420,411

90%

$378,370

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2015 Actual AIP Total Bonus Payouts⁽¹⁾

			Actual Company		Actual Group		Total Actual
	Named Executive Officer		Bonus Payout		Bonus Payout		AIP Bonus Payout
	James H. Roberts		$980,422		-		$980,422
	Laurel J. Krzeminski		$392,169		-		$392,169
	Christopher S. Miller		$463,472		-		$463,472
	Michael F. Donnino		$89,129		$0		$89,129
	Martin P. Matheson		$89,129		$378,370		$467,499

(1)

Represents the sum of 2015 Company bonus payouts and 2015 Group bonus payouts.

LONG TERM INCENTIVE COMPENSATION

In order to emphasize sustained long term performance, all Named Executive Officers participated in the 2015 LTIP. The Compensation Committee reviewed peer group compensation data for comparable positions and established incentive target opportunities which approximate peer group median compensation levels. The opportunities for the Named Executive Officers under the 2015 LTIP are presented below:

	Named Executive Officer		2015 LTIP Incentive Target Opportunity
	James H. Roberts		$1,700,000
	Laurel J. Krzeminski		$550,000
	Christopher S. Miller		$650,000
	Michael F. Donnino		$600,000
	Martin P. Matheson		$450,000

Each Named Executive Officer’s target award is divided into two components – Performance Awards and Service Awards. The table below reflects the weighting of the two components:

LTIP Components Weighting

	Weighting
Performance Award	66.7%
Service Award	33.3%
Total	100%

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Performance Awards

Effective January 1, 2015, the Compensation Committee approved the removal of companies in the TSR peer group who were acquired or are otherwise no longer publically traded. The Committee also approved changes to the TSR funding mechanism. It was determined to move away from a discrete number ranking system to a relative TSR percentile ranking system.

Payout for the 2015 – 2017 performance period is calculated based on Granite’s Total Shareholder Return rank relative to a peer group of companies in the Standard & Poor’s Construction Materials and Construction Equipment classification. The higher the overall performance ranking, the greater the payout percentage.

The following are the 2015 – 2017 peer group companies and funding mechanism. (This peer group consists of the same companies as in the compensation peer group from 2014, excluding AECOM and URS.)

2015 – 2017 TSR Peer Group (11 companies)
●	Aegion Corporation	●	Martin Marietta Materials	●	Quanta Services Inc.
●	Dycom Industries Inc.	●	MasTec Inc.	●	Tutor Perini Corp
●	Emcor Group Inc.	●	MYR Group Inc.	●	Vulcan Materials Co.
●	Layne Christensen Company	●	Primoris Services

2015 – 2017 TSR Funding Mechanism
(Utilizes a Relative TSR Percentile Ranking System to determine payout as a percentage of Target.)

Relative TSR
Percentile Rank	Payout (% of Target)
90th Percentile or better	200%
75th Percentile	150%
50th Percentile	100%
25th Percentile	50%
Below 25th Percentile	0%

Payout for 2014 – 2016 performance period is calculated based on Granite’s Total Shareholder Return (TSR) relative to the industry peer group of construction, engineering and construction materials used for benchmarking data as approved by the Compensation Committee effective January 1, 2014. To determine the performance ranking for the 2014 – 2016 performance periods we use a discrete ranking system.

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The following are the 2014 – 2016 peer group companies and funding mechanism:

2014 – 2016 TSR Peer Group (13 companies)
●	AECOM Technology Corp.	●	Martin Marietta Materials Inc.	●	Tutor Perini Corp
●	Aegion Corporation	●	MasTec Inc.	●	URS Corp.
●	Dycom Industries	●	MYR Group Inc.	●	Vulcan Materials Co.
●	Emcor Gorup Inc.	●	Primoris Services
●	Layne Christensen Company	●	Quanta Services Inc.

2014 – 2016 TSR Funding Mechanism
(Utilizes a Discrete Number Ranking System to determine payout as a percentage of Target.)

Discrete Number Ranking	Payout (% of Target)
1 – 2 of 13	200%
3 of 13	180%
4 of 13	160%
5 of 13	140%
6 of 13	120%
7 of 13	100%
8 of 13	83.3%
9 of 13	66.7%
10 of 13	50%
11 – 13 of 13	0%

Payout for 2013 – 2015 performance period is calculated based on Granite’s Total Shareholder Return (TSR) relative to the industry peer group of construction, engineering and construction materials used for benchmarking data as approved by the Compensation Committee effective January 1, 2013. To determine the performance ranking for the 2013 – 2015 performance period, we use a discrete ranking system.

The following are the 2013 – 2015 peer group companies and funding mechanism:

2013 – 2015 Total Shareholder Return Peer Group (12 companies)
●	Aegion Corporation	●	Headwaters Inc.	●	Texas Industries
●	Dycom Industries Inc.	●	Jacobs Engineering Group Inc.	●	Tutor Perini Corp
●	Emcor Group Inc.	●	Martin Marietta Materials	●	URS Corp.
●	Fluor Corp.	●	Quanta Services Inc.	●	Vulcan Materials Co.

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2013 – 2015 TSR Funding Mechanism
(Utilizes a Discrete Number Ranking System to determine payout as a percentage of Target.)

Discrete Number Ranking	Payout (% of Target)
1 – 2 of 13	200%
3 of 13	180%
4 of 13	160%
5 of 13	140%
6 of 13	120%
7 of 13	100%
8 of 13	83.3%
9 of 13	66.7%
10 of 13	50%
11 – 13 of 13	0%

Total Shareholder Return Performance Calculation

Total Shareholder Return (TSR) is calculated by dividing (i) the sum of the closing price on the last trading day of the performance period and all dividends and per-share cash equivalents paid during the performance period, by (ii) the closing price on the day before the first day of the performance period. The 2013, 2014, and 2015 performance awards are calculated at the end of a three-year performance period. The 2013 performance awards will be calculated for the three-year period ending December 31, 2015 with vesting and payment the following year. The 2014 performance awards will be calculated for the three-year period ending December 31, 2016 with vesting and payment the following year. The 2015 performance awards will be calculated for the three-year period ending December 31, 2017 with vesting and payment the following year.

					Payout Timing
	Total Shareholder Return Performance Period		Award Opportunity		(if award earned based on performance)
	January 1, 2013 – December 31, 2015		0% – 200% of 2013 Performance Award		Q1 2016
	January 1, 2014 – December 31, 2016		0% – 200% of 2014 Performance Award		Q1 2017
	January 1, 2015 – December 31, 2017		0% – 200% of 2015 Performance Award		Q1 2018

2015 PERFORMANCE AWARD PAYOUTS

Total Shareholder Return Awards Earned in 2013 – 2015 and Paid in 2016

Granite’s three-year Total Shareholder Return ranking as of December 31, 2015 for the performance period from January 1, 2013 through December 31, 2015 was 8 out of 13 companies, or 83% of the TSR target opportunity. See “2013-2015 TSR Funding Mechanism” on page 26. The earned awards for the performance period are presented in the following table.

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Performance Period January 1, 2013 – December 31, 2015

Named Executive Officer		Target TSR Incentive		Actual TSR Incentive		Restricted Stock Units Awarded(1)
James H. Roberts		$1,133,333		$944,066		26,828
Laurel J. Krzeminski		$366,667		$305,434		8,680
Christopher S. Miller(2)		-		-		-
Michael F. Donnino		$400,000		$333,200		9,469
Martin P. Matheson(2)		-		-		-

(1)	Awards are denominated as a cash value until earned based on performance. The number of restricted stock units awarded was calculated by dividing the actual long-term incentive value by $35.19, which was the average stock price over the first 30 days of January 2013.
(2)	Mr. Miller and Mr. Matheson were not eligible to participate in the 2013 Total Shareholder Return program.

Service Awards

The Compensation Committee believes granting a portion of equity awards as Restricted Stock Units assists in maintaining competitive levels of compensation, encourages the continued retention of key management, and aligns the interest of Named Executive Officers with that of the shareholders. Service Awards vest ratably over three years.

Service Awards Paid in 2015

Named Executive Officer		Service Award		Restricted Stock Units Awarded(1)
James H. Roberts		$566,653		17,538
Laurel J. Krzeminski		$183,327		5,674
Christopher S. Miller		$216,671		6,706
Michael F. Donnino		$199,999		6,190
Martin P. Matheson		$150,015		4,643

(1)	The number of restricted stock units awarded was calculated by dividing the service award by the closing stock price of $32.31 on March 13, 2015.

Policy Regarding Recovery of Award if Basis Changes Because of Restatement

If the basis upon which a previous compensation award was made is determined to have been in error due to a restatement of a prior year's financial results, it is Granite's policy to either recover the amount overpaid or to offset the overpayment against future incentive compensation earned. There were no adjustments to calculations that affected incentive compensation calculated or paid in 2015.

Stock Ownership Guidelines

Our Board of Directors has adopted Stock Ownership Guidelines to align the interests of Granite's executive officers with the interests of shareholders and to promote Granite's commitment to sound corporate governance. Executive officers are expected to own and hold a minimum number of shares of Granite common stock based on relevant market standards. Stock ownership guidelines are determined as a multiple of the executive officer's base salary, and are as follows:

●	Chief Executive Officer: 3 x annual base salary
●	Other Named Executive Officers: 2 x annual base salary

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Minimum stock ownership levels are to be achieved within five years following the later of the May 13, 2009 adoption of the Stock Ownership Guidelines and the date an individual becomes an executive officer. Compliance with the guidelines is reviewed by the Compensation Committee on an annual basis. Shares that count toward the satisfaction of the guidelines include:

●	Shares owned outright by the executive officer or his or her immediate family members residing in the same household, whether held individually or jointly;
●	Shares represented by restricted stock awards or units where the restrictions have lapsed;
●	Shares held for the executive officer's account in the Granite Construction Incorporated Profit Sharing and 401(k) Plan (“401(k) Plan”); and
●	Shares held in trust for the benefit of the executive officer or his or her family.

Until the applicable guideline is achieved, the executive officer is required to retain an amount equal to 25% of net shares received as a result of the vesting of restricted stock or restricted stock units through Granite's stock incentive plans.

Stock Ownership

Named Executive Officer		2015 Base Salary		Stock Ownership as Multiple of Base		Required Value of Stock Ownership		Date to be Achieved(1)		# Vested Shares Owned(2)		Value of Shares Owned(3)		Percentage of Attainment
James H. Roberts		$750,000		3 x		$2,250,000		May 2014		144,984		$5,161,430		229%
Laurel J. Krzeminski		$475,000		2 x		$950,000		Nov. 2015		36,258		$1,290,785		136%
Christopher S. Miller		$500,000		2 x		$1,000,000		August 2019		915		$32,574		3%
Michael F. Donnino		$475,000		2 x		$950,000		May 2014		60,810		$2,164,836		228%
Martin P. Matheson		$375,000		2 x		$750,000		August 2018		4,144		$147,526		20%

(1)	To be achieved within five years after becoming a Named Executive Officer.
(2)	As of January 1, 2016.
(3)	Based on the 2015 annual average stock price of $35.60.

The Company’s Insider Trading Policy, which applies to employees, officers and directors of the Company and their family members and affiliates, provides that such individuals are prohibited from engaging in hedging transactions involving the Company’s securities.

Non-Qualified Deferred Compensation

Granite offers its executive officers and other key executives participation in the Granite Construction Key Management Deferred Compensation Plan II (the "NQDC"), which:

●	Allows executive officers to defer up to 50% of their base compensation and up to 100% of their incentive compensation (cash and equity);
●	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;
●	Includes a Rabbi Trust, which provides participants a measure of added security that benefit obligations will be satisfied;

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●

Includes an option under which 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

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. 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 the Flexible Bonus Policy is necessary in order to consider the effects of unanticipated events and circumstances on the Company’s business or on a participant’s performance.

Other Compensation

The Named Executive Officers are eligible to participate in the 401(k) Plan. Granite provides matching contributions up to 3% of IRS qualified compensation. Under the terms of a policy applicable to Mr. Roberts, Ms. Krzeminski and Mr. Donnino, each is required to maintain a $5,000,000 personal umbrella liability insurance policy to provide coverage while conducting company business. They are reimbursed for the costs incurred to purchase and maintain the required insurance policy. Mr. Roberts, Ms. Krzeminski and Mr. Donnino receive a $1,417 per month vehicle allowance which includes reimbursement for the personal umbrella liability insurance. Mr. Miller receives a $1,000 per month vehicle allowance. Mr. Matheson is provided a company vehicle and receives a $60 per month vehicle allowance.

Impact of Accounting and Tax Treatments of a Particular Form of Compensation

In connection with its determination of the various elements of compensation for our executive officers, the Compensation Committee takes into account the impact of Section 162(m) of the Internal Revenue Code on the deductibility of compensation for federal income tax purposes. Section 162(m) limits the deductibility of "nonperformance-based" compensation paid to our principal executive officers and our next three highest paid individuals, other than our principal financial officers, to $1 million annually. Some of the elements of our executive compensation package, including certain payments under our AIP, are intended to qualify as "performance-based" compensation, which is exempt from the limitation on deductibility under Section 162(m). The Compensation Committee has the discretion to design and implement elements of executive compensation that may not qualify as "performance based" compensation and to approve compensation packages for individual executive officers that may not be fully deductible.

Change-in-Control Arrangements

All of our Named Executive Officers are participants in the Executive Retention and Severance Plan. The purpose of the plan is to:

●	Provide an incentive to the existing management to continue their employment with Granite during the pendency of a potential change-in-control transaction; and
●	Attract and retain executives by reducing their concerns regarding future employment following a change-in-control.

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The Executive Retention and Severance Plan originally provided that if a participant’s employment with Granite is terminated by Granite within three years after a "change-in-control" of Granite other than for cause, or if the participant resigns from such employment within three 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 three times the participant’s annual base salary rate in effect immediately prior to the participant’s termination;
●	A lump sum payment equal to three 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 three times the average of the aggregate annual employer contribution, less applicable withholding, 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 three 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 such plans; 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-up payments, 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.

In August, 2010, the Compensation Committee approved changes to the Executive Retention and Severance Plan that are believed to be in alignment with emerging best practices. The benefits provided to then-current participants under the Executive Retention and Severance Plan were not changed. Benefits to subsequent new participants will be dependent upon their level of responsibility within the organization and will include the following severance multiples:

Position		Severance Multiple
Chief Executive Officer		2.99 x
Chief Financial Officer		2 x
Chief Operating Officer		2 x
Senior Vice Presidents and Officers		1 x

●

A "change-in-control" is defined as (i) a merger, consolidation or acquisition of Granite where our shareholders do not retain a majority interest in the surviving or acquiring corporation; (ii) the transfer of substantially all of our assets to a corporation not controlled by Granite or its shareholders; or (iii) the transfer to affiliated persons of more than 30% of our voting stock, which leads to a change of a majority of the members of the Board of 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; (iii) relocation of the participant's work place that increases the regular commute distance between the participant's residence and work place by more than 30 miles (one way); or (iv) any material breach of the plan by Granite with respect to the participant during a change-in-control period.

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The 2012 Equity Incentive Plan authorizes the Compensation Committee to set the terms of any equity award to provide that there will be no acceleration of the exercisability, vesting or payment of such award upon the occurrence of a change-in-control unless the change-in-control is accompanied by the award recipient’s involuntary termination without cause or the award recipient’s resignation for good reason. However, under the Executive Retention and Severance Plan, restricted stock and restricted stock unit awards vest in full upon the consummation of a change-in-control, provided the award recipient remains an employee prior to the change-in-control. In addition, the Executive Retention and Severance Plan provides that if the surviving, successor or acquiring corporation does not either assume, continue or substitute outstanding option awards and the award recipient remains an employee prior to the change-in-control, then the vesting and exercisability of such option awards will be accelerated in full upon the consummation of the change-in-control.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the "Compensation Discussion and Analysis" contained in this proxy statement. Based on such review and discussions, the Committee recommended to the Board of Directors that the "Compensation Discussion and Analysis" be included in this proxy statement and incorporated by reference into Granite's Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Members of the Compensation Committee:

This Report of the Compensation Committee does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate this Report of the Compensation Committee by reference therein.

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Summary Compensation Table
2015

The following table summarizes, for the years specified, the compensation for our Chief Executive Officer, our Chief Financial Officer and other Named Executive Officers for the fiscal year ended December 31, 2015.

					Non-Equity
				Stock	Incentive Plan	All Other
Named Executive Officer	Year	Salary	Bonus(1)	Awards(2)	Compensation(3)	Compensation(4)	Total
and Position (a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
James H. Roberts	2015	$750,000	-	$975,859	$980,422	$124,653	$2,830,934
President & CEO	2014	$750,000	-	$1,133,374	$312,937	$126,166	$2,322,477
(Principal Executive Officer)	2013	$750,000	$64,801	$1,398,289	$45,177	$124,778	$2,383,045
Laurel J. Krzeminski	2015	$475,000	-	$333,342	$392,169	$44,212	$1,244,723
EVP & Chief Financial Officer	2014	$450,000	-	$385,719	$125,175	$45,436	$1,006,330
(Principal Financial Officer)	2013	$450,000	$9,629	$478,985	$14,142	$43,957	$996,713
Christopher S. Miller	2015	$500,000	-	$216,671	$463,472	$42,862	$1,223,005
EVP & Chief Operating Officer	-	-	-	-	-	-	-
Michael F. Donnino	2015	$475,000	-	$363,681	$89,129	$54,138	$981,948
Senior Vice President	2014	$475,000	-	$426,701	$148,531	$54,629	$1,104,861
& Large Projects Group Mgr.	2013	$475,000	$33,986	$532,636	$85,763	$65,726	$1,193,111
Martin P. Matheson	2015	$375,000	-	$250,019	$467,499	$29,303	$1,121,821
Senior Vice President	-	-	-	-	-	-	-
& California Group Manager	-	-	-	-	-	-	-

(1)	The amounts in column (d) reflect, for 2013, discretionary cash bonuses approved by the Compensation Committee in recognition of both the Tappan Zee Bridge and I-35 projects receiving final funding and approval by their owners.
(2)	The awards in column (e) reflect the grant date fair value of stock awards granted for service in the stated year based on the Service Award feature of the LTIP and the grant date fair value of stock awards granted in the stated year based on performance for the performance period including the prior year pursuant to the performance based component of the LTIP. The grant date fair value is determined in accordance with Financial Accounting Standards Code Topic 718, without regard to potential forfeitures. For additional information about the assumptions used in these calculations, see Note 14 to the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. Please refer to the "Compensation Discussion and Analysis — Compensation Elements — Long Term Incentive Compensation" beginning on page 23 for a detailed explanation of the LTIP.
(3)	The amounts in column (f) reflect:(i) for 2015, the cash awards earned for performance in 2015 and paid in March 2016 (ii) for 2014, the cash awards earned for performance in 2014 and paid in March 2015; and (iii) for 2013, the cash awards earned for performance in 2013 and paid in March 2014. For a detailed explanation of cash awards for performance in 2015, see "Compensation Discussion and Analysis — Compensation Elements — Annual Incentive Compensation" beginning on page 19.
(4)	Please refer to the Other Compensation Table below for details with respect to all other compensation.

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Other Compensation Table
2015

		401(k)				Vehicle
Named Executive Officer		Match(1)		Dividends(2)		Allowances(3)		Insurance(4)		Total
(a)		(b)		(c)		(d)		(e)		(g)
James H. Roberts		$7,950		$84,013		$17,004		$15,686		$124,653
Laurel J. Krzeminski		$7,950		$5,717		$17,004		$13,541		$44,212
Christopher S. Miller		$7,950		$5,408		$12,000		$17,504		$42,862
Michael F. Donnino		$7,950		$16,512		$17,004		$12,672		$54,138
Martin P. Matheson		$7,950		$5,292		$720		$15,341		$29,303

(1)	The amounts in column (b) reflect the company matching contribution, not to exceed 3%, on compensation deferred into the 401(k) Plan.
(2)	The amounts in column (c) reflect Restricted Stock and ESOP dividends, and Restricted Stock dividend equivalent units.
(3)	The amounts in column (d) reflect the vehicle allowances provided to the Named Executive Officers. For a detailed explanation, please refer to “Other Compensation” on page 29.
(4)	The amounts in column (e) reflect the company expense for medical, dental, vision, life, short and long-term disability insurance, Accidental Death & Dismemberment, Executive Liability Insurance, and Employee Assistance Program.

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Grants of Plan-Based Awards Table
2015

The following table provides additional information about incentive plan awards and other equity awards granted to our Named Executive Officers during the year ended December 31, 2015.

					Estimated Future Payouts under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts under Equity Incentive Plan Awards(2)
	Named Executive Officer (a)		Grant Date (b)		Threshold (c)		Target (d)		Maximum (e)		Threshold (f)		Target (g)		Maximum (h)		All Other Stock Awards: Number of Shares or Stock Units (i)		Grant Date Fair Value of Stock Awards(3) (j)
	James H. Roberts		-		$263,445		$862,500		$2,500,000		-		-		-		-		-
			-		-		-		-		-		$1,700,000		$2,833,000		-		-
			03/13/15		-		-		-		-		-		-		17,538(4)		$566,653
			03/13/15		-		-		-		-		-		-		12,665(5)		$409,206
	Laurel J. Krzeminski		-		$105,378		$356,250		$1,068,750		-		-		-		-		-
			-		-		-		-		-		$550,000		$917,000		-		-
			03/13/15		-		-		-		-		-		-		5,674(4)		$183,327
			03/13/15		-		-		-		-		-		-		4,643(5)		$150,015
	Christopher S. Miller		-		$124,537		$375,000		$1,125,000		-		-		-		-		-
			-		-		-		-		-		$650,000		$1,083,333		-		-
			03/13/15		-		-		-		-		-		-		6,706(4)		$216,671
	Michael F. Donnino		-		$140,850		$356,250		$1,068,750		-		-		-		-		-
			-		-		-		-		-		$600,000		$1,000,000		-		-
			03/13/15		-		-		-		-		-		-		6,190(4)		$199,999
			03/13/15		-		-		-		-		-		-		5,066(5)		$163,682
	Martin P. Matheson		-		$91,907		$281,250		$843,750		-		-		-		-		-
			-		-		-		-		-		$450,000		$750,000		-		-
			03/13/15		-		-		-		-		-		-		4,643(4)		$150,015
			09/09/15		-		-		-		-		-		-		2,971(6)		$100,004

(1)	Amounts in columns (c) through (e) reflect threshold, target and maximum incentives, as applicable (subject to rounding), under the 2015 AIP. Under the 2015 AIP, each Named Executive Officer had the opportunity to earn up to 300% of their target annual incentive compensation based on achievement of performance goals (not to exceed a maximum award payout of $2,500,000). For a more detailed discussion of annual incentive compensation and the payout actually received by each Named Executive Officer under the 2015 AIP, see "Compensation Discussion and Analysis — Compensation Elements — Annual Incentive Compensation" beginning on page 19 and "Compensation Discussion and Analysis — Compensation Elements — Annual Incentive Compensation — 2015 Annual Incentive Plan Company and Group Performance Results and Bonus Payouts" beginning on page 22.
(2)	Amounts in columns (f) through (h) reflect the threshold, target and maximum award amounts applicable to the performance based (TSR) component of our 2015 LTIP. Each of our Named Executive Officers has the ability to earn from 0% to 200% of the TSR component of the LTIP target opportunity. Any payouts under the LTIP are made in the form of restricted stock units. Payouts on the TSR component of the LTIP are made after the end of the year. For more detailed discussion of the 2015 LTIP and payouts thereunder, see “Compensation Discussion and Analysis — Compensation Elements — Long Term Incentive Compensation” beginning on page 23.

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(3)	Amounts in column (j) reflect all restricted stock unit awards granted on March 13, 2015 the grant date fair market value was calculated by multiplying the number of stock units awarded by the closing price of our common stock of $32.31 on the date of the grant.
(4)	The restricted stock units granted on March 13, 2015 reflect the service awards granted under the LTIP. The number of restricted stock units granted for the service award was calculated by dividing the service award by the closing price of our common stock of $32.31 on the date of the grant. The restricted stock units granted as service awards vest in three equal annual installments beginning on March 13, 2015; unless retirement eligibility per the 2012 Equity Plan is met, in which case vesting is accelerated. The holders of restricted stock units are entitled to receive dividends equivalent units in lieu of cash dividends declared by the Board on the outstanding common stock of the Company.
(5)	The restricted stock units granted on March 13, 2015 reflect the performance awards granted under the LTIP. The number of restricted stock units granted for the 2012-2014 Total Shareholder Return performance award was calculated by dividing the performance award by the average stock price over the first 30 days of January 2012 of $26.32. The restricted stock units granted as performance awards are fully vested on the date of grant. The holders of restricted stock units are entitled to receive dividends equivalent units in lieu of cash dividends declared by the Board on the outstanding common stock of the Company.
(6)	Mr. Matheson received a $100,000 restricted stock unit award granted on September 9, 2015. The number of restricted stock units granted for the service award was calculated by dividing the service award by the closing price of our common stock of $33.66 on the date of the grant.

Outstanding Equity Awards at Fiscal Year-End Table
2015

The following table summarizes equity awards made to the Named Executive Officers that were outstanding as of December 31, 2015.

		Stock Awards
		Number of Shares or Units of					Market Value of Shares or Units of
		Stock That Have Not Vested(1)					Stock That Have Not Vested(2)
Named Executive Officer (a)		(b)					(c)
James H. Roberts			34,183	(3)			$1,466,793
Laurel J. Krzeminski			11,060	(3)			$474,585
Christopher S. Miller			9,730	(3)			$417,514
Michael F. Donnino			12,065	(3)			$517,709
Martin P. Matheson			11,513	(3)			$494,023

(1)	Upon death or disability, all of the equity awards of a Named Executive Officer would vest immediately.
(2)	The amounts shown in column (c) are based on the December 31, 2015 closing price of our common stock of $42.91
(3)	Vesting dates for each outstanding Restricted Stock and Restricted Stock Unit (RSU) awards for the Named Executive Officers are as follows:

		Number of Shares Underlying Vesting Awards
		James H.	Laurel J.	Christopher S.	Michael F.	Martin P.
Vesting Date	Award Type	Roberts	Krzeminski	Miller	Donnino	Matheson
2016	-	-	-	-	-	-
03/13/16	RSU	5,914	1,913	2,261	2,087	1,565
03/14/16	RSU	11,375	3,681	-	4,014	2,110
04/01/16	RSU	-	-	-	-	529
09/09/16	RSU	-	-	-	-	994
09/10/16	RSU	-	-	1,472	-	-
2017	-	-	-	-	-	-
03/13/17	RSU	5,915	1,913	2,262	2,087	1,566
03/14/17	RSU	5,063	1,638	-	1,788	1,192
09/09/17	RSU	-	-	-	-	995
09/10/17	RSU	-	-	1,473	-	-
2018	-	-	-	-	-	-
03/13/18	RSU	5,916	1,915	2,262	2,089	1,567
09/09/18	RSU	-	-	-	-	995

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Stock Vested Table
2015

The following table reflects the number of shares our Named Executive Officers acquired upon the vesting of stock awards during 2015 and the value realized before payment of any applicable withholding tax and broker commissions.

		Stock Awards
		Number of Shares		Value Realized
		Acquired on Vesting		Upon Vesting(1)
Named Executive Officer (a)		(b)		(c)
James H. Roberts		29,924		$988,386
Laurel J. Krzeminski		10,487		$346,733
Christopher S. Miller		1,467		$49,431
Michael F. Donnino		10,599		$351,050
Martin P. Matheson		3,554		$116,292

(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
2015

The following table summarizes our Named Executive Officers' compensation under our nonqualified deferred compensation plan for the year ended December 31, 2015, which is also reflected in the Summary Compensation Table on page 32.

		Executive
		Contribution in		Registrant		Aggregate		Aggregate		Aggregate
		Last Fiscal		Contributions in		Earnings in Last		Withdrawals/		Balance at Last
Named Executive Officer		Year(1)(2)		Last Fiscal Year		Fiscal Year(3)		Distributions		Fiscal Year End
(a)		(b)		(c)		(d)		(e)		(f)
James H. Roberts		$37,500		-		($3,521)		-		$558,585
Laurel J. Krzeminski		$25,035		-		($1,134)		-		$155,899
Christopher S. Miller		-		-		-		-		-
Michael F. Donnino		$27,205		-		$4,883		-		$2,543,652
Martin P. Matheson		-		-		$191		-		$69,799

(1)	The Granite Construction Key Management Deferred Compensation Plan II allows Named Executive Officers to defer equity and non-equity incentive compensation. 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. A distribution election is irrevocable on the first day of each plan year.
(2)	Amounts included are $37,500 of Mr. Roberts’s non-equity base salary plan, $25,035 of Ms. Krzeminski’s non-equity incentive plan award and $27,205 or 12% of Mr. Donnino’s service stock award granted March 14, 2012, which vested March 14, 2015. (3) 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 on page 32 as above market or preferential earnings.
(4)	Mr. Miller, and Mr. Matheson elected not to participate in the Nonqualified Deferred Compensation Plan in 2015.

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Potential Payments Upon 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. Upon death or disability, all of the equity awards of a Named Executive Officer would vest immediately.

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 termination of employment under certain circumstances within three years following a change-in-control of Granite. The amounts set forth in the table are based on the assumption that such termination event occurred on the last business day of fiscal year 2015.

												Section
		Cash						Accelerated				280G
		Severance		Insurance		Other		Equity				Safe Harbor		Adjusted
Named Executive		Payment(1)		Benefits(2)		Compensation(3)		Awards(4)		Total		Provision(5)		Total
Officer (a)		(b)		(c)		(d)		(e)		(f)		(g)		(h)
James H. Roberts		$3,214,359		$50,325		$6,623		$1,466,793		$4,738,100		$0		$4,738,100
Laurel J. Krzeminski		$1,744,974		$45,777		$6,623		$474,585		$2,271,959		$0		$2,271,959
Christopher S. Miller		$1,321,590		$6,114		-		$417,514		$1,745,218		$0		$1,745,218
Michael F. Donnino		$1,909,967		$37,554		$6,623		$517,709		$2,471,853		$0		$2,471,853
Martin P. Matheson		$398,875		$16,116		$6,109		$494,023		$915,123		$0		$915,123

(1)	The amounts in column (b) for Mr. Roberts, Ms. Krzeminski and Mr. Donnino and reflect a lump sum payment equal to (i) three 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) three times the annual base salary rate in effect immediately prior to the termination. The amount in column (b) for Mr. Miller reflects a lump sum payment equal to 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 current annual base salary rate in effect immediately prior to the termination. The amount in column (b) for Mr. Matheson reflects a lump sum payment equal to one 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) one times the current annual base salary rate in effect immediately prior to the termination.
(2)	The amounts in column (c) for Mr. Roberts, Ms. Krzeminski and Mr. Donnino reflect a lump sum payment equal to three 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. The amount in column (c) for Mr. Miller reflects a lump sum payment equal to two times the annual average cost to Granite of his group insurance benefits. The amount in column (c) for Mr. Matheson reflects a lump sum payment equal to one times the annual average cost to Granite of his group insurance benefits.
(3)	The amounts in column (d) for Mr. Roberts, Ms. Krzeminski and Mr. Donnino reflect a lump sum payment equal to three 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. The amount in column (d) for Mr. Miller reflects a lump sum payment of two times the annual average cash equivalents of such contributions. The amount in column (d) for Mr. Matheson reflects a lump sum payment of one times the annual average cash equivalents of such contributions. These amounts do not include additional amounts that may be payable for reasonable professional outplacement services for the Named Executive Officer to which the Named Executive Officer is entitled under the plan until the earlier of (i) two years following the date of termination and (ii) the date on which the Named Executive Officer obtains other employment.
(4)	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 the Named Executive Officer's service is terminated under certain circumstances within 12 months following a change-in-control, the exercisability, vesting, and payment of the outstanding equity awards would be accelerated effective immediately as of the date of termination. The amounts in column (e) reflect the outstanding equity awards valued at the December 31, 2015 closing price of our common stock of $42.91.
(5)	Payments under the Executive Retention and Severance Plan 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.

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DIRECTOR COMPENSATION

Stock Ownership

All non-employee directors are required to own and maintain three times their Annual Board Cash Retainer from Granite in Granite common stock within five years after joining the Board.

Cash and Equity Compensation Policy

Granite's non-employee directors receive annual cash retainers and equity grants as set forth in the table below. Key highlights of the director compensation program are as follows:

	1.	Cash retainers are paid in quarterly installments. No additional fees are paid for attendance at meetings whether in person or telephonically;
	2.	The Chairman of the Board's retainer is inclusive of all Committee retainers; and
	3.	Directors, other than the Chairman of the Board, receive an annual grant of Restricted Stock Units valued at $100,000 on the date of grant. The Chairman of the Board receives an annual grant of Restricted Stock Units equal to $175,000 in value on the date of grant. All Restricted Stock Units vest in full on the first anniversary of the date of grant (typically May 20th of each year).

Annual Board Retainers
Member		$	70,000
Chairman of the Board		$	175,000
Annual Committee Retainers
Audit/Compliance		$	10,000
Audit/Compliance Chair		$	20,000
Nominating and Corporate Governance		$	5,000
Nominating and Corporate Governance Chair		$	15,000
Compensation		$	5,000
Compensation Chair		$	17,000
Executive		$	5,000
Annual Equity Grants
Member		$	100,000		Restricted Stock Units
Chairman of the Board		$	175,000		Restricted Stock Units

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Director Compensation Table
2015

The following table presents the compensation provided by Granite to our directors for the year ended December 31, 2015.

		Fees Earned				All Other
		or Paid in Cash(1)		Unit Award(2)		Compensation(3)		Total
Name (a)		(b)		(c)		(d)		(e)
Claes G. Bjork(4)		$95,000		$100,000		$238		$195,238
James W. Bradford, Jr.		$96,000		$100,000		$134		$196,134
Gary M. Cusumano		$75,000		$100,000		$40		$175,040
William G. Dorey		$80,000		$100,000		$71		$180,071
David H. Kelsey(4)		$95,000		$100,000		$266		$195,266
Rebecca A. McDonald(5)		$54,353		$100,000		$45		$154,398
William H. Powell		$175,000		$175,000		$70		$350,070
Gaddi H. Vasquez(4)		$85,000		$100,000		$107		$185,107

(1)	The amount in column (b) reflects the annual cash retainer paid to non-employee directors for the year ended December 31, 2015. In 2015 each non-employee director was paid an annual retainer as a member of the Board 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 market value of the 2015 Restricted Stock Unit awards. The grant date fair value is determined in accordance with Financial Accounting Standards Code Topic 718, without regard to potential forfeitures. For additional information about the assumptions used in these calculations, see Note 14 to the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. These awards have a one year vesting schedule. On June 6, 2015, Messrs. Bjork, Bradford, Cusumano, Dorey, Kelsey, Ms. McDonald and Mr. Vasquez received an annual grant of 2,688 Restricted Stock Units with a grant date fair market value of $37.21 per share. As Chairman of the Board, Mr. Powell received a grant of 4,704 Restricted Stock Units with a grant date fair market value of $37.21 per share. As of December 31, 2015: Mr. Bjork had an outstanding balance of 8,216 options, 14,157deferred units and 2,710 Restricted Stock Units; Mr. Bradford had an outstanding balance of 3,163 options, 7,114 deferred units and 2,710 Restricted Stock Units; Mr. Cusumano had an outstanding balance of 2,710 Restricted Stock Units; Mr. Dorey had an outstanding balance of 2,816 deferred units and 2,710 Restricted Stock Units; Mr. Kelsey had an outstanding balance of 16,056 deferred units and 2,710 Restricted Stock Units; Mr. Powell had an outstanding balance of 4,742 Restricted Stock Units; and Mr. Vasquez had an outstanding balance of 5,256 deferred units, and 2,710 Restricted Stock Units.
(3)	Amounts in column (d) include the cash value of dividend equivalents from deferred units in prior years and restricted stock units.
(4)	The Granite Construction Key Management Deferred Compensation Plan II allows non-employee directors to defer receipt of their annual cash retainer and Restricted Stock Unit awards into the Nonqualified Deferred Compensation Plan (in which case, the Restricted Stock Units are referred to as "deferred units"). Granite does not provide a matching contribution to non-employee director deferrals. Participants are required to make an election each plan year with respect to the amount to be deferred, future payment date and form of distribution. A distribution election is irrevocable on the first day of each plan year. Mr. Bjork deferred 100% of both his annual cash retainer and Restricted Stock Unit awards into the Key Management Deferred Compensation Plan II. Mr. Bradford deferred 100% of his Restricted Stock Unit award into the Key Management Deferred Compensation Plan II. Mr. Dorey deferred 100% of both his annual cash retainer Restricted Stock Unit awards into the Key Management Deferred Compensation Plan II. Mr. Vasquez deferred 75% of his annual cash retainer award and 100% of his Restricted Stock Unit award into the Key Management Deferred Compensation Plan II. Messrs. Bradford, Cusumano, Kelsey and Powell and Ms. McDonald made no deferrals of their annual cash retainers into the Key Management Deferred Compensation Plan II. Messrs. Cusumano, Kelsey and Powell and Ms. McDonald made no deferrals of their Restricted Stock Units into the Key Management Deferred Compensation Plan II.
(5)	Ms. McDonald resigned from the Board effective 7/13/2015 and all outstanding stock was distributed to Ms. McDonald on 7/20/2015. Her board fees were prorated according to her resignation date.

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STOCK OWNERSHIP OF BENEFICIAL OWNERS AND CERTAIN MANAGEMENT

The following table provides information regarding the ownership of our common stock as of March 1, 2016 by each person known to us to beneficially own 5% or more of our common stock, each of our directors and nominees, each of our Named Executive Officers who were employed by Granite on March 1, 2016, and all of our current directors and executive officers as a group.

		Amount and Nature Beneficial				Percentage (%)
Name		Ownership(1)				of Common Stock Outstanding(2)
AllianceBernstein L.P.(3)			2,618,937			6.6%
1345 Avenue of the Americas
New York, NY 01015
BlackRock, Inc(4)			3,340,889			8.5%
55 East 52nd Street
New York, NY 10055
Dimensional Fund Advisors LP(5)			2,469,935			6.3%
Building One
6300 Bee Cave Road
Austin, TX 78746
Franklin Advisory Services, LLC(6)			2,097,570			5.3%
One Parker Plaza, Ninth Floor
Fort Lee, NJ 07024
The Vanguard Group (7)			2,441,630			6.2%
100 Vanguard Blvd.
Malvern, PA 19355
Claes G. Bjork(8)			35,593			*
James W. Bradford, Jr.(9)			17,588			*
Gary M. Cusumano(10)			21,704			*
William G. Dorey(11)			59,326			*
David H. Kelsey			1,113			*
Michael F. McNally			0			*
William H. Powell			40,539			*
Gaddi H. Vasquez(12)			2,140			*
Michael F. Donnino(13)			62,500			*
Laurel J. Krzeminski(14)			50,549			*
Martin P. Matheson(15)			10,550			*
Christopher S. Miller(16)			3,183			*
James H. Roberts(17)			189,155			*
All Executive Officers and Directors As a Group
(14 Persons)(8-17)(18)			517,532			1.3%

(1)

Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. Such shares do not include the individuals’ NQDC shares, if any.

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(2)	Calculated on the basis of 39,413,627 shares of common stock issued and outstanding as of March 1, 2016. For all executive officers and directors as a group the percentage is calculated on the basis of the number of shares of common stock issued and outstanding as of March 1, 2016 and includes 11,379 shares of common stock underlying options exercisable within 60 days after March 1, 2016 and 97,813 shares of common stock issuable upon the vesting of restricted stock units within 60 days after March 1, 2016 that are deemed outstanding in accordance with the rules of the Securities and Exchange Commission.
(3)	Based upon a Schedule 13G filed by AllianceBerstein L.P.(“Alliance”) with the SEC (i) the number of shares beneficially owned is as of December 31, 2015, and (ii) Alliance has sole voting power with respect to 2,290,190 shares and sole dispositive power with respect to all 2,618,937 shares.
(4)	Based upon a Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC (i) the number of shares beneficially owned is as of December 31, 2015, and (ii) BlackRock has sole voting power with respect to 3,226,962 shares and sole dispositive power with respect to all 3,340,889 shares.
(5)	Based upon a Schedule 13G filed by Dimensional Fund Advisors LP (“Dimensional”) with the SEC (i) the number of shares beneficially owned is as of December 31, 2015, and (ii) Dimensional has sole voting power with respect to 2,359,529 shares and shared dispositive power with respect to all 2,469,935 shares.
(6)	Based upon a Schedule 13G/A filed by Franklin Advisory Services, LLC (“Franklin Advisory Services”) with the SEC (i) the number of shares beneficially owned is as of December 31, 2015, and (ii) Franklin Advisory Services has sole voting power with respect to 1,881,270 shares and sole dispositive power with respect to all 2,097,570 shares. Such Schedule 13G notes that (i) the securities in question are beneficially owned by one or more open or closed end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of Franklin Resources, Inc. (“FRI”), and that FRI may be deemed to be the beneficial owner of such shares and (ii) Charles B. Johnson and Rupert H. Johnson, Jr. may be deemed to be the beneficial owners of such shares through their ownership of common stock of FRI.
(7)	Based on a Schedule 13G/A filed by The Vanguard Group (“Vanguard”) with the SEC (i) the number of shares beneficially owned is as of December 31, 2015, and (ii) Vanguard has sole voting power with respect to 49,874 shares, shared voting power with respect to 3,100 shares, sole dispositive power with respect to 2,391,056 shares and shared dispositive power with respect to 50,574.
(8)	Includes 8,216 shares of common stock which Mr. Bjork has the right to acquire within 60 days after March 1, 2016 as a result of vested and exercisable options.
(9)	Includes 3,163 shares of common stock which Mr. Bradford has the right to acquire within 60 days after March 1, 2016 as a result of vested and exercisable options and 14,425 shares of common stock that Mr. Bradford holds jointly with his wife.
(10)	Includes 1,471 shares of common stock that are held in trust for the benefit of Mr. Cusumano’s family as to which shares Mr. Cusumano and his wife share voting and investment power.
(11)	Includes 43,504 shares of common stock that Mr. Dorey holds in trust for the benefit of his family as to which shares Mr. Dorey and his wife share voting and investment power.
(12)	The 2,140 shares of common stock are held in trust for the benefit of Mr. Vasquez and his wife as to which Mr. Vasquez and his wife share voting and investment power.
(13)	Includes 21,570 shares of common stock issuable to Mr. Donnino upon the vesting of restricted stock units within 60 days after March 1, 2016.
(14)	Includes 14,291 shares of common stock issuable to Ms. Krzeminski upon the vesting of restricted stock units within 60 days after March 1, 2016.
(15)	Includes 81 shares of common stock owned by the ESOP but allocated to Mr. Matheson’s account as of March 1, 2016 and 4,220 shares of common stock issuable upon the vesting of restricted stock units within 60 days after March 1, 2016. Subject to continued employment by Granite, Mr. Matheson will become eligible to make withdrawals of his ESOP shares when he attains age 55.
(16)	Includes 2,268 shares of common stock issuable to Mr. Miller upon the vesting of restricted stock units within 60 days after March 1, 2016.
(17)	Includes 127,585 shares of common stock owned by the ESOP but allocated to Mr. Roberts’ account as of March 1, 2016, 44,171 shares of common stock issuable upon the vesting of restricted stock units within 60 days after March 1, 2016 and 17,399 shares of common stock held in trust for the benefit of Mr. Roberts’ family as to which shares Mr. Roberts and his wife share voting and investment power. As a result of having attained age 55 and continuing to be employed by Granite, Mr. Roberts is currently eligible to make withdrawals of his ESOP shares.
(18)	Also includes 6,052 shares of common stock owned by the ESOP but allocated to executive officers accounts as of March 1, 2016 and 11,291 shares of common stock issuable to all executive officers upon the vesting of restricted stock units within 60 days after March 1, 2016.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers, directors and any persons who beneficially own more than 10% of our common stock to report ownership of, and transactions in, Granite stock with the SEC. Our executive officers, directors and any persons who beneficially own more than 10% of our common stock are required by SEC regulation to furnish to Granite copies of all Section 16(a) reports they file.

Based solely on our review of these reports and written representations from all of our executive officers and directors that no other reports were required with respect to their beneficial ownership of our common stock during fiscal year 2015, we believe that all reporting requirements applicable to our executive officers, directors and any persons who beneficially own more than 10% of our common stock pursuant to Section 16(a) of the Exchange Act were satisfied.

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EQUITY COMPENSATION PLAN INFORMATION

The following table contains information as of December 31, 2015 regarding stock authorized for issuance under the 2012 Equity Incentive Plan:

						Number of
						Securities
		Number of				remaining available
		Securities to be				for future issuance
		issued upon		Weighted average		under equity
		exercise of		exercise price of		compensation
		outstanding		outstanding		plans (excluding
		options, warrants		options, warrants		stock reflected in
		and rights		and rights		column (a))
Plan Category		(a)(1)		(b)(2)		(c)
Equity Compensation Plans Approved by Shareholders		493,688		$51.09		1,527,295
Equity Compensation Plans Not Approved by Shareholders		-		-		-
Total		493,688		$51.09		1,527,295

(1)	Reflects options to purchase 11,379 shares of common stock and Restricted Stock Units covering 482,309 shares of common stock.
(2)	Reflects the exercise price per share of common stock purchasable upon the exercise of stock options only.

TRANSACTIONS WITH RELATED PERSONS

Granite's legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related person transactions (transactions involving an executive officer, director, director nominee or greater than 5% beneficial owner of Granite common stock or an immediate family member of, or anyone (other than a tenant or employee) residing in the home of, an executive officer, director, director nominee or greater than 5% beneficial owner of Granite common stock). They also determine, based on the facts and circumstances, whether a related person has a direct or indirect interest in the transaction. In addition, the Board of Directors has adopted a written policy and written procedures for review and approval or ratification of related party transactions involving Granite. The policy requires the Audit/Compliance Committee's review and approval or ratification of any related party transaction (as defined in the policy) in which Granite is a participant. This includes, among other things, any related party transaction that would be required to be disclosed under the rules and regulations of the SEC.

Under the policy, the Audit/Compliance Committee reviews the material facts of all related party transactions that require the Audit/Compliance Committee's approval and either approves or disapproves of the entry into the related party transaction. If advance Audit/Compliance Committee approval of a related party transaction is not feasible, the transaction may only be entered into subject to the Audit/Compliance Committee's later approval. Thereafter, the Audit/Compliance Committee will consider the transaction, and, if the Audit/Compliance Committee determines it to be appropriate, ratify it at the next regularly scheduled meeting of the Audit/Compliance Committee. In determining whether to approve or ratify a related party transaction, the Audit/Compliance Committee takes into account, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person's interest in the transaction.

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The Audit/Compliance Committee has determined that the following transactions shall be deemed to be pre-approved: (i) employment of an executive officer if (a) the executive officer's compensation is required to be reported in Granite's proxy statement or (b) the executive officer is not an immediate family member of another executive officer or director of Granite, the executive officer's compensation would be reported in Granite's proxy statement if the executive officer were a "named executive officer" and the Compensation Committee approved (or recommended that the Board approve) such compensation; (ii) compensation to a director required to be disclosed in Granite's proxy statement; (iii) any transaction with another company at which the related person's only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company's shares, if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of that company's annual revenues; (iv) any charitable contribution, grant or endowment by Granite to a charitable organization, foundation or university at which a related person's only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $100,000 or 2% of the charitable organization's total annual receipts; (v) any transaction where the related person's interest arises solely from the ownership of Granite common stock and all holders of Granite common stock receive the same benefit on a pro rata basis; and (vi) any transaction with a related person involving services as a bank depositary of funds, transfer agent, registrar or trustee under a trust indenture or similar services.

In addition, the Board has delegated to the Chair of the Audit/Compliance Committee the authority to pre-approve or ratify (as applicable) any related person transaction in which the aggregate amount involved is expected to be less than $100,000.

No director who has an interest in the transaction under consideration may participate in the approval process. All related party transactions approved by the Audit/Compliance Committee must be disclosed to the full Board of Directors.

REPORT OF THE AUDIT/COMPLIANCE COMMITTEE

The Audit/Compliance Committee is appointed by the Board of Directors and reports to the Board at each meeting. Its purpose is to (a) assist the Board in its oversight of (1) Granite's accounting and financial reporting principles and policies, and internal and disclosure controls and procedures, including the internal audit function, (2) Granite's system of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, (3) the integrity of Granite's financial statements, (4) the qualifications and independence of Granite's independent registered public accounting firm, (5) Granite's compliance with legal and regulatory requirements, and (6) Granite's Corporate Compliance Program and Code of Conduct; and (b) serve as the Qualified Legal Compliance Committee of the Board of Directors as required. The Audit/Compliance Committee is solely responsible for selecting, evaluating, setting the compensation of, and, where deemed appropriate, replacing the independent registered public accounting firm.

Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and the effectiveness of the internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit/Compliance Committee reviewed and discussed with management the audited financial statements in the Annual Report on Form 10-K for fiscal year ended December 31, 2015, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

The Audit/Compliance Committee also oversees our Ethics and Compliance Program, participates in the annual evaluation of our Corporate Compliance Officer and the Director of Internal Audit, and provides a detailed annual report to the Board on the progress of the program and plans for future activities.

The Director of Internal Audit reports directly to the Chairman of the Audit/Compliance Committee and has direct access and meets regularly with the Audit/Compliance Committee to discuss the results of internal audits and the quality of internal controls. The Corporate Compliance Officer also reports directly to the Audit/Compliance Committee.

The Audit/Compliance Committee reviewed and discussed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of Granite's audited financial statements with generally accepted accounting principles, its judgments as to the quality of Granite's accounting principles, the clarity of disclosures in the financial statements and such other matters as are required to be discussed with the Committee under generally accepted auditing standards, including Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380, as adopted by the Public Company

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Accounting Oversight Board in Rule 3200T). In addition, the Audit/Compliance Committee has discussed with the independent registered public accounting firm the auditor's independence from Granite and its management, and the matters in the written disclosures and the letter received by the Audit/Compliance Committee from the independent registered public accounting firm required by the Public Company Accounting Oversight Board Rule 3526.

The Audit/Compliance Committee discussed with the independent registered public accounting firm the overall scope and plans for their audit. The Audit/Compliance Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of Granite's internal controls, including internal control over financial reporting, and the overall quality of Granite's financial reporting. In addition, the Audit/Compliance Committee reviewed with management and the independent registered public accounting firm drafts of Granite's quarterly and annual financial statements and press releases prior to the public release of the quarterly earnings. In addition to the quarterly review, the Audit/Compliance Committee met with the Chief Executive Officer and the Chief Financial Officer to discuss the process adopted by management to enable them to sign the certifications that are required to accompany reports filed with the SEC.

Based on the review and discussions referred to above, the Audit/Compliance Committee recommended to Granite's Board of Directors that Granite's audited financial statements be included in Granite's Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Members of the Audit/Compliance Committee:

This Report of the Audit/Compliance Committee does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate this Report of the Audit/Compliance Committee by reference therein.

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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

Principal Accountant Fees and Services

Aggregate fees for professional services rendered for us by PricewaterhouseCoopers LLP for the years ended December 31, 2015 and December 31, 2014 were:

			2015		2014
	Audit Fees(1)		$3,116,000		$2,781,642
	Audit-Related Fees(2)		$53,000		$159,900
	All Other Fees(3)		$6,800		$6,800
	Total(4)		$3,175,800		$2,948,342

(1)	Audit Fees paid in 2014 and 2015 were for professional services rendered for the audits of Granite's consolidated financial statements, including audits of internal control over financial reporting, audits of subsidiary financial statements, quarterly financial reviews and audit related expenses.
(2)	Audit-Related Fees paid in 2014 and 2015 were for pre-qualifications and other professional services support. Audit-Related Fees paid in 2014 include professional services rendered for consultation on the new revenue recognition standard effective for Granite as of January 1, 2018.
(3)	All Other Fees include software licenses paid in 2014 and 2015.
(4)	2014 Fees are adjusted from last year’s approved fees to include approved expenses and certain additional fees billed.

Audit/Compliance Committee Pre-Approval Policies and Procedures

The Audit/Compliance Committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. During 2015, no services were provided to us by PricewaterhouseCoopers LLP other than in accordance with the pre-approval policies and procedures.

Based on its review of the non-audit services provided by PricewaterhouseCoopers LLP, the Audit/Compliance Committee believes that PricewaterhouseCoopers LLP's provision of such non-audit services is compatible with maintaining their independence.

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PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board of Directors is asking shareholders to approve an annual advisory resolution on executive compensation. The Board of Directors is providing such vote pursuant to Section 14A of the Exchange Act. The advisory vote is a non-binding vote on the compensation of our Named Executive Officers. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement. We received a favorable vote on a similar resolution at our 2015 Annual Meeting of Shareholders, with approximately 97% of our shareholders approving the resolution. The text of the resolution to be voted on at the annual meeting is as follows:

RESOLVED, that the shareholders of Granite Construction Incorporated approve, on an advisory basis, the compensation of the Company's Named Executive Officers as disclosed in the proxy statement for the Company's 2016 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities Exchange Act of 1934, as amended (which disclosure includes the Compensation Discussion and Analysis section, the Summary Compensation Table for 2015 and the related compensation tables and narrative disclosure within the Executive and Director Compensation and Other Matters section of the proxy statement).

The Company urges you to read the disclosure under "Compensation Discussion and Analysis," which begins on page 16 and discusses how our compensation policies and procedures implement our pay-for-performance compensation philosophy. You should also read the Summary Compensation Table and other related compensation tables and narrative disclosure which provide additional details about the compensation of each individual who served as our Chief Executive Officer, each individual who served as our Chief Financial Officer, our three other most highly-compensated executive officers for fiscal 2015 who were serving as such at December 31, 2015. We have designed our executive compensation structure to attract, motivate and retain executives with the skills required to formulate and implement the Company's strategic objectives and create shareholder value. We believe that our executive compensation program is reasonable, competitive and strongly focused on pay for performance principles, and provides an appropriate balance between risk and incentives. In particular, key elements of our executive compensation program are:

●	Market competitive base salaries, with the 50th percentile of comparable positions in the market as the starting point;
●	Actual pay levels reflecting market data, individual experience, tenure and ability to impact business and financial results;
●	Short-term and long-term goals aligned with the best interests of shareholders, with cash and stock-based incentives earned upon the attainment of pre-established financial and non-financial goals;
●	A comprehensive benefits program which is available to all salaried employees and includes: medical, dental, vision, life, accidental death and dismemberment insurance, short-term and long-term disability insurance, paid vacation and holiday pay; and
●	Eligibility, along with other key management employees, to participate in our Non-Qualified Deferred Compensation Program and a program offering periodic medical examinations.

The vote regarding the compensation of the Named Executive Officers described above, referred to as a "say-on-pay advisory vote," is advisory, and is therefore not binding on the Company, the Compensation Committee or the Board of Directors. Although non-binding, the Compensation Committee and the Board of Directors value the opinions that shareholders express in their votes and will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs as they deem appropriate.

BOARD OF DIRECTORS RECOMMENDATION

The Board of Directors unanimously recommends a vote "FOR" the approval of the compensation of the Named Executive Officers as disclosed in this proxy statement and as described above pursuant to the compensation disclosure rules of the Exchange Act.

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PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit/Compliance Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP to serve as Granite's independent registered public accounting firm to perform the audit of our financial statements for the fiscal year ending December 31, 2016. PricewaterhouseCoopers LLP and its predecessor, Coopers & Lybrand, have been our auditors since 1982.

A representative of PricewaterhouseCoopers LLP will be present at the annual meeting. He or she will be given the opportunity to make a statement if he or she desires and will be available to respond to appropriate shareholder questions.

Although ratification is not required by Granite's bylaws or otherwise, the Board is submitting the selection of PricewaterhouseCoopers LLP to our shareholders for ratification as a matter of good corporate practice. If shareholders do not ratify the appointment of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm, the Audit/Compliance Committee will reconsider the appointment. Even if the selection is ratified, the Audit/Compliance Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year it if determines that such a change would be in the best interest of Granite and our shareholders.

BOARD OF DIRECTORS RECOMMENDATION

The Board of Directors unanimously recommends a vote "FOR" the ratification of the appointment by the Audit/Compliance Committee of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm for the fiscal year ending December 31, 2016.

SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE 2017 ANNUAL MEETING OF SHAREHOLDERS

Under Granite's bylaws, director nominations and proposals for other business to be presented at the annual shareholder meeting by a shareholder may be made only if that shareholder is entitled to vote at the meeting, timely gave the required notice, and was a shareholder of record at the time when he or she gave the required notice. The required notice must be in writing, must contain the information specified in our bylaws, and must be received at our principal executive offices, addressed to the Corporate Secretary, not less than 120 days prior to the first anniversary of the date the proxy statement for the preceding year's annual meeting of shareholders was released to shareholders. If no meeting was held in the previous year, the date of the annual meeting is changed by more than 30 calendar days from the previous year, or in the event of a special meeting, to be on time, the notice must be delivered by the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public announcement of the date of the meeting was made.

Separate from the requirements in our bylaws, you may submit proposals on matters appropriate for shareholder action at our annual meeting of shareholders in accordance with Rule 14a-8 promulgated under the Exchange Act ("Rule 14a-8"). Rule 14a-8 entitles a shareholder to require us to include certain shareholder proposals in Granite's proxy materials if the shareholder meets certain eligibility and timing requirements set forth in Rule 14a-8.

Pursuant to Granite's bylaws and Rule 14a-8, to be considered for inclusion in Granite's proxy statement or otherwise presented at our 2017 annual meeting of shareholders, a shareholder nomination or proposal must be received by our Secretary at Granite's principal executive offices on or before Tuesday, December 27, 2016.

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HOUSEHOLDING

As permitted by the Exchange Act, only one copy of the Notice of Internet Availability of Proxy Materials or proxy materials is being delivered to shareholders residing at the same address, unless any shareholder has notified us of its desire to receive multiple copies of the Notice of Internet Availability of Proxy Materials or proxy materials, as applicable. This is known as householding. We will promptly deliver, upon oral or written request, a separate copy of the Notice of Internet Availability of Proxy Materials or the proxy materials, as applicable, to any shareholder residing at a shared address to which only one copy was mailed. Requests for additional copies of the Notice of Internet Availability of Proxy Materials or proxy materials, or requests to receive multiple or single copies of the Notice of Internet Availability of Proxy Materials or proxy materials at a shared address in the future, should be directed to: Granite Construction Incorporated, 585 West Beach Street, Watsonville, California 95076, Attention: Investor Relations Department, Telephone: 831.724.1011.

FORM 10-K

Copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (excluding exhibits) filed with the SEC are available, without charge, upon written request to Granite Construction Incorporated, 585 West Beach Street, Watsonville, California 95076, Attention: Investor Relations Department. Exhibits to the Annual Report on Form 10-K will be furnished upon payment of a fee of $0.25 per page to cover our expenses in furnishing the exhibits.

OTHER MATTERS

As of the date of this proxy statement, the only matters that management intends to present or knows that others will present at the meeting have been included in this proxy statement. If any other matters are properly presented at the meeting, or any adjournment, your shares will be voted in the discretion of the persons named on your proxy card.

Dated: April 26, 2016

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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
	KEEP THIS PORTION FOR YOUR RECORDS
	DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting & Proxy Statement and, Annual Report (which includes a copy of the Form 10-K) are available at www.proxyvote.com

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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
	KEEP THIS PORTION FOR YOUR RECORDS
	DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting & Proxy Statement and, Annual Report (which includes a copy of the Form 10-K) are available at www.proxyvote.com

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*** Exercise Your Right to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on June 09, 2016

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— Before You Vote —
How to Access the Proxy Materials

— How To Vote —
Please Choose One of the Following Voting Methods

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Voting items

The Board of Directors recommends you vote FOR the following:
1.	Election of Directors
	Nominees
1a.	William G. Dorey
1b.	William H. Powell
1c.	Claes G. Bjork
The Board of Directors recommends you vote FOR proposals 1d, 2 and 3.
1d.	To ratify the directorship of Michael F. McNally, appointed by the Board on February 10, 2016.
2.	Advisory vote to approve executive compensation of the named executive officers.
3.	To ratify the appointment by the Audit/Compliance Committee of PricewaterhouseCoopers LLP as Granite's independent registered public accounting firm for the fiscal year ending December 31, 2016.

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