The Annual Meeting of Shareholders of Astec Industries, Inc., a Tennessee corporation, will be held at the Company’s offices at 4101 Jerome Avenue, Chattanooga, Tennessee, on May 3, 2012,April 25, 2013, at 10:00 a.m., Chattanooga time, for the following purposes:

Only shareholders of record at the close of business on February 23, 201215, 2013 are entitled to notice of, and to vote at, the Annual Meeting.  The transfer books will not be closed.  A complete list of shareholders entitled to vote at the Annual Meeting will be available for inspection by shareholders at the Company’s offices from March 22, 20122013 through the Annual Meeting.

The proxy appointment is solicited by and on behalf of the Board of Directors of Astec Industries, Inc. for use at its Annual Meeting of Shareholders to be held on May 3, 2012,April 25, 2013, at 10:00 a.m. Chattanooga time and at any adjournments thereof.  The Annual Meeting will be held at the Company’s offices at 4101 Jerome Avenue, Chattanooga, Tennessee.

A majority of the outstanding shares of Common Stock entitled to vote on any proposal at the Annual Meeting, either present or represented by proxy, constitutes a quorum for the Annual Meeting. A quorum is necessary to conduct business at the Annual Meeting. The presence, in person or by proxy, of holders of Common Stock representing a majority of the number of votes entitled to be cast on a specific proposal is required to consider that proposal at the Annual Meeting. Even if a quorum is established for the Annual Meeting, it is possible that a quorum may not be established for a specific proposal presented at the Annual Meeting. You will be considered part of the quorum if you attend the Annual Meeting in person, vote via a toll-free telephone number, vote via the internet or vote by proxy.  Abstentions and votes withheld from director nominees count as “shares present” at the Annual Meeting for purposes of determining a quorum for the Annual Meeting, but broker non-votes do not count as “shares present” at the Annual meeting for purposes of determining a quorum for any proposal, including the election of directors.

The affirmative vote of the holders of a majority of the shares of Common Stock represented and entitled to vote in the election of directors at the Annual Meeting at which a quorum is present is required for the election of each of the director nominees. Withholding authority to vote with respect to any one or more director nominees will constitute a vote against such nominee(s).

The approval of the non-binding resolution to approve the compensation of our executive officers and the ratification of the independent registered public accounting firm requires that the votes cast in favor of the matter exceed the votes cast opposing the matter.  Abstaining to vote with respect to either of these matters will not constitute a vote for or against either matter.

Broker non-votes do not count as votes cast, and therefore will not affect the voting result as to any matter, including the election of directors. A broker non-vote occurs when a broker or other nominee who holds shares for another does not vote on a particular item because the nominee does not have discretionary authority to vote on that item and has not received instructions from the owner of the shares.

The telephone and internet voting procedures are designed to authenticate votes cast by use of a personal identification number.  These procedures enable shareholders to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. If your shares are held in the name of a bank or broker, the availability of telephone and internet voting will depend on the voting processes of the applicable bank or broker; therefore, it is recommended that you follow the voting instructions on the form you receive.

 

If you properly sign and return your proxy card or complete your proxy via the telephone or internet (and such proxy is not later revoked), your shares will be voted at the Annual Meeting in accordance with the directions given. In voting by proxy with regard to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees or withhold your votes as to specific nominees.  In voting by proxy with regard to the non-binding resolution to approve the compensation of our executive officers and the ratification of the selection of the independent auditor, you may vote for or against the proposal, or you may abstain from voting.  You should specify your choices when voting by proxy.  If you return a signed proxy card without indicating your vote with regard to the matters to be voted upon, the shares represented by proxy will be voted “FOR” the election of each of the nominees for director, “FOR” the non-binding resolution to approve the compensation of our executive officers and “FOR” the ratification of the independent registered public accounting firm.

A shareholder of record who submits a proxy pursuant to this solicitation may revoke it at any time prior to its exercise at the Annual Meeting by (i) submitting written notice to the Secretary of the Company at the Company’s address shown above, (ii) properly submitting to the Company (by mail, telephone or internet) a proxy bearing a later date, or (iii) attending the Annual Meeting and voting in person.

The Board of Directors of the Company is divided into three classes, with the term of office of each class ending in successive years.  The terms of directors of Class IIIII expire with this Annual Meeting.  The directors of Class IIII and Class III will continue in office until the 20132014 and 20142015 annual meetings of shareholders, respectively.  At the present time, there are three directors serving in each Class.  In anticipation of the Annual Meeting and the implementation of the leadership succession plan recently adopted by the Company, as described in more detail below, the Board of Directors recently increased the size of Class III from three directors to four directors, and as a result there is currently one vacancy in Class III.  The shareholders are being asked to vote for the election of threefour directors to serve in Class II.III.

The persons appointed as proxies will vote the shares represented by the proxy appointment in favor of the election to the Board of Directors of each of the threefour Class IIIII nominees whose names appear below, unless the authority to vote for any or all of the nominees is withheld or such appointment has previously been revoked.  It is anticipated that management shareholders of the Company will submit a proxy granting authority to vote their shares for the election of all the nominees.  Each Class IIIII director will be elected to hold office until the 20152016 annual meeting of shareholders and thereafter until his successor has been duly elected and qualified. In the event that any nominee is unable to serve (which is not anticipated), the persons appointed as proxies will cast votes for the remaining nominees and for such other persons as they may select.

This proposal provides our shareholders with the opportunity to cast an advisory vote on the Company’s executive compensation program (commonly known as a “say-on-pay” proposal)., as required by Section 14A of the Securities Exchange Act of 1934.

As discussed in the Compensation Discussion and Analysis beginning on page 12,10, we have designed our executive compensation program to attract and retain key executives who are critical to our future success and the creation of shareholder value.  We believe that both short-term and long-term incentive compensation opportunities provided to executive officers are directly aligned with our performance, and that our compensation program is structured to ensure that a significant portion of executives’ compensation opportunities is directly related to achievement of financial and operational goals and other factors that impact shareholder value.

The Board invites you to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation beginning on page 20,18, and cast a vote to approve the Company’s executive compensation programs through the following resolution:

“Resolved, that the shareholders approve the compensation of the Company’s named executive officers, including the Company’s compensation philosophy, practices and principles, as discussed and disclosed in the Compensation Discussion and Analysis, the executive compensation tables, and any narrative compensation disclosure contained in this Proxy Statement.”

While the vote does not bind the Board to any particular action, the Board values the input of our shareholders, and will take into account the outcome of this vote in considering future compensation decisions.  The Board has adopted a policy providing for annual say-on-pay advisory votes. Unless the Board modifies this policy, the next say-on-pay advisory vote will be held at our 2014 Annual Meeting.

The Audit Committee of the Board of Directors has appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012.2013. Ernst & Young LLP served as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011,2012, and the services it provided to the Company and its subsidiaries in the fiscal year ending December 31, 20112012 are described under “Audit-Related Matters” below.

We are asking our shareholders to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012.2013. Although ratification is not required by our Bylaws or otherwise, the Board of Directors is submitting the selection of Ernst & Young LLP to our shareholders for ratification as a matter of good corporate practice.

In the event shareholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee and the Board of Directors. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

The following section sets forth the names of the nominees and of the Company’s current directors as of the date of the Annual Meeting, their ages, the year in which they were first elected directors, their positions with the Company, their principal occupations and employers for at least the last five years, any other directorships held by them in companies that are subject to the reporting requirements of the Securities Exchange Act of 1934 or any company registered as an investment company under the Investment Company Act of 1940.  For information concerning membership on Committees of the Board of Directors, see “Corporate Governance—Board Committees” below.

Mr. Frierson, based on his experience as a CEO of a public company for more than 30 years and his service as a Director of the Company for 1819 years, provides the Board with valuable strategic planning and risk assessment experience.  Mr. Frierson’s knowledge and experience in manufacturing is also valuable to the Company.

Mr. Tellock, who serves as the financial expert of the Company’s Audit Committee and has previously served as an audit manager of a major accounting firm, provides the Board with extensive knowledge and experience with respect to financial reporting and risk assessment.  Mr. Tellock’s knowledge of manufacturing and marketing of construction equipment both domestically and internationally is also very valuable to the Company.

Mr. Baker’s strong background in all aspects of executing acquisitions, both in the U.S. and internationally, are valuable to the Company.  He also has over 30 years of experience in strategic planning and operating decisions for middle market companies in a variety of industries.  Mr. Baker has a financial background and has had a wide range of experience in financial reporting for publicly owned companies during his career.  He has served as an independent director on the audit committees of two public companies, had primary responsibility for the financial reporting of a public company and also worked with several public companies during his career with Arthur Andersen & Co.

Mr. Gehl offers a broad range of experiences in both strategic planning and management, having served as the CEO of a publicly owned construction equipment manufacturing company for 16 years.  Mr. Gehl’s manufacturing, marketing and financing knowledge is very valuable to the Company.

Mr. Casey provides valuable experience and relationships within the steel industry, given that Mr. Casey served as the CEO of a publicly traded steel manufacturing company for 11 years and served as the Chairman of the Steel Manufacturers Association.  Steel is a primary raw material of Astec’s manufacturing processes and a critical cost component.  Mr. Casey’s manufacturing knowledge and understanding of the world market and supply of steel is very valuable to the Company.

Mr. Dorey has extensive experience within the infrastructure construction industry and his knowledge and understanding of the industry and our customer needs provides valuable insight to the Company.

The Company's Common Stock is traded in the Nasdaq National Market under the symbol “ASTE.”  Nasdaq requires that a majority of the directors be “independent directors,” as defined in the Rule 5605(a)(2) of the Nasdaq Marketplace Rules, which we refer to as the Nasdaq Rules.  Generally, a director does not qualify as an independent director if the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company.  The Board has affirmatively determined by resolution that current directors (including nominees for re-election) Gehl, Casey, Frierson, Sansom, Tellock, Dorey and Baker, which represents a majority of the directors, have no other direct or indirect relationships with the Company and therefore are independent directors on the basis of the Nasdaq Rules and an analysis of all facts specific to each director. The Board also determined that Ronald Green, who served as a director of the Company last year until his term expired at the Company’s shareholder’s meeting in April 2011, was independent during such period. The Board has affirmatively determined by resolution that the Company must have two or more regularly scheduled executive session meetings each year attended solely by these independent directors.

As is common practice among public companies in the United States, the Company’s PresidentChief Executive Officer currently serves as Chairman of the Board.  In his position as President,CEO, Dr. Brock has primary responsibility for the day-to-day operations of the Company and provides consistent leadership on the Company’s key strategic objectives.  In his role as Chairman of the Board, he sets the strategic priorities for the Board, presides over its meetings and communicates its strategic findings and guidance to management.  The Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy and is important in unifying the Company's strategy behind a single vision.  In addition, we have found that our PresidentCEO is the most knowledgeable member of the Board regarding risks the Company may be facing and, in his role as Chairman, is able to facilitate the Board’s oversight of such risks.

To ensure balance, however, the independent members of the Company’s Board have selected Mr. Sansom as Lead Independent Director to preside over meetings of independent directors.  Additionally, as noted previously, seven of the nine current directors are independent.  With a supermajority of independent directors, an Audit Committee, Compensation Committee and Nominating and Governance Committee each comprised entirely of independent directors, and a presiding Lead Independent Director to oversee all meetings of the non-management directors, the Company’s Board of Directors believes that its existing leadership structure provides for an appropriate balance that best serves the Company and its shareholders. The Company’s Board of Directors will periodically review its leadership structure to ensure that it remains the optimal structure for the Company and its shareholders.

As part of its general oversight duties, the Board oversees the Company’s risk management. Management informs the Board of the operational and financial risks the Company is facing, and the Board reviews the steps that management is taking to address and mitigate such risks. We believe the Board’s current leadership structure facilitates the Board’s oversight of the Company’s risk management.

The Company’s expectation is that all directors attend all meetings of the Board of Directors and committees on which they serve and the annual meeting of shareholders.  The Board has affirmatively determined by resolution that it encourages all members of the Board to attend each annual meeting of shareholders, particularly those directors who are nominees for election at any such meeting.  During 2011,2012, the Board of Directors held eightsix meetings, and the Board’s committees held the meetings described below.  During 2011,2012, each incumbent director attended at least 75% of the aggregate of: (1) the total number of meetings of the Board of Directors held during the period for which he has been a director and (2) the total number of meetings held by all committees of the Board on which he served during the periods that he served.  All of the Company’s directors were in attendance at the Company’s 20112012 annual meeting of shareholders.

During 2011,2012, the Company’s Board of Directors had an Executive Committee, an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.  Certain information regarding the Board’s committees is set forth below.

The Executive Committee is authorized to act on behalf of the Board of Directors on matters that may arise between regular meetings of the Board upon which the Board of Directors would be authorized to act.  During 2011,2012, the members of the Executive Committee were Dr. Brock (Chairman) and Messrs. Smith and Frierson.  The Executive Committee did not meet during 2011.2012.  The current members of the Executive Committee are Dr. Brock (Chairman) and Messrs. Smith and Frierson.

The Compensation Committee’s primary processes for establishing and overseeing executive compensation can be found in the Compensation Discussion and Analysis section beginning on page 1210 of this proxy statement.  Dr. Brock, our Chief Executive Officer and Chairman of the Board, typically attends Compensation Committee meetings but is not present for the executive sessions or for any discussion of his own compensation.  Dr. Brock gives the Compensation Committee a performance assessment and compensation recommendation for each of the other named executive officers. Those recommendations are then considered by the Compensation Committee.  Directors’ compensation is established by the Board of Directors.

During 2011,2012, none of the members of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K, andS-K. In addition, during 2012, none of our executive officers served on the board of directors or the compensation committee (or equivalent) of the board of directors of another entity whose executive officer(s) served on our Board of Directors or our Compensation Committee, and none of our executive officers served on the board of directors of another entity whose executive officer(s) served on our Compensation Committee.  None of the members of the Compensation Committee was an officer or employee of the Company during 20112012 or at any time in the past.

The Nominating and Corporate Governance Committee interviews, evaluates, nominates and recommends individuals for membership on the Company’s Board and committees thereof, and is responsible for establishing and periodically reviewing and revising the Company’s corporate governance policies and principles.  Messrs. Frierson (Chairman), Sansom, Tellock and TellockDorey were members of the Nominating and Corporate Governance Committee during all of 2011, and Mr. Green served as a committee member last year until his term on the Board expired at the Company’s shareholder’s meeting in April 2011.  Mr. Dorey joined the Compensation Committee following his election to the Board at the shareholder’s meeting in April 2011.2012.  The Nominating and Corporate Governance Committee held two meetingsone meeting in 20112012 and has approved the Director nominations submitted in this Proxy Statement.  The current members of the Nominating and Corporate Governance Committee are Messrs. Frierson (Chairman), Sansom, Tellock and Dorey.  All members of the Nominating and Corporate Governance Committee are independent (as independence is defined in the Nasdaq Rules).

The Nominating and Corporate Governance Committee acts under a written charter adopted by the Board of Directors.   A copy of the current Nominating and Corporate Governance Committee’s charter adopted as of July 29, 2010 is available on the Company’s website at www.astecindustries.com.

The Nominating and Corporate Governance Committee will consider written recommendations from shareholders for Company nominees to the Board.  A shareholder who wishes to recommend a person to the Committee for nomination by the Company must submit a written notice by mail to the Nominating and Corporate Governance Committee c/o the Corporate Secretary, Astec Industries, Inc. at 1725 Shepherd Road, Chattanooga, Tennessee 37421.  Such a written recommendation must be received no later than 120 days in advance of the annual meeting of shareholders and should include (i) the candidate’s name, business address and other contact information, (ii) a complete description of the candidate’s qualifications, experience and background, as would be required to be disclosed in the proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, (iii) a signed statement by the candidate in which he or she consents to being named in the proxy statement as a nominee and to serve as a director if elected, (iv) a signed statement authorizing the Company to perform a background search on the candidate and (v) the name and address of the shareholder(s) of record making such a recommendation.

The Nominating and Corporate Governance Committee recommends nominees for election to the Board based on a number of qualifications, including but not limited to, independence, character and integrity, diversity, financial literacy, level of education and business experience, sufficient time to devote to the Board, and a commitment to represent the long-term interests of the Company’s shareholders. There are no differences in the manner in which the Nominating and Corporate Governance Committee evaluates a candidate that is recommended for nomination for membership on the Company’s Board by a shareholder.  The Nominating and Corporate Governance Committee has not received any recommended nominations from any of the Company’s shareholders in connection with the Annual Meeting.

The Nominating and Corporate Governance Committee identifies potential Company nominees for director through a variety of business contacts, including current executive officers, directors, community leaders and shareholders.  The Committee may, to the extent it deems appropriate, retain a professional search firm and other advisors to identify potential nominees for director.

The Nominating and Corporate Governance Committee evaluates candidates to the Board by reviewing their biographical information and qualifications.  If the Nominating and Corporate Governance Committee determines that a candidate is qualified to serve on the Board, such candidate is interviewed by at least one member of the Nominating and Corporate Governance Committee and the Chief Executive Officer.  Members of the Board also have an opportunity to interview qualified candidates. As described above, the Committee will also consider candidates recommended by shareholders.  The Nominating and Corporate Governance Committee then determines, based on the background information and the information obtained in the interviews, whether to recommend to the Board that the Company nominate a candidate for approval by the shareholders to fill a directorship.  With respect to an incumbent director whom the Nominating and Corporate Governance Committee is considering as a potential nominee for re-election, the Committee reviews and considers the incumbent director’s service to the Company during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Company in addition to such person’s biographical information and qualifications. The Nominating and Corporate Governance Committee gives strong consideration to a wide range of diversity factors as a matter of practice when evaluating candidates to the Board and incumbent directors, but the Committee does not have a formal policy regarding Board diversity.

In evaluating candidates to the Board, the Nominating and Corporate Governance Committee also takes into account the skill sets that are needed to balance and complement the skill sets of other candidates and members of the Board, and the skills and expertise of a candidate that facilitate the Company’s compliance with the rules of the Securities and Exchange Commission and the National Association of Securities Dealers.Financial Industry Regulatory Authority (FINRA).

The Board is nominating threefour individuals for election as Directors, all of whomDirectors.  Of the four nominees, three are current Directors.  Benjamin Brock is standing for election by the shareholders for the first time.  The Nominating and Corporate Governance Committee recommended each of the threefour nominees to the Board.

The Board of Directors has unanimously adopted a process to facilitate written communications by shareholders to the Board. Shareholders wishing to write to the Board of Directors of the Company or a specified director or committee of the Board should send correspondence to the Secretary of the Company, Astec Industries, Inc. at 1725 Shepherd Road, Chattanooga, Tennessee 37421.  All written communications received in such manner from shareholders of the Company shall be forwarded to the members of the Board of Directors to whom the communication is directed or, if the communication is not directed to any particular member(s) or committee of the Board of Directors, the communication shall be forwarded to all members of the Board of Directors.

In the paragraphs that follow, we will give an overview and analysis of our compensation programs and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions.  This section includes, among other things, an explanation of the overall objectives of our compensation program, what it is designed to reward, and each element of the compensation that we pay.  Later in this proxy statement under the heading “Executive Compensation” you will find a series of tables containing specific information about the compensation earned or paid in 20112012 to the following individuals, who we refer to as our named executive officers:

The discussion below is intended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.

Our objectives with respect to the Company’s executive compensation program are to:

In order to be effective, we believe our executive compensation program should meet the needs of the Company, our employees and our shareholders.  We seek to provide direct compensation that is competitive within the marketplace, and believe that a portion of total compensation should be performance-based and in the form of equity awards.

Our Compensation Committee of the Board of Directors, composed entirely of independent directors, reviews, determines and approves the base salaries and other compensation of our executive officers, including our named executive officers.  Our Compensation Committee is also responsible for making recommendations to the Board with respect to the Company’s executive compensation policies and the adoption of stock and benefit plans.  As a starting point, base salary increases when given, for named executive officers, when given, historically have reflected a cost of living adjustment, with further increases approved by the Compensation Committee based on a subjective assessment of a number of factors.  As more fully described below, the factors on which this subjective assessment is based fall into three general categories:  Companycompany performance factors, individual performance factors and competitive salary practices.

It is important to emphasize that the subjective assessment of these factors is qualitative, rather than quantitative, and there are no specific weightings or objective criteria associated with any of the factors.  In determining base salaries for the named executive officers each year, the Compensation Committee relies upon Dr. Brock, the Company’s President and Chief Executive Officer, to provide evaluations of the other named executive officers (each of whowhom report directly or indirectly to Dr. Brock) and to provide recommendations regarding whether adjustments to base salaries are warranted. In determining Dr. Brock’s base salary each year, the Compensation Committee relies on its own observations and assessments with respect to Dr. Brock’s individual performance and the overall results of his leadership of the Company.

Our Compensation Committee’s policy is to set senior executive pay at sufficiently competitive levels to attract, retain, and motivate highly talented individuals to contribute to our goals, objectives, and overall financial success.  We believe that the Company’s executive compensation program provides an overall level of compensation opportunity that is competitive within the construction equipment manufacturing industry, as well as with a broader group of companies of comparable size and complexity.  Actual compensation levels may be greater or less than average competitive levels in similar companies based upon annual and long-term Company performance, as well as individual performance.

While market competitiveness is important, it is not the only factor we consider when establishing compensation opportunities of our named executive officers.  Actual pay decisions are made following a review and discussion of the financial and operational performance of our businesses, individual performance, and competitive salary practices which address retention concerns and internal pay equity.

Compensation decisions for a particular year are made following a review of the financial and operational performance of the Company and its business groups for the prior year. In recommending and approving base salaries, the Chief Executive Officer and the Compensation Committee review and assess the Company’s performance, with an emphasis on earnings, return on capital employed and cash flow on capital employed.  These performance criteria are direct reflections of the Company’s profitability and operating efficiency, which the Company believes are key drivers for creating shareholder value.

Company performance factors typically weigh more heavily in the determination of annual cash and long-term incentive compensation than in the determination of base salary adjustments for named executive officers.  As more fully described below, base pay rates for the named executive officers were increased in 20112012 over 20102011 levels after consideration of the improvement in the Company’s performance in 20102011 as compared the 20092010 and consideration of the current economic environment in which the Company operates.

The subjective factors considered by the Compensation Committee in relation to a named executive officer’s individual performance for the previous year include management, leadership, staff development, contribution to the Company’s growth, scope of responsibilities and experience and an assessment of the named executive officer’s future performance potential.

As discussed above, the Compensation Committee’s policy is to set named executive officer compensation at sufficiently competitive levels within the construction equipment manufacturing industry, as well as within a broader group of companies of comparable size and complexity, in order to attract, retain and motivate named executive officers.  In the past, the Company has engaged the services of a compensation consultant, and instructed them to conduct a market analysis and to assist the Company in developing a long-term incentive plan and its overall executive compensation program.  For 2011,wages paid during 2012, the Compensation Committee continued its past compensation program without significant deviation; however, the committee did not engage a compensation consultant nor did it conductduring 2012 to perform a market analysis and specific peer group review but continued its existing compensation program without significant deviation.  For 2012, the Compensation Committee intends to again engage the services of a compensation consultant to conduct a market analysis and peer group survey, and to make recommendations with respect to our executive compensation program,for use in evaluating 2013 salary adjustments in order to ensure that our compensation remains at sufficiently competitive levels within our industry.

At the Annual Meeting of Shareholders on April 28, 2011,May 3, 2012, over 75%95% of the shares voted were cast to approve the compensation of the Company’s named executive officers, as discussed and disclosed in the 20112012 Proxy Statement.  The Board and the Compensation Committee appreciate and value the views of our shareholders.  In consideringAlthough the results of this advisory vote on executive compensation the Committee concludedshows that while the compensation paid to our executive officers and the Company's overall pay practices were supported by over three quartersa vast majority of the shares voted, the CompanyCommittee decided it should revisit its executive pay practices to determine if enhancements could be achieved.

In light of this decision, our Compensation Committee has determined to engageengaged an independent compensation consultant to conduct a market analysis and peer group survey, and to make recommendations with respect to our executive compensation practices. The Compensation Committee anticipates havinghad the results of this study available for their consideration prior to awarding bonusesmaking base salary adjustments for 2012 performance and any pay rate adjustments as of January 1,executive officers for 2013.  The Compensation Committee also approved a new bonus plan for corporate officers to provide incentives for 2013 performance. Going forward, future advisory votes on executive compensation will serve as an additional tool to guide the Board and the Compensation Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its stockholders.

Also at the Annual Meeting of Shareholders on April 18,28, 2011, our shareholders expressed a preference that advisory votes on executive compensation every year.  Consistent with this preference, the Board determined to implement an advisory vote on executive compensation every year until the next required vote on the frequency of stockholder votes on the compensation of executive officers, which is scheduled to occur at the 2017 Annual Meeting.

The Company’s executive officer compensation program is comprised of base salary, annual cash incentive compensation, and long-term incentive compensation in the form of equity grants.  We also provide our executive officers certain perquisites and executive benefits, including contributions to the Company’s Supplemental Executive Retirement Plan, as well as other benefits that are generally available to all employees of the Company, including medical and 401(k) plans.

Base salary is the fixed component of our named executive officers’ total direct compensation, as opposed to at-risk compensation based on performance.  The Compensation Committee reviews base salaries on an annual basis and approves salary levels after a subjective assessment of a number of factors as discussed above.  The Compensation Committee increased the salaries of our named executive officers as of January 1, 2011.2012.  Each of our named executive officers with the exception of Mr. Richmond received a cost of living adjustment to their base salary of between 2.6%3.03% to 2.8%3.57%, effective January 1, 2011.2012.  The most recent previous base salary adjustment for these executives was on January 1, 2009.  Mr. Richmond, who is President of one of the Company’s operating subsidiaries, received a 3% base salary increase effective January 1, 2011.  His most recent previous base salary adjustment was on January 1, 2009.  Mr. Silvious also received a 14.6% increaseAdditionally, in his base salary effective August 1, 2011, upon2012, coincident with his promotion to Company President and Chief FinancialOperating Officer, Mr. Smith received an additional pay rate adjustment of the Company.  He had previously served as the Company’s Corporate Controller for a number of years.$35,000 per annum.

Annual cash incentive compensation rewards an executive officer’s individual performance as well as the overall performance of the Company for a given year.  These profit sharing payments for Messrs. Brock, Hall, Silvious Smith and Campbell,Smith, each of whom is employed at the Astec Industries, Inc. level, are discretionary, but are historically consistent with the percent distributions earned by our subsidiary Presidents.

The Company generally uses two financial metrics—return on capital employed and cash flow on capital employed—in determining the named executive officers’ annual bonuses.  These metrics are the key indicators of proper capital management and are critical to the Company’s success. Although annual bonuses for the named executive officers arehave historically been discretionary, the Company believes the annual bonus program createscreated a performance driven environment with a focus on the Company’s overall financial performance as a whole, rather than on individual achievements. Beginning in 2013, however, the Compensation Committee has adopted a formula driven cash incentive plan for its corporate officers.  The new plan calculates awards based on a mix of return on capital employed, cash flow on capital employed and employee safety.  These elements are measured against pre-determined goals and achievement against those goals which drives a formula that calculates the amount of annual bonus paid.

Mr. Richmond hasPatek and Mr. Vig, in addition to their roles as Group Vice-Presidents also have direct responsibility for oneindividual subsidiaries of the subsidiaries, Roadtec,Company.  Mr. Patek serves as President of Telsmith, Inc.(“Telsmith”) and Mr. Vig serves as President of Kolberg-Pioneer, Inc. (“Roadtec”KPI”)  As such, Mr. Patek and serves as Roadtec’s president.  Mr. Richmond’s 2011Vig’s 2012 annual bonus opportunity isopportunities were pursuant to the incentive program for subsidiary presidents and is based on Roadtec’stheir individual subsidiary’s achievement of performance goals relating to return on capital employed (weighted 45%), cash flow on capital employed (weighted 45%), and  Roadtec’s safety record (weighted 10%).  For 2011,2012, if RoadtecTelsmith and KPI, respectively, met itstheir target goalgoals of 14% for each financial metric and met the safety goal, Mr. RichmondPatek and Mr. Vig would receive a bonus equal to 50% of histheir base salary, or $96,350, which is consistent with past practice of granting maximum annual bonusbonuses opportunities in an amount equal to 50% of an individual’s base salary for achievement of performance goals at the maximum performance level.  For 2011, Roadtec’s2012, Telsmith’s weighted average achievement on the three performance goals was 100%95%, and therefore Mr. RichmondPatek received a bonus equal to 48% of his base salary, or $110,156.  For 2012, KPI’s weighted average achievement on the three performance goals was 100%; therefore Mr. Vig received a bonus equal to 50% of his base salary, or $96,350.$116,000.  Additionally, as Mr. Patek and Mr. Vig each serve as Group Vice-Presidents in addition to their duties as individual subsidiary Presidents; they each were awarded an additional $10,000 discretionary bonus for their performance in fulfilling their additional Group Vice-President duties.

Through August 2012, Mr. Campbell has direct responsibility forSmith was the Company’s subsidiaries in the Mobile Asphalt groupGroup Vice President-Asphalt and the Underground group, and Mr. Smith hashad direct responsibility for the Company’s subsidiaries in the Asphalt group.Group.  In August, 2012 Mr. Smith was promoted to President and Chief Operating Officer of the Company.  Coincident with this promotion, Mr. Smith received a $35,000 increase in his annual salary rate. The Compensation Committee typically intends to provide Mr. Campbell and Mr. Smith with a discretionary bonus not normally exceeding the percentage of base salary bonus opportunities available to the presidents of the Company’s subsidiaries.  The bonus programs applicable to these individual subsidiaries, including the performance criteria, performance goals and maximum bonus opportunity, are generally consistent with the RoadtecTelsmith and KPI bonus program described above; however, in determining the actual amount of bonus to be awarded, the Compensation Committee relies on the Company’s Chief Executive Officer to provide evaluations of Mr. Campbell and Mr. Smith and to make specific recommendations regarding theirhis bonus amounts.amount.  The Committee retains discretion, however, to adjust the amount of bonus earned by Mr. Campbell and Mr. Smith based on the recommendation of the Company’s Chief Executive Officer and a subjective assessment of the Company performance factors and individual performance factors described above.  After the completion of this process and considering the current business environment in which the Company operates Messrs. Campbell and the additional duties assumed by Mr. Smith were eachduring 2012, Mr. Smith was awarded a discretionary bonus of $75,000,$100,000, or 29.2%36% of theirhis base salary for 2011,2012, as compared to the average bonus as a percent of base salary earned by subsidiary Presidents under the subsidiary bonus plan in 20112012 of 35.1%25%.

The Compensation Committee reviews the Company’s performance as a whole in determining the discretionary bonus for Dr. Brock and Messrs. Hall andMr. Silvious because they have responsibility for and oversee the entire Company’s operations. Messrs. HallMr. Silvious, the Company’s Vice President and Silvious, each of whom served as vice president and chief financial officer at points in timeChief Financial Officer during 2011, do2012, does not have the same level of direct impact on the Company’s operating results as Dr. Brock and therefore theirhis annual bonus as a percentage of base salary is generally lower than that of Dr. Brock’s.  In determining the bonuses for Dr. Brock and Messrs. Hall andMr. Silvious, the Compensation Committee reviewed the Company’s return on capital employed and cash flow on capital employed (the same metrics utilized for the subsidiary presidents). Additionally, the Compensation Committee made an overall subjective judgment of the Company performance factors and the individual performance factors described above.  After the completion of this process and considering the current business environment in which the Company operates, Dr. Brock and Messrs. Hall andMr. Silvious were awarded discretionary bonuses of $175,000, $20,000$160,000 and $40,000,$35,000, respectively for 2011.2012. These represent 31.3%, 8.5%28% and 26.2%21% of 20112012 base salaries of Dr. Brock and Messrs. Hall andMr. Silvious, respectively.  Mr. Hall’s bonus percentage was reduced significantly from prior years due to his decreased responsibilities.

The Company provides long-term incentives to its executive officers through its 2006 and 2011 Incentive Plans, which permit the grant of various equity based awards, including stock options, stock appreciation rights, restricted stock and performance awards that are payable in stock.  Grants of equity based compensation are designed to create a strong and direct link between executive officer pay and shareholder return and to enable executive officers to develop and maintain a long-term position in the Company’s common stock.  Awards are granted at our discretion based on Company performance, individual performance and the employee’s position with the Company.

In August 2006, the Company developed a long-term incentive program (the “2006 RSU Program”) for annual grants of restricted stock units (“RSUs”) to approximately 100 employees, including the named executive officers, based on the Company’s goal of increasing its earnings by 100% over a five-year performance period (fiscal year 2006 through fiscal year 2010).  The final RSU’s available under this program were granted in February 2011.  In October 2010, the Compensation Committee approved a successor program (the “2011 RSU Program”), which reserved a maximum of 700,000 RSUs that may be earned each year by employees of the Company and it’sits subsidiaries, including its named executive officers, based on achievement of earnings goals for the year at target levels for a five-year performance period (fiscal year 2011 through fiscal year 2015).  If the goals discussed below are met, the Compensation Committee grants a certain number of RSUs determined in its discretion to each of the Company’s key employees that participate in the program, including the named executive officers. The individuals with greater influence over the Company’s performance generally receive more RSUs. For example, Dr. Brock, as President and CEO, earns more RSUs than other employees because of his level of influence on Company operations. The Compensation Committee, in its discretion and after consideration of the recommendation of the Company’s Chief Executive Officer, determines the amount of RSUs granted to executive officers, including subsidiary presidents, each subsidiary president then divides the remainder allocated to his or her subsidiary among the subsidiary’s key employees. RSUs vest and convert into shares of the Company’s common stock five years from the grant date, subject to the individual’s continued employment (other than in certain cases, such as retirement after reaching age 65).  In addition, management will receive an additional award if the cumulative performance over the five-year period exceeds the cumulative goals.

Dr. Brock and Messrs. Hall, Silvious, CampbellSmith and Smith’sSilvious’s performance targets for 2009 and 2010 (under the 2006 RSU Program), and 2011 and 2012 (under the 2011 RSU Program), were based entirely on the performance of the Company as a whole, with performance targets based on net income and return on capital employed.employed and net income. The performance targets must be met each year, after considering any allowed carryover of prior year’s profits in excess of plan goals or carryback of current year’s profits in excess of plan goals to recoup awards not granted in previous years, in order to earn the RSUs.  The performance targets for both programs were established to provide incentive and rewards based on the Company achieving its goal of increasing its total net income by 100% over the 5-year period with 25% of the net income growth to come from acquisitions.  The final number of shares awarded to the Company’s officers is approved each year by the Compensation Committee.

If the net income goal is not met in one year, no RSUs are granted. However, if the Company misses the goal in one year, the Company can “carry back” net income earned in excess of the goal for any following year to meet the goal for such year. The Company can also “carry forward” net income earned in excess of the goal for one year into any of the following years in the five-year performance period. The number of RSUs granted to named executive officers for fiscal year 2011 included shares earned for 2010 performance as well as a five-year cumulative award equal to the average number of shares earned during the five-year period increased proportionally by the percentage the actual results exceeded the net income goal.  The Company exceeded the cumulative five year net income goal under the 2006 plan provisions by 3.9%.  A similar provision is in the 2011 RSU Program concerning awards earned for 2015.

In addition to achieving the net income goal, the Company (and Roadtec,Telsmith and KPI in the case of Mr. Richmond)Patek and Mr. Vig) must also attain a return on capital employed, as defined, of at least 14% for RSU grants to be earned by the named executive officers in each year.

Mr. Richmond’sPatek and Mr. Vig’s RSU grant isgrants are based upon the Company’s performance as described for the other named executive officers with respect to 25% of his award. The remaining 75% is based upon the performance of Roadtec,Telsmith and KPI, respectively, measured in the same manner as discussed above for the Company.

The Company and certain of its subsidiaries have met the earnings goals discussed above in each of the five years ending 2010 as well as the cumulative five year goal under the 2006 plan, and therefore the Company’s key employees have earned RSUs for those years (the grant is usually made in February of the following year).  RoadtecTelsmith and KP met its goaltheir goals for 2006, 2007, 2008, 2009, 2011 and 2012 but did not meet their goal for 2010 and 2011 as well asor the cumulative five year goal under the 2006 plan; however Roadtec did not meet its goal for 2009 until applying the carry back provisions due to excess 2010 earnings.  According, the RSU’s granted to Mr. Richmond in February 2011 included 2,250 RSU’s related 2009 plan goals.plan.  The Company did not meet the combined company overall goal for 2011 or 2012 and thus no RSU’s were granted to the named executive officers other than Mr. RichmondPatek and Mr. Vig for 2011.2011 or 2012.  Additionally, as stipulated in the plan’s provisions, Mr. Richmond’sPatek and Mr. Vig’s RSU’s granted for 2011 performance were reduced by 25% due to the Company not meeting its overall goal. The RSUs granted to the named executive officers for performance in prior years, based on the allocation determined in the Compensation Committee’s discretion, is as follows:

Executive officers are eligible for certain perquisites and additional benefits that are not available to all employees (but are available to many management level employees), including premiums for term life insurance for the Company’s CEO, Dr. Brock.  In addition, our executive officers are eligible for benefits under our Supplemental Executive Retirement Plan (“SERP”).  The SERP provides additional benefits to individuals whose retirement benefits are affected by the limit on the maximum amount of compensation which may be taken into account under the qualified pension and 401(k) plans and provides additional benefits on annual profit sharing distributions not recognized under the qualified plans. Additional details regarding perquisites and other benefits provided to our named executive officers are disclosed in the Summary Compensation Table and described in the accompanying narrative.

We believe the perquisites and additional benefits provided to our named executive officers are reasonable in light of industry practices and competitive with the perquisites provided to executive officers within our peer group.  We review the perquisites provided to our executive officers on an annual basis to ensure that we are providing benefits that align with our overall compensation goal of providing competitive compensation to our executive officers that maximizes the interests of our shareholders.

In establishing pay levels for our named executive officers, the Committee considers the impact of Section 162(m) of the Internal Revenue Code on the amount of compensation deductible by the Company.  Under current tax law, Section 162(m) imposes a $1 million limit (per “covered employee”) that a publicly traded company can deduct for compensation paid to the CEO and four other most highly compensated executive officers employed as of the end of any fiscal year.  This limitation does not apply to pay that qualifies as “performance-based compensation” (as defined under Section 162(m)).  In order to qualify as “performance-based”, compensation must, among other things, be based solely on the attainment of pre-established objective goals under a shareholder approved plan, with no positive discretion permitted when determining award payouts.

While our current annual incentive program is discretionary and therefore does not qualify as “performance-based compensation” under Section 162(m), the Committee generally seeks to structure long-term incentive arrangements for named executive officers to qualify for full tax deductibility under Section 162(m).  Our current long-term equity incentive program is structured so that all awards to our Chief Executive Officer will be fully deductible under Section 162(m).  Any options and stock appreciation rights granted under the 2011 Incentive Plan will be exempt from the deduction limit of 162(m).  The Compensation Committee may designate any other award granted under the 2011 Incentive Plan as performance-based in order to make the award fully deductible.  However, the Committee reserves the right to make awards outside of these plans or to provide compensation that does not qualify for full tax deductibility under Section 162(m) when deemed appropriate.

The Company considers the accounting implications of all aspects of its executive compensation program.  As a result of the provisions of FASB ASC Topic 718, we do not expect accounting treatment of differing forms of equity awards to vary significantly and, therefore, accounting treatment is not expected to have a material effect on our selection of forms of equity compensation.  In addition, accounting treatment is just one of many factors impacting plan design and pay determinations.  Our executive compensation program is designed to achieve the most favorable accounting and tax treatment possible as long as doing so does not conflict with intended plan design or program objectives.

The Company encourages executive stock ownership but does not currently have formal guidelines in place.  The Committee will periodically monitor executive officer stock ownership levels to determine whether ownership requirements are warranted.

This table provides information regarding compensation paid to or earned by our named executive officers for the fiscal years ended December 31, 2009,2010, December 31, 20102011 and December 31, 2011.2012.