What is the main change to the Post-Retirement Death Benefit Plan?

The main change is the termination of post-retirement death benefits for active elected officers. Instead of a future death benefit, they will receive a one-time cash payment representing the present value of that projected benefit.

When will these termination payments be made?

The termination cash payments are scheduled to be made in March 2008.

How are the termination payments calculated?

The payments are calculated using actuarial assumptions, including mortality, the discount rate used for defined benefit pension and post-retirement benefit plans as of December 31, 2006, and projected salary at retirement for active officers.

Does this affect the compensation of named executive officers?

Yes, the filing lists the specific termination cash payment amounts for several active named executive officers, including Robert J. Stevens, Christopher E. Kubasik, Robert B. Coutts, and Ralph D. Heath. These payments are noted as being substantially less than what the death benefit would have been under the prior plan terms.

What is the purpose of amending the Deferred Management Incentive Compensation Plan?

The DMICP was amended to allow participants the option to defer the termination cash payments received from the PRDB Plan amendment into their DMICP accounts, providing flexibility in how they manage this compensation.

LMT 8-K: Leadership Changes

Summary

Lockheed Martin Corporation (LMT) filed an 8-K on July 3, 2007, reporting amendments to its Post-Retirement Death Benefit Plan (PRDB Plan) and the Deferred Management Incentive Compensation Plan (DMICP). The primary amendment to the PRDB Plan, effective June 28, 2007, terminates the death benefit for active elected officers and replaces it with a one-time, lump-sum cash payment calculated based on the present value of the projected future death benefit. This change affects the company's named executive officers and certain retired officers, offering them a choice between the cash payment or continued participation for those eligible. The termination payments are scheduled for March 2008. This action aims to modify executive compensation structures, potentially reducing future liabilities for the company related to these benefits. The amendment also allows participants to defer these termination payments into their DMICP accounts, providing flexibility in managing their compensation. The filing includes the amended plans as exhibits. For investors, this indicates a shift in how post-retirement benefits are structured for key executives, with a move towards a more immediate cash settlement rather than ongoing future obligations.

Key Highlights

1Lockheed Martin amended its Post-Retirement Death Benefit Plan (PRDB Plan) to terminate death benefits for active elected officers.
2A one-time, termination cash payment will be issued to active officers, calculated as the present value of projected future death benefits.
3This change applies to elected officers and is effective from June 28, 2007.
4Retired elected officers eligible for PRDB benefits can choose between a cash payment or continued participation in the plan.
5Termination cash payments are scheduled for March 2008.
6The Deferred Management Incentive Compensation Plan (DMICP) was amended to allow deferral of these termination payments.
7Termination payments for active named executive officers are disclosed, with amounts ranging from $420,000 to $1,040,000.

LOCKHEED MARTIN CORP 8-K Report, Executive Changes (Jul 3, 2007)

Summary

Key Highlights

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