8-KLeadership ChangesCorporate ChangesExhibits & Filings

LOCKHEED MARTIN CORP 8-K Report, Executive Changes (Jan 29, 2010)

Filed January 29, 2010For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) filed an 8-K on January 29, 2010, detailing key executive compensation decisions and amendments to its corporate bylaws. The company's Board of Directors approved compensation arrangements for 2010, notably maintaining the base salaries of CEO Robert J. Stevens and newly appointed COO Christopher E. Kubasik at their existing levels for the third consecutive year. This voluntary salary freeze by top executives signals a cost-conscious approach during a period where general salary increases for other elected officers were also suspended, except for new appointments. Furthermore, the company amended its 2006 Management Incentive Compensation Plan (MICP), introducing a target percentage for the COO role and adjusting incentive ranges, indicating a refinement of its performance-based compensation structure. In addition to compensation, the filing highlights a significant amendment to Lockheed Martin's corporate bylaws concerning the calling of special stockholder meetings. Previously requiring a substantial majority (50%) of shares, the revised bylaws now permit a special meeting to be called by a single stockholder owning 10% or more of the company's shares, or by a group of stockholders collectively owning 25% or more. This change potentially empowers larger shareholders to convene special meetings more readily, subject to extensive disclosure requirements. Investors should note these changes as they impact corporate governance and shareholder engagement dynamics.

Key Highlights

  • 1CEO Robert J. Stevens and COO Christopher E. Kubasik voluntarily froze their base salaries for 2010, maintaining their 2009 rates.
  • 2All other elected officers' salaries were also frozen for 2010, with no merit or other increases planned unless for a new position.
  • 3The 2006 Management Incentive Compensation Plan (MICP) was amended to establish a target incentive percentage for the President and Chief Operating Officer position.
  • 4Amendments to the MICP also increased the upper range of possible incentive targets for non-officer employees from 55% to 60% of base pay.
  • 5The corporate bylaws were amended to lower the threshold for stockholders to call a special meeting, now requiring 10% ownership by an individual or 25% by a group, down from 50%.
  • 6The amended bylaws detail extensive disclosure requirements for stockholders seeking to call a special meeting.
  • 7An amendment to Robert J. Stevens' Restricted Stock Unit (RSU) award agreement modified the vesting schedule for a portion of his outstanding RSUs.

Frequently Asked Questions

The salary freeze for CEO Robert J. Stevens and COO Christopher E. Kubasik was voluntary and at their request. This action, extending for the third year for the CEO, demonstrates a commitment to cost management and aligns executive compensation with the company's broader decision to freeze salaries for other elected officers in 2010.

The amendment significantly lowers the ownership threshold required for stockholders to call a special meeting. Previously, 50% of shares were needed, but now a single stockholder with 10% or a group with 25% can initiate a special meeting. This change grants more power to larger shareholders to bring specific issues before the broader stockholder base for a vote.

The MICP was amended to formally include a target incentive percentage for the President and Chief Operating Officer role and to clarify performance assessment increments. Importantly, the Board decided to freeze the target incentive levels for executive officers, including the COO, for 2010, meaning their bonus potential remains at 2009 levels unless they assume a new position.

Yes, an amendment was made to Mr. Stevens' existing Restricted Stock Unit (RSU) award agreement. While the total number of RSUs and the initial vesting date remain the same, the distribution of vesting for the remaining 92,000 RSUs has been adjusted. Specifically, the vesting schedule has been accelerated for some tranches in 2012 and 2013, with the final vesting now occurring in September 2013 instead of 2016.