Summary
Lockheed Martin Corporation (LMT) filed an 8-K on February 25, 2011, to announce changes to its 2011-2013 Long-Term Incentive Performance (LTIP) awards for its executives. These changes, approved by the Board of Directors upon the recommendation of the Management Development and Compensation Committee, aim to enhance performance alignment and competitiveness of the executive compensation program. The primary modifications include raising the performance thresholds required for maximum payouts under cash and return on invested capital metrics, and altering the total shareholder return (TSR) measurement to an average of monthly cumulative TSR over the performance period rather than a single point-to-point calculation. Additionally, a two-year mandatory deferral period post-performance cycle has been removed to align with industry practices, though a one-year deferral into phantom stock remains for the CEO on awards exceeding $5 million.
Key Highlights
- 1Lockheed Martin updated its 2011-2013 Long-Term Incentive Performance (LTIP) awards for executives.
- 2Performance measures for cash and return on invested capital have been revised to require higher performance for maximum payouts.
- 3Total Shareholder Return (TSR) measurement methodology changed from end-period to an average of monthly cumulative TSR.
- 4The two-year mandatory deferral period after the performance cycle was eliminated for competitive reasons.
- 5A one-year deferral into phantom stock is retained for the CEO on awards exceeding $5 million.
- 6These changes are intended to enhance executive compensation alignment with company performance and market competitiveness.