Summary
This 8-K filing from Lockheed Martin Corporation, dated April 22, 2011, details an amendment to stock options previously granted to the Chief Executive Officer (CEO) in January 2011. Following discussions with stockholders regarding executive compensation and its link to performance, the Management Development and Compensation Committee of the Board of Directors, with the CEO's agreement, modified the terms of 287,132 stock options. The primary purpose of the amendment is to introduce performance-based forfeiture conditions. Specifically, 50% of these CEO stock options will be forfeited if Lockheed Martin fails to achieve $4 billion in cash from operations for the fiscal year 2011, after certain adjustments. Additionally, another 50% of the options will be forfeited if the company's return on invested capital (ROIC) for 2011 falls below 15%. This action reflects a response to shareholder feedback and aims to strengthen the alignment between executive pay and company financial performance.
Key Highlights
- 1Lockheed Martin amended 287,132 stock options granted to its CEO in January 2011.
- 2The amendment was made in response to stockholder feedback concerning executive compensation and its link to performance.
- 350% of the CEO's 2011 stock options will be forfeited if the company does not generate $4 billion in cash from operations in 2011 (with specific exclusions).
- 4An additional 50% of the CEO's 2011 stock options will be forfeited if Lockheed Martin's Return on Invested Capital (ROIC) for 2011 is less than 15%.
- 5Options not forfeited will be subject to a three-year graded vesting schedule, with one-third vesting annually on January 31st of 2012, 2013, and 2014.
- 6This filing reflects a proactive measure by the company to address corporate governance and pay-for-performance concerns raised by its shareholders.