What is the main change in Lockheed Martin's executive compensation structure for 2013?

The main change is a shift towards a greater emphasis on performance-based compensation within long-term incentive (LTI) packages. Lockheed Martin is introducing Performance Stock Units (PSUs) and eliminating stock options from LTI grants, aiming to better align executive rewards with corporate performance metrics.

How are the new Performance Stock Units (PSUs) structured?

PSUs for 2013 awards are tied to a three-year performance period (January 1, 2013, to December 31, 2015) and are measured against three key metrics: 50% based on the Corporation's three-year average cumulative Total Shareholder Return (TSR) relative to peers, 25% on cumulative cash flow from operations, and 25% on Return on Invested Capital (ROIC). Payouts can range from zero to 200% of the target award for each metric.

What significant changes were made to the company's bylaws?

The bylaws were amended to remove the provision that the Chairman of the Board automatically serves as the Chairman of the Executive Committee. Additionally, the Lead Director was given expanded authority, including the ability to approve topics and schedules of Board meetings, approve information sent to the Board, and call special meetings of independent directors. Several committee charters were also removed from the bylaws as they are now posted on the company's website.

Are there any notable executive retirements or appointments announced in this filing?

Yes, the filing announces the impending retirement of two Executive Vice Presidents: Joanne M. Maguire from Space Systems and Linda R. Gooden from Information Systems & Global Solutions, both effective April 1, 2013. Richard F. Ambrose has been appointed to succeed Ms. Maguire, and Sondra L. Barbour has been appointed to succeed Ms. Gooden.

LMT 8-K: Leadership Changes & Corporate Changes

Summary

Lockheed Martin Corporation (LMT) filed an 8-K on January 28, 2013, detailing significant changes to its executive compensation plans and corporate governance. The primary focus is on the amendment of the 2006 Management Incentive Compensation Plan and the 2011 Incentive Performance Award Plan, aimed at increasing the performance-based component of long-term incentives. Key changes include the introduction of Performance Stock Units (PSUs) and the phasing out of stock options for long-term incentive grants, with a greater emphasis on metrics like total shareholder return (TSR), cash flow from operations, and return on invested capital (ROIC). Additionally, the company announced changes to its corporate bylaws, including the removal of the requirement for the Chairman of the Board to chair the Executive Committee and granting more authority to the Lead Director. The filing also disclosed the retirement of two Executive Vice Presidents, Joanne M. Maguire (Space Systems) and Linda R. Gooden (Information Systems & Global Solutions), with their successors appointed. These strategic adjustments in compensation and governance signal a commitment to aligning executive pay with corporate performance and streamlining board responsibilities.

Key Highlights

1Amendments to 2006 Management Incentive Compensation Plan and 2011 Incentive Performance Award Plan to increase performance-based compensation.
2Introduction of Performance Stock Units (PSUs) and elimination of stock options in long-term incentive (LTI) grants for 2013.
3LTI award allocations revised: for top executives, 30% RSUs, 50% PSUs, 20% LTIP; for other executives, approximately 50% RSUs, 10% PSUs, 40% LTIP.
4Changes to Restricted Stock Unit (RSU) award agreements include modified vesting provisions for retirement and layoff, and a new 'double trigger' acceleration clause upon change of control.
5New Performance Stock Unit (PSU) award agreements introduced, with performance measured by TSR (50%), cash flow from operations (25%), and ROIC (25%) over a three-year period.
6Amendments to corporate bylaws removed the Chairman's automatic role as Chair of the Executive Committee and enhanced the Lead Director's authority.
7Announcement of the retirement of Joanne M. Maguire (EVP, Space Systems) and Linda R. Gooden (EVP, Information Systems & Global Solutions), with successors Richard F. Ambrose and Sondra L. Barbour appointed, respectively.

LOCKHEED MARTIN CORP 8-K Report, Executive Changes (Jan 28, 2013)

Summary

Key Highlights

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