What is the main purpose of this 8-K filing?

The main purpose of this 8-K filing is to disclose updates regarding Lockheed Martin's executive compensation plans for 2014, specifically the approval of annual and long-term incentive awards and minor amendments to the underlying compensation plans and award agreements.

Were there any significant changes to the executive compensation structure?

The core structure of the incentive plans and the mix of LTI award components (RSUs, PSUs, LTIP) remained consistent with previous years. The changes were primarily minor amendments to improve performance integration, address withholding tax mechanics, and introduce a forfeiture cap for large LTIP awards.

How are executive bonuses determined under the amended incentive plans?

Executive bonuses, under the 2006 Management Incentive Compensation Plan, are determined based on a three-factor formula: individual performance, business unit performance, and overall corporate performance, measured against pre-established financial, strategic, and operational goals. The individual performance factor has been refined for better alignment with the LMCommit system.

What impact do the changes to LTIP and RSU agreements have on executives?

For Long-Term Incentive Performance (LTIP) awards, any amount payable to a single executive exceeding $10 million for 2014 grants will be forfeited. For Restricted Stock Units (RSUs), the company can now accelerate vesting to satisfy withholding tax obligations, and there are also provisions for offsetting other payments owed to employees or requiring reimbursement for these taxes.

LMT 8-K: Leadership Changes

Summary

Lockheed Martin Corporation (LMT) filed an 8-K on January 27, 2014, detailing updates to its executive compensation plans for 2014. The primary focus of this filing is the approval of annual and long-term incentive award packages for Named Executive Officers (NEOs) and other executives. These awards are structured to align with the company's established executive compensation philosophy and are designed to be earned based on a combination of individual, business unit, and overall corporate performance. Key changes include minor amendments to the 2006 Management Incentive Compensation Plan, specifically refining the individual performance factor to better integrate with the company's LMCommit performance management system. Additionally, modifications were made to the 2011 Incentive Performance Plan and associated award agreements for Restricted Stock Units (RSUs), Performance Stock Units (PSUs), and Long-Term Incentive Performance (LTIP) awards. These amendments primarily address the mechanics of satisfying withholding tax obligations and introduce a forfeiture clause for LTIP awards exceeding $10 million per participant. Importantly, these revisions were deemed minor and did not require stockholder approval.

Key Highlights

1Approval of 2014 annual and long-term incentive award packages for Named Executive Officers (NEOs) and other executives.
2Minor amendments to the 2006 Management Incentive Compensation Plan to enhance integration with the LMCommit performance management system.
3The individual performance factor in the annual incentive plan now includes a refined tiered performance scale (e.g., 1.15-1.25 for significantly exceeded commitments).
4Long-term incentive (LTI) grants for 2014 consist of a consistent mix of Restricted Stock Units (RSUs), Performance Stock Units (PSUs), and LTIP awards, with specific allocations for senior leadership.
5LTIP award agreements were revised to implement a forfeiture of any amount payable to a single participant exceeding $10 million for 2014 grants.
6RSU award agreements now include provisions for accelerated vesting to satisfy withholding tax obligations.
7The 2011 Incentive Performance Plan was amended to incorporate the withholding tax provisions and prohibit exchanges of underwater stock options.

LOCKHEED MARTIN CORP 8-K Report, Executive Changes (Jan 28, 2014)

Summary

Key Highlights

Frequently Asked Questions