Lockheed Martin 8-K 2008
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) January 24, 2008
LOCKHEED MARTIN CORPORATION
(Exact name of registrant as specified in its charter)
(Registrants telephone number, including area code)
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Clawback Policy. On January 24, 2008, the Board of Directors amended Lockheed Martin Corporations Corporate Governance Guidelines to include what is commonly referred to as a recoupment or clawback policy. If the Board of Directors determines that any elected officers intentional misconduct, gross negligence or failure to report anothers intentional misconduct or gross negligence:
then, after consideration of all the facts and circumstances that the Board of Directors in its sole discretion considers relevant, the Board of Directors shall take such action as it deems to be in the best interests of the Corporation and necessary to remedy the misconduct and prevent its recurrence. The policy notes that, among other things, the Board of Directors may seek to recover or require reimbursement of incentive performance and equity awards made to the elected officer after January 1, 2008 under any plan providing for incentive compensation, equity compensation or performance-based compensation. Concurrently, the Board of Directors amended the Corporations Management Incentive Compensation Plan (MICP), which is an annual incentive bonus plan, to incorporate similar language.
In order to implement the corporate governance policy on clawbacks and to ensure that proprietary information is protected and facilitate retention of key employees, the Management Development and Compensation Committee (the Compensation Committee) of the Board of Directors approved provisions to be included in the award agreements for the restricted stock units (RSUs), stock options, and long-term incentive performance (LTIP) awards granted in January 2008, setting forth the Corporations right to recapture amounts covered by the policy and imposing restrictive covenants upon the recipients of the awards following termination. These covenants include, in the case of executive officers, an agreement:
The 2008 equity awards will not be effective unless the executive agrees to the restrictive covenants and the provision implementing the clawback policy.
Executive Severance Plan. None of the Corporations executive officers currently has an employment agreement. In 2007, the Compensation Committee reviewed whether employment agreements would serve a corporate purpose. The Compensation Committee concluded not to enter into employment agreements with the Corporations executive officers, but decided to review the possibility of adopting an executive severance plan.
In January 2008, the Board of Directors approved the Lockheed Martin Corporation Severance Benefit Plan For Certain Management Employees. Benefits are payable under this plan in the event of a termination of employment initiated by the Corporation, other than for cause. The Board adopted the plan in order to standardize the process by which terminations initiated by the Corporation are handled and to facilitate orderly succession planning. The benefit payable under the plan generally is one times the executive officers base salary and the equivalent of one years target MICP bonus. For the Chief Executive Officer, the multiplier is 2.99 instead of 1. In addition, executive officers participating in the plan will receive a lump sum payment to cover the cost of medical benefits for one year and outplacement and relocation services. In order to receive the full severance benefit, the executive officer must execute a release of claims against the Corporation and an agreement containing post-employment covenants comparable to those described above for RSU, stock option, and LTIP award agreements.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
January 29, 2008