Exhibit 10.4

LTIP (Domestic and International)

Award Date: January 27, 2014

 

LOGO [g658624lm_logo.jpg]

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933

 

Re: Lockheed Martin Corporation 2011 Incentive Performance Award Plan:

Long-Term Incentive Performance Award (2014-2016 Performance Period)

Dear Awardee:

On behalf of the Management Development and Compensation Committee (the
“Committee”) of the Board of Directors of Lockheed Martin Corporation, I am
pleased to tell you that you have been granted a Long-Term Incentive Performance
(“LTIP”) Award under the Corporation’s 2011 Incentive Performance Award Plan, as
amended (the “Plan”). The purpose of this letter is to serve as the LTIP Award
Agreement and to set forth your Target Award as well as the terms and conditions
to the payment of your Award. Additional terms and conditions are set forth in
the Plan and in the Prospectus relating to the Plan of which the Plan document
and this Award Agreement are a part. Your Target Award and the Prospectus are
available at http://www.benefitaccess.com. You should retain the Prospectus and
the attached copy of the Plan in your records.

Your Award is not effective or enforceable until you properly acknowledge your
acceptance of the Award by completing the electronic receipt or returning an
executed copy of this Award Agreement to the Vice President of Total Rewards and
Performance Management as instructed below as soon as possible but in no event
later than May 31, 2014. If you do not properly acknowledge your acceptance of
this Award Agreement on or before May 31, 2014, this Award will be forfeited.

Assuming prompt and proper acknowledgement of your acceptance of this Award
Agreement as described above, this Award will be effective as of the Award Date.
Acceptance of this Award Agreement constitutes your consent to any action taken
under the Plan consistent with its terms with respect to this Award and your
agreement to be bound by the restrictions contained in Section 18 and Exhibit A
(“Post-Employment Conduct Agreement”) and Exhibit B (“Stock Ownership
Requirements”), except where prohibited by law.

The Corporation will comply with all applicable U.S. Tax withholding
requirements applicable to the Award. Please see the prospectus for the Plan for
a discussion of certain material U.S. Tax consequences of the Award. If you are
a taxpayer in a country other than the U.S., you agree to make appropriate
arrangements with the Corporation or its subsidiaries for the satisfaction of
all income and employment tax withholding requirements, as well as social
insurance contributions applicable to the Award. Please see the tax summary for
your country at http://www.benefitaccess.com.

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If you are a taxpayer in a country other than the U.S., you represent that you
will consult with your own tax advisors in connection with this Award and that
you are not relying on the Corporation for any tax advice.

In general, the Corporation will reduce the amount paid to you under this Award
Agreement by an amount sufficient to satisfy any applicable Tax withholding
obligation, based upon the minimum rate of withholding prescribed by law. The
Corporation shall also have the right to (i) offset any other obligation of the
Corporation to you (including but not limited to withholding from your salary)
by an amount sufficient to satisfy the Tax withholding obligation, or
(ii) require you (or your Beneficiary) to pay the Corporation an amount equal to
the Tax withholding obligation.

Capitalized terms used in this Award Agreement either shall be defined in this
Award Agreement or if not defined in this Award Agreement shall have the meaning
given to the term in the Plan. The term “Target Award” as used in this Award
Agreement refers only to the Target Award awarded to you under this Award
Agreement and the term “Award” refers only to the LTIP Award set forth in this
Award Agreement. References to the “Corporation” include Lockheed Martin
Corporation and its Subsidiaries. Appendix A contains an index of all
capitalized terms used in this Award Agreement.

 

Section 1. Target Award; Performance Period.

1.1 Target Award. Your Target Award for the Performance Period under this Award
Agreement shall be the U.S. dollar amount identified as your Target Award in
your account at http://www.benefitaccess.com.

1.2 Performance Period. The Performance Period under this Award Agreement is a
three-year performance period that runs from January 1, 2014, until December 31,
2016.

1.3 Payment of Award. The amount payable to you under your Award is dependent
upon the Corporation’s performance as compared to the metrics described in
Section 3 and Section 4 of this Award Agreement and your continued employment
with the Corporation in accordance with Section 5 of this Award Agreement. As a
result of these requirements, any payments you receive may be larger or smaller
than your Target Award (e.g., the performance factors could result in no payment
in respect of your Award). With respect to US-Based Employees, when an Award
becomes vested in accordance with Section 5.2(a), the Award amount will be paid
to the Participant in US Dollars. With respect to international employees, when
an Award becomes vested in accordance with Section 5.2(a), the amount payable to
the Participant in cash will be the amount of the Participant’s Award converted
into local country currency at the conversion rate set by the Corporation on the
last day of the Performance Period.

 

Section 2. Calculation of Award Payments.

2.1 End of Performance Period Calculation. Following the end of the Performance
Period and prior to any payments being made,

(a) The Committee will calculate the Total Stockholder Return Performance Factor
based on the Corporation’s performance during the Performance Period relative to
the performance of other corporations which compose the “Peer Performance Group”
as defined in Section 3.1 below.

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(b) The Committee will calculate the ROIC Performance Factor based on the
Corporation’s ROIC during the Performance Period as compared to the projected
ROIC for the Performance Period as set forth in the January 22, 2014 Committee
resolution (“ROIC Target”).

(c) The Committee will calculate the Cash Flow Performance Factor based on the
Corporation’s cumulative Cash Flow during the Performance Period as compared to
the projected cumulative Cash Flow for the Performance Period as set forth in
the January 22, 2014 Committee resolution (“Cash Flow Target”).

(d) Your “Potential Award” shall be calculated by multiplying the weighted
average of the Total Stockholder Return Performance Factor, the ROIC Performance
Factor, and the Cash Flow Performance Factor by your Target Award. The Total
Stockholder Return Performance Factor, the ROIC Performance Factor, and the Cash
Flow Performance Factor shall be weighted as follows in determining the weighted
average of the three performance factors:

 

Total Stockholder Return Performance Factor

     50 % 

ROIC Performance Factor

     25 % 

Cash Flow Performance Factor

     25 % 

You must (except as specified in Section 5) remain employed by the Corporation
through December 31, 2016, to receive your Potential Award.

 

Section 3. Total Stockholder Return Performance Factor.

3.1. Peer Performance Group. The Total Stockholder Return Performance Factor
will be based upon the relative ranking of the Corporation’s Average TSR (as
defined in Section 3.2(a)) for the Performance Period to the Average TSR for
such Period for each corporation in the “Peer Performance Group.” The “Peer
Performance Group” shall consist of the corporations which compose the Standard
and Poor’s Aerospace and Defense Index reported under symbol S5AERO by Bloomberg
L.P. The Corporation’s Total Stockholder Return will be based on the performance
of the Stock. With respect to the corporations that make up the Standard and
Poor’s Aerospace and Defense Index, the Total Stockholder Return of each
corporation that is taken into account in computing the Peer Performance Group
Total Stockholder Return will be based on the equity security of the relevant
corporation that is used in computing the Standard and Poor’s Aerospace and
Defense Index.

3.2. Calculation of Total Stockholder Return Performance Factor.

(a) Calculation of Average TSR. During the Performance Period, the Committee
shall compute the Total Stockholder Return (as defined in the Plan and assuming
the reinvestment of any cash dividends) for the Corporation and for each other
corporation in the Peer Performance Group for thirty-six (36) periods during the
Performance Period where each period begins on January 1, 2014 (based on the
closing price for the stock on December 31, 2013) and ends on the last day of
each successive calendar month in the Performance Period on

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which the New York Stock Exchange is open for trading. Each such Total
Stockholder Return shall be computed from data available to the public. At the
end of the Performance Period, the thirty-six (36) Total Stockholder Return
figures for each corporation for the Performance Period will be averaged to
determine each corporation’s average Total Stockholder Return (“Average TSR”)
for the Performance Period. Each corporation’s Average TSR shall be ranked among
the Average TSR for each other corporation in the Peer Performance Group on a
percentile basis (using the Excel PERCENTRANK function).

(b) Percentage Level of Target Award. Your Total Stockholder Return Performance
Factor, expressed as a percentage, will be determined under this Section 3.2(b)
(and Section 3.2(c) to the extent interpolation is necessary) based on the
Percentile Ranking (as determined under Section 3.2(a)) of the Corporation’s
Average TSR for the Performance Period under the following chart:

 

Band

   Percentile Ranking   Total Stockholder
Return Performance
Factor  

One

   75th – 100th     200 % 

Two

   60th     150 % 

Three

   50th     100 % 

Four

   40th     50 % 

Five

   35th     25 % 

Six

   Below 35th     0 % 

(c) Total Stockholder Return Performance Factor Interpolation. If the Percentile
Ranking as determined under Section 3.2(a) puts the Corporation over the listed
Percentile Ranking for the applicable Band (other than Band One) in
Section 3.2(b), your Total Stockholder Return Performance Factor under
Section 3.2(b) shall be interpolated on a linear basis.

 

Section 4. ROIC Performance Factor and Cash Flow Performance Factor.

4.1 ROIC Performance Factor. The ROIC Performance Factor will be determined by
comparing the Corporation’s ROIC for the Performance Period to the ROIC Target
and then identifying the ROIC Performance Factor based upon the factor
associated with the difference on the following table:

 

Change from ROIC Target

   ROIC
Performance
Factor  

Target +³ 160 basis points

     200 % 

Target + 120 basis points

     175 % 

Target + 80 basis points

     150 % 

Target + 40 basis points

     125 % 

Target

     100 % 

Target – 10 basis points

     75 % 

Target – 20 basis points

     50 % 

Target – 30 basis points

     25 % 

Target – ³ 40 or more basis points

     0 % 

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(a) ROIC Definition. For purposes of this Award Agreement, “ROIC” means return
on invested capital for the Performance Period calculated as (A) average annual
(i) net income (excluding any charge or addition to net income resulting solely
from adjustment of deferred tax assets and liabilities for the effect of
enactment of corporate tax reform and related legislation that adjusts United
States federal corporate income tax rates) plus (ii) interest expense times one
minus the average of the highest marginal federal corporate income tax rates
over the three year Performance Period (“Return”), divided by (B) the average of
the four year-end investment balances (beginning with December 31, 2013 year-end
balance) consisting of (i) debt (including current maturities of long-term debt)
plus (ii) stockholders’ equity plus the postretirement plans amounts determined
at year-end as included in the Corporation’s Statement of Stockholders’ Equity.

(b) ROIC Determination. Each component of ROIC and the calculation of any
postretirement plans amounts recorded in the Corporation’s Statement of
Stockholders’ Equity shall be determined by the Committee in accordance with
generally accepted accounting principles in the United States and be based upon
the comparable numbers reported on the Corporation’s audited consolidated
financial statements or, if audited financial statements are not available for
the date or period on which ROIC is being determined, the Committee shall make
its determination in a manner consistent with the historical practices used by
the Corporation in determining the components of ROIC and postretirement plans
amounts recorded in the Corporation’s Statement of Stockholders’ Equity for
purposes of reporting those items on its audited financial statements, as
modified by this paragraph. Notwithstanding the foregoing, ROIC will be adjusted
to exclude the impact of any change in accounting standards or adoption of any
new accounting standards that is required under generally accepted accounting
principles in the United States and that is reported in the Corporation’s
filings with the Securities and Exchange Commission as having a material effect
on the Corporation’s consolidated financial statements. ROIC, as included in the
2014 Long Range Plan, and the change in ROIC for purposes of the ROIC
Performance Factor will be determined in accordance with this Section 4.1(b).

4.2 Cash Flow Performance Factor. The Cash Flow Performance Factor will be
determined by comparing the Corporation’s cumulative Cash Flow during the
Performance Period to the Cash Flow Target, and then identifying the Cash Flow
Performance Factor based upon the factor associated with the change from the
Cash Flow Target on the following table:

 

Change From Cash Flow Target

   Cash Flow Performance
Factor  

Target + ³$2.0B or more

     200 % 

Target + $1.5B

     175 % 

Target + $1.0B

     150 % 

Target + $0.5B

     125 % 

Target

     100 % 

Target – $0.2B

     75 % 

Target – $0.5B

     50 % 

Target – $0.7B

     25 % 

Target – ³ $1.0B or more

     0 % 

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(a) Cash Flow Definition. For purposes of this Award Agreement, Cash Flow means
net cash flow from operations but not taking into account: (i) the aggregate
difference between the amount forecasted in the Corporation’s 2014 Long Range
Plan to be contributed by the Corporation to the Corporation’s defined benefit
pension plans during the Performance Period and the actual amounts contributed
by the Corporation during the Performance Period; or (ii) any tax payments or
tax benefits during the Performance Period associated with the divestiture of
business units, other than tax payments or tax benefits that were included in
the Corporation’s 2014 Long Range Plan.

(b) Cash Flow Determination. Cash Flow shall be determined by the Committee
based upon the comparable numbers reported on the Corporation’s audited
consolidated financial statements or, if audited financial statements are not
available for the period for which Cash Flow is being determined, the Committee
shall determine Cash Flow in a manner consistent with the historical practices
used by the Corporation in determining net cash provided by operating activities
as reported in its audited consolidated statement of cash flows, in either case
as modified by this paragraph.

4.3 Interpolation of ROIC and Cash Flow Metrics. If the change in ROIC or Cash
Flow falls between two numbers listed in the applicable table in Section 4.1 or
4.2, the appropriate factor will be interpolated on a linear basis.
Notwithstanding the foregoing, the ROIC Performance Factor will always be zero
if the ROIC for the Performance Period falls short of the ROIC Target by 40
basis points or more and the Cash Flow Performance Factor will always be zero if
the aggregate Cash Flow for the Performance Period falls short of the Cash Flow
Target by $1.0 billion or more.

 

Section 5. Payment of Award.

5.1. Employment Requirement.

(a) General Rule. In order to be eligible to receive payment of your Award as
determined under Section 2.1, you must accept this Award Agreement and remain
employed by the Corporation through the last day of the Performance Period.
Except as provided below or where prohibited by law, if your employment as an
Employee terminates during the Performance Period, you shall forfeit your right
to receive all or any part of your Award. If you are on Corporation-approved
leave of absence at any point during the Performance Period, for purposes of
this Award Agreement, you will be considered to still be in the employ of the
Corporation, unless otherwise provided in an agreement between you and the
Corporation.

(b) Exceptions. Notwithstanding Section 5.1(a), if the Committee determines

(1) that your employment as an Employee terminated as a result of your death,
Divestiture, or Total Disability or your Retirement (each as defined in
Section 5.1(c)) or

(2) that the Corporation terminated your employment involuntarily, as a result
of a layoff, including through a voluntary layoff program that constitutes a
window program under Section 409A of the Code,

you shall be eligible to receive a fraction of your Award. The numerator of such
fraction shall equal the number of days in the Performance Period before your
employment as an

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Employee terminated, and the denominator shall equal the total number of days in
the Performance Period. The Committee shall have complete and absolute
discretion to make the determinations called for under this Section 5.1(b), and
all such determinations shall be binding on you and on any person who claims all
or any part of your Award on your behalf as well as on the Corporation. If you
terminate employment during the Performance Period but are eligible to receive a
portion of your Potential Award as a result of an exception under this
Section 5.1(b), payment of such portion of your Potential Award shall be in full
satisfaction of all rights you have under this Award Agreement.

(c) Special Definitions. For purposes of this Award Agreement:

(1) Your employment as an Employee shall be treated as terminating because of a
“Total Disability” on the date you commence receiving a benefit under the
Corporation’s long-term disability plan in which you participate, or if you are
not enrolled in the Corporation’s long-term disability plan, the date on which
long-term disability benefits would commence under the plan under which you
would have been covered, had you enrolled, using the standards set forth in that
plan;

(2) Your employment as an Employee shall be treated as terminating as a result
of Divestiture if the Corporation divests all or substantially all of a business
operation of the Corporation and such divestiture results in the termination of
your employment with the Corporation and a transfer of such employment to the
other party in the Divestiture. A “Divestiture” shall mean a transaction which
results in the transfer of control of the business operation to any person,
corporation, association, partnership, joint venture, limited liability company
or other business entity of which less than 50% of the voting stock or other
equity interests are owned or controlled by the Corporation; and

(3) Your employment as an Employee shall be treated as terminating because of
“Retirement” if your employment terminates after (i) you reach age 65, or
(ii) you reach age 55 and have (at the time of your termination) completed at
least ten years of service with the Corporation. The effective date of your
termination is the first day of the month following the date you terminate
services with the Corporation.

5.2. Payment Rules.

(a) General Rule: Vesting; Method of Payment; Timing of Payment. If you are
eligible to receive all, or a portion of, your Potential Award under
Section 5.1, up to $10,000,000 dollars of your Potential Award shall be fully
vested on the date on which the Committee certifies in writing (for purposes of
Section 162(m) of the Code) that your Target Award has become a Potential Award
for the Performance Period. This portion of your award shall be known as the
“Payable Portion” of your Potential Award. The Payable Portion of your Potential
Award shall be (i) paid to you in cash as soon as administratively practicable
after the certification date described above, but not later than March 15, 2017
, or (ii) deferred in accordance with Section 5.2(c). Subject to your deferral
election under Section 5.2(c), in the event of your death, the Payable Portion
of your Potential Award will be made to your estate if you do not have a
properly completed Beneficiary designation form on file with the Vice President
of Total Rewards and Performance Management.

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(b) Special Rules for Certain Employees Terminated During Performance Period. If
you terminate employment during the Performance Period but are eligible to
receive a portion of your Potential Award as a result of an exception under
Section 5.1(b), payment of such portion of your Potential Award shall be in full
satisfaction of all rights you have under this Award Agreement. The portion of
your Potential Award payable to you following a termination of employment during
the Performance Period under circumstances described in Section 5.1(b) shall be
paid to you or, in the event of your death, to your Beneficiary for the Award,
at the time specified in Section 5.2(a) (subject to section 5.2(c). In the event
of your death and you do not have a properly completed Beneficiary designation
form on file with the Vice President of Total Rewards and Performance
Management’s office, your payment will be made to your estate.

(c) Deferral. You will be given an opportunity to elect to defer any amounts
payable under Section 5.2 of this Award Agreement. Such election shall be
irrevocable, shall be made in accordance with the terms of the Lockheed Martin
Corporation Deferred Management Incentive Compensation Plan (“DMICP”) and the
requirements of Code section 409A, and shall be subject to such additional terms
and conditions as are set by the Committee. A deferral election form and the
terms and conditions for any deferral will be furnished to you in due course.
The beneficiary designation for the DMICP (rather than the Beneficiary
designation for this Long Term Incentive Performance Award) shall govern any
amounts deferred under the terms of the DMICP. This Section 5.2(c) shall not
apply if you are a taxpayer in a country other than the United States.

5.3. Cutback. Any portion of your Potential Award in excess of the Payable
Portion of your Potential Award will be forfeited to the extent that such
portion, together with payments attributable to any other Cash-Based Awards that
are granted during 2014 as Performance Based Awards, exceeds $10,000,000.
Amounts in excess of any Plan limits also shall be forfeited.

5.4. Means of Satisfying Code Section 409A. If any payment that would otherwise
be made under this Award Agreement is required to be delayed by reason of
Section 13, such payment shall be made at the earliest date permitted by Code
section 409A. The amount of any delayed payment shall be the amount that would
have been paid prior to the delay, adjusted to include interest from the
original payment date to the actual payment date, at a rate equivalent to the
six month London Interbank Offered Rate (LIBOR) as published in the Money Rates
section of the Wall Street Journal, plus 25 basis points. The increase over
LIBOR may be adjusted to reflect the six month unsecured borrowing rate of the
Corporation.

 

Section 6. No Assignment – General Creditor Status.

You shall have no right to assign any interest you might have in all or any part
of the Target Award or Potential Award which has been granted to you under this
Award Agreement and any attempt to do so shall be null and void and shall have
no force or effect whatsoever. Furthermore, all payments called for under this
Award Agreement shall be made in cash from the Corporation’s general assets, and
your right to payment from the Corporation’s general assets shall be the same as
the right of a general and unsecured creditor of the Corporation.

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Section 7. Plan.

This Award Agreement shall be subject to all of the terms and conditions set
forth in the Plan.

 

Section 8. Change in Control.

8.1. Vesting of Award Upon Change in Control. In the event of a consummation of
a Change in Control during the Performance Period, your Target Award will become
vested (i) on the effective date of the Change in Control if the LTIP Award is
not assumed or continued, or equivalent cash incentives are not substituted for
your LTIP Award by the Corporation or its successor, or (ii) if the LTIP is
assumed, continued or substituted, upon your involuntary termination other than
for Cause (not including death or Total Disability) or your voluntary
termination with Good Reason, in either case, within the 24-month period
following the consummation of the Change in Control. The cash payment in which
you have become vested shall be delivered to you within fourteen (14) days of
the date on which you become vested.

8.2 Special Definitions.

 

(a) Cause shall mean either of the following:

(i) Conviction for an act of fraud, embezzlement, theft or other act
constituting a felony (other than traffic-related offenses or as a result of
vicarious liability);

(ii) Willful misconduct that is materially injurious to the Corporation’s
financial position, operating results or reputation; provided, however that no
act or failure to act shall be considered “willful” unless done, or omitted to
be done, by you (a) in bad faith; (b) for the purpose of receiving an actual
improper personal benefit in the form of money, property or services; or (c) in
circumstances where you had reasonable cause to believe that the act, failure to
act, or omission was unlawful.

 

(b) Good Reason shall mean, without your express written consent, the occurrence
of any one or more of the following:

(i) A material and substantial reduction in the nature or status or your
authority or responsibilities;

(ii) A material reduction in your annualized rate of base salary;

(iii) A material reduction in the aggregate value of your level of participation
in any short or long term incentive cash compensation plan, employee benefit or
retirement plan or compensation practices, arrangements, or policies;

(iv) A material reduction in the aggregate level of participation in
equity-based incentive compensation plans; or

(v) Your principal place of employment is relocated to a location that is
greater than fifty (50) miles from your principal place of employment on the
date the Change in Control is consummated.

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Your continued employment following an event that would constitute a basis for
voluntary termination with Good Reason shall not constitute Good Reason if you
consent to, or waive your rights with respect to, any circumstances constituting
Good Reason. In addition, the occurrence of an event described in (i) through
(v) shall constitute the basis for voluntary termination for Good Reason only if
you provide written notice of your intent to terminate employment within 90 days
of the first occurrence of such event and the Corporation has had at least 30
days from the date on which such notice is provided to cure such occurrence. If
you do not terminate employment for Good Reason within 180 days after the first
occurrence of the applicable grounds, then you will be deemed to have waived
your right to terminate for Good Reason with respect to such grounds.

8.3. Special Rule. Notwithstanding Section 8.1, if a payment in accordance with
those provisions would result in a nonexempt short-swing transaction under
Section 16(b) of the Exchange Act, then the date of distribution to you shall be
delayed until the earliest date upon which the distribution either would not
result in a nonexempt short-swing transaction or would otherwise not result in
liability under Section 16(b) of the Exchange Act.

 

Section 9. Amendment and Termination.

As provided in Section 9 of the Plan, the Board of Directors may at any time
amend, suspend or discontinue the Plan and the Committee may at any time amend
this Award Agreement. Notwithstanding the foregoing, no such action by the Board
of Directors or the Committee shall amend Sections 1, 2, 3, 4, or 5 in a manner
adverse to you or reduce the amount payable hereunder in a material manner
without your written consent. For this purpose, a change in the amount payable
hereunder that occurs solely by reason of a change in the date or form of
payment due to Section 409A of the Code or Section 16 of the Exchange Act shall
in no case be treated as a reduction prohibited by this Section 9. Thus, for
example, if an amount payable by reason of Section 8 is delayed by an amendment
to this Award Agreement or other action undertaken to comply with Section 409A
of the Code and the amount payable is reduced solely by reason of a
corresponding delay in the date of valuation of a share of Stock, such a change
shall not be treated as a reduction prohibited by this Section 9. This Section 9
shall be construed and applied so as to permit the Committee to amend this Award
Agreement at any time in any manner reasonably necessary or appropriate in order
to comply with the requirements of Section 16 of the Exchange Act and of
Section 409A of the Code, including amendments regarding the timing and form of
payments hereunder.

 

Section 10. Data Privacy Consent For Employees Located Outside Of The United
States.

You hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of your personal data as described in
this Award Agreement by and among the Corporation for the exclusive purpose of
implementing, administering and managing your participation in the Plan.

You understand that the Corporation holds certain personal information about
you, including, but not limited to, your name, home address and telephone
number, date of birth, social insurance number or other identification number,
salary, nationality, job title, any shares or directorships held in the
Corporation, details of all awards or any other entitlement to shares awarded,
canceled, exercised, vested, unvested or outstanding in your favor, for the
purpose of implementing, administering and managing

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the Plan (“Data”). You understand that Data may be transferred to any third
parties assisting in the implementation, administration and management of the
Plan, that these recipients may be located in your country or elsewhere, and
that the recipient’s country may have different data privacy laws and
protections than your country. You understand that you may request a list with
the names and addresses of any potential recipients of the Data by contacting
your local human resources representative. You authorize the recipients to
receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing your
participation in the Plan, including any requisite transfer of such Data as may
be required to a broker or other third party with whom the Corporation may elect
to administer the settlement of any award. You understand that Data will be held
only as long as is necessary to implement, administer and manage your
participation in the Plan. You understand that you may, at any time, view Data,
request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in
any case without cost, by contacting in writing your local human resources
representative. You understand, however, that refusing or withdrawing your
consent may affect your ability to participate in the Plan. For more information
on the consequences of your refusal to consent or withdrawal of consent, you
understand that you may contact your local human resources representative.

 

Section 11. No Assurance of Employment; No Right to an Award; Value of Award.

Nothing contained in the Plan or in this Award Agreement shall confer upon you
any right to continue in the employ or other service of the Corporation or
constitute any contract (of employment or otherwise) or limit in any way the
right of the Corporation to change your compensation or other benefits or to
terminate your employment with or without cause. You acknowledge and agree as
follows:

(a) the Plan is discretionary in nature and that the Board of Directors may
amend, suspend, or terminate it at any time;

(b) the grant of the Award is voluntary and occasional and does not create any
contractual or other right to receive future grants of any Awards, or benefits
in lieu of any Award even if Awards have been granted repeatedly in the past;

(c) all determinations with respect to such future Awards, if any, including but
not limited to the times when Awards shall be granted or when Awards shall vest,
will be at the sole discretion of the Committee;

(d) your participation in the Plan is voluntary;

(e) the value of the Award is an extraordinary item of compensation, which is
outside the scope of your employment contract (if any), except as may otherwise
be explicitly provided in your employment contract;

(f) the Award is not part of normal or expected compensation or salary for any
purpose, including, but not limited to, calculating termination, severance,
resignation, redundancy, end of service, or similar payments, or bonuses,
long-service awards, pension or retirement benefits;

(g) the Award shall expire upon termination of your employment for any reason
except as may otherwise be explicitly provided in the Plan and this Award
Agreement;

(h) the future value of the Award is unknown and cannot be predicted with
certainty; and

(i) no claim or entitlement to compensation or damages arises from the
termination of the Award or diminution in value of the Award and you irrevocably
release the Corporation from any such claim that may arise.

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Award Date: January 27, 2014

Page 12

 

Section 12. Conflict.

In the event of a conflict between this Award Agreement and the Plan, the Plan
document shall control.

 

Section 13. Compliance with Section 409A of the Code.

It is the intent of the Corporation that your Award not be subject to taxation
under Section 409A(a)(1) of the Code. Nevertheless, in the event that your Award
is or could be subject to Section 409A of the Code, as determined by the Senior
Vice President, Human Resources and Communications, in consultation with the
General Tax Counsel or his or her delegate, the following rules apply: (i) the
Award will be interpreted and administered to meet the requirements of Sections
409A(a)(2), (3) and (4) of the Code and thus to be exempt from taxation under
Section 409A(a)(1) of the Code; (ii) no Award payment will be made on account of
your termination of employment unless the termination of employment constitutes
a “separation from service” under Code section 409A(a)(2)(a)(i); and (iii) if
you are a “specified employee” within the meaning of Code section 409A, any
payment in respect of this Award made on account of a termination of employment
will be delayed for six (6) months following such termination of employment, and
then made at the earliest date permitted by Section 409A of the Code.

 

Section 14. Post-Employment Covenants & Stock Ownership Requirements.

Except where prohibited by law, by accepting this Award Agreement through the
procedure described above, you agree to the terms of the Post-Employment
Covenants contained in Exhibit A to this Award Agreement and you acknowledge
receipt of the Stock Ownership Requirements (“Ownership Requirements”) attached
as Exhibit B to this Award Agreement and agree to comply with such Ownership
Requirements. If you are not a Vice President (or above) on January 27, 2014,
but you are promoted to Vice President (or above) prior to January 27, 2017, the
Ownership Requirements shall become applicable to you on the date of your
promotion to Vice President (or above).

 

Section 15. English Language.

You have received the terms and conditions of this Award Agreement and any other
related communications, and you consent to having received these documents, in
English. If you have received this Award Agreement or any other documents
related to the Plan translated into a language other than English, and if the
translated version is different from the English version, the English version
will control.

 

Section 16. Currency Exchange Risk.

If your functional currency is not the U.S. dollar, you agree and acknowledge
that you will bear any and all risk associated with the exchange or fluctuation
of currency associated with the Award (the “Currency Exchange Risk”). You waive
and release the Corporation and its subsidiaries from any potential claims
arising out of the Currency Exchange Risk.

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Award Date: January 27, 2014

Page 13

 

Section 17. Exchange Control Requirements.

You agree and acknowledge that you will comply with any and all exchange control
requirements applicable to the Award and any resulting funds including, without
limitation, reporting or repatriation requirements.

 

Section 18. Electronic Delivery; Execution.

By executing this Award Agreement, you consent to receive copies of the
Prospectus applicable to this Award from this internet site
(http://www.benefitaccess.com) as well as to electronic delivery of the
Corporation’s annual report on Form 10-K, annual proxy and quarterly reports on
Form 10-Q. This consent can only be withdrawn by written notice to the Vice
President of Total Rewards and Performance Management at the address noted
below. The Corporation may, in its sole discretion, decide to deliver any
documents related to the Award under the Plan or future Awards that may be
awarded under the Plan by electronic means or request your consent to
participate in the Plan by electronic means. You hereby consent to receive such
documents by electronic delivery and agree to participate in the Plan through
any on-line or electronic system established and maintained by the Corporation
or another third party designated by the Corporation.

No Award is enforceable until you properly acknowledge your acceptance by
completing the electronic receipt or returning an executed copy of this Award
Agreement to the Vice President of Total Rewards and Performance Management as
soon as possible but in no event later than May 31, 2014. Acceptance of this
Award Agreement must be made only by you personally or by a person acting
pursuant to a power of attorney in the event of your inability to acknowledge
your acceptance due to your disability or deployment in the Armed Forces (and
not by your estate, your spouse or any other person) and constitutes your
consent to any action taken under the Plan consistent with its terms with
respect to this Award. The Committee has authorized electronic means for the
delivery and acceptance of this Award Agreement. If you desire to accept this
Award, you must acknowledge your acceptance and receipt of this Award Agreement,
either electronically or by signing and returning a copy of this letter on or
before May 31, 2014 as follows:

 

•   Electronic Acceptance: Go to http://www.benefitaccess.com

 

•   By Mail: Ms. Robin LaChapelle, Vice President of Total Rewards and
Performance Management, Lockheed Martin Corporation, Mail Point 126, 6801
Rockledge Drive, Bethesda MD 20817

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Award Date: January 27, 2014

Page 14

 

Assuming prompt and proper acknowledgment of this Award Agreement as described,
this Award will be effective as of the Award Date.

 

Sincerely, Robin L. LaChapelle Vice President Total Rewards and Performance
Management

(For written acceptance, please complete, sign and return by mail.)

Acknowledged by:

 

 

   

 

Signature     Date

 

   

 

Print Name     Employee ID

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Award Date: January 27, 2014

Page 15

 

Appendix A

Capitalized Terms

 

Average TSR    § 3.2(a) Award    6th ¶ Award Date    Header Cash-Based Award   
Plan Cash Flow    § 4.2(a) Cash Flow Performance Factor    §4.2 Cash Flow Target
   §2.1(c) Cause    § 8.2(a) Change of Control    Plan Code    Plan Committee   
1st ¶ Corporation    6th ¶ Divestiture    § 5.1(c)(2) Employee    Plan Exchange
Act    Plan Good Reason    § 8.2(b) Insider    Plan Payable Portion    § 5.2(a)
Peer Performance Group    § 3.1 Performance-Based Award    Plan Performance
Period    § 1.2 Plan    1st ¶ Potential Award    § 2.1(d) Retirement    §
5.1(c)(3) Return    § 4.1(a) ROIC    § 4.1(a) ROIC Performance Factor    § 4.1
ROIC Target    § 2.1(b) Subsidiary    Plan Target Award    6th ¶, § 1.1 Total
Disability    § 5.1(c)(1) Total Stockholder Return    Plan; § 3.2(a) Total
Stockholder Return Performance Factor    § 3.1; § 3.2

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Award Date: January 27, 2014

Page 16

 

Exhibit A

Post Employment Conduct Agreement

(LTIP Grant)

This Post Employment Conduct Agreement (this “PECA”) attached as Exhibit A to
the Award Agreement with an Award Date of January 27, 2014 (the “Award
Agreement”) is entered into in consideration of, among other things, the grant
of a Long Term Incentive Performance Award to me under the Award Agreement (the
“LTIP”) pursuant to the Lockheed Martin Corporation 2011 Incentive Performance
Award Plan (the “Plan”). References to the “Corporation” shall include Lockheed
Martin Corporation and its Subsidiaries. By accepting the LTIP, I agree as
follows:

1. Protective Covenants.

(a) Covenant Not To Compete – Without the express written consent of the
“Required Approver,” during the one-year (or two-year for Elected Officers)
period following the date of my termination of employment (the “Termination
Date”) with the Corporation, I will not, directly or indirectly, be employed by,
provide services to, or advise a “Restricted Company” (as defined in Section 6),
whether as an employee, advisor, director, officer, partner or consultant, or in
any other position, function or role that, in any such case,

 

  (i) oversees, controls or affects the design, operation, research,
manufacture, marketing, sale or distribution of “Competitive Products or
Services” (as defined in Section 6) of or by the Restricted Company, or

 

  (ii) would involve a substantial risk that the “Confidential or Proprietary
Information” (as defined in Section 1(c)) of the Corporation (including but not
limited to technical information or intellectual property, strategic plans,
information relating to pricing offered to the Corporation by vendors or
suppliers or to prices charged or pricing contemplated to be charged by the
Corporation, information relating to employee performance, promotions or
identification for promotion, or information relating to the Corporation’s cost
base) could be used to the disadvantage of the Corporation.

Section 1(a)(i) and (ii) shall not apply to residents of California.

To the extent permitted by applicable law, including but not limited to any
applicable rules governing attorney conduct (such as the ABA Model Rules of
Professional Conduct and state versions thereof), Sections 1(a)(i) and (ii) and
Section 1(b) relating to non-solicitation, shall apply to individuals who are
employed by the Corporation in an attorney position and whose occupation during
the one-year (or two-year, for Elected Officers) period following employment
with the Corporation does not include practicing law.

In lieu of Section 1(a)(i) and (ii), as well as Section 1(b) relating to
non-solicitation, the following Section 1(a)(iii) shall apply to individuals who
are employed by the Corporation in an attorney position, and whose occupation
during the one-year (or two-year, for Elected Officers) period following
employment with the Corporation includes practicing law.

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Award Date: January 27, 2014

Page 17

 

  (iii) Post-employment Activity As a Lawyer – I acknowledge that as counsel to
the Corporation, I owe ethical and fiduciary obligations to the Corporation and
that at least some of these obligations will continue even after the date of my
termination of employment (“Termination Date”) with the Corporation. I agree
that after my Termination Date I will comply fully with all applicable ethical
and fiduciary obligations that I owe to the Corporation. To the extent permitted
by applicable law, including but not limited to any applicable rules governing
attorney conduct, I agree that I will not:

 

  (a) Represent any client in the same or a substantially related matter in
which I represented the Corporation where the client’s interests are materially
adverse to the Corporation; or

 

  (b) Disclose confidential information relating to my representation of the
Corporation, including the disclosure of information that is to the disadvantage
of the Corporation, except for information that is or becomes generally known.

The Corporation’s Senior Vice President, General Counsel, and Corporate
Secretary or the General Tax Counsel, as applicable, will determine in his or
her discretion whether an individual is employed by the Corporation in an
attorney position.

(b) Non-Solicit – Without the express written consent of the Required Approver,
during the one-year period (two-year period for Elected Officers) following the
Termination Date, I will not (i) interfere with any contractual relationship
between the Corporation and any customer, supplier, distributor or manufacturer
of or to the Corporation to the detriment of the Corporation or (ii) induce or
attempt to induce any person who is an employee of the Corporation to perform
work or services for any entity other than the Corporation.

(c) Protection of Proprietary Information – Except to the extent required by
law, following my Termination Date, I will have a continuing obligation to
comply with the terms of any non-disclosure or similar agreements that I signed
while employed by the Corporation committing to hold confidential the
“Confidential or Proprietary Information” (as defined below) of the Corporation
or any of its affiliates, subsidiaries, related companies, joint ventures,
partnerships, customers, suppliers, partners, contractors or agents, in each
case in accordance with the terms of such agreements. I will not use or disclose
or allow the use or disclosure by others to any person or entity of Confidential
or Proprietary Information of the Corporation or others to which I had access or
that I was responsible for creating or overseeing during my employment with the
Corporation. In the event I become legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
otherwise) to disclose any proprietary or confidential information, I will
immediately notify the Corporation’s Senior Vice President, General Counsel, and
Corporate Secretary as to the existence of the obligation and will cooperate
with any reasonable request by the Corporation for assistance in seeking to
protect the information. All materials to which I have had access, or which were
furnished or otherwise made available to me in connection with my employment
with the Corporation shall be and remain the property of the Corporation. For
purposes of this PECA, “Confidential or Proprietary Information” means
Proprietary Information within the meaning of CPS 710 (a copy of which has been
made available to me), including but not limited to information that a person or
entity desires to

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Award Date: January 27, 2014

Page 18

 

protect from unauthorized disclosure to third parties that can provide the
person or entity with a business, technological, or economic advantage over its
competitors, or which, if known or used by third parties or if used by the
person’s or entity’s employees or agents in an unauthorized manner, might be
detrimental to the person’s or entity’s interests. Confidential or Proprietary
Information may include, but is not limited to:

 

  (i) existing and contemplated business, marketing and financial business
information such as business plans and methods, marketing information, cost
estimates, forecasts, financial data, cost or pricing data, bid and proposal
information, customer identification, sources of supply, contemplated product
lines, proposed business alliances, and information about customers or
competitors, or

 

  (ii) existing or contemplated technical information and documentation
pertaining to technology, know how, equipment, machines, devices and systems,
computer hardware and software, compositions, formulas, products, processes,
methods, designs, specifications, mask works, testing or evaluation procedures,
manufacturing processes, or production processes.

(d) No disparagement – Following the Termination Date, I will not make any
statements, whether verbal or written, that disparage or reasonably may be
interpreted to disparage the Corporation or its stockholders, directors,
officers, employees, agents, attorneys, representatives, technology, products or
services with respect to any matter whatsoever.

(e) Cooperation in Litigation and Investigations – Following the Termination
Date, I will, to the extent reasonably requested, cooperate with the Corporation
in any pending or future litigation (including alternative dispute resolution
proceedings) or investigations in which the Corporation or any of its
subsidiaries or affiliates is a party or is required or requested to provide
testimony and regarding which, as a result of my employment with the
Corporation, I reasonably could be expected to have knowledge or information
relevant to the litigation or investigation. Notwithstanding any other provision
of this PECA, nothing in this PECA shall affect my obligation to cooperate with
any governmental inquiry or investigation or to give truthful testimony in
court.

2. Consideration and Acknowledgement. I acknowledge and agree that the benefits
and compensation opportunities being made available to me under the Award
Agreement are in addition to the benefits and compensation opportunities that
otherwise are or would be available to me in connection with my employment by
the Corporation and that the grant of the LTIP is expressly made contingent upon
my agreements with the Corporation set forth in this PECA. I acknowledge that
the scope and duration of the restrictions in Section 1 are necessary to be
effective and are fair and reasonable in light of the value of the benefits and
compensation opportunities being made available to me under the Award Agreement.
I further acknowledge and agree that as a result of the high level executive and
management positions I hold with the Corporation and the access to and extensive
knowledge of the Corporation’s Confidential or Proprietary Information,
employees, suppliers and customers, these restrictions are reasonably required
for the protection of the Corporation’s legitimate business interests.

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Award Date: January 27, 2014

Page 19

 

3. Remedies For Breach of Section 1; Additional Remedies of Clawback and
Recoupment.

(a) If I become (or currently am) an Insider (as defined in the Plan) or receive
a Long-Term Incentive Performance Award, I agree, upon demand by the
Corporation, to forfeit, return or repay to the Corporation the “Benefits and
Proceeds” (as defined below) in the event any of the following occur:

 

  (i) I breach any of the covenants or agreements in Section 1;

 

  (ii) The Corporation determines that either (a) my intentional misconduct or
gross negligence, or (b) my failure to report another person’s intentional
misconduct or gross negligence of which I had knowledge during the period I was
employed by the Corporation, contributed to the Corporation having to restate
all or a portion of its financial statements filed for any period with the
Securities and Exchange Commission;

 

  (iii) The Corporation determines that I engaged in fraud, bribery or any other
illegal act or that my intentional misconduct or gross negligence (including the
failure to report the acts of another person of which I had knowledge during the
period I was employed by the Corporation) contributed to another person’s fraud,
bribery or other illegal act, which in any such case adversely affected the
Corporation’s financial position or reputation; or

 

  (iv) Under such other circumstances specified by final regulation issued by
the Securities and Exchange Commission entitling the Corporation to recapture or
clawback “Benefits and Proceeds” (as defined below).

(b) The remedy provided in Section 3(a) shall not be the exclusive remedy
available to the Corporation for any of the conduct described in Section 3(a)
and shall not limit the Corporation from seeking damages or injunctive relief.

(c) For purposes of this Section 3, “Benefits and Proceeds” means (i) to the
extent I have earned any of the LTIP, any cash paid to me, whether paid
currently or deferred; and (ii) to the extent I have not earned the LTIP fully,
all of my remaining rights, title or interest in the LTIP.

4. Injunctive Relief. I acknowledge that the Corporation’s remedies at law may
be inadequate to protect the Corporation against any actual or threatened breach
of the provisions of Section 1 or the conduct described in Section 3(a), and,
therefore, without prejudice to any other rights and remedies otherwise
available to the Corporation at law or in equity (including but not limited to,
an action under Section 3(a)), the Corporation shall be entitled to injunctive
relief in its favor and to specific performance without proof of actual damages
and without the requirement of the posting of any bond or similar security.

5. Invalidity; Unenforceability. It is the desire and intent of the parties that
the provisions of this PECA shall be enforced to the fullest extent permissible.
Accordingly, if any particular provision of this PECA is adjudicated to be
invalid or unenforceable, this PECA shall be deemed amended to delete the
portion adjudicated to be invalid or unenforceable, such deletion to apply only
with respect to the operation of this provision in the particular jurisdiction
in which such adjudication is made.

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Award Date: January 27, 2014

Page 20

 

6. Definitions. Capitalized terms not defined in this PECA have the meaning
given to them in the Plan, as applicable. For purposes of this PECA, the
following terms have the meanings given below:

(a) “Restricted Company” means The Boeing Company, General Dynamics Corporation,
Northrop Grumman Corporation, the Raytheon Company, United Technologies
Corporation, Honeywell International Inc., BAE Systems Inc., L-3 Communications
Corporation, the Harris Corporation, Thales, EADS North America and (i) any
entity directly or indirectly controlling, controlled by, or under common
control with any of the foregoing, and (ii) any successor to all or part of the
business of any of the foregoing as a result of a merger, reorganization,
consolidation, spin-off, split-up, acquisition, divestiture, or similar
transaction.

(b) “Competitive Products or Services” means products or services that compete
with, or are an alternative or potential alternative to, products sold or
services provided by a subsidiary, business area, division or operating unit or
business of the Corporation as of the Termination Date and at any time within
the two-year period ending on the Termination Date; provided, that, (i) if I had
direct responsibility for the business of, or function with respect to, a
subsidiary, or for a business area, division or operating unit or business of
the Corporation at any time within the two-year period ending on the Termination
Date, Competitive Products or Services includes the products so sold or the
services so provided during that two-year period by the subsidiary, business
area, division or operating unit of the Corporation for which I had
responsibility, and (ii) if I did not have direct responsibility for the
business of, or function with respect to, a subsidiary, or for a business area,
division or operating unit or business of the Corporation at any time within the
two-year period ending on the Termination Date, Competitive Products or Services
includes the products so sold or the services so provided by a subsidiary,
business area, division or operating unit of the Corporation for which I had
access (or was required or permitted such access in the performance of my duties
or responsibilities with the Corporation) to Confidential or Proprietary
Information of the Corporation at any time during the two-year period ending on
the Termination Date.

(c) “Required Approver” means:

 

  (i) with respect to the Chairman, President and Chief Executive Officer, the
Management and Development Committee of the Corporation’s Board of Directors;

 

  (ii) with respect to an Elected Officer, the Corporation’s Chairman, President
and Chief Executive Officer ; or

 

  (iii) with respect to all other employees, the Senior Vice President, Human
Resources of the Corporation.

(d) “Elected Officer” means an officer of the Corporation who was elected to his
or her position by the Corporation’s Board of Directors.

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Award Date: January 27, 2014

Page 21

 

7. Miscellaneous.

(a) The Plan, the Award Agreement (with Exhibit B) and this PECA constitute the
entire agreement governing the terms of the award of the LTIP to me.

(b) This PECA shall be governed by Maryland law, without regard to its
provisions governing conflicts of law. Any enforcement of, or challenge to, this
PECA may only be brought in the Circuit Court of Maryland or the United States
District Court for the District of Maryland. Both parties consent to the proper
jurisdiction and venue of the Circuit Court of Maryland and the United States
District Court for the District of Maryland for the purpose of enforcing or
challenging this PECA.

(c) This PECA shall inure to the benefit of the Corporation’s successors and
assigns and may be assigned by the Corporation without my consent.

(d) This PECA provides for certain obligations on my part following the
Termination Date and shall not, by implication or otherwise, affect in any way
my obligations to the Corporation during the term of my employment by the
Corporation, whether pursuant to written agreements between the Corporation and
me, the provisions of applicable Corporate policies that may be adopted from
time to time or applicable law or regulation.

This PECA is effective as of the acceptance by me of the award of an LTIP under
the Award Agreement and is not contingent on the vesting of the LTIP.

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Award Date: January 27, 2014

Page 22

 

Exhibit B

Stock Ownership Requirements

Lockheed Martin’s Stock Ownership Requirements for Key Employees apply to all
senior level positions of Vice President and above. This reflects the
expectations of our major stockholders that management demonstrate its
confidence in Lockheed Martin through a reasonable level of personal share
ownership. This practice is consistent with other major U.S. corporations which
link some portion of personal financial interests of key employees with those of
shareholders.

Stock Ownership Requirements

 

Title

  

Annual Base Pay Multiple

Chairman, President and Chief Executive Officer

   6 times

Chief Operating Officer

   5 times

Chief Financial Officer

   4 times

Executive Vice Presidents

   3 times

Senior Vice Presidents

   2 times

Other Elected Officers

   2 times

Other Vice Presidents

   1 times

Satisfaction of Requirements

Covered employees may satisfy their ownership requirements with common stock in
these categories:

 

  •   Shares owned directly.

 

  •   Shares owned by a spouse or a trust.

 

  •   Shares represented by monies invested in 401(k) Company Common Stock Funds
or comparable plans.

 

  •   Share equivalents as represented by income deferred to the Company Stock
Investment Option of the Deferred Management Incentive Compensation Plan
(DMICP).

 

  •   Unvested Restricted Stock Units and Performance Stock Units (based on the
Target Award).

Key employees will be required to achieve the appropriate ownership level within
5 years and are expected to make continuous progress toward their target.
Appointment to a new level will reset the five year requirement. Unexercised
options prior to vesting are not counted toward meeting the guidelines.

Holding Period

Covered employees must retain net vested Restricted Stock Units and Performance
Stock Units and the net shares resulting from any exercise of stock options if
the ownership requirements are not yet satisfied.

Covered employees are asked to report annually on their progress toward
attainment of their share ownership goals.