LOCKHEED MARTIN CORPORATION 2006 MANAGEMENT INCENTIVE COMPENSATION PLAN

1.

Improve cost effectiveness.

2.

Stimulate employees to work individually and as teams to meet objectives and goals consistent with enhancing shareholder values value .

3.

Facilitate the Company's ability to retain qualified employees and to attract top executive talent.

4.

Establish performance goals within the meaning of Section 162(m) of the Internal Revenue Code.

1.

It is expected that the business and individual goals and objectives established for this Plan will be accomplished in accordance with the Company’s policy on ethical conduct in business with the U.S. Government and all other customers. It is a prerequisite before any award can be considered that a Participant will have acted in accordance with the Lockheed Martin Corporation Code of Ethics and Business Conduct and fostered an atmosphere to encourage all employees acting under the Participants' supervision to perform their duties in accordance with the highest ethical standards. Ethical behavior is imperative. Thus, in achieving one's goals, the Participant’s individual commitment and adherence to the Company’s ethical standards will be considered paramount in determining awards under this Plan.

2.

Plan Participants whose individual performance is determined to be less than acceptable unacceptable are not eligible to receive Incentive Compensation awards.

1.

ANNUAL SALARY – The regular base salary of a Participant during a fiscal year of the Company, determined by multiplying by 52 the Participant's weekly base salary rate effective during the first full pay period in December preceding the year of payment, but excluding any Incentive Compensation, commissions, over-time payments, payments under work-week plan, indirect payments, retroactive payments not affecting the base salary or applicable to the current year, and any other payments of compensation of any kind.

2.

BOARD OF DIRECTORS – The Board of Directors of the Company.

3.

CODE – The Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

4.

COMMITTEE – The Management Development & Compensation Committee of the Board of Directors as from time to time appointed or constituted by the Board of Directors.

5.

COMPANY or CORPORATION – Lockheed Martin Corporation and those subsidiaries of which it owns directly or indirectly 50% or more of the voting stock or other equity.

6.

CORPORATE SALARY BOARD – as defined in CPS-504, the corporate Senior Vice President Human Resources and the Chairman, President & Chief Executive Officer.

7.

DISABILITY – Termination of employment as a result of becoming totally disabled as evidenced by commencement of benefits under the Company’s long-term disability plan in which the Participant is enrolled (or, if not a participant in a Company-sponsored long-term disability plan, under circumstances which would result in the Participant becoming eligible for benefits using the standards set forth in the Company’s plan).

8.

6. ELECTED OFFICER – An Employee who has been elected as an officer by the Board of Directors.

9.

7. EMPLOYEE – Any person who is employed by the Company and who is paid a salary as distinguished from an hourly wage. The term “Employee” includes only those individuals that the Company classifies on its payroll records as Employees and does not include consultants, independent contractors, leased employees, co-op students, interns, temporary or casual employees, individuals paid by a third party or other individuals not classified as an Employee by the Company. Notwithstanding the foregoing, the term “Employee” shall not include any employee who, during any part of such year, was represented by a collective bargaining agent.

10.

8. INCENTIVE COMPENSATION – A payment made pursuant to this Plan.

11.

INDIVIDUAL PERFORMANCE FACTORS – The performance factor assigned to a Participant as set forth in Section C of Exhibit A.

12.

ORGANIZATIONAL PERFORMANCE FACTOR – The performance factor assigned to the Company, a Business Area or a Business Unit as set forth in Section D of Exhibit A.

13.

9. PARTICIPANT – Any Employee selected to participate in the Plan in accordance with its terms.

14.

10. PLAN – This 2006 Lockheed Martin Corporation Management Incentive Compensation Plan (Performance Based).

15.

11. PLAN YEAR – A calendar year.

16.

REQUIRED APPROVER – (a) the Committee in the case of the Chief Executive Officer; (ii) the Chief Executive Officer in the case of a vice president (whether appointed or elected); (iii) the relevant business area Executive Vice President in the case of a director level or lower level Employee working in a business area; (iv) the Elected Officer serving as the head of a corporate function in the case of all director level or lower level Employees assigned to that corporate function.

17.

12. RESTRICTED EMPLOYEE – An Employee who either (i) is an Elected Officer, or (ii) at the time of a payment under this Plan, is the recipient of a Long Term Incentive Performance Award under the Lockheed Martin Corporation Amended and Restated 2003 Incentive Performance Award Plan with a performance period yet to be completed.

18.

RETIREMENT – Retirement under the terms of a Company-sponsored pension plan or for Employees who do not participate in a pension plan, termination from employment with the Company following the attainment of age 55 and five years of service.

19.

13. SUBCOMMITTEE – The Stock Option Subcommittee A subcommittee of the Committee, or such subcommittee composed solely of two or more outside directors of the Company (within the meaning of Code section Section 162(m) (4) (C)) or the entire subcommittee is Committee if all members of that subcommittee the Committee are outside directors.

20.

14. TARGET LEVEL – The target levels specified in Section B of Exhibit A.

1.

CALCULATION OF PAYMENTS – Incentive Compensation payments to Participants shall be calculated in accordance with the formula and procedures set forth in Exhibits A and B hereto. All such payments shall be in cash.

2.

TARGETS – At the beginning of each Plan Year or in connection with an internal promotion or an employment offer made later in a Plan Year, the Required Approver, subject to review by the Chief Executive Office Officer, shall identify the Employees eligible for participation in the Plan for that Plan Year and designate a Target Level for each Employee so designated.

3.

INDIVIDUAL PERFORMANCE FACTORS – Each Employee designated as eligible for participation for a particular Plan Year shall identify individual performance goals for that Plan Year on or before March 30 of that Plan Year (or within 30 days of designation as a Participant by the Executive Office Required Approver or assumption of a new position with eligibility for participation in the Plan , whichever is later). As soon as practicable following the end of the Plan Year, the Business Area Executive Vice President or corporate function head, as the case may be, shall evaluate the performance of each Participant is evaluated in the respective Business Area or corporate functional area in light of the individual’s performance goals and assign assigned an Individual Performance Factor as provided for in Exhibit A, subject to approval by the Chief Executive Office Officer . The Individual Performance Factors for elected corporate officers, other than the Chief Executive Officer and President, shall be determined by the Chief Executive Office Officer as provided in Exhibit A, subject to approval by the Committee. The Individual Performance Factor(s) of the Chief Executive Officer and President of Lockheed Martin Corporation shall be determined by the Committee Board of Directors . The Committee may, at the request of any member of the Committee, review the Individual Performance Factors of any other Participant or groups of Participants. The Committee may make adjustments to any such performance factors as it considers appropriate.

4.

ORGANIZATIONAL PERFORMANCE FACTORS – The Chief Executive Office Officer (for the Company) and each Business Area Executive Vice President (for each Business Area and business unit) shall identify organizational performance goals for the Company, each Business Area and each business unit for that Plan Year on or before March 30 of that Plan Year. The Chief Executive Office Officer shall review the Company and Business Area organizational performance goals with the Committee. As soon as practicable following Beginning at the end of the Plan Year, the Chief Executive Office Officer shall evaluate the performance of the Company and each Business Area in light of their respective organizational performance goals and determine the Company’s and the Business Area Organizational Performance Factors, as provided for in Exhibit A, subject to the approval of the Committee. Each Business Area Executive Vice President shall evaluate the performance of each business unit within his or her business area in light of

5.

APPROPRIATIONS TO THE PLAN.

A.

To the extent that the aggregate of all proposed payments of Incentive Compensation to all Participants as determined by the application of the formula set forth in Exhibit A (subject to any adjustments made by the Committee under Paragraph 2 3 or 3 4 above or pursuant to Exhibit B) exceeds the amount determined by the Committee to be available for payment, all proposed payments of Incentive Compensation to Participants shall be reduced on a pro rata basis.

B.

The Committee will recommend to the Board of Directors the authorization of the amount to be appropriated to the Plan by the Company for distribution to Participants and as computed pursuant to the provisions of this Paragraph 5. The Board of Directors may, notwithstanding any provision of the Plan, make adjustments to any proposed Incentive Compensation payment under the Plan, and subject to any such adjustments, the Board of Directors will appropriate to the Plan the amount as recommended by the Committee for distribution to the Participants; provided that, the Board of Directors may appropriate an amount which is less than the amount recommended by the Committee in which event all proposed payments of Incentive Compensation to Participants shall be reduced on a pro rata basi