Exhibit 10.30
Award Date: January 29,
2007
FORM OF THE LOCKHEED MARTIN
CORPORATION
LONG-TERM INCENTIVE PERFORMANCE
AWARD AGREEMENT
(2007-2009 PERFORMANCE
PERIOD)
MDC Committee Meeting:
January 24, 2007
Lockheed Martin
Corporation
6801 Rockledge Drive, Bethesda, MD
20817
Telephone 301-897-6000
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE
SECURITIES ACT OF
1933
[Date]
«Name»
«Street»
«City», «State»
«Zip»
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Re:
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Lockheed Martin
Corporation Amended and Restated 2003
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Incentive Performance Award Plan:
Long-Term Incentive
Performance Award (2007-2009
Performance Period)
Dear
«Call_By_Name»:
On behalf of the Management
Development and Compensation Committee (the
“Committee”) of the Board of Directors of Lockheed
Martin Corporation, I am pleased to announce that you have been
granted a Long-Term Incentive Performance Award under the
Corporation’s Amended and Restated 2003 Incentive Performance
Award Plan (the “Plan”). The purpose of this letter is
to serve as the Award Agreement under such Plan and to set forth
your Target Award as well as the terms and conditions to the
payment of your Target 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. The
Prospectus is available at http://www.etrade.com/stockplans. You
should retain the Prospectus and the attached copy of the Plan in
your records.
PLEASE NOTE THAT, FOR THIS AWARD
TO BE EFFECTIVE, YOU MUST PROMPTLY SIGN AND RETURN A COPY OF THIS
AWARD AGREEMENT.
Capitalized terms used in this
letter which have a special meaning either shall be defined in this
letter or if not defined in this letter, have the meaning ascribed
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 Long Term Incentive
Performance Award set forth in this Award Agreement. References to
the “Corporation” include Lockheed Martin Corporation
and its
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subsidiaries. Appendix A contains an index of
all capitalized terms used in this Agreement.
Section 1. Target Award.
Performance Period .
1.1 Target Award . Your
Target Award for the Performance Period under this Award Agreement
shall be [Target].
1.2 Performance Period . The
Performance Period under this Award Agreement is a three-year
performance period that runs from January 1, 2007, until
December 31, 2009.
1.3 Payment of Award . The
amount payable to you under your Award is dependent upon the
Corporation’s performance as compared to the internal and
external metrics described in this Award Agreement and your
continued employment with the Corporation in accordance with
Section 5 of this 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).
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
External Performance Factor based on the Corporation’s
performance during the Performance Period relative to the
performance of other corporations which compose the
Standard & Poor’s Industrials Index reported under
symbol S5INDU by Bloomberg, L.P. One-half of your Target Award will
be multiplied by the External Performance Factor, with the
resulting dollar amount to be known as the External Performance
Amount.
(b) The Committee will also
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 in the 2007 Long
Range Plan as presented at the February 2007 Board meeting.
One-quarter of your Target Award will be multiplied by the ROIC
Performance Factor, with the resulting dollar amount to be known as
the ROIC Performance Amount.
(c) The Committee will also
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 in the
2007 Long Range Plan as presented at the February 2007 Board
meeting. One-quarter of your Target Award will be multiplied by the
Cash Flow Performance Factor, with the resulting dollar amount to
be known as the Cash Flow Performance Amount.
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(d) Your External Performance
Amount, your ROIC Performance Amount, and your Cash Flow
Performance Amount will then be added together, with the sum of
those three amounts known as your “Potential Award”.
Assuming you satisfy the continued employment requirements set
forth in Section 5 of this Award Agreement, one-half of your
Potential Award (the “Immediate Portion”) will be paid
to you (or deferred to a later payment date specified at your
election subject to the rules on deferrals set forth below) as soon
as practicable after the Committee completes its calculations in
2010.
2.2 Two Year Deferral Period
. The remaining one-half of your Potential Award (the
“Deferred Portion”) will be deferred and paid as soon
as practicable in January 2012.
(a) Between December 31, 2009,
and December 31, 2011, the Deferred Portion will be treated as
though it was invested by the Corporation on December 31,
2009, in the Corporation’s common stock and will be adjusted
to reflect dividends, gains, and losses to reflect the performance
of the Corporation’s common stock, as further specified in
Section 5.2(c)(2).
(b) Assuming you satisfy the
continued employment requirements set forth in Section 5.2(c)
of this Award Agreement, the Deferred Portion (as adjusted) will be
paid to you as soon as practicable in January 2012 (or deferred to
a later payment date specified at your election subject to the
rules on deferrals set forth below).
You must (except as specified in
Section 5) remain employed by the Corporation through
December 31, 2009, to receive a payment of any portion of your
Award and through December 31, 2011, to receive payment of the
Deferred Portion.
Section 3. External
Performance Factor .
3.1. External Performance Factor
– Peer Performance Group . The External Performance
Factor will be based upon the Corporation’s relative ranking
of its Total Stockholder Return (as defined in the Plan and
assuming the reinvestment of any cash dividends) for the
Performance Period to the Total Stockholder Return for such Period
for the corporations which compose the Standard &
Poor’s Industrials Index as reported under symbol S5INDU by
Bloomberg, L.P. (“Peer Performance Group”) at the
beginning of the Performance Period. The Corporation shall be
included as a member of the Peer Performance Group. The
Corporation’s Total Stockholder Return will be based on the
performance of its common stock, par value $1.00. 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 & Poor’s
Industrials Index.
3.2. Calculation of External
Performance Factor .
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(a) Calculation of Total
Stockholder Return . After the end of the Performance Period,
the Committee shall compute the Total Stockholder Return for the
Corporation for such Period and shall compute and rank the Total
Stockholder Return for each corporation in the Peer Performance
Group. Each corporation’s Total Stockholder Return shall be
ranked among the Total Stockholder Return for each other
corporation in the Peer Performance Group on a percentile basis.
Each such Total Shareholder Return shall be computed from data
available to the public.
(b) Percentage Level of Target
Award . Your External Performance Factor, expressed as a
percentage, will be determined under this Section 3.2(b) (and
3.2(c) to the extent interpolation is necessary) based on the
percentile ranking of the Corporation’s Total Stockholder
Return for the Performance Period under the following chart
–
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Percentile
Ranking
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External
Performance
Factor
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One
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75th or higher
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200
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%
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Two
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60
th
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150
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%
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Three
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50
th
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100
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%
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Four
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40
th
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50
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%
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Five
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35
th
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25
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%
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Six
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Below 35
th
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0
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%
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(c) External Performance Factor
Interpolation . If the Corporation’s Total Stockholder
Return puts the Corporation over the listed Percentile Ranking for
the applicable Band (other than Band One) in Section 3.2(b),
your External Performance Factor under Section 3.2(b) shall be
interpolated on a linear basis.
Section 4. Internal
Performance Factors .
4.1 ROIC Performance Factor .
The ROIC Performance Factor will be determined by comparing the
Corporation’s ROIC for the Performance Period to ROIC as
forecasted for the Performance Period in the Corporation’s
2007 Long Range Plan and then identifying the ROIC Performance
Factor based upon the factor associated with the difference on the
following table:
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Change from 2007 LRP
ROIC
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ROIC
Performance
Factor
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Plan + 40 or more basis points
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200
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%
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Plan + 30 basis points
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175
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%
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Plan + 20 basis points
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150
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%
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Plan + 10 basis points
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125
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%
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Plan
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100
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%
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4
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Plan - 10 basis
points
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75
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%
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Plan - 20 basis
points
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50
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%
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Plan - 30 basis
points
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25
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%
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Plan
< - 40 basis points
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0
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%
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(a)
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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 plus (ii) interest
expense times one minus the highest marginal federal corporate tax
rate over the three year Performance period (“Return”),
divided by (B) the average of the four year-end investment
balances (beginning with December 31, 2006 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 Stockholder Equity.
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(b)
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ROIC
Determination . Each
component of ROIC and the calculation of any postretirement plans
amounts recorded in the Corporation’s Statement of
Stockholder 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 Stockholder 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 principals 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 2007 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).
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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 projected cumulative Cash Flow of the
Corporation as forecasted in the Corporation’s 2007 Long
Range Plan. and then identifying the Cash Flow Performance Factor
based upon the factor associated with the change from the 2007 Long
Range Plan on the following table:
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Change From 2007 LRP Cash
Flow
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Cash Flow
Performance
Factor
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Plan + $1B or more
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200
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%
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Plan + $ .75B
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175
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%
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Plan + $ .5B
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150
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%
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Plan + $ .25B
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125
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%
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Plan
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100
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%
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Plan - $ .25B
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75
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%
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Plan - $ .5B
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50
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%
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Plan - $1B
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25
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%
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Plan < -$1B
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0
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%
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(a)
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Cash Flow
Defintion . 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
2007 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; (ii) any tax
payments or benefits during the Performance Period associated with
the divestiture of business units.
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(b)
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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.
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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 be always be zero if the ROIC for the Performance Period is
less than ROIC forecasted for the Performance Period in the 2007
Long Range Plan by 40 basis points or more and the Cash Flow
Performance Factor will always be zero if the aggregate Cash Flow
for the Performanc
