Executive Severance Plan (2014)Full Document 

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LOCKHEED MARTIN CORPORATION

EXECUTIVE SEVERANCE PLAN

Originally Effective January 1, 2008

Amended and Restated Effective June 26, 2008

Amended and Restated Effective December 31, 2010

Amended and Restated Effective April 3, 2012

Amended and Restated Effective September 18, 2012

Amended and Restated Effective December 14, 2012

Amended and Restated Effective November 1, 2013

This document sets forth the terms of the Lockheed Martin Corporation Executive Severance Plan (formerly known as the Lockheed Martin Corporation Severance Benefit Plan for Certain Management Employees) (the "Plan"). The Plan provides benefits to Eligible Employees who leave the employment of the Corporation as a result of an Executive Layoff Event and otherwise satisfy the eligibility requirements of the Plan. The Plan is intended to constitute an employee welfare benefit plan under the Employee Retirement Income Security Act of 1974 ("ERISA") that provides severance benefits to a select group of management or highly compensated employees.

1. Definitions. The following terms when capitalized have the following meaning:

(a) Affiliate – Any person, any corporation, association, partnership, joint venture or other business entity of which 50% or more of the voting stock or other equity interests (in the case of entities other than corporations), is owned or controlled (directly or indirectly) by the Company or by one or more of its Affiliates, or by a combination thereof.

(b) Annual Base Pay – The annual base salary of an Eligible Employee at the time of the Eligible Employee’s Termination of Employment, excluding management incentive compensation, overtime, or any other additions to salary.

(c) Base Pay – The Annual Base Pay of an Eligible Employee divided by 52. Base Pay shall not include management incentive compensation, overtime or any other additions to salary.

(d) Basic Severance Benefit – The benefit payable under Section 5(a) of the Plan.

(e) Cause – Any of the following: (i) Commission of a crime that the Company determines could harm the Company’s reputation or financial prospects or could subject the Company to penalties or sanctions; (ii) A violation of any of the Company’s corporate policy statements that involve compliance with law which violation the Company determines could harm the Company’s reputation or financial prospects; (iii) A violation of the Company’s Code of Ethics and Business Conduct that the Company determines could harm the Company’s reputation or financial prospects; (iv) Refusal to cooperate with the Company in a Company investigation; or (v) Any similar conduct with respect to which the Company determines in its sole discretion that the payment of a benefit under the Plan would not be in the Company’s best interest.

(f) Claims Administrator – The Committee, in the case of an Officer, and the Savings Plan Administrative Committee, in the case of any other Employee.

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(g) Committee – The Management Development and Compensation Committee of the Company’s Board of Directors.

(h) Company – Lockheed Martin Corporation. For the purposes of the Plan, the term "Company" shall include any successor entity (by merger or otherwise).

(i) Eligible Employee – An Employee who satisfies the requirements for eligibility for coverage under Section 3 and who is not covered by any of the exceptions described in Section 4.

(j) Employee – An individual who is employed by the Company and is treated on the Company’s payroll records as a salaried employee of the Company. The term "Employee" includes an Officer but does not include anyone who is not a citizen or resident of the United States and whose duties are primarily performed outside the United States.

(k) Executive Layoff Event – Termination of Employment of an Eligible Employee that is (i) initiated by the Company (including under a separation window program offered by the Company that incorporates the terms of this Plan or a portion thereof and that meets the applicable exception from Code section 409A and the accompanying Treasury Regulations ) for reasons other than for Cause; and (ii) designated by the Board of Directors in the case of an Officer, or the Senior Vice President, Human Resources in the case of any Eligible Employee other than an Officer, as an Executive Layoff Event. An Executive Layoff Event does not include a termination that is described in Section 4.

(l) Follow-on Benefits – A payment equal to the cost to the Eligible Employee of continuing for one year his or her coverage under the Company’s medical, dental and vision plans under the plans and with the same level of coverage as elected by the Eligible Employee during open enrollment for the Plan Year in which the Executive Layoff Event occurs (but excluding flexible spending account plans). The amount will be equal to the cost charged Employees for coverage provided by the Company pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1987 (COBRA coverage).

(m) Full Bonus Equivalent – An amount equal to an Eligible Employee’s Annual Base Pay multiplied by the target level assigned to the Eligible Employee under Paragraph B of Exhibit A to the Lockheed Martin Corporation 2006 Management Incentive Compensation Plan (Performance-Based) or any successor plan.

(n) Officer – An Employee who is elected as an officer of the Company by the Board of Directors.

(o) Plan Administrator – Lockheed Martin Corporation.

(p) Plan Year – The 12-month period beginning on January 1 each year and ending on the following December 31.

(q)

Prorated Bonus Equivalent – An amount equal to (i) an Eligible Employee’s Base Pay multiplied by the target percentage assigned to the Eligible Employee under the Lockheed Martin Corporation 2006 Management Incentive Compensation Plan (2006) (or any successor plan) ("MICP"); the Attorney Incentive Plan, the LM Fellows

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Incentive Plan, or, with respect to Eligible Employees who are not Officers, other annual incentive plan that is designated by the Senior Vice President, Human Resources & Communications in his sole discretion, and (ii) then multiplying the product obtained under (i) by the number of weeks in the Plan Year in which the Executive Layoff Event occurs for which the Eligible Employee was paid by the Company for at least one day. For the purposes of this Section 1(r), no week may be counted twice.

(r) Salaried Employee Plan – The Severance Benefit Plan for Employees of Lockheed Martin Corporation or any successor plan that provides benefits in the case of a layoff or reduction in force to salaried employees of the Company or its Affiliates.

(t) Severance Benefit – Benefits payable under the Plan which could be a Basic Severance Benefit or a Supplemental Severance Benefit.

(u) Supplemental Severance Benefit – The benefit payable under Section 5(b) of the Plan.

(v) Termination of Employment – A separation from service as such term is defined in Code section 409A and the regulations thereunder.

(w) Years of Service – The number of consecutive calendar months from (and including) the month of the Eligible Employee’s date of hire through and including the month in which the applicable Employee’s Executive Layoff Event occurs, divided by 12, subject to the following:

(i) Service Limited to Whole Years. Fractional Years of Service will be disregarded, so that only full Years of Service will be recognized. The only exception relating to fractional years of service pertains to Eligible Employees who have more than six months of service, but less than a full year of service, in which case the Years of Service will be calculated as one year;

(ii) Certain Periods of Leave. Time periods of leave during the Employee’s employment that do not or would not qualify for credited service under the pension plan applicable to the Eligible Employee will be deducted from the total period of employment to calculate the Eligible Employee’s Years of Service;

(iii) An Eligible Employee’s Years of Service under the foregoing rules shall never exceed the actual number of full years worked by the Employee for the Company.

2. Effective Date. The Plan shall be effective with respect to Executive Layoff Events that occur and are announced on or after January 1, 2008. Amendments to the Plan are effective as of the dates set forth above.

3. Eligibility for Coverage. An Employee shall be eligible for coverage under the Plan if the Employee satisfies all of the following:

(a) At the time of the Executive Layoff Event, the Employee is either:

(i) an Officer;

(ii) a Level 7 or Level 8 Employee;

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(iii) any other Employee (other than an Employee described in (i) or (ii) of this Section 3(a)) who is designated in writing by the Senior Vice President, Human Resources & Communications as eligible to participate in the Plan, provided that such Employee was an Employee described in (i) or (ii) of this Section 3(a) within the 6-month period prior to the date that the Employee is designated as eligible for the Plan.

(b) The Employee has not waived coverage under the Plan;

(c) The Employee is not receiving a benefit under the Salaried Employee Plan and is not a party to another plan, agreement or arrangement providing severance or similar benefits on account of termination of employment;

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