Lockheed Martin Corp DEF 14A, filed Mar 14, 2023

Lockheed Martin Corp (LMT)

DEF 14A 2023-03-14

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Added on June 12, 2026

About this DEF 14A

Lockheed Martin Corp filed this DEF 14A on March 14, 2023.

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March 14, 2023 Dear Stockholders:
We hope you will join us at our virtual 2023 Annual Meeting of Stockholders on April 27, 2023. We encourage your attendance and engagement as we cover management and stockholder proposals as well as respond to your questions and comments. As we embark on a journey of enterprise-wide transformation and leadership in global security, we are committed to our company’s core values. These values inspire and unite our 116,000 teammates from diverse cultures and backgrounds across more than 30 countries. Every day, we work to meet the needs of the U.S. Government and its allies as we focus on deterrence through networked capabilities. Our customers’ need for joint all-domain operations is shaping Lockheed Martin to be fast, agile and innovative pathfinders to keep our customers “ahead of ready.” We are accelerating the delivery of 21st Century Security solutions to meet our customers’ hardest challenges. In this 2023 Proxy Statement, you will see we are doing this as responsible corporate citizens focused on positive outcomes and as global stewards for sustainable and ethical business practices. We are confident in our company’s strategy for long-term growth, which comes not only through continuing to innovate and deliver for our customers, but also through the choices we make and the methods we use to accomplish our goals. As a Board, we actively partnered with management to oversee progress in key areas aligned with our strategy and core values, and we are proud of the following 2022 achievements: •Customer Mission Success: We completed 94% of targeted Mission Success events. These are events such as key deliveries, flight tests and demonstrations that we identified at the beginning of the year as important to our customers and our program performance. •Stockholder Value: We created significant stockholder value, returning $10.9 billion to stockholders through dividend payments and share repurchases and achieving one- and three-year total stockholder returns of 40% and 36%, respectively. •OneLM Transformation (1LMX): We invested $400 million in digital and business transformation as part of a multi-year program to transform our processes and deliver capability to our customers that will enhance our speed, agility, insights and value. •R&D and Capital Investments: We increased our company-funded research and development and capital investments to meet emerging challenges and help accelerate the delivery of capabilities our customers need. •Supply Chain: We made progress on our transformation efforts designed to increase savings, improve supplier performance, increase organizational efficiency and decrease supply chain risk and developed an enterprise-wide approach for increasing multi-tier supply chain risk management. •Military & Veteran Support: Veterans make up a fifth of our workforce. We donated more than $9.6 million to ensure service members, veterans and their families are prepared, well-supported and enabled to fully participate and thrive in society.



			Do What’s Right


			Respect Others


			Perform with Excellence


A BOUT LOCKHEED MARTIN			1

PROXY STATEMENT VOTING ROADMAP			3

PROPOSAL 1: ELECTION OF DIRECTORS			6
Board Composition and Effectiveness			7
Commitment to Board Diversity			7
Board Attendance			7
Director Nomi nees ’ Strategic Skills, Core Competencies and Attributes			8
Director Nominees			10

CORPORATE GOVERNANCE			17
Our Alignment with Governance Standards			17
Board Leadership Structure			18
Executive Sessions			19
Committees of the Board of Directors			19
Board Role and Responsibilities			22
Board Role in Strategic Planning			22
Board Oversight of Risk			22
Enterprise Risk Management			23
Board Oversight of Succession Planning			24
Board Oversight of ESG			24
Our Stockholder Engagement Program			24
Board Policies and Processes			26
Corporate Governance Guidelines			26
Oversight of Director Commitments			26
Board Nomination Process			27
Onboarding and Continuing Education			28
Annual Performance Assessment			28
Consideration of Director Tenure			28
Director Independence			29
Related Person Transaction Policy			30
Certain Relationships and Related Person Transactions of Directors, Executive Officers and 5 Percent Stockholders			30
Accountability to Stockholders			31
Director Stock Ownership Guidelines			31
Majority Voting Policy for Director Elections			31
Stockholder Right to Amend Bylaws			31


Proxy Access			31
Stockholder Right to Call Special Meeting			31
No Poison Pill			31

ENVIRONMENTAL , SOCIAL AND GOVERN A NCE (ESG)			32
Sustainability Program			32
Our People Strategy			35
Cybersecurity			37
Political and Public Policy Activities			37
H uman Rights			38

EXECUTIVE COMPENSATION			39

PROPOSAL 2: ADVISORY VOTE T O APPROVE THE COMPENSATION OF OUR NEO s (SAY-ON-PAY )			39
Compensation Committee Report			39

PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NEOs			40
Compensation Discussion and Analysis			41
Executive Compensation Tables			58
CEO Pay Ratio			72
P ay Versus Performance			72

DIRECTOR COMPENSATION			75

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS			77


PROPOSAL 4: R ATIFICATION OF APPOINT MENT OF INDEPENDENT AUDITORS			79
Audit Committee Report			81

STOCKHOLDER PROPOSAL S 5 -7			82

FREQUENTLY ASKED QUESTIONS (FAQs)			91
Appendix A: Definition of Non-GAAP Measures			98
Disclosure Regarding Forward-Looking Statements			100



Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on April 27, 2023: The 2023 Proxy Statement and 2022 Annual Report are available at www.edocumentview.com/LMT.


•Employee Culture: We launched several learning curriculums focused on preparing our leaders and workforce to effectively navigate change and adapt to new ways of working with an emphasis on inclusion and flexibility. Lockheed Martin’s focused efforts around culture, transformation, leadership development and the employee experience contributed to our ranking as the top Aerospace and Defense Employer and 11th best company overall in the 2022 Forbes World’s Best Employers survey. •Internal Audit and Enterprise Risk Management: We enhanced enterprise assurance through increased use of data analytics and automated risk surveillance. •Environmental: We accelerated our 2030 decarbonization goals, restated them on an absolute basis, and updated the baseline year, increasing our targets to 36% reduction of carbon and 40% use of renewables. We also published a climate lobbying assessment report in response to investor interest. •Human Rights: We continued to engage with our investors on human rights issues and published an updated Human Rights Report providing greater transparency into our policies, programs and commitments related to human rights. •Governance and Board of Directors: We have 38% gender and ethnic diversity among our Board nominees. During 2022, we updated our Governance Guidelines to make explicit the Board’s commitment to diversity in our Board member searches. •Stockholder Engagement: We solicited ongoing feedback from investors through our year-round stockholder engagement program, which in 2022 included engagements with stockholders representing nearly half of our outstanding shares. Our energy, ingenuity and values have made us the world’s leader in integrated deterrence. In this Proxy Statement, you will learn more about our Board and governance practices, our approach to Environmental, Social, and Governance (ESG) topics, our executive compensation structure and other important aspects of our company. It is an honor to serve as your Board of Directors and we are thankful for your continued trust. Your vote is important to us and we encourage you to promptly cast your votes in consideration of our recommendations. With respect and gratitude, Your Lockheed Martin Board of Directors



			Frequently Requested Information

			Board Attendance			7

			Board Leadership Structure			18

			Board Oversight of Risk			22

			Board Performance Assessment			28

			Climate & Environmental Stewardship			33

			Compensation Discussion and Analysis			41

			Cybersecurity			37

			Director Compensation			75

			Director Nominees’ Strategic Skills, Core Competencies and Attributes Matrix			8

			Director Nominee Biographies			10

			Diversity & Inclusion			35

			Environmental, Social and Governance (ESG)			32

			Human Rights			38

			Oversight of Director Commitments			26

			Political and Public Policy Activities			37

			Stockholder Engagement Program			24


Financial Strength: 2022 Results		Industry-Leading Portfolio (2022 Sales)

			$27.0B AERONAUTICS

			$11.3B MISSILES AND FIRE CONTROL

	73% 5-year Total Stockholder Return		$16.2B ROTARY AND MISSION SYSTEMS

	7% Increase to Annual Dividend		$11.5B SPACE

	$5.7B Net Earnings



2022 CEO TARGET OPPORTUNITY MIX						2022 ANNUAL INCENTIVE
						Component Weightings and Achievements


3-YEAR SAY-ON-PAY RESULTS						2020-2022 LONG-TERM INCENTIVES
						Component Weightings and Achievements

						*See Appendix A for the definitions of Non-GAAP measures.


At Lockheed Martin, we recognize diversity and inclusion as a business imperative and strategic asset to our investors. We believe that our business accomplishments are a result of the efforts of our employees around the world, and that a diverse employee population will result in a better understanding of our customers’ needs. Our success with a diverse workforce also informs our views about the value of a board of directors that has persons of diverse skills, experiences and backgrounds. Diversity in skills and backgrounds ensures that the widest range of options and viewpoints are expressed in the boardroom. To this end, the Board seeks to identify candidates with areas of knowledge or experience that will expand or complement the Board’s existing expertise in overseeing a technologically-advanced global security and aerospace company. In September 2022, the Board amended the Corporate Governance Guidelines (Governance Guidelines) to make explicit the Governance Committee’s commitment to actively seeking out highly-qualified women and individuals from minority groups as well as candidates with diverse backgrounds, experiences and skills as part of each search the Company undertakes. The Nominating and Corporate Governance Committee implements these guidelines in the identification and review of Board candidates and assesses the effectiveness of these guidelines by including questions regarding the diversity of the Board membership in the Board’s annual self-evaluation. The current composition of our Board and recent refreshment reflects those efforts and the importance of diversity to our Board. Over the past five years, our Board’s gender and racial/ethnic diversity has been enhanced with the additions of Pat Yarrington (2021), Debra Reed-Klages (2019), Vicki Hollub (2018) and Jeh Johnson (2018). We have also added two veterans over the past five years and new Board members have collectively enhanced each of the core competencies and strategic skills outlined on the following page.


						38%
						Gender and Ethnic Diversity 31% Women 8% African American 38% Veterans


Our Board is committed to their Board service. In 2022, there were six Board meetings. Directors are expected to attend all Board meetings and meetings of the committees on which they serve. All directors on the Board during 2022 attended more than 75 percent of the total Board and committee meetings to which they were assigned and overall attendance of the Board as a whole was 99 percent. Board members are also encouraged to attend the annual meeting of stockholders and all director nominees for the 2023 Annual Meeting attended the 2022 Annual Meeting.


						99%
						Average attendance of directors as a group at Board and committee meetings during 2022



21st Century Security / Defense Industry Transformation	We are increasingly confronting an evolving threat landscape that is demanding advanced capabilities and a need for better predictability and capacity faster than ever before. Our 21st Century Security strategy is about taking the best of defense and commercial technology to make forces agile, adaptive and unpredictable, so that they stay ready for any mission - today and in the future. Directors with experience in leading transformation and in the defense, commercial and telecom sectors provide important perspectives as we aim to execute industry partnerships and lead bringing these sectors together to deliver transformational capabilities for national defense.


5G.MIL / Digital & Networking Open Architecture	Lockheed Martin's 5G.MIL solutions integrate military communications with tactical gateway capabilities (.MIL) and enhanced 5G technology to enable seamless, resilient and secure connectivity and data flow across all battlefield assets. Directors with industry experience or technological expertise contribute to an understanding of network-enabled technologies and open architectures to enable our 21st Century Security vision.


AI, Autonomy, Adv. Comms, Hypersonics, Space	Technologies such as Artificial Intelligence, Autonomy, Advanced Communications, Hypersonics and Space are key technology priorities for the Company. Directors with technology backgrounds contribute to an understanding of these technology priorities and our oversight of key investments in these areas.


Business and Digital Transformation	Directors with experience in business processes and systems and their evolution provide valuable insights as we execute our mission-driven business and digital transformation program that is critical to innovate and deliver the speed, agility and insights our customers need.


Operational Execution and Efficiency	Our future success requires us to drive a culture of operational excellence, efficiency and consistent performance. Directors with experience in areas such as complex manufacturing and other large, complicated operations contribute to the understanding of these challenges.


Supply Chain Excellence	Lockheed Martin has a diverse and complex multi-tiered supply chain that is critical to our success. Directors with expertise in the management of the upstream and downstream relationships with suppliers and customers provide important perspectives on managing supply chain challenges and driving its affordability and resiliency.


International Business Expansion	We are a global business with a presence in more than 50 countries. One of our key growth priorities is to expand our business internationally. Directors with experience understanding the complexities and risks of international business help the Company to achieve its international objectives.


Business Model /Commercial Partnerships	A key element of our 21st Century Security strategy is to collaborate with innovative commercial companies outside of the traditional aerospace and defense industry to leverage their technologies for military applications as well as to develop new business models for the defense industry. Directors with commercial experience contribute to an understanding of these new business models and related growth opportunities.


M&A Expertise	We look to leverage inorganic growth and portfolio alignment by pursuing strategically aligned targets with ventures, acquisitions and other investments as well as dispositions. Directors with mergers and acquisitions experience contribute to the Board’s understanding of these opportunities.


	Senior Leadership Experience	All directors have senior leadership experience. We look to have a balance of directors with public company CEO leadership experience, public company CFO experience and other experience managing large, complex organizations.


	Financial Expertise	All directors have the ability to understand financial statements. Directors who qualify as an “audit committee financial expert” have additional education and experience that enables them to provide additional oversight of financial statements and capital allocation decisions as well as important financial metrics in measuring our performance.


	Environment, Social and Governance Expertise	Directors with environmental, social and governance experience, including employee safety and health, climate-related risks, political risks and cybersecurity, play an important role in the Board’s oversight of risks and the Company’s sustainability initiatives.


	Cybersecurity Expertise	Directors with experience in cybersecurity, intelligence and data protection, including U.S. cybersecurity policy and the U.S. Government’s cybersecurity efforts and cybersecurity threats, contribute to the Board’s oversight of cybersecurity risks and digital transformation efforts.


	Senior Military / Government Experience	Directors with experience serving in senior military or government roles bring an important perspective and understanding of our customers and relevant policy issues.


	Race / Ethnicity, Veteran, Gender, Age, Tenure	Our Board believes a balance of director diversity and tenure is a strategic asset to our investors. See the discussion of Board Composition on page 7. Directors who are veterans of the U.S. Armed Forces also contribute to an understanding of our customers and mission.



Principle 1: Boards are accountable to stockholders

	Annual election of directors Majority voting standard for uncontested director elections Directors not receiving majority support must tender resignation to Board for consideration	Market-standard proxy access right for stockholders No poison pill Full disclosure on corporate governance and Board practices



Principle 2: Stockholders should be entitled to voting rights in proportion to their economic interest	One class of voting stock “One share, one vote” standard



Principle 3: Boards should be responsive to stockholders and be proactive in order to understand their perspectives	Proactive, year-round engagement with stockholders, including participation of independent directors as appropriate Engagement topics during 2022 included: Board composition, diversity and refreshment, stockholder rights, climate risks and related climate change goals, workforce diversity and inclusion, executive compensation, human rights and our Human Rights Report, the conflict in Ukraine, lobbying and political spending and other environmental, social and governance (ESG) matters



Principle 4: Boards should have a strong, independent leadership structure	Engaged independent Lead Director Annual review of Board leadership structure Independent chairs of all Board committees



Principle 5: Boards should adopt structures and practices that enhance their effectiveness	12 of 13 director nominees are independent; all Board committees are fully independent Four directors are women; one director is an African-American male Significant Board refreshment yielding a diverse mix of skills and experiences Annual Board and committee self-assessments	2022 updates to Governance Guidelines make explicit the Company’s commitment to actively seek out gender and ethnically diverse Board candidates Board access to officers and employees 2022 Board attendance of 99% Overboarding policy ensures Board members can devote sufficient time to the Company



Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company	Compensation programs actively reviewed by the Board and include short- and long-term goals tied to the long-range plan and that underpin our long-term strategy



The Risk and Compliance Committee and the Integrated Risk Council Management formally reviews enterprise risk management through a Risk and Compliance Committee (RCC) and an Integrated Risk Council (IRC), as well as periodically during executive leadership team meetings. The RCC meets on a quarterly basis and its primary purpose is to (i) oversee the Company’s enterprise risk management program and report to the IRC; (ii) support the Lockheed Martin strategic planning process through identification and management of key risks and opportunities; (iii) provide a forum for business segment and corporate functional representatives to communicate, coordinate and collaborate on their respective risk management activities; and (iv) provide a forum for approval of the Company’s mandatory business conduct and compliance training. In 2022, we formally assigned specific responsibilities for oversight of elements of our sustainability initiatives to the RCC, further enhancing the integration of our sustainability and risk management programs. Our Audit Committee Chair has participated in an RCC meeting. The next level of review in the process is the smaller IRC, which provides a more strategic perspective. The IRC primarily oversees the RCC and reviews the enterprise risk management activities to conduct strategic, operational and compliance risk management; its members inform other senior executives and the Board of those efforts.


Stockholder Outreach. In seeking stockholder perspectives, our senior management team offered during 2022 to engage with a cross section of stockholders representing nearly a majority of our outstanding shares calculated as of December 31, 2022, and engaged with institutions representing 61% of our institutional shares. Our consistent, active and year-round dialogue with stockholders and other stakeholders enables our Board to consider a broad range of viewpoints in boardroom discussions. Stockholders’ views are communicated to the Board throughout the year and are instrumental in the development of our governance, compensation and environmental and social policies and inform our business strategy. Please see the summary below of principal governance-related engagement topics during 2022.			Engagement Highlights 65 Engagements 61% of Institutional Shares Outstanding 47% Outstanding Shares



•The role of the Board and director responsibilities; •The role and responsibilities of the independent Lead Director; •Application of our Code of Ethics and Business Conduct (the Code of Conduct) to the Board; •Director nomination procedures and qualifications; •Director independence standards; •Director overboarding guidelines; •Policies for the review, approval and ratification of related person transactions; •Director orientation and continuing education; •Review by the Governance Committee of any change in job responsibilities of directors;			•Procedures for annual performance evaluations of the Board and its committees; •Director stock ownership guidelines; •Clawback policy for executive incentive compensation; •Policy prohibiting hedging and pledging of Company stock; •Majority voting for the election of directors and resignation procedures for directors who fail to receive a majority vote; •Process for director compensation review, specifically use of competitive data and input from independent compensation consultant; and •Stockholder engagement program; including that our independent Lead Director will consider requests to speak to investors and will engage or designate (in consultation with the Corporate Secretary) a director to engage with the requesting investors, if appropriate.


												Assess the Board’s needs The Governance Committee considers both the short- and long-term strategies of the Company to determine what current and future skills and experience are required of the Board in exercising its oversight function and in the context of our strategic priorities. Board succession planning is a topic on every Governance Committee meeting agenda.
1



												Identify candidates When identifying and selecting director nominees, the Governance Committee screens and recommends candidates for nomination by the full Board. The Governance Committee identifies potential board candidates through two primary channels: •Internal executive search team: The Company’s internal executive search team sources and compiles a list of prospective candidates. •Informal networks: Board members may recommend potential candidates from their own business and professional networks to the Governance Committee for consideration. In identifying candidates, the Governance Committee actively seeks out diverse candidates as described under “Commitment to Board Diversity” on page 7. Director candidates also may be identified by stockholders and will be evaluated under the same criteria applied to other director nominees and considered by the Governance Committee. Information on the process and requirements for stockholder nominees may be found in Sections 1.10 and 1.11 of our Bylaws (available at www.lockheedmartin.com/corporate-governance).
2



												Review and evaluate candidates Our Governance Guidelines (available at www.lockheedmartin.com/corporate-governance) list criteria against which the Governance Committee evaluates candidates. In addition, the Governance Committee considers, among other things: •input from the Board’s self-assessment process to prioritize areas of expertise that were identified; •investor feedback and perceptions; •alignment of the candidates’ skills and competencies to the Company’s future strategic challenges and opportunities; •the needs of the Board in light of expected Board retirements or resignations; •a balance between public company and government customer-related experience; •candidates’ gender and race/ethnicity; and •for incumbent directors, attendance, past performance on the Board, the director’s other time commitments and contributions to the Board and their respective committees.
3




												Interview candidates The Chairman and independent Lead Director interview candidates that the Governance Committee has determined satisfy the evaluation criteria and would add value to the Board.
4



												Recommend candidate to the Board The Governance Committee recommends to the Board the candidate that best fits the needs of the Board at that time. Prior to any formal action, other independent members of the Board are offered the opportunity to interview the prospective candidate.
5


The Board has determined that all of our directors are independent under applicable NYSE listing standards, except Mr. Taiclet, our President and CEO. Under the NYSE listing standards and our Governance Guidelines, a director is not independent if the director has a direct or indirect material relationship with the Company. The Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. The Board has adopted director independence guidelines that are included in our Governance Guidelines, which are available on the Company’s website at www.lockheedmartin.com/corporate-governance. These guidelines set forth certain relationships between the Company and directors and their immediate family members or affiliated entities, which the Board, in its judgment, has deemed to be material or immaterial for purposes of assessing a director’s independence. If a director has a relationship with the Company that is not addressed in the independence guidelines, then the independent members of the Board would determine whether or not the relationship is material. 2022 Independence: In determining that each of the non-management directors is independent, the Board considered the relationships described under “Certain Relationships and Related Person Transactions of Directors, Executive Officers and 5 Percent Stockholders” on the following page, each of which were determined to be immaterial to each individual’s independence. The Governance Committee and Board considered that the Company, in the ordinary course of business, purchases products and services from, or sells products and services to, companies or subsidiaries or parents of companies at which some of our directors (or their immediate family members) are or have been directors, officers or other employees and to other institutions with which some of these individuals have or have had relationships. These relationships included: Mr. Burritt (National Association of Manufacturers); Mr. Carlson (The Utah State University Space Dynamics Laboratory); Mr. Donovan (AT&T Inc. (family member’s employer)); Mr. Dunford (K&L Gates LLP (family member’s employer) and The Atlantic Council); Mr. Ellis (Blue Origin, LLC (family member’s employer), Dominion Energy Inc., the Economist Group (family member’s employer) and Stanford University (family member’s employer)); Mr. Falk (FIS Global (family member’s employer)); Ms. Gordon (International Flavors and Fragrances, Inc. and International Paper Company); Mr. Johnson (Center for a New American Security and MetLife, Inc.); Ms. Reed-Klages (The Boeing Company (family member’s employer) and Caterpillar Inc.); and Mr. Stewart (Goldman Sachs Bank USA and KBR). In determining that these relationships did not affect the independence of those directors, the Board considered that none of the directors had any direct or indirect material interest in, or received any special compensation in connection with, the Company’s business relationships with those entities. In addition to their consideration of these ordinary course of business transactions, the Governance Committee and the Board relied upon the director independence guidelines included in our Governance Guidelines to conclude that contributions to a tax-exempt organization by the Company did not create any direct or indirect material interest for the purpose of assessing director independence. The Governance Committee also concluded that all members of each of the Audit, Compensation and Governance Committees are independent within the meaning of our Governance Guidelines and NYSE listing standards, including the additional independence requirements applicable to members of the Audit Committee and Compensation Committee.


						DIRECTOR NOMINEE INDEPENDENCE

						92%
						Independent


						Independent Directors* Daniel F. Akerson David B. Burritt Bruce A. Carlson John M. Donovan Joseph F. Dunford, Jr. James O. Ellis, Jr. Thomas J. Falk Ilene S. Gordon Vicki A. Hollub Jeh C. Johnson Debra L. Reed-Klages Patricia E. Yarrington Non-Independent Director James D. Taiclet * Vincent R. Stewart served from July 2022 through January 1, 2023 and was independent.




Board of Directors Chairman, President and CEO Nominating and Corporate Governance Committee	Executive Leadership Team Chairman, President and CEO Chief Operating Officer Chief Financial Officer SVP Business Functions Executive VPs Business Segments	Risk and Compliance Committee Chair: Senior Vice President, Ethics and Enterprise Assurance Vice Presidents of business segment and corporate functions	Sustainability Management Team Chair: Director of Sustainability Directors and Senior Managers responsible for functions related to specific sustainability management plan goals

Monitors the Company’s adherence to our Code of Ethics and Business Conduct and oversees performance in corporate sustainability, employee safety and health, ethical business practices and diversity and inclusion.	Oversees the sustainability program and enables business segment and functions to pursue and implement opportunities and practices that support the sustainability policy.	Oversees enterprise risk management to inform Executive Leadership Team and the Board on risk management efforts and provides a forum to review and guide enterprise sustainability initiatives and provide input on SMP execution.	Reviews SMP progress and opportunities for program enhancement and shares internal and external insights and best practices.


Lockheed Martin has been recognized globally for our sustainability efforts and disclosures. We publish annual sustainability reporting which is prepared in accordance with the Global Reporting Initiative (GRI) Standards and undergoes third-party assurance. We also maintain a dedicated sustainability website and an ESG portal that serves as an online repository for our ESG-related disclosures, guidelines, policies and webpage links, including select GRI and Sustainability Accounting Standards Board (SASB) indicators. In 2020, we published our first Climate-Related Risk and Opportunity Assessment report, aligned with the Task Force on Climate-Related Financial Disclosure (TCFD) recommendations, and expect to publish an update in 2023.


	Women(a)		People of Color(a)		Veterans(a)		People with Disabilities(a)
Overall	23	%	30	%	21	%	11	%
Executives(b)	25	%	16	%	21	%	11	%



Board Oversight of People Strategy and Diversity and Inclusion The Board of Directors is actively engaged in the oversight of human capital management and strategy. Our human capital management strategy, which we refer to as our people strategy, is tightly aligned with and enables achievement of our business strategy. There are various ways we measure progress toward the achievement of our human capital objectives. First, we regularly conduct an employee engagement survey to gauge employee satisfaction and to understand the effectiveness of our people strategy and assess employees’ intent to continue their employment. The Board reviews these survey results. Additionally, the Senior Vice President and Chief Human Resources Officer updates the Board on the Company’s people strategy on an annual basis, reporting on measures we use to manage our workforce, including workforce demographics, hiring metrics, talent management metrics, including retention rates of top talent, and diversity metrics with respect to representation, attrition, hiring, promotions and leadership. Talent management and workforce diversity and inclusion criteria are included in the strategic and operational performance commitments under management’s annual incentive program. Board members also are active partners in the development of our workforce, engaging and spending time with our high-potential leaders at Board meetings and other events.



Board Oversight of Cybersecurity Cybersecurity is included in the Company’s enterprise risk management process and is overseen by the Board. The Board receives a briefing from senior leadership on cybersecurity and information security twice a year or more frequently as needed (either orally or in writing). The Classified Business and Security Committee also is briefed by senior management as needed on the cybersecurity of classified programs and information and the security of suppliers and the global supply chain within the Company’s classified business. Other than these classified business related cybersecurity items, the full Board has retained oversight of cybersecurity because of the importance to the Company and the heightened risk in the U.S. aerospace and defense industry. During 2022, the Board received regular updates on any potential cybersecurity impacts of the Russia-Ukraine conflict and the Company’s Shields Up Task Force, formed in response to the conflict. The Board also visited Lockheed Martin’s Security Intelligence Center to review the triad of people, intelligence and tradecraft that frames the Company’s cybersecurity approach.



Board Oversight of Political and Public Policy Activities The Governance Committee oversees Lockheed Martin’s political and public policy activities, including its advocacy efforts, government affairs activities and political spending. The Governance Committee supervises the policies related to these activities to ensure the intended purposes of the activities and their related benefits are well-aligned with the Company’s strategy and driving long-term value. The Governance Committee receives regular reports from management on these matters and, in turn, supports accountability, transparency and public disclosure of corporate political expenditures and lobbying activities. To that end, the Company provides extensive information on its website about its political and public policy activities beyond what is required by law.



Board Oversight of Human Rights The Board, through the Governance Committee, reviews and monitors the Company’s policies and procedures regarding corporate responsibility and human rights. The Governance Committee receives regular reports on 2025 Sustainability Management Plan progress, which includes goals related to human rights. The Governance Committee was briefed on the 2022 Human Rights Report. During 2022, one of our Board members met with the proponent of Proposal 7 to directly discuss and respond to their concerns.



Maryanne R. Lavan Senior Vice President, General Counsel and Corporate Secretary Years of Service: 33 years						Gregory M. Ulmer Executive Vice President Aeronautics Years of Service: 27 years


To assist stockholders in finding important information in the CD&A, sections are highlighted as follows:
	Page(s)
	42	Our 2022 Performance
	43	2022 CEO Compensation
	45	2022 Comparator Group Companies
	47	2022 Compensation Elements
	47 -50	2022 Annual Incentive
	50 -53	2022 Long-Term Incentive Compensation
	53-54	2020-2022 LTIP and PSU Awards
	54	2023 Compensation
	54-57	Other Compensation Matters


2022 CEO Target Pay Mix. We believe that the compensation opportunities of our CEO should be predominantly variable, and the variable elements of the compensation package should tie to the Company’s long-term success and sustainable long-term total returns to our stockholders. As shown in the chart to the right, a significant portion of our CEO’s target compensation is variable and in the form of long-term incentives (LTI) with more than half of total target pay in the form of equity-based incentives. Base Salary. In 2022, Mr. Taiclet’s annual base salary was set at $1,751,000, which remained unchanged from 2021. 2022 Annual Incentive. Mr. Taiclet’s target annual incentive amount for 2022 was 190% of salary, or $3,326,900. 2022-2024 Long-Term Incentives. In 2022, Mr. Taiclet was granted an annual LTI award of $15,000,287, which was allocated 50% in PSUs, 30% in Restricted Stock Units (RSUs) and 20% in the cash-based LTIP. RSUs will cliff-vest after three years, while the payout of PSUs and LTIP will be based upon our results at the end of the three-year performance period relative to the three-year performance goals that were established in the beginning of 2022. Benefit and Retirement Plans. Mr. Taiclet is eligible for benefit and retirement programs, similar to other salaried employees. None of our NEOs received additional years of service credits or other forms of formula enhancements under our benefit or retirement plans. Mr. Taiclet does not participate in our pension plan.						CEO Target Opportunity Mix *

						*Fixed vs. variable and cash vs. equity components are designated in the Compensation Elements table on page 47. We consider base salary and annual incentives as short-term pay and PSUs, LTIP and RSUs as long-term pay. Cash represents base salary, annual incentive target and LTIP target. We do not include retirement or other compensation components in the chart.



Set an Initial List of Companies Attributes •Traded on a major U.S. exchange •Similarity in annual revenue •Participation in Aon executive compensation survey						Apply Refining Criteria to Select Final Comparator Group Refining Criteria •Industrial companies that face similar macro-economic pressures •Companies we compete with for executive talent •Companies with comparable executive officer positions




2022 Comparator Group Companies
3M Company	General Dynamics Corporation*	Northrop Grumman Corporation*
Caterpillar Inc.	General Electric Company	Raytheon Technologies Corporation*
Cisco Systems, Inc.	Honeywell International Inc.*	The Boeing Company*
Deere & Company	HP Inc.	United Parcel Service, Inc.
Dow Inc.	IBM Corporation
FedEx Corporation	Intel Corporation
*Aerospace & Defense Industry


2022 Comparator Group Revenue Percentile



•Balance of fixed and variable pay opportunities •Multiple performance measures, multiple time periods and capped payouts under incentive plans •Stock ownership requirements •Risk oversight by independent Board committee •Incentive goals set at the enterprise or business segment level •Incentive plan caps on individual awards and pool size			•Moderate severance program that includes post-employment restrictive covenants •Institutional focus on ethical behavior •Annual risk assessment •Compensation Committee oversight of equity burn rate and dilution •Clawback policy •Anti-hedging and pledging policy


		Annual Incentive
NEO	Base Salary ($)	Target %	Target Amount ($)	2022 Target LTI Value ($)	Total Target Direct Compensation ($)
Mr. Taiclet	1,751,000	190	3,326,900	15,000,000	20,077,900
Mr. Malave*	960,000	115	1,104,000	12,000,000	14,064,000
Mr. Mollard**	510,000	70	357,000	1,300,000	2,167,000
Mr. St. John	1,000,000	150	1,500,000	6,000,000	8,500,000
Mr. Greene	965,000	115	1,109,750	4,000,000	6,074,750
Ms. Lavan	900,000	110	990,000	3,600,000	5,490,000
Mr. Ulmer	965,000	115	1,109,750	4,000,000	6,074,750


2022 Financial Measures	Weight	2022 Goals ($)	Results ($)	Calculated Payout	Weighted Payout
Sales	20%	66,000M	65,984M	99.8%	20%
Segment Operating Profit*	40%	7,175M	7,219M	106.1%	42%
Free Cash Flow*	40%	≥ 6,000M	6,132M	108.8%	44%
Financial Payout Factor					106	%


2022 Strategic & Operational Goals Summary		Assessment Summary Highlights
	ENTERPRISE PERFORMANCE Achieve Mission Success milestones Execute programs to achieve customer commitments and increase stockholder value	•Orders of $80.4 billion; year-end backlog of $150 billion •Achieved key metrics while mitigating external factors, and completed 94% of mission success events •Returned $10.9 billion of cash to our stockholders through dividends and share repurchases •Achieved $368 million in Retained Savings across business segments and reduced Red Subcontracts •All business segments maintained or improved on-time-deliveries
	NEW BUSINESS / GROWTH Shape and secure key Focus Program wins and achieve Keep Sold Program milestones Continue international expansion through increased orders and sales	•Competitive win rate on programs throughout the year (70% bids, 81% dollars) •Secured key F-35 international selections in Finland, Switzerland, Canada and Germany •Expanded the customer base for key franchises, including F-16, PAC-3 and H-60 •Significant growth in Command & Control, Intelligence Surveillance Reconnaissance (ISR) & Missile Warning
	STRATEGY Assess portfolio on an ongoing basis to maximize stockholder value, which includes M&A activity, cost competitiveness, and other enterprise initiatives Execute 21st Century Security strategy to include technology development, demonstrations and commercial partnerships Drive infrastructure modernization, technology development and functional capability adoption to digitally transform the enterprise	•Aligned enterprise objectives and milestones with 21st Century Security strategic vision •Accelerated enterprise-wide business process and digital transformation •Established partnerships across technology focused domains and commercial 5G.MIL •Exceeded cost competitiveness goals •Multiple Demonstrations of Cross Domain Capabilities in partnership with operational customer exercises
	ENVIRONMENTAL, SOCIAL AND GOVERNANCE Attract, develop and retain our premier workforce Protect Lockheed Martin, U.S. Government and 3rd Party data from cyber intrusion Ensure the safety and security of our products, services and workplace Steward our climate responsibly	•Continued to demonstrate success with a new, hybrid virtual environment •Increased leadership representation for women and people of color •No adverse cyber impacts despite heightened threat levels •Exceeded our retention goals and strengthened our entry-level pipeline by creating internships for over 2,400 students and hiring early career employees •Exceeded greenhouse gas reduction goals