Exhibit 10 (ad)
DEFERRED MANAGEMENT INCENTIVE
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COMPENSATION PLAN
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OF
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LOCKHEED CORPORATION
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AND ITS SUBSIDIARIES
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(Adopted September 30, 1979)
(As Amended and Restated March 15, 1995)
ARTICLE I
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PURPOSE OF THE PLAN
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The purpose of the Deferred Management Incentive Compensation Plan
(the "Deferral Plan") is to provide certain key management employees with
additional benefits upon retirement under a Lockheed Corporation Retirement
Plan. The Deferral Plan amends Section 7 of Article IV of the Lockheed
Management Incentive Compensation Plan (the "MICP") to permit employee
Participants of the MICP an annual election to defer receipt of Incentive
Compensation granted under the MICP. Except as expressly provided
hereinafter, the provisions of the MICP shall be construed entirely
independent of the Deferral Plan.
The Deferral Plan applies solely to MICP awards and expressly does not
apply to any special awards which may be made under any other Lockheed
incentive plans except and to the extent specifically provided under the
terms of such other incentive plans.
ARTICLE II
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DEFINITIONS
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Unless the context clearly indicates otherwise, the following words
and phrases shall have the meanings hereinafter indicated:
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1. DEFERRAL PLAN -- This Deferred Management Incentive Compensation
Plan, adopted by the Board of Directors of Lockheed Corporation on
September 30, 1979, as amended from time to time.
2. MICP -- The Management Incentive Compensation Plan of Lockheed
Corporation and its subsidiaries, as amended on February 5, 1979, and from
time to time thereafter.
3. COMPANY -- Lockheed Corporation and its subsidiaries.
4. BOARD OF DIRECTORS -- The Board of Directors of Lockheed
Corporation.
5. COMMITTEE -- The Management Development and Compensation
Committee of the Board of Directors as is, from time to time, appointed or
constituted by the Board of Directors.
6. EMPLOYEE -- Any person who is employed by the Company and is
paid a salary, as distinguished from an hourly wage. The term shall be
deemed to include any person who was employed by the Company during all or
any portion of the year, with respect to which an appropriation is made to
the MICP by the Board of Directors, but shall not include any employee who,
during any portion of such year, was represented by a collective bargaining
unit.
7. PARTICIPANT -- Any employee who is selected to participate in
the MICP and who satisfies the conditions for eligibility contained in
Article III of the Deferral Plan. The term shall be deemed to include
former employees who have retired under a Company Retirement Plan.
8. INCENTIVE COMPENSATION -- The MICP amount granted to an employee
in a Grant Year.
9. DEFERRED COMPENSATION -- The amount of Incentive Compensation
which a Participant in the Deferral Plan defers for an Award Year.
10. AWARD YEAR -- The Company fiscal year with respect to which the
Participant is awarded Incentive Compensation.
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11. GRANT YEAR -- The Company fiscal year, subsequent to an Award
Year, during which the Participant is actually granted Incentive
Compensation.
12. FISCAL YEAR -- The fiscal year of the Company.
13. CREDITING DATES -- The dates on which interest is credited under
the Deferral Plan on the accumulated amount or amounts in each
Participant's "account." The crediting dates are January 15th and July 15th
of each calendar year.
14. ACCOUNT -- An "account" is merely a bookkeeping record of the
principal sums of the Participant's Incentive Compensation, which have been
deferred and credited, and the interest accretions thereon. An "account" is
an unfunded liability of the Company.
15. DISABILITY -- A Participant shall be deemed to be permanently
disabled when, on the basis of medical evidence satisfactory to the
Committee, the Committee finds that he is wholly and continuously disabled
for a consecutive period of six or more months.
ARTICLE III
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PARTICIPATION
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1. Eligibility. An employee who is selected to
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participate in the MICP may elect to defer all or a portion of his
Incentive Compensation whenever it equals or exceeds the sum of $5,000, or
such other amount as may be determined, from time to time, by the
Committee. Except as provided immediately below, such employee shall become
a Participant in the Deferral Plan with respect to Incentive Compensation
for an Award Year by electing to defer all or a portion of such
compensation in accordance with the deferral election requirements on Form
23-B (the "Lockheed Deferral Election Form").
2. An employee who makes a deferral election but does not
effectively defer Incentive Compensation of at least $5,000 for
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an Award Year shall not be eligible to participate in the Deferral Plan.
3. In no event shall a member of the Committee be eligible to
participate in the Deferral Plan.
ARTICLE IV
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ELECTION OF DEFERRED AMOUNT
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1. Election. On or before November 15th of the Award Year, an
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employee who is selected to participate in the MICP may elect to defer
Incentive Compensation for such Year in accordance with the following
alternatives:
(a) A specific dollar amount of Incentive Compensation not less
than $5,000;
(b) A percentage of Incentive Compensation or $5,000 whichever
is larger; or
(c) The excess of Incentive Compensation over a stated dollar
amount.
In each instance, if the $5,000 minimum deferral requirement is not
satisfied, no amount will be deferred.
2. Effect of Annual Election. The annual election made by a
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Participant for an Award Year shall be irrevocable with respect to such
Year. However, such election shall not be binding on him/her with respect
to deferral elections to be made for any succeeding Award Year. Thus, for
example, the Participant may irrevocably elect a specific dollar amount to
be deferred in one Award Year and a percentage or $5,000, whichever is
larger, in the succeeding Award Year.
3. Period of Deferral. Deferred Compensation shall not become
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payable to a Participant prior to his or her retirement under a Company
Retirement Plan or termination of employment except as provided in Section
4 or Section 5 of Article V."
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ARTICLE V
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PAYOUT PERIOD ELECTIONS, EXCEPTIONS AND RULES
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1. Methods of Payout. Payments under the Deferral Plan shall be
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made in accordance with the following options:
OPTION A. A SINGLE lump sum payment of the amounts credited
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through the first Crediting Date following the Participant's
retirement or termination of employment with the Company, payable as
of such Crediting Date.
OPTION B. FIVE approximately equal annual installments of the
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amounts credited to a Participant through the first Crediting Date
following his/her retirement or termination of employment with the
Company, commencing as of such Crediting Date.
OPTION C. TEN approximately equal annual installments of the
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amounts credited to a Participant through the first Crediting Date
following his/her retirement or termination of employment with the
Company, commencing as of such Crediting Date.
OPTION D. FIFTEEN approximately equal annual installments of the
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amounts credited to a Participant through the first Crediting Date
following his/her retirement or termination of employment with the
Company, commencing as of such Crediting Date.
OPTION E. TWENTY approximately equal annual installments of the
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amounts credited to a Participant through the first Crediting Date
following his/her retirement or termination of employment with the
Company, commencing as of such Crediting Date.
2. Payout Period Election. On or before November 15th of the Award
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Year, an employee who is selected to participate in the MICP and who is a
Participant in the Deferral Plan shall irrevocably elect one of the five
methods of payment with respect
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to all Deferred Compensation for such Award Year. However, the payout period
election made by a Participant in one Award Year shall not be binding on him/her
with respect to Incentive Compensation for any succeeding Award Year. Thus, for
example, a Participant may irrevocably elect a lump sum payment for Deferred
Compensation in one Award Year and a ten-year installment payment method for
his/her Deferred Compensation the succeeding Award Year.
3. Special Circumstance Exceptions. There are several exceptions to
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the payout option rules which may be availed of upon written request by a
Participant retired under a Company Retirement Plan or, if not then living,
his/her beneficiary:
(a) Death While an Active Employee. In the event that a
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Participant dies while an active employee, the Committee has the
discretion to disregard any payout period elections the Participant
has made and to aggregate and pay over to his/her designated
beneficiary either in the year of death or in the first year following
death, the total amount deferred for all Award Years plus accumulated
interest credited through the first Crediting Date following death.
(b) Death, Disability or Financial Hardship During Retirement.
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In the event that a Participant, retired under a Company Retirement
Plan, is permanently disabled or dies, or upon proof of his/her
financial hardship, the Committee may, in its sole discretion,
aggregate and vary the number of installments in which any such
Deferred Compensation will be paid to such Participant or his/her
designated beneficiary, as well as the amount to be paid in all or any
such installments, provided such modification is made solely as
necessary to meet such hardship.
4. Immediate Payout Upon Change in Control.
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(a) Notwithstanding any other provision of the Deferral Plan,
all amounts accumulated and unpaid in each Participant's "account"
shall be paid in a single lump sum within 15 calendar days following a
Change in Control. Section 7(a) of Article VI regarding a Special
Payout Period
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of up to five years shall not apply to payments under this Section 4.
(b) For purposes of this Deferral Plan, a Change in Control
shall be deemed to have occurred if (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than a trustee or other
fiduciary holding securities under an employee benefit plan of
Lockheed Martin Corporation ("Lockheed Martin") or any of its
subsidiaries, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
Lockheed Martin representing 30% or more of the combined voting power
of Lockheed Martin's then outstanding securities; or (ii) during any
period of two consecutive years (not including any period prior to the
adoption of this Section 4), individuals who at the beginning of such
period constitute the Board of Directors of Lockheed Martin, and any
new director (other than a director designated by a person who has
entered into an agreement with Lockheed Martin to effect a transaction
described in clause (i) or (iii) of this Section) whose election by
the Board of Directors of Lockheed Martin or nomination for election
by Lockheed Martin's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof; or (iii) the
shareholders of Lockheed Martin approve a merger or consolidation of
Lockheed Martin with any other corporation, other than a merger or
consolidation which would result in the voting securities of Lockheed
Martin outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of Lockheed Martin or such
surviving entity outstanding immediately after such merger or
consolidation or (iv) the shareholders of Lockheed Martin approve a
plan of complete liquidation of Lockheed Martin or an agreement for
the sale or disposition
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by Lockheed Martin of all or substantially all of Lockheed Martin's
assets.
A Change in Control shall not, however, include any transaction
which has been approved by individuals who at the beginning of any
period of at least two consecutive years (not including any period
prior to the adoption of this Section 4) constitute the Board of
Directors of Lockheed Martin and any new director (other than a
director designated by a person who has entered into an agreement with
Lockheed Martin to effect a transaction described in clause (i) or
(iii) of this Section) whose election by the Board of Directors of
Lockheed Martin or nomination for election by Lockheed Martin's
shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved.
(c) This Section 4 shall apply only to a Change in Control of
Lockheed Martin and shall not cause immediate payout of Deferred
Compensation in any transaction involving Lockheed Martin's sale,
liquidation, merger, or other disposition of any subsidiary.
(d) The Committee may cancel or modify this Section 4 at any
time prior to a Change in Control. In the event of a Change in
Control, this Section 4 shall remain in force and effect, and shall
not be subject to cancellation or modification for a period of five
years, and any other provision defining a capital term used in Section
4 shall not, for purposes of Section 4, be subject to cancellation or
modification during the five year period.
5. Accelerated Payout. Notwithstanding any other provision of the
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Deferral Plan, a Participant may at any time make a written election that
all or any portion of the accumulated and unpaid amounts credited to his or
her "account" under the Deferral Plan be paid in a lump sum as soon as
practicable following the filing of such election; provided, however, that
only 90% of the amount otherwise payable to the Participant upon such
accelerated payout shall be paid to the Participant. The remaining 10% of
the
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amount otherwise payable shall be permanently forfeited and shall not be
paid to, or in respect of, the Participant.
ARTICLE VI
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CREDITS AND FORFEITURES
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1. Credits. There are two basic credits or additions which will be
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added to a Participant's "account": First, the amount of Incentive
Compensation which the Participant has elected to defer for each Award
Year; and Second, the amount of any interest accretions or additions which
have accrued on such Deferred Compensation. Accordingly, all Deferred
Compensation credited and unpaid prior to such Crediting Date, shall be
credited and added to each Participant's "account" balance as of January
15th and July 15th of each calendar year in accordance with the following
formula:
Each Participant shall have credited and added to his/her Deferred
Compensation "account" an amount which shall be calculated by
multiplying such balance by one-half of the interest rate determined
as is set forth in Cost Accounting Standard 415 Deferred Compensation,
as the discount rate for computing the present value of the future
benefits at the time the cost is assignable. Such rate is currently
specified as that rate determined by the Secretary of the Treasury
(semi-annually) pursuant to PL 92-41, 85 Stat. 97. The published
interest rate applicable to the period January 1 through June 30 will
be used in determining the interest to be accrued on the employee
account balance at January 15, and the published interest rate
applicable to the period July 1 through December 31 will be applied to
the employee account balance at July 15. Compounding of interest will
be on an annual basis.
2. Forfeiture. There shall be no forfeiture of any rights, interests
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or benefits accrued under the Deferral Plan except as hereinafter provided
or as provided in Article V, Section 5. In the event that a Participant
either (i) terminates his/her employment with the Company to engage in
other employment prior to retirement, or (ii) has taken or permitted some
action
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or omission resulting in damage or competitive injury to the Company, then,
unless such action or omission shall have been taken or permitted in good
faith without reasonable cause to believe that it was improper or illegal
or harmful, then a majority of the Committee may, in its discretion,
terminate all future crediting of interest on any principal amount of
amounts which the Participant has accumulated in his "account" either from
the date of termination of his/her employment with the Company prior to
retirement or from the date on which the Committee determines that his/her
action or omission resulted in damage or competitive injury to the Company.
3. Safe-Haven Forfeiture Rule. In no event, however, shall any
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cessation of future interest accretions be permitted, for any reason, after
the date of the Participant's retirement under a Company retirement plan.
This provision is subject to Sections 6 and 7 of Article VII and Section 4
of Article V.
4. Governmental Appointments. In the discretion of the Committee,
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and provided that it does not contravene any applicable federal or state
law, the Participant may suspend or terminate his/her employment with the
Company to accept an appointment to a governmental post, for a period not
to exceed four years from the date of his/her suspension or termination,
without forfeiture of any future interest accretions under this Plan.
ARTICLE VII
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MISCELLANEOUS
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1. Plan Shall not Constitute Employment Contract. Neither the
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adoption of the Deferral Plan nor its operation shall affect in any way the
right of the Company to dismiss or discharge a Participant at any time, nor
shall it give an employee a right to participate in the Company's MICP.
2. Rights and Interests. No rights or interests under this Deferral
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Plan shall be assignable, transferable or subject to encumbrance, pledge or
charge of any nature, except that a
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Participant may designate a beneficiary to receive any benefits arising
hereunder upon his/her death.
No Participant, or any person claiming through him/her, shall have any
right or interest in the Deferral Plan or any benefits hereunder unless and
until all of the terms, conditions and provisions of the Deferral Plan that
affect the Participant or such other person claiming through him/her shall
have been complied with as herein specified. Additionally, the Participant
shall complete such forms and furnish such information as the Committee may
require in the administration of the Deferral Plan.
3. To Whom Payments are to be Made. Each payment under the Plan shall be
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made to the Participant, provided he/she is living on the date of payment.
In the event of the Participant's death, payments will thereafter be made
to the beneficiary or beneficiaries whom the Participant has designated on
his/her Lockheed Form 22-B (the "Lockheed Beneficiary Designation Form") to
receive his/her Company basic group life insurance benefits, and in the
same proportions. If no such beneficiary has been designated, or the
designated beneficiary fails to survive the Participant, then such post-
death payments shall be made in accordance with the law of the
Participant's domicile at the date of his/her death.
This provision does not affect the number of payments or the amount of
each payment, but only affects the determination of whom such payments are
to be made to.
4. Withholding. There shall be deducted from each cash payment
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actually made under the Deferral Plan all taxes which are required to be
withheld by the Company in respect to such payment. The Company shall have
the right to reduce any cash payment by the amount of cash sufficient to
provide the amount of said taxes.
5. Trust. Although the Plan is an unfunded plan, the Company has
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established a trust (the "Trust") pursuant to a trust agreement dated
December 22, 1994 by and between the Company and J. P. Morgan California to
hold assets, subject to the claims of the Company's creditors in the event
of its insolvency, to pay benefits under this Plan. The Company shall no
later than nine
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months following the close of its fiscal year make contributions to the
Trust in an amount sufficient, when added to the then principal of the
Trust and after consideration of benefits to be paid pursuant to other
plans covered by the Trust, to equal the present value of benefits which
have accrued under the Plan during the preceding fiscal year.
6. Amendment, Modification, Suspension or Termination. The
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Committee may amend, modify, suspend or terminate the Deferral Plan in
whole or in part, except that no amendment, modification, suspension or
termination shall reduce any Deferred Compensation, pension benefits and
interest previously credited to a Participant prior to the date of such
amendment, modification, suspension or termination, or to be credited in
the future, subject to Section 7 of this Article VII and Sections 4 and 5
of Article V, based on amounts previously credited to a Participant,
provided that any amendment to or change in the Deferral Plan adopted by
the Committee, which will either significantly increase any benefits under
the Deferral Plan or will substantially alter the general principles of the
Deferral Plan, shall not become effective unless ratified by a majority
vote of the full Committee.
7. Special Payouts.
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(a) In the event that the Deferral Plan is amended, modified,
suspended or terminated, the Committee may, at its option, direct an
immediate special lump sum payout or an immediate special payout over
any period of time not in excess of five years, ("Special Payout
Period") provided that it deems this to be in the best interests of
the Company.
(b) In the event of a lump sum payout, each Participant's
"account" shall be credited with interest additions from the most
recent Crediting Date to the first day of the month in which the
payment occurs. In the event a Special Payout Period is used, all
amounts accumulated and unpaid in each Participant's "account" will
continue to draw interest, as specified in Section 1 of Article VI,
throughout the Special Payout Period.
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(c) If no special payout is directed, each Participant's
"account" shall continue to be credited with interest additions until
paid out in full under the provisions of the Deferral Plan.
8. Governing Law. The place of administration of the Deferral Plan
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shall be conclusively deemed to be within the State of California; and the
validity, construction, interpretation and effect of the Deferral Plan and
all rights of any and all persons having or claiming any interest in such
Deferral Plan shall be governed by the laws of the State of California.
ARTICLE VIII
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ADMINISTRATION
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1. Appointment and Removal of Committee. The Deferral Plan shall be
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administered by the Committee. The Committee shall consist of three or more
Directors, none of whom shall be Participants in the Deferral Plan. The
Board of Directors shall have the power to remove any member of the
Committee at any time, with or without cause, and fill any vacancy in its
membership.
2. Powers and Duties of Committee. The Committee shall have such
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powers and duties as are conferred on it by the Deferral Plan and the Board
of Directors. The Committee shall have the authority to take any and all
actions that it deems necessary or appropriate in the administration of the
Deferral Plan. The Committee may adopt such rules and procedures for the
administration of the Deferral Plan as it deems advisable to implement such
rules and procedures. The Committee shall act at meetings by affirmative
vote of a majority of the members of the Committee. Any action permitted to
be taken at a meeting may be taken without a meeting if, prior to such
action, a written consent to the action is signed by all members of the
Committee and such written consent is filed with the minutes of the
proceedings of the Committee.
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3. Construction and Interpretation. The Committee shall have the
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sole responsibility for the construction and interpretation of the terms
and provisions of the Deferral Plan and all determinations made by the
Committee shall be final.
4. Reliance Upon Information. The Committee and the Board of
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Directors may rely upon any information supplied to them by any officer of
the Company, the Company's legal counsel or by the Company's independent
public accountants in connection with the administration of the Deferral
Plan, and shall not be liable for any decision or action in reliance
thereon.
5. Expenses. All expenses of the administration of the Deferral
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Plan shall be borne by the Company.
6. Annual Statement. Under procedures to be established by the
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Committee, a Participant shall receive an annual statement with respect to
his/her Deferred Compensation.
ARTICLE IX
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EFFECTIVE DATE
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The Deferral Plan shall be applicable to and shall be effective as to
awards of Incentive Compensation made for the Company Fiscal Year ending
December 30, 1979, and subsequent Fiscal Years unless specifically provided
otherwise herein. This Deferral Plan shall be submitted for ratification
and approval at the next Board of Directors' meeting to be held on
September 30, 1979, and shall not become effective unless affirmatively
approved by a majority of the Committee.
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ADDENDUM 1 TO
DEFERRED MANAGEMENT INCENTIVE COMPENSATION PLAN
OF LOCKHEED CORPORATION AND ITS SUBSIDIARIES
Amendments to the Deferral Plan, as set forth in this Addendum 1, are
applicable only to those Participants identified below:
Executive-Level Employees Attaining Age 65 During 1988.
1. Section 3 of Article IV is amended by adding at the end thereof: ",
except as set forth in Section 4 of Article V with respect to the
Participants who meet the definition of "Executive-Level Employees" as
defined in Lockheed Corporation Human Resources Policy Statement
Number 20 and who attain age 65 during calendar year 1988."
2. Section 4 of Article V is added to read as follows:
4. Special Payout. Notwithstanding the payout period elections made
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by Participants who are Executive-Level Employees and who attain age
65 during 1988, the payment which would otherwise be made to such
Participants on the first Crediting Date following retirement or
termination of employment with the Company shall be made to such
Participants prior to January 1, 1989; provided, however, that
interest shall only be credited on the accumulated amounts in each of
such Participant's account to the date of payment.
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ADDENDUM 2 TO
DEFERRED MANAGEMENT INCENTIVE COMPENSATION PLAN
OF LOCKHEED CORPORATION AND ITS SUBSIDIARIES
Amendments to the Deferral Plan, as set forth in this Addendum 2, are
applicable only to those Participants identified below:
Executive-Level Employees Attaining Age 65 During 1990.
1. Section 3 of Article IV is amended by adding at the end thereof: ",
except as set forth in Section 4 of Article V with respect to
Participants who meet the definition of "Executive-Level Employees" as
defined in Lockheed Corporation Human Resources Policy Statement
Number 20 and who attain age 65 during calendar year 1990."
2. Section 4 of Article V is added to read as follows:
4. Special Payout. Notwithstanding the payout period elections made by
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Participants who are Executive-Level Employees and who attain age 65
during 1990, the payment which would otherwise be made to such
Participants on the first Crediting Date following retirement or
termination of employment with the Company shall be made to such
Participants prior to January 1, 1991; provided, however, that
interest shall only be credited on the accumulated amounts in each of
such Participant's account to the date of payment.
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