Lockheed Martin 1996 Annual Report Download - page 79

Lockheed Martin Corporation
Accordingly, 29 million common shares have been reserved for this
potential conversion. In April 1998 and thereafter, the Corporation
will be entitled to redeem, at its option, any or all shares of the
Series A preferred stock for either cash or common stock. The
Series A preferred stock is held under a Standstill Agreement
which, among other things, imposes certain limitations on either
the increase or disposal of GE's interest in voting securities of the
Corporation, on GE's solicitation of proxies and stockholder pro-
posals, on GE's voting of its shares and on GE's ability to place or
remove members of the Corporation's Board of Directors. In addi-
tion, the Standstill Agreement requires the Corporation to recom-
mend to its stockholders the election of two persons designated by
GE to serve as directors of the Corporation.
During the second quarter of 1996, the Corporation's Board of
Directors terminated the systematic common stock repurchase
plan which had been established in 1995 to counter the future dilu-
tive effect of common stock issued by the Corporation under its
1995 Omnibus Performance Award Plan. A separate program
authorized in 1995 for the repurchase of up to nine million common
shares to counter the dilutive effect of common stock issued under
the Corporation's other benefit and compensation programs and for
other purposes related to such plans remains in effect.
Approximately 2.3 million common shares were repurchased by
the Corporation in 1995 under these programs; no shares were
repurchased in 1996.
Stock option and award plans — On March 15, 1995, the
stockholders approved the Lockheed Martin 1995 Omnibus
Performance Award Plan (Omnibus Plan). Under the Omnibus
Plan, employees of the Corporation may be granted stock-based
incentive awards, including options to purchase common stock,
stock appreciation rights, restricted stock or other stock-based
incentive awards. Employees may also be granted cash-based
incentive awards, such as performance units. These awards may be
granted either individually or in combination with other awards.
The Omnibus Plan requires that options to purchase common stock
have an exercise price of not less than 100% of the market value of
the underlying stock on the date of grant. The number of shares of
Lockheed Martin common stock currently authorized to be issued
in respect of awards under the Omnibus Plan is 12 million shares.
The Omnibus Plan does not impose any minimum vesting periods
on options or other awards. The maximum term of an option or any
other award is ten years. The Omnibus Plan allows the Corporation
to provide for financing of purchases, subject to certain conditions,
by interest-bearing notes payable to the Corporation.
Prior to the merger of Lockheed and Martin Marietta
Corporation (Martin Marietta) in 1995 (the Business
Combination), Lockheed and Martin Marietta had also utilized
share-based and cash-based incentive award plans. The Agreement
and Plan of Reorganization relating to the Business Combination
provided for each outstanding stock option, stock appreciation
right and other stock-based incentive award to be converted into a
similar instrument of Lockheed Martin upon consummation of the
Business Combination. Effective with the adoption of the Omnibus
Plan, no further grants of share-based or cash-based incentive
awards have been or will be made under any of Lockheed's or
Martin Marietta's prior plans. Accordingly, shares available for
grant under these prior plans were removed from registration
in 1995.
The following table summarizes the stock option activity of
the Corporation's plans during 1994, 1995 and 1996:
December 31, 1993
Additions
Granted
Exercised
Terminated
December 31, 1994
Additions
Granted
Removed from registration
Exercised
Terminated
December 31, 1995
Granted
Exercised
Terminated
December 31, 1996
Number of Shares
(In thousands)
Available
for Grant
3,784
2,119
(2,403)
—
152
3,652
12,000
(2,228)
(3,674)
—
81
9,831
(2,649)
—
141
7,323
Options
Outstanding
8,469
—
2,397
(1,463)
(159)
9,244
—
2,228
—
(1,943)
(109)
9,420
2,649
(2,241)
(170)
9,658
Weighted
Average
Exercise Price
$29.57
—
$42.65
$27.10
$38.04
$33.21
—
$59.38
—
$30.47
$51.63
$39.74
$75.04
$32.65
$63.32
$50.65
Approximately 5.2 million, 6.5 million and 5.7 million out-
standing options were exercisable at December 31, 1994,1995 and
1996, respectively.
Information regarding options outstanding at December 31, 1996 follows (number of options in thousands):
77
Range of
Exercise Prices
Less than $39.99
$40.00 - $59.99
Greater than $60.00
Total
Number of
Options
3,408
3,676
2,574
9,658
Options Outstanding
Weighted
Average
Exercise Price
$30.79
$51.98
$75.06
$50.65
Weighted Average
Remaining Contractual
Life
5 years
8 years
9 years
7 years
Options
Number of
Options
3,408
2,241
5
5,654
Exercisable
Weighted
Average
Exercise Price
$30.79
$50.09
$75.79
$38.48