Lockheed Martin 2001 Annual Report Download - page 53

Lockheed Martin Corporation
December 31, 2001
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13—Stockholders’ Equity and Related Items
Capital stock—At December 31, 2001, the authorized
capital of the Corporation was composed of 1.5 billion
shares of common stock (approximately 441 million
shares issued), 50 million shares of series preferred stock
(no shares issued), and 20 million shares of Series A pre-
ferred stock (no shares outstanding).
Stock option and award plans—In March 1995, the stock-
holders approved the Lockheed Martin 1995 Omnibus
Performance Award Plan (the 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 pur-
chase common stock have an exercise price of not less than
100 percent of the market value of the underlying stock on
the date of grant. 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 10
years. The Omnibus Plan allows the Corporation to provide
for financing of purchases of its common stock, subject to
certain conditions, by interest-bearing notes payable to
the Corporation.
In 2001, 2000 and 1999, a total of 325,000 shares of
restricted common stock (25,000, 125,000 and 175,000
shares, respectively) were awarded under the Omnibus Plan
to certain senior executives of the Corporation. The shares
were recorded based on the market value of the Corpora-
tion’s common stock on the date of the award. The award
requires the recipients to pay the $1 par value of each
share of stock and provides for payment to be made in
cash or in the form of a recourse note to the Corporation.
Recipients are entitled to receive cash dividends and to
vote their respective shares, but are prohibited from selling
or transferring shares prior to vesting. The restricted shares
generally vest over four- to five-year periods from the grant
date. The impact of these awards was not material to
stockholders’ equity or compensation expense in 2001,
2000 or 1999.
In April 1999, the stockholders approved the Lockheed
Martin Directors Equity Plan (the Directors Plan). Approxi-
mately 50 percent of each director’s annual compensation
is awarded under the Directors Plan. Directors of the Corpora-
tion may elect to receive such compensation in the form of
stock units which track investment return to changes in value
of the Corporation’s common stock with dividends reinvested,
options to purchase common stock of the Corporation, or a
combination of the two. The Directors Plan requires that
options to purchase common stock have an exercise price
of not less than 100 percent of the market value of the
underlying stock on the date of grant. Except in certain
circumstances, options and stock units issued under the
Directors Plan vest on the first anniversary of the grant.
The maximum term of an option is 10 years.
The Omnibus Plan and the Directors Plan, as well as
the number of shares of Lockheed Martin common stock
authorized for issuance under these plans, have been
approved by the stockholders of the Corporation. At
December 31, 2001, the number of shares of Lockheed
Martin common stock reserved for issuance under these
plans totaled 53 million.
The following table summarizes stock option and
restricted stock activity related to the Corporation’s plans
during 1999, 2000 and 2001:
Number of Shares Weighted
(In thousands) Average
Available for Options Exercise
Grant Outstanding Price
December 31, 1998 21,634 23,047 $36.38
Additional shares reserved 1,000 ——
Options granted (5,466) 5,466 37.04
Options exercised —(656) 19.76
Options terminated 565 (567) 42.51
Restricted stock awards (175) ——
December 31, 1999 17,558 27,290 36.78
Options granted (8,454) 8,454 19.85
COMSAT options assumed —4,263 22.43
Options exercised —(659) 16.15
Options terminated 755 (766) 33.23
Restricted stock awards (125) ——
December 31, 2000 9,734 38,582 31.91
Additional shares reserved 16,000 — —
Options granted (7,016) 7,016 35.06
Options exercised — (7,024) 22.61
Options terminated 177 (177) 43.27
Restricted stock awards (25) — —
December 31, 2001 18,870 38,397 34.12
Approximately 27.1 million, 27.9 million and 19.7 mil-
lion outstanding options were exercisable by employees at
December 31, 2001, 2000 and 1999, respectively.
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