Lockheed Martin 2003 Annual Report Download - page 60

Lockheed Martin Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
58
The Award Plan allows the Corporation to provide for financ-
ing by award recipients other than executive officers of the
exercise or purchase price of common stock underlying an
award, subject to certain conditions, by interest-bearing notes
payable to the Corporation.
Prior to April 2003, the Corporation granted stock-based
and cash-based incentive awards pursuant to the Lockheed
Martin Corporation 1995 Omnibus Performance Award Plan
(the “Omnibus Plan”), which was approved by the stockholders
in March 1995. Awards under the Omnibus Plan were similar to
those authorized by the Award Plan except that the Omnibus
Plan did not include any minimum vesting requirements.
In 2003, 25,000 shares of restricted common stock were
issued under the Award Plan. In 2001, 25,000 restricted shares
were awarded under the Omnibus Plan. No restricted common
stock was awarded in 2002. The shares were recorded based on
the market value of the Corporation’s common stock on the date
of the award. 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 gen-
erally vest over 4 to 5 year periods from the grant date. The
impact of restricted stock awards was not material to stockholders’
equity or compensation expense in 2003, 2002 or 2001.
In April 1999, the stockholders approved the Lockheed
Martin Directors Equity Plan (the Directors Plan).
Approximately 50% of each director’s annual compensation is
awarded under the Directors Plan. Directors of the Corporation
may elect to receive such compensation in the form of stock
units which track investment returns 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% 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 Award Plan, 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, 2003, the number of shares of Lockheed Martin common
stock reserved for issuance under the Corporation’s stock
option and award plans totaled 58.9 million.
The following table summarizes stock option and restrict-
ed stock activity related to the Corporation’s plans during 2001,
2002 and 2003:
Number of Shares
(In thousands)
Available Weighted
for Options Average
Grant Outstanding Exercise Price
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
Options granted (7,049) 7,049 50.45
Options exercised — (14,231) 30.76
Options terminated 554 (581) 35.55
December 31, 2002 12,375 30,634 39.42
Additional shares reserved 22,500 — —
Retired Omnibus Plan shares (4,814) — —
Options granted (6,664) 6,664 51.08
Options exercised —(1,637) 26.96
Options terminated 29 (181) 49.12
Restricted stock awards (25) — —
December 31, 2003 23,401 35,480 42.14
Approximately 25.5 million, 19.6 million, and 27.1 million
outstanding options were exercisable by employees at
December 31, 2003, 2002 and 2001, respectively.