Lockheed Martin 2005 Annual Report Download - page 63

   
Lockheed฀Martin฀Corporation
The฀ Award฀ Plan฀ and฀ the฀ Directors฀ Plan,฀ as฀ well฀ as฀ the฀
number฀ of฀ shares฀ of฀ Lockheed฀ Martin฀ common฀ stock฀ autho-
rized฀ for฀ issuance฀ under฀ these฀ plans,฀ have฀ been฀ approved฀ by฀
the฀ stockholders฀ of฀ the฀ Corporation.฀ At฀ December฀ 31,฀ 2005,฀
the฀ number฀ of฀ shares฀ of฀ Lockheed฀ Martin฀ common฀ stock฀
reserved฀for฀issuance฀under฀the฀Corporation’s฀stock฀option฀and฀
award฀plans฀totaled฀55.7฀million.
The฀following฀table฀summarizes฀stock฀option฀and฀restricted฀
stock฀activity฀related฀to฀the฀Corporation’s฀ plans฀ during฀2005,฀
2004฀and฀2003:
Number฀of฀Shares฀
(In฀thousands)
Weighted฀฀
Average฀฀
Exercise฀฀
Price
Available฀
for฀Grant
Options฀
Outstanding
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
Options฀granted (7,314) 7,314 49.27
Options฀exercised — (4,729) 34.23
Options฀terminated 160 (242) 51.66
Restricted฀stock฀awards (590) — —
December฀31,฀2004 15,657 37,823 44.44
Additional฀shares฀reserved   
Options฀granted   
Options฀exercised   
Options฀terminated   
Restricted฀stock฀awards   
   
Approximately฀21.2฀million,฀26.4฀million฀and฀25.5฀million฀
outstanding฀ options฀ were฀ exercisable฀ by฀ employees฀ at฀
December฀31,฀2005,฀2004฀and฀2003,฀respectively.
In฀ February฀ 2006,฀ an฀ additional฀ 3.8฀ million฀ options฀ and฀
1.3฀ million฀ restricted฀ stock฀ units฀ were฀ granted฀ to฀ employees.฀
The฀ accounting฀treatment฀for฀restricted฀stock฀units฀is฀similar฀
to฀ the฀accounting฀ for฀ RSAs฀ discussed฀ earlier,฀except฀that฀ the฀
shares฀ are฀ not฀ issued฀ until฀ the฀ restricted฀ stock฀ units฀ vest,฀ no฀
earlier฀than฀three฀years฀from฀the฀date฀of฀the฀award.
Information฀regarding฀options฀outstanding฀at฀December฀31,฀
2005฀follows:
Range฀of฀฀
Exercise฀Prices
Number฀of฀฀
Options฀
(In฀thousands)
Weighted฀
Average฀
Exercise฀
Price
Weighted฀
Average฀
Remaining฀
Contractual฀
Life฀
(In฀years)
Options฀outstanding:
฀ Less฀than฀$20.00 1,349 $18.17 4.0
฀ $20.00–$29.99 536 25.12 4.4
฀ $30.00–$39.99 5,106 35.98 3.8
฀ $40.00–$50.00 8,683 48.36 6.4
฀ Greater฀than฀$50.00 18,464 53.32 6.9
Total 34,138 $47.64 6.1
Options฀exercisable:
฀ Less฀than฀$20.00 1,349 $18.17 4.0
฀ $20.00–$29.99 536 25.12 4.4
฀ $30.00–$39.99 5,106 35.98 3.8
฀ $40.00–$50.00 4,026 47.33 4.4
฀ Greater฀than฀$50.00 10,209 51.07 5.5
Total 21,226 $43.99 4.8
Stock฀options฀granted฀in฀2005฀and฀2004฀under฀the฀Award฀
Plan฀ and฀ stock฀ options฀ granted฀ in฀ 2003฀ under฀ the฀ Omnibus฀
Plan฀have฀ten-year฀terms฀and฀generally฀vest฀over฀a฀three-year฀
service฀period.฀Exercise฀prices฀of฀options฀awarded฀for฀all฀years฀
were฀equal฀to฀the฀market฀price฀of฀the฀stock฀on฀the฀date฀of฀grant.฀
Pro฀ forma฀ information฀ regarding฀ net฀ earnings฀ and฀ earnings฀
per฀share฀as฀if฀the฀Corporation฀had฀accounted฀for฀its฀employee฀
stock฀ options฀ as฀ compensation฀ expense฀ under฀ the฀ fair฀ value฀
method฀is฀included฀in฀Note฀1.

Defined฀ contribution฀ plans—The฀ Corporation฀ maintains฀ a฀
number฀of฀defined฀contribution฀plans฀with฀401(k)฀features฀that฀
cover฀ substantially฀ all฀ employees.฀ Under฀ the฀ provisions฀ of฀
these฀ 401(k)฀ plans,฀ employees’฀ eligible฀ contributions฀ are฀
matched฀ by฀ the฀ Corporation฀ at฀ established฀ rates.฀ The฀
Corporation’s฀matching฀obligations฀were฀$273฀million฀in฀2005,฀
$259฀million฀in฀2004฀and฀$238฀million฀in฀2003,฀the฀majority฀
of฀which฀were฀funded฀in฀Lockheed฀Martin฀common฀stock.