Lockheed Martin Corporation (LMT)

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Lockheed Martin (LMT)

Leadership Transition Conference

November 12, 2012 8:30 am ET


Jerry F. Kircher - Vice President of Investor Relations

Robert J. Stevens - Chairman, Chief Executive Officer and Chairman of Executive Committee

Marillyn A. Hewson - Executive Vice President of Electronic Systems


Joseph B. Nadol - JP Morgan Chase & Co, Research Division

Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division

Michael S. Lewis - Lazard Capital Markets LLC, Research Division

David E. Strauss - UBS Investment Bank, Research Division

Howard A. Rubel - Jefferies & Company, Inc., Research Division

Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division

Myles A. Walton - Deutsche Bank AG, Research Division

George Shapiro



Good morning, and welcome to the Lockheed Martin Leadership Transition Conference. This call is being recorded. I'd now like to turn the call over to Mr. Jerry Kircher, Vice President of Investor Relations. Please go ahead, sir.

Jerry F. Kircher

Thank you, Allie. [Operator Instructions] On the call today are Bob Stevens, Chairman and Chief Executive Officer; Marilyn Hewson, President and Chief Operating Officer; and Bruce Tanner, Executive Vice President and Chief Financial Officer.

Statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Actual results may differ. Please see our SEC filings and charts posted on our website today at www.lockheedmartin.com for descriptions of some of the factors that may cause actual results to vary materially from anticipated results. With that, I'll turn the call over to Bob.

Robert J. Stevens

Hey, thank you, Jerry. Good morning, everyone. Thanks very much for making time for this call today, which I know we scheduled on short notice. By now, I trust that you are aware that our Board of Directors and I asked for and received Chris Kubasik's resignation on Friday.

Through our internal ethics process, an employee raised an allegation of improper conduct that was brought forward at the end of October. Within 3 days, an internal investigation, conducted by our legal and ethics departments, determined that the allegations were not frivolous. And the following day, we secured an independent outside law firm to conduct a thorough investigation.

This outside investigation confirmed the presence of a lengthy, close, personal relationship with a subordinate employee, and the ethics allegation was substantiated. We live and work here by a set of values. They are not negotiable. We have standards of ethics and integrity that we expect all to meet, and we have a Code of Conduct. In this instance, those values, those standards and that code were not met.

While I am deeply disappointed and genuinely saddened by Chris' conduct, I recognize that it was a personal failing, having no impact on either our operational or our financial results. And our clear and swift response demonstrates our unyielding commitment to holding every employee accountable for their actions. Fortunately, we have a strong leadership team and a robust succession plan that allowed the board and me to react quickly and appropriately to this situation.

As our press release on Friday stated, the board elected Marillyn Hewson, President and Chief Operating Officer and a member of our board, effective immediately. And she'll become our Chief Executive Officer on January 1. The board also asked me to serve as Executive Chairman throughout 2013 beginning at the start of the year.

Marillyn is an exceptional leader with impeccable credentials and a deep understanding of our business, customers, shareholders and employees. She is an example of the extraordinary bench strength we've developed through our talent management and development actions taken over many years. I'm confident that her extensive and diverse leadership and multiple roles during her career has prepared her to assume this new realm seamlessly.

She has been with our company for nearly 30 years and has served in both functional and general management assignments. She has had 19 specific assignments in our company, many of which I assigned to her over the last 12 years, and she has moved 8 times during her career. She has led 3 functional departments and has had profit and loss responsibility in 4 distinct and diverse businesses, all have shown marked improvement as a result of her leadership.

For the last 3 years, she's been running our largest business area, Electronic Systems. With more than 4,000 contracts and 45,000 employees in 44 states, Canada, Australia and the United Kingdom, and more than $14.5 billion in revenue, this business on a standalone basis would be larger than Textron or SAIC and would rank in the top 30 defense companies.

She's consistently grown revenue, expanded margins, generated cash and for the past 8 months, has been working directly with me on a daily basis to transition the executive office. She has been an exemplar in modeling ethics and integrity in her personal and professional life, and she will make an outstanding Chief Executive Officer.

Congratulations, Marillyn.

Marillyn A. Hewson

Thank you, Bob. Bob, I'd just like to then thank you and the board for the confidence you've shown in me to lead this great company. I look forward to leading Lockheed Martin as we begin our next 100 years of operations. And for those of you on the call who don't know me well, I look forward to working with you more closely in the future.

Robert J. Stevens

Great. Thank you, Marillyn. So here's our plan. As our Executive Chairman, the board has asked me to devote next year to assuring continuity in the strategic, operational and financial dimensions of our business, which working with Marillyn, I am most happy to do. I'll be actively involved and engaged and willing to play any role to assure a successful transition.

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