">Lockheed Martin Space Systems Company, 4800 Bradford Drive, Building 406, Huntsville, Alabama 35807

Lockheed Martin Corporation stockholders of record at the close of business on March 1, 2013 are entitled to receive notice of, and to vote at, the Annual Meeting.

Items of Business:

1.

Election of 12 director-nominees to serve on the Board for a one-year term ending at next year’s Annual Meeting.

2.

Ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as our independent auditors for 2013.

3.

Advisory vote to approve the compensation of our named executive officers.

4.

Consideration of three stockholder proposals described in the accompanying Proxy Statement, if properly presented at the Annual Meeting.

5.

Consideration of any other matters that may properly come before the meeting.

We have enclosed our 20122015 Annual Report to Stockholders. The report is not part of the proxy soliciting materials for the Annual Meeting.

You can vote if you were a stockholder of record on February 26, 2016. Please vote your shares at your earliest convenience. This will help us to ensure the presence of a quorum at the meeting. Promptly voting your shares via the Internet, by telephone, by scanning the QR code with a mobile device or by signing, dating and returning the enclosed proxy card will save the expense of additional solicitation. If you wish to vote by mail, we have enclosed a self addressed,self-addressed, postage prepaid envelope. Submitting your proxy now will not prevent you from voting your shares at the meeting, as your proxy is revocable at your option.

If you wish to attend the meeting in person, please follow the advance registration instructions on page 89 of the Proxy Statement. For security reasons, all hand-carried items will be subject to inspection and all bags, briefcases and packages must be checked.

Sincerely,

Maryanne R. Lavan
Senior Vice President, General Counsel and Corporate Secretary
March 11, 2016

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on April 25, 2013: The 2013 Proxy Statement and 2012 Annual Report are available at http://www.lockheedmartin.com/investor.

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PROXY STATEMENT

The Board of Directors (the “Board”)Board) of Lockheed Martin Corporation (the “Corporation”)Corporation) is providing the Notice of 2016 Annual Meeting of Stockholders, this Proxy Statement and the proxy card (“Proxy Materials”)(Proxy Materials) in connection with the Corporation’s solicitation of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”)Annual Meeting) to be held on April 25, 2013,onApril 28, 2016, at 10:308:00 a.m. CentralEastern Daylight Savings Time, at the Lockheed Martin Space Systems Company, 4800 BradfordCenter for Leadership Excellence Auditorium, 6777 Rockledge Drive, Building 406, Huntsville, Alabama 35807,Bethesda, Maryland 20817, and at any adjournment or postponement thereof. Proxy Materials or a Notice of Internet Availability were first sent to stockholders on or about March 8, 2013.11, 2016.

PROXY SUMMARY

This proxy summary highlights information contained elsewhere in our Proxy Statement. The summary does not contain all of the information that you should consider and we encourage you to read the entire Proxy Statement carefully.

Business Highlights

Financial HighlightsSTOCKHOLDERS BENEFIT FROM LOCKHEED
MARTIN’S STRONG 2015 PERFORMANCE

We had a strong year financially

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2015 Board Composition, Qualifications and exceeded goals for several key financial metrics despite budget and financial uncertainties.Diversity

In addition to the metrics presented in the table above, we also had a record amount of orders during 2012 which led to a record backlog at the end of 2012.

Returning Cash to Stockholders

Through effective cash management, we returned value to stockholders through $2,342 million in cash dividends and stock repurchases. In September 2012, we increased our dividend by 15%, marking the tenth year in a row that we have increased our dividend by a double-digit percentage.

Total Stockholder Return (“TSR”)

Over the one-and three-year periods ended December 31, 2012, we provided better total returns to our stockholders than the market overall. During 2012, our TSR of 20% outperformed the S&P Aerospace and Defense (A&D) Index (15%) and the S&P 500 Index (16%). Over the three-year period ended December 31, 2012, we performed in line with the S&P A&D Index, while outperforming the S&P 500 Index.

Board Independence		Board Tenure

Gender		Age Mix

	Senior Leadership Experience		Financial Experts
	7 directors are current or former Chief Executive Officers who add to the effectiveness of the Board through their leadership experience in large, complex organizations and their expertise in corporate governance, international business operations, strategic planning and risk management.		3 directors meet the Securities and Exchange Commission’s criteria as “audit committee financial experts.”
	Global Experience		Government/Military Experience
	8 directors have broad leadership experience with multinational companies or in international markets.		5 directors have served in senior government or senior military positions and provide experience and insight into our industry and working with our core customers and governments around the world.

We use the following non-GAAP terms in this Proxy Statement – “segment operating profit,” “segment operating margin,” “return on invested capital (ROIC),” and “adjusted cash from operations” – which are defined in Appendix A. Please refer to Appendix A for an explanation of these terms as well as our disclosure regarding forward-looking statements concerning future performance or goals for future performance.Stockholder Rights

Right to Call Special Meeting

Annual Election of Directors

Mandatory Retirement Age for Directors

Majority Voting for Directors

No Poison Pill

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Corporate Governance Best Practices

Our Governance Profile Reflects Best Practices

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Annual Election of Directors

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Simple Majority Voting for Directors

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Resignation Policy for Directors in Failed Elections

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Over 90% Average Board Meeting Attendance with No Director Attendance of Less Than 75%

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Regular Executive Sessions of Non-Management Directors

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Policy Prohibiting Pledging and Hedging of Our Stock by Directors and Employees

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Majority Independent Directors

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Independent Lead Director With Broad Authority

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Director Stock Ownership Guidelines

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Director Attendance at Annual Meeting

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Mandatory Retirement Policy

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Clawback Policy on all Variable Pay

Stock Ownership Guidelines for Directors and Officers

Overboarding Policy

Corporate Sustainability  Independent Directors Meet Regularly Without Management

•Annual Board Self-Assessment Published Comprehensive Sustainability Report

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Ethics Policy

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Human Rights Policy

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“Go Green” Initiatives

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Disclosure of Corporate Political Contributions

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Target Zero Worker Safety Program

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Board-Level Committee With Ethics and Sustainability Oversight

Long-Standing, Active Investor Engagement Program

We continued to expandactively engage with our investorinvestors as part of our annual corporate governance cycle via email, telephone and in person meetings. Our engagement program on governanceincludes the direct involvement of senior management. Stockholders and compensation mattersothers also may communicate with our Lead Director and met or talkedother non-management directors. During 2015, we held 37 meetings with our largest institutional investors representing more than halfand other interested stockholders. These stockholders represented approximately 40 percent of the Corporation’s outstanding shares. Consistent withWe discussed our strong interest in investor engagement, communication,governance and transparency, thecompensation practices overall and sought feedback on proposed changes to our annual incentive program. Management Development and Compensation Committee (the “Compensation Committee”) continued to refine our executive compensation program to better align the interests of our executives and stockholders and respond toshared investor feedback makingdirectly with the changes summarized below. Executive Compensation Summary 2012 Pay Aligns to Performance • Our 2012 annual incentive bonus paid above target, reflecting record-setting financial results as well as key strategic and operational accomplishments. • The 2010-2012 Long-Term Incentive Performance (“LTIP”) award paid out at 150.8%, based on our three-year cash generation and return on invested capital (“ROIC”) performance against our long-range plan and our three-year cumulative TSR placing us in the 53rd percentileBoard of the S&P Industrials Index. Executive Compensation ChangesDirectors. In response to investor feedback fromreceived during 2015, we enhanced our investors following our 2012 Annual Meeting, the Compensation Committee approved the following changes (effective for 2013, unless noted otherwise): • Reduced the number of shares we use each year for equity compensation (“burn rate”) by using Performance Stock Units (“PSUs”) instead of stock options. • Assigned weightings to the organizational metrics (60% financial, 20% operational, 20% strategic) we use as part of our assessment of performancecorporate governance disclosure in order to clarify the framework around which annual incentive compensation decisions are made. We made this change in 2012. • Increased the emphasis on company performance for annual incentive awards decisions by increasing the weighting of the organizational performance factors (as opposed to individual performance factors) to be used in the assessment. • Changed the equity component of our long-term incentive (“LTI”) package for the Chief Executive Officer (“CEO”) and the other named executive officers (“NEOs”) from 60% to 80%. • Increased the portion of our LTI that is based on achievement of specified performance goals from 40% to 70%. • Refined our executive compensation philosophy to: – Set the market rate for total compensation at the 50th percentile of our comparator group of peer companies, subject to the ability to set compensation above or below the market rate for performance, experience, time in position, and critical skill needs; and – Set salary and LTI for executives who are new to a position at 85% of the market rate with the goal of moving to a market-rate level in two years based on performance. 2013 Proxy Statement       7 by providing additional information regarding the: Back to Contents Voting Matters ●Board evaluation and refreshment process; ●Board’s Voting Recommendations Management Proposals: Board’s Voting Recommendations Page Election of 12 Director-Nominees (Proposal 1) FOR ALL DIRECTOR-NOMINEES 19 Ratification of Ernst & Young LLP as Independent Auditors for 2013 (Proposal 2) FOR 26 Advisory Vote to Approve the Compensation of our Named Executive Officers (“Say-on-Pay”) (Proposal 3) FOR 27 Stockholder Proposals: Stockholder Action by Written Consent (Proposal 4) AGAINST 70 Adopt a Policy that Requires the Board Chairman to be an Independent Director (Proposal 5) AGAINST 71 Report on Corporate Lobbying Expenditures (Proposal 6) AGAINST 72 You may voterole in the following ways: By Internet By Telephone By Mail QR Code In Person You can vote your shares online at http://www.investorvote.com In the United States, Canada, and Puerto Rico, you can vote your shares by calling 1-800-652-8683; outside the United States 1-781-575-2300. You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the accompanying postage-paid envelope. Scan this QR code to vote with your mobile device. Attend the meeting to vote in person. 2013 Proxy Statement       8 Back to Contents CORPORATE GOVERNANCE Lockheed Martin has a culture dedicated to ethical behavior and responsible corporate activity. This commitment is reflected in our core values: “Do What’s Right;” “Respect Others;” and “Perform with Excellence.” These values are shared across the population of approximately 120,000 employees of Lockheed Martin and are the foundation of our commitment to sustainability: “Fostering innovation, integrity and security to preserve the environment, strengthen communities and propel responsible growth.” Lockheed Martin’s Code of Ethics and Business Conduct (“Code of Conduct”) has been in place since the Corporation was formed in 1995. The Code of Conduct (which is available on the Corporation’s website located at http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/setting-the-standard.pdf) applies to all directors, officers, and employees and provides our policies and expectations on a number of topics, including our commitments to good citizenship, promoting a positive and safe work environment, providing transparency in our public disclosures, avoiding conflicts of interest, honoring the confidentiality of sensitive information, preservation and use of company assets, compliance with all laws, and operating with integrity in all that we do. There were no waivers from any provisions of our Code of Conduct or amendments applicable to any director or executive officer. Directors and employees participate in ethics training annually. We inform active suppliers about our Code of Conduct annually and make it available for distribution. Corporate Sustainability Corporate sustainability is part of our business strategy as it influences our operations and informs our decision-making at every stage of our business lifecycle. In 2012, we: • Amended the Charter for the Ethics and Sustainability Committee of the Board to clarify the Committee’s responsibility for sustainability. A copy of the Charter is available on the Corporation’s website located at http://www.lockheedmartin.com/board-ethics-charter. • Created the Office of Sustainability. The office is led by the Vice President of Ethics and Sustainability. The office has convened a Sustainability Council of executive leaders from each of our business areas and key corporate functions. • Published our first comprehensive Sustainability Report. The report discloses performance indicators on our environmental and social responsibilities. A copy of the report is available on the Corporation’s website located at http://www.lockheedmartin.com/sustainability. • Convened a formal stakeholder engagement session. The purpose of the session with external constituencies was to collect input on our sustainability reporting, program goals, progress, and plans. This input will contribute to our ongoing assessment of environmental, social and governance issues, and their possible impact on our performance. • Achieved year-over-year reductions through our Go Green initiative. Our reductions in carbon emissions, use of water, and waste in operations through our Go Green initiative are described in further detail on the Corporation’s website located at http://‌www.‌lockheedmartin.com/go-green. • Expanded our carbon disclosure. Our expanded disclosure of Scope 1, 2, and 3 carbon measurement and reductions in our operations in the Carbon Disclosure Project, a copy of which is available at https://www.cdproject.net/en-US/Results/Pages/Company-Responses.aspx?company=10820. • Took additional steps to protect natural infrastructure. We made multiple pledges, including increasing the number of certified e-Stewards® recyclers supporting our business, to ensure 95 percent of the Corporation’s electronic waste is handled by such recyclers by June 2013. A full description of our pledge is included in the Corporate Eco Forum report available at http://corporateecoforum.com/valuingnaturalcapital. • Improved “Target Zero” program. We improved our safety reporting and accident prevention through our “Target Zero” program aimed at eliminating workplace injuries. This program is described in greater detail on the Corporation’s website located at http://www.lockheedmartin.com/target-zero. Community Involvement and Employee Engagement The Ethics and Sustainability Committee oversees the corporate social responsibilityenterprise risk management; ●Board’s oversight efforts in strategic philanthropy, employee engagement, corporate community involvement,responsibility and investing for social return. In 2012, we: • Achieved $6.4 billion in total spending with small diverse businesses, including businesses owned by women, veterans, service-disabled veterans, small, disadvantaged businesses,environmental stewardship; and historically under-utilized business zones. • Provided training ●Role and mentorship to develop 11 protégés within the U.S. Department of Defense Mentor-Protégé program. • Partnered on more than 300 solicitation topics with over 130 suppliers to exploit new technologies through the Small Business Innovation Program. • Attended more than 100 local and national conferences and events to meet small business and diverse suppliers. • Expanded our disclosure of political contributions, a copy of which is available on the Corporation’s website located at http://www.lockheedmartin.com/corporate-governance. 2013 Proxy Statement       9 Back to Contents • Published a policy to ensure that employees and suppliers take appropriate steps to mitigate the risk of human trafficking and slavery from occurring in any aspect of the supply chain, a copy of which is available on the Corporation’s website located at http://www.lockheedmartin.com/eradicate-human-trafficking. • Established a new Leadership Forum for three employee communities: People with Disabilities; Military/Veterans; and Lesbian, Gay, Bisexual, and Transgender—each of which held inaugural conferences to provide additional opportunities for professional development, mentoring, and networking. • Increased our percentage of military veteran hires as a percentage of all external hires to approximately 39 percent and hired 2,956 veterans. • Contributed more than $25 million to 1,251 charitable organizations in our community including those with a focus on veteran/military care and science, technology, engineering, and math (STEM) education. Separately, our employees contributed more than $21 million of their own money and volunteered more than 900,000 hours to worthy causes. Since 2002, employees have volunteered more than 11 million hours of their time in service to their communities. Corporate Governance Guidelines Lockheed Martin is committed to maintaining and practicing the highest standards of corporate governance. The Board has adopted Corporate Governance Guidelines that describe the framework within which the Board and its committees oversee the governance of the Corporation. The current Corporate Governance Guidelines are available on the Corporation’s website located at http://www.lockheedmartin.com/corporate-governance, by clicking on “Corporate Governance Guidelines.” The Nominating and Corporate Governance Committee (the “Governance Committee”) regularly assesses our governance practices in light of new or emerging trends and best practices. Our Corporate Governance Guidelines cover a wide range of subjects, including: the role of the Board and director responsibilities; the role and enhanced responsibilities of the Lead Director; a comprehensive Code of EthicsAudit Committee.

2015 Say-on-Pay Vote Results

At our 2015 Annual Meeting, more than 94 percent of the votes cast by our stockholders approved our say-on-pay proposal. This vote represents our highest approval rate to date.

As part of our ongoing efforts to align our compensation programs with the interests of our stockholders, we consider the input of our stockholders and emerging best practices in adopting our executive pay programs. Most investor feedback related to our pay governance and executive compensation programs was positive. We will continue to engage with our stockholders in 2016.

A substantial portion of compensation paid to our named executive officers (NEOs) is performance-based. We use the 50th percentile of our comparator group to set target compensation but allow for payments to exceed or fall below the target level based upon actual performance. Due to our record levels of performance in 2015, our short- and long-term incentive plans paid out above thetargets. This outcome is consistent with our pay for performance philosophy to set pay and targets at market levels, but pay incentive compensation to reflect actual performance.

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Board Recommendations on Voting Matters

You can vote in the following ways:

Via the Internet Visit www.investorvote.com		By Telephone In the United States, Canada and Business Conduct; director nomination proceduresPuerto Rico, call 1-800-652-8683; outside the United States call 1-781-575-2300.		By Mail Mark, date and qualifications; director independence standards; a policy forsign your proxy card or voting instruction form and return it in the review, approval, and ratification of related person transactions; director orientation and continuing education; procedures for annual performance evaluations ofaccompanying postage prepaid envelope.		In Person Attend the Board, its committees, and directors; director stock ownership guidelines; a prohibition on hedging transactions; and a claw back policy for executive incentive compensation. The Corporate Governance Guidelines state the Board’s expectation that any incumbent director who failsmeeting to receive more votes for his or her election than against his or her election is required to offer his or her resignation to the Board, as well as set forth the procedures to be followed by the Board vote in considering whether to accept or reject the resignation.person. In recent years, we have amended the Corporate Governance Guidelines to formally implement certain best

Attendance at the Annual Meeting

If you plan to attend the Annual Meeting, you must be a stockholder as of the record date, February 26, 2016, and obtain an admission ticket in advance following the instructions set forth on page 89.

Requests for admission tickets will be processed in the order in which they are received and must be received no later than April 22, 2016. On the day of the Annual Meeting, each stockholder will be required to present valid, government-issued photographic identification (such as a driver’s license or passport) with his orher admission ticket. The Annual Meeting will begin promptly at 8:00 a.m. Stockholders also will be required to enter through a security check point before being granted access into the Annual Meeting. Cameras, cell phones and other electronic devices will not be permitted in the Annual Meeting. All hand-carried items will be subject to inspection and all bags, briefcases and packages must be checked. The Corporation may implement additional security procedures to ensure the safety of the meeting attendees.

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CORPORATE GOVERNANCE

Lockheed Martin believes good governance is integral to achieving long-term stockholder value. We are committed to governance policies and practices and enhance the efficient operation of the Board and its effectiveness. For example, in 2011 we raised the mandatory retirement age for directors from 72 to 75 in recognition of the contributions that experienced directors, with knowledge of the Corporation, bring to effective board oversight. In 2012, we modified the responsibilities of our Lead Director making explicit his authority to approve all board and committee agendas, as well as the ability to call a special meeting of the Board at any time, at any place, and for any purpose. In 2013, we further amended the Bylaws to clarify that serve the interests of the Corporation and its stockholders. The Board monitors emerging issues in the governance community to ensure that it continues to meet its commitment to thoughtful and independent representation of stockholder interests.

The Board’s primary role is to oversee management and represent the interests of stockholders. Directors are expected to attend Board meetings, the meetings of the committees on which they serve and the annual meeting of stockholders. The Board and the committees regularly schedule and hold executive sessions without any members of management present. Between meetings, directors interact with the Chairman, President and Chief Executive Officer (CEO), the Lead Director has authority to approve the topics and schedules of Board meetings, approve information sent to the Board, and call a special meeting of independent directors.

In addition, all directors and employees are prohibited from hedging and pledging transactions involving our stock either through corporate policy statements or the Corporate Governance Guidelines.

Described below are some of the other significant corporate governance practices conducted by the Board.

Role of the Board of Directors

The Board plays an active role in overseeing management and representing the interests of stockholders. Directors are expected to attend Board meetings, the meetings of the committees on which they serve, and the Annual Meeting. Between meetings, directors interact with the Executive Chairman, the Lead Director, the CEO, and other members of management and are available to provide advice and counsel to management.

In 2012, the Board met a total of ten times. All directors attended at least 75 percent of the total board and committee meetings to which they were assigned. Marillyn A. Hewson was elected to the Board in November 2012 and attended all meetings after that date in her capacity as a director. All incumbent directors attended the 2012 Annual Meeting.

The Board and the committees regularly schedule and hold executive sessions without any members of management present.

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The Board has adopted Corporate Governance Guidelines (Governance Guidelines) that describe the framework within which the Board and its committees oversee the governance of the Corporation. The current Governance Guidelines are available on the Corporation’s website atwww.lockheedmartin.com/corporate-governance, by clicking on “Corporate Governance Guidelines.” The Nominating and Corporate Governance Committee (Governance Committee) regularly assesses our governance practices in light of emerging trends and best practices and formally implements best governance practices that it believes enhance the operation and effectiveness of the Board.

Our Governance Guidelines cover a wide range of subjects, including:

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A director may not serve on the boards of more than four other public companies; or

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If the director is an active CEO or equivalent of another public company, the director may not serve on the boards of more than two other public companies; and

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No member of the Audit Committee may serve on more than two other public company audit committees; and

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No member of the Compensation Committee may serve on more than three other public company compensation committees. This policy was added in 2013 in acknowledgement of the increased workload on the committee.

In addition, directors must notify the Chairman, Lead Director, and Senior Vice President, General Counsel and Corporate Secretary before accepting an invitation to serve on the board of any other public company.

Lead Director

The Governance Guidelines also state that any incumbent director who receives more votes “AGAINST” his or her election than “FOR” his or her election is required to offer his or her resignation to the Board. The Governance Guidelines set forth the procedures to be followed by the Board in considering whether to accept or reject the resignation. See “Majority Voting Policy for Director Elections” on page 12.

The Corporation’s strategy is reviewed and implemented in a two-year cycle. The first year is devoted to a review and development of an overall strategy and the second year is devoted to refining and assessing the strategy. The cycle then begins again in the following year. The Board is involved in strategic planning for the Corporation throughout the year. In January, the Executive Vice President and Chief Financial Officer (EVP & CFO) reviews the long-range plan with the Board. Annually, the Board convenes a strategic planning session during which management reviewsthe overall long-range strategy for the Corporation and near-term and long-term initiatives. The Strategic Affairs Committee of the Board meets throughout the year to review the progress of and challenges to the Corporation’s strategy and to approve specific initiatives, including acquisitions and divestitures over a certain size threshold. At each regular Board meeting, the Chairman, President and CEO reviews developments within the context of the Corporation’s strategic framework.

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Corporate Governance

In accordance with our Bylaws and Governance Guidelines, the independent members of the Board annually elect one of the independent directors to serve as the Lead Director by the affirmative vote of a majority of the directors who have been determined to be “independent” for purposes of the New York Stock Exchange (NYSE) listing standards. The Board has structured the role of the Lead Director with sufficient authority to serve as a counter-balance to management. The responsibilities specified in our Bylaws for the Lead Director are to:

•

The committee Chairmen also review and discuss the agendas for the meetings in advance of distribution of the agendas and related Board or committee Chairmen review and discuss the agendas for the meetings in advance of distribution of the agendas and related board material.

Mr. Archibald was elected by the independent directors as Lead Director, effective at the conclusion of the 2015 Annual Meeting and has served in that capacity since that time. Stockholders and other interested parties may communicate with the Lead Director by email atLead.Director@lmco.com.

Mr. McCorkindale served as the elected Lead Director in 2012 and was re-elected to serve as Lead Director by the independent directors for 2013.

The Board regularly reviews its leadership structure in light of the Corporation’s then current needs, governance trends, internal assessments of Board effectiveness and other factors. The Board reviews and considers whether the positions of Chairman and CEO should be combined or separated as part of an ongoing review of the effectiveness of the Corporation’s governance structure.

The Board believes that it must be independent and must provide strong and effective oversight, but also believes that the independent Board members should have the flexibility to respond to changing circumstances and choose the model that best fits the then-current situation.

As a result, the roles of Chairman and CEO have been split from time to time to facilitate leadership transitions, while at other times the roles have been combined.

The Board believes that, at the present time, the Corporation is best served by allocating governance responsibilities between a combined Chairman and CEO and an independent Lead Director with robust responsibilities. This structure allows the Corporation to present a single face to our customers through the combinedChairman and CEO position while at the same time providing an active role and voice for the independent directors through the Lead Director. In making this determination, the independent members of the Board considered:

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Corporate Governance

The independent directors plan to continue to examine our corporate governance policies and leadership structures on an ongoing basis to ensure that they continue to review the leadership structure on an ongoing basis to ensure that it continues to meet the Corporation’s needs.

The Compensation Committee is responsible for reviewing

Board Evaluation and approving corporate goals and objectives relevant to the compensation of both the CEO and the Strategic Advisor to the CEO, evaluating the performance of these officers and, either as a committee or together with the other independent membersRefreshment

To enhance Board functioning and the effectiveness of the Board relationship with management for the benefit of our stockholders, the Board regularly evaluates its performance through self-assessments, corporate governance reviews and periodic charter reviews. Those evaluations, changes in our business strategy or operating environment and the future needs of the Board in lightof anticipated director retirements are used to identify desired backgrounds and skill sets for future Board members. The Board also maintains tenure policies (contained in our Governance Guidelines) as a means of ensuring that the Board regularly benefits from a balanced mix of perspectives and experiences.

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Corporate Governance

The Board recognizes that its members benefit from service on the boards of other companies and it encourages such service. The Board also believes, however, that it is critical that directors dedicate sufficient time to their service on the Corporation’s Board. Therefore, the Governance Guidelines provide that, without obtaining the approval of the Governance Committee:

Directors must notify the CEO, Lead Director and Senior Vice President, General Counsel and Corporate Secretary before accepting an invitation to serve on the board of any other public company.

The Corporation’s Charter and Bylaws provide for simple majority voting. Pursuant to the Governance Guidelines, in any uncontested election of directors, any incumbent director who receives more votes “AGAINST” than votes “FOR” votes than “AGAINST” votes is required to offer his or her resignation for Board consideration.

Upon receipt of a resignation of a director tendered as a result of a failed stockholder vote, the Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation, or whether other action is recommended. In considering the tendered resignation, the Board will consider the Governance Committee’s recommendation as well as any other factors it deems relevant, which may include:

•

Any director whose resignation has been tendered may not participate in the deliberations of the Governance Committee or in the Board’s consideration of the Governance Committee’srecommendation with respect to such director. In the event that a majority of the members of the Governance Committee have offered to resign as a result of their failure to receive the required vote for election by the stockholders, then the independent members of the Governance Committee who have not offered to resign, without further action by the Board, will constitute a committee of the Board for the purpose of considering the offered resignations and will recommend to the Board whether to accept or reject those offers and, if appropriate, make a recommendation to take other actions. If there are no such independent directors, then all of the independent directors, excluding the director whose offer to resign is being considered, without further action of the Board, will constitute a committee of the Board to consider each offer to resign, make a recommendation to the Board to accept or reject that offer and, if appropriate, make a recommendation to take other actions.

The Board will act on a tendered resignation within 90 days following certification of the stockholder vote for the annual meeting and will promptly disclose its decision and rationale as to whether to accept the resignation (or the reasons for rejecting the resignation, if applicable) in a press release, in a filing with the Securities and Exchange Commission (SEC), or by other public announcement, including a posting on the Corporation’s website.

If a director’s resignation is accepted by the Board, or if a nominee for director who is not an incumbent director is not elected, the Board may fill the resulting vacancy or may decrease the size of the Board pursuant to the Corporation’s Bylaws. The Board may not fill any vacancy so created with a director who was nominated but not elected at the annual meeting by the vote required under the Corporation’s Bylaws.

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Corporate Governance

Management has established semi-annual talent reviews that coincide with our business operating reviews, as well as quarterly reviews within each of our operating businesses. During these reviews, the executive leadership team discusses succession plans for key positions and identifies top talent for development in future leadership roles.

The Board also is actively engaged in talent management. Annually, the Board evaluates our succession strategy and leadership pipeline for key roles. High potential leaders are given exposure and visibility to Board members through formal presentations and informal events. More broadly, the Board is regularly updated on key talent indicators for the overall workforce, including diversity, recruiting and development programs. Board members also are active partners, engaging and spending time with our high potential leaders throughout the year at Board meetings and other events.

Our risk management philosophy is to balance risk and reward within management and the Board’s risk tolerance. This is accomplished through risk management practices, core values and our code of conduct, each of which reinforces a risk transparent culture. The Board and its committees receive risk updates throughout the year. Executive management provides updates on risks managed at the enterprise level. Business area management provides updates on risks to individual business area objectives.

The Board considers the full spectrum of business risks including strategic, operational, financial, reputation and compliance risks. Oversight of risk is assigned to the full Board unless delegated to one of the standing committees. The Audit Committee reviews our policies and practices with respect to risk assessment and risk management, identification and oversight of the Corporation’s major financial risk exposures and the steps that have been taken to monitor and control such exposures. The Audit Committee reports the results of its review to the Board.

The Board’s committees review risks within their respective domains. Risk mitigation for the risks identified as most significant to our corporate objectives and strategy are reviewed by the Strategic Affairs Committee or the full Board.

Management employs three levels of controls in providing risk assurance for the Board. Line management provides day-to-day procedures and controls. Functional and corporate management conduct reviews and oversight and Internal Audit, including external auditors, offers an additional level of risk-based assurance.

In 2015, the Board and its Committees received reports on the enterprise risk mitigation plans for risks identified as most significant by management, including reports on cyber security.

2016 Proxy Statement

The Board will act on a tendered resignation within 90 days following certification of the stockholder vote for the annual meeting and will promptly disclose its decision and rationale as to whether to accept the resignation (or the reasons for rejecting the resignation, if applicable) in a press release, in a filing with the Securities and Exchange Commission (“SEC”) or by other public announcement, including a posting on the Corporation’s website.

If a director’s resignation is accepted by the Board, or if a nominee for director who is not an incumbent director is not elected, the Board may fill the resulting vacancy or may decrease the size of the Board pursuant to the Corporation’s Bylaws. The Board may not fill any vacancy so created with a director who was nominated but not elected at the annual meeting by the vote required under the Corporation’s Bylaws.

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Any stockholder who individually owns 10 percent, or stockholders who in the aggregate own 25 percent, of the outstanding common stock may demand the calling of a special meeting to consider any business properly before the stockholders. Our Bylaws do not restrict the timing of a request for a special meeting. The only subject matter restriction is that we are not required to call a special meeting to consider a matter that is substantially the same as a matter voted on at a special meeting within the preceding 12 months unless requested by a majority of all stockholders. The Board believes that our current governance practice strikes an appropriate balance between the right of stockholders tocall a special meeting and the interests of the Corporation and its stockholders in promoting the appropriate use of company resources. The 25 percent threshold is the most prevalent standard among the companies in our comparator group. The Board added the 10 percent threshold in light of our institutional ownership profile which has included large holdings by a single investor.

The Board recommends that you vote AGAINST Stockholder Proposal 5 on page 81 requesting that the Board change the stock ownership threshold to call a special meeting. We believe that the proposal is unnecessary because our stockholders already have a meaningful right to call special meetings.

As part of the Board’s continuing commitment to best corporate governance practices and as a result of dialogue with stockholders, the Board amended the Corporation’s Bylaws in 2010 to permit any stockholder who individually owns 10%, or stockholders who in the aggregate own 25%, of the outstanding common stock to call a special meeting to consider any business properly before the stockholders.

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The Corporation does not have a Stockholder Rights Plan, otherwise known as a “Poison Pill.” Through our Governance Guidelines, the Board has communicated that it has no intentionof adopting one at this time. The Board has indicated that, if it were to adopt a Stockholder Rights Plan, the Board would seek stockholder ratification within 12 months of the date of adoption.

Eleven of our current directors are independent under applicable NYSE listing standards. Under the NYSE listing standards and our Governance Guidelines, a director is not independent if the director has a direct or indirect material relationship with the Corporation. The Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. To assist in this review, the Board has adopted director independence guidelines that are included in our Governance Guidelines, which are available on our Corporation’s website atwww.lockheedmartin.com/corporate-governance.

Our director independence guidelines set forth certain relationships between the Corporation and directors and their immediate family members or affiliated entities, which the Board, in its judgment, has deemed to be material or immaterial for purposes of assessing a director’s independence. In the event a director has a relationship with the Corporation that is not addressed in the independence guidelines, the independent members of the Board determine whether the relationship is material.

The Board has determined that the following directors are independent: Daniel F. Akerson, Nolan D. Archibald, Rosalind G. Brewer, David B. Burritt, Bruce A. Carlson, James O. Ellis, Jr., Thomas J. Falk, Gwendolyn S. King, James M. Loy, Joseph W. Ralston and Anne Stevens. Marillyn A. Hewson is an employee of the Corporation and is not independent under the NYSE listing standards or our Governance Guidelines. In determining that each of the non-management directors is independent, the Board considered the relationships described under “Certain Relationships and Related Person Transactions of Directors, Executive Officers and 5 Percent Stockholders,” on page 15, which it determined were immaterial to the individual’s independence.

The Governance Committee and Board considered that the Corporation in the ordinary course of business purchases products and services from, or sells products and services to, companies or subsidiaries or parents of companies at which some of our directors (or their immediate family members) are or have been directors or officers and to other institutions with which some of these individuals have or have had relationships. These relationships

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included: Mr. Akerson (LDiscovery, LLC, The Carlyle Group and Northrop Grumman Corporation (family member employer)); Mrs. Brewer (Wal-Mart Stores, Inc. which includes Sam’s Club); Mr. Ellis (Level 3 Communications, Inc., Draper Laboratory and Stanford University Hoover Institution); Mr. Falk (Catalyst, Inc.); Mrs. King (ESPN (family member employer)), Mr. Loy (The Cohen Group) and Mr. Ralston (The Cohen Group, The Timken Company and Lynden Air Cargo). In determining that these relationships did not affect the independence of those directors, the Board considered that none of the directors had any direct or indirect material interest in, or received any special compensation in connection with, the Corporation’s business relationships with those entities. In addition to their considerationof these ordinary course of business transactions, the Governance Committee and the Board relied upon the director independence guidelines included in our Governance Guidelines to conclude that contributions to a tax-exempt organization by the Corporation did not create any direct or indirect material interest for the purpose of assessing director independence.

The Governance Committee also concluded that all members of each of the Audit Committee, the Compensation Committee and the Governance Committee are independent within the meaning of our Governance Guidelines and NYSE listing standards, including the additional independence requirements applicable to members of the Audit Committee, Compensation Committee and Governance Committee.

Under applicable NYSE listing standards, a majority of the Board and each member of the Audit Committee, Governance Committee, and Compensation Committee must be independent.

Under the NYSE listing standards and our Corporate Governance Guidelines, a director is not independent if the director has a direct or indirect material relationship with the Corporation. The Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. To assist in this review, the Board has adopted director independence guidelines that are included in our Corporate Governance Guidelines, which are available on our Corporation’s website located at http://www.lockheedmartin.com/corporate-governance.

Our director independence guidelines set forth certain relationships between the Corporation and directors and their immediate family members, or affiliated entities, that the Board, in its judgment, has deemed to be material or immaterial for purposes of assessing a director’s independence. In the event a director has a relationship with the Corporation that is not addressed in the independence guidelines, the independent members of the Board determine whether the relationship is material.

The Board has determined that the following directors are independent: Nolan D. Archibald, Rosalind G. Brewer, David B. Burritt, James O. Ellis, Jr., Thomas J. Falk, Gwendolyn S. King, James M. Loy, Douglas H. McCorkindale, Joseph W. Ralston, and Anne Stevens. Robert J. Stevens, Executive Chairman, and Marillyn A. Hewson, CEO and President, are employees of the Corporation (as was Christopher E. Kubasik) and are not independent under the NYSE listing standards or our Corporate Governance Guidelines. In determining that each of the non-management director-nominees is independent, the Board considered the relationships described under “Certain Relationships and Related Person Transactions of Directors, Executive Officers, and 5 percent Stockholders,” on page 15, which it determined were immaterial to the individual’s independence.

The Governance Committee and Board considered that the Corporation in the ordinary course of business purchases products and services from, or sells products and services to, companies or subsidiaries or parents of companies at which some of our director-nominees are or have been directors or officers. These relationships included: Mr. Archibald (Stanley Black & Decker, Inc., Brunswick Corporation, and Huntsman Corporation); Mrs. Brewer (Sam’s Club, a subsidiary of Walmart Stores, Inc.); Mr. Ellis (Inmarsat plc and Level 3 Communications, Inc.); Mr. Falk (Kimberly-Clark Corporation and Catalyst, Inc.); Mr. Loy (RAND Corporation); Mr. Ralston (Lynden Incorporated, The Timken Company, and URS Corporation); and Ms. Stevens (Anglo American plc). In determining that these relationships did not affect the independence of those directors, the Board considered that none of the director-nominees had any direct material interest in, or received any special compensation in connection with, the Corporation’s business relationships with those companies.

The Governance Committee also concluded that all members of each of the Audit Committee, the Compensation Committee, and the Governance Committee are independent within the meaning of our Corporate Governance Guidelines and NYSE listing standards as these currently apply and as these will apply to NYSE listed corporations after our Annual Meeting.

The Board has approved a written policy and procedures for the review, approval and ratification of transactions among the Corporation and its directors, executive officers and their related interests. A copy of the policy is available on the Corporation’s website located at http://‌www.lockheedmartin.com/corporate-governance. Under the policy, all related person transactions (as defined in the policy) are to be reviewed by the Governance Committee. The Governance Committee may approve or ratify related person transactions at its discretion if deemed fair and reasonable to the Corporation. This may include situations where the Corporation provides products or services to related persons on an arm’s length basis on terms comparable to those provided to unrelated third parties. Any director who participates in or is the subject of an existing or potential related person transaction may not participate in the decision-making process of the Governance Committee with respect to that transaction.

Under the policy, and consistent with SEC regulations and NYSE listing standards, a related person transaction is any transaction in which the Corporation was, is, or will be a participant, where the amount involved exceeds $120,000, and in which a related person had, has, or will have a direct or indirect material interest. A related person includes any director or executive officer of the company, any person who is known to be the beneficial owner of more than 5 percent of any class of the company’s voting securities, an immediate family member of any person described above, and any firm, corporation, or other entity controlled by any person described above.

The policy requires each director and executive officer to complete an annual questionnaire to identify their related interests. A copy of the policy is available on the Corporation’s website atwww.lockheedmartin.com/corporate-governance. Under the policy, all related person transactions (as defined in the policy) are to be reviewed by the Governance Committee. The Governance Committee may approve or ratify related person transactions at its discretion if deemed fair and reasonable to the Corporation. This may include situations where the Corporation provides products or services to related persons on an arm’s length basis on terms comparable to those provided to unrelated third parties. Any director who participates in or is the subject of an existing or potential related person transaction may not participate in the decision-making process of the Governance Committee with respect to that transaction.

Under the policy, and consistent with applicable SEC regulations and NYSE listing standards, a related person transaction is any transaction in which the Corporation was, is or will be a participant, where the amount involved exceeds $120,000, and in which a related person had, has, or will have a direct or indirectmaterial interest. A related person includes any director or director-nominee, any executive officer of the Corporation, any person who is known to be the beneficial owner of more than five percent of any class of the Corporation’s voting securities, or an immediate family member of any person described above.

Our policy requires each director and executive officer to complete an annual questionnaire to identify his or her related interests and persons, and to notify the Corporation of changes in that information. Based on that information, the Corporation maintains a master list of related persons for purposes of tracking and reporting related person transactions.

The policy contemplates that the Governance Committee may ratify transactions after they commence or pre-approve categories of transactions or relationships, because it may not be possible or practical to pre-approve all related person transactions.

Because it may not be possible or practical to pre-approve all related person transactions, the policy contemplates that the Governance Committee may ratify transactions after they commence or pre-approve categories of transactions or relationships. If the Governance Committee declines to approve or ratify a transaction, the related person transaction is referred to management to make a recommendation to the Governance Committee concerning whether the transaction should be terminated or amended in a manner that is acceptable to the Governance Committee.

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The following transactions or relationships are considered to be “related person” transactions under our corporate policy and applicable SEC regulations and NYSE listing standards.

Two of our directors, Mr. Loy and Mr. Ralston, are employed as Senior Counselor and Vice Chairman, respectively, of The Cohen Group, a consulting business that performs services for the Corporation. In 2015, we paid The Cohen Group $522,500 for consulting services and related expenses. Neither Mr. Loy norMr. Ralston’s compensation earned at The Cohen Group is impacted by the consulting services delivered to the Corporation. The Board annually assesses and reviews the Corporation’s relationship with The Cohen Group and has determined that the breadth of military experience coupled with their top security clearances bring a unique value to the Board, particularly with the oversight of our classified programs. Neither Mr. Loy nor Mr. Ralston serves on our Audit, Compensation or Governance Committees.

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We currently employ approximately 126,000 employees and have an active recruitment program for soliciting job applications from qualified candidates. We seek to hire the most qualified candidates and consequently do not preclude the employment of family members of current directors and executive officers. A related person transaction (and compensation) involved a Board member’s (Joseph Ralston) brother-in-law, Mark E. Dougherty, who is employed as a Capture Management Principal. Mr. Dougherty’s 2015 base salary was $174,253, and he received an employee incentive plan award of $16,900. His base salary was increased to $179,655 for 2016 and he received an employee incentive plan award of $13,900. Mr. Dougherty may participate in other employee benefit plans and arrangements that generally are made available to other employees at the same level (including health, welfare, vacation and retirement plans). His compensation was established in accordance with the Corporation’s employment andcompensation practices applicable to employees with equivalent qualifications, experience and responsibilities. Mr. Dougherty did not serve as an executive officer of the Corporation during 2015.

From time to time, the Corporation has purchased services in the ordinary course of business from financial institutions that beneficially own five percent or more of our common stock. In 2015, the Corporation paid $11,691,143 to State Street Corporation and its affiliates (including State Street Bank and Trust Company) for investment management, custodial, benefit plan administration fees and credit facility fees; $903,442 to BlackRock, Inc. and its affiliates for investment management of fixed-income assets held in the Corporation’s master savings trust; $5,402,796 to Capital Guardian, an affiliate of Capital World Investors, for investment management fees and $307,665 to The Vanguard Group, Inc. and its affiliates for investment management services.

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ETHICS AND SUSTAINABILITY

The Ethics and Sustainability Committee of the Board of Directors oversees efforts in corporate responsibility, human rights, environmental stewardship, political contributions, employee safety and health, ethical business practices, community outreach, philanthropy, diversity and inclusion and equal opportunity, as well as the Corporation’s record of compliance with related laws and regulations.

	Independent Reporting		Ethics and Sustainability Committee
	TheVice President, Ethics and Sustainability, has a dual reporting relationship, both to the Chairman, President and CEO and also independently to the Board of Directors.		5 Independent Directorscomprise this Boardcommittee, which provides oversight for the Ethics and Sustainability programs, approves the Code of Conduct and reviews Sustainability Management Plan performance, stakeholder engagement and environmental and social risks and initiatives.
	Executive Leadership Team		Business Segment Steering Committees
	TheChairman, President and CEO,with herexecutive leadership team, review the operations of the Ethics and Sustainability programs at least twice annually.		TheExecutive Vice Presidentof eachBusiness Segment chairs a steering committee that regularly reviews the ethics program within that Business Segment.

Ethics

We strive to enhance our high standards and controls for ethical business conduct, compliance and transparency. Our values – Do What’s Right, Respect Others and Perform with Excellence – underpin our comprehensive Code of Conduct and Supplier Code of Conduct. The Code of Conduct, which has been in place since the Corporation was formed in 1995 (available on the Corporation’s website atwww.lockheedmartin.com/us/who-we-are/ethics/code.html), applies to all Board members as well as officers and employees. It provides our policies and expectations for a number of topics, including our commitment to good citizenship, promoting a positive and safe work environment, providing transparency in our public disclosures, zero tolerance for corruption, avoiding conflicts of interest, honoring the confidentiality of sensitive information, preservation and use of company assets, compliance with all laws, preventing retaliation against reporting parties and operating with integrity in all that we do. To implement this Code of Conduct, Board members, officers and employees participate annually in ethics training. There were no waivers from any provisions of our Code of Conduct or amendments applicable to any Board member or executive officer in 2015.

In 2015, Lockheed Martin:

●	Introduced more interactive testing techniques in an updated anti-corruption virtual training platform. The Ethics staff also led engagement activities at 100 company locations to educate employees regarding potential risk factors, enhance ethics office accessibility and strengthen guidance for small and physically or organizationally remote sites.
●	Streamlined our “Gifts and Business Courtesies” and “Compliance with Anti-Corruption Laws” policies and launched an online tool for employees to verify adherence to these policies on a case-by-case basis.

Notable ethics achievements in 2015 include:

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Sustainability

Our sustainability mission is to foster innovation, integrity and security to protect the environment, strengthen communities and foster responsible growth. First and foremost, our sustainability strategy guides a systematic approach to understand and manage environmental, social and governance risks that represent stakeholder priorities and drivers of long-term business success.

In 2015, Lockheed Martin:

Notable sustainability achievements in 2015 include:

Board Performance Self-Assessment

Each year

●	Selected as only U.S. aerospace and defense prime contractor to the Board evaluates its performanceDow Jones Sustainability World Index, which included Lockheed Martin for the second consecutive year. Selected as only U.S. aerospace and effectiveness. Each director participatesdefense company to receive Silver Class distinction from RobecoSAM for excellence in sustainability performance.
●	Earned an annual performance evaluation to elicit feedback on specific aspectsA rating from MSCI for environmental, social and governance management and performance.
●	Named by CDP (formerly Carbon Disclosure Project) as one of the Board’s role, organization, and meetings (including committee meetings). The collective ratings and comments are compiledtop companies worldwide for climate disclosure.
●	Included in the top ten among 100 Best Corporate Citizens by Corporate Responsibility (CR) Magazine.
●	Recognized by the Senior Vice President, General CounselSustainable Purchasing Leadership Council with five Outstanding Case Study Awards for supplier spend analysis, ethics supplier mentoring, e-waste and Corporate Secretary or her delegatemanufacturing waste stewardship and presented to the Governance Committeeour sustainable supply chain management program.

Supplier and the full Board. Each Board committee conducts an annual performance self-assessment through a similar process.Community Engagement

In 2015, Lockheed Martin partnered with suppliers, the community and non-governmental organizations to strengthen our communities and foster responsible growth, including:

Stockholder Rights Plan

The Corporation does not have a Stockholder Rights Plan, otherwise known as a “Poison Pill.” Through

●	Achieved approximately $4.7 billion in total spending with more than 9,700 small businesses, including businesses owned by women, veterans and service-disabled veterans, small, disadvantaged businesses and businesses located in historically under-utilized business zones. Small businesses represent approximately 64 percent of our Corporate Governance Guidelines, the Board has communicated that it has no intention of adoptingentire active supplier base.
●	Became one at this time. If the Board does choose to adopt a Stockholder Rights Plan, the Board has indicated that it would seek stockholder ratification within 12 months from the date of adoption. 2013 Proxy Statement       15 Back to Contents COMMITTEES OF THE BOARD OF DIRECTORS The Board has seven standing committees as prescribed by our Bylaws. The following table lists our board committees, the chairs of each committee, the directors who currently serve on them, and the number of Committee meetings held in 2012. Charters for each committee are available on the Corporation’s website located at http://www.lockheedmartin.com/corporate-governance. Membership on Board Committees Director Audit Classified Business and Security Ethics and Sustainability Executive Management Development and Compensation Nominating and Corporate Governance Strategic Affairs and Finance Nolan D. Archibald X X Chair Rosalind G. Brewer X X David B. Burritt Chair X X X James O. Ellis, Jr. Chair X X X Thomas J. Falk X X Marillyn A. Hewson* X Gwendolyn S. King Chair X X James M. Loy X X X Douglas H. McCorkindale** X X X X Chair Joseph W. Ralston X X X Anne Stevens X X Chair Robert J. Stevens Chair Meetings held in 2012 5 3 3 0 8 4 3 * Elected Committee member on January 24, 2013 ** Lead Director Audit Committee The Audit Committee oversees our financial reporting process on behalf of the Board. In additionfirst companies to oversighttake the pledge to participate in the U.S. Small Business Administration (SBA) ‘SupplierPay’ Initiative, introduced in 2014. As part of the Corporation’s internalpledge, Lockheed Martin began an accelerated payment schedule that provides prompt payment to over 7,000 small business suppliers.
●	Provided training to approximately 80 current, past or potential protégé small businesses under various federal government agency Mentor-Protégé programs.
●	Hired approximately 3,300 military veterans, representing approximately 36 percent of all external hires.
●	Introduced a Fast Track Supplier Mentoring program, which was developed as an option to accommodate suppliers interested in enhancing or implementing the elements of an effective ethics program. The program is designed to facilitate broader discussion of industry best practices through an accelerated, virtual, consolidated, group-based approach.
●	Contributed nearly $27 million to 975 organizations, with a strategic focus on advancing science, technology, engineering and math (STEM) education and supporting military and veteran causes. Separately, our employees donated more than $19.1 million and reported volunteering more than one million hours to worthy causes. Over the last decade, employees have generously volunteered nearly 12 million hours of their own time in service to their communities.
●	Supported voluntarily the Conflict-Free Sourcing Initiative (CFSI) audit organization, itfund and selected two tin smelters that were identified as potential sources of supply in our supply chain, but had not yet been validated as conflict-free by the CFSI. This is directly responsiblea non-required element of our Conflict Minerals Program.

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COMMITTEES OF THE BOARD OF DIRECTORS

The Board has seven standing committees. The following table lists our Board committees, the chairs of each committee, the directors who served on them following the 2015 annual meeting and the number of committee meetings held in 2015. Charters for each committee are available on the Corporation’s website atwww.lockheedmartin.com/corporate-governance.

2015 Membership on Board Committees

The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities relating to the financial condition of the Corporation, the integrity of the Corporation’s financial statements and the Corporation’s compliance with legal and regulatory requirements. In addition, the Audit Committee has oversight of the Corporation’s internal audit organization, including enterprise risk management processes. It is directly responsible for the appointment, compensation, retention, oversight and termination of the Corporation’s independent auditors. The Audit Committee also is responsible for reviewing the allocation of resources, the Corporation’s financial condition and capital structure and policies regarding derivatives and capital expenditures. The Audit Committee meets privately with the Vice President, Internal Audit, and the Corporation’s independent auditors, Ernst & Young LLP. The functions of the Audit Committee are further described under the heading “Audit Committee Report” on page 21.

All the members of the Audit Committee are independent within the meaning of the NYSE listing standards, applicable SEC regulations and our Governance Guidelines. To be considered independent under applicable SEC regulations, a member of the Audit Committee cannot accept any consulting, advisory or other compensatory fee from the Corporation, or be an affiliated person of the Corporation or its subsidiaries.

The Board has determined that Mr. Falk, Chairman of the Audit Committee, Mr. Akerson and Mr. Burritt Chairman of the Audit Committee, Mr. Falk, and Mr. McCorkindale are qualified audit committee financial experts within the meaning of applicable SEC regulations. All members of the Audit Committee have accounting and related financial management expertise sufficient to be considered financially literate within the meaning of the NYSE listing standards.

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Committees of the Board of Directors

The Classified Business and Security Committee (the CBS Committee) assists the Board in fulfilling its oversight responsibilities relating to the Corporation’s classified business activities and the security of personnel, data and facilities. The CBS Committee consists of three or more directors who meet the independence requirements of the NYSE listing standards and who possess the appropriate security clearance credentials, at leastone of whom must be a member of the Audit Committee, and none of whom are officers or employees of the Corporation and are free from any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a member of the CBS Committee. All members of the CBS Committee hold high-level security clearances.

The Classified Business and Security Committee (the “CBS Committee”) assists the Board in fulfilling its oversight responsibilities relating to the Corporation’s classified business activities and the security of personnel, data, and facilities. The CBS Committee consists of three or more directors who meet the independence requirements of the NYSE and who possess the appropriate security clearance credentials, at least one of whom shall be a member of the Audit Committee, and none of whom are officers or employees of the Corporation and are free from any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a member of the CBS Committee.

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Ethics and Sustainability Committee

The purpose of the Ethics and Sustainability Committee is to assist the Board in fulfilling its oversight responsibilities relating to the Corporation’s ethical conduct, sustainability, environmental stewardship and employee safety and health. The Ethics and Sustainability Committee monitors compliance and recommends changes to our Code of Conduct. It reviews our policies, procedures and compliance with respect to sustainability, including corporate responsibility, human rights, environmental stewardship, employeesafety and health, ethical business practices, community outreach, philanthropy, diversity, inclusion and equal opportunity. It oversees matters pertaining to community and public relations, including government relations, political contributions and expenditures and charitable contributions. The Ethics and Sustainability Committee meets privately with the Vice President, Ethics and Sustainability, and the Senior Vice President, Corporate Secretary and General Counsel.

The Ethics and Sustainability Committee monitors compliance and recommends changes to our Code of Ethics and Business Conduct. It reviews our policies, procedures, and compliance with respect to sustainability, including corporate responsibility, human rights, environmental stewardship, employee health and safety, ethical business practices, community outreach, philanthropy, diversity, inclusion, and equal opportunity. It oversees matters pertaining to community and public relations, including government relations, political contributions, and charitable contributions.

Executive Committee

The Executive Committee serves primarily as a means for taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on all matters other than those specifically reserved by Maryland law to the full Board. The Chairman of the Board chairs the Executive Committee.

The Executive Committee primarily serves as a means for taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on all matters other than those specifically reserved by Maryland law to the full Board.

Management Development and Compensation Committee

The Compensation Committee reviews and approves the corporate goals and objectives relevant to the compensation of the CEO, evaluates the performance of the CEO and, either as a committee or together with the other independent members of the Board, determines and approves the compensation philosophy and levels for the CEO and other members of senior management.

Additional information regarding the role of the Compensation Committee and our compensation practices and procedures is provided under the captions “Compensation Committee Report”on page 32, “Compensation Discussion and Analysis (CD&A)” beginning on page 32 and “Other Corporate Governance Considerations in Compensation” on page 51.

All members of the Compensation Committee are independent within the meaning of the NYSE listing standards, applicable SEC regulations and our Governance Guidelines.

The Compensation Committee reviews and approves the corporate goals and objectives relevant to the compensation of the CEO and the Strategic Advisor to the CEO, evaluates the performance of the CEO and the Strategic Advisor to the CEO and, either as a committee or together with the other independent members of the Board, determines and approves the compensation philosophy and levels of the CEO and the Strategic Advisor to the CEO and other members of senior management.

Additional information regarding the role of the Compensation Committee and our compensation practices and procedures is provided under the captions “Compensation Committee Report” on page 28, “Compensation Discussion and Analysis (“CD&A”)” beginning on page 28, and specifically to the discussion on “Other Corporate Governance Considerations in Compensation” beginning on page 48.

All members of the Compensation Committee are independent within the meaning of the NYSE listing standards and our Corporate Governance Guidelines.

Nominating and Corporate Governance Committee

The Governance Committee is responsible for developing and implementing policies and practices relating to corporate governance, including our Governance Guidelines. The Governance Committee assists the Board by selecting candidates to be nominated to the Board, making recommendations concerning the composition of Board committees and overseeing the evaluation of the Board and its committees.

The Governance Committee reviews and recommends to the Board the compensation of directors. Our executive officers generally do not play a role in determining director pay other than to gather publicly available information.

All members of the Governance Committee are independent within the meaning of the NYSE listing standards, applicable SEC regulations, and our Governance Guidelines.

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Committees of the Board of Directors

Strategic Affairs Committee

The Strategic Affairs Committee reviews and recommends to the Board management’s long-term strategy for the Corporation and reviews risks and opportunities to the strategy as identified by the Corporation’s Enterprise Risk Management processes. The Strategic Affairs Committee reviews and recommends to the Boardcertain significant strategic decisions regarding exit from and entry into lines of business, acquisitions, joint ventures, investments or dispositions of businesses and assets and the financing of related transactions.

Audit Committee Report

Submitted on February 26, 2016 by the Audit Committee:

David B. Burritt, Chairman Thomas J. Falk,Chairman Daniel F. Akerson  David B. Burritt  James O. Ellis, Jr.

Douglas H. McCorkindale 2016 Proxy Statement 21 Thomas J. Falk Anne Stevens Table of Contents PROPOSAL 1: ELECTION OF DIRECTORS There are 11 director-nominees for election to the Board at the Annual Meeting. Each director-nominee currently serves as a director and was recommended for nomination by the Governance Committee. The Governance Committee has determined that all the director-nominees, except for Marillyn A. Hewson, Chairman, President and CEO, are independent under the listing standards of the NYSE and our Governance Guidelines. The Board ratified the slate of director-nominees and recommends that our stockholders vote for the election of all the individuals nominated by the Board. The Board has fixed the number of directors to 11 at the present time. The Governance Committee and the Board will continue to review and assess additional candidates for the Board from time to time. Any candidates identified after the 2016 Annual Meeting willbe considered by the Board as candidates to serve until the 2017 Annual Meeting. The director-nominees are expected to attend the 2016 Annual Meeting. All director-nominees who are elected will serve a one-year term that will end at the 2017 Annual Meeting. If any of the director-nominees are unable or unwilling to stand for election at the 2016 Annual Meeting (an event which is not anticipated), the Board may reduce its size or designate a substitute. If a substitute is designated, proxy holders may vote for the substitute nominee or refrain from voting for any other director-nominee at their discretion. Directors’ ages are reported as of the date of 2016 Annual Meeting. 2013 Proxy Statement       18 Back to Contents PROPOSAL 1: ELECTION OF DIRECTORS   Board Meeting Attendance In 2015, the Board met a total of 10 times. All directors attended more than 75 percent of the total Board and committee meetings to which they were assigned. All incumbent directors attended the 2015 Annual Meeting, except for Mr. Carlson who joined the Board in July 2015. There are 12 director-nominees for election to the Board at the Annual Meeting. Each director-nominee currently serves as a director. Each director-nominee was recommended for nomination by the Governance Committee. The Governance Committee has determined that all the current director-nominees, except for Robert J. Stevens, our Executive Chairman, and Marillyn A. Hewson, CEO and President, are independent under the listing standards of the NYSE and our Corporate Governance Guidelines. The Board ratified the slate of director-nominees and recommends that our stockholders vote for the election of all the individuals nominated by the Board. Director-nominees are expected to attend the 2013 Annual Meeting. All incumbent directors attended the 2012 Annual Meeting, except for Ms. Hewson who was elected to the Board in November 2012 following the Annual Meeting. All director-nominees who are elected will serve a one-year annual term that will end at the 2014 Annual Meeting except Mr. Stevens who will retire as a director on December 31, 2013. If any of the director-nominees are unable or unwilling to stand for election at the 2013 Annual Meeting (an event which is not anticipated), the Board may reduce its size or designate a substitute. If a substitute is designated, proxy holders may vote for the substitute nominee or refrain from voting for any other director-nominee at their discretion. Directors’ ages are reported as of the 2013 Annual Meeting. Board Composition, Qualifications and Diversity We have no agreements obligating the Corporation to nominate a particular candidate as a director, and none of our directors represents a special interest or a particular stockholder or group of stockholders. We believe that our business accomplishments are a result of the efforts of our employees around the world, and that a diverse employee population will result in a better understanding of our customers’ needs. Our success with a diverse workforce also informs our views about the value of a board of directors that has persons of diverse skills, experiences and backgrounds. To this end, the Board seeks to identify candidates with areas of knowledge or experience that will expand or complement the Board’s existing expertise in overseeing a technologically advanced global security and aerospace company. Consistent with the Corporation to nominate a particular candidate as a director, and none of our directors represent a special interest or a particular stockholder or group of stockholders. Subject to election as a director by the stockholders, the Board intends to elect Mr. Stevens as Executive Chairman. As a result of Mr. Stevens’ announcement that he will retire from the Board effective December 31, 2013, the Board will elect a new Chairman effective January 1, 2014. We believe that our business accomplishments are a result of the efforts of our employees around the world, and that a diverse employee population will result in a better understanding of our customers’ needs. Our success with a diverse workforce also informs our views about the value of a board of directors that has persons of diverse skills, experiences, and backgrounds. To this end, the Board seeks to identify candidates with areas of knowledge or experience that will expand or complement the Board’s existing expertise in overseeing a technologically advanced global security and aerospace company. Under the Corporate Governance Guidelines, the Board desires a diverse group of candidates who possess the background, skills, expertise and time to make a significant contribution to the Board, the Corporation and its stockholders. The Governance Committee makes recommendations to the Board concerning the composition of the Board and its committees, including size and qualifications for membership. The Governance Committee evaluates prospective nominees against the standards and qualifications set forth in the Corporation’s Corporate Governance Guidelines, as well as other relevant factors as it deems appropriate. Listed below are the skills and experience that we have considered important for our directors to have in light of our current business and structure. The directors’ biographies that follow note each director’s relevant experience, skills and qualifications relative to this list. • ● Financial Expertise.Knowledge of financial markets, financing and funding operations and accounting and financial reporting processes is important because it assists our directors in understanding, advising and overseeing the Corporation’s capital structure, financing and investment activities, financial reporting and internal control of such activities. ● Public Company Board Experience.Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relationship between a board and the CEO and other management personnel, the importance of particular agenda items and oversight of a changing mix of strategic, operational and compliance matters. ● Government and Military Expertise.Directors who have served in government or in senior military positions provide experience and insight into working constructively with our core customers and governments around the world and addressing significant public policy issues, particularly in areas related to the Corporation’s business and operations. Directors with military, homeland security or intelligence experience and security clearance credentials have unique skills to serve on our CBS Committee. 22    www.lockheedmartin.com/investor Table of Contents Proposal 1: Election of Directors ● Global Expertise.Because we are a global organization with increasing revenue coming from sales outside the United States, directors with global expertise can provide useful business and cultural perspectives regarding many significant aspects of our business. ● Senior Leadership Experience. Directors who have served in senior leadership positions are important, as they bring experience and perspective in analyzing, shaping, and overseeing the execution of important operational and policy issues at a senior level. These directors’ insights and guidance, and their ability to assess and respond to situations encountered in serving on our Board, may be enhanced if their leadership experience was developed at businesses or organizations that operated on a global scale or involved technology or other rapidly evolving business models. • ● Public Company Board Experience. Interpersonal Skills and Diversity.Directors who have servedwith different backgrounds and skills help build diversity on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relationship between a board and the CEO and other management personnel, the importance of particular agenda and oversight matters, and oversight of a changing mix of strategic, operational, and compliance-related matters. • Financial Expertise.Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes are important because it assists our directors in understanding, advising, and overseeing the Corporation’s capital structure, financing and investment activities, financial reporting, and internal control of such activities. • Government and Military Expertise.Directors who have served in government and senior military positions can provide experience and insight into working constructively with our core customer and governments around the world and addressing significant public policy issues, particularly in areas related to the Corporation’s business and operations. They also provide support for science, technology, engineering, and mathematics education. • Global Expertise. Because we are a global organization with increasing revenue coming from sales outside the United States, directors with global expertise can provide useful business and cultural perspectives regarding many significant aspects of our business. 2013 Proxy Statement       19 Back to Contents As part of its annual assessment of Board effectiveness, the Board is asked to evaluate whether it has the appropriate mix of general business expertise, skills, and specific expertise in areas vital to our success. The 2012 assessment reflected that the incumbent slate has the right mix, and the addition of Ms. Hewson complements and strengthens the Board’s business and operations background. Under our Bylaws, unless exempted by the Board, an individual is not eligible to be elected as a director for a term that expires at the Annual Meeting following the individual’s 75th birthday. The Board unanimously recommends a vote FOR each of the following director-nominees. Director-Nominees   Nolan D. Archibald (Age 69) Director Since April 2002 Committees: Executive Committee; Nominating and Corporate Governance Committee; Strategic Affairs and Finance Committee (Chair) Executive Chairman of the Board of Stanley Black & Decker, Inc. since March 2010. Previously, Mr. Archibald was Chairman of the Board and Chief Executive Officermaximize group dynamics in terms of function, experience thought, gender, race and age. The Black & Decker Corporation from 1986 to March 2010; President of The Black & Decker Corporation from 1985 to 2010; and Chief Operating Officer of The Black & Decker Corporation from 1985 to 1986. Mr. Archibald held various management positions at Beatrice Companies, Inc. from 1977 to 1985, including Senior Vice President and PresidentBoard unanimously recommends that you vote FOR each of the Consumer & Commercial Products Group,following Director-Nominees (Proposal 1). Director-Nominees Daniel F. Akerson Age: 67 Director since: 2014 Independent Committees: ●Audit ●Classified Business and currently serves as a director of Brunswick Corporation Security ●Executive ●Management Development and Huntsman Corporation. Compensation Other Public Boards: ●None Skills and Qualifications:Qualifications ●Core leadership skills and experience with the demands and challenges of the global marketplace. ●Extensive operating, financial and senior management experience in a succession of major companies in challenging, highly competitive industries. ●Financial, investment, and mergers and acquisitions expertise. ●The Board has determined that Mr. Akerson meets the SEC’s criteria of an “audit committee financial expert.” Vice Chairman of The Carlyle Group from March 2014 to December 2015. Mr. Akerson was Chairman of the Board of Directors and Chief Executive Officer of General Motors Company from January 2011 until his retirement in January 2014. He was elected to the Board of Directors of General Motors Company in 2009 and was Chief Executive Officer from September 2010 to December 2010. Prior to joining General Motors Company, he was a Managing Director of The Carlyle Group, serving as the Head of Global Buyout from July 2009 to August 2010 and as Co-Head of U.S. Buyout from June 2003 to June 2009. Mr. Akerson formerly served as a director of American Express Company from April 1995 to April 2012 and currently serves as Chairman of the United States Naval Academy Foundation and Chairman of LDiscovery, LLC, an information services company. 2016 Proxy Statement • 23 Table of Contents Proposal 1: Election of Directors Nolan D. Archibald Age: 72 Director since: 2002 Independent Lead Director Committees: ●Executive ●Management Development and Compensation ●Nominating and Corporate Governance ●Strategic Affairs Other Public Boards: ●Brunswick Corporation ●Huntsman Corporation Skills and Qualifications ●Experience with the demands and challenges of the global marketplace with a focus on innovation from his prior executive positions as Executive Chairman ofwith Stanley Black & Decker, Inc. and Chairman, CEO and Chief Operating Officer of The Black & Decker Corporation, companies, a company that have sold products in more than 100 countries. • ●Experience in talent management, business management, strategic planning and international business operations. • ●Corporate governance expertise from service as director of large public companies. Executive Chairman of the Board of Stanley Black & Decker, Inc. from March 2010 until his retirement in April 2013. Previously, Mr. Archibald was Chairman of the Board and Chief Executive Officer of The Black & Decker Corporation from 1986 to March 2010; President of The Black & Decker Corporation from 1985 to 2010; and Chief Operating Officer of The Black & Decker Corporation from 1985 to 1986. Mr. Archibald currently serves as a director of Brunswick Corporation and Huntsman Corporation.    Rosalind G. Brewer (Age 50) Age: 53 Director Since Aprilsince: 2011 Independent Committees: ●Ethics and Sustainability Committee; ●Management Development and Compensation Committee President ●Nominating and Chief Executive Officer of Sam’s Club since February 2012. Previously, Mrs. Brewer was Executive Vice President and President of Walmart Stores, Inc.’s East Business Unit from February 2011 to January 2012; Executive Vice President and President of Walmart South from February 2010 to February 2011; Senior Vice President and Division President of Southeast Operating Division from March 2007 to January 2010; and Regional General Manager, Georgia Operations, from 2006 to February 2007. Previously, Mrs. Brewer was President of Global Nonwovens Division for Kimberly-Clark Corporation from 2004 to 2006; and held various management positions of increasing responsibilities at Kimberly-Clark Corporation from 1984 to 2006. Mrs. Brewer formerly served as a director of Molson Coors Brewing Company from 2006 to 2011 and currently serves on the Board of Trustees of Spelman College and Westminster Schools. Corporate Governance Other Public Boards: ●None Skills and Qualifications: • Qualifications ●Experience in large-scale operations based on her positions as President and Chief Executive Officer of Sam’s Club, Executive Vice President for WalmartWal-Mart Stores, Inc. (Walmart), and more than two decades of experience as an executive with Kimberly-Clark Corporation. • ●Experience in product development, product management, manufacturing, large-scale operations, supply chain logistics and leading change management initiatives. • ●Leadership and executive expertise in international consumer business operations. President and Chief Executive Officer of Sam’s Club, a division of Walmart, since February 2012. Previously, Mrs. Brewer was Executive Vice President and President of Walmart’s East Business Unit from February 2011 to January 2012; Executive Vice President and President of Walmart South from February 2010 to February 2011; Senior Vice President and Division President of Southeast Operating Division from March 2007 to January 2010; and Regional General Manager, Georgia Operations, from 2006 to February 2007. Previously, Mrs. Brewer was President of Global Nonwovens Division for Kimberly-Clark Corporation from 2004 to 2006 and held various management positions of increasing responsibility at Kimberly-Clark Corporation from 1984 to 2006. Mrs. Brewer formerly served as a director of Molson Coors Brewing Company from 2006 to 2011 and currently serves on the Board of Trustees of Spelman College. 24     www.lockheedmartin.com/investor Table of Contents Proposal 1: Election of Directors 2013 Proxy Statement       20 Back to Contents    David B. Burritt (Age 57) Age: 60 Director since Aprilsince: 2008 Independent Committees: ●Audit Committee (Chair); Executive Committee; ●Management Development and Compensation Committee; ●Strategic Affairs and Finance Committee Vice President and Chief Financial Officer of Caterpillar Inc. from 2004 to June 2010; Corporate Controller and Chief Accounting Officer of Caterpillar Inc. from 2002 to 2004; held various positions of increasing responsibility for Caterpillar Inc. in finance, tax, accounting, and international operations from 1978 to 2002; and currently serves as a director of Aperam and Global Brass & Copper Holdings, Inc. Other Public Boards: ●None Skills and Qualifications: • Qualifications ●Expertise in public company accounting, risk management, disclosure, and financial system management and business transformation from roles as CFO at United States Steel Corporation and CFO and Controller at Caterpillar Inc. • Experience ●Over 35 years’ experience with the demands and challenges of the global marketplace from his positions at United States Steel Corporation and Caterpillar Inc., a company that manufactures equipment in over 20 countries and sells products in more than 180 countries. • ●The Board has determined that Mr. Burritt meets the SEC’s criteria of an “audit committee financial expert.” Executive Vice President and Chief Financial Officer of United States Steel Corporation since September 2013. Previously, Mr. Burritt was Vice President and Chief Financial Officer of Caterpillar Inc. from 2004 to June 2010; Corporate Controller and Chief Accounting Officer of Caterpillar Inc. from 2002 to 2004; held various positions of increasing responsibility at Caterpillar Inc. in finance, tax, accounting and international operations from 1978 to 2002. Mr. Burritt formerly served as a director of Aperam from December 2010 to May 2013 and Global Brass & Copper Holdings, Inc. from 2011 until June 2014. • Contributing member of Pathways Commission to define the future of the accounting profession.    James O. Ellis, Jr.Bruce A. Carlson (Age 65) Age: 66 Director since November 2004 since: 2015 Independent Committees: ●Classified Business and Security Committee (Chair); Executive Committee; ●Nominating and Corporate Governance Committee; Strategic Affairs and Finance Committee President and Chief Executive Officer, Institute of Nuclear Power Operations from May 2005 until his retirement in May 2012. Retired from active duty in July 2004. Admiral and Commander, United States Strategic Command, Offutt Air Force Base, Nebraska from October 2002 to July 2004; Commander in Chief, United States Strategic Command from November 2001 to September 2002; Commander in Chief, U.S. Naval Forces, Europe and Commander in Chief, Allied Forces from October 1998 to September 2000; Deputy Chief of Naval Operations (Plans, Policy and Operations) from November 1996 to September 1998; director of Burlington Capital Group from 2004 to 2007; and currently serves as a director of Inmarsat plc and Level 3 Communications, Inc. In February 2013, Mr. Ellis was elected as a member of the National Academy of Engineering. Other Public Boards: ●None Skills and Qualifications: • Qualifications ●Industry-specific expertise and knowledge of our core customer from his service in senior leadership positions with the military. ●Experience with the demands and challenges associated with managing large organizations from his service as a Commander and Joint Staff Director of the Joint Chiefs. ●Skilled in executive management, logistics and military procurement. Retired U.S. Air Force General, Mr. Carlson has been Chairman of the Board of Advisors of Utah State’s Space Dynamics Laboratory since June 2013. Previously, Mr. Carlson served as the 17th Director of the National Reconnaissance Office from July 2009 until July 2012. He retired from the U.S. Air Force in January 2009 after over 37 years of service. During his Air Force career, Carlson served as Commander, Air Force Materiel Command at Wright-Patterson AFB, Ohio from August 2005 to November 2008; Commander, Eighth Air Force at Barksdale AFB, Louisiana from May 2003 to August 2005; Director for Force Structure, Resources and Assessment (J-8) for the Joint Staff from January 2000 to May 2003; Director of Operational Requirements at U.S. Air Force Headquarters from August 1996 to January 2000; and Commander, 49thFighter Wing (the Air Force’s first stealth fighter wing) at Holloman AFB, New Mexico from February 1995 to August 1996. 2016 Proxy Statement • 25 Table of Contents Proposal 1: Election of Directors James O. Ellis, Jr. Age: 68 Director since: 2004 Independent Committees: ●Audit ●Classified Business and Security ●Executive ●Strategic Affairs Other Public Boards: ●Dominion Resources, Inc. ●Level 3 Communications, Inc. Skills and Qualifications ●Industry-specific expertise and knowledge of our core customers from his service in senior leadership positions with the military. ●Expertise in aeronautical and aerospace engineering and emerging energy issues. • ●Over 40 yearsyears’ experience in managing and leading large and complex technology-focused organizations, in large part as a result of serving for 35 years as an active duty member of the U.S.United States Navy. President and Chief Executive Officer of Institute of Nuclear Power Operations from May 2005 until his retirement in May 2012. Mr. Ellis retired from active duty in July 2004 after serving as Admiral and Commander, United States Strategic Command, Offutt Air Force Base, Nebraska from October 2002 to July 2004; Commander in Chief, United States Strategic Command from November 2001 to September 2002; Commander in Chief, United States Naval Forces, Europe and Commander in Chief, Allied Forces from October 1998 to September 2000; Deputy Chief of Naval Operations (Plans, Policy and Operations) from November 1996 to September 1998. He formerly served as a director of Inmarsat plc from June 2005 to March 2014 and currently serves as a director of Level 3 Communications, Inc., Dominion Resources, Inc. and Draper Laboratory. In February 2013, Mr. Ellis was elected to the National Academy of Engineering. He currently serves as an Annenberg Distinguished Fellow of the Hoover Institution at Stanford University. 2013 Proxy Statement       21 Back to Contents    Thomas J. Falk (Age 54) Age: 57 Director since Junesince: 2010 Independent Committees: ●Audit Committee; ●Executive ●Management Development and Compensation ●Nominating and Corporate Governance Committee Chairman of the Board and Chief Executive Officer of Other Public Boards: ●Kimberly-Clark Corporation since 2003; Chief Executive Officer from 2002 and President and Chief Operating Officer from 1999 to 2002; held various senior management positions since joining Kimberly-Clark Corporation in 1983; director of Centex Corporation from 2003 to 2009 (Centex Corporation was acquired by Pulte Homes in 2009); and currently serves as a director of the nonprofit organizations, Catalyst, Inc., the University of Wisconsin Foundation, and The Consumer Goods Forum, and serves as a governor of the Boys & Girls Clubs of America. Skills and Qualifications: • Qualifications ●Experience with the demands and challenges associated with managing global organizations from his experience as Chairman and CEOChief Executive Officer of Kimberly-Clark Corporation. • ●Knowledge of financial system management, public company accounting, disclosure requirements and financial markets. • ●Marketing, talent management, compensation, governance and public company board experience. • ●The Board has determined that Mr. Falk meets the SEC’s criteria of an “audit committee financial expert.”   Marillyn A. Hewson (Age 59) Director since November 2012 Committee: Executive Committee Chief Executive Officer and President Chairman of Lockheed Martin since January 2013; President and Chief Operating Officer from November 2012 to December 2012; Executive Vice President – Electronic Systems from January 2010 to December 2012; President, Systems Integration – Owego from September 2008 to December 2009; Executive Vice President – Global Sustainment for Aeronautics from February 2007 to August 2008; President, Lockheed Martin Logistics Services Company from January 2007 to February 2007; and President and General Manager, Kelly Aviation Center, L.P. from August 2004 to December 2007; and director of Carpenter Technology Corporation from 2002 to 2006. Ms. Hewson chairs the Board of Directors of Sandia Corporation, serves on the Association of the U.S. Army Council of Trustees and the University of Alabama’s Culverhouse College of Commerce and Business Administration Board of Visitors, and Chief Executive Officer of Kimberly-Clark Corporation since 2003; Chief Executive Officer from 2002 and President and Chief Operating Officer from 1999 to 2002; held various senior management positions since joining Kimberly-Clark Corporation in 1983. Mr. Falk currently serves as a director of the nonprofit organizations, Catalyst, Inc., the University of Wisconsin Foundation and The Consumer Goods Forum and serves as a governor of the Boys & Girls Clubs of America. 26www.lockheedmartin.com/investor Table of Contents Proposal 1: Election of Directors Marillyn A. Hewson Age: 62 Director since: 2012 Non-Independent Committees: ●Executive Other Public Boards: ●E. I. du Pont de Nemours and Company (DuPont). Skills and Qualifications: • Qualifications ●Broad insight and knowledge into the complexities of global business management, strategic planning, finance, supply chain and leveraged services based on more than two decades of experience in executive and operational roles with the Corporation and in our industry. • ●Expertise in government relations, government contracting, manufacturing, marketing and human resources. • ●Corporate governance and audit expertise derived from service on boards of other multinational corporations and nonprofit organizations. Chairman, President and Chief Executive Officer of Lockheed Martin since January 2014. Having served 33 years at Lockheed Martin in roles of increasing responsibility, she held the positions of Chief Executive Officer and President from January 2013 to December 2013; President and Chief Operating Officer from November 2012 to December 2012; Executive Vice President – Electronic Systems from January 2010 to November 2012; President, Systems Integration – Owego from September 2008 to December 2009; and Executive Vice President – Global Sustainment for Aeronautics from February 2007 to August 2008. She previously served as Chairman of the Board of Directors of Sandia Corporation from 2010 to July 2013. Ms. Hewson currently serves on the Board of Directors of E. I. du Pont de Nemours and Company (DuPont); the University of Alabama’s Culverhouse College of Commerce and Business Administration Board of Visitors; the Board of Governors of the USO; Chairman of the Board of Governors of the Aerospace Industries Association; the Board of Directors of the Congressional Medal of Honor Foundation; the Board of the National Geographic Education Foundation; the Board of Directors of Catalyst, Inc.; the International Advisory Board of the Atlantic Council and as a Vice Chair of the Business Roundtable. In September 2013, Ms. Hewson was appointed by President Barack Obama to the President’s Export Council, the principal national advisory committee on international trade. 2013 Proxy Statement       22 Back to Contents    Gwendolyn S. King (Age 72) Director since March 1995 Committees: Ethics and Sustainability Committee (Chair); Executive Committee; Nominating and Corporate Governance Committee President of Podium Prose, a Washington, D.C. speaker’s bureau and speechwriting service, since 2000. Founding Partner, The Directors’ Council, a corporate board search firm, from October 2003 to June 2005; Senior Vice President of Corporate and Public Affairs of PECO Energy Company (formerly Philadelphia Electric Company) from October 1992 until her retirement in February 1998; Commissioner of the Social Security Administration from August 1989 to September 1992; director of Marsh & McLennan Companies, Inc. from 1998 to May 2011; and currently serves as a director of Monsanto Company. Skills and Qualifications: • Experience and industry-specific knowledge of our civil customer and the demands and challenges associated with managing large organizations and regulated industries from experience as Senior Vice President at PECO Energy Company and Commissioner of the Social Security Administration. • Expert in external communications and extensive experience in matters relating to public policy, regulatory oversight, and government relations from her senior advisory roles in two previous White House administrations. • Corporate governance expertise and compliance experience from her service on the board of the National Association of Corporate Directors.   James M. Loy (Age 70) Age: 73 Director since Augustsince: 2005 Independent Committees: ●Classified Business and Security Committee; ●Ethics and Sustainability Committee; ●Executive ●Strategic Affairs and Finance Committee Senior Counselor of The Cohen Group since 2005. Deputy Secretary of Homeland Security from 2003 to 2005; Administrator, Transportation Security Administration from 2002 to 2003; Commandant, U.S. Coast Guard from 1998 to 2002; Coast Guard Chief of Staff from 1996 to 1998; Commander of the Coast Guard’s Atlantic Area from 1994 to 1996; a director of L-1 Identity Solutions, Inc. from 2006 to 2011; and currently serves as a director of Rivada Networks, LLC and Board of Trustees of RAND Corporation, a nonprofit organization. Other Public Boards: ●None Skills and Qualifications: • Qualifications ●Experience with the demands and challenges associated with managing large organizations from his service as Commandant, of theU.S. Coast Guard. • ●Industry-specific expertise and knowledge with our core customercustomers including requirements for acquisition of products and services from prior senior management positions with the Department of Homeland Security, the Transportation Security Administration and the Coast Guard. • ●Leadership skills in organization transformation and redesigning larger scale operations from his 45-year career in public service. Senior Counselor of The Cohen Group since 2005. Deputy Secretary of Homeland Security from 2003 to 2005; Administrator, Transportation Security Administration from 2002 to 2003; Commandant, U.S. Coast Guard from 1998 to 2002; Coast Guard Chief of Staff from 1996 to 1998; Commander of the Coast Guard’s Atlantic Area from 1994 to 1996. Mr. Loy formerly served as a director of L-1 Identity Solutions, Inc. from 2006 to 2011, Board of Trustees of RAND Corporation, a nonprofit organization, from 2012 until November 2014 and currently serves as a director of Rivada Networks, LLC. 20132016 Proxy Statement       23 Back to Contents 27    Table of Contents Proposal 1: Election of Directors Douglas H. McCorkindaleJoseph W. Ralston (Age 73) Age: 72 Director since April 2001 since: 2003 Independent Committees:Audit Committee; ●Classified Business and Security Committee; Executive Committee; Management Development and Compensation Committee; Nominating and Corporate Governance Committee (Chair) Chairman of Gannett Co., Inc. (“Gannett”) from 2001 until his retirement in June 2006. Chief Executive Officer of Gannett from June 2000 to 2005; President of Gannett from 1997 to 2005; Vice Chairman of Gannett from 1984 to January 2001; Chief Financial Officer of Gannett from 1979 to 1997; Chief Administrative Officer of Gannett from 1985 to 1997; director of Continental Airlines, Inc. from 1993 to 2010; and currently serves as a director or trustee of approximately 60 fund portfolios in the Prudential Fund Complex, the boards of which meet concurrently and function as a single board. Skills and Qualifications: • Experience with the demands and challenges associated with managing global organizations from prior positions as Chairman, CEO, and President of Gannett Co., Inc. • Expertise in financial system management, public company accounting, disclosure, and financial markets from prior roles as CFO at Gannett Co., Inc. and as trustee of mutual funds. • Corporate governance expertise from service as director of large public companies. • The Board has determined that Mr. McCorkindale meets the SEC’s criteria of an “audit committee financial expert.”    Joseph W. Ralston● (Age 69) Director since April 2003 Committees: Classified Business and Security Committee; Ethics and Sustainability Committee; ●Executive ●Strategic Affairs and Finance Committee Vice Chairman of The Cohen Group since March 2003. Retired from active duty in March 2003. Commander, U.S. European Command and Supreme Allied Commander Europe, NATO, Mons, Belgium from May 2000 to January 2003; Vice Chairman, Joint Chiefs of Staff, Washington, D.C. from March 1996 to April 2000; and currently serves as a director of Other Public Boards: ●The Timken Company and URS Corporation. Skills and Qualifications: • Qualifications ●Industry-specific expertise and insight into our core customer,customers, including requirements for acquisition of products and services, from prior senior leadership positions with the military. • ●Experience with large organization management and assessing human resources, equipment, cyber, and financial requirements, as well as reputational risks during his service as a senior military officer, including Vice Chairman of the Joint Chiefs of Staff. • ●Skilled in executive management, logistics and military procurement due to his distinguished career managing 65,000 troops from 23 countries as Supreme Allied Commander. 2013 Proxy Statement       24 Back to Contents   Anne Stevens (Age 64) Director since September 2002 Committees: Audit Committee; Executive Committee; Management Development and Compensation Committee (Chair) Chairman, Chief Executive Officer and Principal of SA IT Services since June 2011. Previously, Ms. Stevens was Chairman, President and Chief Executive Officer of Carpenter Technology Corporation from November 2006 to October 2009; Executive Vice President, Ford Motor Company and Chief Operating Officer, The Americas, from November 2005 until her retirement in October 2006; Group Vice President, Canada, Mexico and South America, Ford Motor Company from October 2003 to October 2005; Vice President, North America Vehicle Operations of Ford Motor Company from August 2001 to October 2003; and Vice President, North America Assembly Operations of Ford Motor Company from April 2001 to August 2001. Ms. Stevens held various management positions at Ford Motor Company from 1990, including executive director in Vehicle Operations in North America, and held various engineering, manufacturing and marketing positions at Exxon Chemical Co. before joining Ford Motor Company. Member of the National Academy of Engineering and a Trustee of Drexel University Vice Chairman of The Cohen Group since March 2003. Retired from active duty in March 2003. Commander, U.S. European Command and Supreme Allied Commander Europe, NATO, Mons, Belgium from May 2000 to January 2003; Vice Chairman, Joint Chiefs of Staff, Washington, D.C. from March 1996 to April 2000. Mr. Ralston formerly served as a director of URS Corporation from 2003 to October 2014 and currently serves as a director of The Timken Company. Anne Stevens Age: 67 Director since: 2002 Independent Committees: ●Ethics and Sustainability ●Nominating and Corporate Governance ●Strategic Affairs Other Public Boards: ●Anglo American plc. plc ●XL Group Skills and Qualifications: • Qualifications ●Experience with the demands and challenges associated with managing global organizations from prior executive positions at Ford Motor Company. • ●Public company management, talent management and governance experience from prior positions as Chairman, President, and CEO of Carpenter Technology Corporation and Executive Vice President, Ford Motor Company. • ●Engineering and manufacturing expertise derived from educational training and experience managing production lines at Ford Motor Company.   Robert J. Stevens (Age 61) Director since October 2000 Committee: Executive Committee (Chair) Executive Chairman and Strategic Advisor to the Chief Executive Officer of Lockheed Martin Corporation since January 2013; Chairman of the Board and Chief Executive Officer from January 2010 to December 2012; Chairman of the Board, President and Chief Executive Officer from April 2005 to January 2010; President and Chief Executive Officer from August 2004 to April 2005; President and Chief Operating Officer from October 2000 to August 2004; Executive Vice President and Chief Financial Officer from October 1999 to March 2001; Vice President of Strategic Development from November 1998 to October 1999; and currently serves as a director of Monsanto Company. In January 2012, President Obama appointed Mr. Stevens to the Administration’s Advisory Committee for Trade Policy and Negotiations. Skills and Qualifications: • Industry leader with insight into the complexities of operating a global, technology-driven business, strategic planning, regulatory, legislative and public policy matters based on more than two decades of experience in executive and operational roles with the Corporation and in our industry. • Expertise in finance, information technology, technology development, manufacturing, marketing, and human resources, and broad international business management experience. • Corporate governance and risk management experience gained through position of Chairman and CEO of the Corporation. 2013 Proxy Statement       25 Back to Contents PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS    The Audit Committee has appointed Ernst & Young LLP, an independent registered public accounting firm, as the independent auditors to perform an integrated audit of the Corporation for the year ending December 31, 2013. Ernst & Young LLP served as our independent auditors in 2012. The services provided to the Corporation by Ernst & Young LLP for the last two fiscal years are described under the caption “Fees Paid to Independent Auditors” below. The Audit Committee is directly responsible for the appointment, compensation, retention, termination and oversight of the Corporation’s independent auditor in accordance with the NYSE listing standards. The Audit Committee also is responsible for the audit fee negotiations associated with the retention of Ernst & Young LLP. The Audit Committee has discussed the advantages and disadvantages of external audit firm rotation. Further, in conjunction with the periodic mandated rotation of the audit firm’s lead engagement partner, the Audit Committee and its chairman are directly involved in the selection of Ernst & Young LLP’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the Corporation’s independent external auditor is in the best interest of our stockholders. Stockholder approval of the appointment is not required. However, the Board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not vote on an advisory basis in favor of Ernst & Young LLP, the Audit Committee will reconsider whether to hire the firm and may retain Ernst & Young LLP or hire another firm without resubmitting the matter for stockholders to approve. Chairman and Principal of SA IT Services from June 2011 until her retirement in December 2014. Previously, Ms. Stevens was Chairman, President and Chief Executive Officer of Carpenter Technology Corporation from November 2006 to October 2009; Executive Vice President, Ford Motor Company and Chief Operating Officer, The Americas, from November 2005 to October 2006; Group Vice President, Canada, Mexico and South America, Ford Motor Company from October 2003 to October 2005; Vice President, North America Vehicle Operations of Ford Motor Company from August 2001 to October 2003; and Vice President, North America Assembly Operations of Ford Motor Company from April 2001 to August 2001. Ms. Stevens is a member of the National Academy of Engineering and currently serves as a director of Anglo American plc and XL Group. 28www.lockheedmartin.com/investor Table of Contents PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Audit Committee has appointed Ernst & Young, an independent registered public accounting firm, as the independent auditors to perform an integrated audit of the Corporation’s consolidated financial statements and internal control over financial reporting for the year ending December 31, 2016. Ernst & Young served as our independent auditors in 2015 and 2014. The services provided to the Corporation by Ernst & Young for the last two fiscal years are described under the caption “Fees Paid to Independent Auditors” below. The Audit Committee is directly responsible for the appointment, compensation, retention, oversight and termination of the Corporation’s independent auditors in accordance with the NYSE listing standards. The Audit Committee also is responsible for the audit fee negotiations associated with the retention of Ernst & Young. The Audit Committee has discussed the advantages and disadvantages of external audit firm rotation. Further, in conjunction with the periodic mandated rotation of the audit firm’s lead engagement partner, the Audit Committee and its chairman are directly involved in the selection of Ernst & Young’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young to serve as the Corporation’s independent external auditors is in the best interest of our stockholders. The Audit Committee reviews the engagement of Ernst & Young annually following completion of Ernst & Young’s audit of the prior year’s financial statements. The Audit Committee also conducts a mid-year assessment of the quality of Ernst & Young’s work. As part of its annual and mid-year assessment of Ernst & Young, the Audit Committee considers the materials on independence provided by Ernst & Young, work quality, management’s level of satisfaction with their services, the adequacy of Ernst & Young’s staffing, the breadth of knowledge, support and expertise of its national office, familiarity with the Corporation’s account, level of expertise in accounting issues relating to government contracts and Ernst & Young’s role in providing independent analysis of management positions. The Audit Committee also meets with Ernst & Young without management present at every meeting of the Audit Committee in which financial statements are reviewed. Stockholder approval of the appointment is not required. However, the Board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not vote on an advisory basis in favor of Ernst & Young, the Audit Committee will reconsider whether to hire the firm and may retain Ernst & Young or hire another firm without resubmitting the matter for stockholders approval. The Audit Committee retains the discretion at any time to appoint a different independent auditor. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will be available to respond to appropriate questions and will have the opportunity to make a statement if they desire. The Board unanimously recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as independent auditors for 2013. The Board unanimously recommends that you vote FOR the ratification of the appointment of Ernst & Young as independent auditors for 2016 (Proposal 2). Pre-Approval of Independent Auditors Services The Audit Committee pre-approves all audit, audit-related, tax, and other services performed by the independent auditors. The Audit Committee pre-approves specific categories of services up to pre-established fee thresholds. Unless the type of service had previously been pre-approved, the Audit Committee must approve that specific service before the independent auditors may perform it. In addition, separate approval is required if the amount of fees for any pre-approved category of service exceeds the fee thresholds established by the Audit Committee. The Audit Committee may delegate to one or more of its members The Audit Committee pre-approves all audit, audit-related, tax and other services performed by the independent auditors. The Audit Committee pre-approves specific categories of services up to pre-established fee thresholds. Unless the type of service had previously been pre-approved, the Audit Committee must approve that specific service before the independent auditors may perform such service. In addition, separate approval is required if the amount of fees for any pre-approved category of service exceeds the fee thresholds established by the Audit Committee. The Audit Committee also has delegated to the Committee Chairman or any member pre-approval authority with respect to permitted services, provided that the Committee Chairman or any member must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. Fees Paid to Independent Auditors The following table presents the fees billed by Ernst & Young LLP, an independent registered public accounting firm, for audit, audit-related services, tax services, and all other services rendered for 2012 and 2011. The following table sets forth the fees billed by Ernst & Young, the Corporation’s independent auditors, for audit, audit-related services, tax services and all other services rendered for 2015 and 2014. All fees were pre-approved in accordance with the Audit Committee’s pre-approval policy. The Audit Committee considered and concluded that the provision of these services by Ernst & Young LLP was compatible with the maintenance of the auditor’s independence. Ernst & Young LLP Fees 2012 ($) 2011 ($) Audit Fees 15,185,000 15,990,000 Audit-Related Fees 1,280,000 1,220,000 Tax Fees 2,150,000 2,275,000 All Other Fees 40,000 40,000 2016 Proxy Statement Audit Fees:This category includes fees for services related to the annual audit of the consolidated financial statements, including the audit of internal control over financial reporting, the interim reviews of our quarterly financial statements, statutory audits of our foreign subsidiaries, SEC registration statements and other filings, and consultation on accounting matters. Audit-Related Fees: 29For 2012, this category principally includes fees for services related to audits of employee benefit plans and services related to a service organization review at a business segment. For 2011, this category principally includes fees for services related to audits of employee benefit plans and due diligence in connection with acquisitions. Tax Fees: This category includes domestic and international tax compliance and advisory services. All Other Fees:This category includes services related to government contracting matters. 2013 Proxy Statement       26 Back to Contents PROPOSAL 3: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)    We ask our stockholders to vote annually to approve, on an advisory (non-binding) basis, the compensation of our named executive officers (“NEOs”) as described in detail in the Compensation Discussion and Analysis (“CD&A”) and the accompanying tables in the Executive Compensation section beginning on page 28. This vote is commonly known as “Say-on-Pay.” Stockholders should review the entire Proxy Statement and, in particular, the CD&A for information on our executive compensation program and other important items. We believe that the information provided in this Proxy Statement demonstrates that our executive compensation program Table of Contents Proposal 2: Ratification of Appointment of Independent Auditors The increase in fees from prior years is the result of support provided in connection with the acquisition of Sikorsky Aircraft Corporation and the strategic review of our government information technology and technical services businesses that we announced in July 2015. 2015 ($)         2014 ($) Audit Fees (a) 19,900,000 16,905,000 Audit-Related Fees (b) 2,180,000   1,810,000 Tax Fees (c) 2,860,000 2,545,000 All Other Fees (d) 105,000 60,000 (a) Audit fees for 2015 and 2014 are for services related to the annual audit of the Corporation’s consolidated financial statements, including the audit of internal control over financial reporting, the interim reviews of the Corporation’s quarterly financial statements, statutory audits of the Corporation’s foreign subsidiaries, consultations on accounting matters, and registration statements and other documents filed by the Corporation with the SEC. (b) Audit-related fees for 2015 and 2014 are related to carve-out audits of a business unit’s financial statements, due diligence services in connection with acquisitions and audits of the Corporation’s employee benefit plans. Additionally, audit-related fees for 2014 include amounts for reviews of information technology systems and financial models related to customer proposals. (c) Tax fees for 2015 and 2014 are for domestic and international tax compliance and advisory services. Additionally, tax fees for 2015 include amounts for due diligence services in connection with an acquisition. (d) All other fees for 2015 and 2014 are primarily for advisory work related to our Conflict Minerals Report. 30www.lockheedmartin.com/investor Table of Contents PROPOSAL 3: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (SAY-ON-PAY) We ask our stockholders to vote annually to approve, on an advisory (non-binding) basis, the compensation of our named executive officers (NEOs) as described in detail in the Compensation Discussion and Analysis (CD&A) and the accompanying tables in the Executive Compensation section beginning on page 32. This vote is commonly known as “Say-on-Pay.” Stockholders should review the entire Proxy Statement and, in particular, the CD&A for information on our executive compensation programs and other important items. We believe that the information provided in this Proxy Statement demonstrates that our executive compensation programs are designed to link pay to performance. Accordingly, the Board recommends that stockholders approve the compensation of our NEOs by approving the following Say-on-Pay resolution: RESOLVED, that the stockholders of Lockheed Martin Corporation approve, on an advisory basis, the compensation of the named executive officers identified in the “Summary Compensation Table,” as disclosed in the Lockheed Martin Corporation 2013 RESOLVED, that the stockholders of Lockheed Martin Corporation approve, on an advisory basis, the compensation of the named executive officers identified in the “Summary Compensation Table,” as disclosed in the Lockheed Martin Corporation 2016 Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the accompanying footnotes and narratives. This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and procedures related to the NEOs. Although the results of the Say-on-Pay vote do not bind the Corporation, the Board will, as it does each year, continue to review the results carefully and plans to continue to seek the views of our stockholders year-round. The Board unanimously recommends that you vote FOR Proposal 3. The Board unanimously recommends that you vote FOR the advisory vote to approve the compensation of our named executive officers (Proposal 3). 20132016 Proxy Statement       27 Back to Contents EXECUTIVE COMPENSATION31 Table of Contents Compensation Committee Report EXECUTIVE COMPENSATION Compensation Committee Report The Management Development and Compensation Committee makes recommendations to the Board of Directors concerning the compensation of the Corporation’s executives. We have reviewed and discussed with management the Compensation Discussion and Analysis which will be included in the Corporation’s Schedule 14A Proxy Statement, filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended. Based on that review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement and incorporated by reference in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.2015. The Board approved our recommendation. Submitted on February 28, 2013 by the Management Development and Compensation Committee: Anne Stevens, Chairman David B. Burritt Rosalind G. Brewer Submitted on February 26, 2016, by the Management Development and Compensation Committee: Douglas H. McCorkindale Daniel F. Akerson,Chairman David B. Burritt Compensation Committee Interlocks and Insider Participation None of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee. Accordingly, there were no interlocks with other companies within the meaning of the SEC’s proxy rules during 2012. Compensation Discussion and Analysis (“CD&A”) This CD&A discusses the compensation decisions for the NEOs listed in the Summary Compensation Table on page 49. Nolan D. Archibald Thomas J. Falk Rosalind G. Brewer Compensation Discussion and Analysis (CD&A) This CD&A discusses the compensation decisions for the NEOs listed in the Summary Compensation Table on page 54. The NEOs are: Name NEO       Title in 2015       Years in Position At End of 2015 (rounded)       Years of Service At End of 2015 (rounded) Marillyn A. Hewson   Chairman of the Board, President and Chief Executive Officer 3 33 Bruce L. Tanner Executive Vice President and Chief Financial Officer 8 34 Dale P. Bennett Executive Vice President, Mission Systems and Training 3 34 Orlando P. Carvalho Executive Vice President, Aeronautics 3   36 Maryanne R. Lavan Senior Vice President, General Counsel and Corporate Secretary 6 26 To assist stockholders in finding important information, this CD&A is organized as follows: Title in 2012 Page Executive Summary 33 Summary of Compensation Approach 36 2015 Named Executive Officers’ Compensation 39 2016 Compensation Decisions 49 Other Corporate Governance Considerations in Compensation 51 32www.lockheedmartin.com/investor Table of Contents Executive Compensation Executive Summary Our 2015 Performance In 2015, Lockheed Martin achieved record levels of financial performance, and successfully performed on our contracts while undertaking two portfolio-shaping initiatives – the Sikorsky Aircraft Corporation (Sikorsky) acquisition and strategic review of our government information technology (IT) and technical services work in Information Systems & Global Solutions (IS&GS) businesses - that will influence the Corporation’s business for years to come. Net sales for the year were $46.1 billion, compared to $45.6 billion in 2014. Net earnings in 2015 were $3.6 billion, or $11.46 per share, compared to $3.6 billion, or $11.21 per share, in 2014. Cash from Operations in 2015 was $5.1 billion, compared to Cash from Operations in 2014 of $3.9 billion after pension contributions of $2.0 billion. During 2015, we accomplished numerous strategic and operational milestones. The Marine Corps declared Initial Operational Capability (IOC) for the F-35B, a historic event for the program, and we met our 2015 production commitment for the F-35 program by delivering 45 aircraft to the Department of Defense. We were awarded a $5.3 billion multi-year contract to deliver 78 C-130J Super Hercules to the U.S. Air Force, Marine Corps and Coast Guard through 2020. We launched the ninth Littoral Combat Ship (LCS) – the future USS Little Rock – and delivered LCS Five – the USS Milwaukee. We were awarded a contract to produce and deliver PAC-3 missiles and PAC-3 Missile Segment Enhancements to the U.S. and allied military forces. We also had great success expanding our international business during 2015, which represented 21% of our sales. On November 6, 2015, we completed our purchase of Sikorsky. Sikorsky is a world leader in the design, manufacture and support of military and commercial helicopters. On July 20, 2015, we announced a strategic review of our government IT services work in IS&GS and our technical services business in Missiles and Fire Control. In January 2016, Lockheed Martin entered into a definitive agreement to combine our IT and technical services business at the realigned IS&GS with Leidos Holdings, Inc., in a tax-efficient Reverse Morris Trust transaction. The transaction is expected to close in the third or fourth quarter of 2016. Through these accomplishments, Lockheed Martin delivered exceptional one-year and three-year total stockholder returns (TSR) that significantly exceeded the Dow Jones Industrial, S&P 500, S&P Industrials, NASDAQ, and S&P Aerospace & Defense (S&P Aerospace) indices for the one- and three-year periods ended December 31, 2015. 1-Year TSR 3-Year TSR Compensation Overview Our executive compensation programs covering our NEOs are designed to attract and retain critical executive talent, to motivate behaviors that align with stockholders’ interest, and to pay for performance. The majority of our NEOs’ pay is variable and contingent on performance, and approximately 70%, on average, is in the form of long-term incentives (LTI). To ensure pay is competitive with market practices, we conduct benchmarking analyses each year when establishing base salary, annual incentive target opportunities and LTI target opportunities. Each element of compensation is benchmarked against the 50th percentile, which we refer to as “market rate,” of a comparator group of companies, as shown on page 38. For executives new to their role, we may consider targeting pay below the market rate (50th percentile) and then increase pay closer to 100% of the market rate over a time period based on a variety of factors, 2016 Proxy Statement 33 Robert J. Stevens Chairman & Chief Executive Officer Table of Contents Executive Compensation including individual performance, experience, time in position and critical skills. Although target incentive opportunities are set by reference to the market rate, incentive plan terms provide for actual payouts to be based upon actual results. In light of the Corporation’s performance, payouts under the 2015 annual incentive and 2013-2015 performance-based LTI programs were well above target levels. We also provide retirement programs and perquisites that are competitive in our industry and security that is appropriate for the business in which we operate. 2015 Say-on-Pay Vote At our 2015 Annual Meeting, more than 94% of the votes cast by our stockholders approved our Say-on-Pay proposal. We meet with our key investors throughout the year to understand the issues that matter most to them as it relates to executive compensation. We considered the input of our stockholders and emerging best practices in adopting our executive pay programs. During 2015, we engaged with representatives of stockholders owning approximately 40% of our outstanding shares. Most investors with whom we met reacted positively to our pay governance and executive compensation programs. We welcome feedback regarding our executive compensation programs and will continue to engage with our stockholders in 2016. 2015 Chairman, President & CEO Compensation Base Salary. Three years into her role as CEO, Ms. Hewson’s 2015 base salary of $1,565,000 was set at 100% of the market rate (50thpercentile of CEOs’ base salaries in our size-adjusted comparator group of companies). 2015 Annual Incentive. Ms. Hewson’s target annual incentive amount for 2015 was $2,738,750 (175% of salary). Based on our results, Ms. Hewson was awarded 200% of her target or $5,477,500 under the annual incentive plan for 2015 performance. 2013-2015 Long-Term Incentives.In 2013, Ms. Hewson was granted an LTI award of $10.2 million, which was 85% of the market rate at that time given that she was new to her role. The LTI award was allocated 50% in Performance Share Units (PSUs), 30% in Restricted Stock Units (RSUs) and 20% in the cash-based Long-Term Incentive Award Plan (LTIP). Ms. Hewson’s 2013-2015 PSU target award of $5,106,745 was multiplied by the weighting assigned to each PSU component (50% to Relative TSR, 25% to ROIC and, 25% to Performance Cash). She received 200% of her target Relative TSR PSUs, 197.3% of her target Performance Cash PSUs and 112.5% of her target ROIC PSUs, or a total of 127,693 shares based on actual results relative to the three-year performance goals that were established in the beginning of 2013. Ms. Hewson was granted 34,289 RSUs based on the grant date fair value of $3,059,950 in January 2013. These RSUs vested in company shares in January 2016. Ms. Hewson’s 2013-2015 LTIP target award was set at $2,040,000. She received a payout of 177.4% of target, or $3,618,960 in cash, based on our results relative to the three-year performance goals that were established in the beginning of 2013. The PSU and LTIP performance payout factors for Ms. Hewson are the same for all participants in these plans. Benefit and Retirement Plans.Ms. Hewson is eligible for benefit and retirement programs similar to other employees. None of our executives received additional years of service credits or other forms of formula enhancements under our benefit or retirement plans. Like the retirement benefits offered by other companies with defined benefit plans, our pension formula is based on years of service and pension eligible compensation. In light of Ms. Hewson’s 33 years of service, her salary and incentive compensation since becoming CEO in 2013 and the effect of changes in standard mortality tables and interest rates in recent years, the value of Ms. Hewson’s pension benefits increased significantly in recent years. 34www.lockheedmartin.com/investor Table of Contents Executive Compensation 2015 Target Pay Mix.We believe that, to the maximum extent possible, the compensation opportunities of our CEO should be variable and the variable elements of the compensation package should tie to the Corporation’s long-term success and the achievement of sustainable long-term total return to our stockholders. As shown in the chart below, a significant portion of our CEO’s target compensation is variable and in the form of LTI and more than half of total target pay is in the form of equity incentives. CEO TARGET OPPORTUNITY MIX* *Fixed vs. variable and cash vs. equity components are designated in the Core Compensation Elements table on page 39. We consider base salary and annual incentives as short-term pay and performance stock units, LTIP, and restricted stock units as long-term pay. We do not include retirement or other compensation components in the chart. Bruce L. Tanner Our Compensation Programs Incorporate Best Practices Executive Vice President & Chief Financial Officer Marillyn A. Hewson Executive Vice President, Electronic Systems; President & Chief Operating Officer Linda R. Gooden Executive Vice President, Information Systems & Global Solutions Joanne M. Maguire Executive Vice President, Space Systems Christopher E. Kubasik Vice Chairman, President & Chief Operating Officer (resigned November 9, 2012) Best Practices in Our Program Mr. Stevens retired as CEO effective December 31, 2012; during 2013, he ✓ Pay for performance ✓ Active stockholder engagement program ✓ Market-based approach for determining NEO target pay ✓ LTI based on Relative TSR and value-driving financial metrics ✓ Caps on annual and long-term incentives ✓ Lower cap for performance stock units (PSUs) when TSR is serving as Executive Chairmannegative ✓ Perquisites limited to those that are business-related ✓ Severance provisions at or below market ✓ Clawback policy on all variable pay ✓ Double-trigger provisions for change in control ✓ Consideration by Compensation Committee of stockholder dilution and Strategic Advisorburn rate in equity grant decisions ✓ Stock ownership requirements ✓ Annual comparator group review ✓ Policy prohibiting hedging or pledging of company stock by directors, officers and employees ✓ Plan design and administration used to minimize incentives for imprudent risk taking ✓ Independent consultant reports directly to the CEO. Ms. Hewson served as Executive Vice President, Electronic Systems until December 31, 2012; effective with Mr. Kubasik’s resignation on November 9, 2012, Ms. Hewson was elected President and Chief Operating Officer. Effective January 1, 2013, she was elected CEO and President. Ms. Maguire and Ms. Gooden will step down from their respective positions as Executive Vice Presidents effective April 1, 2013. All references to CEO compensationCompensation Committee Practices We Do Not Engage In or Allow ✗ No employment agreements (other than exit transitions) ✗ No option backdating, cash out of underwater options or repricing ✗ No excise tax assistance upon a change in this CD&A (unless otherwise noted) reflect Mr. Stevens’ pay because he was the CEO during allcontrol ✗ No individual change in control agreements ✗ No automatic acceleration of 2012. To assist stockholders in finding important information, this CD&A is organized as follows: Page CD&A Highlights 29 Compensation Changes We Are Making 30 Summary of Our Compensation Approach 31 Our 2012 Performance and Compensation Decisions 32 Compensation Philosophy 43 Other Corporate Governance Considerations in Compensation 48 2013 Proxy Statement       28 Back to Contents CD&A Highlights We Align Pay To Performance • At-Risk Compensation: We divide compensation opportunities into base salary, annual incentives, and long-term incentives (“LTI”). The annual incentive and LTI opportunities are at risk depending on performance. • Specific Goals and Measurement: We identify specific financial, strategic, and operational goals, and assess at-risk compensation against performance on those goals and against our relative TSR. • Market-Based: We benchmark compensation at the size-adjusted 50th percentile of the comparator group of companies we have identified for compensation purposes. We refer to this as the “market rate” for compensation. Realized pay is above or below market rate based on performance against pre-determined goals. Our 2012 Performance • Strong Total Stockholder Return: Our 2012 TSR of 20% outperformed both the S&P Aerospace & Defense Index and the S&P 500 Index. • Record Performance: We reached record levels for sales, segment operating profit, segment operating margin, earnings per share (“EPS”), orders, and backlog. Our 2012 Pay Decisions Awards Reflective of Strong Performance: Our 2012 annualunvested incentive awards reflected strong 2012 financial, strategic,in the event of termination ✗ No enhanced retirement formula or inclusion of LTI in pensions ✗ No enhanced death benefits for executives 2016 Proxy Statement 35 Table of Contents Executive Compensation Summary of Compensation Approach Our Decision-Making Process The Compensation Committee seeks input from our CEO and other members of our management team as well as input and advice from the independent compensation consultant to ensure the Corporation’s compensation philosophy and all information relevant to individual compensation decisions are taken into account. Independent Pay Governance Independent Board Members Independent Compensation Committee Review and operational performance, and our LTI awards reflected strong 2010-2012 performance. Investor Feedback in 2012 Investor Outreach: We spoke with owners of a majority of our shares after receiving 68% approval on our 2012 advisory Say-on-Pay proposal and made changes to our programs based on this feedback. Our Compensation Program Incorporates Best Practices Best Practices in our Program Practices We Do Not Engage In or Allow  Pay for Performance  Active Investor Engagement Program  Target Pay Set At or Below Market in Most Circumstances  Long-Term Incentives Based on Relative Total Stockholder Return and Value-Driving Financial Metrics  Caps on Annual Bonuses and Long-Term Incentives  Lower Cap for Performance Stock Units (“PSUs”) When TSR Outperforms Comparator Group but is Negative  Perquisites Limited to Those That are Business-Related  Severance Provisions At or Below Market  Claw Back Policy on All Variable Pay  Double Trigger Provisions for Change in Control  Consideration by Compensation Committee of Stockholder Dilution and Burn Rate in Equity Grant Decisions  Stock Ownership Requirements  Annual Comparator Group Review  Plan Design and Administration Used to Minimize Incentives for Imprudent Risk Taking  Independent Consultant Reports Directly to the Compensation Committee  No Employment Agreements (Other than Exit Transitions)  No Dividend Equivalents Paid Prior to Vesting (After 2010 Grants)  No Option Backdating or Repricing  No Hedging or Pledging of Company Stock by Directors or Employees  No Excise Tax Assistance upon a Change in Control  No Separate Change in Control Agreements  No Automatic Acceleration of Unvested Incentive Awards in the Event of Termination  No Enhanced Retirement Formula or Inclusion of Long-Term Incentives in Pensions  No Enhanced Death Benefits for Executives 2013 Proxy Statement       29 Back to Contents Compensation Changes We Are Making Response to Our 2012 Advisory Say-on-Pay Vote In 2012, the Compensation Committee worked with management and its compensation consultants to strengthen the pay for performance alignment of our executive compensation program. To allow for sufficient time to consider available alternatives, appropriate changes in compensation philosophy and plan design, and stockholder feedback, the Compensation Committee added meetings to its schedule for 2012. At our 2012 Annual Meeting, 68% of the votes cast by stockholders on the advisory Say-on-Pay proposal were in favor ofapprove the compensation of the NEOsCEO and the NEOs. Reviews with management, at least annually, the succession plan for the CEO and other senior positions as well as the executive talent pool. Reviews and approves corporate objectives relevant to NEO compensation. Evaluates the performance of the CEO and each NEO. Recommends to the independent members of the Board the compensation of the CEO and each NEO. Independent Compensation Consultant Stockholders & Other Key Stakeholders Provides advice on executive pay programs and best practices. Provides design advice for annual and LTI vehicles and other compensation and benefit programs. Provide feedback on various executive pay practices and governance during periodic meetings with management which then is reviewed by and discussed with our independent Board members. The following summary sets forth the responsibilities of various parties in connection with the implementation of our compensation programs. Role Responsibilities Independent Compensation Committee: Daniel F. Akerson, Chairman Nolan D. Archibald Rosalind G. Brewer David B. Burritt Thomas J. Falk ●      Reviews and approves corporate objectives relevant to NEO compensation. ● Evaluates and approves the performance of the CEO and each NEO. ● Recommends to the independent members of the Board the compensation of the CEO and each NEO. ● Approves Enterprise and Business Segment performance measures, weightings and goals for the annual and LTI compensation plans. ● Reviews proposed candidates for senior executive positions and recommends their compensation to the Board. ● Approves equity and other LTI grants. This authority resides solely in our 2012 proxy statement. Following the meeting, the Compensation Committee requested that(subject to ratification by the independent members of the Board) and has not been delegated to any member of management. Independent Members of Board of Directors ● Reviews and approves the compensation of the CEO and the NEOs. ● Reviews with management, follow up with our investorsat least annually, the succession plan for the CEO and other senior positions as well as the executive talent pool. Independent Compensation Consultant: Meridian Compensation Partners, LLC (Meridian) ● Provides input to obtain additional feedbackthe Compensation Committee’s decision-making on the Say-on-Pay vote and our corporate governance practices and to discuss ways in which we could improve our executive compensation program. Management met or talked with representatives of stockholders owning a majority of our outstanding shares. Although the investors we talked to represent a broad range of investment styles and have differing views on various corporate governance and executive compensation topics, most of them indicated that they viewed our executive compensation program as sound. Not surprisingly, we found differing views among investors on what types of programs would best motivate management, what level of discretion is appropriatematters in annual bonus plans, and the appropriate methodology for measuring whether pay is aligned with performance. Our Corporate Governance Committee considered the feedback relating to corporate governance issues, and our Compensation Committee considered the feedback relating to our executive compensation program. The Compensation Committee considered all of these views in the context of our compensation philosophy, the programs of our competitors, and the unique demands of our industry, and adopted a number of changes to our executive compensation program. Manylight of the changes are effectiveCorporation’s business strategy, pay philosophy, prevailing market practices, stockholder interests and relevant regulatory mandates. ● Provides advice on executive pay philosophy and relevant peer groups. ● Provides design advice for grantsshort-term and LTI vehicles and other compensation decisions beginning in 2013 because in many cases it was not possibleand benefit programs. ● Provides input to make changes mid-cycle to ongoing executive compensation programs. A summaryand interprets the results of, the feedback we received from our investors and others, and the actions we have taken are highlighted below. Investor Feedback Action Taken by the Company* Impact of Company Response Annual usage of shares (burn rate) for equity grants is too high • Replaced stock options with PSUs. • Reduces the burn rate. A lower number of PSUs is required to achieve the same long-term incentive value as a higher number of options. • For the 2013 grant, this resulted in awarding nearly 3.7 million fewer shares when counting PSUs at target (or 3.4 million fewer shares when counting PSUs at maximum payout). In 2012, 5.4 million shares were granted as options and RSUs. In 2013, 1.7 million shares (at target) and 2.0 million (at maximum) were granted as RSUs and PSUs. Level of discretion under the annual incentive program • For 2012 annual bonuses, assigned weightings to organizational metrics (60% financial, 20% operational, and 20% strategic). • For 2013 annual bonuses, we will use three categories to measure performance (enterprise, business area, and individual). The financial goals at the enterprise level are based on publicly disclosed guidance provided to investors in the first quarter of 2013 or disclosed in this Proxy Statement. • Clarifies the framework for assessing organizational performance and how Compensation Committee discretion may be applied. • By using two company performance factors instead of one, increased emphasis on organizational performance rather than individual performance. Proportion of equity as part of total compensation • Reduced the cash component of our long-term compensation package for the CEO and the other NEOs from 40% to 20%. • Increases the portion of long-term incentive compensation that is equity based from 60% to 80%, resulting in a closer alignment of interests between executives and stockholders. Strength of link between compensation and performance • Increased the portion of our long-term incentive compensation that is based on achievement of specified performance goals from 40% to 70%. • Closer alignment of long-term incentive compensation with stockholder interests. Concerns about above-market pay The Compensation Committee clarified its compensation philosophy to: • Confirm that the market rate used for compensation is the size adjusted 50th percentile, subject to the ability to adjust the market-rate (up or down) for differences in job scope compared to our comparator group of companies; and • Set base salary and long-term incentive compensation opportunities for executives who are new to a position at 85% of the market-rate with the goal of moving to a market-rate level in two years, subject to performance, experience, time in position, and critical skills. • Clarifies approach for aligning compensation with market rate. • The Compensation Committee approved compensation for Ms. Hewson in her new CEO role to align with our pay philosophy, where the combined values for base salary, target bonus, and long-term incentives are positioned at 85% of the market rateor conducts, competitive market studies as background against which means Ms. Hewson's compensation is below market (85% of the 50thpercentile). * Unless otherwise noted, all actions apply to compensation programs beginning January 1, 2013. 2013 Proxy Statement       30 Back to Contents Other Changes We Made Since Our 2012 Annual Meeting In addition to the changes that were directly related to our discussions with many of our stockholders in 2012, we made the following changes in our executive compensation program: • We added double triggers for payouts following a change of control for all long-term incentive compensation awards. With a double trigger, if the successor assumes the LTI agreements, vesting accelerates following a change in control only for an employee who is terminated without cause or who terminates voluntarily for good reason. • Beginning with the 2013 long-term incentive awards, we made changes that enable the Compensation Committee can consider CEO and senior management compensation. ● Reviews and provides an independent assessment of the data and materials presented by management to providethe Compensation Committee, including data provided by the regular compensation consultant of the Corporation. ● Participates in Compensation Committee meetings as requested and communicates with the Chairman of the Compensation Committee between meetings. ● Advises the Compensation Committee about emerging best practices and changes in the regulatory and corporate governance environment. ● Reviews the CD&A and provides input to the Compensation Committee. 36www.lockheedmartin.com/investor Table of Contents Executive Compensation Role Responsibilities Management ●     The CEO reviews and approves corporate goals and objectives and provides feedback to the Compensation Committee on compensation and performance of the other NEOs and other senior management. ● The EVP and CFO develops internal financial goals for continued vestingboth our annual and LTI programs, which are reviewed by the CEO before presentation to the Compensation Committee for consideration and approval. ● The Senior Vice President, Human Resources (SVP HR) presents a schedule with a market rate for each compensation element (base salary, annual incentive, and LTI) to the Compensation Committee and consults with the CEO on recommended compensation for senior executives. The SVP HR does not recommend a specific amount of compensation for the CEO. Corporation’s Compensation Consultants: Aon Hewitt & Willis Towers Watson ● Provides management with market data and compensation practices from our comparator group. ● Performs market research and other analyses to assist management in situations involving layoff or retirement. Givenmaking plan design recommendations to the uncertaintyCompensation Committee and the Board. How We Determine Market Rate Compensation As a starting point, for each of the principal elements of executive compensation we define the “market rate” as the size-adjusted 50th percentile of the comparator group of companies we have identified for compensation purposes. Size-adjusted market rates are calculated for us by Aon Hewitt using regression analysis. This statistical technique accounts for revenue size differences within the peer group and results in a market rate for all compensation elements consistent with our revenue relationship to our peers. We also may adjust the market rate to reflect differences in an executive’s job scope relative to the industry or the comparator group of companies, as appropriate. Actual annual and long-term incentive compensation earned by executives may be above or below the target level we set for each executive based on our performance against pre-established metrics and goals. Our incentive plans are designed so that actual performance in excess of established performance targets results in payouts above target and actual performance below established performance targets results in payouts below target or no payout. How We Select the Comparator Group for Market Rate and Performance Purposes Companies Selected for Market Rate Determination We regularly review our comparator group to maintain relevancy and to ensure the availability of data, while seeking to avoid significant annual changes in the group to ensure a level of consistency. To establish the market rate for each of the principal elements of compensation, we select a group of publicly-traded companies (our comparator group) to identify market rates for all pay elements. Because the number of comparable companies with our revenue level is not extensive, we include companies in our comparator group based on a number of factors, including: ● Similarity in size (a high correlative factor in determining pay), generally between one-half and two times our annual revenue. ● Participation in the Aon Hewitt executive compensation survey (our primary source for data in making market comparisons); this enables us to obtain reliable data for market comparisons that otherwise may not be publicly available. ● Industrial companies and, to the extent possible, companies that compete in the aerospace and defense industryindustry; this enables comparison with companies that face similar overall labor costs and market fluctuations. ● Companies that are included in the Corporation’s needexecutive talent pool we consider when recruiting outside talent. Competitive conditions and a limited number of comparably sized aerospace and defense companies require us to respondrecruit outside the core aerospace and defense companies for a broad range of disciplines (e.g., finance, human resources, supply chain management) to changesobtain individuals with a broad range of skills that are transferable across industries. ● Companies with comparable executive officer positions or management structures, which enables more appropriate compensation comparisons. We do not consider market capitalization in selecting our comparator group because market capitalization can change quickly as industries and companies go in and out of favor as investments and as companies restructure. Market capitalization may be more reflective of expectations about a particular company’s growth potential rather than its actual financial performance or the complexity of its operations. The data presented to and considered by the Compensation Committee regarding the level of compensation at the Corporation’s comparator group of peer companies was developed from the proprietary results of the Aon Hewitt executive compensation survey, subject to review by Meridian. All of the comparator group companies participate in the Aon Hewitt survey. 2016 Proxy Statement 37 Table of Contents Executive Compensation At the beginning of 2015, based on the objectives and criteria summarized above, we selected the following companies as our comparator group for purposes of establishing market rate compensation for each of the principal elements of our compensation programs. Our 2015 revenue represented the 53rd percentile of our comparator group. Comparator Group Rationale Company A&D Industry Similarity (size, revenue, geographic presence or business model) Comparable Executive Officer Positions (scope, responsibilities) Participation in government programs as a resultExecutive Compensation Survey 3M Company ✓ ✓ ✓ The Boeing Company ✓ ✓ ✓ ✓ Caterpillar Inc. ✓ ✓ ✓ Cisco Systems, Inc. ✓ ✓ ✓ Deere & Company ✓ ✓ ✓ The Dow Chemical Company ✓ ✓ ✓ E. I. du Pont de Nemours & Company ✓ ✓ ✓ FedEx Corporation ✓ ✓ ✓ General Dynamics Corporation ✓ ✓ ✓ ✓ Honeywell International Inc. ✓ ✓ ✓ ✓ Intel Corporation ✓ ✓ ✓ International Paper Company ✓ ✓ ✓ Johnson Controls, Inc. ✓ ✓ ✓ Northrop Grumman Corporation ✓ ✓ ✓ ✓ Raytheon Company ✓ ✓ ✓ ✓ United Parcel Service, Inc. ✓ ✓ ✓ United Technologies Corporation ✓ ✓ ✓ ✓ Consideration of Internal Pay Equity Consistent with past practice, the Compensation Committee reviewed the pay relationship of the CEO to the other NEOs as part of the January 2015 and January 2016 meetings. This material was presented to the Compensation Committee by Meridian in its capacity as the Committee’s independent compensation consultant. Compensation and Risk The Corporation’s executive and broad-based compensation programs are intended to promote decision-making that supports a pay for performance philosophy while mitigating risk by utilizing the following design features: ●Mix of budget pressures, the fixed and variable pay opportunities ●Multiple performance measures, multiple time periods and capped payouts under incentive plans ●Stock ownership requirements ●Oversight by Board committees ●Moderate severance program and post-employment restrictive covenants ●Institutional focus on ethical behavior ●Annual risk review ●Compensation Committee concludedoversight of equity run rate and overhang ●Clawback policy At the Compensation Committee’s request, Meridian reviewed all executive and broad-based incentive compensation programs in 2015 and determined that risks arising from our incentive compensation programs are not reasonably likely to have a material adverse effect on the Corporation as a whole. 38www.lockheedmartin.com/investor Table of Contents Executive Compensation 2015 Named Executive Officers’ Compensation Guiding Pay Principles ● Attract, motivate and retain executive talent ● Use the revised vesting schedule would be helpful in addressing concerns about the timing of organizational changes. Summary of Our Compensation Approach Principal Objective The objective of our compensation program is to align pay to performance. The program is designed to provide employees with a competitive compensation package that rewards performance against specific identified financial, strategic, and operational goals that the Compensation Committee and the Board believe are critical to the Corporation’s long-term success and the achievement of sustainable long-term total return to our stockholders. The principal elements of the compensation program are base salary, cash-based annual incentive compensation, and cash- and equity-based long-term incentive compensation. How We Implement This Objective Pay for Performance • The vast majority of executive pay is “at-risk” based on individual and business performance. • Annual incentive compensation awards are based on achievement of pre-established financial, strategic, and operational goals and individual performance against specific objectives that are tailored to the positions of each of our executive officers. • Long-term incentive awards are tied to key business financial goals and TSR: – Stock options, which were part of our equity incentives through the end of 2012, provide value from stock price appreciation. In recent years, stock options granted to our CEO included performance goals based on the achievement of specified levels of adjusted cash from operations and ROIC. – Restricted stock units, or “RSUs,” provide value based on our stock price performance. RSUs for the NEOs are forfeitable to the extent the grant date value exceeds a cap based on adjusted cash from operations in the year in which the RSUs are granted. – Cash-based long-term incentive performance (“LTIP”) awards are earned based on relative TSR performance (50%), adjusted cash from operations (25%), and ROIC (25%) over a three-year performance period. – PSUs, which replaced stock options in 2013, are earned based on relative TSR performance (50%), adjusted cash from operations (25%), and ROIC (25%) over a three-year performance period and provide value based on stock price performance. Pay Relative to Market • We utilize a group of companies that we believe represent an appropriate comparator group for compensation purposes. The companies range from one-half to two times our revenue. • We regularly review our comparator group to maintain relevancy and to ensure the availability of data, while avoiding significant annual changes in the group to ensure a level of consistency. • We establish the market rate for each element of compensation at the size adjusted 50th percentile to target all compensation elements ● Link pay to performance ● Provide an appropriate mix of the comparator group of companies. We use the market rate as a reference point in our compensation decisions. • We generally set the target level for our incentive compensation at the market rate, with actualshort-term vs. long-term pay received determined by performance against the pre-established goals that are designedand fixed vs. variable pay ● Align to support the Corporation’s objectivesstockholder interests and sustainable long-term total return to stockholders.company value • We seek to provide other benefits that are consistent with the types of benefits being offered by our comparator group of companies and limit perquisites to those that are business-related in light of our business and the global security environment and industry in which we operate. 2015 Core Compensation Elements Our compensation programs are designed to provide a mix of short- and long-term compensation, fixed and variable pay and cash and equity-based compensation, as well as to reflect our philosophy of providing pay for performance. Retirement or “all other compensation” programs are not included in our core compensation elements below (additional information about these programs can be found on page 48). WHAT? Cash Cash Equity Cash Equity WHEN? Annual Annual 3-year Performance Cycle 3-year Performance Cycle 3-year Cliff Vesting HOW? 2013 Proxy StatementMeasures, Weightings &       31Payouts BackIndividual performance, experience, time in position, and critical skills Enterprise Performance (60% Financial, 20% Strategic, 20% Operational) X Business Segment Performance (60% Financial, 20% Strategic, 20% Operational) X Individual Performance Payout: 0-200% of target Relative TSR* ROIC** Performance Cash** (50%) (25%) (25%) Value delivered through Long-Term Stock Price Performance ●Award 0-200% of target # of shares ●Relative TSR measure capped at 100% if TSR is negative ●Up to Contents400% of stock price on date of grant X shares earned ●Payout: 0-200% of target ●Relative TSR measure capped at 100% if TSR is negative WHY? Our 2012 PerformanceProvides competitivelevels of fixed pay to attract and Compensation Decisionsretainexecutives 2012 Performance Despite financial, economic,Attracts and budget uncertainties, we hadmotivatesexecutives by linking annual company, BusinessSegment and individualperformance to an annual cash incentive Creates strong alignment with stockholderinterests by linking long-term pay to key performance metrics and stock price.Provides a strong year financiallybalance of internal and attained record levels for sixmarketbased measures to assess long-term performance Promotes retention of key financial metrics:talent andaligns executive andstockholder interests • sales • segment operating profit • segment operating margin • earnings per share • orders • backlog 2010–2012 Performance Key financial metrics showed sustained growth when considered over the three-year period ended December 31, 2012. Over the one- and three-year periods ended December 31, 2012, we provided better total returns to * Relative TSR performance is measured against our stockholders than the market overall. During 2012, our TSR of 20% outperformedindustry peers in the S&P Aerospace and Defense (A&D) Index (15%) and the S&P 500 Index (16%). Over the three-year period ended December 31, 2012, we performed in line with the S&PIndex. **   See Appendix A&D Index, while outperforming the S&P 500 Index. for explanation of non-GAAP terms. 20132016 Proxy Statement       32 Back to Contents Compensation Decisions for our CEO and our Other Named Executive Officers In 2012, target compensation for each pay element was established at the beginning of the year in a manner consistent with our overall compensation philosophy. The following table shows the target compensation for each of our NEOs and its relationship to the market rate we determined following the review of data from our comparator group of companies. In the chart below, the “Percentage of Market Rate” shows the compensation element as a percentage of the market rate target (with market rate being the 50th percentile of our comparator group). Mr. Stevens' base salary, for example, was 12% above the 50th percentile and his annual incentive target was 9% below the 50th percentile. NEO Years in Position as of December 31, 20112 Base Salary   Annual Incentive   LTI5   Total Target Compensation Amount ($)   Percentage of Market Rate Target Target % as a Percentage of Market Rate4 Total LTI Target Economic Value ($)   LTI Target Economic Value as a Percentage of Market Rate5 Total Compensation ($) As a Percentage of Market Rate Mr. Stevens 7 1,800,000 3 112 %   150 % 91 %   12,002,501 107 %   16,502,501 107 % Mr. Tanner 4 765,500 95 %   90 % 86 %   3,431,944 100 %   4,886,394 96 % Ms. Hewson1 2 700,000 90 %   90 % 98 %   2,926,192 100 %   4,256,192 96 % Ms. Gooden 5 673,000 94 %   90 % 103 %   2,417,800 100 %   3,696,500 98 % Ms. Maguire 6 668,000 92 %   90 % 102 %   2,525,008   102 % 6 3,794,208 99 % (1) Target compensation for Ms. Hewson reflects compensation and market rate for the position she held at the beginning of 2012 (Executive Vice President, Electronic Systems). (2) Rounded years in position as of December 31, 2011 (2012 compensation decisions were made in January 2012). (3) Mr. Stevens’ base salary has not changed since 2008. It is above-market for a number of reasons, including tenure, sustained high performance, and changes in management of the members of the comparator group which resulted in lower market rates. (4) Based on 2012 annual incentive compensation target as a percentage of base salary. The market rate for the annual incentive target was rounded up or down to 90%. This resulted in an actual annual incentive target slightly above the market target (Mss. Gooden and Maguire) and slightly below the market target (Mr. Stevens and Ms. Hewson). Mr. Tanner’s target was set at 90% to be consistent with the targets of the other executive vice presidents. (5) In 2012, the LTI market values were reduced by 5% to address burn rate and affordability concerns. The position to market shown is calculated as the LTI grant value divided by the adjusted LTI market value. (6) Above target rate was used to compensate Ms. Maguire for elimination of other benefits and perquisites. Variable and Performance-Based Compensation Annual Incentive Compensation Element What it is Designed to Reward Why We Choose to Pay This Element and How it Aligns With Our Objectives Performance Measured Fixed or Variable/ Performance- Related Cash or Equity Short-Term/Annual Incentive • The objective of an annual incentive bonus is to tie a portion of annual pay to performance against goals set at the beginning of the year • Organizational performance during the year against our publicly-disclosed financial guidance and other pre- established performance criteria • Individual performance during the year measured against identified goals • Competitive targets enable us to attract and retain top talent • Payout of award depends on individual and organizational performance and aligns pay to performance Individual and Organizational • Financial • Strategic • Operational Variable Performance- Related Cash Market-Based Targets 39– We assign bonus levels for NEOs expressed as a percentage of the NEO’s base salary. In 2012, the Compensation Committee concluded that the target percentage for each of the Executive Vice Presidents should be the same. Beginning in 2013, executive officer annual incentive targets will be set at the market rate (subject to rounding) for the position that each executive officer holds. Role of Performance – The annual incentive target award is adjusted for both individual and organizational performance. For 2012 bonuses, the Compensation Committee assessed individual performance on a scale ranging from 0.00 to 1.30 and organizational performance on a scale ranging from 0.00 to 1.50. The potential higher or lower ratings for organizational performance reflect the importance we place on team performance and organizational results. No bonus was paid for an individual performance rating below 0.60 or below 0.50 on the organizational performance factor. A rating of 1.0 represented an assessment that objectives or expectations were met. Under the terms of our 2012 annual incentive program, the CEO’s bonus cannot exceed 0.3% of cash flow and the bonus for each of the other NEOs cannot exceed 0.2% of cash flow, and no individual bonus can exceed 195% of target. Establishment of 2012 Goals – At its January 2012 meeting, the Compensation Committee approved corporate objectives for 2012 reflecting financial, strategic, and operational goals. These objectives serve as the corporate organizational goals for all participants as well as the individual goals for the CEO. The Compensation Committee used the guidance we disclosed publicly at the beginning of the year as our financial metrics. We believe this approach to setting the financial metrics for annual bonus purposes appropriately links compensation to our effectiveness in meeting our public commitments to our stockholders. 2013 Proxy Statement       33 Back to Contents For each of the NEOs (other than the CEO), the Compensation Committee establishes individual performance objectives in the first quarter of the year. For the business area NEOs, these objectives largely reflect the organizational goals for the business area. For functional area NEOs, individual objectives typically represent achievements important for the functional area that contribute to the success of the business areas. Formula for Calculating 2012 Annual Bonus Award – We used the following formula to determine annual bonus awards for 2012: Base Salary x Target % x Organizational Performance Rating x Individual Performance Rating Because we multiply the organizational and individual performance factors together (a “multiplicative approach”), a zero rating on either factor results in no payment. Assessment of Organizational Performance for 2012 Annual Incentive Award – In January 2013, the Compensation Committee assigned an organizational rating of 1.40 (on a scale of 0 to 1.50) for corporate performance. In making this assessment, the Compensation Committee considered the financial, strategic, and operational goals it established in January 2012 (with the following weightings: financial results 60%, strategic results 20%, and operational results 20%), and the resulting performance assessments set forth below.   2012 Financial Goals Summary 2012 Goal   2012 Actual   2012 Assessment Sales $ 45,000 – 46,000M $ 47,182M Exceeded Goal Segment Operating Profit* $ 5,025 – 5,125M $ 5,583M Exceeded Goal Segment Operating Margin* 11.2 % 11.8 % Exceeded Goal Earnings Per Share $ 7.70 – 7.90 $ 8.36 Exceeded Goal Cash From Operations $ 3,800M $ 1,561M $2.2B below goal after making discretionary pension contributions of $2.5B ROIC* ≥14.5 % 15.5 % Exceeded Goal * See Appendix A for explanation of non-GAAP terms. Contributions we make to our pension trust reduce the cash from operations that we report on our financial statements. For purposes of measuring performance against the cash from operations goal, our annual incentive plan authorizes us to include the amount of any discretionary contribution we make to our pension trust that we did not forecast in our long-range plan. When the 2012 discretionary pension contribution of $2.5 billion is included in our 2012 cash calculation, the result is an adjusted cash number for 2012 that exceeds the 2012 goal. We adjust cash in our annual incentive plan calculation so that the reduction in cash from operations that results from a discretionary pension contribution is not a factor in the decision as to whether to make the contribution. Performance Rating (Financial) 1.40 Given the nature of the strategic and operational goals, the difficult contracting environment, and the increase in contractor challenges to contract award decisions, the Compensation Committee used its discretion to assess performance against these goals in reaching the following strategic and operational performance ratings. 2012 Strategic Goals Summary Assessment Summary • Identify growth markets outside our core business • Exceeded goals for winning new programs and keeping existing programs sold • Expand support for high priority programs • Exceeded international sales goals • Enhance enterprise risk management • Developed adjacent market pipeline • Enhance our supply chain • Improved program advocacy and support • Increase employee engagement • Improved organizational health index reflected in employee survey • Achieve staffing goals • Used talent plan to fill 80% of positions • Improved media coverage • Enhanced enterprise risk management through inclusion in strategic planning and increased leader communications • Increased pension funding • Resolution of litigation Table of Contents Executive Compensation 2015 Target Compensation Consistent with our pay philosophy to consider moving executives to the market rate (50th percentile) over time if and when they perform effectively in their new roles, all NEOs were closely aligned to the market rate given that they have performed effectively in their respective roles for multiple years.   Base Salary ($) Annual Incentive 2015 LTI Grant ($) Total Target Direct Compensation ($) NEO               Target %        Target Amount ($)               Ms. Hewson 1,565,000 175 2,738,750 11,202,915 15,506,665 Mr. Tanner 925,000   105 971,250   4,016,033   5,912,283 Mr. Bennett* 790,000 95/90   717,715 2,500,641 4,008,356 Mr. Carvalho 790,000 95 750,500 3,000,882 4,541,382 Ms. Lavan 735,000 95 698,250 2,600,765 4,034,015 *  Mr. Bennett’s Target % was increased to reflect the change in the scope of his role after the acquisition of Sikorsky. Base Salary Base salaries are reviewed annually and may be increased to reflect the executive’s individual performance and/or adjusted to align more appropriately with the market rate (50th percentile). In establishing the base salary for each NEO, we determined the market rate using comparator group company data and evaluated whether the market rate should be adjusted up or down based on differences in the scope of the NEO’s position as compared to the industry and the comparator group companies. The Compensation Committee establishes an executive’s base salary relative to the market rate with consideration for the executive’s individual performance, experience, time in position and critical skills. Annual Incentive The annual incentive for 2015 uses a “multiplicative approach” to determine bonuses based on Enterprise, Business Segment and Individual performance factors as follows: Target Award X Enterprise Performance Factor X Business Segment Performance Factor X Individual Performance Factor = Payout - Financial (60%) - Financial (60%) - Strategic (20%) - Strategic (20%) - Operational (20%) - Operational (20%) Performance Rating (Strategic) 1.40 2013 Proxy Statement       34 Back to Contents 2012 Operational Goals Summary Assessment Summary • Successful execution of programs • 100% mission success • Continue to develop affordability and relevance initiatives • Resolved program issues • Continuously improve performance • Achieved cost savings through affordability initiatives • Assure supply chain performance • Achieved program savings through supply chain activities • Improve workplace safety • Reduced number of suppliers with performance issues • Centralize sustainability focus • Achieved workplace safety goals • Achieve 100% ethics awareness and compliance training • Established sustainability office and published inaugural sustainability report • Refresh and embed full spectrum leadership • Achieved 100% ethics awareness and compliance • Improved leadership excellence index as measured in our employee survey • Failure to receive earned value management system certification at two sites • Award fee shortfall Performance Rating (Operational) Because we multiply the Enterprise, Business Segment and Individual performance factors together, a zero rating on any factor results in no payout. Under the terms of our 2015 annual incentive plan, the CEO’s bonus may not exceed 0.3% of Performance Cash (see Appendix A for non-GAAP definition) and the bonus for each of the other NEOs cannot exceed 0.2% of Performance Cash. Annual incentive payouts may not exceed 200% of the target award. The Compensation Committee adopted these parameters to establish the structure around which annual incentive decisions would be made, to align participants to the performance of the overall Enterprise and to use financial performance as a core element of the rating. Although the annual incentive plan uses a formulaic approach, the Compensation Committee retains discretion, which includes choosing and approving metrics, assessing strategic, operational and individual performance of our NEOs and approving the final ratings for each factor based on performance results. The Business Segment factor applied to the corporate officers (Ms. Hewson, Mr. Tanner, and Ms. Lavan) is the average of all Business Segment performance factors, which can be adjusted up or down (maximum 0.05) based on the Compensation Committee’s assessment. In accordance with the annual incentive plan, factors are determined in .05 increments. 40www.lockheedmartin.com/investor Table of Contents Executive Compensation 2015 Goals for Enterprise Performance Factor At its January 2015 meeting, the Compensation Committee approved enterprise-wide objectives for 2015 reflecting financial, strategic, and operational goals. These objectives serve as the corporate organizational goals for all participants as well as the individual goals of the CEO. The Compensation Committee used the guidance we disclosed publicly at the beginning of the year for our financial metrics as disclosed in the 2015 proxy statement. We believe this approach to setting the financial metrics for annual bonus purposes appropriately links compensation to our effectiveness in meeting our public commitments to our stockholders. Financial Commitments:Our financial commitments are established at the completion of our annual long-range planning process and are consistent with our long-range plan commitments. The long-range planning process includes reviews of the assumptions used by the Business Segments in generating their financial projections, such as industry trends and competitive assessments, current and future projected program performance levels and the risks and opportunities surrounding these baseline assumptions. Business Segment financial projections also are compared against historical patterns of performance. The long-range plan on which our financial goals are based is tied to the business environment in which we operate, which can vary year over year. In recent years, the U.S. Government, representing 78% of our net revenues for 2015, has faced significant deficit reduction pressures that are likely to continue. Our long-range plan values for Orders, Sales, Segment Operating Profit (see Appendix A for definition of non-GAAP terms) and Cash from Operations represent the target level (1.0 rating) for each of these metrics. We established maximum (1.30 rating for Enterprise, 1.25 rating for Business Segments) and threshold payout levels (0.50 rating) around these targets based on a review of historical performance against long-range plan commitments for each of the four annual incentive goal metrics. We used straight-line interpolation between target and both maximum and minimum historical performance levels. In all cases, payouts deteriorate more rapidly as we move from target level to the minimum payout level compared to the level of increase as we move from target level to maximum payout level. This asymmetry reflects the importance we place on meeting our financial goals. Strategic and Operational Commitments:Our strategic and operational performance assessments are inherently different than financial performance assessments. For the 2015 performance year, objective metrics were set for each of our strategic and operational commitments at the beginning of the year. The Compensation Committee used these metrics as a reference point for its assessment along with past levels of performance to identify the top and bottom of the performance rating range and the expected target level. The Compensation Committee also took into account qualitative considerations that could not be forecasted reliably and used discretion where appropriate to evaluate the level of performance. For example, because some strategic goals, such as having “no Red Programs” are aspirational in nature, achieving the goal represents the maximum rating rather than the target rating (we designate a program as a “Red Program” when it has a value over $100 million and exhibits significant cost, schedule, technical or quality challenges). Performance Ratings Performance ratings for 2015 were determined using the scales below. The higher maximum rating for the Enterprise performance factor reflects the importance we place on company-wide results. ● 1.35 Applying the weighting of 60% financial performance, 20% strategic performance, and 20% operational performance resulted in a 2012 corporate performance score of 1.40 (rounded to nearest .05). Goal Score Weighting Result Financial 1.40 X .60 0.84 Strategic 1.40 X .20 0.28 Operational 1.35 X .20 0.27 Score 1.40 Assessment of Individual Performance The Compensation Committee used its discretion to evaluate the performance of each of our NEOs (other than the CEO) against their pre-established goals and assign individual performance ratings for their 2012 award. In the case of the CEO, whose individual performance rating initially was based on our organizational performance, the Compensation Committee used its discretion to evaluate the totality of Mr. Stevens’ performance and leadership during the year. The Compensation Committee concluded that the performance of each of the NEOs exceeded their commitments for the year and warranted individual performance ratings above the 1.0 target level. In making that determination, the Compensation Committee considered the following: Executive Performance Considerations Mr. Stevens • Performance against our 2012 financial, strategic, and operational goals • Leadership during management transitions • Industry leader on sequestration impact Mr. Tanner • Leadership of successful cash deployment strategy • Record levels of financial performance • Leadership of strong internal control environment and transparent financial disclosures • Reduced corporate office overhead expenses for second consecutive year • Supported seamless transition from four business areas to five Ms. Hewson • Electronic Systems significantly exceeded all financial commitments • Electronic Systems’ superior operational performance; successful achievement of key performance milestones and major test events • Electronic Systems achieved significant product, process, and infrastructure cost savings • Strong focus on customer relationships and successful business expansion • Successful restructure of Electronics Systems business area resulting in annual savings Ms. Gooden • IS&GS wins in key programs • IS&GS developed and executed a strategy to develop cyber, health, and energy business opportunities • IS&GS developed a strategy, established infrastructure, and assigned leaders in the three international focus countries to support its international growth Ms. Maguire • Space Systems’ exceptional performance with increased segment operating profit and segment operating margin levels and backlog • Space Systems’ strong strategic positioning of core business with significant follow-on orders • 100% mission success • Led realignment of Space Systems organization with streamlined executive roster Mr. Kubasik did not receive an annual incentive award. 2013 Proxy Statement       35 Back to Contents 2013 Annual Incentive Changes In January 2013, the Compensation Committee approved the following changes to our annual incentive program: • Performance will be assessed using the following elements: – Enterprise performance (0.00 rating or 0.50 – 1.30 rating) – ● Business area/corporate headquartersSegment performance (0.00 rating or 0.50 – 1.25 rating) – ● Individual performance (0.00 rating or 0.50 – 1.25 rating) Enterprise Performance Enterprise Financial Assessment (60% of Enterprise Performance) We exceeded the target ranges established at the beginning of the year for all of the financial measures and set records for Orders and Cash from Operations. – Cap of 200% of target Base Salary x Target % x Enterprise Performance Rating x Business Area/Corporate Headquarters Rating x Individual Performance Rating 2015 Financial Measures Weighting % 2015 Goals ($) Reported Results ($) 2015 Assessment No payment is made if performance on any element (enterprise, business area/organizational, or individual) falls below 0.50. • Enterprise and business area/corporate headquarters performance will each be based upon financial, strategic, and operational commitments, weighted 60%, 20%, and 20%, respectively. For corporate headquarters employees, the business area/corporate headquarters performance rating will be the average of the ratings for the five business areas subject to adjustment by the Compensation Committee of +/- .05 to take into account significant items. • Targets for individual performance will align to the market rate. The Compensation Committee reviewed the market data for the NEOs and approved a target level of 105% for Mr. Tanner; target level changes were not approved for Ms. Gooden and Ms. Maguire due to their announced retirements. The Compensation Committee did not change the 2013 target levels approved in 2012 for Ms. Hewson (175%) or for Mr. Stevens (150%). For 2013, the Compensation Committee will use the following performance definitions which align with the Corporation’s non-executive performance management system as follows: Factor Performance Definitions Orders 20 43,500M – 45,000M 50,229M Significantly Exceeded Sales 20 43,500M – 45,000M 46,132M Significantly Exceeded Segment Operating Profit* 30 5,100M – 5,250M 5,486M Significantly Exceeded Cash from Operations 30 ≥ 5,000M 5,101M Exceeded 1.20 – 1.25 / 1.30 Results significantly exceeded all requirements and expectations 1.05 – 1.15 Results exceeded some requirements and expectations 1.00 Results achieved requirements and expectations 0.50 – 0.95 Results partially achieved some requirements and expectations 0.00 Results did not achieve requirements and expectations The Compensation Committee adopted these parameters to establish the structure around which future annual incentive decisions would be made, to align participants to the performance of the overall enterprise, and to use financial performance as a core element of the rating. The Compensation Committee will retain discretion, including in choosing and approving metrics, assessing strategic, operational, and individual performance, and in applying the average business area performance factor to corporate headquarters employees. Establishment of 2013 Annual Incentive Performance Goals For 2013, the Compensation Committee approved key corporate commitments to be used in assessing Enterprise Performance: • Financial Commitments: Our financial commitments are established at the completion of our annual long-range planning process. This process includes reviews of the assumptions used by the business areas in generating their financial projections, such as industry trends and competitive assessments, current and future projected program performance levels, and the risks and opportunities surrounding these baseline assumptions. Business area financial projections are also compared against historical patterns of performance, and are independently assessed for reasonableness by our CFO’s Independent Cost Estimating (ICE) organization. The ICE organization uses the expertise it has developed through both evaluation of new business proposals and assessments of financial performance on existing contracts to provide an independent evaluation of the likelihood of our business areas achieving their financial projections. The financial commitments we use as our annual incentive performance goals are identical to our long-range plan commitments, and are consistent with the ranges we provided as public guidance in our year-end earnings release. These commitments are set forth below. 2013 Commitments Sales $44,500 – $46,000M Segment Operating Profit* $5,175 – $5,325M Cash From Operations** ≥$4,000M * See Appendix A for explanation *   See Appendix A for definition of non-GAAP terms. ** Before Discretionary Pension Contributions We did not provide guidance on orders as part of our year-end earnings release; however, we did indicate that year-end 2013 backlog is expected to be approximately $80 billion. Consistent with that expectation and our financial commitment as to the level of 2013 sales, we anticipate a range of orders for 2013 of $41,750 - $43,250 million. The Compensation Committee approved a commitment for orders that is consistent with this range of outcomes. Our long-range plan values for orders, sales, segment operating profit, and adjusted cash from operations become the target level (1.0 rating) for each of these metrics. We established maximum (1.3 rating) and minimum payout levels (0.5 rating) around these targets based on a review of historical performance against long-range plan commitments for each of the four annual incentive performance goal metrics. We used straight line interpolation between target and both maximum and minimum historical performance levels. In all cases, payouts deteriorate more rapidly as we move from target level to the minimum payout level compared to the level of increase as we move from target level to maximum payout level. This asymmetry reflects the importance we place on meeting our financial goals. Performance Rating (Financial) 1.20 20132016 Proxy Statement       36 Back to Contents •41 Table of Contents Executive Compensation Enterprise Strategic Assessment (20% of Enterprise Performance) The Enterprise strategic performance goals were set to further develop focus around growth of the core businesses, sustaining return in new businesses, maximizing international and adjacent business opportunities and talent management. We exceeded the target for each goal in this category. 2015 Strategic Commitments: – Measures Weighting % Assessment Summary 2015 Assessment Meet all corporate focus programEnterprise Focus Program objectives for 20132015 and drive new business captureEnterprise performance through winning new business, maintaining all follow-on program value, and maximizing internationalcritical programs core to our business and adjacent market opportunities – opportunities. 60 ●Business capture and retention of existing business significantly exceeded target level. Significantly Exceeded Identify growth areas outside the core businessinternationally and position the corporationCorporation for successful entry and sustainable returns in these areas – areas. 20 ●Continued expansion, increased orders and exceeded sales goals in international markets. Significantly Exceeded Embed our workforce planning strategies to define the capabilities needed for today and tomorrow, delivering an integrated talent management strategy that reinforces our culture of leadership and performanceperformance. 20 ●Exceeded workforce goals through retention, merit increase differentiation and placement of high performers in critical positions. Exceeded Performance Rating (Strategic) • 1.20 Enterprise Operational Assessment (20% of Enterprise Performance) The operational performance targets were set with a focus on achieving Mission Success® and no Red Programs. We exceeded the target for Mission Success® (based on a list of identified critical client events or deliverables). Additionally, given the difficulty of achieving an aspirational goal of no Red Programs (considering there are over 200 programs that are valued over $100 million), the maximum assessment applies only if the goal was accomplished. 2015 Operational Commitments: – Perform successfully (achieve “mission success”)Measures Weighting % Assessment Summary 2015 Assessment Achieve Mission Success® on identified critical eventsevents. 50 ●Continued operational excellence with 98% Mission Success® in targeted events. Significantly Exceeded No Red Programs. 50 ●Continued low rate of Red Programs. Exceeded Performance Rating (Operational) 1.25 Overall Enterprise Performance Factor Based on the results discussed above, the calculated 2015 Enterprise Performance Factor was 1.20. In assessing this rating, the Compensation Committee considered a variety of factors in addition to the calculated score to determine the final Enterprise Performance Factor. The Compensation Committee reviewed the outstanding financial, strategic and operational results while also considering the efforts taken in reshaping the Corporation’s portfolio for future growth, which included the acquisition of Sikorsky and the realignment of the IS&GS businesses. The Compensation Committee recognized that these initiatives have far-reaching consequences, but are difficult to forecast, do not readily lend themselves to an advance goal setting structure and fall outside the normal formulaic assessment of achievements. The Compensation Committee also considered other achievements in 2015 that were not part of the forecasted metrics, including our record backlog in 2015, management’s execution of strategic priorities without disruption to existing businesses, international growth and affordability improvements. The Compensation Committee increased the Enterprise Factor because they viewed the Corporation’s 2015 successes as the result of a coordinated Corporate-wide effort. 42www.lockheedmartin.com/investor Table of Contents Executive Compensation In light of these accomplishments in tandem with our exceptional performance in 2015 against its pre-set goals, the Compensation Committee approved a discretionary increase of 0.10. The Enterprise Factor that is used to calculate annual incentive payouts is applied to all Executives of the Corporation (not just the NEOs). Goal       Performance Rating       Weighting       Result Financial 1.20 X .60 .72 Strategic 1.20 X .20 .24 Operational 1.25 X .20 .25 Calculated Enterprise Factor (Rounded to nearest .05) 1.20 Discretionary Factor 0.10 Final Enterprise Factor 1.30 Business Segment Performance At the January 2015 meeting, the Compensation Committee approved key financial, strategic and operational performance commitments that would be used to evaluate each Business Segment’s performance. At its January 2016 meeting, the Compensation Committee assessed financial, strategic and operational goals specific to each Business Segment to determine the performance factors. The following chart describes indicative accomplishments of each Business Segment among a wide range of measures and performance results that were reviewed. Business Segment     Measure     Weight %     Indicative Financial, Strategic, and Operational Accomplishments     Performance Factor Aeronautics Financial 60 ●Exceeded Orders, Sales and Segment Operating Profit goals. 1.25 Strategic 20 ●Stabilized F-35 production profitability and received C-130J multi-year contract. Operational 20 ●Outgoing product quality improved by 52%. Information Systems & Global Solutions Financial 60 ●Exceeded all financial goals with strong Cash from Operations. 1.20 Strategic 20 ●Strong performance without major business disruption due to strategic review businesses. Operational 20 ●100% Mission Success®. Missiles & Fire Control (MFC) Financial 60 ●Exceeded financial goals with record Orders and Cash from Operations. 1.25 ●Secured key franchise programs and expanded internationally. Strategic 20 ●100% Mission Success®. No Red Programs. Operational 20 Mission Systems & Training (MST) Financial 60 ●Exceeded all financial goals with record Orders and Backlog. 1.25 ●Successfully executed acquisition and integration of Sikorsky. Strategic 20 ●100% Mission Success®. No Red Programs. Operational 20 Space Systems Financial Strategic 60 20 ●Exceeded all financial goals with strong Sales, Segment Operating Profit and Cash from Operations. 1.25 Operational 20 ●Exceptional program performance and successful growth in protected markets. ●100% Mission Success®. No Red Programs. LM International* Financial 60 ●Exceeded all financial goals, setting a record high in international Sales and having the highest Orders in 15 years. 1.25 Strategic 20 ●Improved customer relationships and strategies in key markets. Operational 20 ●Facilitated enterprise-wide collaboration with international customers. EO Business Segment Factor (Rounded Average) 1.25 * LM International supports each of the other Business Segments named above in our strategy to grow our international sales. Our international operating results are included within each of the other Business Segments’ operating results as presented in our 2015 Annual Report on Form 10-K. 2016 Proxy Statement 43 Table of Contents Executive Compensation Individual Performance For 2015, the following individual performance definitions were used, which align with the Corporation’s individual performance management system: Factor Performance Definitions 1.15 – 1.25 Significantly exceeded all or majority of commitments and met or exceeded all behavioral expectations. 1.00 – 1.15 Exceeded all or majority of commitments and met or exceeded behavioral expectations. 0.75 – 1.00 Achieved all or majority of commitments and met all or majority of behavioral expectations. 0.00 or 0.50 – 0.75 Did not achieve majority of commitments and/or did not meet majority of behavioral expectations. In January 2016, the Compensation Committee approved a factor for each NEO based on achievement of individual performance goals established at the beginning of 2015. The individual goals and assessments take into account both the Enterprise and/or Business Segment results, as well as the individual’s impact on the overall organization, the difficulty of their roles and their leadership contributions. The Compensation Committee evaluated the performance of each of our NEOs and assigned an individualperformance factor for their 2015 awards. The Compensation Committee concluded that the performance of each of the NEOs exceeded his or her commitments for the year and warranted an individual performance factor above the 1.0 target level. In making that determination, the Compensation Committee took a wide range of accomplishments into account including but not limited to the following: Have no red programs Similar NEO Performance Considerations Performance Factor Ms. Hewson ●Significantly exceeded Enterprise financial, strategic and operational goals were established by each business area based onand achieved record Backlog. 1.25 ●Led the programs in their respective portfolios. Strategic and operational performance assessments are inherently different than financial performance assessments. To the extent there are objective metrics for our strategic and operational commitments, the Compensation Committee intends to use as a reference point for its assessment, past levels of performance to identify the top and bottomreshaping of the performance rating range as well asCorporation’s portfolio for future growth through the expected target level but will also take into account qualitative considerationsacquisition of Sikorsky and circumstances that could not be forecasted reliablyrealignment of the IS&GS business. ●Drove international business growth through the implementation of strategic initiatives, key wins and use discretion where appropriatestrong operational performance. Mr. Tanner ●Significantly exceeded Enterprise financial goals. 1.25 ●Successfully closed Sikorsky acquisition, including obtaining temporary and long-term financing at favorable rates. ●Provided financial leadership to evaluatealign corporate costs to the levelnew organization after completion of performance. Because uncertainty existed atstrategic actions. Mr. Bennett ●Significantly exceeded MST’s financial goals. 1.25 ●Successfully executed portfolio shaping initiatives with the timeSikorsky acquisition. ●Successfully executed MST’s growth strategy, resulting in record Orders and Backlog. Mr. Carvalho ●Exceeded Aeronautics Orders, Sales, and Segment Operating Profit goals. 1.25 ●Achieved F-35 operational goals, including F-35 United States Marine Corps Initial Operating Capability. ●Ensured key aircraft deliveries were achieved across the commitments were establishedportfolio while continuing to make significant progress in outgoing product quality and continues as to whether an agreement will be reached on sequestration or other budget cuts intended to replace sequestration, our public guidance relating to our 2013 financial outlookproduction cost performance. Ms. Lavan ●Successful litigation management reducing corporate risk profile. 1.20 ●Executed cost-management initiatives. ●Cross functional leadership and the related financial commitments as well as the commitment for orders established under our 2013 annual incentive program do not take into account the changescollaboration in our results that could occur from sequestration. In evaluating individual performance andportfolio shaping activities. Summary of Annual Incentive Payout Calculations NEO       Base Salary ($)       Target % of Salary (%)       Target Award ($)     X        Enterprise Factor     X     Business Segment Factor     X     Individual Factor        =     Payout* ($) Ms. Hewson 1,565,000 175 2,738,750 1.30 1.25 1.25 5,477,500 Mr. Tanner 925,000 105 971,250 1.30 1.25 1.25 1,942,500 Mr. Bennett* 790,000 95/90 717,715 1.30 1.25 1.25 1,435,430 Mr. Carvalho 790,000 95 750,500 1.30 1.25 1.25 1,501,000 Ms. Lavan 735,000 95 698,250 1.30 1.25 1.20 1,361,600 * Mr. Bennett’s Target % was increased during the performance against strategic and operational commitments, the Compensation Committee retains discretion to consider all relevant factors, which would include its evaluation of how the Corporation responded to the challenges of sequestration or other budget cuts to replace sequestration, subject to the limitations on payments contained in the annual incentive plan. For the CEO, the enterprise goals will also serve as the CEO’s individual goals for 2013 (subject to the Compensation Committee’s consideration of any other relevant factors); likewise the organizational goals established for each business area will serve as the individual performance goals for the Executive Vice President in charge of the respective business area. The Compensation Committee approved individual commitments for the Executive Chairman based on the terms of his Transition Retirement Agreement (see page 41). Long-Term Incentive Compensation After determining the economic value target for each of our NEOs, consistent with our past practices and plan limitations, the overall long-term incentive award was allocated to approximate the following percentages: 2013 Proxy Statement       37 Back to Contents Stock Option Grants Long-Term Incentives What it is Designed to Reward Why We Choose to Pay This Element and How it Aligns With Our Objectives Performance Measured Fixed or Variable/ Performance- Related Cash or Equity Stock Options • The objective of stock options is to provide compensation equal to the increase in stock price and align executive interests with stockholder interests • Increase in stock price • Retention • Value dependent on price of our stock; no value unless the stock price increases • Three-year graded vesting supports retention Organizational Variable Performance- Related Equity As a general matter, stock option grant sizes are calculated by multiplying the overall target LTI economic value determined as noted above by the weighting assigned to the stock options element (30% in 2012) and dividing the result by the value of a single option, determined under the Black-Scholes methodology applying the same assumptions used for recognizing expense in our audited financial statements. These assumptions are set out in Note 11 to our financial statements contained in our 2012 Annual Report. In 2012, the grant date fair value was $10.57 for each stock option. As such, the formula (excluding rounding) for determining the number of stock options awarded to a NEO was: LTI Economic Value x 30% = number of stock options $10.57 In response to feedback we received in previous years, vesting of our CEO’s 2012 stock option grant also was made dependent on performance conditions. Under the stock option agreement with Mr. Stevens, 50% of his stock options were forfeitable if the Corporation did not achieve its publicly disclosed goal of generating at least $3.8 billion in adjusted cash from operations in 2012 (without taking into account discretionary pension contributions) and 50% were forfeitable if the Corporation did not achieve ROIC of at least 14.5% in 2012. These performance metrics were taken from our 2012 long-range plan. Both requirements were satisfied and no forfeiture occurred. In response to feedback we received from a number of significant investors to reduce our burn rate, we will not grant stock options in 2013. Restricted Stock Unit Grants Long-Term Incentives What it is Designed to Reward Why We Choose to Pay This Element and How it Aligns With Our Objectives Performance Measured Fixed or Variable/ Performance- Related Cash or Equity RSUs • The objectiveof RSUs is to provide compensation that aligns executive interests with stockholder interests through fluctuation in stock price • Increase in stock price • Retention • Although RSUs typically have value, the value increases or decreases as stock price increases or decreases • Three-year cliff vesting supports retention Organizational Variable Performance- Related Equity As a general matter, RSU grants are calculated by multiplying the overall target LTI economic value by the weighting assigned to the RSU element (30% in 2012) and dividing the result by the value of a single RSU, determined using the estimated grant date fair value. The 2012 RSU fair value on the date of grant was $81.93. As such, the formula (excluding rounding) for determining the number of RSUs awarded to a NEO was: LTI Economic Value x 30% = number of RSUs $81.93 To further link RSUs to organizational performance, all RSUs awarded to NEOs in 2012 were subject to forfeiture to the extent the grant date value of the RSUs exceeded 0.2% of 2012 adjusted cash from operations in the case of the CEO and 0.1% in the case of each of the other NEOs. These performance requirements were satisfied and no forfeiture occurred. 2013 Proxy Statement       38 Back to Contents Cash-Based LTIP Awards Long-Term Incentives What it is Designed to Reward Why We Choose to Pay This Element and How it Aligns With Our Objectives Performance Measured Fixed or Variable/ Performance- Related Cash or Equity Long-Term Incentive Performance Awards (LTIP) • The objectiveof LTIP is to pay compensation to the extent that long-term value-driving objectives are achieved • Performance relative to other companies as measured by TSR • Meeting or exceeding ROIC goal • Meeting or exceeding cash generation goal • Retention • Focus executives on metrics important to our stockholders • Three-year performance period and cliff vesting supports retention Organizational • Relative TSR (50%) • ROIC (25%) • Adjusted Cash (25%) Variable Performance-Related Cash As a general matter, LTIP grants are calculated by multiplying the overall target LTI economic value by the weighting assigned to the LTIP element (40% in 2012). As such, the formula (excluding rounding) for determining the value of LTI attributed to LTIP for each NEO was: LTI Economic Value x 40% Each NEO’s LTIP target is determined at the beginning of the three-year performance period and the actual payout at the end of the period is calculated based on our performance measured against three financial metrics: relative TSR, ROIC, and adjusted cash from operations. The Compensation Committee has used these financial metrics because, in the case of TSR, it is directly tied to total stockholder return over the period, and in the case of ROIC and adjusted cash from operations, these measures are correlated to the long-term stock price performance and are related to our overall quality of our earnings. Payouts can range from 0% (no payout) to 200% (maximum) of the applicable target. For the 2012-2014 LTIP grants, in the case of our CEO, the Compensation Committee imposed a one-year mandatory deferral on the grant in the event and to the extent the total award ultimately exceeds $10 million to comply with an annual limit on cash awards under our long-term incentive plan. Assessment of 2010-2012 Corporate Performance for LTIP Award The cash-based LTIP award for the 2010-2012 performance period measured corporate performance from January 1, 2010 through December 31, 2012, against financial goals established in January 2010. Since the award calculation is formulaic, neither the Compensation Committee nor management had any authority to adjust the final award. The final payout factor was calculated as follows:   Goal Result Performance Factor Weight of Performance Factor Weighted Payout Factor Total Stockholder Return Relative to TSR of S&P Industrials Index Companies 38.7 (53rd Percentile) % 117 % 50 % 58.5 % Adjusted Cash From Operations*   $ 10.0B   $ 10.9B 194 % 25 % 48.5 % ROIC* 16.0 % 16.3 % 175 % 25 % 43.8 % Total Payout Factor as a % of Target 150.8 % * See Appendix A for explanation of non-GAAP terms. 2013 LTI Grants The following summary shows the breakdown for the CEO, the CFO, and the business area executive vice presidents of our 2013-2015 long-term incentive awards between equity-based RSUs and PSUs as well as cash-based LTIP and summarizes a number of the other principal terms of the awards. % of Total LTI Form Principal Terms of Awards RSUs 30 Equity Grant Date Value cannot exceed • CEO - 0.2% of 2013 Adjusted Cash From Operations* • Other Elected Officers - 0.1% of 2013 Adjusted Cash From Operations* LTIP 20 Cash Minimum, target and maximum award levels based on relative TSR (50%), ROIC* (25%), and Adjusted Cash From Operations* (25%). ROIC* and Adjusted Cash From Operations* targets represent the amounts reflected in the Corporation’s long-range plan for the three-year performance period. Payout is capped at 200% of target. PSU 50 Equity Minimum, target and maximum award levels based on relative TSR (50%), ROIC* (25%), and Adjusted Cash From Operations* (25%). ROIC* and Adjusted Cash From Operations* targets represent the amounts reflected in the long-range plan for the three-year performance period. Payout is capped at 200% of target shares. The PSUs are also subject to the following additional caps: • 100% cap on PSU component measured by relative TSR if TSR is negative • 400% cap on value of PSU shares at time of payout * See Appendix A for explanation of non-GAAP terms. 2013 Proxy Statement       39 Back to Contents In making its determinations about the appropriate level of equity grants for 2013—including the determination to grant PSUs instead of stock options—the Compensation Committee took into consideration a variety of factors, including the number of awards outstanding and shares remaining available for issuance under the Corporation's equity incentive plans, the number of shares that would be issued under contemplated awards over the range of potential performance achievement, the total number of the Corporation's outstanding shares, and the resulting implications for stockholder dilution and the equity compensation program burn rate. The Compensation Committee believes that the Corporation's equity compensation program appropriately balances its objectives with those considerations. Setting Goals For LTI (LTIP and PSUs) We followed the same approach in setting the goals for adjusted cash from operations and ROIC for the LTIP and PSU grants as we used in developing our annual incentive performance goals. Our long-range planning process is used to establish the target, or 100% level of payment. In setting minimum and maximum levels of payment, we reviewed historical levels of performance against long-range plan commitments, and conducted sensitivity analyses on alternative outcomes focused on identifying likely maximum and minimum boundary performance levels. Levels between 100% and the minimum and maximum levels were derived using linear interpolation between the minimum and maximum levels. As with our annual incentive performance goals, LTIP and PSU payouts deteriorate more rapidly as we move from target level to the minimum payout level than they increase as we move from target level to maximum payout level. This asymmetry reflects the importance we place on meeting our financial commitments. The goals established by the Compensation Committee for ROIC and adjusted cash from operations for the 2012 RSUs and the 2012-2014 LTIP were lower than the corresponding goals for the 2011-2013 period. This reduction was not a lessening of the difficulty of achieving the targets but rather was intended to keep the level of difficulty constant in an increasingly challenging global economic environment where government spending levels are under pressure. The goals as approved were intended to take into account these economic and industry trends, appropriate opportunities for exceptional performance and minimize incentives for imprudent risk taking that could result from unrealistic goals. Because uncertainty existed at the time the goals were established and continues as to whether an agreement will be reached on sequestration or other budget cuts intended to replace sequestration, we did not forecast the specific effects of sequestration in our three-year, long-range plan or LTI goals. Depending upon the ultimate outcome of these initiatives, sequestration is likely to have the effect of making it more difficult for our executives to realize value from these arrangements for each of the open performance periods. The Compensation Committee does not have discretion to adjust LTIP and PSU targets or RSU performance requirements. Fixed Elements of Compensation Base Salary Compensation Element What it is Designed to Reward Why We Choose to Pay This Element and How it Aligns With Our Objectives Performance Measured Fixed or Variable/ Performance- Related Cash or Equity Base Salary • The objective of base salary is to provide a competitive rate of pay • Sustained high level of performance • Demonstrated success in meeting or exceeding key financial and other business objectives • Highly developed skills and abilities critical to success of the business • Experience and time in position • Competitive base salaries enable us to attract and retain top talent • Merit-based salary increases align pay to performance Individual Fixed Merit increases are Performance-Related Market adjustments may be applied to align base salary to the market Cash Base salaries are reviewed annually and may be increasedyear to reflect the executive’s individual contribution to business results and/or adjusted to align more appropriately with market. In establishing base salary for each NEO, we determined the market rate using comparator group company data and then evaluated whether the market value should be adjusted up or down based on differenceschange in the scope of his role after the NEO’s position as comparedacquisition of Sikorsky. 44www.lockheedmartin.com/investor Table of Contents Executive Compensation 2015 Long-Term Incentive Compensation The following summary shows the 2015 LTI compensation mix for the CEO, EVPs and Senior Vice Presidents (SVPs) and other principal terms of the awards. % of Target LTI Form Principal Terms of Awards PSUs 50 Equity Minimum, target and maximum award levels based on three-year: ●Relative TSR (50%) ●ROIC (25%) ●Performance Cash (25%) ●PSU awards are subject to the industryfollowing caps: – 200% of target shares – Up to 400% of stock price on date of grant times shares earned – Relative TSR measure capped at 100% if the Corporation’s TSR is negative LTIP 20 Cash Minimum, target and the comparator group companies generally. The Compensation Committee positions an executive’s base salary relativemaximum award levels based on three-year: ●Relative TSR (50%) ●ROIC (25%) ●Performance Cash (25%) ●LTIP payout is subject to the market rate based uponfollowing caps: –  200% of target amount –  Relative TSR measure capped at 100% if the Corporation’s TSR is negative RSUs 30 Equity RSUs vest 100% three years after the grant date. Forfeiture to extent grant date value exceeds: ●CEO – 0.2% of service, experience, performance, and critical skills. For example, Mr. Stevens’ base salary has not changed since 2008—his base salary reflects our previous pay practices, time in position, and performance over the entire period during which he served as our CEO. In the caseactual 2015 Performance Cash ●Other Elected Officers – 0.1% of Ms. Hewson, since it was anticipated in November 2012 when she was elected President and COO that she would hold that position only until January 1, 2013, the Compensation Committee and the Board established her base salary at the same level as her predecessor. See discussion of 2012 compensation decisions relating to Ms. Hewson on page 41.actual 2015 Performance Cash In determining the appropriate level of equity grants for 2015, the Compensation Committee took into consideration a variety of factors, including the number of awards outstanding and shares remaining available for issuance under the Corporation’s equity incentive plans, the number of shares that would be issued under contemplated awards over the range of potential performance achievement, the total number of the Corporation’s outstanding shares, the resulting implications for stockholder dilution and the number of shares granted to our executives year over year. PSU Awards (50% of the LTI award) PSU awards are calculated by multiplying the overall target LTI award value by the weighting assigned to the PSU element. The total PSU value is then multiplied by the weighting assigned to each PSU component (50% to Relative TSR, 25% to ROIC, 25% to Performance Cash). The number of PSUs granted is based on the fair value of each PSU element on the date of grant using the Monte Carlo simulation method for the Relative TSR component and the fair value on the date of grant discounted to reflect the deferral of dividends for ROIC and Performance Cash components. Each NEO’s PSU target number of shares is determined at the beginning of the three-year performance period and the actual number of shares earned at the end of the period is calculated based on our performance measured against the three financial metrics: Relative TSR, ROIC and Performance Cash. The number of shares granted at the end of the cycle can range from 0% to 200% of the applicable target number of shares. If TSR is negative at the end of the performance cycle, the ratingfor the Relative TSR measure is capped at 100%. In addition, the maximum value that can be earned under a PSU award is 400% of the stock price on the date of grant times the shares earned. The award calculation is formulaic and no adjustment can be made to the final number of shares granted. Participants also receive deferred dividend equivalents on the shares earned, which are only paid following vesting of the underlying shares. LTIP Awards (20% of the LTI award) LTIP awards are cash-based and are calculated by multiplying the overall target LTI award value by the weighting assigned to the LTIP element. Each NEO’s LTIP target is determined at the beginning of the three-year performance period and the actual award earned at the end of the period is calculated based on the same performance measures as those used for the PSUs: Relative TSR, ROIC and Performance Cash. Payouts can range from 0% to 200% of the applicable target. The award calculation is formulaic and no adjustment can be made to the final payout factor. For the 2015-2017 LTIP grants, any amount payable to a single participant in excess of $10 million will be forfeited. RSU Awards (30% of LTI award) RSU awards are calculated by multiplying the overall target LTI award value by the weighting assigned to the RSU element. The number of RSUs granted is determined by the fair value on the date of grant discounted to reflect deferral of dividends. 20132016 Proxy Statement       40 Back to Contents Indirect Elements45 Table of Contents Executive Compensation All RSUs awarded to NEOs in 2015 were subject to forfeiture to the extent the grant date value of the RSUs exceeded 0.2% of 2015 Performance Cash in the case of the CEO and 0.1% of 2015 Performance Cash in the case of each of the other NEOs. These performance requirements were satisfied and no forfeitures occurred. Deferred dividend equivalents are accrued during the vesting period and paid following vesting of the underlying shares. Selection of Performance Measures The LTI performance metrics approved by the Compensation Committee are measures that we believe most effectively support our long-term business and strategic goals and directly tie the long-term goals of our executive leadership team to the interests of our stockholders. The measurements used for the financial component of our 2015 annual incentive plan (Orders, Sales, Segment Operating Profit and Cash from Operations) also serve as the foundation for achieving our long-term goals such that we must consistently achieve or exceed the Corporation’s annual goals in order to achieve our LTI goals. The selected LTI performance metrics consist of Relative TSR (50% weight), ROIC (25% weight) and Performance Cash (25% weight). We chose these three metrics because we believe they represent the best measures of value creation for the Corporation over a long-term period. We also applied equal weighting to the market-based measure of value creation, TSR, to what we believe are the best internal measures of value creation, Performance Cash and ROIC. We selected Relative TSR to measure our performance against our industry peers in the S&P Aerospace Index. Because every industry faces different challenges and opportunities, we believe that comparing our TSR against peers facing a similar business environment is preferred to those outside our industry. While the S&P Aerospace Index is, in our judgment, the best index against which to compare our Relative TSR, we recognize that it does not perfectly correlate to the environment in which Lockheed Martin operates since some firms in the index are almost entirely in the commercial aerospace business, some are entirely government contractors and some have a mixture of the two businesses. Because the Relative TSR index is not perfectly aligned with the businesses in which Lockheed Martin operates and because any number of macro-economic factors that could affect market performance are beyond the control of the Corporation, we use ROIC and Performance Cash as internal measures that can be directly affected by management’s decisions. ROIC measures how effectively we employ our capital over time, while our Performance Cash over time provides the means for value creation through capital deployment. By including a cash measure in both our annual and long-term incentive plans, the plans also mitigate the risk of short-term cash strategies that do not provide long-term value. In tandem, we believe that these metrics drive the behaviors of our management team in ways that are intended to create the most value for our stockholders. Setting Goals for LTI (PSUs and LTIP) Our long-range planning process is used to establish the target (100% level of payment) for the Performance Cash and ROIC metrics in the PSU and LTIP grants. In setting minimum and maximum levels of payment, we reviewed historical levels of performance against long-range plan commitments, and conducted sensitivity analyses on alternative outcomes focused on identifying likely minimum and maximum boundary performance levels. Levels between 100% and the minimum and maximum levels were derived using linear interpolation between the performance hurdles. As with our annual incentive performance goals, PSU and LTIP payouts deteriorate more rapidly as we move from target level to the minimum payout level than they increase as we move from target level to maximum payout level. This asymmetry reflects the importance we place on meeting our financial commitments. The specific Performance Cash and ROIC target values for the 2015-2017 PSU and LTIP plans are not publicly disclosed at the time of grant due to the proprietary nature and competitive sensitivity of the information. However, the method used to calculate the awards will be based on actual performance compared to the Corporation’s 2015-2017 targets as shown below, which use straight-line interpolation between points. The Compensation Committee does not have discretion to adjust the results of the PSU and LTIP awards. 46www.lockheedmartin.com/investor Table of Contents Executive Compensation 2015-2017 Performance Goals Relative TSR (50%)*       Performance Cash (25%)       ROIC (25%) Relative TSR Percentile Payout Factor Performance Cash Metric Payout Factor       ROIC Performance Metric Payout Factor 75th– 100th 200% Plan + ≥ $2.0B 200% Plan + ≥ 160 bps 200% 60th 150% Plan + $1.5B 175% Plan + 120 bps 175% 50th 100% (Target) Plan + $1.0B 150% Plan + 80 bps 150% 40th 50%   Plan + $0.5B 125% Plan + 40 bps 125% 35th 25%   Plan * 100%   Plan 100% <35th 0% Plan - $0.2B 75%   Plan - 10 bps 75% * Relative TSR performance is measured against our industry peers in the S&P Aerospace Index. Plan - $0.5B 50% Plan - 20 bps 50%   Plan - $0.7B 25% Plan - 30 bps 25%   Below Plan - $0.7B   0%   Below Plan - 30 bps   0% 2013-2015 LTIP and PSU Awards The cash-based LTIP and share-based PSU payouts for the three-year performance period ended December 31, 2015, were calculated by comparing actual corporate performance for each metric for the period January 1, 2013 through December 31, 2015, against a table of payment levels from 0% to 200% (with the 100%payout level being considered target) established at the beginning of the performance period in January 2013. The award calculation is formulaic and no adjustment can be made to the final payout factor. The S&P Aerospace Index was used for the 2013-2015 Relative TSR goal, since that Index was specified at the time the awards were made. Measure       Performance Target       Performance Result       Weighting       Payout Factor Relative TSR 50thPercentile 90thPercentile 50% 200.0% Performance Cash $13.00B $14.95B 25% 197.3% ROIC 15.7% 15.9% 25% 112.5% 2013-2015 LTIP Payouts Based on a weighted payout factor of 177.4%, the following table shows the payouts under the 2013-2015 LTIP. 2013–2015 LTIP NEO Target ($)       Payout ($) Ms. Hewson $ 2,040,000 $ 3,618,960 Mr. Tanner $ 738,000 $ 1,309,212 Mr. Bennett $ 450,000 $ 798,300 Mr. Carvalho1 $ 479,000 $ 849,746 Ms. Lavan1 $ 965,000 $ 1,711,910 (1)   Mr. Carvalho’s and Ms. Lavan’s LTIP target awards represented 40% of Executive Compensation In addition to base salary and annual andtheir 2013 long-term incentive compensation, we offer agrant. 2016 Proxy Statement 47 Table of Contents Executive Compensation 2013-2015 PSU Awards The 2013-2015 target PSU award value was allocated to each performance measure based on the pre-defined weightings, namely 50% to Relative TSR, 25% to ROIC, and 25% to Performance Cash. The number of PSUs granted for each element is based on the fair value on the date of grant using Monte Carlo simulationmethod for the Relative TSR component and the fair value on the date of grant discounted to reflect the deferral of dividends for ROIC and Performance Cash components. PSU awards earned are calculated by multiplying the payout factor for each performance metric by the target number of units granted. The actual value realized by the NEO also depends on the price of our stock which may be higher or lower than the grant date fair value.  2013-2015 Target PSUs (#) Total Shares Distributed/ Earned NEO Relative TSR       Performance Cash       ROIC Ms. Hewson 41,715 14,287 14,288       127,693 Mr. Tanner 15,083 5,166 5,166 46,171 Ms. Bennett 9,200 3,151 3,151 28,162 Mr. Carvalho1 983 336 337 3,009 Ms. Lavan1 1,972 675 675 6,036 (1)   Mr. Carvalho’s and Ms. Lavan’s PSU target awards represented 10% of their 2013 long-term incentive grant. Benefit, Retirement and Perquisite Programs In addition to base salary and annual and long-term incentive compensation, we offer a number of other compensatory arrangements to our executive officers. These indirect elements of executive compensation are not performance-based. The purpose for offering these benefits is to provide an overall total rewards package that ensures security of executives, are for business-related purposes, and are competitive with the other companies with which we compete for talent. Set forth below is a summary of the benefit, retirement and perquisite programs available to our executive officers. These indirect elements of executive compensation are not performance based and are offered as part of the overall compensation packages to ensure that the package is competitive with the other companies with which we compete for talent. Set forth below is a summary of the principal indirect elements of compensation earned by our NEOs. Element Description •Health, Welfare and Retirement Benefits Benefits – Our NEOs are eligible for savings, pension, medical and life insurance benefits under the plans available to salaried, non-union employees. We also make available supplemental pension and savings plans to employees (including the NEOs) to make up for benefits that otherwise would be unavailable due to Internal Revenue Service (“IRS”)(IRS) limits on qualified plans. These plans are restorative and do not provide an enhanced benefit. We also offer a plan for the deferral of short-term and certain long-term incentive compensation, which allows our executives to defer all or a portion of their incentive compensation as part of their overall financial planning. All NEOs are eligible for four weeks of vacation.vacation annually. •In 2014, we announced that accruals for all employees (including the NEOs) under our defined benefit plan will be frozen in two steps, with compensation accruals frozen on January 1, 2016, and service accruals frozen on January 1, 2020. Thereafter, retirement benefits will be earned through defined contribution plans. Perquisites and Security– We provide limited perquisites as a retention and recruiting and retention tool and to ensureprovide for the health, safety and safetybusiness needs of our key executives. The perquisites provided to NEOs for 20122015 are described in footnotes to the Summary Compensation Table located on page 51.56. For security reasons, our Board has directed our CEO and our COO to use the corporate aircraft for personal travel. As an additional element of our security program, we provide home security to certain executives. We believe this approach is consistent with security generally provided to corporate executives in public companies in our industry. We also have a corporate policy to provide any employee who is the subject of a credible and specific threat on account of his or her employment at the Corporation with security that is appropriate toGiven the nature and extent of the threat.our business, additional security may be provided for travel in high-risk areas or to address particular situations. The Board believes it is important to provide this protection due to the nature of our defense business and because it believes that an employee should not be placed at personal risk due to his or her association with the Corporation’s business. In the event of a threat to an executive officer, the Classified Business and Security Committee reviews and approves the security recommended by our Chief Security Officer. We believe that providing personal security in response to threats arising out of employment by the Corporation is business-related. • 48www.lockheedmartin.com/investor Table of Contents Executive Compensation Element Description Tax Assistance– We do not have agreements or severance arrangements that provide tax assistancegross-ups (tax assistance) for excise taxes imposed as a result of a change in control. WeIn 2015, we provided tax assistance in 2012 for taxable business association expenses, security expenses and travel expenses for a family member accompanying a NEO for a business reason. In addition, we paid an amount estimated to cover the income tax imposed on employees (including the NEOs) who traveled out of their home state for business and became subject to income tax in another state due to the business travel. These items are reported in the “All Other Compensation” column of our Summary Compensation Table on page 4954 and are further identified in the chart included in the footnote to that table on page 52.57. The IRS requires that the executive pay income tax for these items even though the executive receives no cash in connection with the item. Tax assistance for these perquisites took the form of additional payments and was made for the purposes of ensuring that these perquisites and the associated tax assistance were economically neutral to the NEOs. We believe the items for which we provide tax assistance are business-related and the associated tax liability imposed on the executive would not have been incurred had they not been business-related.unless business reasons required the items to be provided. Management Transition 2016 Compensation ActionsDecisions 2016 Base Salary The Compensation Committee approved the following 2016 salary increases based on the executive’s performance, time in position and movement in the market rate. NEO 2015 Base Salary ($) 2016 Base Salary ($) % Increase Ms. Hewson         1,565,000         1,645,000         5% Mr. Tanner 925,000 970,000 5% Mr. Bennett 790,000 830,000 5% Mr. Carvalho 790,000 830,000 5% Ms. Lavan 735,000 770,000 5% 2016 Annual Incentive Plan Following various conversations with our stockholders, Board members and plan participants concerning the complexity in design features of our annual incentive program, the Compensation Committee engaged Meridian and management engaged Willis Towers Watson to review the design of our annual incentive plan to better align with market best practice and reduce complexity. We also sought stockholder input on the proposed design changes as part of our ongoing stockholder outreach program. Our stockholders were supportive of the new design. In particular, the simplified plan design in tandem with the enhanced weighting on financial criteria, was viewed positively by our institutional stockholders. In the September 2015 meeting, the Compensation Committee approved amendments to the annual incentive plan, effective for 2016 annual incentives, to (i) eliminate the Business Segment and Individual performance factors for the CEO and her direct reports (including the NEOs); (ii) increase the weighting of the Financialcomponent from 60% to 70% under the Enterprise Performance factor, with the remaining 30% of the Enterprise Performance factor to be based on key strategic and operational goals; and (iii) remove Orders from the financial metric under the Enterprise component given the timing issues surrounding Orders in our industry and because they are considered under strategic and operational goals, as manifested in key new business won or retained. The Compensation Committee, in collaboration with the executive leadership team, will continue to set pre-established measures at the beginning of the performance cycle, which will be disclosed to stockholders prospectively, similar to our current practice. The new design is intended to: ● Appointment of Marillyn A. Hewson as President and Chief Operating Officer in November 2012 and Chief Executive Officer in January 2013 Immediately afterAlign with stockholder interests given the resignation of Christopher E. Kubasik, the Board elected Marillyn A. Hewson as President and COO. Following her election, the Compensation Committee recommended and the Board approved an increase in Ms. Hewson’s annual base salary from $700,000 to $1,100,000 and an increase in her target annual incentive percentage from 90% to 125%. Both changes were effective November 9, 2012. The new base salary and target percentage wereemphasis on key metrics that drive performance at the same level as previously approvedenterprise level; ● Support a more collaborative team approach among the CEO’s direct reports, including our NEOs; and ● Enhance line of sight and goal congruence through a simplified design for Mr. Kubasik. plan participants. 2016 Proxy Statement 49 Table of Contents Executive Compensation The change in the annual incentive formula and the weightings underlying the Enterprise component for NEOs are shown below: Previous Design Enterprise Component x Business Area Component x Individual Component 60% FINANCIAL 20% STRATEGIC 20% OPERATIONAL New Design 100% Enterprise Component 70% FINANCIAL 30% STRATEGIC & OPERATIONAL The Board or Compensation Committee may adjust a NEO’s payout at their discretion. As in prior years, the Compensation Committee retains discretion in setting target levels for participants, choosing and approving metrics, assigning weighting to the metrics and assessing performance. Under the terms of the annual incentive program, as amended, the CEO’s bonus still may not exceed 0.3% of Performance Cash from operations for the plan year and the bonus for each of the other NEOs may not exceed 0.2% of Performance Cash from operations for the plan year. These caps were not modified and remain consistent with the prior plan features. Similarly, annual incentive payouts for any participant may not exceed 200% of the target award. No changes were made to annual incentive target percentages for any of the NEOs for 2016 other than for our EVP & CFO, which was increased to 110% of his base salary to better align with the 2016 market rate (50th percentile). 2016 Annual Incentive Metrics and Goals The Compensation Committee approved the key corporate commitments set forth below for purposes of assessing performance in 2016. 2016 Enterprise Financial Goals (Weighted 70%) The financial commitments for the Enterprise Performance Factor are consistent with our long-range plan commitments, and are the same ranges we provided as public guidance in January 2016 in our year-end earnings release. These commitments for 2016 are set forth below. 2016 Commitments Weighting 2016 Goal ($M) Sales 20% 49,500 – 51,000 Segment Operating Profit 40% 4,900 – 5,050 Cash from Operations 40% ≥5,300 For the purposes of assessing performance under our annual incentive program, results may be adjusted from reported amounts for the incremental benefits or impacts associated with non-recurring items, such as acquisitions or divestitures. Our 2016 public guidance assumed a full year of operations of our IS&GS business segment. The Leidos transaction is expected to be completed in the third or fourth quarter of 2016 and an adjustment could be made to take into account the completion of the transaction. Cash from Operations results have been adjusted in prior years for unplanned pension contributions so that the impact on incentive compensation is not a factor in the decision to make the additional pension contribution. 50www.lockheedmartin.com/investor Table of Contents Executive Compensation 2016 Enterprise Strategic and Operational Goals (Weighted 30%) The strategic and operational commitments for the Enterprise Performance Factor for 2016 are set forth below: ● Secure key Focus and Keep Sold Program wins. ● Achieve Mission Success® milestones. ● Execute programs to achieve customer satisfaction and increase stockholder value. ● Review portfolio on an ongoing basis to maximize stockholder value, to include mergers and acquisition activity, execution of the strategic review and appropriate technology and other enterprise investments. ● Attract, develop and retain the workforce needed to deliver commitments to customers and stockholders. 2016 Long-Term Incentive Award Opportunities The Compensation Committee approved 2016 LTI award opportunities for all executive officers commensurate with their respective 2016 LTI market rate, the executive’s performance and time in position. For 2016, the LTI award opportunity for the CEO and the other NEOs is allocated 50% toward PSUs, 20% toward LTIP and 30% toward RSUs. The terms of the 2016-2018 RSU grants are the same as for the 2015-2017 RSUs awards (see page 45), other than the following changes: ● The changegrants will vest on a pro-rata basis in Ms. Hewson’s annual incentive target applied onlythe event of a divestiture (rather than accelerated vesting), unless the other party to the portion of 2012 in which she served as Presidentdivestiture assumes the awards fully and COO. As a result, her annual incentive bonus for 2012 service was pro-rated so that approximately ten months were based on her original target rate of 90% as Executive Vice President of Electronic Systems and approximately two months were basedcontinues the awards on the new target ratesame terms. ● The awards will be forfeited if the executive is terminated for misconduct, even if retirement eligible. The same measures and approach used for the 2015-2017 PSU and LTIP awards (see page 45) will be used to determine the 2016-2018 PSU and LTIP awards, other than the following: ● The targets for Performance Cash and ROIC will be adjusted to exclude the impact of 125% as President and COO. Consistent with the plan terms, Ms. Hewson’s annual incentive bonus for 2012 was calculated using her base salary in effect on December 1, 2012. The Compensation Committee also recommended and the Board approved a second increase in Ms. Hewson’s base salary to $1,375,000 and target annual incentive percentage to 175%. This increase was effective January 1, 2013, the date on which Ms. Hewson became CEO and President. The Compensation Committee based its decision for her 2013 compensation on its previously summarized pay philosophy that a newly promoted executive should be paid a base salary equal to 85% of the market-rate base salary for comparable positions with our comparator group of companies and an annual incentive target equal to 100% of the market-rate target percentage within the comparator group. Compensation for the Executive Chairman and Strategic Advisoracquisition or divestiture valued at more than $1 billion. (Note: this provision does not apply to the CEO in 2013 During 2012, the Corporation disclosed that Mr. Stevens intended to step down at the end of the year as CEO, but had indicated a willingness, subject to election by the Board and our stockholders, to remain Chairman of the Board through December 31, 2013. Following the resignation of Mr. Kubasik, the Board elected Mr. Stevens to serve as Executive Chairman, effective January 1, 2013. In addition, Mr. Stevens agreed to remain an employee in the position of Strategic Advisor to the CEO through February 28, 2014, which represented an expansion of the transition role that originally was contemplated by the Board and Mr. Stevens. In November 2012, the Compensation Committee recommended and the Board approved a transition agreement with Mr. Stevens that specified, among other things, the services to be provided by Mr. Stevens as Strategic Advisor to the CEO and the compensation to be paid to him for those services. Pursuant to the transition agreement, as Strategic Advisor to the CEO, Mr. Stevens: • Assists in the transition of management responsibilities over the day-to-day operation of the Corporation to Ms. Hewson; • Provides counsel to Ms. Hewson on a variety of historical, strategic, and policy issues; • Supports the transition of responsibilities for the management of the Corporation to Ms. Hewson by facilitating introductions and establishing relationships with customers, members of Congress, investors, and other stakeholders; 2013 Proxy Statement       41 Back to Contents • Represents the Corporation in a number of forums regarding issues facing the aerospace and defense industry; and • Performs other duties at the request of the Board2014-2016 or Ms. Hewson, including customer and congressional outreach and strategic and talent development.2015-2017 awards.) Mr. Stevens will receive the following compensation for his services as Strategic Advisor to the CEO in 2013: • Annual base salary of $1.8 million; • Eligibility for an annual incentive bonus target of 150%; • Payment, if any, earned under his 2011-2013 LTIP grant; and • Continued participation in employee benefit plans such as 401(k), pension, and insurance. For January and February 2014, as Strategic Advisor Mr. Stevens will receive: • Base salary of $100,000 per month or $200,000 in the aggregate; • Payment, if any, earned under the 2012-2014 LTIP (prorated to reflect service for only 26 months of the three-year cycle); and • Continued participation in employee benefit plans such as 401(k), pension, and insurance. ● The transition agreement provides for a lower rate of pay in 2014 because it is anticipated that the transitionawards will be substantially completed in 2013 and, as a result, Mr. Stevens will have a more limited role in 2014. The transition agreement further provides that,forfeited if Mr. Stevens is still an employee of the Corporation on February 28, 2014, in lieu of receiving equity grants for his service in 2013, the Corporation will pay him $2 million, contingent upon execution of a three-year non-competition agreement pursuant to which Mr. Stevens will agree that he will not accept employment from companies that the Corporation designates as competitors or interfere with, disrupt, or attempt to disrupt the relationship, contractual or otherwise, between the Corporation and any customer, supplier, or employee. It is anticipated that the contemplated non-competition agreement will apply to more companies than Mr. Stevens’ existing non-competition agreements. Through December 31, 2014, Mr. Stevens will be eligible under the transition agreement for an executive physical, office and technical and administrative support, and business and professional subscriptions. The transition agreement states that the Compensation Committee will re-evaluate on an annual basis any continuation of office support and subscriptions after December 31, 2014. Mr. Stevens also is authorized under the transition agreement to use a corporate aircraft for business and personal use through December 31, 2014. In addition, the Corporation will provide Mr. Stevens with personal security through December 31, 2014; thereafter, personal security will be based upon an assessment of the degree to which Mr. Stevens continues to be associated with the Corporation and the assessed level of risk. To the extent that the personal security is taxable, the Corporation will provide tax assistance. In determining the compensation for Mr. Stevens’ service as Strategic Advisor for 2013 and 2014 and approving the transition agreement, the Compensation Committee considered a variety of factors and input from its independent consultant and concluded that the level of compensation was appropriate. In particular, the Compensation Committee considered that: • The services to be performed by Mr. Stevens as Strategic Advisor will provide value to the Corporation in the management transition and in maintaining ongoing relationships with customers, Congress, investors, and other stakeholders; • Mr. Stevens’ role in the transition of management of the Corporation will require a time commitment significantly beyond that normally associated with service as Chairman of the Board; • Mr. Stevens is uniquely qualified to provide the services contemplated due to his knowledge of the Corporation and its customers, investors, and other stakeholders; • The compensation represents a reduction in compensation from prior years due to the decision not to provide long-term incentive grants for 2013 or 2014; • Based on a review by the Compensation Committee’s independent consultant of the proposed compensation relative to other publicly reported compensation levels, the compensation to be paid to Mr. Stevens is consistent with compensation publicly reported by other companies as paid in similar circumstances; and • Consistent with its policy of not providing board fees to employee directors, Mr. Stevens will not receive a director or chairman fee for his services as Executive Chairman of the Board. Separation Agreement for Christopher E. Kubasik In connection with his resignation, the Corporation and Mr. Kubasik entered into a separation agreement pursuant to which the Corporation agreed to pay Mr. Kubasik $3.5 million as a separation payment. As a result of his resignation, Mr. Kubasik did not receive a separate bonus for 2012 under the Corporation’s annual incentive plan. He forfeited all unvested RSUs, stock options, and LTIP awards. The Corporation entered into the separation agreement with Mr. Kubasik after reviewing actions taken by other companies in similar situations and concluding that it was in the best interest of the Corporation to reach a negotiated settlement with Mr. Kubasik concerning the terms of his exit from the Corporation. The principal factors supporting the conclusion reached by the Board were: • The elimination of the risk of protracted litigation over his exit; • The ability to secure a release of claims by Mr. Kubasik; • The reaffirmation of his non-competition, non-solicitation, proprietary information, non-disparagement, and cooperation obligations to the Corporation; • The fact that the amount paid was substantially less than amounts paid by other companies in similar situations (which in some instances was tens of millions of dollars and included accelerated vesting of LTI awards); and • The desire to reach a prompt and comprehensive settlement. 2013 Proxy Statement       42 Back to Contents Compensation Philosophy Market-Rate Target Compensation with Compensation Earned Based on Performance and Increases in Equity Value As a starting point, for each of the principal elements of executive compensation we define the “market rate” as the size-adjusted 50th percentile of the comparator group of companies we have identified for compensation purposes. We then in limited circumstances may adjust this market rate of compensation to reflect differences in an executive’s job scope relative to the industry or the comparator group of companies. The target level of compensation we assign to an executive is determined based on a variety of factors including knowledge, skills, performance, or tenureterminated for misconduct, even if retirement eligible. For the 2016-2018 LTIP grants, any amount payable to a single participant in excess of $10 million will be forfeited. Other Corporate Governance Considerations in position. Actual incentive compensation earned by executives is either above or below the target level we set for each executive based on our performance against pre-established goals and our relative TSR—performance in excess of the target goals results in above-target payments and performance below the target goals results in below-target payments or no payment. To further support the Corporation’s long-term success and the achievement of sustainable long-term total return to our stockholders, we have structured the various elements of executive compensation and the mix of those elements in a way that the Compensation Committee and the Board believe are consistent with good corporate governance practices. How We Select the Comparator Group of Companies for Market-Rate Purposes and for Performance Purposes Companies for Market-Rate Determination To establish the market rate for each of the principal elements of compensation, we select a group of publicly-traded companies (our comparator group) to identify market values for all pay elements. Because the number of comparable companies with our revenue level is not extensive, we include companies in our comparator group based on a number of factors, including: • Similarity in size (revenue), which is a high correlative factor in determining pay—generally between one-half and two times our annual revenue. • Participation in the Aon Hewitt executive compensation survey (our primary source for data in making market comparison)—enables us to obtain reliable data for market comparisons. • Industrial companies and, to the extent possible, companies that compete in the aerospace and defense industry—enables comparison with companies that face similar overall labor costs. • Companies that are included in the executive talent pool we consider—competitive conditions and a limited universe of comparably sized aerospace and defense companies require us to recruit outside the core aerospace and defense companies and to recruit from a broad range of disciplines (for example, finance, human resources, supply chain management) to obtain individuals with a broad range of skills that are transferable across industries. • Companies with comparable executive officer positions or management structures—enables more appropriate compensation comparisons. We do not consider market capitalization in selecting our comparator group because market capitalization can change quickly as industries and companies go in and out of favor as investments and as companies restructure. Furthermore, market capitalization may not reflect the complexity of the business and may be more reflective of future expectations about a particular company’s growth potential rather than its actual financial performance or complexity. The data presented to and considered by the Compensation Committee regarding the level of compensation at the Corporation's comparator group of peer companies was developed from the proprietary results of the Aon Hewitt executive compensation survey in which all of the comparator group companies participate. 2013 Proxy Statement       43 Back to Contents At the beginning of 2012, based on the objectives and criteria summarized above, we selected the following companies as our comparator group for purposes of establishing market-rate compensation for each of the principal elements of our compensation program: Company Comparator Group Rationale A&D Industry Similarity (size, revenue, geographic presence, business model) Comparable Executive Officer Positions (scope, responsibilities) Participation in Executive Compensation Survey 3M Company The Boeing Company Caterpillar Inc. Cisco Systems, Inc. Deere & Company The Dow Chemical Company E. I. du Pont de Nemours & Company FedEx Corporation General Dynamics Corporation Honeywell International Inc. Intel Corporation International Paper Company Johnson Controls, Inc. Merck & Co., Inc. Northrop Grumman Corporation Raytheon Company United Parcel Service, Inc. United Technologies Corporation Valero Energy Corporation Our 2011 revenue represented the 57th percentile of our comparator group. To further account for differences in the size of the companies making up our comparator group, management’s compensation consultant, Aon Hewitt, conducted a regression analysis (a statistical technique that adjusts the compensation data for differences in our comparator group company revenues) thereby allowing comparison of compensation levels to similarly sized companies. Valero Energy Corporation and Merck & Co., Inc. ceased participation in the executive compensation surveys available to us and will not be included in our comparator group for 2013 compensation decisions. 2013 Proxy Statement       44 Back to Contents Companies for TSR Performance Evaluation Because the comparator group of companies that we use for purposes of establishing a market rate for specific elements of compensation includes companies in different industries and TSR can vary significantly by industry sector, we use a different group of companies for purposes of determining our relative TSR for LTI performance measurement. At the beginning of 2012, for the 2012-2014 performance period under the Corporation’s LTIP, we selected the following companies which comprise the S&P Aerospace & Defense Index as our comparator group for purposes of relative TSR performance measurement. We will use the same group for the 2013-2015 LTIP and PSU awards. Company TSR Comparator Group Rationale S&P A&D Company Similarity of Business Products Stock Correlation The Boeing Company General Dynamics Corporation Goodrich Corporation (acquired by United Technologies in 2013) Honeywell International Inc. L3 Communications Holdings, Inc. Northrop Grumman Corporation Precision Castparts Corp. Raytheon Company Rockwell Collins, Inc. Textron Inc. United Technologies Corporation How We Allocate Compensation Opportunities Policy for Allocating Between Fixed and Variable Compensation We believe that, to the maximum extent possible, the compensation opportunities of our executives should be variable and the variable elements of the compensation package should tie to the Corporation’s long-term success and the achievement of sustainable long-term total return to our stockholders. The following chart shows the allocation of the 2012 compensation of our CEO between variable and fixed compensation. Policy for Allocating Between Short- and Long-Term Compensation We believe that the mix between short-term and long-term compensation should be balanced and be derived from the market rate. Linking both our cash-based and our equity-based long-term incentives to three-year performance and vesting periods allows the Corporation indirectly to tie the value realized by our executives to longer-term sustained levels of performance and better aligns with stockholders’ interests. The following chart shows the allocation of the 2012 compensation of our CEO between long-term and short-term compensation. 2013 Proxy Statement       45 Back to Contents Policy for Allocating Between Cash Compensation and Equity Incentives Equity compensation creates an identity of interest between executives and our stockholders and we, therefore, seek to maximize the portion of our compensation opportunities that is available in the form of equity incentives. Since the base salary and annual incentive compensation elements of compensation are paid in cash consistent with the practices of our comparator group of companies, we rely on the long-term incentive compensation element to provide the equity incentive component of our compensation package. Subject to the constraints of our long-term incentive plans and the desires of the Compensation Committee and the Board not to create excessive dilution to our stockholders, after giving consideration to the mix of cash and equity compensation paid by our comparator group of companies, we seek to pay the majority of our long-term incentive compensation in the form of equity incentives. The following chart shows the allocation of the 2012 compensation of our CEO between equity and cash incentives based on the value we attributed to the equity grants for compensation purposes. Consideration of Internal Pay Equity Consistent with its past practice, at its January 2012 and 2013 meetings, the Compensation Committee reviewed the pay relationship of the NEOs. This material was presented to the Compensation Committee by the independent compensation consultant at the time. Because the principal elements of our compensation program are based on the market rate, our internal pay equity reflects the relative pay of our comparator group of companies. Compensation and Risk At the Compensation Committee’s request, Steven Hall & Partners (“Steven Hall”), its independent compensation consultant prior to June 2012, performed a compensation risk assessment and reported to the Compensation Committee at its January 2012 meeting that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Corporation. Also at the Compensation Committee’s request, Meridian Compensation Partners, LLC (“Meridian”) performed an assessment of the changes to the 2013 compensation programs and reported to the Compensation Committee at the January 2013 meeting that the changes do not create risks that are reasonably likely to have a material adverse effect on the Corporation. Our Decision-Making Process To implement the Corporation’s compensation philosophy and to ensure that all information relevant to individual compensation decisions is taken into account, the Compensation Committee seeks input from our CEO and other members of our management team as well as input and advice from the independent compensation consultant it has retained for this purpose. 2013 Proxy Statement       46 Back to Contents The following summary sets forth the responsibilities of various parties in connection with the implementation of our compensation program: Responsibilities Compensation Committee: Anne Stevens, Chair Rosalind G. Brewer David B. Burritt Douglas H. McCorkindale • Reviews and approves corporate goals and objectives relevant to the CEO’s compensation. • Evaluates the performance of the CEO and each NEO against specified objectives. • Recommends to the Board the compensation of the CEO and each NEO’s compensation level. • Approves performance goals for annual and long-term incentive compensation. • Reviews proposed candidates for senior executive positions and recommends their compensation to the Board. • Approves equity and other long-term incentive grants. This authority resides solely in the Compensation Committee (subject to ratification by the Board) and has not been delegated to any member of management. Independent Members of Board of Directors • Reviews and approves the compensation of the CEO and each of his or her direct reports, including the NEOs. • Reviews with management the succession plan and executive talent pool at least annually. Independent Compensation Consultant: Meridian Compensation Partners, LLC • Provides input to the Compensation Committee’s decision making on executive compensation matters in light of the Corporation’s business strategy, pay philosophy, prevailing market practices, stockholder interests, and relevant regulatory mandates. • Provides advice on executive pay philosophy and relevant peer groups. • Provides design advice for short-term and long-term incentive vehicles and other compensation and benefit programs, to meet our objectives. • Provides input to and interprets the results of, or conducts, competitive market studies as background against which the Compensation Committee can consider CEO and senior management compensation. • Reviews and provides an independent assessment of the data and materials presented by management to the Compensation Committee. • Participates in Compensation Committee meetings as requested and communicates with the Chair of the Compensation Committee between meetings. • Apprises the Compensation Committee about emerging best practices and changes in the regulatory and corporate governance environment. • Reviews the CD&A and provides input to the Compensation Committee. Management • The CEO reviews and approves corporate goals and objectives and provides feedback on compensation and performance of the other NEOs and other senior management. • The Executive Vice President and CFO develops, for consideration and approval by the Compensation Committee, internal financial goals for both our annual and LTI programs, which are reviewed by the CEO before presentation to the Compensation Committee. • The Senior Vice President, Human Resources (“SVP HR”), presents a schedule with a market rate for each compensation element (base salary, annual bonus, and long-term incentives) and consults with the CEO on recommended compensation for senior executives. The SVP HR does not recommend a specific amount of compensation for the CEO. Management’s Compensation Consultant: Aon Hewitt • Provides management with market data and compensation practices from our comparator group. • Performs market research and other analyses to assist management in making plan design recommendations to the Compensation Committee and the Board. Our Use of Independent Compensation Consultants The Compensation Committee believes that an independent compensation consultant can provide important information about market practices, the types and amounts of compensation offered to executives generally, and the role of corporate governance considerations in making compensation decisions. The Compensation Committee’s charter authorizes it to retain any outside advisors that it believes are appropriate to assist in evaluating executive compensation. Prior to June 2012, Steven Hall had served as independent consultant to the Compensation Committee and reported directly to the Compensation Committee. In June 2012, the Compensation Committee decided not to continue its relationship with Steven Hall and instead retained Meridian. The change in compensation consultants was part of our broader effort to develop another perspective on the Corporation's compensation programs in light of the 68% favorable stockholder response to our 2011 and 2012 advisory Say-on-Pay votes which was lower than the average favorable vote in the S&P 500. Meridian's retention by the Compensation Committee was not due to a disagreement with Steven Hall over its advice or other services. Meridian reports directly to the Compensation Committee. Our Use of Independent Compensation Consultants The independent compensation consultant provides important information about market practices, the types and amounts of compensation offered to executives generally and the role of corporate governance considerations in making compensation decisions. The Compensation Committee’s charter authorizes it to retain outside advisors that it believes are appropriate to assist in evaluating executive compensation. For 2015, the Compensation Committee continued to retain Meridian as an independent compensation consultant. In connection with its retention of Meridian, the Compensation Committee considered the following factors in assessing Meridian’s independence: • ● Meridian wasdoes not performingperform other services for the Corporation. • ● The compensation paid to Meridian is less than 2%1% of Meridian’s revenues. • ● Meridian has client information, business ethics and insider trading and stock ownership policies, which are designed to avoid conflicts of interest. • ● Meridian employees supporting the engagement do not own Lockheed Martin stock.securities. • ● Meridian employees supporting the engagement have no business or personal relationships with members of the Compensation Committee or with any Lockheed Martin executive officer. In connection with its engagement of Meridian, the Compensation Committee also noted and considered the fact that, in early 2012 prior to its engagement by the Compensation Committee, Meridian had been requested by management to provide specified market information from publicly available sources regarding the compensation of boards of directors. Meridian was not asked to provide, and did not provide, any recommendation for modifying the Board’s compensation or any other advice to management or the Board in that regard. 20132016 Proxy Statement       47 Back to Contents At the time it hired Meridian, the Compensation Committee concluded that Meridian was independent. The Committee had previously received information on Steven Hall from which it had concluded that Steven Hall also was independent.51 The nature and scope of both Steven Hall’s and Meridian’s engagement were determined by the Compensation Committee and were not limited in any way by management. The consultants were hired to support the Compensation Committee’s work by providing advice and counsel on each of the principal elements of compensation, evaluating the Corporation’s approach to establishing appropriate target levels for each of these elements of compensation, and providing input on any other compensation-related matters or corporate governance considerations they believed were appropriate under the circumstances. Other Corporate Governance Considerations in Compensation Tax Deductibility of Executive Compensation The Corporation’s tax deduction for compensation paid to each of the NEOs who are subject to the compensation deduction limits of Section 162(m) of the Internal Revenue Code is capped at $1 million. Section 162(m) provides an exemption from the $1 million cap for compensation qualifying as “performance-based.” We intend for our annual incentive and LTI programs to qualify as “performance-based” compensation exempt from the $1 million cap on deductibility. For our annual incentive program and RSU grants to all NEOs, we establish caps on maximum payouts at the beginning of the performance period using an objective formula based on cash flow. The formula is a cap that serves to set maximum levels of payment and does not establish entitlement to payment at the level of the cap. Payments to NEOs were less than the caps generated by the formula. For our LTIP and PSU grants, the level of performance determines the payout level. Table of Contents Executive Compensation At its February 2016 meeting, the Compensation Committee renewed the engagement of Meridian. At that time, Meridian confirmed the continuing validity of each of the factors described above. The nature and scope of Meridian’s engagement was determined by the Compensation Committee and not limited in any way by management. A description of the services provided by Meridian can be found on page 36. Policy Regarding Timing of Equity Grants We have a corporate policy statement concerning the grant of equity awards. Under that policy: • ● The Compensation Committee is responsible for determining the grant date of all equity awards. • ● No equity award may be backdated. The grant date will not be earlier than the date the Compensation Committee approves the equity award. A future date may be used if, among other reasons, the Compensation Committee’s action occurs in proximity to the release of earnings or during a trading blackout period. • ● Proposed equity awards are presented to the Compensation Committee in January of each year. Off-cycle awards may be considered in the Compensation Committee’s discretion in special circumstances, which may include hiring, retention or acquisition transactions. In addition, our existing incentive performance award plan prohibits repricing of stock options or paying cash for underwater stock options. Clawback and Other Protective Provisions The Governance Guidelines include a clawback policy. Under the policy (as incorporated in our award agreements), if the Board determines that an officer’s intentional misconduct, gross negligence or failure to report such acts by another person: ● The closing pricewas a contributing factor in requiring us to restate any of our financial statements; or ● constituted fraud, bribery or another illegal act, or contributed to another person’s fraud, bribery or other illegal act, which adversely impacted our financial position or reputation; the Board shall take such action as it deems in the best interests of the Corporation and necessary to remedy the misconduct and prevent its recurrence. Among other actions, the Board may seek to recover or require reimbursement of any amount awarded to the officer after January 1, 2008, in the form of an annual incentive bonus or LTI award. The clawback policy is included in our annual incentive plan and in the award agreements for the RSUs, stock options, PSUs and LTIP. In the event the Board recoups incentive compensation under our policy, management intends to disclose the aggregate amount of incentive compensation recovered, so long as the underlying event has already been publicly disclosed in our filings with the SEC. This disclosure would appear in the proxy statement following any such Board action and would provide the aggregate amount of recovery for each event if there is more than one applicable event. The award agreements for the NEOs also contain post-employment restrictive covenants. The post-employment restrictions were incorporated into all executive level award agreements beginning in 2011. There were no clawback actions taken by the Board during 2015. Anti-Hedging and Pledging Policy Our policies prohibit hedging and pledging of Lockheed Martin stock by all directors, officers and employees. Stock Ownership Requirements for Key Employees To better align their interests with the long-term interests of our stockholders, we expect our officers (including the NEOs) and other members of management to maintain an ownership interest in the Corporation based on the following guidelines: Title Annual Base Salary Multiple Chairman, President and CEO 6 times Chief Financial Officer 4 times Executive Vice Presidents 3 times Senior Vice Presidents 2 times 52www.lockheedmartin.com/investor Table of Contents Executive Compensation NEOs are required to achieve ownership levels within five years of assuming their role and must hold net shares from vested RSUs and PSUs and net shares from options exercised until the value of the shares equals the specified multiple of base salary. The securities counted toward their respective target threshold include common stock, unvested RSUs, unvested PSUs at target (which no longer may be counted towards ownership levels beginning with 2015 awards) and stock units under our 401(k) plans and other deferral plans. As of February 1, 2016, each of our NEOs exceeded their respective ownership requirements. Post-Employment, Change in Control, Divestiture and Severance Benefits Our NEOs do not have employment agreements. In January 2008, the Board approved the Lockheed Martin Corporation Severance Benefit Plan For Certain Management Employees (renamed the Lockheed Martin Corporation Executive Severance Plan). Benefits are payable under this plan in the event of a company-initiated termination of employment other than for cause. All of the NEOs are covered under the plan. The benefit payable in a lump sum under the plan is two weeks of basic severance plus a supplemental payment of one times the NEO’s base salary and the equivalent of one year’s target annual incentive bonus. For the CEO, the multiplier is 2.99 instead of 1. NEOs participating in the plan also receive a lump sum payment to cover the cost of medical benefits for one year in addition to outplacement and relocation services. To receive the supplemental severance benefit, the NEO must execute a release of claims and an agreement containing post-employment, non-compete and non-solicitation covenants comparable to those included in our NEOs’ LTI award agreements. With respect to LTI, upon certain terminations of employment, including death, disability, retirement, layoff, divestiture or a change in control, the NEOs may be eligible for continued vesting on the normal schedule, immediate payment of benefits previously earned or accelerated vesting of LTI in full or on a pro rata basis. The type of event and the nature of the benefit determine which of these approaches will apply. The purpose of these provisions is to protect previously earned or granted benefits by making themavailable following the specified event. We view the vesting (or continued vesting) to be an important retention feature for senior-level employees. Because benefits paid at termination consist of previously granted or earned benefits, we do not consider termination benefits as a separate item in compensation decisions. Our LTI plans do not provide for tax assistance. In the event of a change in control, our plans provide for the acceleration of the payment of the nonqualified portion of earned pension benefits and nonqualified deferred compensation. Unless the successor does not assume the award agreements, all LTI awards require a “double trigger” for vesting to accelerate (both a change in control and a qualifying termination of employment). For executives whose business unit is divested, 2014 and 2015 RSUs accelerate and PSUs and LTIP are prorated to the day of the divestiture and paid at end of the cycle. For 2016 awards, RSUs, PSUs and LTIP are pro-rated to the day of the divestiture unless assumed by the successor. Tax Deductibility of Executive Compensation The Corporation’s tax deduction for compensation paid to each of the NEOs who are subject to the compensation deduction limits of Section 162(m) of the Internal Revenue Code is capped at $1 million. Section 162(m) provides an exemption from the $1 million cap for compensation qualifying as “performance-based.” We intend for our annual incentive and LTI programs for NEOs to qualify as “performance-based” compensation exempt from the $1 million cap on deductibility. The Corporation and Compensation Committee reserve the right to provide compensation that does not qualify under Section 162(m). We are proposing that stockholders re-approve the performance-based goals applicable to awards under the Lockheed Martin Corporation 2011 Incentive Performance Award Plan, as amended and restated (2011 IPAP or Plan) for five additional years (see Proposal 4 on page 71). The performance goals must be approved by stockholders every five years to preserve, to the extent possible, our tax deduction for certain awards made under the Plan in accordance with Section 162(m) of the Internal Revenue Code of 1986. 2016 Proxy Statement 53 Table of Contents Executive Compensation Summary Compensation Table The following table shows annual and long-term compensation awarded, earned or paid for services in all capacities to the NEOs for the fiscal year ended December 31, 2015 and, where applicable, the prior fiscal years. Numbers have been rounded to the nearest dollar. Name and Principal Position   Year   Salary ($) Stock Awards ($) Non-Equity Incentive Plan Compensation ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Total Without Change In Pension Value* ($) (a)      (b)      (c)      (e)      (g)      (h)      (i)      (j)        Marillyn A. Hewson Chairman, President and Chief Executive Officer   2015 1,603,221 8,962,915 9,096,460 8,402,875 500,573 28,566,044 20,163,169 2014 1,497,692 8,905,240 7,060,860 15,817,715 415,055 33,696,562 17,878,847 2013 1,368,654 8,166,696 5,979,710 9,409,264 238,150 25,162,474 15,753,210 Bruce L. Tanner Executive Vice President and Chief Financial Officer   2015 937,436 3,213,033 3,251,712 2,004,331 63,043 9,469,555 7,465,224 2014 884,311 3,243,441 4,350,640 3,864,483 55,018 12,397,893 8,533,410 2013 838,586 2,952,952 3,384,234 865,902 74,779 8,116,453 7,250,551 Dale P. Bennett Executive Vice President Mission Systems and Training   2015 717,720 2,000,641 2,233,730 2,980,085 69,117 8,001,293 5,021,208 - - - - - - - - - - - - - - - - Orlando P. Carvalho Executive Vice President Aeronautics   2015 795,370 2,400,882 2,350,746 3,033,253 59,180 8,639,431 5,606,178 2014 720,836 2,407,492 1,949,430 3,694,876 72,074 8,844,708 5,149,832 - - - - - - - - Maryanne R. Lavan Senior Vice President, General Counsel and Corporate Secretary   2015 744,704 2,080,765 3,073,510 1,475,058 53,873 7,427,910 5,952,852 2014 702,287 2,122,226 2,723,950 2,745,209 48,970 8,342,642 5,597,433 2013 668,348 1,447,149 2,114,090 1,193,094 46,158 5,468,839 4,275,745 *      See explanation of Total Without Change In Pension Value on the NYSE on the date specified as the grant date is the exercise price for an option award. In addition, our existing incentive performance award plan prohibits repricing of stock options. Claw Back Policy and Other Post-Employment Provisions Our annual and long-term incentive plans and all our LTI grants since January 2008 set forth our right to recapture amounts in the event employees participate in enumerated bad acts or know of specified activities of others in that regard and fail to report them. The LTI award agreements since January 2008 for the NEOs also contain post-employment restrictive covenants, including two-year non-competition and non-solicitation covenants. Anti-Hedging and Pledging Policy In 2011, we amended our policy on compliance with U.S. securities laws to prohibit hedging of Lockheed Martin stock by all employees and directors. Effective January 1, 2012, our policies also prohibit pledging of Lockheed Martin stock by employees and directors. Stock Ownership Requirements for Key Employees To better align their interests with the long-term interests of our stockholders, we expect our officers (including the NEOs) and other members of management to maintain an ownership interest in the Corporation. Our existing stock ownership requirements have been increased, and beginning in 2012 we require the following equity ownership levels: page 57. Title Annual Base Salary Multiple Executive Chairman 6 times Chief Executive Officer and President 6 times Chief Financial Officer 4 times Business Area Executive Vice Presidents 3 times Corporate Senior Vice Presidents 2 times NEOs are required to achieve ownership levels within five years and must hold net shares from vested RSUs and PSUs and net shares from options exercised until the value of the shares equals the specified multiple of base salary. The securities counted toward their respective target threshold include common stock, unvested RSUs, unvested PSUs at target, and stock units under our 401(k) plans and deferred bonus plan. As of February 1, 2013, our NEOs exceeded our ownership requirements. Post-Employment, Change in Control, and Severance Benefits Our NEOs do not have employment agreements, except for certain exit transitions. In January 2008, the Board approved the Lockheed Martin Corporation Severance Benefit Plan For Certain Management Employees (“Executive Severance Plan”). Benefits are payable under this plan in the event of a company-initiated termination of employment other than for cause. All of the NEOs are covered under the plan. 2013 Proxy Statement       48 Back to Contents The benefit payable in a lump sum under the plan is one times the NEO’s base salary and the equivalent of one year’s target annual incentive bonus. For the CEO, the multiplier is 2.99 instead of 1. In addition, NEOs participating in the plan will receive a lump sum payment to cover the cost of medical benefits for one year in addition to outplacement and relocation services. In order to receive the full severance benefit, the NEO must execute a release of claims and an agreement containing post-employment, non-compete, and non-solicitation covenants comparable to those included in our NEOs’ LTI award agreements. With respect to long-term incentives, upon certain terminations of employment, including death, disability, retirement, layoff, divestiture, or a change in control, the NEOs may be eligible for continued vesting on the normal schedule, immediate payment of benefits previously earned, or accelerated vesting of long-term incentives in full or on a pro rata basis. The type of event and the nature of the benefit determine which of these approaches will apply. The purpose of these provisions is to protect previously earned or granted benefits by making them available following the specified event. We view the vesting (or continued vesting) to be an important retention feature for senior-level employees. Our long-term incentive plans do not provide for tax assistance. Because benefits paid at termination consist of previously granted or earned benefits, we do not consider termination benefits as a separate item in compensation decisions. In the event of a change in control, our plans provide for the acceleration of the payment of the nonqualified portion of earned pension benefits and nonqualified deferred compensation. In the case of stock options and LTIP, for awards made prior to January 1, 2013, vesting following a change in control is a “single trigger” and occurs upon the change in control. In the case of RSUs granted prior to January 1, 2013, the award agreements impose a “double trigger”—both a change in control and termination of employment must occur. Beginning in 2013, unless the successor does not assume the award agreements, all long-term incentive awards require a “double trigger” for vesting to accelerate. Summary Compensation Table The following table shows annual and long-term compensation awarded, earned, or paid for services in all capacities to the NEOs for the fiscal year ended December 31, 2012. Numbers have been rounded to the nearest dollar. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Robert J. Stevens Chairman & Chief Executive Officer 2012 1,800,000 4,914,000 3,599,922 3,600,079 8,294,000 3,703,985 1,637,458 27,549,444 2011 1,800,000 4,725,000 3,749,811 3,749,944 4,400,000 4,830,660 2,114,226 25,369,641 2010 1,800,000 4,050,000 2,995,600 4,071,600 4,600,000 2,779,208 1,601,412 21,897,820 Bruce L. Tanner Executive Vice President & Chief Financial Officer 2012 762,346 1,205,700 1,027,402 1,027,541 1,553,240 2,249,096 54,060 7,879,385 2011 745,000 1,220,300 842,673 842,775 810,000 2,005,646 51,066 6,517,460 2010 745,000 838,100 539,208 772,200 640,000 1,240,885 41,512 4,816,905 Marillyn A. Hewson President & Chief Operating Officer 2012 738,462 1,880,100 876,569 876,623 1,281,800 5,406,361 330,407 11,390,322 2011 640,000 1,067,000 776,111 776,208 280,000 2,290,063 77,413 5,906,795 2010 639,038 750,000 438,107 641,628 350,000 1,278,904 745,765 4,843,442 Linda R. Gooden Executive Vice President Information Systems & Global Solutions 2012 670,231 866,200 724,343 724,457 1,327,040 1,936,245 16,502 6,265,018 - - - - - - - - - - - - - - - - - - Joanne M. Maguire Executive Vice President Space Systems 2012 665,231 1,070,900 752,445 752,563 1,131,000 929,126 185,638 5,486,903 2011 650,000 1,045,700 648,228 648,351 590,000 783,442 171,385 4,537,106 - - - - - - - - - Christopher E. Kubasik Former Vice Chairman, President & Chief Operating Officer 2012 957,692 0 1,809,998 1,810,007 0 1,427,274 3,957,890 9,962,861 2011 1,000,000 2,275,000 1,440,622 1,440,675 900,000 1,617,292 783,723 9,457,312 2010 1,000,000 1,875,000 1,085,905 1,541,592 1,000,000 876,462 500,975 7,879,934 2013 Proxy Statement       49 Back to Contents Name and Principal Position (Column (a)) Ms. Hewson was appointed CEO and President effective January 2013. Ms. Hewson served as Executive Vice President – Electronic Systems from January 2010 to December 2012 and was appointed President and Chief Operating Officer from November 2012 to December 2012. Information is provided for 2011 for Ms. Hewson because she also was a NEO in 2010. Information is provided for 2012 only for Ms. Gooden. Ms. Gooden was not a NEO in 2011 Ms. Hewson was appointed Chairman of the Board effective January 2014 and President and CEO effective January 2013. Information is provided for 2015 and 2014 only for Mr. Carvalho as he was not a NEO in 2013, and for 2015 only for Dale P. Bennett as he was not a NEO in 2014 or 2010. Mss. Gooden and Maguire will step down from their Executive Vice President positions on April 1, 2013. Mr. Kubasik resigned as Vice Chairman, President and Chief Operating Officer and as a member of the Board effective November 9, 2012. Salary (Column (c)) Salary is paid weekly in arrears. The amount of salary reported may vary from the approved annual rate of pay because the salary reported in the table is based on the actual number of weekly pay periods in a year. 54www.lockheedmartin.com/investor Table of Contents Executive Compensation Salary is paid in arrears. The amount of salary reported may vary from the approved annual rate of pay because the salary reported in the table is based on the actual number of weekly pay periods in a year. Bonus (Column (d)) Annual incentive bonuses are reported in the year the bonus is earned. Annual incentive bonuses historically have been listed in this column (d) because the annual incentive bonus is not entirely formulaic. The Compensation Committee uses discretion to assess performance against objectives established at the beginning of the year. Once performance is assessed and individual and organizational ratings are assigned, the final award is calculated using the formula defined in the plan document and the Compensation Committee does not use discretion to increase or decrease the award amount (other than rounding). Under the terms of his separation agreement, Mr. Kubasik did not receive an annual incentive bonus for 2012. Stock Awards (Column (e)) Represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 (ASC 718) for RSUs granted in 2015, 2014 and 2013, and PSUs granted in 2015, 2014 and 2013, disregarding potential forfeitures based on service requirements. 2015 Grant Date Fair Value RSUs ($) 2015 Grant Date Fair Value PSUs ($) Ms. Hewson       3,359,901       5,603,014 Mr. Tanner 1,204,442 2,008,591 Mr. Bennett 749,892 1,250,749 Mr. Carvalho 899,870 1,501,011 Ms. Lavan 779,888 1,300,877 The ASC 718 grant date fair value of one 2015 RSU ($192.28), one 2014 RSU ($146.85) and one 2013 RSU ($89.24), is the closing price of one share of our stock on the date of grant, discounted to take into account the deferral of dividends until vesting. Values for the PSUs, which are subject to performance conditions, are based on the probable outcome on the grant date of three separate performance conditions (approximately 50% of the target shares are earned based upon Relative TSR, approximately 25% of the target shares are earned based upon Performance Cash, and approximately 25% of the target shares are earned based upon ROIC). The grant date fair value of $188.96 for 2015, $134.59 for 2014 and $61.29 for 2013 for the TSR portion of the PSU award was determined using a Monte Carlo simulation model. The valuewas determined using the historical stock price volatilities of the companies in our comparator group over the most recent 2.92-year period for 2015, 2.93-year period for 2014 and 2.92-year period for 2013, assuming dividends for each company are reinvested on a continuous basis and a risk-free rate of interest of 0.81% for 2015, 0.73% for 2014 and 0.44% for 2013. The grant date fair value of $192.28 for 2015, $146.85 for 2014 and $89.24 for 2013 for the Performance Cash and ROIC portions of the awards is based on the closing price of one share of our stock on the date of grant, discounted to take into account the deferral of dividends until vesting. The grant date fair values for the 2013-2015 and 2014-2016 PSUs have been modified from the disclosure in prior years to make an immaterial correction (less than 50 cents per share) in the Monte Carlo simulation model. In addition to the level of performance achieved, the value of the PSUs earned will be determined by the price of our stock which may be more or less than the grant date fair value. The maximum grant date fair values of the 2015 PSU awards, assuming a 200% maximum payout on all three metrics are as follows: Ms. Hewson: $11,206,028; Mr. Tanner: $4,017,182; Mr. Bennett: $2,501,498; Mr. Carvalho: $3,002,023 and Ms. Lavan: $2,601,754. The maximum grant date fair values of the 2014 PSU awards, assuming a 200% maximum payout on all three metrics are as follows: Ms. Hewson: $11,138,497; Mr. Tanner: $4,057,101; Mr. Carvalho: $3,011,372; and Ms. Lavan: $2,654,654. The maximum grant date values of the 2013 PSU awards, assuming a 200% maximum payout on all three metrics are as follows: Ms. Hewson: $10,213,491; Mr. Tanner: $3,692,930; and Ms. Lavan: $482,676. Represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 (“ASC 718”) for RSUs granted in 2012 assuming that all awards will fully vest. The grant date fair value of one 2012 RSU award of $81.93 and one 2011 RSU award of $79.43 takes into account the deferral of dividends until vesting. The grant date fair value of one 2010 RSU award equals the closing price of our stock on the date of grant (February 1, 2010) of $74.89 because cash dividend equivalents on these awards were paid at the time dividends are declared on our stock and prior to the time the RSUs vested. Mr. Kubasik forfeited all outstanding, unvested RSU awards and accrued dividend equivalents on the unvested RSUs. Option Awards (Column (f)) Represents the aggregate grant date fair value computed in accordance with ASC 718 of the options granted in 2012 ($10.57). The grant date fair value of the options is determined using the Black-Scholes methodology and is based on the closing price of our stock ($82.01) on the date of grant (January 30, 2012). Values reported for 2011 and 2010 are based on grant date fair value of $13.06 (closing price of $79.60) and $14.04 (closing price of $74.89), respectively. The assumptions used in determining the grant date fair value of the option grants are set forth in Note 11 to our financial statements contained in our 2012 Annual Report. Mr. Stevens’ 2011 stock option award agreement was amended on April 22, 2011 to provide for forfeiture if certain additional performance goals were not satisfied at the end of 2011. Mr. Stevens’ 2012 stock option award agreement has a similar forfeiture provision. The risk of forfeiture under the 2011 option amendment and 2012 agreement was not taken into account in determining the grant date fair value. Under the terms of his stock option award agreements, Mr. Kubasik had 30 days after his resignation to exercise his outstanding, vested stock options. Mr. Kubasik forfeited all outstanding, unvested stock options and stock awards. Non-Equity Incentive Plan Compensation (Column (g)) The amounts listed for LTIP awards were earned in the three-year period ending on December 31 of the year reported in column (b) Includes the amount paid for annual incentive bonuses. We report the annual incentive bonus in column (g) because the annual incentive bonus is based on an assessment of performance against pre-established goals. The Compensation Committee willcontinue to use discretion to assess performance against objectives established at the beginning of the year. We also report amounts earned under our LTIP awards in the three-year period ending on December 31 of the year reported in column (g) of the table. For the years shown, 50 percent of the amount shown is deferred by the Corporation for two years and treated during that period as if it were invested in our common stock. Deferred amounts (whether mandatory deferrals by the Corporation or voluntary deferrals by the executive) are reported for the year earned and not when paid to the executive. See the “2012 Nonqualified Deferred Compensation” table on page 59. Mr. Kubasik forfeited his unvested LTIP awards. The table below shows the respective 2015 annual incentive bonus and amount earned under the 2013-2015 LTIP and reported for each NEO: Annual Incentive Payout ($) LTIP Payout ($) Ms. Hewson       5,477,500       3,618,960 Mr. Tanner 1,942,500 1,309,212 Mr. Bennett 1,435,430 798,300 Mr. Carvalho 1,501,000 849,746 Ms. Lavan 1,361,600 1,711,910 20132016 Proxy Statement       50 Back to Contents 55 Table of Contents Executive Compensation Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column (h)) Reports the present value of the change in pension benefit for the NEO for the year reported (for example, from December 31, 2014 to December 31, 2015) and is not the amount that will be paid to the NEO. The disclosure is based on the Corporation’s final average compensation formula in its defined benefit plan which multiplies a percentage (1.25% of compensation below the social security wage base and 1.5% above that level) times years of service times the average of the employee’s highest three years of compensation in the last ten years. This is the same formula used for all participants accruing a pension benefit in 2015; none of the NEOs (including Ms. Hewson) has been credited with any extra years of service or provided a benefit from a special or enhanced formula. Under a three-year final average compensation formula, increasing service, age and compensation will result in an increase in the earned benefit. When an employee receives a compensation increase, the three-year average compensation that goes into the formula likewise increases. The impact of that increase in the average is greater with a long service employee because the pension formulamultiplies the now-higher average compensation by years of service. The year-over-year value is also affected by the changes in interest rate and increased life expectancy assumptions. The amounts reported for 2015, 2014 and 2013 used a discount rate of 4.375%, 4.00% and 4.75% respectively, as the interest rate. This is the same rate we used to report pension liabilities in our financial statements for each of those years. Longevity assumptions are used to estimate the life expectancy of plan participants during which they are expected to receive benefit payments. Recent actuarial studies indicate life expectancies are longer and have the resultant effect of increasing the total expected benefit payments to plan participants. The amounts reported beginning in 2014 reflect the use of new longevity assumptions, which results in a larger accumulated pension benefit than otherwise would be the case under the 2013 longevity assumptions. We used the same new longevity and interest rate assumptions to report pension liabilities for all pension plan participants in our financial statements beginning in 2014. Represents solely the aggregate change in the accumulated benefit under all defined benefit and actuarial pension plans (including tax-qualified and nonqualified defined benefit plans) for the year reported (from December 31 to December 31). The amounts were computed using the same assumptions we used to account for pension liabilities in our financial statements in accordance with ASC 715 and as described in Note 9 to our financial statements contained in our 2012 Annual Report, except that the amounts were calculated based on benefits commencing at age 60 for each of the NEOs. We used age 60 rather than the plan's normal retirement age of 65 because an employee may commence receiving pension benefits at age 60 without any reduction for early commencement. The amounts shown for Mr. Stevens and Mr. Tanner reflect grandfathered plan provisions that apply a reduction for early commencement on a portion of their benefits at age 60. Amounts paid under our plans are based on assumptions contained in the plans and may be different than the assumptions used for financial statement reporting purposes. The NEOs earn a pension based on a formula that applies a percentage of pay (salary plus annual incentive bonus) times years of service. The amount accrued in each year differs from the amount accrued in other years due to an increase in the number of years of service and any increases or decreases in pay (salary and bonus). The amount reflected for the change in the accumulated benefit under our pension plans is also sensitive to changes in the interest rate used to determine the present value of the payments to be made over the life of the executive. The amounts reported for 2010, 2011, and 2012 used 5.50%, 4.75%, and 4.00%, respectively, as the interest rate, which is the same rate we used to report pension liabilities in our financial statements for each of those years. Using a lower interest rate assumption results in a larger present value of accumulated pension benefits and, therefore, results in a larger change in the accumulated pension benefit than otherwise would be the case. The interest rate is determined at December 31 of each year and the lower rates are reflective of the downward trend in interest rates during the last three years. All Other Compensation (Column (i)) Perquisites and other personal benefits provided to the NEOs in 2012 included: security; annual executive physicals; business association expenses; use of corporate aircraft for personal travel; and travel for a family member accompanying the NEO while on business travel. Not all of the listed perquisites or personal benefits were provided to each NEO. In addition, the Corporation made available event tickets and a company-provided car and driver for personal commuting to some of the NEOs, but required the NEOs to reimburse the Corporation for the incremental cost of such items. The cost of any category of the listed perquisites and personal benefits did not exceed the greater of $25,000 or 10% of total perquisites and personal benefits for any NEO, except for (i) security for Mr. Stevens ($1,319,628), Ms. Hewson ($123,332), and Mr. Kubasik ($99,420) and (ii) use of the corporate aircraft for Ms. Hewson ($25,205), Ms. Maguire ($147,555), and Mr. Kubasik ($105,397). The incremental cost for use of corporate aircraft for personal travel was calculated based on the total personal travel flight hours multiplied by the estimated hourly aircraft operating costs for 2012 (including fuel, maintenance, and other variable costs, but excluding fixed capital costs for the aircraft, hangar facilities, and staff salaries). The amounts reported for security include providing home security to our executives consistent with what is provided to corporate executives in public companies in our industry. Security is also provided in accordance with our corporate policy to provide any employee who is the subject of a credible and specific threat on account of his or her employment at Lockheed Martin with security that is appropriate to the nature and extent of the threat. We believe that providing personal security in response to threats arising out of employment by the Corporation is business-related. Under the terms of his separation agreement, Mr. Kubasik received $3.5 million as a separation payment. He also received $174,191 of accrued vacation at the time of his departure. Column (i) contains items of compensation listed in the following table. All items in the following table are paid under broad-based programs for U.S. salaried employees except the tax assistance and the Lockheed Martin Corporation Supplemental Savings Plan (“NQSSP”) match. Items include matching contributions made to eligible universities, colleges, and other non-profit organizations under the Corporation’s matching gift programs. Listed amounts include matching contributions made in 2013 in respect of 2012 executive contributions or actions. 2013 Proxy Statement       51 Back to Contents Other Items of Compensation Included in “All Other Compensation” Column (i) Name Tax Assistance for Business-Related Items ($) Corporation Matching Contribution to 401(k) Plan ($) Corporation Matching Contribution to NQSSP (Nonqualified 401(k) Plan) ($) Group Life Insurance ($) Matching Gift Programs ($) Mr. Stevens 221,013 3,579 68,421 15,444 0 Mr. Tanner 4,952 3,579 26,899 3,974 10,000 Ms. Hewson 131,941 4,533 25,497 6,347 11,000 Ms. Gooden 0 10,000 0 6,502 0 Ms. Maguire 0 8,500 18,096 0 10,000 Mr. Kubasik 27,532 8,500 30,577 4,761 0 In 2012, Perquisites and other personal benefits provided to the NEOs in 2015 included: security; annual executive physicals; business association expenses; use of corporate aircraft for personal travel; and travel for a family member accompanying the NEO while on business travel. Not all of the listed perquisites or personal benefits were provided to each NEO. In addition, the Corporation made available event tickets, a company-provided car and driver for personal commuting, and access to club memberships to some of the NEOs, but required the NEOs to reimburse the Corporation for the incremental cost to the Corporation in 2015 of such items. The cost of any category of the listed perquisites and personal benefits did not exceed the greater of $25,000 or 10% of total perquisites and personal benefits for any NEO, except for (i) security for Ms. Hewson ($120,768) and (ii) use of the corporate aircraft for Ms. Hewson ($253,397). The incremental cost for use of corporate aircraft for personal travel was calculated based on the total personal travel flight hours multiplied by the estimated hourly aircraft operating costs for 2015 (including fuel, maintenance, staff travel expenses, and other variable costs, but excluding fixed capital costs for the aircraft, hangar facilities, and staff salaries). The amounts reported for security include providing home security to some of our NEOs consistent with what is provided to corporate executives in other public companies in our industry. Given the nature of our business, additional security may be provided for travel in high-risk areas or to address particular situations. We believe that providing personal security in response to concerns arising out of employment by the Corporation is business-related. In addition to perquisites, column (i) also contains items of compensation listed in the following table. All items are paid under broad-based programs for U.S. salaried employees except for the tax assistance and the Lockheed Martin Corporation Supplemental Savings Plan (NQSSP) match. Items include matching contributions made to eligible universities, colleges and other non-profit organizations under the Corporation’s matching gift programs. Listed amounts may include contributions made in 2016 to match 2015 executive contributions or actions as applicable. 56www.lockheedmartin.com/investor Table of Contents Executive Compensation Other Items of Compensation Included in “All Other Compensation” Column (i) Name Tax Assistance for Business-Related Items ($) Corporation Matching Contribution to 401(k) Plan ($) Corporation Matching Contribution to NQSSP (Nonqualified 401(k) Plan) ($) Group Life Insurance ($) Matching Gift Programs ($) Ms. Hewson    41,581    4,500    57,789    15,741    1,000 Mr. Tanner 4,740 4,500 32,259 9,104 0 Mr. Bennett 31,125 4,500 23,474 6,317 1,000 Mr. Carvalho 23,200 10,600 0 7,379 0 Ms. Lavan 2,460 4,500 24,701 7,168 11,000 In 2015, the Corporation provided tax assistance on business-related items associated with taxable business association expenses, security expenses, non-resident state taxes on business travel and travel expenses for a family member accompanying the NEO while on business travel. *Total Without Change In Pension Value The separate column labeled “Total Without Change in Pension Value” shows total compensation as required to be disclosed by the SEC in column (j) less the amount shown in Change in Pension Value and Nonqualified Deferred Compensation Earnings in column (h). The amounts shown in this column are not a substitute for the amounts reported in the Total column, and differ substantially from the amounts reported in the Total column for several reasons. The amount reported in column (h) for Changein Pension Value is not current compensation and represents the present value of an estimated stream of payments to be made following retirement. The methodology used to report the Change in Pension Value under applicable accounting rules is sensitive to assumptions about life expectancy and changes in the discount rate determined at each year end, which are functions of economic factors and actuarial calculations that are outside of the control of the Compensation Committee. 2016 Proxy Statement 2012 Grants of Plan-Based Awards Name Grant Date   Estimated Future Payouts Under Non-Equity Incentive Plan Awards   Estimated Future Payouts Under Equity Incentive Plan Awards All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($/Sh) Grant Date Fair Value of Stock and Option Awards ($) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) (a) (b)   (c) (d) (e)   (f) (g) (h) (j) (k) (l) Robert J. Stevens 1/30/2012 LTIP 353,125 5,650,000 11,300,000 0 43,939 43,939 - - 3,599,922 1/30/2012 - - - 0 340,594 340,594 - 82.01 3,600,079 Bruce L. Tanner 1/30/2012 LTIP 101,250 1,620,000 3,240,000 0 12,540 12,540 - - 1,027,402 1/30/2012 - - - - - - 97,213 82.01 1,027,541 Marillyn A. Hewson 1/30/2012 LTIP 86,250 1,380,000 2,760,000 0 10,699 10,699 - - 876,569 1/30/2012 - - - - - - 82,935 82.01 876,623 Linda R. Gooden 1/30/2012 LTIP 71,250 1,140,000 2,280,000 0 8,841 8,841 - - 724,343 1/30/2012 - - - - - - 68,539 82.01 724,457 Joanne M. Maguire 1/30/2012 LTIP 75,000 1,200,000 2,400,000 0 9,184 9,184 - - 752,445 1/30/2012 - - - - - - 71,198 82.01 752,563 Christopher E. Kubasik* 1/30/2012 LTIP 175,000 2,800,000 5,600,000 0 22,092 22,092 - - 1,809,998 1/30/2012 - - - - - - 171,240 82.01 1,810,007 * Mr. Kubasik forfeited all awards made in 2012. 57 Table of Contents Executive Compensation 2015 Grants of Plan-Based Awards Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards Grant Date Fair Value of Stock Awards ($) Name    Grant Date    Award Type Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) (a)     (b)         (c)     (d)     (e)     (f)     (g)     (h)     (l) Marillyn A. Hewson 1/29/2015 MICP 342,344 2,738,750 5,477,500 - - - 0 1/29/2015 RSU - - - 0 17,474 17,474 3,359,901 1/29/2015 LTIP 140,000 2,240,000 4,480,000 - - - 0   1/29/2015 PSU - - - 1,821 29,396 58,792 5,603,014 Bruce L. Tanner 1/29/2015 MICP 121,406 971,250 1,942,500 - - - 0 1/29/2015 RSU - - - 0 6,264 6,264 1,204,442 1/29/2015 LTIP 50,188 803,000 1,606,000 - - - 0 1/29/2015 PSU - - - 653 10,538 21,076 2,008,591 Dale P. Bennett 1/29/2015 MICP 89,714 717,715 1,435,430 - - - 0 1/29/2015 RSU - - - 0 3,900 3,900 749,892 1/29/2015 LTIP 31,250 500,000 1,000,000 - - - 0 1/29/2015 PSU - - - 407 6,562 13,124 1,250,749 Orlando P. Carvalho 1/29/2015 MICP 93,813 750,500 1,501,000 - - - 0 1/29/2015 RSU - - - 0 4,680 4,680 899,870 1/29/2015 LTIP 37,500 600,000 1,200,000 - - - 0 1/29/2015 PSU - - - 488 7,875 15,750 1,501,011 Maryanne R. Lavan 1/29/2015 MICP 87,281 698,250 1,396,500 - - - 0 1/29/2015 RSU - - - 0 4,056 4,056 779,888 1/29/2015 LTIP 32,500 520,000 1,040,000 - - - 0 1/29/2015 PSU - - - 423 6,825 13,650 1,300,877 Estimated Future Payouts Under Non-Equity Incentive Plan Awards (Columns (c), (d) and (e)) Includes annual incentive grants (MICP) for 2015 and LTIP grants for the 2015-2017 period ending December 31, 2017. The MICP measures performance over a one-year period and is described under “Annual Incentive” on page 40 in the CD&A. The threshold, or minimum amount payable, is 12.5% of target while the maximum is 200% of target. The LTIP award measures performance against three separate metrics described under “2015 Long-Term Incentive Compensation” on page 45 in the CD&A. The threshold is the minimum amount payable for a specified level of performance stated in the LTIP award agreement. For the 2015-2017 award, the threshold amount payable is 6.25% of the target award. Themaximum award payable under the LTIP award is 200% of target value. Awards are subject to forfeiture upon termination of employment prior to the end of the performance cycle, except in the event of retirement, death, disability, divestiture, or layoff. If the event occurs prior to the end of the performance period, LTIP awards are prorated. Following a change in control, the 2015-2017 LTIP awards vest at the target amount upon involuntary termination without cause or voluntary termination with good reason or if the successor does not assume the LTIP awards. 58www.lockheedmartin.com/investor Table of Contents Executive Compensation Includes LTIP grants for the 2012-2014 period ending December 31, 2014. At the end of the three-year performance period, the amount earned is payable in cash, except for the CEO. If the CEO’s award exceeds $10 million, then the amount up to or equal to $10 million is payable in cash and the remaining portion of the award is deferred for one year in stock units. Awards are subject to forfeiture upon termination of employment prior to the end of the performance period, except in the event of retirement, death, disability, divestiture, layoff, or change in control. If the event occurs prior to the end of the performance period, LTIP awards are prorated. If the event occurs during the mandatory deferral period, LTIP awards are paid out immediately. The threshold is the minimum amount payable for a specified level of performance stated in the LTIP award agreement. LTIP awards measure performance against three separate metrics described under “LTIP Awards” beginning on page 39 (if any). If performance falls below the stated level of performance for a metric, no amount would be paid with respect to that metric. Assuming any payment is earned, the minimum amount payable under the LTIP is 6.25% of the target.The maximum award payable under the LTIP is 200% of the target. 2013 Proxy Statement       52 Back to Contents Estimated Future Payouts Under Equity Incentive Plan Awards (Columns (f), (g) and (h)) Shows the number of RSUs granted by the Compensation Committee on January 29, 2015. The RSU grants made to the NEOs were subject to forfeiture to the extent the value of the RSUs granted for a recipient on the award date was greater than 0.2% for the CEO and 0.1% for each of the other NEOs of 2015 Performance Cash. Based on 2015 Performance Cash, none of the RSUs were forfeited. The RSUs vest on the third anniversary of the date of grant or upon death, disability, divestiture. Following a change in control, the RSUs vest upon involuntary termination without cause or voluntary termination for good reason or if the RSUs are not assumed. If the employee retires or is laid off after July 29, 2015, but prior to the third anniversary of the date of grant, the RSUs become nonforfeitable and are paid at the end of the vesting period. During the vesting period, dividend equivalents are accrued and subject to the same vesting schedule as the underlying RSUs. At the end of the vesting period, the RSUs are paid in shares of stock and the deferred dividend equivalents are paid in cash. If any tax withholding is required on the 2015 RSUs or dividend equivalents during the vesting period (for example, on account of retirement-eligibility), the RSUs provide for accelerated vesting of the number of shares or dividend equivalents required to satisfy the tax withholding. The award is then reduced either by the number of shares or by the amount of accrued dividend equivalents that were accelerated for the tax withholding. The table includes PSU grants for the 2015-2017 period ending December 31, 2017. At the end of the three-year vesting period, which ends on the third anniversary of the date of grant, the amount earned is payable in shares of stock and cash representing dividend equivalents accrued during the three-year performance period. Awards are subject to forfeiture upon termination of employment prior to the end of the vesting period, except in the event of termination following retirement, death, disability, divestiture, or layoff. If the event occurs after July 29, 2015, but prior to the end of the vesting period, PSU awards are paid out at the end of the vesting period on a prorated basis. Following a change in control, the PSUs vest at the target amount upon involuntary termination without cause or voluntary termination with good reason or if the successor does not assume the PSUs. Shares are earned under the PSU awards based upon performance against three separate metrics described under “PSU Awards” on page 45. If performance falls below the threshold level of performance for a metric, no shares would be earned with respect to that metric. Assuming any payment is earned, the minimum amount payable under the PSU is 25% of the target shares attributable to ROIC or Performance Cash, the lowest level payable under these metrics. The maximum number of shares payable under the PSU is 200% of the number of target shares. Shows the number of RSUs granted by the Compensation Committee on January 30, 2012. The RSU grant made to Mr. Stevens (43,939) was subject to forfeiture to the extent the value of the RSUs on January 30, 2012 was greater than 0.20% of 2012 adjusted cash from operations. The RSU grants made to the other NEOs were subject to forfeiture to the extent the value of the RSUs granted for a recipient on January 30, 2012 was greater than 0.10% of 2012 adjusted cash from operations. Based on 2012 adjusted cash from operations, none of the RSUs were forfeited. The RSUs vest on the third anniversary of the date of grant or upon death, disability, divestiture, or termination following change in control. If the employee retires or is laid off after January 30, 2013 but prior to the third anniversary of the date of grant, a pro rata portion of the RSUs becomes nonforfeitable. During the vesting period, dividend equivalents are accrued and subject to the same vesting schedule as the underlying RSUs. Mr. Stevens’ January 30, 2012 option award (340,594) was 50% forfeitable if the Corporation failed to generate in 2012 $3.8 billion in adjusted cash from operations and 50% of the grant was forfeitable if 2012 ROIC was less than 14.5%. Both performance criteria were satisfied in 2012 and no forfeiture occurred. The remaining terms of Mr. Stevens’ option grant are the same as the terms described in column (j) for the stock option grants for the other NEOs. All Other Option Awards: Number of Securities Underlying Options (Column (j)) Shows the number of stock options granted by the Compensation Committee on January 30, 2012 to the NEOs other than Mr. Stevens which are reported under columns (g) and (h). Under the 2012 award agreements, options have a ten-year term and vest in three equal installments on the first, second, and third anniversary of the date of grant. Options expire 30 days following termination of employment, except in the case of death, disability, divestiture, layoff, or retirement. In the event of death or disability, all outstanding options vest immediately and expire ten years after the date of grant (the normal expiration date of the award). In the event of divestiture, the options become exercisable on the date the options otherwise would have vested and any outstanding options terminate five years from the effective date of the divestiture or on the option’s normal expiration date, whichever occurs first. In the event of layoff or retirement, unvested options are forfeited and vested options expire at the normal expiration date for the grant. Upon a change in control, all options vest immediately. Grant Date Fair Value of Stock and Option Awards (Column (l)(1)) Represents the aggregate grant date fair value computed in accordance with FASB ASC 718 for RSUs and PSUs granted in 2015, disregarding potential forfeitures based on service requirements. The grant date fair value of the 2015 RSU grant is $192.28 per RSU, which is based on the closing price of one share of our stock on the date of grant, discounted to take into account the deferral of dividends until vesting. The grant date fair value for the PSUs, which are subject to performance conditions, is based on the probable outcome of each of the three performance conditions. The grant date fair value of $188.96 for the Relative TSR portion of the award is determined using a Monte Carlo simulation model. The grant date fair value of $192.28 for the Performance Cash and ROIC portions of the awards is based on the closing price of one share of our stock on the date of grant, discounted to take into account the deferral of dividends until vesting. 2016 Proxy Statement The assumptions used 59 Table of Contents Executive Compensation Outstanding Equity Awards at 2015 Fiscal Year-End Option Awards Stock Awards Name    Number of Securities Underlying Unexercised Options Exercisable (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested1 (#) Market Value of Shares or Units of Stock That Have Not Vested2 ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested3 (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested4 ($) (a)      (b)      (e)      (f)      (g)      (h)      (i)      (j) Marillyn A. Hewson 82,935 82.01 1/28/2022 17,474  5 3,794,479 31,353  6 6,808,304   59,434 79.60 1/29/2021 21,913  7 4,758,408 46,183  8 10,028,639 - - - 34,289  9 7,445,856 - - - - - 127,693  10 27,728,535 - - Bruce L. Tanner 97,213 82.01 1/28/2022 6,264  5 1,360,228 11,240  6 2,440,766 64,531 79.60 1/29/2021 7,897  7 1,714,834 16,822  8 3,652,898 55,000 74.89 1/31/2020 12,399  9 2,692,443 - - 49,700 82.52 1/25/2019 46,171  10 10,026,033 - - Dale P. Bennett 10,800 106.87 1/26/2018 3,900  5 846,885 6,999  6 1,519,833 - - 1/28/2022 4,817  7 1,046,012 10,182  8 2,211,022 - - 1/29/2021 7,562  9 1,642,088 - - - - - 28,162  10 6,115,379 - - Orlando P. Carvalho 29,705 82.01 1/28/2022 4,680  5 1,016,262 8,399  6 1,823,843 20,466 79.60 1/29/2021 5,940  7 1,289,871 12,486  8 2,711,335 15,300 74.89 1/31/2020 6,712  9 1,457,511 - - 12,700 82.52 1/25/2019 3,009  10 653,404 - - Maryanne R. Lavan 8,202 82.01 1/28/2022 4,056  5 880,760 7,279  6 1,580,635 6,518 79.60 1/29/2021 5,212  7 1,131,786 11,006  8 2,389,953 - - - 13,512  9 2,934,131 - - - - - 6,036  10 1,310,718 - - (1) We reported RSUs granted in January 2015 as equity incentive awards in columns (f) through (h) of the “2015 Grants of Plan-Based Awards” table because there was the potential for determiningforfeiture based on failure to achieve the grant date fair value are set forthperformance metrics specified in Note 11 to our financial statements containedthe award agreements. For this table, we reported the RSUs in our 2012 Annual Report. The grant date fair value computed in accordance with ASC 718columns (g) and (h) because the performance feature of the RSU grants was satisfied at the end of 2015. This column also includes PSUs granted on January 28, 2013 for the 2013- 2015 performance period. The vesting period for the PSU granted ends on January 30, 2012 equity awards was $10.5728, 2016 but the performance period ended on December 31, 2015.The number of shares shown in column (g) for each optionthe 2013-2015 PSUs is the number of shares earned under the PSU metrics and $81.93to be paid upon vesting in January 2016. (2) The market value shown in column (h) is calculated by multiplying the number of shares shown in column (g) by the December 31, 2015 per share closing price of our stock ($217.15). NEOs also receive a cash payment for each RSU. The grant date fair value of RSUs takes into account the deferral of dividends until vesting. Beginning with the 2011 RSU grants, the RSU grant date fair value is discounted to reflect the deferral ofdeferred dividend payments until theequivalents upon vesting date. 2013 Proxy Statement       53 Back to Contents Outstanding Equity Awards at 2012 Fiscal Year-End Name Option Awards   Stock Awards Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options1 ( #) Unexercisable   Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)   Market Value of Shares or Units of Stock That Have Not Vested 2,3 ($) (a) (b) (c) (e) (f)   (g) (h) Robert J. Stevens 0 340,594 4 82.01 1/28/2022   43,939 5 4,055,130 95,710 191,422 6 79.60 1/29/2021   47,209 7 4,356,919 193,332 96,668 8 74.89 1/31/2020   40,000 9 3,691,600 440,000 0 82.52 1/25/2019   - - 250,000 0 106.87 1/26/2018   - - 225,000 0 96.06 1/29/2017   - - - - - -   11,800 10 1,089,022 Bruce L. Tanner 0 97,213 4 82.01 1/28/2022   12,540 5 1,157,317 21,510 43,021 6 79.60 1/29/2021   10,609 7 979,105 36,666 18,334 8 74.89 1/31/2020   7,200 9 664,488 81,700 0 82.52 1/25/2019   - - 39,500 0 106.87 1/26/2018   - - 7,400 0 96.06 1/29/2017   - - 6,000 0 67.97 2/1/2016   - - 11,500 0 57.81 1/31/2015   - - Marillyn A. Hewson 0 82,935 4 82.01 1/28/2022   10,699 5 987,411 19,811 39,623 6 79.60 1/29/2021   9,771 7 901,766 30,466 15,234 8 74.89 1/31/2020   5,850 9 539,897 29,600 0 82.52 1/25/2019   - - 22,500 0 106.87 1/26/2018   - - 12,067 0 96.06 1/29/2017   - - 6,000 0 67.97 2/1/2016   - - Linda R. Gooden 0 68,539 4 82.01 1/28/2022   8,841 5 815,936 16,929 33,860 6 79.60 1/29/2021   8,350 7 770,622 31,000 15,500 8 74.89 1/31/2020   6,250 9 576,813 69,600 0 82.52 1/25/2019   - - 44,000 0 106.87 1/26/2018   - - 26,400 0 96.06 1/29/2017   - - 12,000 0 67.97 2/1/2016   - - 8,667 0 57.81 1/31/2015   - - 167 0 49.27 1/29/2014   - - Joanne M. Maguire 0 71,198 4 82.01 1/28/2022   9,184 5 847,591 16,548 33,096 6 79.60 1/29/2021   8,161 7 753,179 26,466 13,234 8 74.89 1/31/2020   5,500 9 507,595 39,300 0 106.87 1/26/2018   - - 26,400 0 96.06 1/29/2017   - - Christopher E. Kubasik 0 0 - -   0 0 (1) Column (d) omitted because none of the NEOs held options that qualified as equity incentive plan awards at 2012 year-end. (2) We reported RSUs granted in January 2012, as well as Mr. Stevens’ 2011 stock option grant, as amended, as equity incentive awards in columns (f) through (h) of the “2012 Grants of Plan-Based Awards” table because there was the potential for forfeiture based on failure to achieve the performance metrics specified in the award agreements. This feature of the grants was satisfied at the end of 2012. Columns (i) and (j) omitted because none of the NEOs held stock awards that qualified as equity incentive plan awards at 2012 year-end. (3) The market value shown in column (h) is calculated by multiplying the number of RSUs by the December 31, 2012 closing price of our stock ($92.29). (4) Represents stock options granted on January 30, 2012, which vest in three equal annual installments on January 30, 2013, January 30, 2014, and January 30, 2015, except that vesting may occur earlier as described in the “2012 Grants of Plan-Based Awards” table. (5) Represents RSUs granted on January 30, 2012, which vest January 30, 2015, except that vesting may occur earlier as described in the “2012 Grants of Plan-Based Awards” table. (6) Represents stock options granted on January 31, 2011, which vest in three equal annual installments on January 31, 2012, January 31, 2013, and January 31, 2014, except that vesting may occur earlier as described the “2012 Grants of Plan-Based Awards” table. (7) Represents RSUs granted on January 31, 2011, which vest on January 31, 2014, except that vesting may occur earlier as described in the “2012 Grants of Plan-Based Awards” table. (8) Represents stock options granted on February 1, 2010, which vested in three equal annual installments on February 1, 2011, February 1, 2012, and February 1, 2013. (9) Represents RSUs granted on February 1, 2010, which vested on February 1, 2013. (10) Represents the remaining balance of the February 1, 2006 RSU award to Mr. Stevens, which vests on September 8, 2013. 2013 Proxy Statement       54 Back to Contents Option Exercises and Stock Vested During 2012 Name Option Awards   Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise1 ($) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($) (a) (b) (c)   (d)   (e)   Robert J. Stevens 450,000 10,274,507   56,000 2 4,861,070 3 Bruce L. Tanner 20,000 810,212   33,750 4 2,783,363 5 Marillyn A. Hewson - -   2,950 4 243,287 5 Linda R. Gooden - -   30,900 4 2,548,323 5 Joanne M. Maguire 133,300 3,034,754   30,400 4 2,507,088 5 Christopher E. Kubasik 237,070 3,140,652   46,650 3,847,226 (1) Value realized was calculated based on the difference between the aggregate exercise price of the options and the weighted average sale price per share on the date of sale. (2) Mr. Stevens received an award of 31,000 RSUs on January 26, 2009, which vested on January 26, 2012, and an award of 92,000 RSUs on February 1, 2006, of which 25,000 vested on September 8, 2012. Number of shares shown as vesting is prior to reduction in shares to satisfy income tax withholding requirements. (3) Value realized was calculated based on the number of shares multiplied by the closing market price of our common stock on the date of vesting on January 26, 2012 ($82.47) and September 8, 2012 ($92.18). (4) Vesting on January 26, 2012 of RSUs granted on January 26, 2009. Number of shares shown as vesting is prior to reduction in shares to satisfy income tax withholding requirements. (5) Value realized was calculated based on the number of shares multiplied by the closing market price of our common stock on the date of vesting ($82.47). 2013 Proxy Statement       55 Back to Contents Retirement Plans During 2012, the NEOs participated in the Lockheed Martin Corporation Salaried Employee Retirement Program (“LMRP”), which is a combination of the following prior plans for salaried employees with some protected benefits: Lockheed Martin Corporation Retirement Income Plan which covered former Martin Marietta employees; Lockheed Martin Corporation Retirement Income Plan III which covered former Loral Corporation employees; and Lockheed Martin Corporation Retirement Plan for Certain Salaried Employees which covered former Lockheed employees (collectively, the “Prior Plan”). The calculation of retirement benefits under the LMRP is determined by a formula that takes into account the participant’s years of credited service and average compensationRSUs. (3) Represents PSUs granted on January 29, 2015 for the highest three years2015-2017 performance period and on January 27, 2014 for the 2014-2016 performance period; the PSUs are earned and paid out in shares of our stock at the end of the last ten years of employment. Average compensation includes the NEO’s base salary, annual incentive bonuses,three-year vesting period based upon performance on three separate metrics (Relative TSR, Performance Cash, and lump sum payments in lieu of a salary increase. NEOs must have either five years of service or be actively employed by the Corporation at age 65 to vest in the LMRP. Normal retirement age is 65; however, benefits are payable as early as age 55 (with five years of service) at a reduced amount or without reduction at age 60. Benefits are payable as a monthly annuity for the lifetime of the employee, as a joint and survivor annuity, as a life annuity with a five or ten year guarantee, or as a level income annuity. ROIC). The calculation of retirement benefits under the Prior Plan is based on a number of formulas, someshares of which take into account the participant’s years of credited service and pay over the career of the NEO. Certain other formulasstock shown in the Prior Plan arecolumn (i) is based upon the final average compensation and credited servicethreshold level of performance for each of the employee. Pay under certain formulas inthree metrics or, if performance to date on the Prior Plan currently includes salary, commissions, overtime, shift differential, lump sum pay in lieumetric has exceeded the threshold level (as is the case for 2015 and 2014), the estimated level of a salary increase, annual incentive bonuses awarded that year, and 401(k) and pre-tax contributions. The Prior Plan also contains a Personal Retirement Provision which is an account balance based on past allocations. This account balance is available as a lump sum at termination or can be converted into an annuity. A portion of the pension benefits for Mr. Stevens and Mr. Tanner was earned under the Prior Plan. Mr. Stevens, Ms. Hewson, Ms. Gooden, and Ms. Maguire were eligible for early retirementperformance as of December 31, 2012. As2015. Performance under each metric is determined separately, with the three results added together to obtain the number of shares shown in column (i). NEOs also receive a cash payment for accrued dividend equivalents upon vesting of the PSUs. (4) The market value shown in column (j) is calculated by multiplying the number of PSUs reported in column (i) by the December 31, 2012, all2015 per share closing price of our stock ($217.15). (5) Represents RSUs granted on January 29, 2015, which vest January 29, 2018, except that vesting may occur earlier as described in the “2015 Grants of Plan-Based Awards” table. (6) Represents PSUs granted on January 29, 2015 and which are earned over a three-year period but provide for pro rata payments for certain terminations as described in connection with the “2015 Grants of Plan-Based Awards” table. (7) Represents RSUs granted on January 27, 2014, which vest on January 27, 2017, except that vesting may occur earlier as described in the “2015 Grants of Plan-Based Awards” table. (8) Represents PSUs granted on January 27, 2014 and which are earned over a three-year period but provide for pro rata payments for certain terminations as described in the “2015 Grants of Plan-Based Awards” table. (9) Represents RSUs granted on January 28, 2013, which vested on January 28, 2016. (10)   Represents PSUs granted on January 28, 2013, which vested on January 28, 2016. 60www.lockheedmartin.com/investor Table of Contents Executive Compensation Option Exercises and Stock Vested During 2015 Option Awards Stock Awards Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise1 ($) Number of Shares Acquired on Vesting2 (#) Value Realized on Vesting3 ($) (a)       (b)       (c)       (d)       (e) Marillyn A. Hewson 45,700 5,386,088 11,503 2,170,141 Bruce L. Tanner 32,000 4,049,882 12,916 2,434,540 Dale P. Bennett 16,809 1,940,399 2,686 506,747 Orlando P. Carvalho 0 0 4,033 760,526 Maryanne R. Lavan 19,000 2,216,546 7,632 1,438,470 (1)   Value realized was calculated based on the difference between the aggregate exercise price of the NEOs were vested inoptions and the LMRP. Duringweighted average sale price per share on the date of exercise and sale. (2) Vesting on January 30, 2015 of RSUs granted on January 30, 2012 following the NEOs also participated inthree-year vesting period; and accelerated vesting on January 29, 2015 of a portion of RSUs granted on January 27, 2014 equal to the Lockheed Martin Corporation Supplemental Retirement Plan (“Supplemental Pension”), which is a restorative plan and provides benefits in excessvalue of the benefit payable under IRS rules throughtax withholding obligation due upon retirement-eligibility of the LMRP, our tax-qualified plan. SeeNEO and following the footnoteBoard’s certification of the one-year performance goal based on the per share closing price on the date of vesting. Represents aggregate number of shares vested prior to column (b)disposition of shares to the 2012 Pension Benefits TableCorporation to satisfy tax withholding obligation. (3) Value realized was calculated based on page 57.the number of shares acquired on vesting multiplied by the per share closing price of our common stock on the date of vesting (January 30, 2015, $188.37) and (January 29, 2015, $192.50). Retirement Plans During 2015, the NEOs participated in the Lockheed Martin Corporation Salaried Employee Retirement Program (LMRP), which is a combination of several prior plans (collectively, the “Prior Plan”) for salaried employees with some protected benefits. The calculation of retirement benefits under the LMRP is determined by a formula that takes into account the participant’s years of credited service and average compensation for the highest three years of the last ten years of employment. Average compensation includes the NEO’s base salary, annual incentive bonuses and lump sum payments in lieu of a salary increase. NEOs must have either five years of service or be actively employed by the Corporation at age 65 to vest in the LMRP. Normal retirement age is 65; however, benefits are payable as early as age 55 (with five years of service) at a reduced amount or without reduction at age 60. Benefits are payable as a monthly annuity for the lifetime of the employee, as a joint and survivor annuity, as a life annuity with a five or ten year guarantee, or as a level income annuity. The calculation of retirement benefits under the Prior Plan is based on a number of formulas, some of which take into account the participant’s years of credited service and pay over the career of the NEO. Certain other formulas in the Prior Plan are based upon the final average compensation and credited service of the employee. Pay under certain formulas in the Prior Plan currently includessalary, commissions, overtime, shift differential, lump sum pay in lieu of a salary increase, annual incentive bonuses awarded that year, and 401(k) and pre-tax contributions. A portion of the pension benefits for Mr. Tanner was earned under the Prior Plan. All of the NEOs were eligible for early retirement as of December 31, 2015. As of December 31, 2015, all of the NEOs were vested in the LMRP. During 2015, the NEOs also participated in the Lockheed Martin Corporation Supplemental Retirement Plan (Supplemental Pension), which is a restorative plan and provides benefits in excess of the benefit payable under IRS rules through the LMRP, our tax-qualified plan (see the footnote to column (d) to the “2015 Pension Benefits” table on page 62). In July 2014, the Corporation announced that the LMRP will be frozen, in two steps, with increases in compensation no longer taken into account effective January 1, 2016 and increases in service no longer taken into account effective January 1, 2020. This change in plan structure also will carry over to the Supplemental Pension benefit accruals available to the NEOs. Retirement benefits earned thereafter will be paid through defined contribution plans. Beginning in 2016 eligible salaried employees (including the NEOs) will receive a 2% company contribution to the salaried 401(k) plan. 20132016 Proxy Statement       56 Back to Contents 2012 Pension Benefits61 Name Plan Name Number of Years Credited Service (#) Present Value of Accumulated Benefit ($) Payments During Last Fiscal Year ($) (a) (b) (c) (d) (e) Robert J. Stevens Lockheed Martin Corporation Salaried Employee Retirement Program 25.6 1,048,887 0 Lockheed Martin Corporation Supplemental Retirement Plan - 25,092,164 0 Bruce L. Tanner Lockheed Martin Corporation Salaried Employee Retirement Program 30.1 1,178,640 0 Lockheed Martin Corporation Supplemental Retirement Plan - 7,811,297 0 Marillyn A. Hewson Lockheed Martin Corporation Salaried Employee Retirement Program 30.1 1,577,570 0 Lockheed Martin Corporation Supplemental Retirement Plan - 11,765,952 0 Linda R. Gooden Lockheed Martin Corporation Salaried Employee Retirement Program 32.5 1,735,324 0 Lockheed Martin Corporation Supplemental Retirement Plan - 9,497,451 0 Joanne M. Maguire Lockheed Martin Corporation Salaried Employee Retirement Program 9.9 508,236 0 Lockheed Martin Corporation Supplemental Retirement Plan - 3,055,499 0 Christopher E. Kubasik Lockheed Martin Corporation Salaried Employee Retirement Program 13.2 488,114 0 Lockheed Martin Corporation Supplemental Retirement Plan - 5,521,984 0 Table of Contents Executive Compensation 2015 Pension Benefits Name Plan Name Number of Years Credited Service (#) Present Value of Accumulated Benefit ($) Payments During Last Fiscal Year ($) (a)       (b)       (c)       (d)       (e) Marillyn A. Hewson Lockheed Martin Corporation Salaried Employee Retirement Program 33.1 1,852,063 0 Lockheed Martin Corporation Supplemental Retirement Plan 45,121,313 0 Bruce L. Tanner Lockheed Martin Corporation Salaried Employee Retirement Program 33.1 1,538,477 0 Lockheed Martin Corporation Supplemental Retirement Plan 14,186,176 0 Dale P. Bennett Lockheed Martin Corporation Salaried Employee Retirement Program 34.6 1,796,270 0 Lockheed Martin Corporation Supplemental Retirement Plan 11,037,324 0 Orlando P. Carvalho Lockheed Martin Corporation Salaried Employee Retirement Program 35.5 1,696,551 0 Lockheed Martin Corporation Supplemental Retirement Plan 11,874,179 0 Maryanne R. Lavan Lockheed Martin Corporation Salaried Employee Retirement Program 25.8 1,291,176 0 Lockheed Martin Corporation Supplemental Retirement Plan 8,625,309 0 Plan Name (Column (b)) The Supplemental Pension uses the same formula for benefits as the tax-qualified plan uses for calculating the NEO’s benefit. All The Lockheed Martin Corporation Supplemental Retirement Plan (Supplemental Pension) uses the same formula for benefits as the tax-qualified plan uses for calculating the NEO’s benefit. Although all service recognized under the tax-qualified plan is recognized under the Supplemental Pension although a benefit would be earned under the tax-qualified plan is recognized under the Supplemental Pension, a benefit would be earned underthe Supplemental Pension only in years when the employee’s total accrued benefit would exceed the benefit accrued under the tax-qualified plan. The Supplemental Pension benefits are payable in the same form as benefits are paid under the LMRP, except lump sum payments are available under the Supplemental Pension. Present Value of Accumulated Benefit (Column (d)) The amounts in column (d) were computed using the same assumptions we used to account for pension liabilities in our financial statements and as described in Note 9 to our financial statements contained in our 2012 Annual Report, except that the amounts were calculated based on benefits commencing at age 60. We used age 60 rather than the plan’s normal retirement age of 65 because an employee may commence receiving pension benefits at age 60 without any reduction for early commencement. A portion of Mr. Stevens’ and Mr. Tanner’s benefit was earned under grandfathered plans that apply a reduction for early commencement at age 60. The amounts shown for Mr. Stevens and Mr. Tanner reflect the reduction for early commencement of the benefit. Amounts paid under our plans use assumptions contained in the plans and may be different than those used for financial statement reporting purposes. Only the benefit payable under the Supplemental Pension is payable in the form of a lump sum. If an executive elected a lump sum payment, the amount of the lump sum would be based on plan assumptions and not the assumptions used for financial statement reporting purposes. As a result, the actual lump sum payment would be an amount different than what is reported in this table. While the discount rate used for financial statement purposes (4.00%) was the same as the plan rate of 4.00% on December 31, 2012 (Pension Benefit Guaranty Corporation rate for terminating pension plans plus 1%, not to be lower than 4% or exceed 7%), the lump sum payment would be different than the amount shown in this table due to the differences in mortality tables used (1983 Group Annuity Mortality table for the plan and RP-2000 Mortality table for financial statement purposes). The age of the executive at retirement would also impact the size of the lump sum payment. The amount using plan assumptions is shown on the “Potential Payments Upon Termination or Change in Control” table. 2013 Proxy Statement       57 Back to Contents Nonqualified Deferred Compensation Participants in our tax-qualified 401(k) plan may contribute up to 25% of base salary. In addition, we make a matching contribution equal to 50% of up to the first 8% of compensation contributed by the participant. Employee and Corporation matching contributions in excess of the Internal Revenue Code limitations are contributed to the NQSSP. Employee and Corporation matching contributions are nonforfeitable at all times. NQSSP contributions are credited with earnings or losses, as appropriate, based on the investment option or options in which the account has been invested, as elected by the participant. The investment options available under our tax-qualified 401(k) plan for salaried employees are available under the NQSSP (other than the self-managed account). The NQSSP provides for payment following termination of employment in a lump sum or up to 25 annual installments at the participant’s election. All amounts accumulated and unpaid under the NQSSP must be paid in a lump sum within 15 calendar days following a change in control. The DMICP provides the opportunity to defer, until termination of employment or beyond, the receipt of all or a portion of annual incentive bonuses, LTIP awards, and amounts paid in respect of the termination of the Lockheed Martin Post-Retirement Death Benefit (“PRDB”) Plan. Employees may elect any of the investment funds available in the NQSSP (with the exception of the Company Stock Fund and the self-managed account) The amounts in column (d) were computed using the same assumptions we used to account for pension liabilities in our financial statements and as described in Note 11 to our financial statements contained in our 2015 Annual Report, except that the amounts were calculated based on benefits commencing at age 60 (or current age if greater). We used these ages rather than the plan’s normal retirement age of 65 because an employee may commence receiving pension benefits at age 60 without any reduction for early commencement. A portion of Mr. Tanner’s benefit was earned under grandfathered plans that apply a reduction for early commencement at age 60. The amounts shown for Mr. Tanner reflect the reduction for early commencement of the benefit. Amounts paid under our plans use assumptions contained in the plans and may be different than those used for financial statement reporting purposes. Only the benefit payable under the Supplemental Pension is payable in the form of a lump sum. If an executive elected a lump sum payment, the amount of the lump sum would be based on plan assumptions and not the assumptions used for financial statement reporting purposes. As a result, the actual lump sum payment would be an amount different than what is reported in this table. The age of the executive at retirement would also impact the size of the lump sum payment. The amount using plan assumptions is shown on the “Potential Payments Upon Termination or Change in Control” table. 62www.lockheedmartin.com/investor Table of Contents Executive Compensation Nonqualified Deferred Compensation Participants in our tax-qualified 401(k) plan may defer up to 25% of base salary on a pre-tax, Roth or after-tax basis. In addition, we make a matching contribution equal to 50% of up to the first 8% of compensation contributed by the participant. Employee and Corporation matching contributions in excess of the Internal Revenue Code limitations may be contributed to the NQSSP on a pre-tax basis at the election of the NEO. Employee and Corporation matching contributions are nonforfeitable at all times. NQSSP contributions are credited with earnings or losses, as appropriate, based on the investment option or options in which the account has been invested, as elected by the participant. Each of the NQSSP investment options is available under our tax-qualified 401(k) plan for salaried employees. The NQSSP provides for payment following termination of employment in a lump sum or up to 25 annual installments at the participant’s election. All amounts accumulated and unpaid under the NQSSP must be paid in a lump sum within 15 calendar days following a change in control. The Deferred Management Incentive Compensation Plan (DMICP) provides the opportunity to defer, until termination of employment or beyond, the receipt of all or a portion of annual incentive bonuses, LTIP awards and amounts paid in respect of the termination of the Lockheed Martin Post-Retirement Death Benefit Plan. Employees may elect any of the investment fundsavailable in the NQSSP (with the exception of the Company Stock Fund) or two investment alternatives available only under the DMICP for crediting earnings (losses). Under the DMICP Stock Investment Option, earnings (losses) on deferred amounts will accrue at a rate that tracks the performance of our common stock, including reinvestment of dividends. Under the DMICP Interest Investment Option, earnings accrue at a rate equivalent to the then published rate for computing the present value of future benefits under Cost Accounting Standards 415, Deferred Compensation (“CAS 415 rate”). The Interest Investment Option was closed to new deferrals and transfers from other investment options effective July 1, 2009. Amounts credited to the Stock Investment Option may not be reallocated to other options. In addition, Stock Investment Option deferrals will be paid in shares of our common stock upon distribution. For the 2013–2015 LTIP grant, any award is subject to a one-year mandatory deferral to the extent the award value of future benefits under Cost Accounting Standards 415, Deferred Compensation (“CAS 415 rate”). The Interest Investment Option was closed to new deferrals and transfers from other investment options effective July 1, 2009. Amounts credited to the Stock Investment Option may not be reallocated to other options. In addition, Stock Investment Option voluntary deferrals will be paid in shares of our common stock. Prior to the 2011-2013 LTIP grant, 50% of any LTIP award must be mandatorily deferred for two years to the Stock Investment Option and remains subject to the continued employment requirements of the award. Mandatory LTIP deferrals are paid in cash at the end of two years or further deferred at the election of the executive based on the price of our stock at that time. The mandatory deferral was eliminated beginning with the 2011-2013 LTIP grant, except for the CEO who is subject to a one-year mandatory deferral to the extent the payout would exceed $5 million. For the 2012-2014 LTIP grant, the CEO is subject to a one-year mandatory deferral to the extent the total award would exceed $10 million. For the 2014–2016 LTIP grant, the amount in excess of $10 million is forfeited. The DMICP provides for payment in January or July following termination of employment in a lump sum or up to 25 annual installments at the NEO’s election. All amounts accumulated under the DMICP must be paid in a lump sum within 15 days following a change in control. 20132016 Proxy Statement       58 Back to Contents 2012 Nonqualified Deferred Compensation63 Name Executive Contributions in Last FY ($) Registrant Contributions in Last FY ($) Aggregate Earnings in Last FY ($) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($) (a)   (b) (c) (d) (e) (f) Robert J. Stevens NQSSP 427,632 68,421 576,715 0 5,545,655 DMICP (Bonus) 0 0 1,069,675 0 16,978,570 DMICP (LTIP1 Mandatory) 0 2,168,100 952,723 2,994,778 5,854,526 DMICP (LTIP2 Voluntary) 2,994,778 0 422,773 0 22,917,045 TOTAL 3,422,410 2,236,521 3,021,886 2,994,778 51,295,796 Bruce L. Tanner NQSSP 168,120 26,899 213,193 0 1,653,599 DMICP (Bonus) 0 0 84,581 0 777,100 DMICP (LTIP1 Mandatory) 0 405,000 153,728 106,006 944,665 DMICP (LTIP2 Voluntary) 0 0 0 0 0 TOTAL 168,120 431,899 451,502 106,006 3,375,364 Marillyn A. Hewson NQSSP 95,000 25,497 200,639 0 1,487,318 DMICP (Bonus) 0 0 532,759 0 5,774,308 DMICP (LTIP1 Mandatory) 0 137,970 67,243 243,761 413,212 DMICP (LTIP2 Voluntary) 381,731 0 202,463 0 2,900,488 TOTAL 476,731 163,467 1,003,104 243,761 10,575,326 Linda R. Gooden NQSSP 0 0 0 0 0 DMICP (Bonus) 0 0 11,527 0 156,512 DMICP (LTIP1 Mandatory) 0 344,925 149,050 365,642 915,916 DMICP (LTIP2 Voluntary) 0 0 16,502 0 269,459 TOTAL 0 344,925 177,079 365,642 1,341,887 Joanne M. Maguire NQSSP 36,191 18,096 35,162 0 465,002 DMICP (Bonus) 0 0 137,326 0 1,059,423 DMICP (LTIP1 Mandatory) 0 290,723 130,429 365,642 801,493 DMICP (LTIP2 Voluntary) 0 0 102,950 0 751,799 TOTAL 36,191 308,819 405,867 365,642 3,077,717 Christopher E. Kubasik NQSSP 61,539 30,577 126,254 277,233 1,091,966 DMICP (Bonus) 560,454 0 496,397 0 4,398,170 DMICP (LTIP1 Mandatory) 0 450,000 157,942 1,864,673 0 DMICP (LTIP2 Voluntary) 252,121 0 344,647 0 2,757,329 TOTAL 874,114 480,577 1,125,240 2,141,906 8,247,465 Table of Contents Executive Compensation 2015 Nonqualified Deferred Compensation This table reports compensation earned by the NEOs and deferred under our NQSSP and DMICP. The NQSSP is a nonqualified 401(k) plan with an employer match on a portion of the salary deferral. Three types of compensation may be deferred into the DMICP: • ● Annual incentive bonus (“DMICP (Bonus)”). • ● Amounts earnedpayable under our LTIP program butand mandatorily deferred into company stock for two years (and subject to forfeiture) (“DMICP (LTIP1 Mandatory)”). • ● Amounts payable under our LTIP program and voluntarily deferred (“DMICP (LTIP2 Voluntary)”). Amounts paid in respect of the termination of the PRDB in 2008 could also be deferred into the DMICP. In the table above, deferrals of PRDB payments are included in the Aggregate Balance at Last FYE for the DMICP (Bonus) entry. Name Executive Contributions in Last FY ($) Registrant Contributions in Last FY ($) Aggregate Earnings in Last FY ($) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($) (a)             (b)       (c)       (d)       (e)       (f) Marillyn A. Hewson NQSSP 361,178 57,789 24,361 0 3,173,740 DMICP (Bonus) 2,284,653 N/A (222,115 ) 0 14,871,871 DMICP (LTIP1 Mandatory) N/A N/A 0 1,402,870 0   DMICP (LTIP2 Voluntary) 3,029,654 N/A 54,619 0 8,254,742 TOTAL 5,675,485 57,789 (143,135 ) 1,402,870 26,300,353 Bruce L. Tanner NQSSP 201,620 32,259 142,599 0 3,581,322 DMICP (Bonus) 0 N/A 183,734 0 1,575,911 DMICP (LTIP1 Mandatory) N/A N/A 0 1,740,858 0 DMICP (LTIP2 Voluntary) 0 N/A 0 0 0 TOTAL 201,620 32,259 326,333 1,740,858 5,157,233 Dale P. Bennett NQSSP 146,714 23,474 100,398 0 1,518,089 DMICP (Bonus) 278,863 N/A 221,450 0 3,187,458 DMICP (LTIP1 Mandatory) N/A N/A 0 396,104 0 DMICP (LTIP2 Voluntary) 550,745 N/A 58,205 0 1,161,066 TOTAL 976,322 23,474 380,053 396,104 5,866,613 Orlando P. Carvalho NQSSP 0 0 0 0 0 DMICP (Bonus) 0 N/A 28,597 0 210,858 DMICP (LTIP1 Mandatory) N/A N/A 0 490,144 0 DMICP (LTIP2 Voluntary) 0 N/A 0 0 0 TOTAL 0 0 28,597 490,144 210,858 Maryanne R. Lavan NQSSP 104,978 24,701 70,132 0 1,847,563 DMICP (Bonus) 19,086 N/A 150,516 0 1,088,211 DMICP (LTIP1 Mandatory) N/A N/A 0 354,932 0 DMICP (LTIP2 Voluntary) 24,315 N/A 98,466 0 784,407 TOTAL 148,379 24,701 319,114 354,932 3,720,181 64www.lockheedmartin.com/investor Table of Contents Executive Compensation Executive Contributions in Last Fiscal Year (Column (b)) Includes 2012 salary deferrals to NQSSP, annual incentive bonus paid in 2012 for 2011 performance deferred to DMICP, and voluntary deferrals of LTIP for the 2009-2011 period to the DMICP. The table reflects the year in which the deferral is credited to the NEO’s account (2012) and not the year in which it was earned (2011) Includes 2015 salary deferrals to NQSSP, annual incentive bonus paid in 2015 for 2014 performance deferred to DMICP, and voluntary deferrals of LTIP for the 2012–2014 period to the DMICP. The table reflects the year in which the deferral is credited to the NEO’s account (2015) and not the year in which it was earned (2014). 2013 Proxy Statement       59 Back to Contents Registrant Contributions in Last Fiscal Year (Column (c)) Includes mandatory deferrals of LTIP for 2009-2011 and 2012 Corporation matching contributions to NQSSP. The NQSSP match is also included in column (i) of the “Summary Compensation Table.” The table reflects the year in which the deferral is credited to the NEO’s account (2012) and not the year in which it was earned (2011) Includes 2015 Corporation matching contributions to NQSSP. The NQSSP match is also included in column (i) of the “Summary Compensation Table.” The table reflects the year in which the deferral is credited to the NEO’s account (2015) and not the year in which it was earned (2014). Aggregate Withdrawals/Distributions (Column (e)) Includes distributions of mandatory LTIP deferral from the 2010-2012 period in January 2015 following the 2007-2009 period in January 2012 following end of the two-year deferral period. Aggregate Balance at Last Fiscal Year End (Column (f)) The following table lists the amounts reported as executive or registrant contributions in columns (b) and (c) of the “2012 Nonqualified Deferred Compensation” table that are also reported as compensation in the “Summary Compensation Table” for 2012. These contributions consist of NEO and Corporation contributions made to the NQSSP for service in 2012. Contributions with respect to 2012 performance deferred in 2013 (annual incentive bonus and LTIP) are not included as these amounts are not credited until 2013, and are not included in column (f). The following table also lists the amounts reported in column (f) as part of the Aggregate Balance at Last FYE (2012) that is reported as compensation for prior years in the “Summary Compensation Table” for years beginning with 2006. For 2012, there were no earnings in excess of 120% of the applicable federal rate. Name Aggregate Balance at December 31, 2012 in Column (f) ($) Of Amount Reported in Column (f) NEO and Corporation Contributions to NQSSP Reported in “Summary Compensation Table” for 2012 ($) Amount Reported in “Summary Compensation Table” for Prior Years (Beginning with 2006) ($) Mr. Stevens 51,295,796 496,053 43,967,747 Mr. Tanner 3,375,364 195,019 1,654,436 Ms. Hewson 10,575,326 120,497 1,168,908 Ms. Gooden 1,341,887 0 723,049 Ms. Maguire 3,077,717 54,287 343,973 Mr. Kubasik 8,247,465 92,116 7,584,668 Potential Payments Upon Termination or Change in Control The table below summarizes the benefits that become payable to a NEO at, following, or in connection with any termination, including without limitation resignation, severance, retirement, or a constructive termination of a NEO, or a change in control under the terms of our benefit plans. Our plans do not contain specific provisions regarding termination for cause. Provisions unique to the 2006 RSU grant to Mr. Stevens are described in the “Potential Payments Upon Termination or Change in Control” table on page 64. In addition, pursuant to a Transition Agreement, contingent upon execution of a non-competition agreement, we will pay Mr. Stevens $2 million following his retirement on February 28, 2014. In February 2013, the Corporation entered into a Retirement Transition Agreement with each of Ms. Maguire and Ms. Gooden, both of whom will retire from the Corporation in 2013. Under each of the agreements, provided the executive signs a release of claims no later than June 1, 2013, the executive will receive a payment of $1.2 million, less appropriate deductions for applicable taxes. In addition, the Corporation agreed to reimburse Ms. Maguire for costs, fines or penalties resulting from an audit of her 2010 tax return as a consequence of the early distribution of a portion of her 2005-2007 LTIP award. The following table lists the amounts reported as executive or registrant contributions in columns (b) and (c) of the “2015 Nonqualified Deferred Compensation” table that are also reported as compensation in the “Summary Compensation Table” for 2015. These contributions consist of NEO and Corporation contributions made to the NQSSP for service in 2015. Contributions with respect to 2015 performance deferred in 2016 (annual incentive bonus and LTIP) are not included as these amounts are not credited until 2016, and are not included in column (f). The following table also lists the amounts reported in column (f) as part of the Aggregate Balance at Last FYE (2015) that is reported as compensation for prior years in the “Summary Compensation Table” for years beginning with 2006. For 2015, there were no earnings in excess of 120% of the applicable federal rate. Of Amount Reported in Column (f) Name      Aggregate Balance at December 31, 2015 in Column (f) ($)      NEO and Corporation Contributions to NQSSP Reported in “Summary Compensation Table” for 2015 ($)      Amount Reported in “Summary Compensation Table” for Prior Years (Beginning with 2006) ($) Ms. Hewson   26,300,353   418,967   12,152,836 Mr. Tanner 5,157,233 233,879 3,066,591 Mr. Bennett   5,866,613   170,189   0 Mr. Carvalho 210,858 0 0 Ms. Lavan   3,720,181   129,679   304,783 20132016 Proxy Statement       60 Back to 65 Table of Contents Executive Compensation Potential Payments Upon Termination or Change in Control The table below summarizes the benefits that become payable to a NEO at, following, or in connection with any termination, including resignation, severance, retirement, or a constructive termination of a NEO, or a change in control under the terms of our benefit plans. SUMMARY OF PAYMENT TRIGGERS Plan Retirement Change in Control Death/Disability/Layoff Divestiture1 Termination/ Resignation Pension2 Payable PENSION-QUALIFIED1 Retirement –Annuity payable on a reduced basis at age 55; annuity payable on a non-reduced basis at age 60; steeper reduction for early commencement at age 55 for terminations prior to age 55 than for terminations after age 55. None for qualified; see below for Supplemental Pension. Spousal benefit as required by law in event of death unless waived by participant; no provision for disability. Layoff between age 53 and 55 with 8 years of service or before age 55 with 25 years of service is eligible for the more favorable actuarial reductions for participants terminating at age 55. No provisions; absent a negotiated transfer of liability to buyer, treated as retirement or termination. Payable on a reduced basis at age 55; payable on a non-reduced basis at age 60; steeper reduction for early commencement at age 55 for terminations prior to age 55 than for terminations after age 55. • LMRP • Supplemental Pension2 Annuity form only. Annuity or lump sum. No acceleration. Lump sum. Annuity form only. Annuity or lump sum. No acceleration. No provisions; absent a negotiated transfer of liability to buyer, treated as retirement or termination. Annuity form only. Annuity or lump sum. LTIP Prorated payment at the end of the three-year performance period for retirement during that period. Immediate payment for retirement during the mandatory deferral period (if applicable) based on closing price of our stock on date of triggering event. Immediate prorated payment following change in control for event occurring during performance period. Immediate payment for change in control during the mandatory deferral period (if applicable) based on closing price of our stock on date of triggering event. Prorated payment at the end of the three-year performance period for death, disability, or layoff during that period. Immediate payment in event of death, disability, or layoff during the mandatory deferral period (if applicable) based on closing price of our stock on date of triggering event. Prorated payment at the end of the three-year performance period for divestiture during that period. Immediate payment for divestiture during the mandatory deferral period (if applicable) based on closing price of our stock on date of triggering event. Forfeit if termination occurs prior to age 55; termination on or after age 55 treated as retirement. Options Forfeit unvested options if retirement occurs prior to one year anniversary of date of grant. If retirement occurs after one year anniversary of date of grant, forfeit unvested options and vested options expire at ten-year term. Immediate vesting. Immediate vesting in event of death/disability. In the event of layoff, forfeit unvested options if layoff occurs prior to one year anniversary of date of grant. If layoff occurs after one year anniversary of date of grant, forfeit unvested options and vested options expire at ten-year term. Term of options limited to five years; options become exercisable on date the options would have otherwise vested. Vested options expire 30 days after termination or resignation. Forfeit unvested options if termination occurs prior to age 55; resignation on or after age 55 treated as retirement. RSUs Forfeit RSUs if retirement occurs prior to one year anniversary of date of grant; otherwise vest in one-third increments for each full year of service following date of grant. Immediate vesting following termination in the event of a change in control. Immediate vesting following death or disability. Forfeit RSUs if layoff occurs prior to one year anniversary of date of grant; otherwise vest in one-third increments for each full year of service following date of grant. Immediate vesting. Forfeit unvested RSUs if termination occurs prior to age 55; termination on or after age 55 treated as retirement. Annual Incentive Bonus3 May prorate for retirement with six months of participation in the year. Full payment if retirement occurs on December 31. No provision. May prorate for death, disability, or layoff with six months of participation in the year. Full payment if death or disability occurs on December 31. No provision. Eligible for prorated award if termination/ resignation occurs after December 1. DMICP4 Lump sum or installment payment in accordance with NEO elections. Immediate lump sum payment. Lump sum or installment payment in accordance with NEO elections, except lump sum only for layoff prior to age 55. Follows termination provisions. Lump sum if termination is prior to age 55; after age 55, lump sum or installment payment in accordance with NEO elections. 2013 Proxy Statement       61 Back to Contents Plan Retirement Change in Control Death/Disability/Layoff Divestiture1 Termination/ Resignation NQSSP4 Lump sum or installment payment in accordance with NEO elections. Immediate lump sum payment. Lump sum for death; for disability or layoff, lump sum or installment payment in accordance with NEO elections. Lump sum or installment payment in accordance with NEO elections. Lump sum or installment payment in accordance with NEO elections. Executive Severance Plan No payment. No payment unless terminated. No payment for death or disability. Payment of a lump sum amount equal to a multiple of salary, MICP, and health care continuation coverage cost and outplacement and relocation assistance. The multiple of salary and MICP for the CEO is 2.99; for all other NEOs it is 1.0. No payment. No payment. (1) Divestiture is defined as a transaction which results in the transfer of control of a business operation to any person, corporation, association, partnership, joint venture, or other business entity of which less than 50% of the voting stock or other equity interests (in the case of entities other than corporations) is owned or controlled directly or indirectly, by us, one or more of our subsidiaries, or by a combination thereof following the transaction. (2) See “2012 Pension Benefits” table on page 57 for present value of accumulated benefit. (3) See “Compensation Discussion and Analysis” commencing on page 28 for discussion of annual incentive bonus payment calculation. (4) See “Aggregate Balance at Last FYE” column in “2012 Nonqualified Deferred Compensation” table on page 59 for amount payable. 2013 Proxy Statement       62 Back to Contents The following table quantifies the payments under executive compensation plans as a result of a change in vesting provisions in stock options, RSUs, and LTIP awards and the lump sum payable under the Supplemental Pension that would be made assuming a termination event occurred on December 31, 2012. Payments under other plans do not change as a result of the termination event and quantification of those payments are found elsewhere in this Proxy Statement or are paid under plans available generally to salaried employees. Numbers have been rounded to the nearest dollar. Potential Payments Upon Termination or Change in Control Name   Retirement ($) Change In Control ($) Death/ Disability ($) Layoff ($) Divestiture ($) Termination/ Resignation ($) Robert J. Stevens Supplemental Pension 24,110,220 24,110,220 24,110,220 24,110,220 24,110,220 24,110,220 LTIP 6,736,496 18,046,806 6,736,496 6,736,496 6,736,496 6,736,496 Options 1,682,023 7,612,475 7,612,475 1,682,023 7,612,475 1,682,023 RSUs 4,029,822 13,724,364 13,724,364 4,029,822 12,635,342 4,029,822 Executive Severance 0 0 0 13,473,355 0 0 TOTAL 36,558,561 63,493,865 52,183,555 50,031,916 51,094,533 36,558,561 Bruce L. Tanner Supplemental Pension 0 9,311,653 0 0 0 0 LTIP 0 4,036,414 1,260,337 1,260,337 1,260,337 0 Options 0 1,864,298 1,864,298 319,012 1,864,298 0 RSUs 0 2,931,457 2,931,457 795,529 2,931,457 0 Executive Severance 0 0 0 1,472,855 0 0 TOTAL 0 18,143,821 6,056,092 3,847,733 6,056,092 0 Marillyn A. Hewson Supplemental Pension 12,953,037 12,953,037 12,953,037 12,953,037 12,953,037 12,953,037 LTIP 805,686 3,301,416 805,686 805,686 805,686 805,686 Options 265,072 1,620,459 1,620,459 265,072 1,620,459 265,072 RSUs 684,621 2,545,779 2,545,779 684,621 2,545,779 684,621 Executive Severance 0 0 0 2,500,052 0 0 TOTAL 14,708,416 20,420,691 17,924,961 17,208,468 17,924,961 14,708,416 Linda R. Gooden Supplemental Pension 10,271,449 10,271,449 10,271,449 10,271,449 10,271,449 10,271,449 LTIP 1,075,485 3,170,814 1,075,485 1,075,485 1,075,485 1,075,485 Options 269,700 1,403,964 1,403,964 269,700 1,403,964 269,700 RSUs 662,012 2,261,850 2,261,850 662,012 2,261,850 662,012 Executive Severance 0 0 0 1,296,911 0 0 TOTAL 12,278,646 17,108,077 15,012,748 13,575,557 15,012,748 12,278,646 Joanne M. Maguire Supplemental Pension 3,126,709 3,126,709 3,126,709 3,126,709 3,126,709 3,126,709 LTIP 912,728 3,021,451 912,728 912,728 912,728 912,728 Options 230,272 1,382,175 1,382,175 230,272 1,382,175 230,272 RSUs 609,587 2,206,870 2,206,870 609,587 2,206,870 609,587 Executive Severance 0 0 0 1,288,967 0 0 TOTAL 4,879,286 9,737,205 7,628,482 6,168,263 7,628,482 4,879,296 Christopher E. Kubasik Supplemental Pension 0 7,181,618 0 0 0 0 LTIP 0 0 0 0 0 0 Options 0 0 0 0 0 0 RSUs 0 0 0 0 0 0 Executive Severance 0 0 0 0 0 0 Separation Agreement 0 0 0 0 0 3,500,000 TOTAL 0 7,181,618 0 0 0 3,500,000 Termination/Resignation Resignation by executives who are eligible for retirement, for purposes of this table, is treated as retirement. Mr. Tanner and Mr. Kubasik were not eligible for retirement on December 31, 2012; Mr. Stevens, Ms. Hewson, Ms. Gooden, and Ms. Maguire were eligible for retirement. Mr. Kubasik resigned on November 9, 2012. 2013 Proxy Statement       63 Back to Contents Supplemental Pension The Supplemental Pension lump sum value was calculated using plan assumptions and age of executive as of December 31, 2012. Payments under the Supplemental Pension do not commence prior to age 55 exceptthan for terminations after age 55. Change in the caseControl –No acceleration. Death/Disability/Layoff – Spousal annuity benefit as required by law in event of a change in control. Mr. Tannerdeath unless waived by participant. For either (i) disability between age 53 and Mr. Kubasik had not attained55 with eight years of service or (ii) layoff between age 53 and 55 with eight years of service or before age 55 by December 31, 2012, and would bewith 25 years of service, participant is eligible for an immediatethe more favorable actuarial reductions for participants terminating after age 55. Divestiture2 –No provisions; absent a negotiated transfer of liability to buyer, treated as retirement or termination. Termination/Resignation – Annuity payable on a reduced basis at age 55; annuity payable on a non-reduced basis at age 60; steeper reduction for early commencement at age 55 for terminations prior to age 55 than for terminations after age 55. SUPPLEMENTAL PENSION1 Retirement – Annuity or lump sum for a December 31, 2012, termination onlyat later of age 55 or termination. Change in the event of a change in control. TheControl – Lump sum. Death/Disability/Layoff – Annuity or lump sum payableat later of age 55 or termination. Divestiture2 – No provisions; absent a negotiated transfer of liability to each of them upon change in control has been reduced to reflect early payment. The Supplemental Pension assumptions in effect for December 31, 2012, are 4.00% discount rate and 1983 Groupbuyer, treated as retirement or termination. Termination/Resignation – Annuity Mortality table. The Supplemental Pension assumptions are different than the assumptions used to calculate the accrued benefit reported in the “2012 Pension Benefits” table. In the event of any other termination, Mr. Tanner’s and Mr. Kubasik’s accrued pension benefit would be payable at age 55. Long-Term Incentive Performance The 2011-2013 and 2012-2014 LTIP periods were not completed at December 31, 2012 (“Incomplete Periods”), and there is no payout until the end of each period. NEOs who terminate during an Incomplete Period due to retirement, death, disability, divestiture, or layoff are eligible for a prorated awardlump sum. LTIP Retirement/Death/Disability/Layoff – Prorated payment at the end of the three-year performance period; the only circumstanceperiod for retirement, death, disability, or layoff during that period. Change in which aControl –Immediate payment would be accelerated and paid during an Incomplete Period would beat target for a change in control in which case a proratedevent occurring during performance cycle if not assumed by successor; immediate payment would be madeat target following ainvoluntary termination without cause or voluntary termination with good reason within 24 months of change in control.control during performance cycle if award is assumed by successor. Divestiture2 – Prorated payment at the end of the three-year performance period for divestiture during that period. Termination/Resignation – Forfeited if termination occurs prior to becoming retirement-eligible; termination on or after (i) age 55 and ten years of service or (ii) age 65 treated as retirement-eligible. RSUs Retirement –Continued vesting of RSUs and dividend equivalents subject to six-month minimum service from date of grant. Change in Control –Immediate vesting of RSUs and dividend equivalents if not assumed by successor. Immediate vesting following involuntary termination without cause or voluntary termination with good reason within 24 months of change in control if assumed by successor. Death/Disability/Layoff –Continued vesting of RSUs and dividend equivalents after layoff, subject to six-month minimum service from date of grant. For all awards, immediate vesting following death or disability. Divestiture2 –Immediate vesting of RSUs and dividend equivalents. Termination/Resignation –Forfeit unvested RSUs and dividend equivalents if termination occurs prior to becoming retirement-eligible. Termination on or after (i) age 55 and ten years of service or (ii) age 65 with at least six months of service during the Incomplete Periods,performance cycle is treated as retirement-eligible. 66www.lockheedmartin.com/investor Table of Contents Executive Compensation PSUs Retirement/Death/Disability/Layoff – Prorated payment of PSUs and dividend equivalents at the amounts shownend of the three-year performance period for retirement, death, disability or layoff during that period subject to six-month minimum service from date of grant. Change in this table include onlyControl – Immediate vesting of PSUs and dividend equivalents at target if award is not assumed by successor. Immediate payment at target following involuntary termination without cause or voluntary termination with good reason within 24 months of change in control if assumed by successor. Divestiture2 –Prorated payment of PSUs and dividend equivalents at the paymentsend of the three-year performance period for divestiture during that would have been acceleratedperiod. Termination/Resignation – Forfeit PSUs and paiddividend equivalents if termination occurs prior to becoming retirement-eligible; termination on December 31, 2012,or after (i) age 55 and ten years of service or (ii) age 65 treated as retirement-eligible. EXECUTIVE SEVERANCE PLAN Retirement –No payment. Change in Control –No payment unless terminated. Death/Disability – No payment for death or disability. Layoff – Payment of a lump sum amount equal to a multiple of salary, annual bonus equivalent, and health care continuation coverage cost plus outplacement services and relocation assistance. The multiple of salary and annual bonus equivalent for the CEO is 2.99; for all other NEOs it is 1.0. Divestiture2 – No payment. Termination/Resignation – No payment. ANNUAL INCENTIVE BONUS3 Retirement – Payment may be prorated for retirement during the year with six months of participation in the eventyear. Change in Control –No provision. Death/Disability/Layoff – Payment may be prorated for death, disability or layoff during the year with six months of participation in the year. Divestiture2 – No provision. Termination/Resignation – Eligible for prorated award if termination/ resignation occurs after December 1 with six months of participation in the year. DMICP4 Retirement – Lump sum or installment payment in accordance with NEO elections. Change in Control – Immediate lump sum payment. Death/Disability/Layoff – Lump sum or installment payment in accordance with NEO elections, except lump sum only for layoff prior to age 55. Divestiture2 – Follows termination provisions. Termination/Resignation – Lump sum if termination is prior to age 55; after age 55, lump sum or installment payment in accordance with NEO elections. NQSSP4 Retirement – Lump sum or installment payment in accordance with NEO elections. Change in Control –Immediate lump sum payment Death/Disability/Layoff –Lump sum for death; for disability or layoff, lump sum or installment payment in accordance with NEO elections. Divestiture2 – Lump sum or installment payment in accordance with NEO elections. Termination/Resignation – Lump sum or installment payment in accordance with NEO elections. (1) See “2015 Pension Benefits” table for present value of accumulated benefit. (2) Divestiture is defined as a transaction which results in the transfer of control of a change in control. The 2010-2012 and 2009-2011 LTIP performance periods were completed on December 31, 2012 and 2011, respectively (“Completed Periods”). Following the completionbusiness operation to any person, corporation, association, partnership, joint venture, or other business entity of each of these periods,which less than 50% of the amount earned forvoting stock or other equity interests (in the period was paid to the executive in the following January. The LTIP award agreement for 2010-2012 and 2009-2011 requires mandatory deferralcase of the remaining 50% of the award for two years. For the Completed Periods, the amounts shown in this table include the 50% mandatorily deferred portion that would be accelerated in the event of retirement, death, disability, divestiture, layoff,entities other than corporations) is owned or change in control. NEOs who voluntarily resign during the mandatory deferral period of the Completed Periods forfeit the mandatorily deferred portion. Stock Options The value attributable to the vesting of stock options was based upon the number of unvested stock options multipliedcontrolled directly or indirectly by the difference between the closing priceus, one or more of our stock on December 31, 2012 ($92.29) andsubsidiaries, or by a combination thereof following the option exercise price. As of December 31, 2012, portions of stock optiontransaction. Beginning with the 2016 grants, made in 2012, 2011, and 2010 were unvested. See “Outstanding Equity Awards at 2012 Fiscal Year-End” table for terms of option grants. Restricted Stock Units The value attributable to the vesting of RSUs was based upon the closing price of our stock on December 31, 2012 ($92.29). All 2012 RSUs would be forfeited for retirement or layoff occurring on December 31, 2012. RSUs granted in 2010 and 2011 vest on a prorated basis unless assumed by the buyer. (3) See “Compensation Discussion and Analysis” for discussion of annual incentive bonus payment calculation. (4)   See “Aggregate Balance at Last FYE” column in “2015 Nonqualified Deferred Compensation” table for amounts payable. 2016 Proxy Statement 67 Table of Contents Executive Compensation The following table quantifies the payments under our executive compensation programs in RSUs and LTIP awards and the lump sum payable under the Supplemental Pension that would be made assuming a termination event had occurred on December 31, 2015. Payments under other plans do not change as a result of the termination event, and quantification of those payments are found elsewhere in this Proxy Statement or are paid under plans available generally to salaried employees. The table shows amounts that would actually be paid on or shortly after December 31, 2015 onaccount of the trigger event. Amounts that are contingent upon future performance, continued vesting or already earned as of December 31, 2015 are described and quantified in the footnotes following the table. Award agreements for the NEOs contain post-employment restrictive covenants and to receive a supplemental severance benefit, an executive must execute a release of claims and an agreement containing a two-year post-employment non-compete and non-solicitation covenants. Numbers have been rounded to the nearest dollar. Potential Payments Upon Termination or Change in Control Name         Retirement ($)     Change In Control ($)     Death/ Disability ($)     Layoff ($)     Divestiture ($)     Termination/ Resignation ($) Marillyn A. Hewson Supplemental Pension 45,743,777 45,743,777 45,743,777 45,743,777 45,743,777 45,743,777 LTIP 0 4,464,000 0 0 0 0   RSUs 0 16,924,301 16,924,301 0 16,924,301 0 PSUs 0 32,054,429 0 0 0 0 Executive Severance 0 0 0 12,894,703 0 0 TOTAL 45,743,777 99,186,507 62,668,078 58,638,480 62,668,078 45,743,777 Bruce L. Tanner Supplemental Pension 15,451,906 15,451,906 15,451,906 15,451,906 15,451,906 15,451,906 LTIP 0 1,613,000 0 0 0 0 RSUs 0 6,101,540 6,101,540 0 6,101,540 0 PSUs 0 11,593,960 0 0 0 0 Executive Severance 0 0 0 1,915,986 0 0 TOTAL 15,451,906 34,760,406 21,553,446 17,367,892 21,553,446 15,451,906 Dale P. Bennett Supplemental Pension 11,570,114 11,570,114 11,570,114 11,570,114 11,570,114 11,570,114 LTIP 0 990,300 0 0 0 0 RSUs 0 3,739,208 3,739,208 0 3,739,208 0 PSUs 0 7,086,178 0 0 0 0 Executive Severance 0 0 0 1,559,874 0 0 TOTAL 11,570,114 23,385,800 15,309,322 13,129,989 15,309,322 11,570,114 Orlando P. Carvalho Supplemental Pension 12,989,586 12,989,586 12,989,586 12,989,586 12,989,586 12,989,586 LTIP 0 1,201,300 0 0 0 0 RSUs 0 3,971,778 3,971,778 0 3,971,778 0 PSUs 0 4,598,136 0 0 0 0 Executive Severance 0 0 0 1,571,479 0 0 TOTAL 12,989,586 22,760,800 16,961,364 14,561,064 16,961,364 12,989,586 Maryanne R. Lavan Supplemental Pension 9,104,324 9,104,324 9,104,324 9,104,324 9,104,324 9,104,324 LTIP 0 1,050,000 0 0 0 0 RSUs 0 5,254,156 5,254,156 0 5,254,156 0 PSUs 0 4,462,237 0 0 0 0 Executive Severance 0 0 0 1,460,287 0 0 TOTAL 9,104,324 19,870,717 14,358,480 10,564,610 14,358,480 9,104,324 Termination/Resignation Resignation by executives who are eligible for retirement, for purposes of this table, is treated as retirement. All NEOs were eligible for retirement as of December 31, 2015. 68www.lockheedmartin.com/investor Table of Contents Executive Compensation Supplemental Pension The Supplemental Pension lump sum value was calculated using plan assumptions and age of the executive as of December 31, 2015. Payments under the Supplemental Pension do not commence prior to age 55, except in the case of a change in control. The lump sum payable upon change in control has been reduced to reflect early payment. The Supplemental Pension assumptions in effect for December 31, 2015, are a 4.00% discount rate (2.25% for benefits earned prior to 2005) and the mortality tables applicable to lump sum distributions for qualified plans under section 417(e) of the Internal Revenue Code (1983 Group Annuity Mortality forbenefits earned prior to 2005 and after 2004 if the resulting benefit is larger). The Supplemental Pension assumptions are set forth in the plan document and may be different than the assumptions used to calculate the accrued benefit reported in the “2015 Pension Benefits” or “Summary Compensation” tables or for financial reporting. In 2015, the Supplemental Pension Plan was amended to use the mortality assumptions applicable to lump sum distributions for qualified plans under section 417(e) of the Internal Revenue Code for benefits accrued after December 31, 2004. Long-Term Incentive Performance Awards The table shows an amount payable only in the event of a change in control trigger event for the 2014-2016 and 2015-2017 LTIP performance periods. For a trigger event based upon death,disability, retirement (or resignation after satisfying the requirements for retirement), layoff or divestitures on December 31, 2015, amounts (if any) for the 2014-2016 and 2015-2017 LTIP performance periods would not be payable until after the end of the performance period. The estimated prorated amounts payable for the 2014-2016 performance cycle based on performance through December 31, 2015 are: Ms. Hewson: $1,666,582; Mr. Tanner: $606,984; Mr. Bennett: $367,413; Mr. Carvalho: $450,592; andMs. Lavan: $397,163. The estimated prorated amounts payable for the 2015-2017 performance cycle based on performance through December 31, 2015 are: Ms. Hewson: $792,913; Mr. Tanner: $284,246; Mr. Bennett: $176,990; Mr. Carvalho: $212,388; and Ms. Lavan: $184,070. The table does not include amounts for the 2013-2015 performance cycle which are reported in the Summary Compensation Table (see notes to column (g)) or mandatory deferrals for the 2011-2013 performance cycle because these amounts become payable on December 31, 2015 without regard to any trigger event. Restricted Stock Units All 2013, 2014 and 2015 RSUs would continue to vest for retirement or layoff occurring on December 31, 2015, and would not become payable until January 2016, January 2017 and January 2018, respectively, and are not included in the table. For a change of control (assuming satisfaction of the double trigger), death, disability or divestiture, the reported value of the RSUs was based upon the closing price of our stock on December 31,2015 ($217.15) plus accrued dividend equivalents. The amounts payable for retirement or layoff on December 31, 2015 at the end of the respective vesting periods (January 2016, January 2017 and January 2018 for the 2013, 2014 and 2015 RSUs, respectively) are the same as the amounts shown for immediate payment on account of death, disability and divestiture. Performance Stock Units The table shows an amount payable only in the event of a change in control trigger event for the 2013-2015, 2014-2016 and 2015-2017 performance periods. The amount shown for the PSUs upon a change in control is the target level of the shares valued using the closing price of our stock on December 31, 2015 ($217.15) plus accrued dividend equivalents. The table assumes the double trigger occurred. For a trigger event based upon death, disability, retirement (or resignation after satisfying the requirements for retirement), layoff or divestitures on December 31, 2015, amounts (if any) for the 2013-2015, 2014-2016 and 2015-2017 PSU performance periods would be paid on a prorated basis following the end of the applicable performance period. The payments estimated to be paid on a non-prorated basis following the end of the performance cycle using the December 31, 2015 stockprice are reported for the 2013-2015 PSU performance cycle in column (h) of the Outstanding Equity Awards at 2015 and for the 2014-2016 and 2015-2017 in column (j) of that table. The prorated amounts for a trigger event occurring on December 31, 2015 plus accrued dividend equivalents are for each cycle: (i) 2013-2015 cycle: Ms. Hewson: $29,064,984; Mr. Tanner: $10,509,015; Mr. Bennett: $6,410,329; Mr. Carvalho: $684,593; and Ms. Lavan: $1,374,326; (ii) 2014-2016 cycle: Ms. Hewson: $6,781,336; Mr. Tanner: $2,470,246; Mr. Bennett: $1,494,915; Mr. Carvalho: $1,833,294; and Ms. Lavan: $1,616,173; and (iii) 2015-2017 cycle: Ms. Hewson: $2,151,049; Mr. Tanner: $771,278; Mr. Bennett: $480,096; Mr. Carvalho: $576,337; and Ms. Lavan: $499,298. 2016 Proxy Statement 69 Table of Contents Executive Compensation Executive Severance The total amounts projected for severance payments due to layoff are based on the plan (as amended) approved by the Board in 2008. It includes payment for salary and target annual incentive equivalentto one-year’s payment (2.99 years for Ms. Hewson), estimated costs for benefits continuation for one year, outplacement services and relocation assistance (if required under the plan terms). Equity Compensation Plan Information The following table provides information about the Corporation’s equity compensation plans that authorize the issuance of shares of Lockheed Martin common stock to employees and directors. The information is provided as of December 31, 2015.     Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)     Weighted-average exercise price of outstanding options, warrants and rights ($)     Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) Plan category (a) (b) (c) Equity compensation plans approved by security holders1 8,186,564 $86.61 6,955,485 Equity compensation plans not approved by security holders2 1,185,715 0 2,484,313 Total 9,372,279 $86.61 9,439,798 (1) Column (a) includes, as of December 31, 2012. Mr. Stevens’ 2006 RSU agreement does not contain vesting provisions for retirement, divestiture or layoff.2015: 2,567,391 shares that have been granted as RSUs, have a double trigger in1,307,992 shares that could be earned pursuant to grants of PSUs (assuming the eventmaximum number of a change in control (termination followingPSUs are earned and payable at the change in control); the table assumes both elementsend of the double trigger occurred. Amounts forthree-year performance period) and 4,137,024 shares granted as options under the RSUs granted in 2012 that vest on account of change in control, death, disability2011 IPAP or divestiture include dividend equivalents accruedpredecessor plans prior to the vesting date. Amounts for the RSUsJanuary 1, 2013 and 28,439 shares as options and 145,718 stock units payable in stock or cash granted in 2011 that vest on account of termination or change in control include dividend equivalents accrued prior to the vesting date. Executive Severance The total amounts projected for severance payments due to layoff are based on the plan approved by the Board in 2008. It includes payment for salary and target bonus equivalent to one year’s payment (2.99 years for Mr. Stevens) and estimated costs for benefits continuation for one year, outplacement services, and relocation assistance (if required under the plan terms). 2013 Proxy Statement       64 Back to Contents DIRECTOR COMPENSATION 2012 Annual Directors’ Compensation (Non-Employee Directors) Annual Cash Retainer $130,000 Annual Equity Retainer $110,000 payable under the Lockheed Martin Corporation 2009 Directors Equity Plan (“Directors Equity Plan”) Committee Chairman Fees $12,500 (other than Audit Committee Chairman) Audit Committee Chairman Fees $20,000 Lead Director Fees $25,000 Deferred Compensation Plan Deferral plan for cash retainer Stock Ownership Guidelines Ownership in common stock or stock units that has a value equivalent to two times the annual retainer within five years of joining the Board* Travel Accident Insurance $1,000,000 Director education Reimbursed for costs and expenses * Each non-employee director has exceeded the stock ownership guidelines, with the exception of Mrs. Brewer who joined our Board in April 2011 and has until April 2016 to satisfy the ownership guidelines. Mrs. Brewer defers a portion of her cash compensation in stock units. The retainer for services as a non-employee director was established as $220,000 (split equally between cash and equity) in November 2006, with no changes made to the retainer in the following five years. In June 2012, the Governance Committee reviewed data from 2011 proxy statements of the companies that compose the peer group we use for benchmarking executive compensation and determined that the Corporation’s director compensation program was below the median or market for director compensation overall. Based on this information, the Governance Committee recommended (and the Board approved) an increase in the annual retainer to $260,000 beginning on January 1, 2013. The portion of the increase attributable to the remainder of 2012 ($20,000) was paid in cash in the second half of 2012. For 2013, the non-employee director annual retainer of $260,000 (not including Lead Director or committee chairman fees) will be paid 50% in cash and 50% in equity. The cash portion of the non-employee director retainer is paid quarterly. The Directors Equity Plan governs the equity portion(Directors Equity Plan) or predecessor plans for members (or former members) of the non-employee director retainer. For 2012, the equity portionBoard of the retainer remained at $110,000 and each non-employee director had the opportunity to elect to receive: • A numberDirectors. Column (c) includes, as of stock units with an aggregate grant date fair value of $110,000 on January 30, 2012; or • Options to purchase a number of shares of Lockheed Martin common stock, which options had an aggregate grant date fair value equal to $110,000 on January 30, 2012; or • A combination of stock units with an aggregate grant date fair value equal to $55,000 and options to purchase a number of shares of Lockheed Martin common stock which options had an aggregate grant date fair value equal to $55,000 on January 30, 2012. The Directors Equity Plan provides that a director eligible for retirement at the next Annual Meeting receives a prorated grant (one-third) for the four months of service prior to the Annual Meeting. Except in certain circumstances, options and stock units vest 50% on June 30 and 50% on December 31, following2015, 6,491,410 shares available for future issuance under the grant date. Upon a change in control2011 IPAP as options, stock appreciation rights, restricted stock awards, RSUs, or a director’s retirement, death, or disability, the director’s stock unitsPSUs and outstanding options become fully vested, and the director has the right to exercise the options. Upon a director’s termination of service from our Board, we distribute the vested stock units, at the director’s election, in whole464,075 shares of stock or in cash, in a lump sum, or in annual installments over a period of up to 20 years. Prior to distribution, a director has no voting, dividend, or other rights with respect to the stock units heldavailable for future issuance under the Directors Equity Plan but is credited with additionalas stock units representing dividend equivalents (convertedoptions and stock units. Of the 6,491,410 shares available for grant under the 2011 IPAP on December 31, 2015, 670,409 and 284,662 shares are issuable pursuant to stock units basedgrants made on January 28, 2016, of RSUs and PSUs (assuming the closing pricemaximum number of our stock onPSUs are earned and payable at the dividend payment dates). The options have a term of ten years. The Directors Equity Plan provides that the grants are made with respect to a calendar year on the second business day following the later of (i) the dateend of the first regular meeting ofthree-year performance period), respectively. Of the Board in each calendar year, or (ii) the date on which the Corporation publicly releases its financial results464,075 shares available for the previous calendar year; provided that if the second business day is later than February 15, the award date is February 15 (or the next business day if February 15 is not a business day). The exercise price (in the case of option grants) is the closing price of our stock on the NYSE on the date of grant. The Lockheed Martin Corporation Directors’ Deferred Compensation Plan (“Directors’ Deferred Compensation Plan”) provides non-employee directors the opportunity to defer up to 100% of the cash portion of their fees. Deferred amounts earn interest at a rate that tracks the performance of (i) the interest rate under the CAS 415 rate; (ii) one of the investment options available under the employee deferred compensation plans; or (iii) our company stock (with dividends reinvested), at the director’s election. The CAS 415 rate option was closed to new deferrals on July 1, 2009; amounts deferred before that date may continue to use the CAS 415 rate until such time as they are transferred to another available earnings option under the plan. Deferred fees are distributed in a lump sum or in up to 15 installments commencing at a designated time following termination. The following table provides information on the compensation of our directors for the fiscal year ended December 31, 2012. Mr. Stevens and Ms. Hewson did not receive separate compensation for their service as a director. 2013 Proxy Statement       65 Back to Contents 2012 Director Compensation Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) (a) (b) (c) (d) (f) (g) (h) Nolan D. Archibald 142,500 110,000 0 0 10,000 262,500 Rosalind G. Brewer 130,000 110,000 0 0 10,000 250,000 David B. Burritt 150,000 55,000 55,000 0 12,785 272,785 James O. Ellis, Jr. 142,500 110,000 0 0 6,042 258,542 Thomas J. Falk 130,000 110,000 0 0 11,553 251,553 Gwendolyn S. King 142,500 110,000 0 0 214 252,714 James M. Loy 130,000 110,000 0 0 500 240,500 Douglas H. McCorkindale 167,500 55,000 55,000 0 9,685 287,185 Joseph W. Ralston 130,000 110,000 0 0 0 240,000 Anne Stevens 142,500 110,000 0 0 1,833 254,333 Fees Earned or Paid in Cash (Column (b)) Represents the aggregate dollar amount of 2012 fees earned or paid in cash for services as a director, including annual retainer fees, committee chairman fees, and Lead Director fee. Stock Awards (Column (c)) Represents the aggregate grant date fair value computed in accordance with ASC 718 for awards of stock units in 2012 under the Directors Equity Plan.Plan on December 31, 2015, 7,142 shares are issuable (or payable in cash) pursuant to grants made on February 1, 2016. The grant date fair value isweighted average price does not take into account shares issued pursuant to RSUs or PSUs or as stock units under the Directors Equity Plan. (2)   The shares represent annual incentive bonuses and LTIP payments earned and voluntarily deferred by employees. The deferred amounts are payable under the DMICP. Deferred amounts are credited as phantom stock units at the closing price of our stock on the date of grant (January 30, 2012) ($82.01). For 2012, each of Mr. Archibald, Mrs. Brewer, Mr. Ellis, Mr. Falk, Mrs. King, Mr. Loy, Mr. Ralston, and Ms. Stevens wasthe deferral is effective. Amounts equal to our dividend are credited with 1,341as stock units with an aggregate grant date fair valueat the time we pay a dividend. Following termination of $110,000; eachemployment, a number of Mr. Burritt and Mr. McCorkindale was credited with 671shares of stock units with an aggregate grant date fair value of $55,000. The outstandingequal to the number of stock units credited to the employee’s DMICP account are distributed to the employee. There is no discount or value transfer on the stock distributed. Distributions may be made from newly issued shares or shares purchased on the open market. Historically, all distributions have come from shares held in a separate trust and, therefore, do not further dilute our common shares outstanding. As a result, these shares also were not considered in calculating the total weighted average exercise price in the table. Because the DMICP shares are outstanding, they should be included in the denominator (and not the numerator) of a dilution calculation. 70www.lockheedmartin.com/investor Table of Contents PROPOSAL 4: MANAGEMENT PROPOSAL TO RE-APPROVE THE PERFORMANCE GOALS FOR THE 2011 INCENTIVE PERFORMANCE AWARD PLAN Our Board’s compensation philosophy has always been to link executive compensation to the Corporation’s performance against pre-established strategic, operational and financial goals and to use equity as a means to tie a substantial portion of executive compensation to the long-term interests of our stockholders. Share-based and cash-based long-term incentive awards have been a significant component of the Corporation’s management compensation since the Corporation was formed in 1995. In 2011, the Board adopted, and stockholders approved, the Lockheed Martin Corporation 2011 Incentive Performance Award Plan, which Plan was further amended and restated most recently on September 24, 2015 (collectively, the 2011 IPAP or Plan). We are proposing that stockholders re-approve the performance-based goals applicable to certain awards under the Plan for five additional years. The performance goals must be approved by stockholders to preserve, to the extent possible, our tax deduction for certain awards made under the Plan in accordance with Section 162(m) of the Internal Revenue Code of 1986. The principal features of the 2011 IPAP are summarized below. This summary does not contain all the information that may be important to you. The following description is qualified in its entirety by reference to the text of the 2011 IPAP. You are urged to read the 2011 IPAP in its entirety, which is attached as Appendix B. The 2011 IPAP authorizes an independent Compensation Committee of the Board to award stock options, restricted stock, stock appreciation rights (SARs), stock units and cash-based performance awards to key employees for the purpose of attracting, motivating, retaining and rewarding talented and experienced employees. The Compensation Committee performs this function and is composed entirely of independent directors. Section 162(m) denies a publicly-held corporation a tax deduction for certain compensation in excess of $1 million paid to “covered employees” (generally, (a) the CEO and (b) the three highest compensated officers other than the CEO or the CFO, as identified in the “Summary Compensation Table” on page 54), unless the compensation qualifies as performance-based compensation. For certain types of incentive compensation intended to qualify as performance-based compensation, IRS regulations generally require that (i) the compensation must be paid solely as a result of attaining one or more objective performance goals established inadvance by the independent Compensation Committee and (ii) the material terms, including the performance goals, must be properly disclosed in the proxy statement and approved by the stockholders. The performance goals must be submitted for re-approval by the stockholders no later than five years after initial approval or earlier if the performance goals are materially modified. Stockholders initially approved these goals when the Plan was adopted in 2011. The goals are approved currently until April 2016. Stockholder approval of this proposal at the 2016 Annual Meeting would extend the approval period from 2016 until 2021. The material terms of the performance goals of the Plan include: ● Eligibility—the employees eligible to receive compensation; ● Business Criteria upon which the performance goals are based; and ● Participant Award Limits—the maximum amount of compensation that may be paid to an employee during a specified period if the performance goals are met. Eligibility Awards under the Plan may be granted to key salaried employees (including officers) of the Corporation and its subsidiaries. All elected officers of the Corporation (one of whom also is a director of the Corporation) are among those eligible to receive awards. The number of key salaried employees of the Corporation and its subsidiaries eligible to receive awards in any given year is subject to the discretion of the Compensation Committee. In January 2016, share-based awards in the form of performance share units (PSUs) or restricted share units (RSUs) were made to approximately 1,276 employees; and cash-based long-term incentive performance (LTIP) awards were made to approximately 324 employees. The awards made to the NEOs in 2015 are set forth in Grant of Plan-Based Awards table on page 58 and the awards made in 2016 are described in the CD&A on page 49. As of December 31, 2015, approximately 2,701 employees and former employees have received grants under the Plan. The individual employees who are to receive future awards, the number of awards that will be granted to any employee or group of employees, and the amounts payable with respect to future awards have not been determined at this time. 2016 Proxy Statement 71 Table of Contents Proposal 4: Management Proposal to Re-Approve the Performance Goals for the 2011 Incentive Performance Award Plan Business Criteria for Performance Goals Under the Plan, one or more of the following criteria or combination of the following criteria will be used exclusively by the Compensation Committee in establishing goals for performance-based awards: ● Backlog; ● Cash flow; ● Earnings per share; ● Earnings per share growth; ● Free cash flow per share; ● Orders; ● Percentage of free cash flow to stockholders; ● Return on invested capital (ROIC); ● Sales; ● Segment operating profit; ● Segment return on invested capital; or ● Total stockholder return (TSR). Performance goals may be applied over either consecutive, rolling or stand-alone cycles determined by the Compensation Committee in its discretion, on an absolute, average or relative basis (including relative to published or specially constructed indices), and may be measured on a corporate, consolidated, subsidiary, segment or business unit basis (or combination basis). The performance cycles for cash-based awards must be more than one but not more than five years. Specific cycles, weightings of more than one performance goal and target levels of performance upon which actual payments are based, as well as the award levels payable upon achievement of specified levels of performance, are determined by the Compensation Committee not later than the applicable deadline under Section 162(m) and in any event at a time when achievement of such targets is substantially uncertain. These variables may change from cycle to cycle. The Compensation Committee has the right to determine conditions, restrictions or other limitations on the payment of an individual award and may reserve the right to reduce the amount payable on any basis that the Committee determines with the result that an individual award recipient or all award recipients may receive an amount less than the amount payable upon satisfaction of a specified performance goal. Appropriate adjustments to the performance goals and targets in respect of performance-based awards may be made by the Compensation Committee based upon objective criteria in the case of an extraordinary gain or loss or other event that is considered under GAAP to be an extraordinary item recognized under any accounting policy or practice affecting the Corporation and/or any performance goals or targets, provided in each case that the nature of any such adjustments is specified at the time the performancegoals or targets are established by the Compensation Committee. The Compensation Committee may reserve the right to authorize payment in the event of a change in control without regard to satisfaction of the performance goals. Award agreements have provided for adjustments to take account of tax payments or tax benefits associated with divestitures and voluntary prefunding of pension contributions which in either case were not forecast in the Corporation’s long range plan and the impact of an acquisition or divestiture with a transaction value in excess of $1 billion. The Compensation Committee must certify the achievement of the applicable performance goals and the actual amount payable to each participant under the RSU, PSU and LTIP awards prior to payment. The Compensation Committee may retain discretion to reduce, but not increase, the amount payable under a PSU or LTIP award to any participant, notwithstanding the achievement of targeted performance goals. We have used cash flow, TSR and ROIC as performance goals in PSU and LTIP awards and cash flow in RSU awards, as described on page 45 of the CD&A. In addition, other types of awards under the Plan may be granted to qualify as performance-based compensation under Section 162(m). Stock options and SARs granted under the Plan are intended to qualify as performance-based compensation and may qualify without regard to whether satisfaction of any performance goals are conditions to the underlying award. In addition, restricted stock and restricted stock units may be granted under the Plan to qualify as performance-based compensation under Section 162(m), using the performance goals, certification and payout procedures, and Compensation Committee discretion discussed above. Participant Award Limits The maximum annual amounts payable to any one participant as performance-based awards are as follows: ● Share-Based Awards:The aggregate number of shares of stock issuable under the Plan for options, SARs payable in shares, restricted stock and stock units payable in shares granted as performance-based awards during any calendar year to any participant may not exceed 1,000,000. Of that amount, the maximum number of shares of stock that may be granted as restricted stock awards during any calendar year to any participant (including as performance-based awards) may not exceed 750,000 shares. Awards canceled as a result of forfeiture or expiration during a calendar year are counted against these limits. ● Share-Unit Awards and SARs Payable Only in Cash:The maximum number of stock units or SARs exercisable or payable only in cash during any calendar year to any participant as performance-based awards is 300,000. Awards canceled during a calendar year due to expiration or forfeiture are counted against this limit. ● Cash-Based Awards:The aggregate amount payable to any participant under all cash-based awards granted under the Plan during any calendar year is $10,000,000. 72www.lockheedmartin.com/investor Table of Contents Proposal 4: Management Proposal to Re-Approve the Performance Goals for the 2011 Incentive Performance Award Plan Other Features of the 2011 IPAP Types of Awards The 2011 IPAP authorizes awards in the form of nonqualified stock options, incentive stock options (“ISOs”), SARs, restricted stock, stock units (including RSUs and PSUs) or cash-based incentive awards. Awards may be granted singly or in combination with other awards. Since the Corporation’s formation in 1995, we have made equity grants in the form of restricted stock awards, stock options and stock units, and cash awards in the form of LTIP awards. The last year in which we granted restricted stock awards was 2004 and the last year in which we granted stock options to employees was 2012. We have never granted ISOs or SARs under the 2011 IPAP. Authorized Shares The aggregate number of shares of our stock that initially were subject to awards under the 2011 IPAP was 9,963,688, which represented 1,963,688 shares that were reserved for future awards under the Corporation’s predecessor incentive performance award plan (the 2003 IPAP) at the time the stockholders approved the 2011 IPAP and an additional 8,000,000 shares approved under the 2011 IPAP. At our 2014 annual meeting, stockholders approved an increase of 4,000,000 in the number of shares available for awards under the 2011 IPAP. Shares of our stock subject to awards outstanding under the 2011 IPAP and the 2003 IPAP that are unexercised, unconverted or undistributed as a result of termination, expiration or forfeiture of an award (other than in the case of SARs and shares withheld to satisfy a tax withholding obligation) also are available for grants under the 2011 IPAP. As of February 1, 2016, 5,595,492 shares were available for issuance in respect of future awards under the 2011 IPAP. Terms of Awards The maximum term of an award is 10 years after the date of grant of the award. Each award under the 2011 IPAP is evidenced by an award agreement in a form approved by the Compensation Committee setting forth, in the case of share-based awards, the number of shares of stock or share units, as applicable, subject to the award, and the price (if any) and term of the award and, in the case of performance-based awards, any applicable performance goals. Awards under the 2011 IPAP that are not vested or exercised generally are nontransferable by a holder (other than by will or the laws of descent and distribution). Section 6 of the 2011 IPAP sets forth minimum vesting requirements for options, SARs payable in stock, restricted stock and stock units payable in stock. Vesting requirements for cash-based awards are at the discretion of the Compensation Committee. Adjustments to Stock; Corporate Reorganizations The number and type of shares available for grant and the shares subject to outstanding awards (as well as individual share and share unit limits on awards, performance targets and exercise or conversion prices of awards) may be adjusted to reflect the effect of a recapitalization, stock dividend, stock split, merger, combination, consolidation or other reorganization, any extraordinary dividend or other extraordinary distribution in respect of our shares, or any split-up, spin-off, split-off or extraordinary redemption, or in exchange of outstanding shares, any other similar corporate transaction or event, or a sale of all or substantially all of the Corporation’s assets. Change in Control The Compensation Committee is authorized to include provisions in award agreements relating to the treatment of awards in the event of a “change in control” of the Corporation (as defined in the 2011 IPAP) and is authorized to take certain other actions in such an event, including but not limited to providing for acceleration or extension of time for purposes of exercising, vesting in or realizing gain from an award and providing for the assumption or continuation of the award and the substitution of shares of stock of a successor entity, or a parent or subsidiary of a successor entity, together with appropriate adjustments to the terms of the award to reflect the change in control transaction. In addition, if an award constitutes deferred compensation for purposes of the Internal Revenue Code, benefits available in the event of a change in control are accelerated only if the events that constituted a change in control under the 2011 IPAP also constituted a change in the ownership or effective control of the Corporation or in the ownership of a substantial portion of the assets of the Corporation within the meaning of Section 409A of the Internal Revenue Code. The award agreements for all currently unvested awards contain double trigger change in control provisions in the event the awards are not assumed by the successor which are described on page 53 of the CD&A. Administration The 2011 IPAP is administered by a committee of the Board, constituted so as to permit the 2011 IPAP to comply with the “non-employee director” provisions of Rule 16b-3 under the Securities Exchange Act of 1934 and the “outside director” requirements of Section 162(m) of the Internal Revenue Code. The Compensation Committee currently performs this role. The Compensation Committee has the authority to designate recipients of awards, determine or modify the form, amount, terms, conditions, restrictions, and limitations of awards, including vesting provisions, terms of exercise of an award, 2016 Proxy Statement 73 Table of Contents Proposal 4: Management Proposal to Re-Approve the Performance Goals for the 2011 Incentive Performance Award Plan expiration dates and the treatment of an award in the event of the retirement, layoff, disability, death or other termination of a participant’s employment with the Corporation, and to construe and interpret the Plan. The authority of the Compensation Committee is subject to any express limitation set forth in the 2011 IPAP. The Compensation Committee also has the authority to grant awards under the 2011 IPAP in substitution for or as the result of the assumption of stock incentive awards held by employees of another entity who become employees of the Corporation or a subsidiary as a result of a merger or acquisition of the entity. The Compensation Committee may delegate to the officers or employees of the Corporation or its subsidiaries the authority to execute and deliver such instruments and documents and to take actions necessary, advisable or convenient for the effective administration of the 2011 IPAP. Duration, Amendment and Termination The 2011 IPAP will remain in existence as to all outstanding awards until all awards are either exercised or terminated; however, no award can be made after April 27, 2021. The Board has the authority to terminate, suspend or discontinue the 2011 IPAP at any time. The Board may amend the 2011 IPAP at any time, provided that any material amendment to the 2011 IPAP will not be effective unless approved by the Corporation’s stockholders. For this purpose, an amendment is considered to be a “material” amendment only if it would: ● materially increase the number of shares of stock available under the Plan or issuable to a participant (except in the limited case of adjustments relating to a change in control, adjustments to our stock or other corporate reorganizations);  ● change the types of awards that may be granted under the Plan; ● expand the class of persons eligible to receive awards or otherwise participate in the Plan; ● reduce the price at which an option is exercisable or the base price of a SAR, either by amendment of an award agreement or by substitution of a new award at a reduced price (except in the limited case of adjustments relating to a change in control, adjustments to our stock or other corporate reorganizations); or ● require stockholder approval pursuant to the New York Stock Exchange Listed Company Manual (so long as the Corporation is a listed corporation on the NYSE) or other applicable law. The Compensation Committee may at any time alter or amend any or all award agreements under the 2011 IPAP in any manner that would be authorized for a new award under the Plan, so long as such an amendment would not require approval of the Corporation’s stockholders if such amendment were made to the Plan. No action by the Board or the Compensation Committee, however, shall affect adversely any outstanding award without the consent in writing of the participant entitled to the award. Non-Exclusivity The 2011 IPAP is not exclusive and does not limit the authority of the Board or its committees to grant awards or authorize any other compensation, with or without reference to our common stock, under any other plan or authority. The 2011 IPAP has not been and is not expected to be our exclusive cash incentive plan for eligible persons (including executive officers); other cash incentive plans may be retained and/or developed to implement our compensation objectives and policies. Federal Income Tax Consequences The following is a general description of federal income tax consequences to participants and the Corporation relating to nonqualified stock options, LTIP awards, RSUs, and PSUs under the 2011 IPAP. This discussion does not purport to cover all tax consequences relating to awards under the Plan. There are no federal income tax consequences to a participant upon the grant of a nonqualified stock option to purchase shares of stock. Upon the exercise of the option, the participant will recognize compensation income in an amount equal to the excess of the fair market value of the stock on the date the option is exercised over the option price for the stock. This compensation income will be taxable to the participant in the year of the exercise of the option. The Corporation will withhold FICA (Social Security and Medicare) taxes and federal, state, and local income taxes at the minimum rate prescribed by law. The participant’s tax basis in the stock acquired will equal the option price for the stock plus the amount of compensation income that the participant recognizes upon exercise of the option. For capital gains tax purposes, the holding period of the stock commences upon the date of exercise. A participant who sells stock will recognize capital gain or loss measured by the difference between the participant’s tax basis in the stock and the amount realized on the sale. The capital gain or loss will be long-term if the stock is held for more than one year following exercise. There are no federal income tax consequences to a participant upon the award of an LTIP. A participant will recognize compensation income for federal income tax purposes upon payment of the award. At the time of payment, the Corporation will withhold FICA taxes and federal, state, and local income taxes at the minimum rate prescribed by law. There are no federal income tax consequences to a participant upon the grant of RSUs. Upon the termination of the restricted period, the fair market value of the stock deliverable to a participant in respect of the RSUs will be taxable to the participant as compensation income, based on the fair market value of the stock on the day the stock is deliverable to the participant. FICA tax withholding also will apply except to the extent FICA taxes have already been collected in the case of laid off or retirement-eligible employees as described below. 74     www.lockheedmartin.com/investor Table of Contents Proposal 4: Management Proposal to Re-Approve the Performance Goals for the 2011 Incentive Performance Award Plan Withholding taxes on stock deliverable to a participant will be satisfied by means of the Corporation reducing the number of shares of stock delivered to the participant. The Corporation will withhold FICA taxes and federal, state, and local income taxes at the minimum rate prescribed by law. Any cash paid to a participant for deferred dividend equivalents also will be taxable to the participant as compensation income in the year paid. Such cash payments will be subject to withholding of federal, state, and local income taxes at the minimum rate prescribed by law, as well as FICA taxes (except to the extent FICA taxes have already been collected in the case of laid off or retirement-eligible employees as described below). The Corporation will withhold taxes on the deferred dividend equivalents by reducing the cash paid to the participant. A participant’s tax basis in the shares of stock delivered to him or her in respect of the RSUs will be equal to the fair market value of such shares on the day the stock is deliverable to the participant. A participant’s holding period for purposes of determining long-term capital gain or loss treatment on any subsequent sale of such stock will begin on that day. If a participant is or becomes eligible for retirement (attainment of age 55 with ten years of service or attainment of age 65) or is laid off during the restricted period, such participant’s RSU award (and any deferred dividend equivalents) will become subject to FICA taxes prior to the termination of the restricted period. The Corporation will generally accelerate vesting on deferred dividend equivalents or a number of RSUs sufficient to satisfy the withholding obligation shortly before or after the date FICA taxes are due. Alternatively, the Corporation may withhold the FICA taxes due with respect to the RSU award from the participant’s paycheck or require a participant to deliver a check to the Corporation to satisfy the withholding obligation. There are no federal income tax consequences to a participant upon the grant of PSUs. Upon the termination of the vesting period, the fair market value of the stock deliverable to a participant in respect of the PSUs will be taxable to the participant as compensation income, based on the fair market value of the stock on the day the stock is deliverable to the participant. FICA (Social Security and Medicare) tax withholding also will apply. Withholding taxes on stock deliverable to a participant will be satisfied by means of the Corporation reducing the number of shares of stock delivered to the participant. The Corporation will withhold FICA taxes and federal, state, and local income taxes at the minimum rate prescribed by law. Any cash paid to a participant as deferred dividend equivalents also will be taxable to the participant as compensation income in the year paid. Such cash payments will be subject to withholding of federal, state, and local income taxes at the minimum rate prescribed by law, as well as FICA taxes. The Corporation will withhold taxes on the deferred dividend equivalents by reducing the cash paid to the participant. A Participant’s tax basis in the shares of stock delivered to him or her in respect of the PSUs will be equal to the fair market value of such shares on the day the stock is deliverable to the participant. A participant’s holding period for purposes of determining long-term capital gain or loss treatment on any subsequent sale of such stock will begin on that day. Additional Information Inasmuch as the awards under the 2011 IPAP are subject to the discretion of the Compensation Committee, it is not possible to determine the number of awards that will be granted in the future. The following table provides information about option awards granted under the 2011 IPAP since it was adopted. No options have been granted since 2012. Such options to purchase shares of our common stock were granted at an exercise price of not less than 100% of the fair market value of our common stock on the date of the grant and had a term of 10 years. No options have been granted since 2012. Stock options previously granted to the NEOs under the 2011 IPAP and outstanding as of December 31, 2015 are included in the Outstanding Equity Awards at 2015 Fiscal Year End on page 60. The information is provided as of February 1, 2016. The closing price of our common stock on February 1, 2016 was $209.80. Name of Individual or Identity of Group Number of Options Granted Since Plan Inception Ms. Hewson 82,935 Mr. Tanner 97,213 Mr. Bennett 19,356 Mr. Carvalho 29,705 Ms. Lavan 57,602 All Current Executive Officers (including NEOs) 358,929 All Current Directors who are not Executive Officers* 0 Director Nominees* 0 All Employees (including officers who are not Executive Officers) 3,031,419 *   Directors who are not employees of the Corporation are not eligible to receive equity awards under the 2011 IPAP, but are eligible to receive equity awards under the Directors Equity Plan. The only director-nominee who is an employee of the Corporation and received an option grant under the 2011 IPAP in the amount of 82,935 is Ms. Hewson. 2016 Proxy Statement 75 Table of Contents Proposal 4: Management Proposal to Re-Approve the Performance Goals for the 2011 Incentive Performance Award Plan No person received 5% or more of the total equity awards granted to all participants under the 2011 IPAP. No associate of a director, nominee for election as a director or executive officer has received an equity award under the 2011 IPAP. Required Vote for Approval and Consequences of Vote The affirmative vote of a majority of the votes cast at the 2016 Annual Meeting is needed to re-approve the performance goals under the 2011 IPAP. If stockholders re-approve the performance goals, we can continue to deduct until April 2021, to the extent permissible, amounts payable under performance awards that are in excess of $1 million in any year for certain of our executive officers. If stockholders do not re-approve the performance goals applicable to the Plan at the 2016 Annual Meeting, no performance awards under the Plan within the meaning of section 162(m) (other than stock options and SARs) would be made after the April 2016 Annual Meeting. Absent stockholder approval, we may grant other types of equity awards after the April 2016 Annual Meeting to executive officers and other employees that are not intended to qualify for the exemption for performance-based compensation under Section 162(m) under the Plan. In addition, absent stockholder approval of the performance-based goals, we may grant cash-based incentive awards that are not intended to qualify for the exemption under Section 162(m) under other benefit plans. The Board unanimously recommends that you vote FOR the re-approval of performance goals for the 2011 Incentive Performance Award Plan (Proposal 4). 76     www.lockheedmartin.com/investor Table of Contents DIRECTOR COMPENSATION Annual Directors’ Compensation (Non-Employee Directors) Annual Cash Retainer $145,000 Annual Equity Retainer1 $145,000 Audit Committee Chairman Fees $25,000 Compensation Committee Chairman Fees $20,000 Other Committee Chairman Fees $15,000 Lead Director Fees $25,000 Travel Accident Insurance $1,000,000 Deferred Compensation Plan – deferral plan for cash retainer Director Education – reimbursed for costs and expenses Stock Ownership Guidelines – five times the annual cash retainer (1) Payable under the Lockheed Martin Corporation 2009 Directors Equity Plan. The Governance Committee annually reviews publicly available data for the companies that comprise the peer group we use for benchmarking executive compensation. In June 2015, it determined that the Corporation’s director compensation was lower than the peer group median or market for director compensation. Based on this information, the Board approved an increase in the annual retainer from $260,000 to $290,000. A prorated portion of the increase in the cash portion of the retainer attributable to the remaining six months of 2015 ($15,000) was paid in the second half of 2015, with the full increase in the cash and equity portions taking effect in January 2016. The non-employee director annual retainer of $290,000 (not including Lead Director or committee chairmen fees) is paid 50% in cash and 50% in equity. The cash portion of the non-employee director retainer is paid quarterly. The Lockheed Martin Corporation 2009 Directors Equity Plan (Directors Equity Plan) or predecessor plans governs the equity portion of the non-employee director retainer. In June 2014, the Board resolved that each non-employee director would elect to receive the equity portion of the retainer in the form of stock units for each year beginning with 2015 and would not elect options to purchase shares unless the Board resolution is further amended or revoked. The Directors Equity Plan provides that a director eligible for retirement at the next Annual Meeting receives a prorated grant (one-third) for the four months of service prior to the Annual Meeting. Except in certain circumstances, stock units vest 50% on June 30 and 50% on December 31 following the grant date. Upon a change in control or a director’s retirement, death, or disability, the director’s stock units and outstanding options become fully vested, and the director has the right to exercise the options. Upon a director’s termination of service from our Board, we distribute the vested stock units, at the director’s election, in whole shares of stock or in cash, in a lump sum or in annual installments over a period of up to 20 years. Prior to distribution, a director has no voting, dividend or other rights with respect to the stock units held under the Directors Equity Plan, but is credited with additional stock units representing dividend equivalents (converted to stock units based on the closing price of our stock on the dividend payment dates). The outstanding options have a term of ten years. The Directors Equity Plan provides that equity grants are made with respect to a calendar year on the second business day following the later of (i) the date of the first regular meeting of the Board in each calendar year, or (ii) the date on which the Corporation releases its financial results for the previous calendar year; provided that, if such date is later than February 15, the award date is February 15 (or the next business day if February 15 is not a business day). The Lockheed Martin Corporation Directors Deferred Compensation Plan (Directors Deferred Compensation Plan) provides non-employee directors the opportunity to defer up to 100% of the cash portion of their fees. Deferred amounts earn interest at a rate that tracks the performance of: (i) the investment options available under the employee deferred compensation plans; or (ii) our company stock (with dividends reinvested), at the director’s election. Deferred fees are distributed in a lump sum or in up to 15 annual installments commencing at a time designated by the director following termination. To align their interests with the long-term interests of our stockholders, we expect our directors to maintain an ownership interest in the Corporation. Under our Director Stock Ownership Guidelines, non-employee directors have five years from the time they join the Board to achieve stock ownership levels (common stock or stock units) equivalent to five times the annual cash retainer. Each non-employee director has exceeded the stock ownership guidelines, with the exception of Mr. Carlson who has until July 2020 to meet the guidelines. Ms. Hewson is subject to the Stock Ownership Requirements for Key Employees as described on page 52. The following table provides information on the compensation of our directors for the fiscal year ended December 31, 2015. Ms. Hewson does not receive separate compensation for service as a director of the Corporation. 2016 Proxy Statement 77 Table of Contents Director Compensation 2015 Director Compensation Name       Fees Earned or Paid in Cash ($)       Stock Awards ($)       All Other Compensation ($)       Total ($) (a) (b) (c) (g) (h) Daniel F. Akerson 151,346 130,000 0 281,346 Nolan D. Archibald 169,808 130,000 10,000 309,808 Rosalind G. Brewer 137,500 130,000 11,804 279,304 David B. Burritt 145,192 130,000 11,215 286,407 Bruce A. Carlson 72,500 65,000   50 137,550 James O. Ellis, Jr. 152,500 130,000 20,036 302,536 Thomas J. Falk   154,808   130,000 11,190 295,998 Gwendolyn S. King 142,115 130,000 115   272,230 James M. Loy 147,885 130,000 253 278,138 Douglas H. McCorkindale 52,308 43,333 773 96,414 Joseph W. Ralston 147,885 130,000 680 278,565 Anne Stevens 143,654 130,000 1,575 275,229 Fees Earned or Paid in Cash (Column (b)) Represents the aggregate dollar amount of 2015 fees earned or paid in cash for services as a director, including annual retainer fees, committee chairman fees, and Lead Director fees. Stock Awards (Column (c)) Represents the aggregate grant date fair value computed in accordance with ASC 718 for awards of stock units in 2015 under the Directors Equity Plan. For 2015, each non-employee director (with the exception of Messrs. McCorkindale and Carlson) was credited with 687 stock units with an aggregate grant date fair value of $130,000. The grant date fair value is the closing price of our stock ($189.33) on the date of the grant (February 2, 2015). Mr. McCorkindale, who retired from the Board at the 2015 annual meeting, received a prorated award on February 2, 2015 and was credited with 229 stock units with an aggregate grant date fair value of $43,333. Mr. Carlson joined the Board in July 2015 and was credited with 313 stock units on August 3, 2015 with an aggregate grant date fair value of $65,000. The grant date fair value of Mr. Carlson’s grant was $207.79 per share. The outstanding number of stock units credited to each director under the Directors Equity Plan (and the comparable plan in place prior to January 1, 2009), as of December 31, 2015, were: Mr. Akerson 1,406; Mr. Archibald 21,752; Mrs. Brewer 5,929; Mr. Burritt 6,290; Mr. Carlson 317; Mr. Ellis 16,729; Mr. Falk 7,393; Mrs. King 30,201; Mr. Loy 15,441; Mr. Ralston 20,088; and Ms. Stevens 18,642. The outstanding number of stock units credited under the Lockheed Martin Corporation Directors Deferred Stock Plan (Directors Deferred Stock Plan) as of December 31, 2015, was 1,530 for Mrs. King. All Other Compensation (Column (g)) Perquisites and other personal benefits provided to directors did not exceed $10,000, except for personal use of corporate aircraft for Mr. Ellis ($16,067) to attend a meeting of the board of directors of The Space Foundation. All other compensation includes matching contributions made to eligible universities, colleges, and other non-profit organizations under the Corporation’s matching gift programs. The Corporation’s matching contribution includes the following charitable contributions made in 2015 or to be made by the Corporation in 2016 to match a contribution in the prior year: Mr. Archibald $10,000; Mrs. Brewer $11,000; Mr. Burritt $10,000; Mr. Carlson $50; Mr. Ellis $1,000; and Mr. Falk $10,000. The matching gift programs are the same as the programs generally available to employees. Other amounts include tax assistance on travel expenses for a spouse accompanying a director while on business travel. 78     www.lockheedmartin.com/investor Table of Contents SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS Directors and Executive Officers The following table shows Lockheed Martin common stock beneficially owned by and stock units credited to each NEO, director, nominee and all NEOs, directors, nominees and other executive officers as a group as of February 1, 2016. Except as otherwise noted, the named individuals had sole voting and investment power with respect to such securities. No director, nominee or NEO, individually or as a group, beneficially owned more than one percent of our outstanding common stock. All amounts are rounded to the nearest whole share. No shares have been pledged. The address of each director, nominee and executive officer is c/o Lockheed Martin Corporation, 6801 Rockledge Drive, Bethesda, MD 20817. Name       Common Stock1,2          Stock Units*          Total Daniel F. Akerson 5,022 3 2,097 6 7,119 Nolan D. Archibald 21,751 691 6 22,442 Dale P. Bennett 42,483 27,471 8,9,10 69,954 Rosalind G. Brewer 5,929 3,380 6,7 9,309 David B. Burritt 8,502 11,876 6,7 20,378 Bruce A. Carlson 317 1,034 6,7 1,352 Orlando P. Carvalho 104,541   16,202 8,10 120,743 James O. Ellis, Jr. 16,929 691 6 17,621 Thomas J. Falk 5,250 4 8,085 6 13,335 Marillyn A. Hewson 235,798 65,987 8,9,10 301,785 Gwendolyn S. King 546 5 31,961 6,11 32,507 Maryanne R. Lavan 26,379   23,085 8,9,10   49,465 James M. Loy   0 16,132   6 16,132 Joseph W. Ralston 20,088 691 6 20,780 Anne Stevens 17,177 2,156 6 19,333 Bruce L. Tanner 324,166 29,228 8,9,10 353,393 All directors, nominees and executive officers as a group (21 individuals including those named above) 976,430 315,177 1,291,606 * Does not include unvested PSUs. (1) Includes common stock not currently owned but which could be acquired within 60 days following February 1, 2016 through the exercise of stock options for Mr. Bennett 10,800; Mr. Carvalho 78,171; Ms. Hewson 142,369; Ms. Lavan 14,720; and Mr. Tanner 266,444. Includes shares payable at termination with respect to vested stock units credited under the Directors Equity Plan (and the comparable planfor which a director has elected payment in place prior to January 1, 2009), as of December 31, 2012, werestock for Mr. Archibald 16,702;21,752; Mrs. Brewer 2,411;5,929; Mr. Burritt 3,465;340; Mr. Carlson 317; Mr. Ellis 12,166; Mr. Falk 3,734; Mrs. King 24,333; Mr. Loy 11,002; Mr. McCorkindale 9,888;16,729; Mr. Ralston 15,200;20,088; and Ms. Stevens 13,893.17,177. Units for which a director has elected payment in cash are reported in the “Stock Units” column. There are no voting rights associated with stock units. (2) Includes shares attributable to the participant’s account in the Lockheed Martin Salaried Savings Plan for Mr. Bennett 8,296; Mr. Carvalho 10,186; Ms. Hewson 403; Ms. Lavan 620; and Mr. Tanner 2,324. Participants have voting power and investment power over the shares. (3) Includes 22 shares owned by Mr. Akerson’s spouse’s family trust. (4) Represents shares beneficially owned by Mr. Falk and his spouse through a family limited partnership. (5) Represents shares held jointly by Mrs. King and her spouse with shared voting or investment power. (6) Includes stock units under the Directors Equity Plan for Mr. Akerson 1,406; Mr. Burritt 5,949; Mr. Falk 7,393; Mrs. King 30,201; Mr. Loy 15,441 and Ms. Stevens 1,465; for which directors have elected to receive distributions of units in the form of cash and unvested stock units credited on February 1, 2016 under the Directors Equity Plan (691 for each director, except Mrs. King who was credited with 230). There are no voting rights associated with stock units. (7) Includes stock units under the Directors Deferred Compensation Plan representing deferred cash compensation for Mrs. Brewer 2,689; Mr. Burritt 5,235 and Mr. Carlson 343. The outstanding numberstock units (including dividend equivalents credited as stock units) are distributed in the form of cash. There are no voting rights associated with stock units. (8) Includes stock units attributable to the participant’s account under the DMICP (including units credited under the Lockheed Martin Corporation Directors’LTIP awards) for Mr. Bennett 11,044; Mr. Carvalho 939; Ms. Hewson 8,090; Ms. Lavan 8,239; and Mr. Tanner 5,841. Although most of the units will be distributed following termination or retirement in shares of stock, none of the units are convertible into shares of stock within 60 days of February 1, 2016. There are no voting rights associated with stock units. (9) Includes stock units attributable to the participant’s account under the NQSSP for Mr. Bennett 3,062; Ms. Hewson 2,537; Ms. Lavan 1,897; and Mr. Tanner 3,675. Amounts credited to a participant’s account in the NQSSP are distributed in cash following termination of employment. There are no voting rights associated with stock units. (10)  Includes unvested RSUs for Mr. Bennett 13,364; Mr. Carvalho 15,263; Ms. Hewson 55,360; Ms. Lavan 12,949; and Mr. Tanner 19,712. Each RSU represents a contingent right to receive one share of common stock. There are no voting rights associated with RSUs. (11) Includes 1,530 stock units under the Directors Deferred Stock Plan (“Directors’ Deferred Stock Plan”) as of December 31, 2012, was 1,382 for Mrs. King. Effective May 1, 1999,There are no additional shares may be awarded under the Directors’ Deferred Stock Plan. Option Awards (Column (d)) Represents the aggregate grant date fair value computed in accordancevoting rights associated with ACS 718stock units. 2016 Proxy Statement 79 Table of Contents Security Ownership of Management and Certain Beneficial Owners Security Ownership of Certain Beneficial Owners The following table shows information regarding each person known to be a “beneficial owner” of more than 5% of our common stock. For purposes of this table, beneficial ownership of securities generally means the power to vote or dispose of securities, or the right to acquire securities that may be voted or disposed of, regardless of any economic interest in the securities. All information shown is based on information reported by the filer on a Schedule 13G filed with the SEC on the dates indicated in the footnotes to this table. Name and Address Amount of Common Stock Percent of Outstanding Shares State Street Corporation and State Street       51,378,136       16.7 Bank and Trust Company1 State Street Financial Center One Lincoln Street   Boston, MA 02111   Capital World Investors2   28,304,237   9.2 333 South Hope Street Los Angeles, CA 90071 BlackRock, Inc.3 18,705,512 6.1 55 East 52nd Street   New York, NY 10022 The Vanguard Group4 17,430,560 5.67 100 Vanguard Boulevard Malvern, PA 19355   (1)   As reported on a Schedule 13G filed on February 16, 2016 by State Street Corporation (State Street) and State Street Bank and Trust Company. State Street Bank and Trust Company beneficially owns 45,893,513 of the options granted to Mr. Burritt and Mr. McCorkindale in 2012. We awarded each of Mr. Burritt and Mr. McCorkindale 5,203 options with an aggregate grant date fair value of $55,000. The grant date fair value for options granted ($10.57 per share) is determined using the Black-Scholes methodology and is based on the closing price of our stock on January 30, 2012 ($82.01). The assumptions used in determining the grant date fair value of the options are set forth in Note 11 to our financial statements contained in our 2012 Annual Report. The aggregate outstanding number of stock options51,378,136 shares held by each director,State Street and its direct and indirect subsidiaries, acting in various capacities. Both State Street and State Street Bank and Trust Company have sole voting power with respect to 1,794,963 shares. State Street has shared voting power with respect to 49,583,173 shares, and State Street Bank and Trust Company has shared voting power with respect to 44,098,550 shares. State Street has shared dispositive power with respect to 51,378,136 shares and State Street Bank and Trust Company has shared dispositive power with respect to 45,893,513 shares. State Street Bank and Trust Company holds 41,666,167 of its 45,893,513 shares as of December 31, 2012, was Mr. Burritt 18,918 and Mr. McCorkindale 30,214. The grant date fair valuetrustee, independent fiduciary and/or investment manager for options remains the same through the vesting period and no adjustment is made to reflect an increase or decrease in our stock price. Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column (f)) For 2012, there were no above-market earnings on deferred compensation (above 120% of the applicable federal rate published by the IRS). 2013 Proxy Statement       66 Back to Contents All Other Compensation (Column (g)) Perquisites and other personal benefits provided to directors did not exceed $10,000. All other compensation includes matching contributions made to eligible universities, colleges, and other non-profit organizations under the Corporation’s matching gift programs. The Corporation’s matching contribution includes the following charitable contributions made in 2012 or to be made by the Corporation in 2013 to match a contribution or activity in the prior year: Mr. Archibald $10,000; Mrs. Brewer $10,000; Mr. Burritt $11,000; Mr. Ellis $6,000; Mr. Falk $10,000; Mr. Loy $500; and Mr. McCorkindale $9,500. The matching gift programs are the same as the programs generally available to employees. Other amounts include tax assistance on travel expenses for a spouse accompanying a director while on business travel. 2013 Proxy Statement       67 Back to Contents SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS Directors and Executive Officers The following table showsvarious Lockheed Martin common stock beneficially ownedemployee benefit plans. In this capacity, State Street Bank and Trust Company has dispositive power and voting power over the shares in certain circumstances. (2) As reported on a Schedule 13G/A filed on February 12, 2016 by Capital World Investors (Capital World), a division of Capital Research and stock units credited to each NEO, director, nominee and all NEOs, directors, nominees, and other executive officers as a group as of February 1, 2013. Except as otherwise noted, the named individualsManagement Company (Capital Research). Capital World had sole voting and investmentdispositive power with respect to such securities. No director, nominee, or NEO, individually or as a group, beneficially owned more than one percent of our outstanding common stock. All amounts are rounded to the nearest whole share. No shares have been pledged. The address of each director, nominee, and executive officer is c/o Lockheed Martin Corporation, 6801 Rockledge Drive, Bethesda, MD 20817. Name Common Stock1,2   Stock Units   Total Nolan D. Archibald 16,702 1,455 6 18,157 Rosalind G. Brewer 2,411 2,686 6,7 5,097 David B. Burritt 18,918 8,921 6,7 27,839 James O. Ellis, Jr. 12,366 1,455 6 13,821 Thomas J. Falk 5,250 3 5,189 6 10,439 Linda R. Gooden 286,443 30,299 8,9,10 316,742 Marillyn A. Hewson 197,338 71,930 8,9,10 269,268 Gwendolyn S. King 675 4 27,171 6,11 27,846 James M. Loy 0 12,458 6 12,458 Joanne M. Maguire 197,193 42,831 8,9,10 240,024 Douglas H. McCorkindale 42,274 14,061 6,7 56,335 Joseph W. Ralston 15,200 1,455 6 16,655 Anne Stevens 13,893 1,455 6 15,348 Robert J. Stevens 1,711,804 5 180,278 8,9,10 1,892,082 Bruce L. Tanner 306,357 57,244 8,9,10 363,601 All directors, nominees and executive officers as a group (21 individuals including those named above) 3,163,958 625,049 3,789,007 (1) Includes common stock not currently owned but which could be acquired within 60 days following February 1, 2013 through the exercise of stock options for Mr. Burritt 18,918; Ms. Gooden 264,038; Ms. Hewson 183,134; Ms. Maguire 162,228; Mr. McCorkindale 30,214; Mr. Stevens 1,509,951; and Mr. Tanner 276,524. Includes shares payable at termination with respect to vested stock units credited under the Directors Equity Plan for which a director has elected payment in stock for Mr. Archibald 16,702; Mrs. Brewer 2,411; Mr. Ellis 12,166; Mr. McCorkindale 9,888; Mr. Ralston 15,200; and Ms. Stevens 13,893. Units for which a director has elected payment in cash are reported in the “Stock Units” column. There are no voting rights associated with stock units. (2) Includes shares attributable to the participant’s account in the Lockheed Martin Salaried Savings Plan for Ms. Gooden 6,621; Ms. Hewson 301; Ms. Maguire 27; Mr. Stevens 245; and Mr. Tanner 2,036. Participants have voting power and investment power over the shares. (3) Represents shares beneficially owned by Mr. Falk and his spouse through a family limited partnership. (4) Represents shares held jointly by Mrs. King and her spouse with shared voting or investment power. (5) Includes 5,000 shares held jointly by Mr. Stevens and his spouse with shared voting or investment power. (6) Includes stock units under the Directors Equity Plan for Mr. Burritt 4,192; Mr. Falk 5,189; Mrs. King 25,789; and Mr. Loy 12,458 for which directors have elected to receive distributions of units in the form of cash. Includes shares payable at termination with respect to unvested stock units credited under the Directors Equity Plan for which a director has elected payment in stock for Mr. Archibald 1,455; Mrs. Brewer 1,455; Mr. Ellis 1,455; Mr. McCorkindale 728; Mr. Ralston 1,455; and Ms. Stevens 1,455. There are no voting rights associated with stock units. (7) Includes stock units under the Directors’ Deferred Compensation Plan representing deferred cash compensation for Mrs. Brewer 1,231; Mr. Burritt 4,729; and Mr. McCorkindale 13,333. The stock units (including dividend equivalents credited as stock units) are distributed in the form of cash. There are no voting rights associated with stock units. (8) Includes stock units attributable to the participant’s account under the DMICP (including units credited under the LTIP awards) for Ms. Gooden 13,108; Ms. Hewson 15,874; Ms. Maguire 25,281; Mr. Stevens 72,183; and Mr. Tanner 18,931. Although most of the units will be distributed following termination or retirement in shares of stock, none of the units are convertible into shares of stock within 60 days of February 1, 2013. There are no voting rights associated with stock units. (9) Includes stock units attributable to the participant’s account under the NQSSP for Ms. Hewson 1,297; Ms. Maguire 206; Mr. Stevens 5,146; and Mr. Tanner 2,765. Amounts credited to a participant’s account in the NQSSP are distributed in cash following termination of employment. There are no voting rights associated with stock units. (10) Includes unvested RSUs for Ms. Gooden 17,191; Ms. Hewson 54,759; Ms. Maguire 17,345; Mr. Stevens 102,948; and Mr. Tanner 35,548. The RSUs represent a contingent right to receive one share of common stock. There are no voting rights associated with RSUs. (11) Includes 1,382 stock units under the Directors’ Deferred Stock Plan for Mrs. King. There are no voting rights associated with stock units. 2013 Proxy Statement       68 Back to Contents Security Ownership of Certain Beneficial Owners The following table shows information regarding each person knowndeemed to be a “beneficial owner” of more than 5% of our common stock. For purposes of this table, beneficial ownership of securities generally means the power to vote or dispose of securities, regardless of any economic interest in the securities. All information shown is based on information reported by the filer on a Schedule 13G filed with the SEC on the dates indicated in the footnotes to this table. Name and Address Amount of Common Stock Percent of Outstanding Shares State Street Corporation1 State Street Financial Center One Lincoln Street Boston, MA 02111 61,075,638 18.9 Capital World Investors2 333 South Hope Street Los Angeles, CA 90071 39,721,556 12.3 Massachusetts Financial Services Company3 111 Huntington Avenue Boston, MA 02199 17,595,510 5.4 (1) As reported on a Schedule 13G filed on February 12, 2013, as amended by a Schedule 13G/A filed on February 19, 2013 by State Street Corporation (“State Street”), State Street and its direct and indirect subsidiaries, acting in various capacities, had beneficial ownership, in the form of sole voting power with respect to 2,155,922 shares, shared voting power with respect to 58,919,716 shares, and shared dispositive power with respect to 61,075,638 shares, of which 50,720,985 shares were held as trustee, independent fiduciary and/or investment manager for various Lockheed Martin employee benefit plans. (2) As reported on a Schedule 13G filed on February 13, 2013 by Capital World Investors, a division of Capital Research and Management Company (“CRMC”), Capital World Investors is deemed to be the beneficial owner of such shares, as a result of CRMC acting as an investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Capital World Investors has sole dispositive power over such shares and sole voting power over 27,881,556 shares. (3) As reported on a Schedule 13G filed on February 13, 2013 by Massachusetts Financial Services Company (“MFS”), MFS and/or certain other non-reporting entities had beneficial ownership with sole dispositive power and sole voting power over 15,547,754 shares. SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors (and persons who own more than 10% of our equity securities) file reports of ownership and changes in ownership with the SEC, the NYSE, and with us. Based solely on our review of copies of forms and written representations from reporting persons, we believe that all ownership filing requirements were timely met during 2012. 2013 Proxy Statement       69 Back to Contents STOCKHOLDER PROPOSALS The stockholders identified below have submitted the following proposals to be voted upon at the Annual Meeting. In accordance with SEC rules, we are reprinting the proposals and supporting statements as they were submitted to us. The Corporation is not responsible for the contents thereof or any inaccuracies they may contain. Proposal 4:   Stockholder Proposal by John Chevedden John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, the beneficial owner of no less than 100 shares of common stock of the Corporation having a market value greater than $2,000, has notified the Corporation that he intends to present the following proposal at this year’s Annual Meeting: Proposal 4 – Right to Act by Written Consent Resolved, Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent includes all issues that shareholders may propose. This written consent is to be consistent with applicable law and consistent with giving shareholders the fullest power to act by written consent consistent with applicable law. The shareholders of Wet Seal (WTSLA) successfully used written consent to replace certain underperforming directors in October 2012. This proposal topic could potentially receive our majority vote depending on one or two factors: If our directors are neutral on this topic and/or if our directors are willing to make it as easy to vote for this proposal as to vote against it. Had this proposal been on our 2012 ballot it could take only one-click to vote against this proposal – but 15-clicks to vote in favor of it due to our biased Internet voting system. This proposal should also be evaluated in the context of our Company’s overall corporate governance as reported in 2012: GMI/The Corporate Library, an independent investment research firm, rated our company “D” with “High Governance Risk.” Also “Very High Concern” in Executive Pay - $25 million for our Chairman Robert Stevens. Mr. Stevens was given $1.6 million for security and a $350,000 tax gross-up. Because such pay is not directly tied to performance, it is difficult to justify in terms of shareholder value. Annual incentive pay for our highest paid executives was largely subjective. More than 30% of voting shareholders rejected say on executive pay in 2012 and 2011. Only 154 Russell 3000 companies recorded lower approval rates for 2011 according to GMI. Our directors even spent extra money in promoting our yes-votes for the excessive executive pay that they approved. Directors James Loy and Joseph Ralston were potentially conflicted since they were employed by The Cohen Group, which billed Lockheed $700,000 for consulting. Director Gwendolyn King was negatively flagged by GMI for her tenure on the Marsh & McLennan board while Marsh was sued by the New York State Attorney General for alleged bid rigging, price fixing, and kickbacks. Ironically Ms. King chaired our Ethics Committee and was on our nomination committee as Lockheed ousted its incoming CEO, Christopher Kubasik, for having a “close personal relationship” with a Lockheed subordinate and selected Marillyn Hewson as our new CEO. Nolan Archibald and Douglas McCorkindale, who received our high negative votes, were also on this committee. Finally, our Chairman and Ms. King worked together on the Monsanto board, raising concerns about intra-board relationships that can compromise a director’s independence. Please encourage our board to respond positively to this proposal to protect shareholder value: Right to Act by Written Consent – Proposal 4 Board of Directors Statement in Opposition to Proposal 4 Your Board does not believe that the proposed stockholder written consent arrangement is an appropriate corporate governance model for a widely-held public company. This proposal has the potential to be cumbersome and time consuming, and may create confusion among our stockholders. Multiple groups of stockholders would be able to solicit written consents at any time and as frequently as they choose on a range of special or self-interested issues. It also is possible that consent solicitations may conflict with one another or be duplicative, or may be directed at the interests of a group of stockholders and not at the interests of the Corporation or the stockholders as a whole. Matters that are sufficiently important to require stockholder approval should be communicated in advance, so that they can be considered and voted upon by all stockholders based on appropriate and timely disclosure. This proposal would allow a group of stockholders to take action by written consent without prior communication to all stockholders of the proposed action or the reasons for the action. In that regard, this proposal disenfranchises stockholders who do not have the opportunity to participate in the process. Maryland law only permits stockholders to take action by less than unanimous written consent if it is expressly authorized in a corporation’s charter. Because Lockheed Martin’s Charter does not provide for stockholder action by less than unanimous written consent, all stockholders currently have an opportunity to consider any action subject to stockholder approval sufficiently in advance of the action being taken. Requiring that all stockholder business be acted upon at a meeting is an inherently more democratic and open process than this proposal and helps to ensure the accuracy and completeness of information presented to stockholders to obtain their approval. The Corporation’s Bylaws require minimum advance notice and disclosures regarding the matters to be presented and voted upon at meetings, as well as relevant information about the interests of the proponents of such actions. The Board believes that its members, as elected representatives charged with pursuing the best interests of the Corporation, should be provided the opportunity to consider stockholder proposals carefully, so that the Board may make appropriate recommendations to stockholders regarding the proposals. 2013 Proxy Statement       70 Back to Contents The Board believes that an open and candid dialogue between the Board, management and stockholders is in the Corporation’s best interests. To foster that dialogue, the Board has an established mechanism for stockholders to raise important matters outside the annual meeting cycle. Stockholders may communicate confidentially at any time with the Lead Director or with the non-management directors as a group (see details on page 79). The Board also encourages management, consistent with the Corporation’s obligations under the securities laws, to disseminate information about the business broadly. Members of senior management regularly participate in conferences and other forums with stockholders and the investment community where there are opportunities to provide updates about the Corporation’s plans and progress toward achievement of our objectives. Management also regularly seeks input from stockholders on governance issues. As part of the Board’s continuous review of, and commitment to, best corporate governance practices and as a result of management’s ongoing dialogue with stockholders, in recent years the Corporation has adopted a number of governance changes. In recent years, the Board has amended the Corporation’s BylawsCapital Research acting as an investment adviser to reduce the percentage of shares that an individual stockholder or group of stockholders must own to cause the Corporate Secretary to call a special meeting of stockholders (see further discussion on page 13). These changes have been implemented by the Board with a view toward balancing stockholders’ rights to call a special meeting between annual meetings and the desire to enable the Board and management to focus their energies and attention on the businessvarious investment companies registered under Section 8 of the Corporation. The Corporation also adoptedInvestment Company Act of 1940. (3) As reported on a majority vote standard for uncontested director electionsSchedule 13G/A filed on February 10, 2016 by BlackRock, Inc. BlackRock, Inc. and eliminated certain supermajority vote provisions in the Corporation’s Charter. In addition, each member of the Board is elected annually, all of the current directors (except for two management directors) are independent,its subsidiaries had sole dispositive power with respect to 18,703,221 shares and the Corporation does not havesole voting power over 16,579,320 shares. (4) As reported on a “Poison Pill.” Finally, our current practice of not authorizing actionschedule 13G filed on February 10, 2016 by less than unanimous written consent is consistentVanguard Group. Vanguard had sole dispositive power with the approach taken by the majority of widely-held public companies. As has been its practice, the Board will continuerespect to review best corporate governance practices16,910,945 shares and adopt those it believes, in light of specific circumstances, serve the best interests of the Corporation.sole voting power over 498,926 shares. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors (and persons who own more than 10% of our equity securities) file reports of ownership and changes in ownership with the SEC, the NYSE and with us. Based solely on our review of copies of forms and written representations from reporting persons, we believe that all ownership filing requirements were timely met during 2015. 80     www.lockheedmartin.com/investor Table of Contents STOCKHOLDER PROPOSAL 5 The stockholder identified below has submitted the following proposal to be voted upon at the Annual Meeting. In accordance with SEC rules, we are reprinting the proposal and supportingstatements as they were submitted to us. The Corporation is not responsible for the contents thereof or any inaccuracies the proposal may contain. The Board of Directors recommends a vote AGAINST Proposal 4. Proposal 5: Stockholder Proposal by the American Federation of State, County and Municipal Employees, AFL-CIO Employees Pension Plan The American Federation of State, County and Municipal Employees (AFSCME) Employees Pension Plan, 1625 L Street, N.W., Washington, D.C. 20036-5687, the beneficial owner of 2,031 shares of common stock of the Corporation having a market value greater than $2,000, has notified the Corporation that it intends to present the following proposal at this year’s Annual Meeting: RESOLVED: The stockholders of Lockheed Martin Corporation (“Lockheed” or the “Company”) request the Board of Directors to adopt a policy, and amend the bylaws as necessary, to require the Chair of the Board of Directors to be an independent member of the Board. This independence requirement shall apply prospectively so as not to violate any Company contractual obligation at the time this resolution is adopted. Compliance with this policy is waived if no independent director is available and willing to serve as Chair. SUPPORTING STATEMENT Robert Stevens is stepping down as Lockheed’s CEO, but he will remain as chair. Marillyn Hewson will serve as CEO. We believe the board’s retaining a former CEO as chair weakens a corporation’s governance structure, which can harm shareholder value. Having a former CEO serve as chair is often called the “apprentice” model, and studies show that reliance on the apprentice model can lead to underperformance. A 2010 study found apprenticed CEOs underperformed non-apprenticed CEOs on average (CEO Succession 2000—2009: A Decade of Convergence and Compression, Booz & Co. Summer 2010), while a 2007 study found that companies in which CEOs served while the previous CEO was chair performed significantly worse for investors from 1998 – 2006 (The Era of the Inclusive Leader, Booz Allen Hamilton, Summer 2007). In our view, shareholder value is enhanced by having an independent board chair; independence ensures a balance of power between the CEO and the board and supports strong board leadership. The primary duty of a board of directors is to oversee the management of a company on behalf of its shareholders. We believe that having a former CEO also serve as chair creates a conflict of interest that can result in excessive management influence on the board and weaken the board’s oversight of management. An independent board chair has been found in academic studies to improve the financial performance of public companies. A 2007 Booz & Co. study found that in 2006, all of the underperforming North American companies with long-tenured CEOs lacked an independent board chair (The Era of the Inclusive Leader, Booz Allen Hamilton, Summer 2007). A more recent study found that, worldwide, companies are now routinely separating the jobs of chair and CEO: in 2009 less than 12 percent of incoming CEOs were also made chair, compared with 48 percent in 2002 (CEO Succession 2000—2009: A Decade of Convergence and Compression, Booz & Co., Summer 2010). 2013 Proxy Statement       71 Back to Contents We believe that independent board leadership would be particularly constructive at Lockheed, where Robert Stevens was named as one of the S&P 500’s Overpaid 25 for both 2011 and 2010 (Pay Dirt 2011 and 2010, Glass Lewis). What’s more, in 2011, Stevens received nearly four times the average compensation of the other named executive officers. Academic research shows pay inequity is associated with lower firm value and greater CEO entrenchment (Lucian Bebchuk, “Pay Distribution in the Top Executive Team,” February 2007). We urge stockholders to vote for this proposal. Special Meeting Stock Ownership Threshold