By JIM McELHATTON
On the same day in March that Lockheed Martin warned that the sequester could lead to thousands of employee furloughs and layoffs, the nation’s largest federal contractor disclosed that it had just boosted the compensation of its former CEO by more than $2 million.
Former Lockheed CEO Robert Stevens, who retired as CEO on Jan. 1 but remains chairman, saw his overall compensation rise from $23.4 million in 2011 to $27.5 million in 2012, according to Securities and Exchange Commission (SEC) forms.
The disclosure shows how even with a looming sequester, budget standoffs and defense cutbacks, federal belt-tightening hasn’t yet hit the wallets of top executives for some of the nation’s biggest federal contractors.
“I don’t think you’re going to start seeing that until companies’ numbers are going flat and negative,” said Paul Dorf, managing director of Compensation Resources Inc.
And despite its eventual warnings of sequester-related layoffs, Lockheed officials said the company performed well last year.
“We reached record levels for sales, segment operating profit, segment operating margin, earnings per share … orders and backlog,” the company said in a March 8 SEC filing.
The company also reported last week an increase in first quarter profits.
Lockheed officials declined to comment on its compensation policies other than to refer to the company’s proxy statement, which noted the company’s total stockholder return last year outperformed both the Standard & Poor’s index and the S&P aerospace and defense index.
While his base salary of $1.8 million remained flat, Stevens’ compensation also included a bonus, stock and option awards, non-equity incentive plan compensation, deferred compensation and other compensation.
Likewise, at Boeing, the second biggest federal contractor in 2012, CEO James McNerney Jr. saw his base salary remain flat at $1.9 million. But with stock and option awards and boosts in pension and incentive earnings, his overall compensation rose from $22.9 million in 2011 to $27.5 million in 2012.
Boeing spokesman John Dern noted that Boeing’s compensation, too, is based on pay for performance, and that the company performed “extremely well” against targets with record revenues in 2012. He also said more than half of Boeing’s business is based on commercial airplane sales.
The company reported total revenues of $81.7 billion in 2012 compared to $68.7 billion in 2011. In its annual report, the company said one-third of its revenues came from federal contracts, including foreign military sales through the U.S. government.
Among other top federal contractors, Raytheon has not yet filed a proxy statement with the SEC detailing 2012 compensation.
General Dynamics’ CEO, Phebe Novakovic, took over on Jan. 1. The company’s former CEO, Jay Johnson, saw his overall compensation rise from $16.1 million to $18 million from 2011 to 2012, SEC forms show.
Wesley Bush, CEO of Northrop Grumman, saw his overall compensation last year decline from $26.6 million to $24.4 million.
Ben Freeman, an investigator for the Project On Government Oversight, said the numbers aren’t surprising. Last year, he found CEO compensation for the top five federal contractors averaged $21.5 million during 2011.
“If you’re going through a time of austerity, you’d hope the heads of these organizations would lead by example,” Freeman said.