Lockheed Martin Corp., the world’s largest defense company, said about 25 percent of its executives opted for a voluntary retirement program designed to cut costs as U.S. defense spending slows.
More than 600 vice presidents and directors applied for the program offered in July, Bethesda, Maryland-based Lockheed said in a statement today. Executives taking the retirement plan have begun leaving and all will have gone by February, Jeffery Adams, a Lockheed spokesman, said in a telephone interview.
The severance program will yield “substantial savings” starting in 2011, Lockheed said. It also will provide “a leaner management structure at a time when our customers have an urgent need for more affordable solutions to the global security challenges they face,” Chief Executive Officer Bob Stevens said in the statement.
Stevens is trimming expenses as Defense Secretary Robert Gates seeks to chop as much as $60 billion from weapons and military-service purchases in five years amid a mounting U.S. fiscal deficit. Lockheed has eliminated about 10,000 jobs since 2009, the company said in the statement. Its workforce now totals about 136,000.
“It’s a significant cut” at the executive-management level, rather than the “C-suite level,” said Gail Meneley, a co-founder of executive-transition firm Shields Meneley Partners in Chicago. C-suite refers to top managers with title acronyms that begin with the letter C, such as CEO and CFO.
Lockheed is the second U.S. defense contractor this week to announce cuts in its executive ranks. Chicago-based Boeing Co. yesterday said it would reduce by 10 percent the managerial jobs at its military aircraft unit as part of a broader effort to eliminate 400 positions in the defense division.
Boeing’s defense unit, which makes F-15 and F/A-18 jet fighters, accounted for about 50 percent of its 2009 sales of $68.3 billion.
Lockheed’s profit this year, excluding some items, may be $7.15 to $7.35 a share on sales of $45.5 billion to $46.5 billion, the company said in July. Adjusted profit was $8.43 a share in 2009 on sales of $45.2 billion.
Lockheed declined 68 cents to $68.91 at 2:18 p.m. in New York Stock Exchange composite trading. Boeing rose $1.13, or 1.8 percent, to $64.55.
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