Stephanie Hill
LOCKHEED MARTINAbout Stephanie Hill
President, Rotary and Mission Systems (RMS) at Lockheed Martin; Named a Named Executive Officer (NEO) for 2024 with 38 years of service at the company as of year-end 2024 . Compensation is tied to pay-for-performance: annual incentive weighted 70% financial and 30% strategic/operational (overall payout factor 89%), and long-term incentives (PSUs/LTIP) tied to three-year Relative TSR (50%), Free Cash Flow (25%), and ROIC (25%) with the 2022–2024 cycle paying at 120.2% overall . Hill’s 2024 compensation totaled $6,610,246 (salary $995,000; stock awards $3,400,048; annual incentive $2,024,300; all other compensation $190,898) . Anti-hedging/pledging and robust stock ownership requirements (3x base salary for segment presidents, achieved within five years) support alignment; as of Dec 31, 2024, all NEOs exceeded their ownership requirements .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lockheed Martin | Senior Vice President, Enterprise Business Transformation | Through 6/15/2020 | Led enterprise transformation; predecessor role to business segment leadership |
| Lockheed Martin | Executive Vice President, Rotary & Mission Systems | Appointed 6/15/2020 | Promoted to lead RMS; part of 2020 leadership transition |
| Lockheed Martin | President, Rotary & Mission Systems | 2024 NEO | Current business segment leadership role with 38 years of service |
Fixed Compensation
| Component | FY 2024 Amount ($) | Notes |
|---|---|---|
| Base Salary | 995,000 | Paid weekly in arrears; amount reflects actual pay periods |
| All Other Compensation (Perqs and benefits) | 190,898 | Includes perqs such as personal aircraft use, executive physicals, etc. |
Perquisites detail:
- Personal use of corporate aircraft: $89,761 incremental cost for 2024 .
Performance Compensation
2024 Annual Incentive (MICP)
| Metric | Weight | 2024 Factors | Weighted Payout |
|---|---|---|---|
| Financial | 70% | 67% | 47% |
| Strategic & Operational | 30% | 140% | 42% |
| Overall Payout Factor | — | — | 89% |
| NEO | Base Salary ($) | Target % of Salary (%) | Target Award ($) | Overall Payout Factor | Payout ($) |
|---|---|---|---|---|---|
| Stephanie C. Hill | 995,000 | 120 | 1,194,000 | 89% | 1,062,700 |
2024 Long-Term Incentive Awards (Granted Feb 22, 2024)
| Instrument | Target/Count | Grant Date Fair Value ($) | Vesting | Performance Metrics |
|---|---|---|---|---|
| RSUs | 3,007 units | 1,283,087 | Cliff vest 3 years after grant | None (time-based) |
| PSUs | Target 5,014; Threshold 314; Max 10,028 | 2,116,961 | 3-year performance; payout 0–200% | Relative TSR 50%, FCF 25%, ROIC 25% |
| Cash LTIP | Target $860,000; Threshold $53,750; Max $1,720,000 | N/A | 3-year performance; payout 0–200% | Relative TSR 50%, FCF 25%, ROIC 25% |
2024–2026 PSU performance goals:
| Metric | Target (100% payout) | Max (200%) | Threshold (25%) | Notes |
|---|---|---|---|---|
| Relative TSR (vs defined capital goods peers) | 50th percentile | 75th–100th percentile | 35th percentile | TSR component capped at 100% if absolute TSR negative |
| Free Cash Flow | Plan (Target) | Plan +30% | Plan –15% | Non-GAAP per Appendix A |
| ROIC | Plan (Target) | Plan +12% | Plan –10% | Non-GAAP per Appendix A |
2022–2024 LTI results (paid in 2025):
| Performance Measure | Weight | Calculated Payout | Weighted Payout |
|---|---|---|---|
| Relative TSR | 50% | 164.3% | 82.1% |
| Free Cash Flow | 25% | 101.5% | 25.4% |
| ROIC | 25% | 50.7% | 12.7% |
| Overall Payout | — | — | 120.2% |
| NEO | LTIP Target ($) | LTIP Payout ($) | PSUs Target (#) | Total Shares Distributed/Earned |
|---|---|---|---|---|
| Stephanie C. Hill | 800,000 | 961,600 | 5,144 | 6,184 |
Stock vested during 2024 (includes 2019–2021 RSUs/PSUs vest on Feb 25, 2024 and tax-withholding-related accelerated vesting on Dec 9, 2024):
| Name | Shares Acquired on Vesting (#) | Value Realized ($) |
|---|---|---|
| Stephanie C. Hill | 8,633 | 3,734,837 |
Notes: No employee stock options have been granted since 2012; no option repricing/cash-out of underwater options allowed .
Equity Ownership & Alignment
Beneficial ownership as of Feb 28, 2025; no shares pledged; no individual NEO/director owns ≥1% of outstanding shares .
| Holder | Common Stock (shares) | Stock Units (units) | Total |
|---|---|---|---|
| Stephanie C. Hill | 13,399 | 10,275 | 23,675 |
- Includes 4,067 shares in the Lockheed Martin Salaried Savings Plan (voting/investment power retained) .
- Anti-hedging/anti-pledging policy prohibits all hedging/pledging by directors, officers, and employees .
- Stock ownership guidelines for key employees: CEO 6x salary; CFO/COO 4x; Business Segment Presidents 3x; Senior/Elected VPs 2x. NEOs must reach levels within five years and hold net shares until compliant; as of Dec 31, 2024, each NEO exceeded their requirement .
Outstanding equity awards at Dec 31, 2024:
| Award | Grant Date | Status | Units | Market/Payout Value ($) |
|---|---|---|---|---|
| RSU | 2/23/2022 | Unvested | 2,957 | 1,436,925 |
| PSU (2022–2024) | 2/23/2022 | Earned | 6,184 | 3,005,053 |
| RSU | 2/22/2023 | Unvested | 2,556 | 1,242,063 |
| PSU (2023–2025) | 2/22/2023 | Unearned | 2,482 | 1,206,103 |
| RSU | 2/22/2024 | Unvested | 2,969 | 1,442,756 |
| PSU (2024–2026) | 2/22/2024 | Unearned | 3,029 | 1,471,912 |
Employment Terms
- No individual employment agreements (company policy) .
- Executive Severance Plan: lump sum of 1x base salary + 1x target annual incentive (CEO 2.99x), plus one year of benefits continuation, outplacement and relocation; requires execution of release and post-employment non-compete/non-solicit covenants (two-year duration per 2022 proxy) .
- LTI treatment: double trigger required for change-in-control acceleration; RSUs continue/pro-rata vesting depending on event; PSUs/LTIP generally prorated and paid post-cycle for death, disability, retirement, layoff, divestiture; immediate payment at target on double-trigger change-in-control if successor does not assume awards .
Potential payments (as of Dec 31, 2024):
| Scenario | LTIP ($) | RSUs ($) | PSUs ($) | Executive Severance ($) | Total ($) |
|---|---|---|---|---|---|
| Change in Control (double trigger) | 2,500,000 | 4,330,571 | 7,424,313 | 2,256,025 | 14,254,884 |
| Retirement | — | — | — | — | — (RSUs/PSUs continue per normal schedules) |
| Death/Disability | — | 4,330,571 | — | — | 4,330,571 |
| Layoff | — | — | — | 2,256,025 | 2,256,025 |
Clawbacks and compliance:
- Supplemental discretionary clawback policy on variable pay .
- Anti-hedging/pledging policy; no tax gross-ups on aircraft use or change-in-control; no automatic acceleration of unvested awards; no enhanced pensions; no enhanced death benefits .
Deferred compensation and pensions:
| Plan | Executive Contributions 2024 ($) | Registrant Contributions 2024 ($) | Aggregate Earnings 2024 ($) | Aggregate Balance at FYE ($) |
|---|---|---|---|---|
| NCAP | — | 40,882 | 17,532 | 258,491 |
| DMICP | — | — | 624,557 | 4,560,439 |
| Total | — | 40,882 | 642,090 | 4,818,930 |
Pension benefits (present value, as of 12/31/2024):
| Plan | Credited Service (years) | Present Value ($) |
|---|---|---|
| Salaried Employee Retirement Program | 33.0 | 1,666,842 |
| Consolidated Supplemental Retirement Benefit Plan (Supplemental Pension) | — | 4,576,438 |
Compensation Peer Group and Say-on-Pay
- Comparator group: Industrial companies of similar revenue, talent competition, and macro pressures; market rate set at 50th percentile; includes Aerospace & Defense peers (RTX, General Dynamics, Northrop Grumman, Boeing, Honeywell) plus broader industrials (Deere, Caterpillar, Cisco, IBM, UPS, FedEx, etc.). 2024 group same as 2023; 2025 removed GE Aerospace and Dow due to survey participation changes .
- Say-on-Pay approvals: 2024 >93% approval; program viewed positively by investors for pay mix and transparency . 2021 >92% approval .
Compensation Structure Analysis
- Year-over-year cash vs equity: 2024 target LTI for Hill $4.3M with RSUs/PSUs mix; aligns with market rate at 50th percentile and formulaic PSU/LTIP metrics to constrain discretion .
- Shift from options to RSUs: No employee options granted since 2012, reducing risk of option repricing; PSU value capped at 400% of grant-date stock price times shares earned; TSR component capped at 100% if absolute TSR negative .
- Performance targets: Transparent multi-metric design with defined payout curves; 2022–2024 cycle overall 120.2% payout supports value creation; annual incentive below target (89%) driven by mixed financial outcomes offset by strong strategic/operational execution .
- Clawbacks, double-trigger CoC, anti-hedging/pledging: Governance features mitigate misalignment and risk-taking .
Investment Implications
- Alignment: High equity exposure (RSUs/PSUs) and stringent ownership requirements (3x salary for segment presidents, exceeded) drive long-term alignment; anti-hedging/pledging policy reduces misalignment risk .
- Retention risk: Favorable vesting on retirement/layoff (continued/pro-rata vesting) and severance protections (1x salary+bonus) provide retention; change-in-control requires double trigger, limiting windfalls .
- Trading signals: PSU/LTIP deliveries and RSU cliff vesting cluster around February anniversaries; retirement-eligibility can trigger tax-withholding-related accelerated vesting/disposition events (Dec 9, 2024), potentially adding predictable Form 4 activity around vest dates .
- Execution outlook: 2024 annual incentive paid below target (89%) suggests headwinds in financial metrics, but strong strategic/operational outcomes (140%) and robust three-year TSR/FCF performance (120.2% LTI payout) signal effective segment execution under Hill’s leadership .
- Governance risk: No employment agreements, no tax gross-ups, no options/repricing; robust clawbacks and ownership guidelines—low governance red flags for compensation practices .