By Calvin Biesecker
Lockheed Martin [LMT] yesterday said that just over 600 of its executives, or about 25 percent of its total executive population, applied to receive financial incentives in return for voluntarily departing the company as the defense contractor moves to slash costs.
Lockheed Martin didn’t say how much it expects to save through its Voluntary Executive Separation Program (VESP) other than to say it will result in “substantial savings” in 2011 and on a recurring basis in 2012 and beyond. The company won’t be able to quantify costs until it has a better handle on positions and the final tally of departing executives is known and what positions will be filled via promotions, a Lockheed Martin spokeswoman told Defense Daily.
By leaning out its organization, Lockheed Martin said it will speed decision-making and remain agile. The early-exit program will also free up some positions to enable the company to promote talented individuals, although it said not all of the positions will be filled.
“We will fill some and that will afford more upward mobility to the existing talent pool so they get the experience needed to hone leadership competencies that our customers rely on us to develop,” the spokeswoman said.
The establishment of the VESP program was announced in July (Defense Daily, July 7).
The thinning of the company’s executive ranks follows job reductions of about 10,000 employees that began early in 2009, Lockheed Martin said. The company is also taking other cost cutting and strategic alignment moves, including the divestment of two business units and reducing advertising and participation in international trade shows.
“The VESP program will enable us to achieve significant cost savings and 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,” Bob Stevens, Lockheed Martin’s chairman and CEO, said in a statement.
The deadline for executives to opt for the separation program was Tuesday night. The VESP program requires participants to leave the company by Feb. 1, 2011.