GAO, Pentagon Asked to Look at Exec Bonuses : Compensation: Sen. Boxer says the $92 million in payments planned at Lockheed Martin may violate federal rules.
WASHINGTON — The $92 million in executive bonuses that Lockheed Martin managers will receive in the aftermath of last month’s merger may violate federal regulations, Sen. Barbara Boxer said Tuesday.
The California Democrat asked the General Accounting Office and Defense Secretary William Perry to review the payments to determine whether the company’s plan to bill taxpayers for a portion of the bonuses are allowed under Pentagon policy and rules.
The controversial plan has already attracted criticism by investors, who have branded the payments as excessive. If Boxer’s letters trigger a negative GAO review, it could seriously complicate Lockheed Martin’s problems, a congressional aide said.
“I have concerns about the fundamental fairness of such lucrative corporate payments,†Boxer wrote to GAO chief Charles Bowsher. “They transfer millions of dollars in average taxpayers funds to highly paid corporate officials while thousands of average . . . employees will have to sacrifice jobs and income.â€
Lockheed Martin spokeswoman Susan Pearce said she had not seen Boxer’s letters. Pearce added that the entire issue has been misunderstood and that taxpayers will incur no greater liabilities than they would had the merger between Lockheed and Martin Marietta not occurred. Nor will the firm seek to bill the government for any bonuses related to the merger, she said.
Under the bonus plan, 460 executives and managers will receive a total of $92 million, stemming from various benefit plans triggered by a change in control of the company, according to a Defense Department briefing paper.
The company plans to seek repayment from the government for $31 million, of which $19 million has already been claimed in requests for overhead reimbursements by Martin Marietta in prior years, according to the Pentagon document.
The company also plans to claim $12 million as an allowable cost under defense contracts, but the plan is still subject to an agreement between Lockheed Martin and the government.
But Boxer said that plan “raises serious questions about twisting allowability rules to sock it to taxpayers for the benefit of high-paid top executives.â€
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