final assessment lockheed martin corporationcompanies.defenceindex.org/pdf/lockheedmartin.pdf ·...

LOCKHEED MARTIN 11/09/14 HTTP://WWW.LOCKHEEDMARTIN.COM/

FINAL ASSESSMENT

LOCKHEED MARTIN CORPORATION

The following pages contain the detailed scoring for your company based on

public information.

The following table represents a summary of your scores:

Topic Number of

questions

% score based

on public

information

Leadership, Governance and

Organisation

10 85%

Risk Management 7 78.6%

Company Policy and Codes 12 100%

Training 5 100%

Personnel and Helplines 7 85.7%

Total 41 90.2%


A1:

Does the company publish a statement from the Chief Executive Officer or the Chair of the Board supporting the ethics and anti-corruption agenda of the company?

Score:

2

Comments:

Based on public information, there is evidence that the company has published several statements from the CEO, specifically supporting the company’s strong stance against corruption.

References:

Public: Code of Conduct (2014), p.ii: A Message from our Chairman, President and Chief Executive Officer Dear Colleague: At Lockheed Martin, we are committed to our core values. We Do What’s Right, Respect Others and Perform with Excellence. We never allow our ethics or integrity to be compromised by our desire to succeed, regardless of the circumstances of our business. As we continue to expand our reach in the global marketplace, strengthen our position as a leading technology innovator, and find new solutions to our customers’ complex challenges, we must hold firm to our high standards for ethical conduct. Our values and ethics are fundamental to who we are and what we do. They not only define us, they distinguish us. When we demonstrate integrity in all of our dealings, we build bonds of trust, which lead to stronger, more enduring relationships. It’s these trusted relationships that create the opportunity for new and repeat business, and that’s what will secure our future. We hold every Lockheed Martin employee accountable for upholding our ethical standards. Those standards go well beyond compliance with laws, rules and regulations that govern our business. They require each of us to abide by our values in every decision we make and every action we take. Setting the Standard is our Code of Ethics and Business Conduct. It explains how we must conduct ourselves when representing or acting on behalf of our company. It details the high expectations we set for employee behavior, from our commitment to good citizenship to our zero tolerance policy on corruption. And, it serves as the most basic building block for future success. In addition to relying on our Code, I encourage you to consult other valuable resources, including your manager, Ethics officer and Human Resources business partner, whenever an


ethics-related issue or question arises. They can provide additional guidance and insight when you need it. Thank you for embracing and implementing our core values, and for committing to the high standards for ethics and integrity that define who we are at Lockheed Martin.’ http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/code-of-conduct.pdf

Company website: Our Continued Commitment to the Highest Legal and Ethical Standards (18 June 2013)

‘A Message From Marilyn

To: All Lockheed Martin Employees

As we begin our annual ethics awareness training across the Corporation, I’d like to underscore the importance of complying with all laws governing our business, especially as we grow our international portfolio.

For all of us, and particularly for those of you contributing to Lockheed Martin’s growth internationally, it’s critically important we continue to adhere to our policy on Compliance with the Anti-Corruption Laws, CPS-730 and the principles of ethical and legal compliance set forth in our Code of Ethics and Business Conduct.

As a reminder, our company has a zero-tolerance policy for corruption and expects anyone acting on behalf of Lockheed Martin to strictly adhere to all U.S. and foreign anti-corruption laws. Under no circumstances will we sacrifice our integrity. We would rather lose a business opportunity than violate the law or look the other way while a violation is taking place.

I am proud of Lockheed Martin’s commitment to comply with the Foreign Corrupt Practices Act and foreign anti-corruption laws, and I ask each of you to continue to set the standard through your daily actions. Our customers value and respect our unwavering commitment to ethics and integrity. Thanks to your dedication, our company is well positioned for continued growth abroad.’

http://www.lockheedmartin.com/us/employees/enr/0618-hewson.html

Company website: A Message from Marilyn (9 December 2014)

‘To All Lockheed Martin Employees:

Today is International Anti-Corruption Day, designated by the United Nations General Assembly as a day to highlight efforts to prevent corrupt business practices around the world. To recognize its importance, I would like to take this opportunity to thank you for upholding the Corporation’s high standards of ethics and values-based conduct in every aspect of our business.

As we continue to strengthen our international portfolio, it’s more important than ever to hold true to these high standards.

Our policy of zero tolerance for corruption—combined with an expectation that anyone who acts on behalf of Lockheed Martin adhere to all applicable anti-corruption laws—sustains our reputation for integrity and enables us to win business around the world.

As a U.S.-based company, any actions on behalf of Lockheed Martin in any corner of the

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/code-of-conduct.pdf




world are subject to the U.S. Foreign Corruption Practices Act. Similarly, our global operations obligate us to adhere to the anti-corruption laws, such as the UK Bribery Act, of many other nations.

While we certainly abide by all of these laws, I’m proud that our commitment to ethical business practices goes beyond the letter of the law. We will not compromise our values or act in a way that damages the trust and transparency necessary to conduct our business. We will not tolerate any questionable dealings. Our Code of Ethics and Business Conduct sets the standard for how we will live our values in our daily work lives.

Thank you for your continued dedication to meeting the high standards we set for doing business around the world. Together, we can create a better climate for doing business everywhere.

http://www.lockheedmartin.com/us/employees/enr/1209-hewson.html YouTube website: Marillyn Hewson on DII Video on importance of ethics and business integrity. https://www.youtube.com/watch?v=lpTjQGb5Pck

Company website: Voicing Our Values

Chairman, President and CEO video introduction to ethics.

‘Our foundations is our values.’

‘Highest standards of ethics and integrity.’

‘Each of us is responsible for living our values daily.’

‘Zero tolerance for corrupt practices.’

‘Our colleagues, our customers and our suppliers want to know we are trustworthy in all our dealings. Honesty and integrity are fundamental to those relationships, and critical to the success of our business.’

‘You play a critical role in upholding Lockheed Martin’s commitment to the highest standards of ethical business conduct.’

http://www.lockheedmartin.co.uk/us/who-we-are/ethics/training/voicing-values-training.html


https://www.youtube.com/watch?v=lpTjQGb5Pck




A2:

Does the company’s Chief Executive Officer or the Chair of the Board demonstrate a strong personal, external facing commitment to the ethics and anti-corruption agenda of the company?

Score:

2

Comments:

Based on public information, there is evidence that the company’s CEO, Marillyn Hewson is the Chair of the DII Steering Committee. Further, Leo Mackay (VP Ethics and Sustainability) is Chair of the DII Working Group.

References:

Public:

Defence Industry Initiative:

http://www.dii.org/dii-steering-committee

http://www.dii.org/dii-working-group

Interview excerpt on ethics: http://www.worldofceos.com/dossiers/marillyn-hewson


http://www.dii.org/dii-working-group

http://www.worldofceos.com/dossiers/marillyn-hewson


A3:

Does the company’s Chief Executive Officer demonstrate a strong personal, internal-facing commitment to the ethics and anti-corruption agenda of the company, actively promoting the ethics and anti-corruption agenda at all levels of the company structure?

Score:

1

Comments:

Based on public information, there is evidence that the CEO has demonstrated an internal-facing commitment to the company’s anti-corruption agenda. The CEO provides a video introduction to the company’s Voicing Our Values 2014, directed towards employees. The company therefore scores 1. To score higher the company would need to provide at least two other examples of this internal engagement, such as speaking at training events or chairing a review of anti-corruption programmes.

References:

Public:













A4:

Does the company publish a statement of values or principles representing high standards of business conduct, including honesty, trust, transparency, openness, integrity and accountability?

Score:

2

Comments:

Based on public information, there is evidence that the company publishes a statement of values representing high standards of business conduct, including integrity and honesty. The company explains these values and demonstrates that these are translated into company policies and codes. In particular, the CEO provides a video introduction to the company’s Voicing Our Values 2014, directed towards employees.

References:

Public:

Code of Conduct (2014), p.1:

‘Lockheed Martin sets the standard for integrity in everything we do. We demand this of ourselves, just as others — like our shareholders and customers — expect this of us.

Our Vision:

Be the global leader in supporting our customers to strengthen global security, deliver citizen services and advance scientific discovery.

Our Values:

Do What’s Right

Respect Others

Perform With Excellence’

(p.25):‘We Conduct International Business with Integrity

We set the standard

We have zero tolerance for corruption.

If you perform work internationally, you are subject to the laws and regulations of the countries where we do business. You may find conflicts between the laws of the countries where we operate and the laws of the U.S. or our Corporation’s policy.

Unless prohibited or penalized by U.S. law, you are responsible for complying with the


national and local laws of the countries in which we operate.

Why We do it

Our high standards of ethical business conduct are a key component of our business strategy that enables us to build customer relationships and win programs around the world.

Bribes, export and import violations and illegal boycotts damage the trust and transparency needed to transact business.

Corruption creates unfair competition, increases cost and jeopardizes the quality and capability of our products and services.’


Company Website – Who We are – Culture:

‘Lockheed Martin’s Values

Do What’s Right - We are committed to the highest standards of ethical conduct in all that we do. We believe that honesty and integrity engender trust, which is the cornerstone of our business. We abide by the laws of the United States and other countries in which we do business, we strive to be good citizens and we take responsibility for our actions.

Respect Others - We recognize that our success as an enterprise depends on the talent, skills and expertise of our people and our ability to function as a tightly integrated team. We appreciate our diversity and believe that respect - for our colleagues, customers, partners, and all those with whom we interact - is an essential element of all positive and productive business relationships.

Perform With Excellence - We understand the importance of our missions and the trust our customers place in us. With this in mind, we strive to excel in every aspect of our business and approach every challenge with a determination to succeed.’

http://www.lockheedmartin.com/us/who-we-are/culture.html

Company website: A Message from Marillyn (9 December 2014)

‘To All Lockheed Martin Employees:

Today is International Anti-Corruption Day, designated by the United Nations General Assembly as a day to highlight efforts to prevent corrupt business practices around the world. To recognize its importance, I would like to take this opportunity to thank you for upholding the Corporation’s high standards of ethics and values-based conduct in every aspect of our business.

As we continue to strengthen our international portfolio, it’s more important than ever to hold true to these high standards.

Our policy of zero tolerance for corruption—combined with an expectation that anyone who acts on behalf of Lockheed Martin adhere to all applicable anti-corruption laws—sustains our reputation for integrity and enables us to win business around the world.

As a U.S.-based company, any actions on behalf of Lockheed Martin in any corner of the world are subject to the U.S. Foreign Corruption Practices Act. Similarly, our global



http://www.lockheedmartin.com/us/who-we-are/culture.html


operations obligate us to adhere to the anti-corruption laws, such as the UK Bribery Act, of many other nations.

While we certainly abide by all of these laws, I’m proud that our commitment to ethical business practices goes beyond the letter of the law. We will not compromise our values or act in a way that damages the trust and transparency necessary to conduct our business. We will not tolerate any questionable dealings. Our Code of Ethics and Business Conduct sets the standard for how we will live our values in our daily work lives.

Thank you for your continued dedication to meeting the high standards we set for doing business around the world. Together, we can create a better climate for doing business everywhere.











Company website: International Business

‘We Conduct International Business with Integrity

We set the standard



Unless prohibited or penalized by U.S. law, you are responsible for complying with the national and local laws of the countries in which we operate.

Why We do it



Corruption creates unfair competition, increases cost and jeopardizes the quality and





capability of our products and services.’

http://lockheedmartin.com/us/who-we-are/ethics/global_integrity.html

http://lockheedmartin.com/us/who-we-are/ethics/global_integrity.html


A5:

Does the company belong to one or more national or international initiatives that promote anti-corruption or business ethics with a significant focus on anti-corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company is a member of the DII and IFBEC.

References:

Public:

http://ifbec.info/our-members/


http://ifbec.info/our-members/



A6:

Has the company appointed a Board committee or individual Board member with overall corporate responsibility for its ethics and anti-corruption agenda?

Score:

2

Comments:

Based on public information, there is evidence that the Ethics and Sustainability Committee has overall corporate responsibility for the company’s ethics and anti-corruption agenda.

References:

Public:

Ethics and Sustainability Committee:

http://www.lockheedmartin.com/us/who-we-are/corporate-governance/board/board-committees/ethics-corp-charter.html

‘The Board of Directors by resolution adopted by a majority of the Board of Directors may provide for an Ethics and Sustainability Committee (the “ES Committee”) of three (3) or more directors. If provision is made for an ES Committee, the members of the ES Committee shall be elected by and serve at the pleasure of the Board of Directors. The Board of Directors shall designate a chairman from among the membership of the ES Committee. Upon recommendation by the Nominating and Corporate Governance Committee, the Board of Directors may remove any member of the ES Committee at any time. Vacancies on the ES Committee shall be filled by the Board of Directors.

2.0 Purpose. The purpose of the ES Committee shall be to assist the Board of Directors in fulfilling its oversight responsibilities relating to the Corporation’s ethical conduct, sustainability, environmental stewardship, and employee health and safety.

3.0 Responsibilities. In order to achieve the purpose outlined in this charter, the ES Committee shall:

3.1 monitor compliance with the Code of Ethics and Business Conduct, and review and resolve all matters of concern presented to it by the Corporate Steering




Committee on Ethics and Business Conduct or the Corporate Ethics Office’.


A7:

Has the company appointed a person at a senior level within the company to have responsibility for implementing the company’s ethics and anti-corruption agenda, and who has a direct reporting line to the Board?

Score:

2

Comments:

Based on public information, there is evidence that the Vice President Ethics and Sustainability is responsible for implementing the company’s ethics and anti-corruption agenda. This individual is identifiable by name, Leo Mackay, Vice President of Ethics and Sustainability.

References:

Public:

Code of Conduct:

‘The Vice President, Ethics and Business Conduct, reports directly to the Chief Executive Officer and the Ethics and Corporate Responsibility Committee of the Board of Directors, and oversees a vigorous corporate-wide effort to promote a positive, inclusive, and ethical work environment for all employees’.

‘The Business Area Ethics Directors report directly to the Vice President, Ethics and Business Conduct, and to the Executive Vice Presidents who lead their Business Area’.

How the Ethics Process works:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/How-Ethics-Process-Works.pdf

‘The Vice President, Ethics and Sustainability, is an elected officer of the Corporation, reporting directly to the Chief Executive Office, and to the Ethics and Sustainability Committee of the Board of Directors. The Vice President, Ethics and Sustainability, is responsible for overseeing corporate-wide efforts to promote a work environment that is positive, diverse, open, and inclusive - where employees and others can ask questions, express work-related personal concerns about ethics issues, make inquiries, or report violations without fear of retaliation.




Sustainability Report 2013

‘The vice president of Ethics and Sustainability is an elected corporate officer and reports directly to the CEO and the Ethics and Sustainability Committee of the Board of Directors. This role has authority over the ethics program and the execution of the Corporation’s compliance training, procurement integrity and anti-corruption efforts’.

Polishing Our Ethics Performance:

http://www.lockheedmartin.co.uk/us/who-we-are/ethics/culture-ethics.html

http://www.lockheedmartin.co.uk/us/who-we-are/ethics/culture-ethics.html


A8:

Is there regular Board level monitoring and review of the performance of the company’s ethics and anti-corruption agenda?

Score:

2

Comments:

Based on public information, there is evidence that the Ethics and Sustainability Committee monitors and reviews the performance of the company’s ethics and anti-corruption agenda. Evidence suggests this review takes place at least annually, as the Committee meets at least three times a year.

References:

Public:


Ethics and Sustainability Committee


3.1 monitor compliance with the Code of Ethics and Business Conduct, and review and resolve all matters of concern presented to it by the Corporate Steering Committee on Ethics and Business Conduct or the Corporate Ethics Office;

3.2 review and monitor the adequacy of the Corporation’s policies and procedures with respect to sustainability, including corporate responsibility, human rights, environmental stewardship, employee health and safety, ethical business practices, community outreach, philanthropy, diversity, inclusion, and equal opportunity, and the Corporation’s record of compliance with laws and regulations related thereto;

4.3 Reports to Board of Directors. The ES Committee shall report regularly to the Board of Directors.

5.0 Procedures. The ES Committee shall hold at least three meetings per year and shall




meet with management and separately in executive session without management.


A8(a):

Is there a formal, clear, written plan in place on which the review of the ethics and anti-corruption agenda by the Board or senior management is based, and evidence of improvement plans being implemented when issues are identified?

Score:

0

Comments:

Based on public information, there is no readily available evidence of a formal, clear, written plan in place on which the review of the ethics and anti-corruption agenda by the Board is based, or evidence of improvement plans being implemented when issues are identified.

References:

Public:

TI notes:


‘SUSTAINABILITY MANAGEMENT PLAN

These metrics, part of our Sustainability Management Plan, measure our performance in Governance. We will report on our progress in next year’s Sustainability report.

Continue to monitor and measure anti-bribery and anticorruption by assessing deviations from corporate policy statements on international and domestic business conduct’.

Anti-corruption policy

‘In accordance with its annual audit plans, corporate Internal Audit periodically will assess or audit internal controls across the Corporation, assuring compliance with this policy’.

Company Website – Corporate Governance - Ethics and Sustainability Charter:

‘1.0 Membership. The Board of Directors by resolution adopted by a majority of the Board of Directors may provide for an Ethics and Sustainability Committee (the “ES Committee”) of three (3) or more directors. If provision is made for an ES Committee, the members of the ES Committee shall be elected by and serve at the pleasure of the Board of Directors. The Board of Directors shall designate a chairman from among the membership of the ES


Committee. Upon recommendation by the Nominating and Corporate Governance Committee, the Board of Directors may remove any member of the ES Committee at any time. Vacancies on the ES Committee shall be filled by the Board of Directors.

2.0 Purpose. The purpose of the ES Committee shall be to assist the Board of Directors in fulfilling its oversight responsibilities relating to the Corporation’s ethical conduct, sustainability, environmental stewardship, and employee health and safety.


3.1 monitor compliance with the Code of Ethics and Business Conduct, and review and resolve all matters of concern presented to it by the Corporate Steering Committee on Ethics and Business Conduct or the Corporate Ethics Office;

3.2 review and monitor the adequacy of the Corporation’s policies and procedures with respect to sustainability, including corporate responsibility, human rights, environmental stewardship, employee health and safety, ethical business practices, community outreach, philanthropy, diversity, inclusion, and equal opportunity, and the Corporation’s record of compliance with laws and regulations related thereto;

3.3 oversee matters pertaining to community and public relations, including governmental relations;

3.4 review, as needed, the proposed contributions budget of the Corporation and make recommendations to the Board of Directors for adoption; and

3.5 the ES Committee shall annually conduct an evaluation of its performance."’





A9:

Does the company have a formal process for review and where appropriate update its policies and practices in response to actual or alleged instances of corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company reviews its policies to assess any deviations that may occur from its anti-bribery and anti-corruption policies. There is public information to suggest the company updated its training program under the guidance of the risk and compliance committee. The Sustainability Report explicitly states that policies, procedures and training are updated from monitoring incidents of corruption.

References:

Public:


‘Continue to monitor and measure anti-bribery and anticorruption by assessing deviations from corporate policy statements on international and domestic business conduct’.

‘In addition, we annually review our training, as well as our policy on zero tolerance for corruption, to ensure effective risk reduction and control. Relevant employees, including those doing business internationally, also receive specific anti-corruption training.

In 2013, our Ethics and Enterprise Risk Management departments oversaw a major overhaul of the training program under the guidance of our risk and compliance committee. The enhanced program links training to risk’.

(p.16): ‘Our risk analyses, policies and proce-dures, and training reflect ongoing moni-toring of publicly reported incidents of corruption across the globe, and are updated accordingly.’

http://lockheedmartin.com/content/dam/lockheed/data/corporate/documents/Sustainability/2013-sustainability-report.pdf




A9(a):

Does the company have a formal anti-corruption risk assessment procedure implemented enterprise-wide?

Score:

1

Comments:

Based on public information, there is evidence that the company has a formal anti-corruption risk assessment procedure implemented enterprise-wide. However, there is insufficient detail provided regarding mitigation plans and no evidence of who owns the process. The company therefore scores 1.

References:

Public:


‘Corruption related risk assessments are an integral part of business decisions, particularly when entering new markets, considering acquisitions and establishing new consulting agreements. These efforts propel responsible growth and a business climate where doing what’s right, wins’.

‘On all large programs, we work with major suppliers to complete a comprehensive risk assessment, which includes governance, labor and other sustainability-related issues’.

‘Since we implemented a comprehensive risk assessment and other countermeasure tools, the percentage of poor performing Lockheed Martin subcontract suppliers has been consistently below our 2.5 percent ceiling’.

Anti-corruption policy:

Referring to the UK Bribery Act:

‘Risk assessment – that a corporation conducts an informed assessment of the nature

and extent of potential bribery risks on a regular basis and documents those efforts


This policy (CPS-730) is part of Lockheed Martin’s adequate procedures designed to prevent

bribery. Understanding and following this policy are therefore critical’.

Sustainability Report 2013, p.19: ‘International Supplier Monitoring “We work with U.S. Customs Border Protection to monitor supply chain security activity of contracted foreign suppliers, and we participate in the Customs Trade Partnership Against Terrorism (C-TPAT) program. To measure supply chain risk, each year we send questionnaires developed through the Aerospace Industries Association to foreign suppliers with open purchase orders greater than $100,000. We analyze responses and act on any identified risks that require mitigation. In 2013, we conducted 334 such reviews. We additionally include requirements in our subcontracts requiring subcontractors to address potential supply chain risks. Sub-tier supplier information is not always available, and the methodology and resources do not exist that allow tracking of smaller suppliers’ global footprint. The industry is moving towards Mutual Recognition Arrangements stressing supply chain security best-practices for all suppliers.” 2013 2012 2011 2010 2009

“We also conduct anti-corruption law due diligence on international suppliers of goods and services during the supplier registration process. Our Global Supply Chain Operations organization ensures that such companies disclose anti-corruption information, which we use to determine whether to do business with them. We also revised our acquisition procedures to require our buyers to verify every supplier’s anti-corruption rating before initiating a contract outside the United States. We review all supplier profiles with unsatisfactory anti-corruption responses and decide with our Legal department if additional due diligence is required. In addition, we require suppliers based in countries with a Transparency International Corruption Index score of 50 or less to complete an International Subcontractor Anti-Corruption Questionnaire. Internally, our buyers are audited monthly to ensure they are following the anti-corruption process.”’

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/Sustainability/2013-sustainability-report.pdf

CPS-730 Anti-Corruption policy, section 3.0 Introduction and Responsibilities: ‘Anti-Corruption Due Diligence Requirements 7.15 Before engaging any international partner, a risk-based anti-corruption due diligence must be conducted to determine whether there is a reasonable risk that the international partner could pay or authorize improper payments to a foreign official. This requirement extends to international consultants, joint venture partners, teammates, and suppliers. The due diligence requires fact-collecting on the potential international partner, consultation with the element’s Legal Counsel, and anti-corruption certification by the potential international partner. The extent of the due diligence will vary depending on the risk factors raised by the potential international partner. Primary responsibility for fact-collecting on the potential international partner rests with the responsible Business Development executive and will include obtaining a completed Form C-730-2, International Business Venture




Anti-Corruption Questionnaire, from potential international joint venture partners and international teammates, and providing it to the element’s Legal Counsel for review.

International Joint Ventures 7.18 Any joint venture agreement with an international partner in connection with an international business opportunity must comply with CPS-032, Business Ventures, and must be approved in writing by the element’s Legal Counsel and the business area Vice President & General Counsel before the agreement is entered into. Before providing approval, the business area Vice President & General Counsel and the element’s Legal Counsel must ensure that adequate risk-based anti-corruption due diligence has been conducted on the proposed international joint venture partner and that the joint venture agreement contains adequate Anti-Corruption Law compliance provisions.’ http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/lm-cps-730.pdf

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/lm-cps-730.pdf



A10:

Does the company have a formal anti-corruption risk assessment procedure for assessing proposed business decisions, with clear requirements on the circumstances under which such a procedure should be applied?

Score:

2

Comments:

Based on public information, there is evidence that the company has a formal anti-corruption risk assessment procedure for assessing proposed business decisions, with criteria as to when this procedure needs to be applied.

References:

Public:

Sustainability Report 2013:

‘Corruption related risk assessments are an integral part of business decisions, particularly when entering new markets, considering acquisitions and establishing new consulting agreements. These efforts propel responsible growth and a business climate where doing what’s right, wins’.

‘On all large programs, we work with major suppliers to complete a comprehensive risk assessment, which includes governance, labor and other sustainability-related issues’.

‘Since we implemented a comprehensive risk assessment and other countermeasure tools, the percentage of poor performing Lockheed Martin subcontract suppliers has been consistently below our 2.5 percent ceiling’.

‘Section 7.15-7.16 Anti-Corruption Due Diligence Requirements of anti-corruption policy, CPS-730 Compliance with the Anti-Corruption Laws:

‘Anti-Corruption Due Diligence Requirements

7.15 Before engaging any international partner, a risk-based anti-corruption due diligence must be conducted to determine whether there is a reasonable risk that the international



partner could pay or authorize improper payments to a foreign official. This requirement extends to international consultants, joint venture partners, teammates, and suppliers. The due diligence requires fact-collecting on the potential international partner, consultation with the element’s Legal Counsel, and anti-corruption certification by the potential international partner. The extent of the due diligence will vary depending on the risk factors raised by the potential international partner. Primary responsibility for fact-collecting on the potential international partner rests with the responsible Business Development executive and will include obtaining a completed Form C-730-2, International Business Venture Anti-Corruption Questionnaire, from potential international joint venture partners and international teammates, and providing it to the element’s Legal Counsel for review.

7.16 Supporting documentation for the due diligence must be maintained for five years after completion of the due diligence or after conclusion of the business relationship with the international partner, whichever is later.’





A11:

Does the company conduct due diligence that minimises corruption risk when selecting or reappointing its agents?

Score:

2

Comments:

Based on public information, there is evidence that the company conducts due diligence when selecting agents. Evidence shows that an international consultant agreement has a maximum term of two years, with due diligence refreshed at such intervals.

References:

Public:

Anti-corruption policy: http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/lm-cps-730.pdf


7.15 Before engaging any international partner, a risk-based anti-corruption due diligence must be conducted to determine whether there is a reasonable risk that the international partner could pay or authorize improper payments to a foreign official. This requirement extends to international consultants, joint venture partners, teammates, and suppliers. The due diligence requires fact-collecting on the potential international partner, consultation with the element’s Legal Counsel, and anti-corruption certification by the potential international partner. The extent of the due diligence will vary depending on the risk factors raised by the potential international partner’.

‘7.17 Due diligence must be conducted on all international consultants in accordance with CPS-704’.

2014 Setting the Standard, We Properly Engage Third Parties: http://lockheedmartin.com/us/who-we-are/ethics/third_parties.html

2013 Sustainability Report 2013, pdf, p.47:



http://lockheedmartin.com/us/who-we-are/ethics/third_parties.html



‘Risk Management Tools

When selecting suppliers we aim to ensure operational capabilities, quality and financial stability. The many factors we take into account include multi-tier supply chain exposure, country solvency, cyber security posture, legislative and regulatory requirements, counterfeit parts exposure, rare earth elements and specialty materials dependencies, geopolitical events, potential impacts from U.S. budget reductions, and likelihood of natural disasters.

For our active suppliers, we employ enterprise-wide risk tools and risk mitigation processes, overseen by Global Supply Chain Operations and our Enterprise Risk Management (ERM) process. Risk indicators and mitigation activities are reported quarterly to our chief financial officer and annually to the Board of Directors. We partner with corporate peers and the U.S. federal government on our risk activities, and recently disclosed our detailed risk-mitigation processes and tools to the Defense Contract Management Agency. Our business areas deploy real-time incident management systems to track and react to disruptions such as natural disasters, terrorist activities, labor strikes, criminal activity and fires.

We use risk management tools to evaluate an individual supplier’s operational and financial health. Suppliers are ranked by risk level, based on several factors including their significance to product criticality, sole-source status, quality-of-service history and strength of supplier relationship.

Since we cannot equally monitor 23,000 suppliers on a day-to-day basis, our supply chain management practices are driven by a proven process of “trust but verify.”

On all large programs, we work with major suppliers to complete a comprehensive risk assessment, which includes governance, labor and other sustainability-related issues. This is followed by a supplier excellence plan, which lays out required risk-mitigating actions. Using comprehensive risk assessments, we have significantly improved our ability to predict risk with suppliers and mitigate unforeseen events in a timely and proactive manner.’


Company website: Cross Function Procedure CRX-011 – International Consultants

‘No work for Lockheed Martin will be done by and no payments will be made to any international consultant until a written agreement, approved as provided in this procedure, has been executed by both parties.’

‘Perform a preliminary due diligence’.

‘Review the approval package and preliminary due diligence for legal sufficiency.’

‘The Agreement must state its duration in terms of a commencement date and an ending date, for a term not to exceed two years, unless otherwise approved by the CRB or CRC.’

http://phx.corporate-ir.net/phoenix.zhtml?c=83941&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTg3NTQwNjImRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d








A12:

Does the company have contractual rights and processes for the behaviour, monitoring, control, and audit of agents with respect to countering corruption?

Score:

1

Comments:

Based on public information, there is evidence that the company has agreement monitors who are tasked with ensuring agents comply with the company’s policies. Further, the company makes clear that agents must report any suspicious activities to their agreement monitors immediately. However, there is no direct evidence of contractual arrangements. The company therefore scores 1.

References:

Public:

‘Agreement monitors must direct consultants to inform them immediately of any suspected violation. The agreement monitor must immediately report the suspected violation to the Responsible Officer. The Responsible Officer, upon receiving a report from an officer, employee, or agreement monitor, must immediately inform the element’s Legal Counsel, who will cause an investigation to be conducted’.

‘Consultants must immediately report such suspicions to their agreement monitors, who must immediately refer the matter to the Responsible Officer, the chief financial officer of the element, and the element’s Legal Counsel. The Responsible Officer must report any such suspicion in writing to the corporate Vice President & Associate General Counsel-International with a copy to the element’s Legal Counsel’.


A13:

Does the company make clear to contractors, sub-contractors, and suppliers, through policy and contractual terms, its stance on bribery and corruption and the consequences of breaches to this stance?

Score:

2

Comments:

Based on public information, there is evidence that the company audits compliance of suppliers and sub-contractors to ensure they comply with the company anti-corruption policies. The consequences of breaches to the company stance are also made clear.

References:

Public:


‘We work with U.S. Customs Border Protection to monitor supply chain security activity of contracted foreign suppliers, and we participate in the Customs Trade Partnership Against Terrorism (C-TPAT) program. To measure supply chain risk, each year we send questionnaires developed through the Aerospace Industries Association to foreign suppliers with open purchase orders greater than $100,000. We analyze responses and act on any identified risks that require mitigation. In 2013, we conducted 334 such reviews. We additionally include requirements in our subcontracts requiring subcontractors to address potential supply chain risks.’

‘We also conduct anti-corruption law due diligence on international suppliers of goods and services during the supplier registration process. Our Global Supply Chain Operations organization ensures that such companies disclose anti-corruption information, which we use to determine whether to do business with them. We also revised our acquisition procedures to require our buyers to verify every supplier’s anti-corruption rating before initiating a contract outside the United States. We review all supplier profiles with unsatisfactory anti-corruption responses and decide with our Legal department if additional due diligence is required. In addition, we require suppliers based in countries with a Transparency International Corruption Index score of 50 or less to complete an International Subcontractor Anti-Corruption Questionnaire. Internally, our buyers are audited monthly to ensure they are following the anti-corruption process’.



‘3.2 It is the individual responsibility of each director, officer, employee, and consultant of the Corporation and its wholly owned subsidiaries, by action and supervision as well as continuous review, to ensure strict compliance with this policy. Any violation of this policy may result in disciplinary action, up to and including termination’.


A13(a):

Does the company explicitly address the corruption risks associated with offset contracting?

Score:

1

Comments:

Based on public information, there is evidence that the company addresses the corruption risks associated with offset contracting at a general level. The company’s conducts due diligence that minimises corruption risk when selecting its offset brokers, as part of the company’s procedure for international consultants. The company therefore scores 1. To score higher the company would need to provide evidence that corruption risk is explicitly addressed in the company’s offset policies, procedures and contractual terms.

References:

Public:3rd annual conference of the International Forum on Business Conduct (2012), p.10-11:

Lockheed Martin’s VP, Ethics and Sustainability moderated a panel discussing the challenges offsets pose to a company operating by a strict code of ethical conduct, entitled “Offsets and Ethics & Compliance Programs.” This discussion was a first step in bringing the issue to the table for dialogue and action. ‘

http://ifbec.info/wp-content/uploads/2013/07/conference-report-full.pdf

2013 annual conference:

Lockheed Martin’s VP for Industrial Participation and the company’s subject-matter expert on offsets participated in a panel entitled “Operating in a Global Environment: Business Aspects.”

http://ifbec.info/wp-content/uploads/2013/07/2013_10_04_Final-Agenda.pdf

2014, Lockheed Martin offset practitioners also participated in panels at the Defense Industry Offset Association conference recognizing the corruption risks associated with offsets.


‘An offset broker is an international consultant unless the offset broker does not and will

http://ifbec.info/wp-content/uploads/2013/07/conference-report-full.pdf

http://ifbec.info/wp-content/uploads/2013/07/2013_10_04_Final-Agenda.pdf


not have contact with foreign customers or offset authorities on behalf of Lockheed Martin and the offset broker has or will have offset credits from independent transactions not on behalf of Lockheed Martin. See CPS-603, Offset/Countertrade Commitments.’











A13(b):

Does the company conduct due diligence that minimises corruption risk when selecting its offset partners and offset brokers?

Score:

2

Comments:

Based on public information, there is evidence that the company’s conducts due diligence that minimises corruption risk when selecting its offset brokers, as part of the company’s procedure for international consultants. Evidence shows that an international consultant agreement has a maximum term of two years, with due diligence refreshed at such intervals.

References:

Public:


‘This policy applies to all directors, officers, and employees of the Corporation and all of its

wholly owned subsidiaries and, by written agreement flowing down all appropriate provisions, to any representative, distributor, reseller, consultant, offset broker, or any other person or firm by whatever name known, of U.S. or any other nationality, who has or is likely to have contact with a foreign customer’.


7.15 Before engaging any international partner, a risk-based anti-corruption due diligence must be conducted to determine whether there is a reasonable risk that the international partner could pay or authorize improper payments to a foreign official.’


‘An offset broker is an international consultant unless the offset broker does not and will not have contact with foreign customers or offset authorities on behalf of Lockheed Martin and the offset broker has or will have offset credits from independent transactions not on behalf of Lockheed Martin. See CPS-603, Offset/Countertrade Commitments.’



A15:

Does the company have an anti-corruption policy that prohibits corruption in its various forms?

Score:

2

Comments:

Based on public information, there is evidence that the company has an anti-corruption policy that prohibits corruption in its various forms.

References:

Public:

Code of conduct 2014, p.25:

‘We set the standard



Unless prohibited or penalized by U.S. law, you are responsible for complying with the national and local laws of the countries in which we operate.

Why We do it



Corruption creates unfair competition, increases cost and jeopardizes the quality and capability of our products and services.

We Conduct International Business with Integrity

Setting the Standard

We do What’s right We respect others We perform With excellence’

‘Non-compliance can result in potential debarment, incarceration and monetary penalties.

Corruption destabilizes economies and damages the fabric of society.


anti-Corruption

You must strictly comply with the anti-corruption laws that govern our operations in the countries where we do business. These laws include the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act and similar laws in other countries.’

Anti-corruption policy CPS-730:

Introduction and Responsibilities

Description of the Foreign Corrupt Practices Act

Description of the U.K. Bribery Act

Other Anti-Corruption Laws

Operational Directions

Financial and Accounting Directions

Hospitality Guidelines

Training

Corporate Internal Audit


A16:

Is the anti-corruption policy explicitly one of zero tolerance?

Score:

2

Comments:

Based on public information, there is evidence that the company has a zero tolerance policy to corruption.

References:

Public:

Code of conduct 2014,p.25:


We have zero tolerance for corruption’





A17:

Is the company's anti-corruption policy easily accessible to Board members, employees, contracted staff and any other organisations acting with or on behalf of the company?

Score:

2

Comments:

Based on public information, there is evidence that the company’s anti-corruption policy is easily accessible to Board members, employees, and contracted staff. TI notes that the policy is available in multiple languages.

References:

Public:

Code of conduct

Anti-corruption policy

Ethics website: http://www.lockheedmartin.com/us/who-we-are/ethics.html

Code of Ethics: http://www.lockheedmartin.com/us/who-we-are/ethics/code-of-ethics.html

http://www.lockheedmartin.com/us/who-we-are/ethics.html

http://www.lockheedmartin.com/us/who-we-are/ethics/code-of-ethics.html


A17(a):

Is the company’s anti-corruption policy easily understandable and clear to Board members, employees and third parties?

Score:

2

Comments:

Based on public information, there is evidence that the company provides various tools to help everyone understand their anti-corruption policies. This includes an easy to understand code of conduct, various videos explaining ethics on the company’s website, scenario-based exercises, a document explaining how the code works, and a clearly written anti-corruption policy.

References:

Public:

How the Ethics process works: http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/How-Ethics-Process-Works.pdf

Integrity minute videos:

http://www.lockheedmartin.com/us/who-we-are/ethics/iminute/archive/s27eps1.html



http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/How-Ethics-Process-Works.pdf






A18:

Does the anti-corruption policy explicitly apply to all employees and

members of the Board?

Score:

2

Comments:

Based on public information, there is evidence that the company’s code applies to all employees including the Board of directors.

References:

Public:


‘# 2.0 Applicability

2.1 This policy applies to all directors, officers, and employees of the Corporation and all of its wholly owned subsidiaries and, by written agreement flowing down all appropriate provisions, to any representative, distributor, reseller, consultant, offset broker, or any other person or firm by whatever name known, of U.S. or any other nationality, who has or is likely to have contact with a foreign customer (including contact in the U.S.) and is retained to provide services directly related to obtaining, retaining, or facilitating business or business opportunities, in or with any foreign country or foreign firm (“consultant”), as defined in CPS-704, International Consultants’.


‘Our Code applies to all Lockheed Martin employees, members of the Board of Directors,

consultants, contract laborers and other agents when they represent or act for the Corporation.*

* Any waiver of the Code for executive officers or members of the Board of Directors may be made only by the Board or a Board committee and must be promptly disclosed to the shareholders. This prevents waivers of the Code from being hidden from the public and complies with New York Stock Exchange (NYSE) requirements and similar rules under the Securities and Exchange Commission and the Sarbanes-Oxley Act of 2002.’





A20:

Does the company have a policy on potential conflicts of interest, and does it apply to both employees and board members?

Score:

2

Comments:

Based on public information, there is evidence that the company has a policy on conflicts of interest and it applies to both employees and Board directors.

References:

Public:

Code of Conduct 2014, p.15-17:

‘We Avoid Conflicts of Interest’

‘What is a personal Conflict of interest?

A personal conflict of interest exists when you have divided loyalties — when you have a direct or indirect personal interest in a transaction or matter such that it might reasonably appear to affect the judgment you exercise on behalf of Lockheed Martin, influence your actions or lead you to neglect Lockheed Martin business interests.

Our Conflict of interest policy covers many situations, including these examples’

‘We are committed to the highest standards of ethical business conduct. We expect this of our employees, agents and Board of Directors. Agents include consultants, contract laborers and anyone else representing or acting for the Corporation.’





A21:

Does the company have a policy for the giving and receipt of gifts to ensure that such transactions are bona fide and not a subterfuge for bribery?

Score:

2

Comments:

Based on public information, there is evidence that the company has a policy on business courtesies that sets upper limits for gift exchange with both government and non-government employees.

References:

Public:


‘We Provide and Accept Appropriate Business Courtesies

The fair market value limits are different based on an individual or employee role.

Some gift limit rules are calculated within a calendar year and others depend on the fair market value of the courtesy being offered or received.

Consult policy and obtain guidance if you are uncertain if an action is inappropriate or within the allowable limits.

Policies

CPS-008 Gifts, Gratuities, and Other Business Courtesies

CPS-716 Compliance with the Anti-Kickback Act of 1986

CPS-730 Compliance with the Anti-Corruption Laws

CRX-011 International Consultants’



Avoid the perception that favorable treatment is being sought, received or given in exchange for business courtesies.

Ensure that the offer or receipt of any gift or business courtesy is permitted by law and

consistent with reasonable marketplace customs.




Verify that the rules of the recipient’s organization are not violated by a gift.

Do not offer, give, solicit or receive any form of bribe or kickback. A kickback is any money, fee, commission, credit, gift, gratuity, thing of value, loan, entertainment, service or compensation of any kind that is provided, directly or indirectly, to any prime contractor, prime contractor employee, subcontractor or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract with the U.S., or a subcontract in connection with a prime contract with the U.S.

These are criminal acts under the laws of many countries including the U.S.

We Provide and Accept Appropriate Business Courtesies


We do What’s right We respect others We perform With excellence

Why We do it

We compete on the merits of our products and services and do not use the exchange of business courtesies to gain an unfair competitive advantage.

When people exchange gifts or business courtesies it can create the perception that favors

were granted in order to influence business judgment.

The term business courtesy is intentionally broad and includes any item that has monetary value for which fair market value is not paid by the recipient.

Recognize that complex rules and limits apply when dealing with U.S. and other government

personnel, including members of the military.

There are specific guidelines that apply in each country where we do business.

There are different rules for employees who work in Supply Chain Management or are involved in the process of directing business or funds to our business relations.’


Online Version – Section 11 of 26:

Links to the most up-to-date policies on Gifts and Business Courtesies and Anti-Corruption. These contain specific value limits.

Also has an integrity video in regard to gifts and hospitality.

http://lockheedmartin.com/us/who-we-are/ethics/business_courtesies.html

Compliance with the Anti-Corruption Laws (June 2011), pp.18-19:

‘9.10 Cash gifts to foreign officials are not permitted under any circumstances. Per diem payments are similarly prohibited unless they are expressly provided for in a written contract with a foreign government customer. Per diem payments must be paid strictly in accordance with contract requirements and payment must be made by check, not cash. When feasible, the check for per diem payments should be made payable to the foreign government customer, not to any individual foreign official. Payment always must be accompanied by appropriate documentation accurately recording the amount and nature of





the payment in accordance with the contract requirement.

9.11 Unless otherwise provided in the Hospitality Rules for Foreign Officials, product models or pictures of little or no intrinsic value bearing the company logo or other items of small dollar value (less than U.S. $100) that are distributed for advertising or commemorative purposes are permitted. Gifts to foreign officials valued at $100 or more must have the prior written approval of the element’s Legal Counsel, who must obtain from outside counsel a written opinion that the higher amount complies with the foreign country’s laws and regulations. No item costing more than $1,000 (regardless of intrinsic value) may be given without the prior written approval of the corporate Vice President & Associate General Counsel-International. When appropriate, a gift should be made to the customer organization, not to an individual.’


A22:

Does the company’s anti-corruption policy include a statement on the giving and receipt of hospitality that ensures that such transactions are bona fide and not a subterfuge for bribery?

Score:

2

Comments:

Based on public information, there is evidence that the company has a policy on business courtesies that sets upper limits for hospitality exchange with both government and non-government employees.

References:

Public:


‘We Provide and Accept Appropriate Business Courtesies

The fair market value limits are different based on an individual or employee role.

Some gift limit rules are calculated within a calendar year and others depend on the fair market value of the courtesy being offered or received.

Consult policy and obtain guidance if you are uncertain if an action is inappropriate or within the allowable limits.

Policies

CPS-008 Gifts, Gratuities, and Other Business Courtesies

CPS-716 Compliance with the Anti-Kickback Act of 1986

CPS-730 Compliance with the Anti-Corruption Laws

CRX-011 International Consultants’



Avoid the perception that favorable treatment is being sought, received or given in exchange for business courtesies.

Ensure that the offer or receipt of any gift or business courtesy is permitted by law and




consistent with reasonable marketplace customs.

Verify that the rules of the recipient’s organization are not violated by a gift.

Do not offer, give, solicit or receive any form of bribe or kickback. A kickback is any money, fee, commission, credit, gift, gratuity, thing of value, loan, entertainment, service or compensation of any kind that is provided, directly or indirectly, to any prime contractor, prime contractor employee, subcontractor or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract with the U.S., or a subcontract in connection with a prime contract with the U.S.

These are criminal acts under the laws of many countries including the U.S.

We Provide and Accept Appropriate Business Courtesies


We do What’s right We respect others We perform With excellence

Why We do it

We compete on the merits of our products and services and do not use the exchange of business courtesies to gain an unfair competitive advantage.

When people exchange gifts or business courtesies it can create the perception that favors

were granted in order to influence business judgment.

The term business courtesy is intentionally broad and includes any item that has monetary value for which fair market value is not paid by the recipient.

Recognize that complex rules and limits apply when dealing with U.S. and other government

personnel, including members of the military.

There are specific guidelines that apply in each country where we do business.

There are different rules for employees who work in Supply Chain Management or are involved in the process of directing business or funds to our business relations.’


Online Version – Section 11 of 26:

Links to the most up-to-date policies on Gifts and Business Courtesies and Anti-Corruption. These contain specific value limits.

Also has an integrity video in regard to gifts and hospitality.


Compliance with the Anti-Corruption Laws (June 2011), pp.16-18:

‘9.0 Hospitality Guidelines

9.1 These Hospitality Guidelines apply with respect to officials or employees of foreign governments, or agencies or instrumentalities of foreign governments, in all countries, including such activities in the United States. Guidance for hospitality related to U.S. government officials is in CPS-008.

Note: Hospitality must not be provided to any employee or other member of a commercial





enterprise (who is not a foreign official) with the intention of inducing or rewarding him or her to perform certain functions improperly. Further, no Lockheed Martin director, officer, or employee may request, agree to receive, or accept a financial or other advantage from any employee or other member of a commercial enterprise (whether a national of the U.K., U.S., or elsewhere), intending that, in consequence, a function or activity will be performed improperly or as a reward for the improper performance.

9.2 All hospitality offered on behalf of Lockheed Martin must be directly related to Lockheed Martin business (that is, the sale of its products and services) or otherwise directly in support of its business interests. Non-business related hospitality is not permitted. Any question as to whether hospitality is directly related to Lockheed Martin business must be referred to the element’s Legal Counsel for resolution.

9.3 Hospitality always must be reasonable and proportionate in amount; offered in good faith only in connection with the promotion, demonstration, or explanation of company products or services, or the execution or performance of a contract with a foreign government or an agency; lawful under applicable local law; and appropriate under the circumstances so as not to create an appearance of impropriety. Hospitality must never be offered or provided in return for any favour or benefit to Lockheed Martin or to influence improperly any official decision.

9.4 Unless otherwise provided in the Hospitality Rules for Foreign Officials or approved by the element’s Legal Counsel or the corporate Vice President & Associate General Counsel International in writing, expenses for meals and refreshments must not exceed the following U.S. dollar amount per person per day:

• Breakfast–$50.00

• Lunch–$100.00

• Dinner–$150.00

• Refreshments–$50.00

9.5 Higher amounts may be appropriate in a specific country but must be approved by the element’s Legal Counsel or the corporate Vice President & Associate General Counsel International, supported by a written legal opinion obtained from outside counsel stating that the higher amounts comply with the country’s laws and regulations and are not unreasonable or excessive. The element’s Legal Counsel or the corporate Vice President & Associate General Counsel-International may rely on an existing legal opinion from outside counsel they deem applicable if it is not more than two years old.

9.6 The frequency of hospitality must be carefully monitored, as the cumulative effect of frequent hospitality may give rise to the appearance of impropriety. Hospitality provided to a foreign official by an element must not exceed six events in any calendar year. An “event” is one or more instances of hospitality provided to a foreign official in one day. For example, an “event” may be a single dinner for one or more foreign officials at the Paris Air Show, or it may be lunch, dinner, and hotel accommodations for a foreign official visiting a Lockheed Martin facility for one night. For purposes of this paragraph, an “event” does not include meals or refreshments and snacks served in Lockheed Martin facilities in the context of business meetings during normal business hours. An “event” also does not include local ground transportation (other than rental vehicles operated by foreign officials) for foreign officials between an airport, hotel, restaurant, and Lockheed Martin facility, the giving of marketing gifts bearing the Lockheed Martin logo that cost less than $100, or any hospitality


specifically required by a contract in writing. Where an element anticipates hospitality for a foreign official in excess of six events in any calendar year, the element’s Legal Counsel must provide prior written approval.

9.7 Unless otherwise provided in the Hospitality Rules for Foreign Officials, if Lockheed Martin will pay airfare or lodging expenses for foreign government officials or employees in connection with a plant visit or similar activity, the element must send invitations or itineraries, or both, to the foreign officials or employees to inform them of the hospitality that Lockheed Martin is proposing to provide, enable consultation with their superiors, and give them the option to decline. The element also must obtain prior written approval or confirmation from the invitee’s superior or other authorized official that the visit and proposed hospitality are permissible. If the confirmation or approval is verbal, a file memorandum documenting the conversation is sufficient. If obtaining prior approval is not practical for very senior invitees, the element’s Legal Counsel must obtain a written legal opinion from outside counsel that addresses the particular circumstances of the visit and confirms that the visit is lawful under applicable local law.

9.8 When a plant visit is specifically required by the terms of a contract with a foreign government customer or Foreign Military Sales contract, prior written approval or confirmation from the invitee’s superior or other authorized official is not required, but all hospitality expenses related to the visit must comply with these Hospitality Guidelines unless approved in writing by the element’s Legal Counsel. Whenever feasible, payment or reimbursement must be made to the foreign government or agency involved, not directly to the individual official incurring the expense.

9.9 Refreshments, meals, or mementos of reasonable value that otherwise comply with these Hospitality Guidelines that are furnished in connection with trade shows; association meetings; official governmental functions; or ceremonial, commemorative, or celebratory functions such as ship launchings, airplane rollouts, deliveries, or demonstrations, are permissible. Opinions from the element’s Legal Counsel and outside counsel are not required with respect to the foreign government officials’ or employees’ participation in such an event if foreign government officials or employees from three or more countries are invited and the refreshments, meals, or mementos to be offered are of reasonable value and otherwise comply with these Hospitality Guidelines, and are not offered to influence improperly any official decision. Element Legal Counsel should be notified at least 15 days before the event. The notification must generally describe the event; the per person cost of the refreshments, meals, and mementos offered; and any other relevant aspects of the event.’

(p.19): ‘9.12 Use of Lockheed Martin corporate aircraft to transport foreign officials is prohibited unless prior written authorization is obtained from the Senior Vice President, General Counsel & Corporate Secretary, the corporate Vice President & Associate General Counsel-International, or the corporate Vice President & Deputy General Counsel-Litigation & Compliance. Authorization will not be given without review and approval by the element’s Legal Counsel and the business area Vice President & General Counsel. The request must be accompanied by a legal opinion of outside counsel approving the use of the aircraft. Other non-local transportation may be approved, after legal review, on a case-by-case basis.

9.13 All commercial airfare for foreign officials paid for by Lockheed Martin will be coach or


business class, depending on the officials’ status or rank. No first class airfare for such officials will be paid for by Lockheed Martin without prior written authorization by the corporate Vice President & Associate General Counsel-International.

9.14 The prior written approval of the element’s Legal Counsel is required for any hospitality offered to the spouse and/or children of a foreign official.’


A23:

Does the company have a policy that explicitly prohibits facilitation payments?

Score:

2

Comments:

Based on public information, there is evidence that the company prohibits facilitation payments. The company also provides guidance on how to implement this policy.

References:

Public:


‘Our policy prohibits offering or making improper payments of money or anything of value. The policy applies to anyone conducting business on behalf of Lockheed Martin. This includes Lockheed Martin directors, officers, employees, consultants, representatives, distributors, offset brokers, suppliers, wholly owned subsidiaries and other business

partners.

Our policy specifically prohibits facilitating payments. Facilitating payments include payments made to expedite or secure performance of a routine governmental action like obtaining a visa or customs clearance.’



‘Personal Safety Payments

7.8 Lockheed Martin recognizes that its personnel operating outside of the U.S. may confront situations where payment is demanded to avoid physical harm. In these very limited circumstances, “Personal Safety Payments” may be made. Examples of such circumstances include:

• Being stopped by persons claiming to be police, military, or paramilitary personnel,

who demand payment as a condition of passage of persons;




• Being threatened with imprisonment for a routine traffic or visa violation unless a

payment is made; and

• Being asked by persons claiming to be security personnel, immigration control, or

health inspectors to pay for (or to avoid) an allegedly required inoculation or similar procedure.

7.9 Only under these or similar circumstances, and only where there is an imminent threat to the health or safety of Lockheed Martin personnel, may a Personal Safety Payment be made without prior approval.

7.10 If the need for a Personal Safety Payment can be anticipated, or if circumstances permit, the element’s Legal Counsel or the corporate Vice President & Associate General Counsel-International should be consulted before making any payment.

7.11 After a Personal Safety Payment is made, and as soon as possible (but no more than seven days) after the danger has passed, the payment must be reported to the element’s Legal Counsel and the corporate Vice President & Associate General Counsel-International, and on an expense report, reflecting accurately the amount paid, the recipient, the means of payment, and the circumstances under which the payment was made. The element’s Legal Counsel will investigate and document the circumstances surrounding the Personal Safety Payment and work with Finance to ensure that the payment is promptly and accurately recorded in the Corporation’s books and records. A copy of the report documenting the investigation will be provided to the corporate Vice President & Associate General Counsel-International by the element’s Legal Counsel.’


A24:

Does the company prohibit political contributions, or regulate such contributions in order to prevent undue influence or other corrupt intent? Does the company record and publicly disclose all political contributions?

Score:

2

Comments:

Based on public information, there is evidence that the company prohibits political contributions to non-US candidates and parties. In the USA the company’s Washington Operations has responsibility for managing and the company’s political activities. The company’s state contributions and Governors Association contributions are publically disclosed on its website.

References:

Public:


‘7.13 Consistent with CPS-004, Political Activity, under no circumstances will any money, assets, property, or other thing of value of the Corporation or any of its subsidiaries or other legal Entities be contributed, loaned, or made available to any non-U.S. candidate, party, or political committee’.

Code of conduct 2014, p.30-31:


We follow corporate policy and the law concerning the political process in all countries

where we do business.

Why We do it

We uphold the spirit and letter of all laws relating to our participation in the political

process.

Laws governing political contributions, gifts and lobbying are complex. Even unintended

violations can result in loss of business opportunities.

prohibited

Using any Lockheed Martin funds, assets or facilities for the benefit of political parties

or candidates anywhere in the world without obtaining prior written approval of


Washington Operations or Lockheed Martin International for political activities outside of the United States.

We Respect the Political Process


We do What’s right We respect others We perform with excellence

Many countries, in addition to the United States, may prohibit corporate political contributions. This may include donating corporate funds, goods or services, directly or indirectly, to political candidates, including employee work time.

Local and state laws may limit corporate political contributions and activities.

use Caution

Contact Washington Operations or Lockheed Martin International (for political activities

outside of the United States) for any of the following issues:

Public Office — Conflicts of interest can arise if you seek or hold public office or serve on

commissions or advisory groups.

Lobbying — Lobbying can be direct or indirect, but either way, it is highly scrutinized.

You must follow all applicable rules and regulations, particularly avoiding violations — even unintentional — of corporate policy and federal rules concerning gifts and lobbying.

U.S. Congressional and Executive Branch — It is important that Lockheed Martin presents a single, consistent business message to our Washington, D.C.-based customer community. Washington

Operations must authorize any interaction with U.S. Congressional members or Executive Branch officials in Washington, D.C. or their employees and staff.

State and Local Governments — Washington Operations must authorize any interaction with state and local government officials on behalf of Lockheed Martin.

Non-U.S. Governments — You must know and follow corporate policies and procedures before contacting any member or employee of a non-U.S. entity.

Individual Political Contributions — Some state and local laws may restrict, limit or require disclosure of personal political contributions made by individual employees or their immediate family members.’


Company Website: Political Disclosures

‘Lockheed Martin complies with all applicable laws and regulations in connection with the Company’s political and public policy activities. Any political or other public policy activity in which Lockheed Martin engages, including political expenditures, comply with all internal policies and procedures, are made solely based upon the best interests of the Corporation and its stockholders, and are not based on personal agendas of individual directors, officers, or employees.

Responsibility for managing and coordinating the Company’s political and public policy




activities lies with its Washington Operations function.’

‘Independent Expenditures. Lockheed Martin has not spent any direct corporate funds on independent expenditure communications to the general public that expressly advocate the election or defeat of a clearly identified federal candidate, and has no present plans to spend direct corporate funds on such communications.’

State Contributions. In certain states where permitted by law, Lockheed Martin makes corporate political contributions in accordance with established criteria, including candidates and political committees whose positions on business issues are important to the Corporation; candidates who represent geographic areas where Corporate facilities are located; or candidates who have leadership positions or committee assignments that are important to the Corporation’s interests. All corporate contributions are fully disclosed with the appropriate state or local campaign finance authority, as well as published on this website.’

‘527 Political Organizations. Lockheed Martin does not provide funding to 527 political organizations that are not registered as a federal or state political committee, with the exception of the Democratic Governors Association (DGA) and the Republican Governors Association (RGA). Lockheed Martin maintains memberships in the DGA and RGA as a means to support our operations in all fifty states. In over half of the states in which we operate we employ from a thousand to over twenty thousand people. We do not consult with the DGA and RGA regarding the expenditure of their funds. The primary contact with the DGA and RGA is Larry Duncan, Vice President of Federal and State Government Relations and PAC Affairs.’

‘Political Action Committee. In accordance with federal law, Lockheed Martin does not make corporate contributions to federal candidates or federal political committees. The Corporation supports candidates for federal office through the Lockheed Martin Employees’ Political Action Committee (LMEPAC). The LMEPAC is funded exclusively through voluntary contributions from eligible employees and directors; employees participating in the LMEPAC are not reimbursed, directly or indirectly, for political contributions or expenses. The Lockheed Martin Employees’ Political Action Committee (LMEPAC) supports federal and state political candidates who support national defense and other business issues of interest to the corporation. Disbursements by the LMEPAC are made solely based upon the best interests of the Corporation and its stockholders, and are not based on personal agendas of individual directors, officers, or employees. All LMEPAC contributions are fully disclosed in reports filed with the Federal Election Commission (FEC) and can be accessed by going to the FEC website, as well as published on this website.’

http://www.lockheedmartin.com/us/who-we-are/corporate-governance/political-disclosures.html

2013 Corporate State Contributions:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/governance/Corporate-State-Contributions-2013.pdf






2012 Corporate State Contributions:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/governance/2012-corporate-state-contributions.pdf

2013 Governors Association Contributions:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/governance/Governors-Association-Contributions-2013.pdf

2012 Governors Association Contributions:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/governance/2012%20Governors%20Association%20Contributions.pdf

2013 Sustainability Report, p.19:

Political Participation Disclosure

‘We actively engage our stockholders on our corporate governance. In 2013, a stockholder proposal sought greater disclosure of the policy, procedures and oversight governing our direct political spending and of our third-party political spending, such as by trade associations.

In response, we now publish spending records by the Lockheed Martin Employees’ Political Action Committee (LMEPAC) on our website, as well as listing trade associations to which we paid annual dues of $50,000 or more, and the estimated portion of those payments used for lobbying purposes. Lockheed Martin does not make independent expenditures on political advocacy. Internal audits of our Political Action Committee have produced no adverse findings.

We continue to publicly register all employees who engage with regulators for more than 20 percent of their time, the threshold directed by lobbying transparency regulation.’








A25:

Does the company have a clear policy on engagement in lobbying activities, in order to prevent undue influence or other corrupt intent, and discloses the issues on which the company lobbies?

Score:

2

Comments:

Based on public information, there is evidence that the company advises personnel to consult the legal department before making contact with government officials. There is also evidence that the company discloses the issues on which it lobbies.

References:

Public:

Code of conduct 2014, p.30-31:


We follow corporate policy and the law concerning the political process in all countries

where we do business.

Why We do it

We uphold the spirit and letter of all laws relating to our participation in the political

process.

Laws governing political contributions, gifts and lobbying are complex. Even unintended

violations can result in loss of business opportunities.

prohibited

Using any Lockheed Martin funds, assets or facilities for the benefit of political parties

or candidates anywhere in the world without obtaining prior written approval of Washington Operations or Lockheed Martin International for political activities outside of the United States.

We Respect the Political Process


We do What’s right We respect others We perform with excellence

Many countries, in addition to the United States, may prohibit corporate political


contributions. This may include donating corporate funds, goods or services, directly or indirectly, to political candidates, including employee work time.

Local and state laws may limit corporate political contributions and activities.

use Caution

Contact Washington Operations or Lockheed Martin International (for political activities

outside of the United States) for any of the following issues:

Public Office — Conflicts of interest can arise if you seek or hold public office or serve on

commissions or advisory groups.

Lobbying — Lobbying can be direct or indirect, but either way, it is highly scrutinized.

You must follow all applicable rules and regulations, particularly avoiding violations — even unintentional — of corporate policy and federal rules concerning gifts and lobbying.

U.S. Congressional and Executive Branch — It is important that Lockheed Martin presents a single, consistent business message to our Washington, D.C.-based customer community. Washington

Operations must authorize any interaction with U.S. Congressional members or Executive Branch officials in Washington, D.C. or their employees and staff.

State and Local Governments — Washington Operations must authorize any interaction with state and local government officials on behalf of Lockheed Martin.

Non-U.S. Governments — You must know and follow corporate policies and procedures before contacting any member or employee of a non-U.S. entity.

Individual Political Contributions — Some state and local laws may restrict, limit or require disclosure of personal political contributions made by individual employees or their immediate family members.’


Company Website – Who We Are – Political Disclosures:

‘Lobbying Expenditures. Lockheed Martin lawfully engages in the legislative process to communicate its views on legislative and regulatory matters affecting the Company’s business. Federal lobbying activities are regulated by the Lobbying Disclosure Act (LDA). In accordance with the LDA, the Company files quarterly disclosure reports with the Clerk of the House and Secretary of the Senate regarding payments for all federal lobbying activities. These reports disclose all direct and indirect expenses related to lobbying, expenditures for grassroots efforts, and payments to trade associations that are used for lobbying. The reports are available here. (Search Field: "Registrant Name" Criteria: "Lockheed").’

‘In states where the Corporation is engaged in advocacy efforts and is registered to lobby, the Corporation files reports as required with the state ethics agency. Lockheed Martin files all lobbying disclosure reports at the federal and state level in a complete and timely manner in accordance with applicable requirements.’




http://disclosures.house.gov/ld/ldsearch.aspx




A25(a):

Does the company prohibit charitable contributions, or regulate such contributions in order to prevent undue influence or other corrupt intent?

Score:

2

Comments:

Based on public information, there is evidence that the company regulates charitable contributions. The company conducts due diligence before making charitable contributions and publicly declares recipients via a publicly accessible online platform.

References:

Public:


‘7.14 Lockheed Martin, its subsidiaries and affiliates may make charitable contributions in accordance with CPS-204, Contributions. Charitable contributions may not be made at the suggestion, request, or at the behest of any foreign official to obtain any improper advantage or to a charity owned, controlled, or connected to a foreign official. Before authorizing a contribution, sufficient due diligence must be conducted to confirm that none of the money contributed by Lockheed Martin will be paid, directly or indirectly, to or for the benefit of any foreign official or otherwise paid, directly or indirectly, to or for the benefit of any foreign political party, organization, or public international organization to improperly influence any foreign official, government employee, or candidate for public office, or any official of a public international organization, in the performance of his or her officials duties, or to obtain any improper advantage. This due diligence must be conducted by the element’s Legal Counsel or the corporate Vice President & Associate General Counsel-International’.

http://www.lockheedmartin.com/us/who-we-are/community/philanthropy.htm

IRS Form 990 detailing the recipients and dollar amounts of Lockheed Martin Corporation Foundation's grants and contributions posted annually and available publicly on Guidestar. The website simply requires the creation of a free account to access the form.

http://www.guidestar.org/organizations/13-6161566/lockheed-martin-corporation-fndn.aspx

http://www.lockheedmartin.com/us/who-we-are/community/philanthropy.htm




Overview of some of Lockheed Martin’s major community partnerships:

http://lockheedmartin.com/us/who-we-are/community/education.html

http://lockheedmartin.com/us/who-we-are/community/customer.html

http://lockheedmartin.com/us/who-we-are/community/education.html

http://lockheedmartin.com/us/who-we-are/community/customer.html


A26:

Does the company provide written guidance to help Board members and

employees understand and implement the firm’s ethics and anti-corruption

agenda?

Score:

2

Comments:

Based on public information, there is evidence that the company provides guidance to help all concerned parties understand and implement the company’s ethics and anti-corruption agenda.

References:

Public:

How ethics works: http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/How-Ethics-Process-Works.pdf

Integrity minute videos:


Code of conduct: http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/setting-the-standard.pdf




http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/setting-the-standard.pdf

http://www.lockheedmartin.co.uk/content/dam/lockheed/data/corporate/documents/ethics/setting-the-standard.pdf


A27:

Does the company have a training programme that explicitly covers anti-corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company has a training programme which explicitly covers anti-corruption.

References:

Public:

Ethics training website section:

‘International Business Practices Course covers compliance with anti-corruption laws in the US and other countries in which we do business. Highlights requirements of the U.S. Anti-boycott Law, the UK Bribery Act and the U.S. Foreign Corrupt Practices Act’.

Leader’s guide:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/2013-EAT-Leaders-Guide.pdf

Section on anti-corruption training.


Several ethics training videos, with one on conflicts of interest.

http://www.lockheedmartin.com/us/who-we-are/ethics/training/voicing-values-training.html






A28:

Is anti-corruption training provided in all countries where the company operates or has company sites?

Score:

2

Comments:

Based on public information, there is evidence that the company requires all directors and officers to complete anti-corruption training.

References:

Public:

‘10.0 Training

All directors, officers, and employees of the Corporation and all of its wholly owned subsidiaries involved in international business are required to complete annual training on compliance with Anti-Corruption Laws in a form determined by the Legal department in consultation with the Office of Ethics and Business Conduct. Annual training of international consultants will be conducted in accordance with CPS-704’.


A29:

Does the company provide targeted anti-corruption training to members of the Board?

Score:

2

Comments:

Based on public information, there is evidence that the company requires all employees, including members of the Board, to complete anti-corruption training. Available information suggests this training is refreshed annually

References:

Public:


‘All directors, officers, and employees of the Corporation and all of its wholly owned subsidiaries involved in international business are required to complete annual training on compliance with Anti-Corruption Laws in a form determined by the Legal department in consultation with the Office of Ethics and Business Conduct. Annual training of international consultants will be conducted in accordance with CPS-704’.


‘All employees are required to undergo annual business conduct and compliance training. All employees participate in live annual ethics and compliance training, beginning with the CEO and cascading through leadership to the entire corporation. This includes an annual live training session for our Board of Directors. In addition, we annually review our training, as well as our policy on zero tolerance for corruption, to ensure effective risk reduction and control. Relevant employees, including those doing business internationally, also receive specific anti-corruption training.

In 2013, our Ethics and Enterprise Risk Management departments oversaw a major overhaul of the training program under the guidance of our risk and compliance committee. The enhanced program links training to risk’.


A30:

Does the company provide tailored ethics and anti-corruption training for employees in sensitive positions?

Score:

2

Comments:

Based on public information, there is evidence that the company provides specific anti-corruption training to relevant employees and those doing business internationally. The company tailors its ethics and anti-corruption training programme for employees facing different levels of risk.

References:

Public:


‘Relevant employees, including those doing business internationally, also receive specific anti-corruption training’.

Company Website Ethics – Business Conduct Compliance Training:

‘Target populations are reviewed annually and tailored for each course based on job function, role and level. Employees fulfilled 100% of their training commitments with over 500,000 Business Conduct and Compliance training courses completed in 2013.” The aforementioned annual review is a risk-assessment that identified target populations in need of specific training, and assigns courses accordingly’.

http://www.lockheedmartin.com/us/who-we-are/ethics/business-conduct-compliance.html

Code of Conduct 2014, p.19:

‘‘We set the standard

Our training is designed to help employees learn to execute our values through examples based on real situations in our work environment.

Ethics Awareness Training is required annually of all employees, consultants and the Board of Directors.

Business Conduct Compliance Training educates employees about the specific compliance requirements and the target audience for each course is often role-specific.

http://www.lockheedmartin.com/us/who-we-are/ethics/business-conduct-compliance.html


Audits are conducted for effective execution, and you are required to take your training by the specified due dates.’


A31:

Does the company have a clear and formal process by which employees declare conflicts of interest?

Score:

2

Comments:

Based on public information, there is evidence that the company has a clear and formal process for employees to declare conflicts of interest, in which they are declared to the Legal department in writing.

References:

Public:



You must be fair and impartial in all business dealings.

Our policies prohibit both an actual conflict of interest and activities that create the appearance of a conflict of interest. Avoid situations in which your personal interests might conflict, or appear to conflict, with Lockheed Martin interests.

Never use your contacts or position in the Corporation to advance outside or personal interests.

Do not use our Corporation’s property, information or opportunities for personal gain.

You must provide written disclosure of actual or potential conflicts of interest.’


Company website: Conflicts of Interest

A training video states that disclosures of conflicts of interest must be made to the Legal department.

http://www.lockheedmartin.com/us/who-we-are/ethics/conflicts_of_interest.html



http://www.lockheedmartin.com/us/who-we-are/ethics/conflicts_of_interest.html


A32:

Is the company explicit in its commitment to apply disciplinary procedures to employees, Directors and Board members found to have engaged in corrupt activities?

Score:

1

Comments:

Based on public information, there is evidence that the company may apply disciplinary procedures against employees and Board members found to have engaged in corrupt activities. The company therefore scores 1. To score higher the company would need to provide evidence that the company has an explicit commitment to apply disciplinary procedures to employees who have violated its anti-corruption policy, using language such as “will”, rather than “may”.

References:

Public:


‘3.2 It is the individual responsibility of each director, officer, employee, and consultant of the Corporation and its wholly owned subsidiaries, by action and supervision as well as continuous review, to ensure strict compliance with this policy. Any violation of this policy may result in disciplinary action, up to and including termination’.


‘We are committed to the highest standards of ethical conduct in our dealings with our constituencies. Violations of the Code may result in disciplinary action up to and including

termination. Failure to report may itself violate this Code.’





A33:

Does the company have multiple, well-publicised channels that are easily accessible and secure, to guarantee confidentiality or anonymity where requested by the employee (e.g. web, phone, in person), to report concerns or instances of suspected corrupt activity?

Score:

1

Comments:

Based on public information, there is evidence that the company provides several channels for employees to report instances of corruption. These channels include an ethics officer, the Corporate Office of Ethics and Business Conduct and the Audit Committee. Employees can remain anonymous if they wish to. The company therefore scores 1. To score higher the company would need to provide evidence of an independent channel for reporting concerns.

References:

Public:

Code of conduct2014, p.6:

‘You are responsible for reporting a violation or suspected violation of the Code or a contract provision.

You must not take illegal or unethical action, even if it appears to benefit the Corporation or is directed by a higher authority in the organization.

Why We do it

We are committed to the highest standards of ethical conduct in our dealings with our constituencies.

Violations of the Code may result in disciplinary action up to and including termination. Failure to report may itself violate this Code.

You can report suspected violations to:

Management

Human Resources

Legal Department

Security


Internal Audit

Energy, Environment, Safety and Health (EESH)

Ethics Office

We Report Violations


We do What’s right We respect others We perform With excellence’

‘1-800-LM ethiC (1-800-563-8442) —

Caller ID not used

for the hearing or speech impaired:

1-800-441-7457

fax: 1-301-897-6442

internationally: when calling or faxing from outside the U.S., first dial the origin country’s exit code

email: [email protected]

Mail:

Office of Ethics and Business Conduct

Lockheed Martin Corporation

6801 Rockledge Drive

Bethesda, MD 20817

Audit Committee:

Employees may transmit concerns about accounting, internal controls or auditing matters and confidential or anonymous submission of questionable accounting or auditing matters to the Audit Committee of the Lockheed Martin Board of Directors. If you wish to raise a concern to the Audit Committee, you may do so by contacting the Corporate Office of Ethics and Business Conduct and your concern will be communicated to the Chair of the Audit Committee of the Board. ‘


How ethics works:


‘Those who call the HelpLine and wish to remain anonymous may do so without concern that their phone number will be identified’.

‘Can I remain anonymous and still keep track of what is happening on an ethics investigation initiated by my contact? Yes. We will provide you with a case number so you can contact us about the status or outcome of an ethics investigation initiated by you. You may also set up a personal e-mail account the ethics officer may use to contact you with updates and questions’.






Company website: Report Violations

Link to email the Ethics Office.

Contacts tab:

‘Your Ethics Officer:

Visit Enhanced White Pages, enter your name, click search

Click on the "Properties" tab. Your Ethics Officer's name appears under "Organization Info"

Corporate Office of Ethics and Business Conduct:

Send an email to the Corporate Office of Ethics and Business Conduct.

1-800-LM ETHIC (1-800-563-8442) - Caller ID not used

For the Hearing or Speech Impaired: 1-800-441-7457

Fax: U.S. Access Code (if required) 1-301-897-6442

Internationally: when calling or faxing from outside the US, first dial the origin country's exit code

Office of Ethics and Business Conduct

Lockheed Martin Corporation

6801 Rockledge Drive

Bethesda MD 20817

Audit Committee:

Employees may transmit concerns about accounting, internal controls or auditing matters and confidential or anonymous submission of questionable accounting or auditing matters to the Audit Committee of the Lockheed Martin Board of Directors. If you wish to raise a concern to the Audit Committee, you may do so by contacting the Corporate Office of Ethics and Business Conduct and your concern will be communicated to the Chair of the Audit Committee of the Board.’

http://www.lockheedmartin.com/us/who-we-are/ethics/violations.html

http://www.lockheedmartin.com/us/who-we-are/ethics/violations.html


A33(a):

Are the whistleblowing channels available to all employees in all geographies?

Score:

2

Comments:

Based on public information, there is evidence that various reporting channels are available in all geographies. This includes Ethics Officers, an Ethics Helpline and an Ethics email address. The company provides resources instructing employees on how to use the ethics helpline when abroad.

References:

Public:

Company website:

http://www.lockheedmartin.co.uk/us/who-we-are/ethics.html

‘Ethics HelpLine Domestic – 1-800-LM-ETHIC (1-800-563-8442)

International - Use the International Access Code listing and locate the AT&T Direct Access Code for the country the call is being originated from and dial the number on this spreadsheet.

Next, dial the Corporate Ethics Helpline number (800-LM-ETHIC) and the call is put through to the Corporate Ethics and Business Conduct office in Bethesda, MD’.

http://www.lockheedmartin.co.uk/us/who-we-are/ethics.html


A33(b):

Does the company have formal and comprehensive mechanisms to assure itself that whistleblowing by employees is not deterred, and that whistleblowers are treated supportively?

Score:

2

Comments:

Based on public information, there is evidence that the company has a range of practices to ensure that whistleblowing is encouraged and not penalised. The company conducts periodic surveys which ask employees about their willingness to report unethical behaviour, and the Ethics Office conducts regular analysis of the whistleblowing data and implements assessments at business locations each year to ensure the whistleblowing process is operating correctly. In particular, whistleblowers are encouraged to complete a voluntary feedback form, and if they disagree with the outcome of an investigation, whistleblowers have two opportunities to request a review.

References:

Public:



We do not tolerate retaliation.

We take appropriate corrective action in response to violations of this Code, even if

these actions are not always visible to you.

If someone tries to stop you from reporting an issue, that person can be subject to disciplinary action up to and including termination.

There is never a penalty for contacting the Ethics Office or any source in good faith.

“Good faith” does not mean you have to be right but it does mean you believe the information provided is truthful.

Why We do it

Retaliation destroys trust and damages our ethical culture.

When you speak up, it gives us the opportunity to improve our overall culture and performance.


What is retaliation?

Retaliation is unfair or inappropriate treatment against an employee for reporting misconduct, filing a complaint, assisting another in making a complaint, participating in an internal investigation or making an ethics-related inquiry.’


How ethics works:

‘There is never a penalty for contacting the Ethics Office in good faith. People in a position of authority cannot stop you. If they try, they are subject to disciplinary action up to and including termination’.

Company website:

http://www.lockheedmartin.com/us/who-we-are/ethics/culture-ethics.html

‘In recent years, measures of ethical behavior and perceptions in the Corporation - already at high levels - have improved even further. In last year’s Employee Perspectives Survey, employees said they were more willing to report unethical behavior, while the percentage of those observing misconduct was at its lowest level since the Corporation began collecting this data’.

How the Ethics Process Works (2012), p.11:

‘What can I do if I disagree with the outcome of an ethics investigation when the allegation is unsubstantiated?

Reporting parties who believe an ethics investigation into their concern was not thorough or fair, or who have new information that should be considered in the investigation, can request a review via email to the Corporate Office of Ethics and Business Conduct at [email protected].

Please include “Review Request” in the subject line. In your message, include your contact information and the basis for your request, which will be screened by the Corporate Ethics Investigations Office. You will receive a response to your request within 10 business days.

If your request is approved, a Corporate Ethics Director from outside your Business Area will conduct the review, and may contact you for additional information. Please note that this is not a re-investigation, but an examination of the existing investigation documentation. You will receive the results of the review within approximately 10 business days.

If you remain dissatisfied with the results of the review, you may request a second, and final, review by the Vice President, Ethics and Sustainability, by following the same steps as above. Please include “VP Review Request” in the subject line.’

(p.12): ‘How does Lockheed Martin measure the effectiveness of its ethics process?

The Ethics Office conducts regular analysis to look at trends and information about the types of contacts received, allegations reported, and timeliness of response. This data is provided to the Sustainability Council, Ethics Steering Committees, executive leadership, and the





Ethics and Sustainability Committee of the Board of Directors for discussion and analysis.

Results of our periodic LMVoice employee survey also provide a measure of the effectiveness of the ethics program through employee ratings and comments regarding ethics and integrity.

Those who bring concerns forward are encouraged to complete a voluntary Reporting Party Feedback Survey to provide feedback about their experience during the investigation process. This information helps improve the ethics officer’s ability to provide service to those requesting help.

The Ethics Office conducts internal ethics program assessments each year at business locations to assess program implementation effectiveness.’

2013 Sustainability Report, p.16:

‘To gauge the effectiveness of our ethics officers’ engagement with internal reporting parties, we also solicit feedback from those who reported misconduct that resulted in an ethics investigation’.

(p.18): ‘Ethics Reporting: By the Numbers

Our ethics organization received 4,249 contacts worldwide in 2013 through sources that include our helpline, corporate email and our anonymous online reporting tool, Ask Us. As is our policy, every query and concern was investigated.’


A34:

Does the company have well-publicised resources available to all employees where help and advice can be sought on corruption-related issues?

Score:

2

Comments:

Based on public information, there is evidence that the company provides well-publicised resources to all employees where help and advice can be sought on corruption-related issues. Resources include an ethics officer, a human resources business partner, or the Corporate Ethics Officer.

References:

Public:

How ethic works:

‘The Office of Ethics and Business Conduct serves as a resource for information, advice, and resolution of problems and issues. The ethics program is based on company values and compliance with laws, regulations and policies’.

‘You are encouraged to seek advice from or express concerns about ethical misconduct to

whomever you are most comfortable:

• Your supervisor

• Your manager

• Your ethics officer

• Your human resources business partner

• Your Equal Opportunity Program office

• Legal

• Security

• Internal Audit

• Energy, Environment, Safety and Health

• Corporate Ethics Office’.

‘Your ethics officer is a resource for you. If you have a question or need advice, you will be


provided with guidance, often in the same phone call. Sometimes your ethics officer will help connect you with a subject matter expert to provide additional information. Other times, it may take a few days to get the information needed to provide guidance to you’.


A35:

Is there a commitment to non-retaliation for bona fide reporting of corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company have a commitment to non-retaliation for bona fide reporting of corruption. There is also evidence that disciplinary measures may be applied to employees who breach this commitment.

References:

Public:

Code of Conduct 2014, online interactive version Section 7 of 26:

‘‘We set the standard

We do not tolerate retaliation.

We take appropriate corrective action in response to violations of this Code, even if these actions are not always visible to you.

If someone tries to stop you from reporting an issue, that person can be subject to disciplinary action up to and including termination.

There is never a penalty for contacting the Ethics Office or any source in good faith. “Good faith” does not mean you have to be right but it does mean you believe the information provided is truthful.

Why We do it

Retaliation destroys trust and damages our ethical culture.

When you speak up, it gives us the opportunity to improve our overall culture and performance.

What is retaliation?

Retaliation is unfair or inappropriate treatment against an employee for reporting misconduct, filing a complaint, assisting another in making a complaint, participating in an internal investigation or making an ethics-related inquiry.


Other Rights:

U.S. law also entitles each Lockheed Martin employee to certain rights and protections against reprisals if the employee discloses, to certain governmental officials or to the Legal Department or Ethics Office, information that the employee reasonably believes is evidence of gross waste, mismanagement, abuse of authority, or violations of law related to U.S. government contracts, grants, or funds; or evidence of a substantial and specific danger to public health and safety.’

(Includes interactive section eg FAQs on retaliation)

http://lockheedmartin.com/us/who-we-are/ethics/retaliation.html

Sustainability Report (2013) p21, pdf version:

‘Anti-Retaliation Program

Our ethics program will only succeed if employees feel confident that they can report misconduct without fear of reprisal. In January 2014, we introduced an Anti-Retaliation Program to identify and protect employees at possible risk of retaliation as a result of having contacted our ethics team. Actions include follow-up conversations with those who report ethical concerns, surveys to a sampling of reporting parties, and close monitoring of potentially higher-risk reporting parties, such as those making complaints against a leader. Instances of possible retaliation will be fully investigated. Employees and leaders will also receive training and communications on common types of overt and subtle retaliation and how to avoid them. We intend the Anti-Retaliation Program to serve as a deterrent and preventive measure for those who might consider retaliatory action, and also as an added measure of assurance for employees who may have observed misconduct, that they may report their observations with no personal adverse impacts. In 2013, Ethics Officers received specific training to strengthen their skills in investigating allegations of possible retaliation.’


Company website:


‘In recent years, measures of ethical behavior and perceptions in the Corporation - already at high levels - have improved even further. In last year’s Employee Perspectives Survey, employees said they were more willing to report unethical behavior, while the percentage of those observing misconduct was at its lowest level since the Corporation began collecting this data’.

How the Ethics Process Works (2012), pp.6-7:

‘There is never a penalty for contacting the Ethics Office in good faith. People in a position of authority cannot stop you. If they try, they are subject to disciplinary action up to and including termination.

Lockheed Martin does not tolerate retaliation against employees who raise concerns to any source in good faith.’

http://lockheedmartin.com/us/who-we-are/ethics/retaliation.html






Information Sources:

Company website:

www.lockheedmartin.com

Annual Report 2013:

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/2013-Annual-Report.pdf

Sustainability Report (2013):


Setting the Standard: Code of Ethics and Business Conduct (2014):

http://lockheedmartin.com/us/who-we-are/ethics/code.html (online, interactive version)

Setting the Standard: Code of Ethics and Business Conduct (2014):

http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/ethics/code-of-conduct.pdf (PDF Version)

How the Ethics process works (Updated 2012):


Anti-Corruption Policy:


(effective June 2011)

Ethics and Sustainability Charter:


http://www.lockheedmartin.com/





http://lockheedmartin.com/us/who-we-are/ethics/code.html









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