Christopher Kubasik, vice chairman, president, and chief operating officer of Lockheed Martin Corporation (NYSE:LMT) resigned after an ethics investigation confirmed that he had a “close personal relationship,” with a subordinate employee, which is a violation of the Code of Ethics and Business Conduct of the company.
According to the company, the board of directors asked Kubasik to resign effective immediately, although his actions did not affect the financial or operational performance of the company. Kubasik will receive $3.5 million separation pay.
The board of directors of the company immediately appointed Marillyn Hewson to succeed Kubasik and to serve as director, president, COO, and CEO of the company effective January 1, 2013. Prior to her appointment, she was the executive vice president of the electronics systems business division of Lockheed Martin Corporation (NYSE:LMT) since 2010. She joined the company in 1983.
In a statement, Robert J. Stevens, chairman and CEO of Lockheed Martin Corporation (NYSE:LMT), said, “While I am deeply disappointed and saddened by Chris’ actions, which have been inconsistent with our values and standards, our swift response to his improper conduct demonstrates our unyielding commitment to holding every employee accountable for their actions.”
Stevens added, “Fortunately, we have a strong leadership team and a robust succession plan that allowed the board and me to react quickly and appropriately to this situation. Marillyn is an exceptional leader, with impeccable credentials and deep knowledge of our business, customers, shareholders, and employees.”
Furthermore, Stevens said he will remain very active in the company as Board Executive Chairman in 2013.
On the other hand, Lockheed Martin’s Corporation (NYSE:LMT) independent lead director, Douglas H, McCorkindale emphasized, “Upholding the highest ethical standards is embedded in the fabric of the Lockheed Martin character and is the foundation of the decisive action we took in the face of a very challenging situation.” He is also confident in Hewson’s capability to lead the company, citing her strong leadership and record of delivering impressive results. According to him, the board of directors fully supports Hewson’s appointment as CEO.
Hewson holds a Bachelors degree in Business Administration and a Masters degree in Economics from the University of Alabama. She also attended business development programs from the Columbia Business School and Harvard Business School.
She serves as the chairman of the board of directors of Sandia Corporation. She is also a member of the board of DuPont..
Meanwhile, Lockheed Martin’s Corporation (NYSE:LMT) options trading surged wherein approximately 57,000 puts changed hands before the announcement of Kubasik’s resignation on November 9. Ophir Gotlieb, managing director of Livevol Inc commented, “This is either a one in 1,000 random event or an egregious example of improprieties trading based on non-public information. Nothing is certain, but the odds certainly point toward the latter.”