Lockheed Martin employees listening to presentation.

Ethical Governance and Leadership


Objective

Maintain consistent, transparent and high ethical standards, policies, practices and leadership across our business.

Management

Lockheed Martin employees listening to a speech.

Lockheed Martin Ethics in Engineering Case Competition.

At Lockheed Martin, we are committed to integrity and the highest standards of ethical conduct. We require all employees, consultants, contract laborer and Board members to follow the standards as outlined in our Code of Ethics and Business Conduct. Our ethics commitment directly aligns to our Core Values to Do What’s Right, Respect Others and Perform with Excellence. For decades, Lockheed Martin has applied rigorous systems thinking to our ethics programming. By embedding ethics into our governance and leadership, we instill a culture of integrity throughout our operations. Our commitment to ethics also makes us a reliable and worthy partner to customers, who trust us to develop and protect the critical infrastructure underpinning society.

Our approach to managing ethics features a top-down accountability structure, with the Senior Vice President (SVP) of Ethics and Enterprise Assurance overseeing our corporate-wide Ethics Programs, including all ethics and business conduct training. The SVP of Ethics and Enterprise Assurance reports directly to the Chairman, President and Chief Executive Officer (CEO) and makes regular reports to the Board of Directors. The Nominating and Corporate Governance Committee (Governance Committee) of the Board has special responsibilities for setting the direction and adoption of Lockheed Martin’s ethics standards. Employees from across all Lockheed Martin functions ensure consistent, company-wide adherence to the Code of Ethics and Business Conduct and our corporate policies, which are in many cases more stringent than U.S. and other national laws. The Lockheed Martin Code of Ethics and Business Conduct and Ethics and Business Conduct Policy clearly communicate our commitment to Do What’s Right for our employees, suppliers and customers who rely on our technology.

As our business expands and adapts to a changing environment, we continuously evolve our Ethics Program to meet the new needs of our business and stakeholders. We perform internal Ethics Program Assessments on a continuous three-year rotation to evaluate the effectiveness and integration of Lockheed Martin’s Ethics and Business Conduct program into key business entities. These reviews help us identify best practices, potential risk areas and opportunities to improve program integration and overall ethical culture.

To ensure consistent implementation of our Ethics Program, the Lockheed Martin Ethics Office provides confidential advice to those with questions related to ethical business practices. Our Ethics Officers educate leaders and employees on how to promote a positive, inclusive and ethical work environment. They provide resources, communications, training and tools to support and enhance the high ethical standards and behaviors at Lockheed Martin. Employees can reach an Ethics Officer through several modes of communication, including our Corporate Helpline. Further information on our ethics polices, process, training and investigations and reporting practices is available to all employees and the general public on our Ethics website. Lockheed Martin does not tolerate retaliation in any form when reporting an ethics concern in good faith.

2020 Investigation Feedback Scores [1] (satisfaction scored on a five-point scale)

GOAL
5
4
3
2
1
0

4.3

 

4.5

 
Reporting PartySubject

[1]  Investigation Feedback Score – Perspectives of reporting party and subjects on the ethics investigative process.

We empower everyone at Lockheed Martin to embrace ethical business practices by providing a standard ethics training program that is mandatory for all employees. The program consists of multiple components including annual Ethics Awareness Training, simulated real-world scenarios for discussion, and a video series aptly named Integrity Minute. Integrity Minute consists of a serialized story delivered to employees emails as short video clips over a three-week period. In 2020, we included a series specific to the COVID-19 work environment including new challenges suddenly facing telecommuters as well as employees on-site at our facilities. We shifted to virtual ethics trainings in 2020 to accommodate the shift to remote work in response to the COVID-19 pandemic.

To further strengthen the culture of ethics across our value chain, in 2020 we conducted a Structured Improvement Activity (SIA) focused on Lockheed Martin joint ventures. The objective of this effort was to standardize a framework for the ethics and business conduct programs, which we require for Lockheed Martin business ventures. Also in 2020, we released an updated Code of Ethics and Business Conduct. We added a section on Lockheed Martin’s approach to ethics and Artificial Intelligence (AI) that is aligned with the principles outlined by the U.S. Department of Defense (DoD). We also augmented our discussions of discrimination and harassment.

Ethics Contacts (per 1,000 employees)[1, 2, 3, 4]

GOAL
50
40
30
20
10
0

37

 

5

 

36

 

4

 

40

 

4

 

37

 

4

 

38

 

4

 

33.9

 

2.8

 
202020192018201720162015
Guidances
Cases

[1] Ethics Contact — Requests for an Ethics Officer to provide guidance or to investigate misconduct.
[2] Ethics Guidance — Information, advice and/or resources to clarify policy and resolve workplace questions on a wide-range of ethics and compliance topics.
[3] Ethics Case — Internal investigation into a good-faith allegation of misconduct.
[4] Investigation Feedback Score — Perspectives of reporting party and subjects on the ethics investigative process.

2020 SMP Goals

Meet or exceed global benchmark for Ethics Index based on All Employee Survey.

Achievement

Success: In 2019, the Ethics Index-based All Employee Survey improved to 84% favorable, exceeding the global benchmarking index of 76%. The survey is biennial.

Ethical Governance and Leadership
Raising the Bar: Lockheed Martin Annual Ethics in Engineering Case Competition

Reaffirming our commitment to business ethics, we held our third annual “Ethics in Engineering Case Competition” in 2020. Student teams majoring in engineering or business from 21 colleges and universities presented their resolution of a case involving ethical, business and engineering dilemmas in AI, machine learning (ML) technology and large-scaled data analytics. This year’s case involved potential data bias within a fictional disaster relief startup’s AI and ML technology, and was won by the Brigham Young University team competing against Virginia Tech in the final round. The competition also included hands-on opportunities for visiting students to learn about Lockheed Martin, its technologies and the role of ethics at Lockheed Martin.

Business Integrity

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