WASHINGTON — As commentary bubbles up in the media and on Capitol Hill about the influence of Lockheed Martin and its chief executive on the Pentagon, and the amount of taxpayer dollars that land in its coffers, CEO Marillyn Hewson’s description of the company’s influence in the agency is almost comically simple: “We are a global security company that’s in aerospace and defense.”
It’s just a really big and really successful one.
Hewson sat down with Defense News in an exclusive interview March 5, in which she spoke about the company’s position within the defense industrial complex and the influence that comes with being the largest defense company on the globe.
“We in my view have the honor and privilege of leading what is a national asset,” Hewson said. “What we do for this country, men and women in uniform, and the things that we do on advanced discovery that helps change people’s lives, the things that we do to support innovation and growth and jobs, is an important element of the economy. So I take that responsibility very seriously.”
Hewson’s comments were specifically in response to a Washington Post article that noted Lockheed Martin’s revenue from government contracts as being more than the budget of many federal agencies — $35.2 billion, or 70 percent of its total sales. The article went on to compare Hewson’s influence to that of a cabinet-level secretary, if not greater.
“We are a $51 billion company,” Hewson said. “We’re not the largest in the United States, [but] we’re among the top Fortune 100. And that’s because of what we do, some of the most important work for not only our citizens but for citizens of our allies around the world. Comparing that to a Cabinet secretary — I think that’s the wrong comparison.”
As for cooperation with government, “it’s important that we have a voice not only with the Department of Defense, which is our largest customer, but with our intel agencies, with the [Department of] Homeland Security, with NASA, with Commerce Department and others; that as the leader of the corporation, I have an opportunity to represent our company just as I do with leaders around the world,” Hewson continued.
Further commentary about Lockheed filtered from the Hill on Wednesday, with Sen. Bernie Sanders, I-Vt., calling Lockheed “for all intent and purposes, a government agency.” Repeatedly referring to Lockheed’s CEO as a “he,” and “this guy,” Sanders also questioned how it can be that the secretary of defense makes $200,000 or less, while the CEO of a company that relies on government contracts for the vast majority of its revenue made more than $20 million in its most recent fiscal year.
“I think that might be an issue you might want to raise,” Sanders told David Norquist, the Pentagon comptroller, during a Senate Budget Committee hearing on the ongoing DoD audit and management reforms. “For all intent and purposes, Lockheed Martin is a government agency. Private, but a government agency, virtually fully funded by the United States government. Is it reasonable to say they keep their CEO salaries in check?”
Norquist responded, “Taxpayers should be paying for the services we receive,” adding that he was unsure whether executive salaries “fall within the scope of procurement roles.”
According to Lockheed’s latest proxy statement, Hewson’s total compensation was $20.6 million for 2016. That includes $9.79 million in base salary and bonuses, $9.23 million in stock awards, and a little more than $1 million in pension assets. Her compensation is not an anomaly for CEOs of publicly traded companies that are comparable in size to Lockheed, a fact often referenced by industry advocates that argue the compensation for Hewson and other chief executives of top defense contractors is justified and necessary to attract talent to the market.
As for the massive dollars funneled to the company from the Pentagon, defense analysts question the perception that revenue derived from government contracts necessarily translates to influence.
“It’s kind of ironic to me,” said Richard Aboulafia, vice president of analysis at Teal Group. “Yes, in terms of what they do, and their share of the national budget, they would seem to have outsized importance. But unlike Cabinet secretaries like [Defense Secretary] Gen. [Jim] Mattis, CEOs can’t afford to stand up to [President Donald] Trump. These are sensible businessmen and women who, for example, regard trade wars as radioactive, but they can’t copy [former White House economic adviser] Gary Cohn and simply protest by resigning.”
Daniel Goure, senior vice president of the Lexington Institute, also described reports of the power of Lockheed as “greatly exaggerated,” pointing to lucrative programs that the company has lost in recent years — from the B-21 bomber that went to Northrop Grumman to the Air and Missile Defense Radar that went to Raytheon.
“Does Lockheed have an ability to push back against an overreaching, even predatory government? Yes, in some cases,” Goure said. “But if Lockheed were as powerful as its critics suggest, we would have a lot more F-22s than were actually built.”
Jill Aitoro was editor of Defense News. She was also executive editor of Sightline Media's Business-to-Government group, including Defense News, C4ISRNET, Federal Times and Fifth Domain. She brought over 15 years’ experience in editing and reporting on defense and federal programs, policy, procurement, and technology.