A little-known amendment to the Department of Defense appropriations bill drops a bomb on the nation's largest defense contractor, Lockheed Martin Corp.
The bill, passed in late September by a joint House-Senate committee, would block payment of $31 million from the Pentagon - one-third of the $92 million in bonuses that top executives of Martin Marietta Corp. granted themselves when the two companies merged in March. The payments were the result of corporate anti-takeover provisions that required future stock options and incentive payments to be paid out in the event of a change in control of Martin Marietta, even if the managers remained with the company.
None of the $31 million in defense funds has been paid so far.
"Even by Washington standards, $31 million is a lot of money," said Frank McArdle, manager of the Washington research group of Hewitt Associates.
Institutional shareholders, especially union funds, are fuming over the golden parachutes in the merger.
"Yes, we are opposed to golden parachutes in general. At Martin Marietta, (top executives) had their merger, collected their money and stayed put. We submitted a proposal (regarding golden parachutes) but it never went forward because they never had an annual meeting," said James Combs, international representative of the $5.4 billion National Electrical Benefit Fund, Washington, which has introduced proposals at a number of companies against golden parachutes.
"Martin Marietta laid off thousands of people, and top executives collected" their payout, he said, adding that union officials would support the amendment.
Two months after the executives took the $92 million bonus package, Lockheed Martin announced it was firing 19,000 U.S. workers.
Chip Manor, a spokesman for Lockheed Martin, said: "This money was needed to keep our firm competitive with private industry. It was good for Lockheed Martin and it is good for American taxpayers."
Despite vigorous opposition from Lockheed Martin lobbyists, a joint House-Senate conference committee included the amendment, written by Rep. Bernard Sanders, I-Vt., in the final version of the fiscal year 1996 Defense Department Appropriations Act.
The amendment, which would block taxpayer-financed corporate bonuses to top executives of defense contractors, is being sent to President Clinton.
Despite Defense Department approval, President Clinton intends to veto the defense spending bill because it is part of a broader White House strategy to get congressional Republicans to shift $7 billion now earmarked for defense to domestic spending.
The amendment had bipartisan support, though the Senate did not include the provision in its version of the same bill.
"Any decision of top Pentagon officials to give $31 million to the executives is indefensible," said Mr. Sanders. "It's even more outrageous at a time when the Congress is moving to cut funding for Medicare, education and other vital domestic needs."
The amendment would limit Pentagon payments to normal executive compensation and prohibit use of federal money for bonuses for defense firms.
Another booster of the amendment to prohibit payment of the federal share of defense contractor bonus packages is Sen. Charles Grassley, R-Iowa. He criticized President Clinton for approving the bonus package in the Lockheed-Martin Marietta merger.