Bethesda-based Lockheed will get about $272 million immediately to deliver four of the aircraft to the Marines, the U.S. Defense Department said in a statement yesterday. Lockheed will provide a total of 40 Air Force and 20 Marine Corps versions of the aircraft through 2009.
The contract is the largest for the C-130J and will ensure that the program is profitable, said Lockheed spokesman Peter Simmons. Lockheed developed the C-130J in the early 1990s to replace the C-130 Hercules, the world's most widely used aircraft for hauling troops, cargo and armored vehicles. The Pentagon's top tester has said the new version is unreliable.
Lockheed has contracts for 118 C-130Js, dubbed "Super Hercules," and needs to sell 120 to turn a profit on the program. It has delivered 94 and has agreements with the United States, Britain, Italy, Australia and Denmark. Rolls Royce PLC's Defense North America unit, based in Indianapolis, provides the engines.
The Pentagon's director of equipment testing, Thomas Christie, said last month that the C-130J isn't reliable and may be too vulnerable to small-arms fire. Lockheed said most of the problems are fixed. The Air Force says they're being worked on and is confident they'll be solved.
Meanwhile, Lockheed increased Chief Executive Officer Vance Coffman's pay 58 percent to $11.2 million last year after the company's shares outpaced those of its rivals.
Coffman got a salary of $1.55 million, a $2.6 million bonus and $380,258 in other compensation, the company said in a filing with the U.S. Securities and Exchange Commission. He also received $3 million in incentive pay for share performance and $3.7 million in restricted stock awards.
Lockheed said Coffman, 58, deserved the raise because the company exceeded its objectives for financial performance. Lockheed had 2002 net income of $500 million, or $1.11 a share, compared with a net loss of $1 billion, or $2.42, in 2001.
Lockheed's shares rose 24 percent in 2002, the most among the top five U.S. defense companies, while the S&P; 500 Aerospace & Defense Index fell 6.7 percent.
Its shares rose $1.98 to $45.19 yesterday .
Coffman also was awarded options to buy 450,000 shares that eventually could be worth $36 million.