Major Businesses: Lockheed Corporation
About the major world business Lockheed Corporation, history, headquarters, size, and leader.
Lay of the Land: Lockheed's headquarters are in Burbank, Calif. Its principal plants are located in California; Marietta, Ga. (home of Lockheed-Georgia Co.); Seattle, Wash. (headquarters of Lockheed Shipbuilding and Construction Co.); New Jersey; and Texas.
Size: The company has been the largest U.S. Defense Dept. contractor in 11 of the past 15 years. It is the 71st-largest industrial corporation.
Population: 58,000 employees.
Who Rules: Lockheed's day-to-day policy decisions are made by Chairman and Chief Executive Officer Roy A. Anderson and President and Chief Operating Officer Lawrence O. Kitchen. The company's officers are elected by a 17-member board of directors. The board is elected by shareholders owning 11.4 million shares.
Who REALLY Rules: A consortium of 24 banks, headed by Bankers Trust and Bank of America and including the seven largest New York banks, effectively controls Lockheed's operations. When Lockheed was in financial trouble in 1971, it entered, into financial agreements with these banks to burrow up to $620 million, $250 million of which was guaranteed by the U.S. government. The loans were secured by the stock of five of the company's subsidiaries. When international bribery scandals involving the company were made public, it was the banks that forced the resignation of Lockheed's tow top officers. In 1975 and 1976 the banks agreed to restructure Lockheed's financing by exchanging loans for the right to buy Lockheed's stock. In addition, as part of the refinancing agreement, the banks own a controlling interest in a class of preferred stock, whose owners have the right to elect 20% of the company's board of directors whenever the company misses two dividend payments. Lockheed has not paid a common stock dividend since 1969.
However between 1970 and 1975, Lockheed did pay between $30 million and $38 million in the form of bribes, political contributions, and extortion payments to influence 15 foreign governments to buy the company's aircraft. According to a report by Lockheed directors, the company's top management--Chairman D. J. Haughton and Pres. A. C. Kotchian--masterminded the bribery program, which included phony corporations, false invoices, and intimidation of Lockheed employees who objected to the questionable practices.
Congress passed the Emergency Loan Guarantee Act in 1971 to permit Lockheed to borrow $250 million from the banks that had already loaned it $400 million. Lockheed threatened to file bankruptcy proceedings if it did not get the loan guarantee, and the banks refused to lend the company any more money without it.
Congress acted because Lockheed has produced 50% of all U.S. satellites, all fleet ballistic missiles (Polaris, Poseidon, and Trident), all antisubmarine warfare aircraft, and all airlift planes for the past 20 years.
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