THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, March 18, 1995 TAG: 9503180213
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Short : 48 lines
The Defense Department said Friday it is footing the bill for $31 million in ``compensation and incentive payments'' to Martin Marietta Corp. executives who arranged the defense contractor's merger with Lockheed Corp.
But the $31 million would have been paid later by the government even if the merger had not happened, Defense Department spokesman Kenneth Bacon said. He was responding to a New York Newsday story that reported that the federally subsidized compensation included an $8.2 million bonus for Marietta Chairman Norman Augustine.
``The Pentagon is not paying one penny more than it would have paid without the merger,'' Bacon said.
Without the merger, the same sum would have been paid later because it includes deferred compensation as part of the executives' employment contract, he said.
In a statement released later, the Pentagon said: ``The Defense Department is not making any special or unusual payments to the company for executive compensation as a result of the merger.''
The statement said mergers often trigger such accelerated payments to company executives.
``As a result of the merger, certain officials of Martin Marietta are entitled to accelerated payment of deferred compensation and incentive payments,'' the Pentagon said.
The Pentagon contribution represents one-third of the $92 million in bonuses the executives will receive, Newsday reported.
Bacon said $19 million of the $31 million has already been accrued by Marietta for work it has completed for the Defense Department, and $12 million is money it intends to clear under existing contracts.
The Pentagon defended its endorsement of the merger, largest ever in the defense industry. It predicted that the merger will save the military more than $1 billion over the next five years and at least $300 million a year after that.
Defense Secretary William Perry and his deputy, John Deutch, were employed as consultants by Martin Marietta before joining the Pentagon and have close personal relationships with Augustine, according to Newsday. by CNB