Lockheed Martin’s $29.5 Million Settlement Includes Compensation for More Than 1,000 Employees
Key Facts
The U.S. Justice Department and the Equal Employment Opportunity Commission announced on November 3 a two-part agreement with Lockheed Martin worth about $29.5 million in total, settling allegations of employment discrimination and false compliance certifications during the company’s work as a federal contractor. The department said the amount includes a payment to the government and direct compensation for employees, in a case involving nondiscrimination requirements tied to federal contracts. The department described the agreement as a settlement of claims concerning hiring, compensation and compliance practices. The allocation means one part of the agreement addresses allegations against the company involving the government, while the other is earmarked for affected employees. The statement said the allegations settled by the department and the commission remain allegations, and no determination of liability was made.
Under the Justice Department agreement, Lockheed Martin will pay $22 million to the United States to settle allegations that it violated the False Claims Act and failed to comply with nondiscrimination requirements in federal contracts. The Equal Employment Opportunity Commission agreement includes more than $7.5 million in monetary compensation for more than 1,000 employees. The commission’s allegations concern discrimination against white employees in performance reviews, bonuses and other compensation decisions. The allocation puts most of the settlement’s value in the government payment, with roughly more than a quarter earmarked for employee compensation, based on the figures in the statement. Each part stems from separate allegations and settlement proceedings at the two federal agencies.
The Justice Department said its allegations cover a period that began in 2019, and claim the company submitted false certifications of compliance with federal contract requirements while discriminating on the basis of race or sex. According to the allegations, the company launched an additional incentive program in 2021 called the “Compensation Adder,” which gave the top 20% of employees in each business segment an increase on top of the general annual increase. The department said some human resources employees pressed to revise the program’s recipient lists by removing employees who were not minorities and adding minority employees. The allegations link the design of the bonus program and the mechanisms for selecting recipients with the issue of compliance certifications submitted by the company as a federal contractor. These facts remain among the government’s allegations covered by the settlement, without a finding of liability.
The department added that the company’s diversity and compliance offices set companywide hiring goals in 2023 that it described as “aspirational plus,” and that some business units met their goals related to people of color. The Justice Department settlement also included a whistleblower lawsuit brought by Tim Bohr, a former vice president at Lockheed Martin. The agreement stipulated that Bohr would receive $4.4 million from the settlement. Including the whistleblower lawsuit gives part of the amount a separate path within the government agreement, alongside the payment due to the United States. The department said the claims settled by the two agencies do not constitute a determination of liability.
The Equal Employment Opportunity Commission agreement requires Lockheed Martin to comply with Title VII of the Civil Rights Act and Executive Order 14151. It also requires hiring, compensation, bonus and promotion decisions to be based on merit, and allows the commission to review the company’s compliance throughout the agreement’s term. These obligations form a forward-looking part of the settlement, alongside the payments due to the United States, employees and the whistleblower. In the context of the company’s size, Lockheed disclosed in its annual report that it hired about 10,800 new employees during 2025, including nearly 1,500 college graduates. It said its workforce totaled about 123,000 employees as of December 31, 2025, with about 93% of them in the United States.
The settlement follows Lockheed Martin’s announcement of its third-quarter 2026 results on October 22. Net income was $1.8 billion, or $7.97 a share, compared with $1.6 billion and $6.95 a share in the same period of 2025. Free cash flow was $3 billion, versus $3.3 billion in the third quarter of the previous year, while the backlog reached a record $292 billion. Chief Executive Jim Taiclet said the company raised its sales, earnings per share and free cash flow forecasts for the second consecutive time. The Equal Employment Opportunity Commission agreement requires the company to continue complying and to allow the commission to review its compliance throughout the agreement’s term.