Lockheed Martin settles DEI probe for $29.5M

Lockheed Martin (LMT) has agreed to pay approximately $29.5 million to resolve federal allegations that it engaged in unlawful employment discrimination and falsely certified compliance with civil rights requirements while serving as a U.S. government contractor. The resolution closes investigations by the Department of Justice and the Equal Employment Opportunity Commission into the company’s diversity, equity and inclusion practices and their impact on compensation, hiring and promotion decisions.

Of the total, $22 million will be paid to the United States under a civil settlement addressing alleged violations of the False Claims Act tied to anti-discrimination provisions in federal contracts. In a parallel agreement, more than $7.5 million will be distributed as monetary relief to over 1,000 Lockheed (LMT) employees to resolve claims under Title VII of the Civil Rights Act.

Federal authorities alleged that from 2019 to the present, Lockheed Martin falsely certified that it would make employment decisions without regard to race or sex while using race- and sex-based criteria in certain programs and decisions. Beginning in 2021, the company operated an incentive program known as “Compensation Adder” or “Comp Adder,” which awarded additional pay increases to the top 20% of employees in each business area.

Managers were initially directed to base Comp Adder nominations on merit-based performance criteria, subject to review to preserve the 20% cap. The government alleged that Lockheed then performed statistical analyses of the race and sex composition of the nominee lists, flagging groups as outliers and prompting human resources staff to pressure leaders to adjust selections by adding minority employees and removing non-minority employees.

In some cases, HR personnel allegedly instructed leaders to re-review nominees until enough changes were made to clear race-related flags. One HR employee was quoted as saying that increasing people of color in the Comp Adder pool would result in removing an equal number of non-minority employees. Another message referenced identifying additional people of color to add to the list so that a race flag would clear.

The government further alleged that Lockheed incorporated demographic goals into its broader management incentive structure. A Management Incentive Compensation Plan reportedly included performance metrics tracking progress toward specified representation targets for women and minorities, with quarterly summaries indicating whether units met, nearly met or did not meet those goals.

In 2023, Lockheed’s Global Diversity & Inclusion and Equity & Compliance offices allegedly set company-wide hiring goals described as “aspirational plus,” intended to stretch beyond what was considered potentially achievable. In certain business units, these aspirational plus goals for people of color were said to have been met. Authorities also alleged that some training, mentoring and leadership development programs, such as an Executive Leadership Diversity Mentoring program, were offered on the basis of race or sex.

The EEOC settlement resolves a Commissioner’s Charge filed in 2025 alleging that Lockheed discriminated based on race against employees in performance assessments and in bonus and other compensation decisions, including through the Comp Adder program. The EEOC agreement requires the company to comply with Title VII and Executive Order 14151 and to maintain a merit-based workplace in which race and sex are not considered in hiring, compensation, bonus or promotion decisions, with oversight of compliance for the term of the agreement.

The False Claims Act portion of the case originated as a whistleblower suit filed by former Lockheed vice president Tim Booher under qui tam provisions that allow private parties to share in recoveries. Under the settlement, Booher will receive $4.4 million. The government emphasized that federal contractors must treat employees and applicants without regard to race or sex and that this resolution is part of broader efforts, including a Civil Rights Fraud Initiative, to enforce anti-discrimination requirements tied to taxpayer-funded contracts. Lockheed cooperated in resolving the matter, and the settlement explicitly notes that the allegations are resolved without a determination of liability.