Incoming Lockheed CEO resigns after ethics investigation

Chris Kubasik, who was slated to take over CEO of Lockheed Martin in January, resigned Friday over an inappropriate "close personal relationship" with a subordinate employee.

Kubasik left the company Friday after Lockheed conducted an ethics investigation that confirmed the relationship, the company said.

Current CEO Bob Stevens announced Kubasik's resignation on a conference call on Friday, saying he was “deeply disappointed” in what he called a personal indiscretion. He said Kubasik violated the company's ethics code.

Kubasik was tapped in April to replace Stevens as CEO after serving as the company's chief operating officer.

Stevens, who has been CEO of the company for a decade, said he will still step down at the beginning of next year, although he will remain on the board of directors.

Kubasik will receive a $3.5 million separation payment from the company, according to a Securities and Exchange Commission filing on the resignation. The $3.5 million totaled one-year's worth of salary and bonus, a company official told The Hill.

Lockheed's board approved Marillyn Hewson on Friday to take over as CEO instead of Kubasik in January. Hewson was slated to become COO in January, a position she will now assume immediately. Hewson has been executive vice president of the company's electronic systems business since January 2010.

Kubasik's resignation deals the world's largest defense contractor a major blow at a time of huge uncertainty for the defense industry. The Pentagon is already planning to cut nearly $500 billion from its budgets over the next decade, and another $500 billion cut is looming over sequestration.

Stevens said an employee came forward about the relationship at the end of October, prompting Lockheed to hire an outside firm to conduct an ethics investigation.

The subordinate who was involved with Kubasik is also no longer with the company, Stevens said.

The CEO stressed that the relationship had no bearing on the company's operational or financial performance.

Kubasik, 51, had been with Lockheed Martin since 1999, when he came over from Ernst & Young. He was promoted to chief operating officer in 2010 and was seen as being groomed to be Stevens's successor.

“I am deeply disappointed and genuinely saddened by Chris's actions,” Stevens told reporters.

Stevens said that Kubasik's departure would require the company's leadership to rework its plans some, as the company does not plan to bring in a COO to replace Hewson when she takes over.

Stevens said Lockheed has used a variety of management structures in the past, including without a chief operating officer.

Hewson said she would continue the transition plan that was already begun when Stevens first announced his retirement.

—This story was last updated at 6:48 p.m.