The CEO-in-waiting of the defense contractor who declined to issue WARN Act layoff notices on the urging of the Obama administration — sequestration-related notices mandated by law that would have gone out just before the election — has resigned, citing an affair.
Christopher E. Kubasik, 51, today resigned from his role as vice chairman, president and chief operating officer (COO), effective immediately, Lockheed Martin announced. Kubasik was set to become CEO in January.
He “resigned after an ethics investigation confirmed that he had a close personal relationship with a subordinate employee. His actions violated the company’s Code of Ethics and Business Conduct, but did not affect the company’s operational or financial performance,” the defense giant said in a statement.
On Oct. 1, Kubasik and Bob Stevens, current chairman and CEO, sent a controversial memo to employees bowing to the administration’s advice to not warn employees of impending sequestration layoffs.
With the 60 days’ notice mandated by the WARN Act, the notices would have gone out at the beginning of November.
“We have been working closely with the government to understand our obligations under the WARN Act and to ensure our employees are provided fair treatment and appropriate notice, if their jobs are impacted by sequestration,” Kubasik and Stevens wrote. “After careful review of the additional guidance provided by the Office of Management and Budget and the Department of Defense, we will not issue sequestration-related WARN notices this year. …If sequestration were to happen, we are compelled to comply with the law and will do so as respectfully and as ably as we can.”
House Armed Services Committee Chairman Buck McKeon (R-Calif.) lashed out at Lockheed for “bowing” to the administration.
“It appears companies will bow to the threat implicit in last week’s OMB guidance; withhold notices today or the government might not cover your court costs down the road,” McKeon said on the day the memo went out. “Let me be clear, neither the OMB guidance nor the Lockheed decision will protect a single defense industry job if sequestration occurs in January.”
Other defense contractors were more guarded than Lockheed in their reactions to the guidance, which the OMB said was provided to “minimize the potential for waste and disruption associated with the issuance of unwarranted layoff notices.”
“General Dynamics has not determined whether we will issue WARN notices to employees as a result of sequestration, because the Defense Department has not informed us of how our programs will be impacted,” Rob Doolittle, staff vice president for communications, told PJM after the Lockheed announcement.
Lockheed Martin immediately elected Marillyn A. Hewson, 58, president of the Electronic Systems business area, to fill Kubasik’s current spot as president and COO and to become CEO in January.
The sequestration, which goes into effect Jan. 2 without “fiscal cliff” action in the lame-duck session, puts more than 2 million jobs at risk.
Virginia, Florida, and Pennsylvania — all swing states won by President Obama — would take the hardest hit with more than 365,000 job losses combined, according to a George Mason University & Chmura Economics and Analytics report.