Good morning. Welcome to Lockheed Martin's 2014 annual meeting of stockholders. We also welcome those who are participating by webcast. I'm Maryanne Lavan, general counsel and corporate secretary for Lockheed Martin. Let me introduce you to Marillyn Hewson, our chairman, president, and CEO, and Bruce Tanner, our executive vice president and chief financial officer. We also have members of our board of directors and executive officers who Marillyn will introduce to you shortly. First, let me remind you that in our discussion today, we may make forward-looking statements which project future events. Please be aware that the corporation's actual results may vary from what we believe or anticipate. You may wish to review our forward-looking statements either on our website or the SEC's website.
The notice of this meeting, the proxy statement, and the annual report were duly and properly mailed. The affidavits to that effect will be filed with the records of this meeting. Inspectors of election from Computershare Trust Company have been appointed to act at this meeting. Their preliminary report shows that more than 289 million shares or approximately 90% of the shares outstanding and entitled to vote are represented here today. This meets the quorum requirement of our bylaws. We may proceed with today's meeting. Stockholders who wish to vote in person by ballot may do so at this time. If you've already voted by proxy, there is no need to vote by ballot unless you wish to change your vote. Please raise your hand if you don't have a ballot. Seeing none, I will turn the meeting over to our chairman, Marillyn Hewson.
Thank you, Maryanne. Good morning, ladies and gentlemen. We're excited to be here in Florida, home to several of our businesses and just a stone's throw from Eglin Air Force Base, which is home to many of our F-35 fighter jets. On behalf of the board of directors, let me first welcome all of you here to our 2014 annual meeting. This meeting gives us a chance to reflect back on what we've accomplished over the past year and to look ahead to the opportunities and challenges ahead of us. I hope you enjoyed our opening video, which just gave you a small sampling of the extraordinary innovations underway at Lockheed Martin. Let me begin by introducing my fellow board members that are here for today's meeting. I would ask each director to please stand as I call your name.
Our newest board member, Dan Akerson, vice chairman and special advisor to the board of The Carlyle Group. Dan joined our board in February. Nolan Archibald, retired executive chairman of the board of Stanley Black & Decker Incorporated. Roz Brewer, president and chief executive officer of Sam's Club. Dave Burritt, executive vice president and chief financial officer of United States Steel Corporation. Jim Ellis, retired president and chief executive officer of the Institute of Nuclear Power Operations. Tom Falk, chairman of the board and chief executive officer of the Kimberly-Clark Corporation. Lynn King, president of Podium Pros, a Washington, D.C.-based speakers bureau. Jim Lloyd, senior counselor at The Cohen Group. Doug McCorkindale, our independent lead director and retired chairman and chief executive officer of the Net Companies. Joe Walston, vice chairman of The Cohen Group. To all of our board of directors, thank you for being here today.
Let me also take a moment to introduce the Lockheed Martin senior executives who are with us today. Please stand as I call your name. Rick Ambrose, Executive Vice President, Space Systems. Sondra Barbour, Executive Vice President, Information Systems and Global Solutions. Dale Bennett, Executive Vice President, Mission Systems and Training. Orlando Carvalho, Executive Vice President, Aeronautics. Rick Edwards, Executive Vice President, Missiles and Fire Control. We also have a number of other corporate officers and senior leaders who are in attendance today. Would you please stand and be recognized? Thank you. As is customary, our independent accountants, Ernst & Young, are represented here today by the account partners, Tim Messick, Michael Blunt, and Jill Wheeler. Tim, Michael, and Jill, would you please stand?
As I mentioned earlier, just a few miles away from here across Choctawhatchee Bay is Eglin Air Force Base, home to the 33rd Fighter Wing. The 33rd's primary mission is to train world-class pilots and maintainers on all three variants of our fifth-generation multi-role stealth fighter, the F-35 Lightning II. The first time many pilots strap into the F-35 is right here at Eglin, and they'll tell you, as many of them have told me, there's nothing like it, and they mean that literally. The technology we built into the F-35 is light years ahead of other aircraft. We're very proud of the F-35 and the role that it will play in strengthening global security for decades to come. We're also very proud of the men and women of Lockheed Martin who support the global security mission, many of whom are right here in Florida.
Each of Lockheed Martin's businesses has a presence in Florida, and in total, we employ 11,800 people in the state. That number will grow to more than 12,000 later this year as we expand our Mission Systems and Training unit in Orlando. Here in the Panhandle, we employ almost 1,000 people, making us one of the largest employers in this area. Our people live, work, and contribute to the economic growth and vitality of the Emerald Coast. Lockheed Martin employees support Florida in other ways as well. One way is through volunteerism. Last year, more than 4,000 of our employees volunteered 100,000 hours with nonprofit organizations in Florida, and we contributed more than $1.1 million to Florida community programs, including support for the National Naval Aviation Museum, the University of Central Florida Academy of Mathematics and Science programs, and the Manatee Education Foundation.
Lockheed Martin is absolutely committed to Florida and its communities, and we're proud to help this state to continue to flourish. I'd like to give you a brief overview of our 2013 performance and then talk about our strategy for future growth. Last year, Lockheed Martin faced a very challenging business environment. Dynamic political and economic conditions brought about sequestration, shrinking customer budgets, and a 16-day government shutdown. It was a difficult time, yet we were prepared for it. We had anticipated the decline in U.S. spending several years ago, and we began taking actions. We cut costs. We consolidated facilities. We reshaped our portfolio, and we invested in adjacent growth markets. Most importantly, we were determined to meet our commitment to our customers. We knew what they were up against, fewer resources and increasing demand, and we were determined to support them through this challenging period.
The prudent actions we took in anticipation of a decline in U.S. defense spending, combined with a focus on performance for our customers, resulted in strong bottom-line performance in 2013, even as sales declined slightly. Specifically, we delivered one-year total shareholder returns of 68%. That's a reflection of the market's confidence in this company, its employees, and our strategy for growth. We showed strong financial performance in several key areas, including all-time records in segment operating profit, segment margin, earnings per share, and backlog of $82.6 billion. We generated very healthy cash flow, and we're being strategic about how we deploy that cash. First and foremost, we're returning value to you, our stockholders. In 2013, we paid cash dividends of $1.5 billion. We repurchased 16.2 million shares, and we increased our quarterly dividend by 16%.
In other words, we continue to make good on our commitment to return at least 50% of free cash flow to our investors. This is a goal we remain committed to. We're also continuing to deploy our cash with the long view in mind, strategically reinvesting in the business. Strong financial performance depends on outstanding operational execution, and across our business areas, Lockheed Martin delivered. Among the thousands of examples, I'd like to highlight just a few for you today. I've told you about how proud we are of the F-35. Let me tell you about that program's accomplishments last year. All three F-35 variants met key milestones. The F-35A, which is the conventional takeoff and landing variant, completed its first in-flight missile launch. The F-35B, the short takeoff, vertical landing variant, performed its first vertical night landing on the USS Wasp.
The F-35C carrier variant completed its first in-flight refueling. This unique aircraft continues to meet the demanding expectations of our U.S. and international customers and will soon own the skies wherever it flies. In an important strategic win, our Information Systems and Global Solutions business was selected by NATO to design the active network infrastructure of its new headquarters in Brussels, Belgium. This project will deliver secure, collaborative, network-enabled facility that serves the needs of NATO's 28 member nations with 21st-century communications and computing capability. Our Missiles and Fire Control business achieved a number of firsts last year. Among them, the Medium Extended Air Defense System, or MEADS, demonstrated unprecedented capability when it intercepted both a tactical ballistic missile and an air-breathing target approaching from opposite directions. This successful dual intercept has proved that the system is ready to begin protecting our war fighters and allies.
Our Mission Systems and Training business launched its third littoral combat ship, the future USS Milwaukee. These leading-edge surface combatants are fast, maneuverable, and provide a wide range of capabilities, including mine clearing, anti-submarine, and anti-surface warfare. Our Space Systems team successfully launched its MAVEN spacecraft, now on its 10-month journey to Mars. When it arrives late this year, it will study the planet's upper atmosphere to understand the Martian climate. These are just a handful of the 2013 accomplishments we achieved while supporting the customer's critical missions. Our employees are focused, engaged, and dedicated to delivering for our customers. They understand what's at stake, and they're determined to do their part to ensure that our customers get what they need when they need it.
Looking ahead, while we continue to face economic challenges and uncertainty, I believe that we are well-positioned to lead the global security and aerospace industry into the second half of this decade and beyond. We are focused on meeting our commitments, anticipating the needs of our customers, and investing in the innovations for the future. We've sharpened our core capabilities in such areas as cybersecurity, unmanned systems, and missile defense, and we're also leveraging our technological expertise in areas that will have fundamental positive impacts on our world, such as advanced manufacturing and materials, data analytics, renewable energy, and energy efficiency. We're aggressively seeking new opportunities to grow our business internationally. We have significant opportunities in the Middle East, Australia, and other parts of the Asia Pacific region.
Last year, we created a new organization called Lockheed Martin International to focus these efforts and to drive international growth from 17% of sales to over 20% within a few years. We are well on our way. As we grow, we want to do so responsibly. We're continuing to build sustainable business practices into our operations. To us, that means protecting our environment, strengthening our communities, driving responsible growth, and always adhering to our values and the highest ethical standards. We've made good progress in this area. Last year, we were named the Dow Jones Sustainability North America Index, a highly respected benchmark for sustainability. The Carbon Disclosure Project named us, for the third consecutive year, one of the top companies worldwide on its global Carbon Performance Leadership Index. Corporate Responsibility Magazine named Lockheed Martin one of its 100 best corporate citizens in 2013.
I'm also very proud of the progress that we've made in diversity and inclusion. Recently, I had the honor of accepting the 2014 Catalyst Award on behalf of Lockheed Martin. This prestigious annual award honors innovative initiatives that expand opportunities for women in business. Lockheed Martin was specifically recognized for our U.S.-based initiative, Women Accelerating Tomorrow. This initiative is part of a broad strategic effort at Lockheed Martin to attract, develop, and retain diverse talent in a highly technical and engineering-focused industry. With solid financial performance, excellent program execution, and a continued focus on culture and business practices, the Lockheed Martin team is in top form. I am as optimistic as I've ever been about the future of our company. We have the right products and services that our customers tell us are crucial to enabling them to do their jobs.
We have the right people in place to drive innovation throughout our businesses. With our technology, our capabilities, our depth of experience, and our dedicated people, we will continue to deliver value to our customers and shareholders and to grow our business. It is my privilege to lead the men and women of Lockheed Martin. Every day, I am humbled by their talent, their passion, and their dedication, and I'm grateful for the opportunity to be part of this great organization. A great organization that will make this company even stronger and more worthy of your investment. Thank you for your continued confidence in us. Now I'd like to turn the floor to Maryanne, who will review the procedures for the business portion of today's meeting. Maryanne?
Thank you, Marillyn. Before proceeding to the official business of the meeting, please review the agenda and the meeting rules and procedures for today's meeting, which you received at the registration desk. As a courtesy to all stockholders, we ask that you honor the following procedures. To speak at this meeting, you must be a stockholder of record as of February 21st, 2014, a person named in a written authorization in the form of a proxy given by a stockholder of record as of that date, or the duly authorized representative of an organization which was a stockholder of record as of that date. During the discussion periods for each proposal, if you wish to speak, please proceed to the microphone and wait to be recognized. Please state your name, address, and whether or not you are an individual stockholder, proxy holder, or representative of an organization holder.
We ask that you keep your remarks brief in order to provide all stockholders an adequate opportunity to speak. We request that stockholders not return to the microphone for a second time. A general discussion period will be held at the end of the meeting, at which time the stockholders are welcome to ask questions and make comments if generally applicable. Today's meeting will focus on six specific proposals described in the proxy statement. I wish to note that on April 14th, we received a letter from the New York City Comptroller withdrawing their stockholder proposal relating to our stock clawback policy. Consequently, proposal seven will not be presented for a vote.
The remaining proposals are the election of 12 directors, ratification of the appointment of Ernst & Young as the independent auditors, approval on an advisory basis of the compensation of our named executive officers in the proxy, management proposals to amend the 2011 Incentive Performance Award Plan to authorize an additional 4 million shares, and the two remaining stockholder proposals. While discussing each of these proposals, no other business may be brought before the meeting. Nolan Archibald, David Burritt, and Doug McCorkindale have been appointed proxies by holders of at least 289 million shares and have voted these shares in accordance with the instructions of those stockholders. I'll turn the podium back to Marillyn, who will chair the remainder of the meeting. Thank you.
We'll turn now to the official business of this meeting. Proposal one, the nomination of 12 directors to serve on the board of directors, is now before the meeting. Is there any discussion on proposal one? Hearing none, that concludes our discussion on the election of the board of directors. Proposal two, the ratification of the appointment of Ernst & Young as independent auditors, is now before the meeting. Is there any discussion on proposal two? Hearing none, that concludes our discussion of the ratification of the appointment of the independent directors. Proposal three, the approval on an advisory basis of the compensation of our named executive officers, is now before the meeting. Is there any discussion on proposal three? Hearing none, that concludes our discussion of the approval of the compensation of our named executive officers.
Proposal four is a proposal by management to amend the 2011 Incentive Award Plan to authorize an additional 4 million shares. The proposal is presented on pages 28 through 36 of the proxy statement. Is there any discussion on proposal four? Hearing none, that concludes our discussion of the Plan amendment. Proposal five is a stockholder proposal offered by John Chevedden. The proposal requests that the corporation permit stockholder action by written consent. The proposal and the board's response are presented on pages 78 and 79 of the proxy statement. Mr. John Chevedden has designated Ms. Jan Fusco to present on his behalf, as a courtesy, his proposal. Ms. Fusco, would you please introduce the proposal?
Thank you. Proposal five, right to act by written consent, sponsored by John Chevedden of Redondo Beach, California. Resolved, shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with giving shareholders the fullest power to act by written consent in accordance with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with applicable law. Wet Seal shareholders successfully used written consent to replace certain underperforming directors in 2012. This proposal topic also won majority shareholder support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint.
This proposal would empower shareholders by giving them the ability to effect change at our company without being forced to wait until an annual shareholders meeting. Shareholders could replace a director using action by written consent. Shareholder action by written consent could save our company the cost of holding a physical meeting in between annual meetings. Please vote to protect shareholder value. Right to act by written consent proposal. Thank you.
Thank you, Ms. Fusco. We support the concept of stockholders being able to effect change outside of the annual meeting process. We have several ways for that to be done. We believe that our governance provision allowing stockholders to call a special meeting satisfies this concept. Is there any other discussion on proposal five? Hearing none, that concludes our discussion of proposal five. Proposal six is a stockholder proposal offered by the American Federation of Labor and Congress of Industrial Organizations, the AFL-CIO Reserve Fund. The proposal requests that the corporation adopt a policy which would require our senior executives to retain a significant percentage of shares acquired through equity compensation until retirement. The proposal and the board's response are presented on pages 79 and 80 of the proxy statement. Ms. Fusco has been designated to present the AFL-CIO's proposal. Would you please introduce the proposal?
Proposal six, stockholder proposal by the American Federation of Labor and Congress of Industrial Organizations. Resolved, shareholders of Lockheed Martin urge the Compensation Committee of the Board of Directors to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age. For the purpose of this policy, normal retirement age shall be defined by the company's qualified retirement plan that has the largest number of plan participants. The shareholders recommend that the committee adopt a share retention percentage requirement of at least 75% of net after-tax shares. The policy should prohibit hedging transactions for shares subject to this policy, which are not sales that reduce the risk of loss to executives.
This policy shall supplement any other share ownership requirements that have been established for senior executives and should be implemented so as not to violate the company's existing contractual obligations or the terms of any compensation or benefit plan currently in effect. The full text of this proposal is in the annual meeting.
Thank you, Ms. Fusco. We support the concept of meaningful long-term stock ownership by senior executives. We believe our robust stock ownership guidelines satisfies this concept. We also believe that the 75% requirement is too high, and most of our investors told us they agree with our belief. Is there any other discussion on proposal six? Not hearing any, we'll move on. Thank you very much. The polls are now closed, anyone present who has voted by ballot, please raise your hand and an attendant will pick up your completed ballot. Thank you. At this time, I'd like to recognize Mr. Kevin Laurita, one of the inspectors of an election, to announce the preliminary voting results on the six proposals presented today.
Ms. Chairman, in accordance with the corporation's charter and bylaws, the affirmative vote of a majority of votes cast is required for the passage of each of these six proposals. With the return of 90.7% of the shares outstanding and entitled to vote, proposal number one, all 12 directors received at least 90% of the shares voting in favor and have been elected to the board. Proposal number two, the ratification of the appointment of Ernst & Young LLP as independent auditors, received more than 98% of shares voting in favor and has been approved. Proposal three, the compensation of the named executive officers, received more than 93% of shares voting in favor and has been approved on an advisory basis.
Proposal number four, management's proposal to authorize an additional 4 million shares under the Incentive Performance Award Plan, has received more than 92% of the shares voting in favor and has been approved. Stockholder proposal five, a request that the corporation permit stockholder action by written consent, received more than 60% of the shares voting against and was rejected. Stockholder proposal six, a request that the corporation adopt a policy that would require executives to retain a significant percentage of equity compensation, received more than 78% of the shares voting against and was rejected. Thank you, and I'll stand back.
Thank you. At this time, I would like to thank those who participated in our webcast for your continued interest in Lockheed Martin. This concludes the official business and the webcast portion of our meeting today.