156
FORTUNE.COM // JUNE.1.19
It also runs the supply and logistics net-
work for the government’s remote McMur-
do Station research outpost in Antarctica,
moving people and supplies back and forth
from the U.S. for a residential population
that can exceed 1,000 in the summer. CEO
Krone learned firsthand just how remote
the base can be when he got stuck there
over Thanksgiving in 2017.
Souvenirs of that longer-than-expected
stay are the hundreds of photographs he
took of the seals there, one of which adorns
the wall opposite the desk in his office.
Nearby, a somewhat cluttered bookcase
contains mementos of aircraft he helped
design and the Lockheed Martin deal,
alongside childhood artwork from his three
now-grown children.York City payroll project landed two executives in jail and resulted
in fines and restitution costs totaling more than $500 million. At
the same time, the federal government tightened its conflict-of-
interest rules, prompting big contractors like Northrop Grumman
and Lockheed Martin to spin off their services divisions.
So in 2012, the company moved to shrink itself by splitting in
two. A technical services unit, which performed tasks like upgrad-
ing military vehicles and assembling flight simulators, was spun
off under the SAIC name. The larger information technology and
sciences unit went forward as Leidos. The name was created by
lopping off the front and the back of the word kaleidoscope.
To run the new operation, Leidos hired Roger Krone, now
62, an aerospace engineering graduate from Georgia Tech who
holds an MBA from Harvard. Before joining Leidos in 2014, he
served in senior positions of finance and project management at
Boeing, McDonnell Douglas, and General Dynamics.
In a well-tailored navy suit with an on-brand purple tie, the Lei-
dos corporate color, and a distinguished shock of silver hair, Krone
could fit in easily on Capitol Hill among the senators and lobbyists
at any hearing. But the CEO is a computer nerd at heart, recounting
stories of his earliest programming days growing up near Cincinnati
with a TRS-80 home computer that he upgraded himself and writ-
ing programs on punch cards for an IBM 360 mainframe at nearby
Xavier University. The part-time punch-card job, which paid $7 an
hour, came after his programming teacher caught him working the
ovens at Pizza Bob’s in Cincinnati and challenged him to put his
skills to better use. But finding the bugs and rewriting code didn’t
suggest a satisfying career path, so he went into aerospace engineer-
ing, eventually helping design airplanes, helicopters, and spacecraft.
A year after taking over as CEO, a bargain of sorts fell into
Krone’s lap. Defense giant Lockheed Martin had spent $9 billion
to acquire Sikorsky Aircraft and decided to raise some money by
selling its IT businesses, a jumble of units with total sales of about
$5 billion. For $4.6 billion, paid mostly in stock, Krone gobbled
up businesses whose work included designing a next-generation
air-traffic control system, billions of dollars of IT programs for the
Social Security Administration, and a host of military projects.
The deal, which nearly doubled Leidos’s revenue, closed in the
summer of 2016, coinciding almost perfectly with the arrival of the
Trump administration and major increases in defense spending to
combat the growing military presence of China and smaller threats
from North Korea and Russia.
Having successfully integrated the acquisition, Leidos is on the
upswing; revenue last year was twice the $5.1 billion the com-
pany booked for the 12 months before the merger. And in the first
quarter of this year, the Leidos backlog of business grew to a record
$21.5 billion, aided by a $3 billion contract to run NASA’s IT
network for up to 10 years. Leidos’s share price, at $75 recently, has
returned 207% since Krone took over in July 2014. That compares
with a 60% rise in the S&P 500 index and a 106% gain for the
Dow Jones U.S. Select Aerospace and Defense index.
In addition to defense and intelligence work, Leidos is deeply in-
volved in a wide range of critical research on cancer and vaccines.
0
50
100
150
200%
LEIDOS STOCK
S&P 500
DOW JONES U.S.
SELECT AEROSPACE
& DEFENSE INDEX
206%
MAY 9, 2014 MAY 9, 2019
CUMULATIVE GROWTH IN TOTAL RETURN
SOURCES: BLOOMBERG; S&P GLOBAL
KRONE
APPOINTED
CEO
LEIDOS A DEFENSE CONTRACTOR’S HIGH-SEAS ADVENTURE
ROGER KRONE : CEO, Leidos