FALLS CHURCH, Va. (Map, News) - Defense contractor General Dynamics Corp. (GD, News) said Wednesday that the head of the power company Dominion Virginia Power will replace current Chief Executive Nicholas Chabraja when he retires next summer.

Jay L. Johnson is currently a member of General Dynamics board of directors. Under a succession plan, he will become vice chairman of the board and a General Dynamics executive on Sept. 2, then take over as CEO on July 1, 2009, a day after Chabraja retires.

The decision was announced following the company's annual shareholders meeting at General Dynamics' suburban Washington headquarters and a meeting of the company's board later in the day.

Johnson, 61, has led Richmond-based Dominion since 2007. He has been a General Dynamics director since 2003 and is a former Navy admiral who was chief of naval operations in the late 1990s. He said in a statement that he was "excited about this opportunity to expand my relationship with this tremendous corporation."

Chabraja, 65, told reporters after the company's annual shareholder meeting Wednesday morning that he planned to retire. He will remain the board chairman until May 2010.

"It's been a great run," Chabraja said of his nearly 11-year tenure as CEO. "The company has done spectacularly well. I've been privileged to lead it."

In a conference call last month, Chabraja said a decision on his replacement already had been made and that a successor would be publicly named this month. But he told Wall Street analysts on the call that the board had to meet again to finalize its choice.

Chabraja will not leave the executive office empty-handed. According to the company's proxy statement filed in March with the Securities and Exchange Commission, Chabraja will receive a retirement package worth more than $67 million from the vesting of stock options, the value of his pension and other perks.

That amount likely will change by the time Chabraja retires, since much of the package's value comes from stock options that are affected by changes in the company's share price.

Falls Church-based General Dynamics is one of the nation's largest defense contractors, making everything from warships to bullets for the military. Its armored vehicle division, which builds tanks and armored vehicles, has benefited from heavy Pentagon spending on wars in Iraq and Afghanistan.

Last month, the company reported a 32 percent jump in quarterly profit, much of it from work retrofitting and fixing vehicles for the Army. The company made $2.1 billion in 2007, an 11 percent increase from 2006.

Chabraja was the company's longtime lawyer before he became an executive vice president in 1994. In 1997, he became chairman and CEO, a relatively unusual pick in a highly technical industry where top executives often rise from the ranks of engineers or program managers.

Under Chabraja, the company expanded, reversing several years of contraction during which General Dynamics sold off marquis such as its fighter division, which made the F-16 jet, and the Cessna Aircraft company.

During Chabraja's time as a company executive, General Dynamics purchased ship maker Bath Iron Works, private jet maker Gulfstream Aerospace, General Motors' defense unit, and the information technology company Anteon International.

Shares of General Dynamics fell 48 cents to $89.68 in trading Wednesday.