![]() | Preliminary Proxy Statement | ||||||
![]() | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||||
![]() | Definitive Proxy Statement | ||||||
![]() | Definitive Additional Materials | ||||||
![]() | Soliciting Material Pursuant to §240.14a-12 |
![]() | No fee required. | |||||||||
![]() | Fee paid previously with preliminary materials. | |||||||||
![]() | Fee computed on table | |||||||||
We Do the Right Thing | ||||||||
We Do What We Promise | We own the delivery of results, focused on quality outcomes. | |||||||
We Commit to Shared Success | We work together to focus on the mission and take accountability for the sustainable success of our people, customers, shareholders, suppliers and communities. | |||||||
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world’s most challenging problems. |
2022 Proxy Statement | 1 |
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David P. Abney | Marianne C. Brown | Donald E. Felsinger | ||||||||||||
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Ann M. Fudge | William H. Hernandez | Madeleine A. Kleiner | ||||||||||||
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Karl J. Krapek | Graham N. Robinson | Gary Roughead | ||||||||||||
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Thomas M. Schoewe | James S. Turley | Kathy J. Warden | ||||||||||||
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Mark A. Welsh III |
2 | Northrop Grumman |
![]() | DATE AND TIME May 18, 2022 (Wednesday) 8:00 AM Eastern Daylight Time | ![]() | LOCATION Northrop Grumman Corporation, Principal Executive Office 2980 Fairview Park Drive Falls Church, Virginia 22042 | ![]() | WHO CAN VOTE Shareholders of record at the close of business on March 22, 2022 are entitled to vote at the Annual Meeting |
Proposals | Board Vote Recommendations | For Further Details | |||||||||
1. | Election of Directors | “FOR”each Director Nominee | Page 14 | ||||||||
2. | Advisory Vote on Compensation of Named Executive Officers | “FOR” | Page 47 | ||||||||
3. | Ratification of Appointment of Independent Auditor | “FOR” | Page 86 | ||||||||
4. | Shareholder Proposal to Change the Ownership Threshold to Call a Special Meeting | “AGAINST” | Page 89 |
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How to Vote | Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on May The Proxy Statement for the |
![]() | MAIL Mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope |
2022 Proxy Statement | 3 |
Our Values | IFC* | |||||||
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Board | ||||||||
4 | Northrop Grumman |
2021 Grants of Plan-Based Awards | ||||||||
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Indemnification Agreements | ||||||||
Voting on Other Matters | ||||||||
Shareholder Nominations for Director Election at the | ||||||||
5 |
29% Total Shareholder Return | Sales of $35.7 billion and organic sales* growth of 3% to $35.5 billion | Operating margin rate of 15.8%; Segment margin rate* of 11.8%, a 40 basis pointincrease | Diluted EPS of $43.54; Transaction-adjusted earnings per share* increased 8% to $25.63 | Net cash provided by operating activities of $3.6 billion | ||||||||||||||||||
Total backlog of over $76 billion or 2xour annual sales | We retired over $2.2 billion of debt | We returned $4.7 billion to our shareholders through dividends and share repurchases | We increased our quarterly dividend byapproximately 8% to $1.57 per share | In 2021, our capital expenditures totaled $1.4 billion, and we invested $1.1 billion in R&D |
Northrop Grumman |
CEO | NEOs | ||||
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We sustained strong financial performance in 2021 | 130% 2021 ANNUAL INCENTIVE PLAN (AIP) PAY FOR OUR NAMED | 122% 2021 LONG-TERM INCENTIVE PLAN (LTIP) PAYOUT FOR OUR NEOs | ||||||
We are committed to environmental sustainability, the development of a fair and equitable workplace for our employees, and an unrelenting focus on our customers. To reinforce these commitments we include related non-financial metrics in our executive compensation program. | Non-financial Metrics in Annual Incentives | |||||||
![]() | People Diversity | Employee Experience | Safety | |||||||
![]() | Environment Environmental Sustainability | |||||||
![]() | Customer Quality | Customer Satisfaction | |||||||
2022 Proxy Statement | 7 |
Consistent Shareholder Approval 96% 3-YEAR AVERAGE OF SHAREHOLDER VOTES IN FAVOR OF SAY-ON-PAY | Governing principle highlights of our 2021 executive compensation programs: | |||||||||||||||||||
Over 80%of Executive Compensation is Variable | Stock OwnershipGuidelines for All Officers: CEO 7x Other NEOs 3x | 3-Year Mandatory Holding Periodfor 50% of Vested Shares | ||||||||||||||||||
Recoupment Policy on Cash and Equity Incentive Payouts | NoIndividual Change in Control Agreements | No Hedging or Pledging |
Name | Age (1) | Director since | Professional Background | Committee Memberships | Other Public Company Boards | |||
Audit | Comp | Gov | Policy | |||||
Wesley G. Bush | 57 | 09/2009 | Chairman, Northrop Grumman Corporation | — | — | — | — | 1 |
Marianne C. Brown | 60 | 03/2015 | Co-Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. | ![]() | ![]() | — | ||
Donald E. Felsinger | 71 | 02/2007 | Lead Independent Director, Northrop Grumman Corporation; Former Chairman and CEO, Sempra Energy | ![]() | ![]() | 2 | ||
Ann M. Fudge | 67 | 03/2016 | Former Chairman and Chief Executive Officer, Young & Rubicam Brands | ![]() | ![]() | 1 | ||
Bruce S. Gordon | 73 | 10/2008 | Former President, Retail Markets Group, Verizon Communications Inc.; Former President and CEO, NAACP | ![]() | ![]() | — | ||
William H. Hernandez | 70 | 09/2013 | Former Senior Vice President and CFO, PPG Industries, Inc. | ![]() | ![]() | 2 | ||
Madeleine A. Kleiner | 67 | 10/2008 | Former Executive Vice President and General Counsel, Hilton Hotels Corporation | ![]() | ![]() | 1 | ||
Karl J. Krapek | 70 | 09/2008 | Former President and COO, United Technologies Corporation | ![]() | ![]() | 2 | ||
Gary Roughead | 67 | 02/2012 | Retired Admiral, United States Navy and Former Chief of Naval Operations | ![]() | ![]() | — | ||
Thomas M. Schoewe | 66 | 08/2011 | Former Executive Vice President and CFO, Wal-Mart Stores, Inc. | ![]() | ![]() | 2 | ||
James S. Turley | 63 | 02/2015 | Former Chairman and Chief Executive Officer, Ernst & Young | ![]() | ![]() | 3 | ||
Kathy J. Warden | 47 | 07/2018 | Chief Executive Officer and President, Northrop Grumman Corporation | — | — | — | — | — |
Mark A. Welsh III | 65 | 12/2016 | Dean of the Bush School of Government and Public Service, Texas A&M University; Retired General, United States Air Force and Former Chief of Staff, United States Air Force | ![]() | ![]() | — |
Northrop Grumman |
Age* | Director Since | Committee Memberships | Other Public Company Boards | |||||||||||||||||||||||
Name and Professional Background | AR | C | G | P | ||||||||||||||||||||||
![]() | David P. Abney Former Executive Chairman of the Board of Directors and Chief Executive Officer of United Parcel Service, Inc. (UPS) | 66 | 06/ 2020 | ![]() | ![]() | 2 | ||||||||||||||||||||
![]() | Marianne C. Brown Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. | 63 | 03/ 2015 | ![]() | ![]() | 3 | ||||||||||||||||||||
![]() | Donald E. Felsinger Lead Independent Director, Northrop Grumman Corporation; Former Chairman and CEO, Sempra Energy | 74 | 02/ 2007 | ![]() | ![]() | 1 | ||||||||||||||||||||
![]() | Ann M. Fudge Former Chairman and Chief Executive Officer, Young & Rubicam Brands | 70 | 03/ 2016 | ![]() | ![]() | 1 | ||||||||||||||||||||
![]() | William H. Hernandez Former Senior Vice President and CFO, PPG Industries, Inc. | 74 | 09/ 2013 | ![]() | ![]() | — | ||||||||||||||||||||
![]() | Madeleine A. Kleiner Former Executive Vice President and General Counsel, Hilton Hotels Corporation | 70 | 10/ 2008 | ![]() | ![]() | 1 | ||||||||||||||||||||
![]() | Karl J. Krapek Former President and COO, United Technologies Corporation | 73 | 09/ 2008 | ![]() | ![]() | 2 | ||||||||||||||||||||
![]() | Graham N. Robinson Senior Vice President, Stanley Black & Decker, Inc., and President of STANLEY Industrial | 53 | 08/ 2021 | ![]() | ![]() | — | ||||||||||||||||||||
![]() | Gary Roughead Retired Admiral, United States Navy and Former Chief of Naval Operations | 70 | 02/ 2012 | ![]() | ![]() | — | ||||||||||||||||||||
![]() | Thomas M. Schoewe Former Executive Vice President and CFO, Wal-Mart Stores, Inc. | 69 | 08/ 2011 | ![]() | ![]() | 2 | ||||||||||||||||||||
![]() | James S. Turley Former Chairman and Chief Executive Officer, Ernst & Young | 66 | 02/ 2015 | ![]() | ![]() | 3 | ||||||||||||||||||||
![]() | Kathy J. Warden Chair, Chief Executive Officer and President, Northrop Grumman Corporation | 50 | 07/ 2018 | 1 | ||||||||||||||||||||||
![]() | Mark A. Welsh III Dean of the Bush School of Government and Public Service, Texas A&M University; Retired General, United States Air Force and Former Chief of Staff, United States Air Force | 68 | 12/ 2016 | ![]() | ![]() | — |
AR | Audit and Risk Committee | G | Governance Committee | ![]() | Chair | ![]() | Member | ||||||||||||||||
C | Compensation Committee | P | Policy Committee | ||||||||||||||||||||
* Age as of ![]() ![]() |
2022 Proxy Statement | 9 |
50s | |||||
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60s | |||||
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70s | |||||
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Independent | |||||
![]() | 12 |
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6-10 | |||||
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>10 | |||||
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Racially/Ethnically Diverse | |||||
![]() | 3 |
![]() | Senior Leadership Experience | ![]() | Senior Government/Military Experience | ||||||||||
![]() | Corporate Governance | ![]() | International Experience | ||||||||||
![]() | Financial Expertise/Literacy | ![]() | Human Capital Strategy/ Talent Management | ||||||||||
![]() | ![]() | Cyber Expertise | |||||||||||
![]() | Aerospace/Defense Industry Experience | ![]() | Environmental Sustainability/Corporate Responsibility |
10 | Northrop Grumman |
STRONG INDEPENDENT OVERSIGHT | COMMITMENT TO BOARD EFFECTIVENESS | ROBUST SHAREHOLDER RIGHTS | |||||||||||||||
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BOARD REFRESHMENT AND DIVERSITY | DIRECTOR RECOGNITION | ||||||||||||||||
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Three of our female directors | |||||||||||||||||
CORPORATE RESPONSIBILITY AND SUSTAINABILITY | |||||||||||||||||
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![]() ![]() | For more information on our | ||||||||||||||||
2022 Proxy Statement | 11 |
PROPOSAL 1 | |||||
Election of Directors | > See page 14 for more details | ||||
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PROPOSAL 2 | |||||
Advisory Vote on Compensation of Named Executive Officers | > See page 47 for more details | ||||
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PROPOSAL 3 | |||||
Ratification of Appointment of Independent Auditor | > See page 86 for more details | ||||
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PROPOSAL 4 | |||||
Shareholder Proposal to Change the Ownership Threshold for Shareholders to Call a Special Meeting | > See page 89 for more details | ||||
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12 | Northrop Grumman |
ENGAGED | ||||||||||||||
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COMPANY REPRESENTATIVES | • •Chief Sustainability Officer | •General Counsel •Corporate Secretary •Treasurer and VP, Investor Relations | |||||||||||||||||
TOPICS DISCUSSED | Governance Topics •Shareholder •Executive Compensation •Board Structure | Sustainability Topics •Diversity •Environmental Goals •Human Rights | |||||||||||||||||
Financial Topics •Financial Performance •Portfolio Mix •Capital Deployment | Company Strategy •Technology Roadmap •Customer Priorities •Competitive Landscape | ||||||||||||||||||
HOW WE ENGAGED | •Proxy Discussions •Investor Conferences •Site Visits •1x1 calls/meetings | •Annual Meeting •Fireside Chats •Quarterly Earnings Calls •ESG Focused Discussions | |||||||||||||||||
13 |
![]() | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE 13 NOMINEES FOR DIRECTOR LISTED BELOW. | ||||
14 | Northrop Grumman |
Why is this important for Northrop Grumman? | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||||||||||||
![]() | SENIOR LEADERSHIP EXPERIENCE | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
Directors with this experience possess strong leadership qualities and the ability to identify and develop those qualities in others | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | CORPORATE GOVERNANCE | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
Supports our goals of strong Board and management accountability, transparency and protection of shareholder interests | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | FINANCIAL EXPERTISE/LITERACY | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
Assists directors in understanding and overseeing our financial reporting and internal controls | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | RISK OVERSIGHT/MANAGEMENT | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
Critical to the Board’s role in overseeing the risks facing the Company | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | AEROSPACE/DEFENSE INDUSTRY EXPERIENCE | n | n | n | n | 4 | |||||||||||||||||||||||||||||||||||||||||
Supports oversight of the Company’s business performance and strategic developments in our industry | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | INTERNATIONAL EXPERIENCE | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
For understanding our business and strategy | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | HUMAN CAPITAL STRATEGY/TALENT MANAGEMENT | n | n | n | n | n | n | n | n | n | n | n | n | n | 13 | ||||||||||||||||||||||||||||||||
Helps us attract, motivate and retain top candidates for positions at the Company | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | CYBER EXPERTISE | n | n | n | n | 4 | |||||||||||||||||||||||||||||||||||||||||
Supports our business in enhancing internal operations and navigating the rapidly changing landscape for cybersecurity | |||||||||||||||||||||||||||||||||||||||||||||||
![]() | ENVIRONMENTAL SUSTAINABILITY/ CORPORATE RESPONSIBILITY | n | n | n | n | n | n | n | 7 | ||||||||||||||||||||||||||||||||||||||
Strengthens the Board’s oversight and assures that strategic business imperatives and long term value creation are achieved consistent with our commitment to environmental sustainability and corporate responsibility |
2022 Proxy Statement | 15 |
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decade with General Electric Company working in commercial industries. ATTRIBUTES, SKILLS AND QUALIFICATIONS • | ||||||||
•Prior leadership positions within Northrop Grumman (including as •Significant aerospace and defense industry experience OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Merck & Co., Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member and former Chair of the Aerospace Industries Association •Member of the Board of Directors of Catalyst •Former Chair of the Board of Directors of the Federal Reserve Bank of Richmond •Member of the Board of Visitors of James Madison University | ||||||||
Kathy J. Warden Chair, Chief Executive Officer and President, Northrop Grumman Corporation Director since: July 2018 | ||||||||
Northrop Grumman |
![]() ![]() | ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive leadership and business experience as a •Significant expertise in international operations and global logistics •Significant board experience, including as non-executive chair OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Freeport-McMoRan Inc. •Member of the Board of Directors of Target Corporation FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Executive Chairman of the Board of Directors of UPS •Member of the Board of Directors of Johnson Controls International plc •Member of the Board of Directors of Macy's, Inc. | |||||||
David P. Abney Former Executive Chairman of the Board of Directors and Chief Executive Officer of United Parcel Service, Inc. (UPS) Age: 66 Director since: June 2020 Committee membership: Compensation Committee, | ||||||||
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Ms. Marianne C. Brown | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
![]() | •Member of the •Member of the Board of Directors of VMWare, Inc. | |||||||
Marianne C. Brown Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. Age: 63 Director since: March 2015 Committee membership: Audit and Risk Committee, Governance Committee | ||||||||
2022 Proxy Statement | 17 |
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Mr. Donald E. Felsinger is the former Chairman and Chief Executive Officer of Sempra Energy. From July 2011 through his retirement in November 2012, he served as Executive Chairman of the Board of Directors of Sempra Energy, and from February 2006 through June 2011, he was | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
![]() | Former Chairman and Chief Executive Officer, Age:74 Director February 2007 Compensation Committee, Governance Committee | |||||||
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Ms. Ann M. Fudge served as Chairman and Chief Executive Officer of Young & Rubicam Brands at WPP Group PLC from May 2003 to December 2006. Prior to that, she served in various leadership positions at Kraft Foods from 1986 to 2001, including President of Beverages, Desserts and Post Divisions, and President of Maxwell House Coffee and Kraft General Foods. | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Catalyst Partners Acquisition Corp. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Chair of the Board of Trustees of WGBH Public Media •Senior trustee of the Brookings Institution FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Member of the Board of Directors of Novartis AG •Member of the Board of Directors of Unilever | ||||||||
Ann M. Fudge Former Chairman and Chief Executive Officer, Young & Rubicam Brands Age:70 Director since: March 2016 Committee membership: Audit and Risk Committee, Governance Committee | ||||||||
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Mr. William H. Hernandez served as Senior Vice President, Finance, and Chief Financial Officer of PPG Industries, Inc. (PPG), from 1995 until his retirement in 2009. Prior to that, he was | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Member of the Board of Directors of Albemarle Corporation •Member of the Board of Directors of Black Box Corporation •Member of the Board of Directors of USG Corporation | ||||||||
William H. Hernandez Former Senior Vice President and Chief Financial Officer, PPG Industries, Inc. Age:74 Director since: September 2013 Committee membership: Audit and Risk Committee (Chair), Policy Committee | ||||||||
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Ms. Madeleine A. Kleiner served as Executive Vice President, General Counsel and Corporate Secretary for Hilton Hotels Corporation from January 2001 until February 2008. From 1999 through 2001, she served as a director of a number of Merrill Lynch mutual funds operating under the Hotchkis and Wiley name. | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Jack in the Box Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of the Ladies Professional Golf Association | ||||||||
Madeleine A. Kleiner Former Executive Vice President and General Counsel, Hilton Hotels Corporation Age:70 Director since: October 2008 Committee membership: Compensation Committee, Governance Committee (Chair) | ||||||||
19 |
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Mr. Karl J. Krapek served as President and Chief Operating Officer of United Technologies Corporation from 1999 until his retirement in January 2002. At United Technologies Corporation, he served for 20 years in various leadership | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Prudential Financial, Inc. •Member of the Board of Directors of American Virtual Cloud Technologies, Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of Trinity Health of New England | ||||||||
Karl J. Krapek Former President and Chief Operating Officer, United Technologies Corporation Age:73 Director since: September 2008 Committee membership: Compensation Committee, Governance Committee | ||||||||
![]() | Mr. Graham N. Robinson has served as Senior Vice President & President of STANLEY Industrial, a business segment of Stanley Black & Decker, Inc., since April 2020. Prior to joining Stanley Black & Decker, Mr. Robinson served as an executive with Honeywell for seven years, including roles as President of Honeywell Industrial Safety from 2018 to 2020, President of Honeywell Sensing and Internet of Things from 2016 to 2018, and Chief Marketing Officer of Honeywell’s Automation and Controls Solution division from 2014 to 2016. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Broad industrial and technical experience, including his current and former roles as President of divisions of large public companies •Significant international experience as an executive of large multinational companies •Extensive senior leadership skills SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of the Connecticut Business & Industry Association •Member of the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation | |||||||
Graham N. Robinson Senior Vice President, Stanley Black & Decker, Inc., and President of STANLEY Industrial Age:53 Director since: August 2021 Committee membership: Audit and Risk Committee, Policy Committee | ||||||||
20 | Northrop Grumman |
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Admiral Gary Roughead retired from his position as the 29th Chief of Naval Operations in September 2011, after serving in that position for four years. The Chief of Naval Operations is the senior military position in the United States Navy. As Chief of Naval Operations, Admiral Roughead stabilized and accelerated ship and aircraft procurement plans and the | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of Maersk Line, Limited •Chairman of the Board of Directors of Fincantieri Marinette Marine Corporation •Trustee of the Dodge and Cox Funds •Trustee of Johns Hopkins University •Member of the Board of Managers of the Johns Hopkins University Applied Physics Laboratory | ||||||||
Gary Roughead Admiral, United States Navy (Ret.) and Former Chief of Naval Operations Age: 70 Director since: February 2012 Committee membership: Compensation Committee, Policy Committee (Chair) | ||||||||
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Mr. Thomas M. Schoewe was Executive Vice President and Chief Financial Officer of Wal-Mart Stores, Inc. from 2000 to 2011. Prior to his employment with Wal-Mart, he held several leadership roles at the Black | ||||||||
Corporation. ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of General Motors Corporation •Member of the Board of Directors of KKR & Co. Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of the Ladies Professional Golf Association | ||||||||
Thomas M. Schoewe Former Executive Vice President and Chief Financial Officer, Wal-Mart Stores, Inc. Age: 69 Director since: August 2011 Committee membership: Compensation Committee (Chair), Policy Committee | ||||||||
2022 Proxy Statement | 21 |
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Mr. James S. Turley served as Chairman and Chief Executive Officer of Ernst & Young from 2001 until his retirement in 2013. Mr. Turley joined Ernst & Young in 1977 and held various positions | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
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•Independent Chair of the Board of Directors of •Member of the Board of SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of the Boy Scouts of America •Member of the Board of Directors of Kohler Co. •Member of the Board of Directors of St. Louis Trust Company •Non-Executive Chair of Sita Capital Partners LLP | |||||
James S. Turley Former Chairman and Age: 66 Director since: February 2015 Committee membership: Audit and Risk Committee, Governance Committee | |||||
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General Mark A. Welsh III has been the Dean of the Bush School of Government and Public Service at Texas A&M University since August 2016. Prior to his current position, General Welsh served as Chief of Staff of the United States Air Force, the senior uniformed Air Force officer responsible for the organization, training and equipping of | ||||||||
ATTRIBUTES, SKILLS AND QUALIFICATIONS | ||||||||
SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Managers of Peak NanoSystems, LLC | ||||||||
Mark A. Welsh III Dean of the Bush School of Government and Public Service, Texas A&M University; General, United States Air Force (Ret.); Former Chief of Staff, United States Air Force Age: 68 Director since: December 2016 Committee membership: Audit and Risk Committee, Policy Committee | ||||||||
22 | Northrop Grumman |
Board Changes since 2015 | Diversity of newly added Directors | Skills of newly added Directors | |||||||||||||||
7 new directors have been added to the Board | 2 new directors are racially/ ethnically diverse | ![]() | senior leadership expertise | ||||||||||||||
5 directors have left the Board | 3 new directors are female | ![]() | operations and logistics | ||||||||||||||
For more details on our Board’s robust self-evaluation process, see page 41. | ![]() | senior military experience | |||||||||||||||
![]() | cyber expertise | ||||||||||||||||
66.6 YEARS n2 50's n5 60's n6 70's | AVERAGE TENURE 7.9 YEARS n4 <5 years n4 6-10 years n5 >10 years | ||||||||||
GENDER 4/13 n4Female n9Male | RACIAL/ ETHNIC DIVERSITY 3/13 n3 Racially/Ethnically Diverse n10 White/Caucasian | ||||||||||
INDEPENDENT 12/13 n12 Independent n1 Non-Independent |
2022 Proxy Statement | 23 |
1 | ESTABLISH NOMINEE CRITERIA | The Governance Committee is responsible for establishing the criteria for Board membership. In nominating directors, the Governance Committee bears in mind that the foremost responsibility of a director is to represent the long-term interests of our shareholders as a whole. | |||||||||
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2 | REVIEW OF CANDIDATE’S HISTORY | The activities and associations of candidates are reviewed for any legal impediment, conflict of interest or other consideration that might prevent or interfere with service on our Board. | |||||||||
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3 | CANDIDATE EVALUATION | In evaluating candidates, the Governance Committee considers: •the personal integrity and the professional reputation of the individual; •the education, professional background and particular skills and experience most beneficial to service on our Board; •how the nominee brings diversity, experience and skills valuable to the Company and Board at the time; and •whether a director candidate is willing to submit to and obtain a background check necessary for obtaining and retaining the required top secret security clearance. The Governance Committee evaluates potential director candidates on the basis of the candidate’s background, qualifications and experience. The Governance Committee carefully considers whether each potential candidate would be able to fulfill his or her duties to the Company consistent with Delaware law and the Company’s governing documents, including the Principles of Corporate Governance and security requirements. | |||||||||
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4 | RECOMMENDATION FOR ELECTION | The Governance Committee recommends to the full Board nominees for election. | |||||||||
24 | Northrop Grumman |
2022 Proxy Statement | 25 |
![]() | Values | ![]() | Principles of Corporate Governance | ![]() | Standards of Business Conduct | ||||||||||||||||||||||||
Our values provide the foundation for our culture and success: •We •We Do What We Promise - we own the delivery of results, focused on quality outcomes; •We Commit To Shared Success -we work together to •We Pioneer - with fierce curiosity, dedication and innovation, we seek to | Our | Our Standards of Business Conduct reflect and reinforce our commitment to our core values. They apply to our directors, officers and employees. We also require our suppliers to meet similar standards through our Standards of Business Conduct for Suppliers and Other Trading Partners. Our Standards of Business Conduct and our Standards of Business Conduct for Suppliers and Other Trading Partners are available at |
Northrop Grumman |
![]() | Strategy and Risk | ![]() | Culture and Human Capital | ![]() | Governance | ||||||||||||||||||
Oversee our long-term business strategies, operations and performance ______ Review and approve significant corporate actions ______ Oversee management of each of our major risks and the enterprise risk management processes overall ______ Oversee effective management of cyber and other security risks | Ensure a strong culture ______ Oversee human capital strategy ______ Execute robust succession planning, including selecting the Chief Executive Officer, and electing officers of the Company ______ Oversee our diversity, equity and inclusion programs ______ Review and approve executive compensation | Ensure an effective corporate governance practice ______ Oversee our ethics and compliance programs ______ Review and enhance Board performance ______ Elect directors to fill vacant positions between Annual Meetings ______ Oversee our commitment to ESG/sustainability ______ Provide advice to management |
2022 Proxy Statement | 27 |
BOARD OF DIRECTORS | ||||||||
•The full Board has ultimate responsibility for the oversight of risk, and receives updates from each of the committees, as well as periodic reports from management addressing various risks, including those related to financial and other performance, cybersecurity, climate, human capital and culture. •The Board and its Committees provide oversight of the Company’s risk management processes, including the Enterprise Risk Management Council (ERMC). | ||||||||
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AUDIT AND RISK COMMITTEE | COMPENSATION COMMITTEE | |||||||
•Focuses on risks tied most directly to our financial performance, and those related to natural disasters and security, including cybersecurity. •Responsible for assisting the Board in its oversight of enterprise risk management overall. •Receives multiple regular reports, including (1)from the Chief Financial Officer and members of the Finance Department addressing the nature of the material financial risks the Company faces and how the Company responds to and mitigates these risks; (2)from our Controller and Chief Accounting Officer, on our internal controls and SEC filings; (3)from our Vice President, Internal Audit addressing the internal audits; (4)from our independent auditors on their review of our internal controls over financial reporting; (5)from our General Counsel on legal and other compliance risks and how the Company is addressing and mitigating those risks; (6)from our Chief Compliance Officer on the Company’s compliance program overall; (7)from the Vice President, Global Corporate Responsibility on matters communicated through the Company’s OpenLine; (8)from the Company’s Vice President and Chief Information Security Officer addressing information security and cybersecurity matters, at least four times a year; and (9)from the Company’s Treasurer, addressing the Company’s insurance program, including coverage with respect to property and casualty, information security and cybersecurity, among others. | •Reviews at least annually a risk assessment of the Company’s compensation programs and, together with its independent compensation consultant, evaluates the mix of at-risk compensation linked to stock appreciation. •Reviews the Company’s diversity, equity and inclusion program and oversees management of the Company's human capital risk. | |||||||
POLICY COMMITTEE | ||||||||
•Assists the Board in identifying and evaluating global security, political, budgetary and technological issues and trends that could impact the Company’s business. •Reviews the Company’s external relations and receives regular reports from the Vice President, Global Corporate Responsibility on the Company’s ethics and corporate responsibility programs. •Reviews and oversees the Company’s commitment to environmental sustainability, climate change and human rights. | ||||||||
GOVERNANCE COMMITTEE | ||||||||
•Regularly reviews the Company’s policies and practices on issues of corporate governance, and considers issues of succession and composition of the Board, recommending proposed changes to the full Board for approval. •Oversees and reviews the Company’s management of its governance-related risks, including risks related to corporate culture. •Oversees the roles and responsibilities of the Committees and Committee assignments. | ||||||||
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ENTERPRISE RISK MANAGEMENT COUNCIL (ERMC) | ||||||||
•The ERMC is comprised of all members of the Executive Leadership Team, the Chief Accounting Officer, Chief Compliance Officer, Corporate Secretary, Chief Sustainability Officer, Vice President, Internal Audit and Treasurer; meets at least twice per year. •The Chief Technology Officer and Vice President, Supply Chain also attend each ERMC meeting. •The ERMC seeks to ensure that the Company has identified the most significant risks and implemented effective mitigation plans for each. •The General Counsel and Chief Financial Officer provide an update at least annually to the Audit and Risk Committee on the deliberations of the ERMC and significant areas of concern. | ||||||||
Northrop Grumman |
2022 Proxy Statement | 29 |
ROLES AND RESPONSIBILITIES Assist the Board in overseeing | |||||
•appointing, retaining, overseeing, evaluating and terminating, if necessary, the independent auditor •reviewing and pre-approving audit and permitted non-audit services and related fees for the independent auditor •reviewing and discussing with the independent auditor any critical audit matters identified by the | |||||
COMMITTEE MEMBERS: William H. Hernandez* (chair) Marianne C. Brown Ann M. Fudge Graham N. Robinson James S. Turley* Mark A. Welsh III Number of | |||||
* Qualifies as Audit Committee Financial Expert; all members are financially literate. |
30 | Northrop Grumman |
ROLES AND RESPONSIBILITIES Assist the Board in overseeing the | ||||||||
•reviewing and monitoring the Company’s diversity, equity and inclusion programs •conducting an annual evaluation of the compensation consultant and reporting results of the evaluation to the Board •producing an annual report on executive compensation for inclusion in the •establishing stock ownership guidelines and reviewing ownership levels on an annual basis | ||||||||
Compensation Committee COMMITTEE MEMBERS: Thomas M. Schoewe (chair) David P. Abney Donald E. Felsinger Madeleine A. Kleiner Karl J. Krapek Gary Roughead |
31 |
ROLES AND RESPONSIBILITIES Assist the Board in overseeing the | ||||||||
•meeting with shareholders and | ||||||||
Governance Committee COMMITTEE MEMBERS: Madeleine A. Kleiner (chair) Marianne C. Brown Donald E. Felsinger Ann M. Fudge Karl J. Krapek James S. Turley Number of meetings in 2021: 5 |
ROLES AND RESPONSIBILITIES Assist the Board in overseeing policy, government relations and corporate responsibility, including by: •identifying and evaluating global security, political, budgetary, technological and other issues and trends that could impact the Company’s business activities and performance •reviewing and providing oversight of the Company’s programs regarding environmental sustainability, climate change, human rights, and health and safety •reviewing and providing oversight over the Company’s ethics and corporate social responsibility policies and programs •reviewing the Company’s public relations strategy •reviewing and monitoring the Company’s government relations strategy and political action committee policies •reviewing the Company’s community relations and charitable activities | ||||||||
Policy Committee COMMITTEE MEMBERS: Gary Roughead (chair) Graham N. Robinson Thomas M. Schoewe Mark A. Welsh III Number of meetings in | ||||||||
32 | Northrop Grumman |
![]() | 98% AVERAGE ATTENDANCE In 2021, the Board held 10 meetings. Each incumbent director serving in 2021 attended 95% or more of the total number of Board and committee meetings he or she was eligible to attend. On average, each meeting averaged 98% of directors attending the meeting. | ![]() | 100% SHAREHOLDER MEETING ATTENDANCE Board members are expected to attend each annual meeting, except where the failure to attend is due to unavoidable circumstances. All of our then-serving directors who were nominees for election attended the 2021 Annual Meeting. |
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Director Independence |
Northrop Grumman |
35 |
Northrop Grumman |
37 |
![]() | Dow Jones Sustainability North America Index for the sixth consecutive year and _____ an AA rating from MSCI for environmental, social and governance management and performance _____ achieved a perfect score on the CPA-Zicklin Index of Corporate Political Disclosure and Accountability _____ named as one of 3BL Media’s 100 Best Corporate Citizens _____ one of DiversityInc’s Top 50 Companies for Diversity for the 12th year in a row as well as a top company for people with disabilities, Native American/Pacific Islander employees, LGBTQ+ employees, employee resource groups, mentoring, executive diversity councils, philanthropy and ESG _____ named as one of Equileap’s top 25 companies on the S&P 500 for gender equality | named as one of the top 10 industry supporters for engineering programs at HBCUs by Career Communications Group, Inc. _____ received the highest ranking for the seventh year in a row on the Disability Equality Index and named a “Best Place to Work For Disability Inclusion” _____ achieved a perfect score on the Corporate Equality Index and designated a “Best Place to Work for LGBTQ+ Equality” _____ named as one of the 2021 Best of the Best Top Supplier Diversity Programs and Top Veteran-Friendly Employers by U.S. Veterans magazine _____ a leadership score of A- in CDP’s 2021 climate change program for the 10th consecutive year |
38 | Northrop Grumman |
2022 Proxy Statement | 39 |
NEW DIRECTOR ORIENTATION | •All new directors to the Board •All directors receive regular in-person training regarding our Company policies and procedures, and broad exposure to our operations and the teams. Members of senior management review with the Board the operating plan for each of our business sectors and the Company as a whole. | ||||
CONTINUING DIRECTOR EDUCATION AND SITE VISITS | •Directors attend outside director and other continuing education programs to assist them in staying current on developments in corporate governance, our industry, the global environment and issues critical to the operation of public company boards. •The Board also conducts periodic site visits to our facilities as part of its regularly scheduled Board meetings, and during “Sector Days,” when our directors visit our business operations to meet with local employees and management. These visits allow directors to interact with a broader group of our executives and employees and gain firsthand insights into our operations. | ||||
Director Overboarding Policy | ||
Directors may not serve on more than three other boards of publicly traded companies in addition to our Board | ||
40 | Northrop Grumman |
EVALUATION | The self-assessment of the full Board is overseen by the Governance Committee. As part of this assessment, the Lead Independent Director and Chair of the Governance Committee facilitate a broad discussion of Board performance, held in executive session. Among other topics, the Board considers: •the Board’s effectiveness in evaluating and monitoring the Company’s business plan, long-term strategy and risks; •whether strategic and critical issues are being addressed by the Board in a timely manner; •whether the Board’s expectations and concerns are openly communicated to and discussed with the Chief Executive Officer; •whether there is adequate contact between the Board and members of senior management; •whether the directors collectively operate effectively as a Board; •whether the individual directors have the appropriate mix of attributes and skills to fulfill their duties as directors of the Company; •whether there are adequate opportunities to raise questions and comments on issues, both inside and outside of Board meetings; •whether the Board has focused adequately on succession planning; and •whether the Board is adequately responsive to shareholder communication. Following this review, the Board discusses the results and identifies opportunities for improvement, including any necessary steps to implement such improvements. | ||||
COMMITTEE EVALUATION | Each of the Committees also conducts an annual self-assessment. During an executive session led by the Committee chair, each Committee discusses, among other topics: whether the quality of participation and discussion at the Committee meetings is effective in facilitating the Committee’s obligations under its charter; the opportunity to engage in strategic discussion; and whether the Committee is covering the right topics in the right amount of detail. Following this discussion, the Committee develops and implements a list of action items, as appropriate. | ||||
INDIVIDUAL DIRECTOR EVALUATION | Also as part of the annual self-assessment process, each non-employee director completes an individual director evaluation for each of the other non-employee directors. These evaluations address various aspects of how each director contributes to the Board and serves our shareholders. The evaluation process is overseen by an independent third-party who compiles the results and provides them directly to the Chair, the Lead Independent Director and the Chair of the Governance Committee. These assessments include, among other topics, each non-employee director’s: •understanding of the Company’s overall business and risk profile and its significant financial opportunities and plans; •engagement during meetings and other Board functions; •analysis of benefits and risks of courses of action considered by the Board; and •appropriate respect for the views of other Board members. The Lead Independent Director or the Chair of the Governance Committee meets with each non-employee director individually to discuss the results of his or her assessment, including comments provided by other non-employee directors, and opportunities for growth. | ||||
SELF-ASSESSMENT FEEDBACK | The Lead Independent Director or the Chair of the Governance Committee reports generally on the overall results of these discussions to the Board in executive session. These evaluations also assist the Governance Committee with its recommendation for directors to be renominated for election to the Board of Directors. | ||||
2022 Proxy Statement | 41 |
Northrop Grumman |
Name | Amount ($) (1/1/21 - 5/18/21) | Amount ($) (5/19/21 - 12/31/21) | ||||||
Annual Cash Retainer | 130,000 | 135,000 | ||||||
Lead Independent Director Retainer | 35,000 | 50,000 | ||||||
Committee Chair Retainer | 20,000 | 25,000 | ||||||
Audit and Risk Committee Retainer | 10,000 | 15,000 | ||||||
Annual Equity Grant(1) | 160,000 | 170,000 |
Current Non-Employee Director Fees | Current Additional Annual Fees | ||||
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Compensation Element | Amount ($) (1/1/18 - 5/15/18) | Amount ($) (5/16/18 - 12/31/18) | ||||
Annual Cash Retainer | 122,500 | 127,500 | ||||
Lead Independent Director Retainer | 35,000 | 35,000 | ||||
Audit Committee Retainer | 10,000 | 10,000 | ||||
Audit Committee Chair Retainer | 20,000 | 20,000 | ||||
Compensation Committee Chair Retainer | 20,000 | 20,000 | ||||
Governance Committee Chair Retainer | 15,000 | 20,000 | ||||
Policy Committee Chair Retainer | 7,500 | 20,000 | ||||
Annual Equity Grant (1) | 150,000 | 155,000 | ||||
(1) The annual equity grant is deferred into a stock unit account pursuant to the 2011 Long-Term Incentive Stock Plan (2011 Plan) as described below. The Northrop Grumman Equity Grant Program for Non-Employee Directors (Director Program) sets forth the terms and conditions of the equity awards granted to non-employee directors under the 2011 Plan. |
2022 Proxy Statement | 43 |
Non-employee directors are required to own common stock of the Company in an amount equal to five times the annual cash retainer, with such ownership to be achieved within five years of the director’s election to the Board. Deferred stock units and Company stock owned outright by the director count towards this requirement. Anti-Hedging and Pledging Policy Company policy prohibits our directors, NEOs, other elected and appointed officers, designated employees who are subject to specific preclearance procedures under the Company’s insider trading policy and any other employees who receive performance-based compensation, from engaging in hedging, pledging or other specified transactions. Specifically, this policy prohibits such persons from: engaging in hedging or derivative transactions, such as “cashless” collars, forward contracts, equity swaps or other similar or related transactions; entering into margin transactions involving Company stock; pledging Company securities as collateral for loans or other transactions; trading in puts, calls, options, warrants or other similar derivative instruments involving Company securities; or engaging in short sales of Company securities. None of the shares of Company common stock held by our directors are pledged or subject to any hedging transaction. |
Northrop Grumman |
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||||||||
David P. Abney | 136,925 | 170,000 | 15 | 306,940 | ||||||||||
Marianne C. Brown | 146,150 | 170,000 | 12,227 | 328,377 | ||||||||||
Donald E. Felsinger | 177,300 | 170,000 | 41,662 | 388,962 | ||||||||||
Ann M. Fudge | 146,150 | 170,000 | 11,191 | 327,341 | ||||||||||
Bruce S. Gordon(4) | 50,050 | — | 14,082 | 64,132 | ||||||||||
William H. Hernandez | 169,225 | 170,000 | 7,620 | 346,845 | ||||||||||
Madeleine A. Kleiner | 156,150 | 170,000 | 22,652 | 348,802 | ||||||||||
Karl J. Krapek | 133,075 | 170,000 | 31,718 | 334,793 | ||||||||||
Graham N. Robinson | 58,126 | 130,900 | 2 | 189,028 | ||||||||||
Gary Roughead | 156,150 | 170,000 | 15,578 | 341,728 | ||||||||||
Thomas M. Schoewe | 156,150 | 170,000 | 6,896 | 333,046 | ||||||||||
James S. Turley | 146,150 | 170,000 | 1,280 | 317,430 | ||||||||||
Mark A. Welsh III | 146,150 | 170,000 | 733 | 316,883 |
Name | Fees Earned or Paid in Cash (1) ($) | Stock Awards (2) ($) | All Other Compensation (3) ($) | Total ($) | |||||
Marianne C. Brown | 129,400 | 155,000 | 18,825 | 303,225 | |||||
Victor H. Fazio (4) | 50,350 | — | 4,621 | 54,971 | |||||
Donald E. Felsinger | 160,600 | 155,000 | 36,576 | 352,176 | |||||
Ann M. Fudge | 135,600 | 155,000 | 29,379 | 319,979 | |||||
Bruce S. Gordon | 128,450 | 155,000 | 39,875 | 323,325 | |||||
William H. Hernandez | 155,600 | 155,000 | 10,799 | 321,399 | |||||
Madeleine A. Kleiner | 153,700 | 155,000 | 19,475 | 328,175 | |||||
Karl J. Krapek | 133,200 | 155,000 | 22,356 | 310,556 | |||||
Gary Roughead | 138,000 | 155,000 | 2,279 | 295,279 | |||||
Thomas M. Schoewe | 138,000 | 155,000 | 2,994 | 295,994 | |||||
James S. Turley | 135,600 | 155,000 | 16,871 | 307,471 | |||||
Mark A. Welsh III | 135,600 | 155,000 | 79 | 290,679 |
Name | Automatic Stock Units | Elective Stock Units | Total | ||||||||
David P. Abney | 465 | — | 465 | ||||||||
Marianne C. Brown | 4,468 | 2,934 | 7,402 | ||||||||
Donald E. Felsinger | 23,089 | 16,218 | 39,307 | ||||||||
Ann M. Fudge | 3,464 | 508 | 3,972 | ||||||||
Bruce S. Gordon(1) | — | — | — | ||||||||
William H. Hernandez | 6,178 | — | 6,178 | ||||||||
Madeleine A. Kleiner | 18,454 | — | 18,454 | ||||||||
Karl J. Krapek | 17,841 | 4,581 | 22,422 | ||||||||
Graham N. Robinson | 361 | — | 361 | ||||||||
Gary Roughead | 9,590 | — | 9,590 | ||||||||
Thomas M. Schoewe | 10,869 | — | 10,869 | ||||||||
James S. Turley | 3,883 | — | 3,883 | ||||||||
Mark A. Welsh III | 3,013 | — | 3,013 |
Name | Automatic Stock Units | Elective Stock Units | Total | ||||
Marianne C. Brown | 2,774 | 1,571 | 4,345 | ||||
Victor H. Fazio (1) | — | — | — | ||||
Donald E. Felsinger | 20,470 | 14,890 | 35,360 | ||||
Ann M. Fudge | 1,820 | 483 | 2,303 | ||||
Bruce S. Gordon | 17,067 | — | 17,067 | ||||
William H. Hernandez | 4,400 | — | 4,400 | ||||
Madeleine A. Kleiner | 16,065 | — | 16,065 | ||||
Karl J. Krapek | 17,110 | 5,291 | 22,401 | ||||
Gary Roughead | 7,642 | — | 7,642 | ||||
Thomas M. Schoewe | 8,857 | — | 8,857 | ||||
James S. Turley | 2,843 | — | 2,843 | ||||
Mark A. Welsh III | 1,391 | — | 1,391 | ||||
(1) Mr. Fazio did not stand for reelection at the 2018 Annual Meeting. All stock units were paid out to Mr. Fazio in the form of common stock after his retirement from the Board in May 2018. |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Class | ||||
State Street Corporation One Lincoln Street, Boston, MA 02111 | 17,679,908 | (1) | 10.2% | |||
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 13,976,016 | (2) | 8.0% | |||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 11,613,939 | (3) | 6.7% | |||
T. Rowe Price Associates, Inc. 100 E. Pratt Street, Baltimore, MD 21202 | 11,458,250 | (4) | 6.6% | |||
Capital International Investors 11100 Santa Monica Boulevard, 16th Floor, Los Angeles, CA 90025 | 10,452,149 | (5) | 6.0% |
Shares of Common Stock Beneficially Owned | Share Equivalents (1) | Total | ||||||
Non-Employee Directors | ||||||||
Marianne C. Brown | — | 4,364 | 4,364 | |||||
Donald E. Felsinger | — | 35,508 | 35,508 | |||||
Ann M. Fudge | 93 | 2,312 | 2,405 | |||||
Bruce S. Gordon | — | 17,138 | 17,138 | |||||
William H. Hernandez | 1,000 | 4,418 | 5,418 | |||||
Madeleine A. Kleiner | 971 | 16,132 | 17,103 | |||||
Karl J. Krapek | 4,856 | 21,614 | 26,470 | |||||
Gary Roughead | — | 7,674 | 7,674 | |||||
Thomas M. Schoewe | 3,160 | 8,894 | 12,054 | |||||
James S. Turley | — | 2,855 | 2,855 | |||||
Mark A. Welsh III | — | 1,397 | 1,397 | |||||
Named Executive Officers | ||||||||
Wesley G. Bush (2) | 296,286 | (3) | 5,661 | 301,947 | ||||
Kathy J. Warden (4) | 99,732 | — | 99,732 | |||||
Kenneth L. Bedingfield | 40,005 | — | 40,005 | |||||
Mark A. Caylor | 15,879 | 35 | 15,914 | |||||
Blake L. Larson | 3,596 | — | 3,596 | |||||
Other Executive Officers | 159,537 | 15,788 | 175,325 | |||||
All Directors and Executive Officers as a Group (27 persons) | 625,115 | 143,790 | 768,905 | (5) |
Plan category | Number of shares of common stock to be issued upon exercise of outstanding options and payout of outstanding awards (1) (#) | Weighted-average exercise price of outstanding options (2) ($) | Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) (3) (#) | ||||
Equity compensation plans approved by shareholders | 1,723,560 | N/A | 5,927,560 | ||||
Equity compensation plans not approved by shareholders | N/A | N/A | N/A | ||||
Total | 1,723,560 | N/A | 5,927,560 | (4) |
![]() | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE |
47 |
![]() | ![]() | David F. Keffer Corporate Vice President and Chief Financial Officer | ![]() | Mark A. Caylor Corporate Vice President and President, Mission Systems | |||||||||||||||
![]() | Blake E. Larson Former Corporate Vice President and President, Space Systems | ![]() | Mary D. Petryszyn Corporate Vice President and President, Defense Systems |
Compensation Philosophy and Objectives |
![]() | Pay for Performance | ||||
•Our incentive plans are based on peer performance and benchmarks, the market, •Above-target incentive payouts are awarded when we outperform our peers, market and LRSP benchmarks. | |||||
![]() | Leadership Recruitment, Retention and Succession | ||||
•Compensation is designed to be competitive | |||||
•Programs are | |||||
![]() | Sustainable Performance •Our | ||||
48 | Northrop Grumman |
![]() | Alignment with Shareholder Interests | ||||
•Our compensation structure places an appropriate amount of compensation at risk based on annual and long-term results. | |||||
•At-risk compensation is based on financial and non-financial performance measures and relative | |||||
•A significant portion of compensation is delivered in equity, the vesting and value of which provides alignment with shareholder returns. | |||||
•Stock ownership guidelines, holding requirements for equity awards and our recoupment policy further align executive and shareholder interests. | |||||
![]() | Benchmarking • | ||||
•Benchmarks are set using a hybrid approach of peer, market and LRSP data. •We seek to outperform our peers (a group of top global defense companies identified as the Performance Peer Group on page | |||||
•We use a Target Industry Peer Group (TIPG) (identified on page | |||||
2022 Proxy Statement | 49 |
Compensation Element | CEO | Other NEOs (Average) | Purpose | Key Characteristics | ||||||||||
Fixed | 9% | 18% | ||||||||||||
Base Salary | ![]() | ![]() | Compensate equitably and competitively | •Determined by level of responsibility, competitive market pay assessment and individual performance | ||||||||||
Variable | 91% | 82% | ||||||||||||
Annual Incentive Plan (AIP) | ![]() | ![]() | Motivate and reward achievement of annual business objectives | •Financial Metrics •35% Adjusted Cash Flow from Operations Conversion* •35% Segment Operating Income* Growth •15% Pension-adjusted Net Income* Growth •15% Pension-adjusted Operating Margin (OM) Rate* •Non-financial metrics | ||||||||||
Long-Term Incentive Plan (LTIP) Restricted Stock Rights (RSRs) | ![]() | ![]() | Tie our executive officers’ priorities to shareholders and retain executive talent | •30% of annual LTIP grant •Three-year cliff vesting | ||||||||||
LTIP Restricted Performance Stock Rights (RPSRs) | ![]() | ![]() | Link the interests of our executive officers to shareholders, motivate and reward achievement of long-term strategic goals and retain executive talent | •70% of annual LTIP grant •Three-year performance period •Equally weighted metrics of relative TSR, Adjusted Cumulative Free Cash Flow* (Adjusted Cumulative FCF*) and Operating Return on Net Assets* (Operating RONA |
50 | Northrop Grumman |
Achieved robust backlog of over $76B | Sales of $35.7B Organic Sales* increased ~3%to $35.5B | |||||||
Diluted EPS of $43.54 Transaction-adjusted EPS* increased ~8% to $25.63 | Over $4.7B returned to Shareholders via Dividends & Buybacks | |||||||
Earnings Per Share | 3-Year Total Shareholder Return | |||||||
![]() | ![]() |
The Company annually asks shareholders to approve, on an advisory basis, the compensation paid to our NEOs. We regularly engage with our shareholders to address their questions regarding executive compensation and emphasize our philosophy and competitive pay practices. The Compensation Committee annually reviews and discusses the results of the say-on-pay vote. In 2021, our executive compensation programs continued to receive strong support from shareholders with 96% approval at our 2021 Annual Meeting of Shareholders. Based on its review and feedback from shareholder engagement, the Compensation Committee determined that our programs are effective and aligned with shareholder interests, and no substantive changes were required. | ![]() % of votes in favor of Say-on-Pay Proposal in 2021 |
2022 Proxy Statement | 51 |
What We Do | What We Don't Do | |||||||||||||||||||
Pay for Performance | Annual Peer Group Review | Long-Term Incentives Focused on Performance | No Individual Change in Control Agreements | |||||||||||||||||
Compensation Elements Benchmarked at Market Median | Above-Target Annual Incentive Payouts Only When We Outperform Our Peer Benchmarks | Independent Consultant Reports Directly to Compensation Committee | No Employment Contracts for Chief Executive Officer (CEO) or Other NEOs | |||||||||||||||||
Recoupment Policy on Cash and Equity Incentive Compensation Payments | Dividends Paid Upon Vesting of Equity Awards | Stock Ownership Guidelines and Stock Holding Requirements | No Excise Tax Gross-ups for Payments Received Upon Termination After a Change in Control | |||||||||||||||||
LTIP Double Trigger Provisions for Change in Control | Regular Risk | Cap on Annual Bonuses and RPSR Payouts | No Hedging or Pledging of Company Stock |
Assess | Establish | ||||||||||
• •Market data with Independent Compensation Consultant •Alignment of our financial and non-financial performance metrics with our overall strategy •Annual independent risk review of compensation structure | •Performance metrics for AIP and RPSRs •Relevant compensation and performance peer groups •Annual salary, target AIP and target LTIP awards | ||||||||||
Rigorous Committee Oversight | |||||||||||
Approve | Monitor | ||||||||||
•AIP and RPSR performance metric results •Final total compensation for NEOs (recommend CEO compensation to independent board members for approval) | •Progress against AIP and RPSR performance metrics •NEO performance •Company policies and practices with respect to human capital risks |
52 | Northrop Grumman |
COMPENSATION COMMITTEE | •Oversees our compensation policies, incentive and equity compensation plans and approves payments or grants under these plans and the compensation for the elected officers, other than the CEO. •Recommends the base, bonus, and equity compensation for our CEO to the independent directors of the Board for approval. •Reviews market data and other input from its Independent Compensation Consultant. •Reviews and approves incentive goals and objectives (CEO goals and objectives are reviewed and approved by the independent directors). •Evaluates and approves executive benefit and perquisite programs. •Evaluates the competitiveness of each elected officer’s total compensation package. •Reviews and monitors the results of the Company’s diversity, equity and inclusion programs. •Oversees the Company's management of its human capital risk. •Conducts an annual evaluation of the Independent Compensation Consultant. •Evaluates the performance of elected officers against their respective goals and objectives. •Reviews and discusses with management the CD&A and provides a Compensation Committee | ||||
INDEPENDENT DIRECTORS | •Evaluate the performance and determine the compensation | ||||
INDEPENDENT COMPENSATION CONSULTANT (Frederic W. Cook & Co.) | •Reports directly to the Compensation Committee. •Regularly participates in meetings of the Compensation Committee and communicates with the Compensation Committee Chair between meetings as needed. •Participates in executive session with the Compensation Committee. •Provides proactive advice to the Compensation Committee on best practices for Board governance of executive compensation, •Provides a review of market data and advises the Compensation Committee on the levels and structure of our executive compensation policies and procedures, including compensation matters for NEOs. •Reviews and advises the Compensation Committee on our total compensation philosophy, peer groups and target competitive positioning. •Identifies market trends and practices and advises the Compensation Committee on program design implications. •Serves as a resource to the Compensation Committee Chair on setting agenda items for Compensation Committee meetings and researches special projects. •Receives compensation only for engagement with the Compensation Committee and does not receive any fees or income from the Company. | ||||
MANAGEMENT (CEO with assistance from the Corporate Vice President and Chief Human Resources Officer and other Company employees) | • | ||||
• •Provides recommendations to |
53 |
BAE Systems | ||||||||
General Dynamics |
Lockheed Martin Corporation | ||||||||
The Boeing Company | Raytheon |
BAE Systems | L3Harris Technologies, Inc. | Raytheon Technologies Corporation(2) | ||||||
The Boeing Company | Leidos Holdings, Inc. | Thales Group | ||||||
Booz Allen Hamilton Holding Corporation(1) | Leonardo | |||||||
General Dynamics Corporation |
Northrop Grumman |
3M Company | Johnson Controls International | ||||
The Boeing Company(1) | |||||
Caterpillar, Inc. | Lockheed Martin Corporation(1) | ||||
Eaton Corporation | |||||
Emerson Electric Company | Raytheon Technologies Corporation(1) | ||||
General Dynamics Corporation(1) | Textron, Inc. | ||||
Honeywell International, Inc.(1) | |||||
55 |
Name | 2021 Base Salary | 2020 Base Salary | Increase to Base Salary | ||||||||
Kathy J. Warden | $ | 1,600,000 | $ | 1,545,000 | 3.6 | % | |||||
David F. Keffer | $ | 800,000 | $ | 750,000 | 6.7 | % | |||||
Mark A. Caylor | $ | 855,000 | $ | 855,000 | 0.0 | % | |||||
Blake E. Larson | $ | 835,000 | $ | 811,000 | 3.0 | % | |||||
Mary D. Petryszyn | $ | 750,000 | $ | 725,000 | 3.4 | % |
Name | Target Bonus (% of Base Salary) | ||||
Kathy J. Warden | 180 | % | |||
David F. Keffer | 100 | % | |||
Mark A. Caylor | 100 | % | |||
Blake E. Larson | 100 | % | |||
Mary D. Petryszyn | 100 | % |
56 | Northrop Grumman |
X | = | |||||||||||||
BASE SALARY | TARGET PAYOUT % | TARGET BONUS | ||||||||||||
X | = | |||||||||||||
TARGET BONUS | COMPANY PERFORMANCE FACTOR | |||||||||||||
FINAL BONUS AWARD | |||||
Financial Metrics | How Calculated | Rationale | ||||||
ADJUSTED CASH FLOW FROM OPERATIONS CONVERSION* (35%) | Calculated as Adjusted cash provided by operating activities* divided by earnings before interest, taxes, depreciation and amortization, excluding mark-to-market (MTM) expense and the MTM-related deferred state tax benefit (Adjusted EBITDA*). | Emphasizes the importance of converting earnings into cash and enables management to make capital investment decisions that support long-term profitable growth without impacting performance-based incentive compensation. | ||||||
SEGMENT OPERATING INCOME* GROWTH (35%) | Calculated as segment operating income* multiplied by an average of peer-based growth rates. | Incentivizes management to focus on profitable growth and enables management to evaluate the financial performance and operational trends of our sectors. | ||||||
PENSION-ADJUSTED NET INCOME* GROWTH (15%) | Calculated as net income before the after-tax impact of the total net FAS/CAS pension adjustment multiplied by a market-based growth rate. | Incentivizes management to achieve relative long-term profitable growth greater than a projected industry growth rate. | ||||||
PENSION-ADJUSTED OM RATE* (15%) | Calculated as OM rate (operating margin divided by sales) before FAS/CAS operating adjustment. | Establishes high program performance expectations for the Company and incentivizes sound core operational business decisions. | ||||||
2022 Proxy Statement | 57 |
![]() | In addition to the financial goals, various non-financial goals are used to align our objectives with our stakeholders. Performance against these non-financial metrics can result only in a downward adjustment to the financial metric score. | ||||
Non-Financial Metric | How Measured | ||||||||||
People | ![]() | Representation of females and people of color in all management level positions with respect to internal and external benchmarks. | |||||||||
DIVERSITY | |||||||||||
![]() | Perform at or above the Global High Performance (GHP) Norm, a Willis Towers Watson (WTW) index, with a focus on inclusion and engagement. Results are derived from the annual employee survey with a "percent favorable response" measurement scale. | ||||||||||
EMPLOYEE EXPERIENCE | |||||||||||
![]() | Total case rate, defined as the number of Occupational Safety & Health Administration recordable injuries as well as lost work day rate associated with those injuries. | ||||||||||
SAFETY | |||||||||||
Environment | ![]() | Reductions in absolute greenhouse gas emissions and potable water consumption, and improvement in solid waste diversion (i.e., waste diverted from landfill disposal). | |||||||||
ENVIRONMENTAL SUSTAINABILITY | |||||||||||
Customer | ![]() | Program-specific objectives, including defect rates, process quality, supplier quality, planning quality or other appropriate criteria for program type and phase. | |||||||||
QUALITY | |||||||||||
![]() | Customer feedback, including customer-generated performance scores, award fees and verbal and written feedback. | ||||||||||
CUSTOMER SATISFACTION | |||||||||||
2022 NON-FINANCIAL METRIC CHANGES In February 2022, the Compensation Committee approved changes to the non-financial metrics in the AIP design. The Company revised the metric from a negative-only modifier by embedding it in our core metrics to reflect our continued focus on ESG and to bring greater alignment for employees, shareholders and other stakeholders. The non-financial metrics account for 10% of the overall 2022 annual incentive plan goals. | |||||||||||
58 | Northrop Grumman |
Metric/Goal | Weighting | Performance to Achieve Target Payout | 2021 Performance | 2021 Financial Score | ||||||||||
Adjusted Cash Flow from Operations Conversion* | 35% | 69.0% | 69.0% | 35% | ||||||||||
Segment Operating Income* Growth | 35% | $4.15B | $4.22B | 35% | ||||||||||
Pension-adjusted Net Income* Growth | 15% | $2.77B | $3.05B | 30% | ||||||||||
Pension-adjusted OM Rate* | 15% | 10.6% | 11.5% | 30% | ||||||||||
130% |
2022 Proxy Statement | 59 |
![]() | We met or exceeded our employee diversity goals in 2021, and since 2010, have made significant progress towards our long-term goals. | ||||
DIVERSITY | |||||
![]() | Met the 2021 target goals against the GHP norm. We achieved the designation of a High Performing Company by WTW, a selective classification for participants. | ||||
EMPLOYEE EXPERIENCE | |||||
![]() | The Company exceeded the annual target in 2021. | ||||
SAFETY | |||||
![]() | The Company exceeded the annual target for the year, driving further progress towards our multi-year environmental sustainability goals. | ||||
ENVIRONMENTAL SUSTAINABILITY | |||||
![]() | Corporate quality metric was at target for the year. | ||||
QUALITY | |||||
![]() | Customer satisfaction metric was at target for the year. | ||||
CUSTOMER SATISFACTION | |||||
60 | Northrop Grumman |
Metric/Goal | Weighting | Performance to Achieve Target Payout | 2018 Performance | 2018 Financial Score |
Pension-adjusted OM Rate* | 1/3 | 9.9% | 11.4% | 67% |
Pension-adjusted Cash Flow from Operations* | 1/3 | $3.4B | $3.2B | 32% |
Pension-adjusted Net Income* Growth | 1/3 | $1.9B | $2.4B | 67% |
166% | ||||
* This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures." |
Name | AIP Target % of Salary | AIP Payout Range % | Performance Payout | Actual Payout (1) | ||||||||||
Kathy J. Warden | 180 | % | 0% - 200% | 130 | % | $ | 3,744,000 | |||||||
David F. Keffer | 100 | % | 0% - 200% | 130 | % | $ | 1,040,000 | |||||||
Mark A. Caylor | 100 | % | 0% - 200% | 130 | % | $ | 1,112,000 | |||||||
Blake E. Larson | 100 | % | 0% - 200% | 130 | % | $ | 1,086,000 | |||||||
Mary D. Petryszyn | 100 | % | 0% - 200% | 130 | % | $ | 975,000 |
Name | Target Payout % of Salary | Payout Range % of Salary | Actual Payout % of Salary | Actual Payout (1) | ||||
Wesley G. Bush | 180% | 0% - 360% | 288% | $4,562,000 | ||||
Kathy J. Warden | 120% | 0% - 240% | 192% | $1,920,000 | ||||
Kenneth L. Bedingfield | 100% | 0% - 200% | 160% | $1,304,000 | ||||
Mark A. Caylor | 100% | 0% - 200% | 160% | $1,328,000 | ||||
Blake E. Larson (2) | 96% | 0% - 192% | 153% | $1,127,000 | ||||
(1) The potential range of bonus payouts based on 2018 performance is disclosed in the Grants of Plan-Based Awards Table. Actual bonus payouts for 2018 performance are disclosed above and in the Summary Compensation Table. | ||||||||
(2) Mr. Larson was elected President, Innovation Systems, effective as of the Merger Date. The actual payout utilizes full-year metrics defined under the EOIP, but reflects the higher target adjusted for the time he served as an elected officer of Northrop Grumman. |
2022 Proxy Statement | 61 |
![]() | Restricted Performance Stock Rights (RPSRs) The RPSRs ensure sustainability and achievement of business goals over time. The RPSRs will vest and be distributed following the completion of the three-year performance period (commencing January 1, 2021, and ending December 31, 2023) if goals are met. | ||||
![]() | Restricted Stock Rights (RSRs) The RSRs provide retentive value and generally vest 100% after three years. |
Metric | Weighting | Rationale | ||||||
Relative Total Shareholder Return | 1/3 | Aligns the interests of executives with shareholders. | ||||||
Adjusted Cumulative FCF* | 1/3 | Focuses on cash generation | ||||||
Operating RONA* | 1/3 | Drives operational productivity through the efficient use of capital resources. |
62 | Northrop Grumman |
RPSR Metrics | Calculation | ||||
Relative Total Shareholder Return | Relative TSR is measured by comparing cumulative stock price appreciation with reinvestment of dividends over the three-year period to the TSR Peer Group (50% of relative TSR portion of award) and to the S&P Industrials (50% of relative TSR portion of award), which comprises companies within the S&P 500 classified as Industrials, reflecting the range of similar investment alternatives available to our shareholders. To smooth volatility in the market, the TSR calculation is based on the average of the three-year returns for each of the 30 calendar days, starting from the grant date, to the last 30 days of the performance period. The maximum relative TSR payout is capped at 100% of target shares if the absolute TSR is negative, even if the relative TSR would have resulted in a higher score. | ||||
Adjusted Cumulative FCF* | Adjusted Cumulative FCF* focuses on cash generation after capital investments and is calculated as the aggregate Transaction-Adjusted Free Cash Flow before after-tax total pension funding*, which is adjusted to exclude unplanned reductions in CAS pension reimbursement, and include divestiture-related activity**, over a three-year period. | ||||
Operating RONA* | Operating RONA* is calculated as Adjusted Net Operating Profit After-Tax* (adjusted NOPAT*) divided by the two-year average of net operating assets, adjusted for a 2020 balance sheet change made in tax revenue recognition on certain long-term contracts, and divestiture-related activity**. |
Performance Required to Score | ||||||
Metric/Goal | Weighting | 0% | 100% | 150% | 2018 Actual Performance | 2018 Score |
Relative TSR - 2016 Performance Peer Group | 35% | 25th | 50th | 80th | 45th | 29% |
Relative TSR - S&P Industrials | 35% | 25th | 50th | 80th | 64th | 43% |
Cumulative FCF* | 30% | $4.8B | $5.5B | $6.2B | $6.1B | 43% |
RPSR Performance Factor | 115% |
Performance Required to Score | |||||||||||||||||
RPSR Metrics | Weighting | Threshold 0% | Target 100% | Maximum 150% | 2021 Score | ||||||||||||
Relative TSR - 2019 Performance Peer Group | 1/3 | ![]() | 25% | ||||||||||||||
Relative TSR - S&P Industrials | ![]() | 11% | |||||||||||||||
Adjusted Cumulative FCF* | 1/3 | ![]() | 50% | ||||||||||||||
Operating RONA* | 1/3 | ![]() | 36% | ||||||||||||||
RPSR Performance Factor | 122% |
2022 Proxy Statement | 63 |
Other NEO Benefits |
64 | Northrop Grumman |
2022 Proxy Statement | 65 |
Position | Stock Value as a Multiple of Base Salary | ||||
Chair and Chief Executive Officer | ![]() | ||||
Other NEOs | ![]() |
SHAREHOLDER ALIGNMENT AND FOCUS ON LONG-TERM, SUSTAINABLE GROWTH | ||||||||||||||||||||||||||||||||
STOCK OWNERSHIP | + | STOCK HOLDING | = | |||||||||||||||||||||||||||||
66 | Northrop Grumman |
67 |
Name & Principal Position | Year | Salary (1) ($) | Stock Awards (2) ($) | Non-Equity Incentive Plan Compensation (3) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings (4) ($) | All Other Compensation (5) ($) | Total ($) | ||||||
Wesley G. Bush | 2018 | 1,578,039 | 16,924,462 | 4,562,000 | — | 1,120,758 | 24,185,259 | ||||||
Chairman and Chief Executive Officer | 2017 | 1,548,577 | 9,999,969 | 3,662,000 | 2,733,390 | 925,121 | 18,869,057 | ||||||
2016 | 1,530,000 | 10,000,072 | 4,406,400 | 3,036,744 | 868,625 | 19,841,841 | |||||||
Kathy J. Warden | 2018 | 963,462 | 9,999,869 | 1,920,000 | — | 458,976 | 13,342,307 | ||||||
President and Chief Operating Officer | 2017 | 807,116 | 3,499,993 | 1,061,000 | 388,015 | 206,548 | 5,962,672 | ||||||
2016 | 772,500 | 3,499,856 | 1,272,000 | 200,220 | 165,596 | 5,910,172 | |||||||
Kenneth L. Bedingfield | 2018 | 811,154 | 3,500,008 | 1,304,000 | — | 302,268 | 5,917,430 | ||||||
Corporate Vice President and Chief Financial Officer | 2017 | 790,192 | 3,250,106 | 1,041,000 | — | 351,426 | 5,432,724 | ||||||
2016 | 756,539 | 2,999,980 | 1,232,000 | — | 314,724 | 5,303,243 | |||||||
Mark A. Caylor (6) | 2018 | 790,577 | 3,900,096 | 1,328,000 | — | 127,017 | 6,145,690 | ||||||
Corporate Vice President and President, Mission Systems | |||||||||||||
Blake E. Larson (6) | 2018 | 426,216 | 6,499,923 | 1,127,000 | 5,297 | 35,717 | 8,094,153 | ||||||
Corporate Vice President and President, Innovation Systems | |||||||||||||
Name & Principal Position | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total ($) | ||||||||||||||||||
Kathy J. Warden Chair, Chief Executive Officer and President | 2021 | 1,589,439 | — | 13,500,119 | 3,744,000 | 371,464 | 671,745 | 19,876,767 | ||||||||||||||||||
2020 | 1,536,346 | — | 13,499,889 | 3,977,000 | 1,144,248 | 649,661 | 20,807,144 | |||||||||||||||||||
2019 | 1,488,462 | — | 13,000,159 | 4,509,000 | 687,615 | 623,484 | 20,308,720 | |||||||||||||||||||
David F. Keffer Corporate Vice President and Chief Financial Officer | 2021 | 790,392 | — | 3,000,038 | 1,040,000 | — | 195,335 | 5,025,765 | ||||||||||||||||||
2020 | 634,616 | — | 4,000,102 | 928,000 | — | 71,494 | 5,634,212 | |||||||||||||||||||
Mark A. Caylor Corporate Vice President and President, Mission Systems | 2021 | 855,002 | — | 3,000,038 | 1,112,000 | 206,044 | 138,474 | 5,311,558 | ||||||||||||||||||
2020 | 855,000 | — | 3,000,212 | 1,223,000 | 870,818 | 144,715 | 6,093,745 | |||||||||||||||||||
2019 | 850,192 | — | 3,499,779 | 1,428,000 | 886,646 | 129,727 | 6,794,344 | |||||||||||||||||||
Blake E. Larson (6) Former Corporate Vice President and President, Space Systems | 2021 | 830,398 | — | 3,499,978 | 1,086,000 | 154,294 | 203,163 | 5,773,833 | ||||||||||||||||||
2020 | 802,154 | — | 3,500,217 | 1,160,000 | 326,767 | 217,676 | 6,006,814 | |||||||||||||||||||
2019 | 746,394 | — | 3,000,163 | 1,278,000 | 388,000 | 189,586 | 5,602,143 | |||||||||||||||||||
Mary D. Petryszyn (7) Corporate Vice President and President, Defense Systems | 2021 | 745,198 | — | 3,000,038 | 975,000 | — | 268,498 | 4,988,734 | ||||||||||||||||||
Name | Maximum Grant Date Fair Value ($) | ||||
Ms. Warden | |||||
Mr. | |||||
Mr. Caylor | |||||
Mr. Larson | |||||
Ms. Petryszyn | 4,199,853 |
Compensation Tables (4)These amounts relate solely to the increased |
(5) Amounts include, as applicable, (a) the value of perquisites and personal benefits, (b) basic life insurance premiums, (c) matching contributions through the Northrop Grumman Foundation made to eligible educational institutions and to non-profit organizations under a Company program, and (d) Company contributions to defined contribution and deferred compensation plans. Where the value of the items reported in a particular category for an NEO exceeded $10,000 in 2021 (other than perquisites and personal benefits, which are subject to different thresholds as described below), those items are identified and quantified below. |
Name | Company Contributions ($) | ||||
Ms. Warden | |||||
Mr. | |||||
Mr. Caylor | |||||
Mr. Larson | |||||
Ms. Petryszyn | 231,653 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock Awards(4) ($) | ||||||||||||||||||||||||||||||||
Name | Grant Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
Kathy J. Warden | Incentive Plan | — | 2,880,000 | 5,760,000 | |||||||||||||||||||||||||||||||
RPSR | 2/16/2021 | — | 32,505 | 65,010 | 9,450,165 | ||||||||||||||||||||||||||||||
RSR | 2/16/2021 | 14,776 | 4,049,954 | ||||||||||||||||||||||||||||||||
David F. Keffer | Incentive Plan | — | 800,000 | 1,600,000 | |||||||||||||||||||||||||||||||
RPSR | 2/16/2021 | — | 7,223 | 14,446 | 2,099,926 | ||||||||||||||||||||||||||||||
RSR | 2/16/2021 | 3,284 | 900,112 | ||||||||||||||||||||||||||||||||
Mark A. Caylor | Incentive Plan | — | 855,000 | 1,710,000 | |||||||||||||||||||||||||||||||
RPSR | 2/16/2021 | — | 7,223 | 14,446 | 2,099,926 | ||||||||||||||||||||||||||||||
RSR | 2/16/2021 | 3,284 | 900,112 | ||||||||||||||||||||||||||||||||
Blake E. Larson | Incentive Plan | — | 835,000 | 1,670,000 | |||||||||||||||||||||||||||||||
RPSR | 2/16/2021 | — | 7,223 | 14,446 | 2,099,926 | ||||||||||||||||||||||||||||||
RSR | 2/16/2021 | 3,284 | 900,112 | ||||||||||||||||||||||||||||||||
RSR (5) | 2/16/2021 | 1,824 | 499,940 | ||||||||||||||||||||||||||||||||
Mary D. Petryszyn | Incentive Plan | — | 750,000 | 1,500,000 | |||||||||||||||||||||||||||||||
RPSR | 2/16/2021 | — | 7,223 | 14,446 | 2,099,926 | ||||||||||||||||||||||||||||||
RSR | 2/16/2021 | 3,284 | 900,112 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (3) (#) | Grant Date Fair Value of Stock Awards (4) ($) | ||||||||
Name | Grant Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||
Wesley G. Bush | Incentive Plan | — | 2,851,200 | 5,702,400 | |||||||
RPSR | 2/13/2018 | — | 19,888 | 29,832 | 7,000,145 | ||||||
RSR | 2/13/2018 | 9,033 | 3,000,149 | ||||||||
RPSR (5) | 9/19/2018 | — | 13,681 | 20,522 | 4,807,271 | ||||||
RSR (5) | 9/19/2018 | 6,976 | 2,116,897 | ||||||||
Kathy J. Warden | Incentive Plan | — | 1,200,000 | 2,400,000 | |||||||
RPSR | 2/13/2018 | — | 9,944 | 14,916 | 3,500,072 | ||||||
RSR | 2/13/2018 | 4,516 | 1,499,909 | ||||||||
RPSR | 9/19/2018 | — | 13,016 | 19,524 | 3,499,914 | ||||||
RSR | 9/19/2018 | 4,943 | 1,499,974 | ||||||||
Kenneth L. Bedingfield | Incentive Plan | — | 815,000 | 1,630,000 | |||||||
RPSR | 2/13/2018 | — | 6,961 | 10,442 | 2,450,138 | ||||||
RSR | 2/13/2018 | 3,161 | 1,049,870 | ||||||||
Mark A. Caylor | Incentive Plan | — | 830,000 | 1,660,000 | |||||||
RPSR | 2/13/2018 | — | 6,961 | 10,442 | 2,450,138 | ||||||
RSR | 2/13/2018 | 3,161 | 1,049,870 | ||||||||
RSR (6) | 12/4/2018 | 1,655 | 400,088 | ||||||||
Blake E. Larson | Incentive Plan | — | 704,423 | 1,408,846 | |||||||
RPSR | 6/13/2018 | — | 6,642 | 9,963 | 2,100,049 | ||||||
RSR | 6/13/2018 | 2,831 | 899,938 | ||||||||
RSR (7) | 6/13/2018 | 11,010 | 3,499,936 |
Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested(1) (#) | Market Value of Shares or Units of Stock that Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(2) ($) | ||||||||||||
Kathy J. Warden | 2/16/2021 | 14,776 | 5,719,346 | 32,505 | 12,581,710 | ||||||||||||
2/12/2020 | 11,453 | 4,433,113 | 27,037 | 10,465,212 | |||||||||||||
2/13/2019 | 14,227 | 5,506,845 | 33,572 | 12,994,714 | |||||||||||||
David F. Keffer | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | ||||||||||||
5/5/2020 | 3,847 | 1,489,058 | 8,753 | 3,388,024 | |||||||||||||
Mark A. Caylor | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | ||||||||||||
2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | |||||||||||||
2/13/2019 | 3,830 | 1,482,478 | 9,038 | 3,498,339 | |||||||||||||
Blake E. Larson | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | ||||||||||||
2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | |||||||||||||
2/13/2019 | 3,283 | 1,270,751 | 7,748 | 2,999,018 | |||||||||||||
Mary D. Petryszyn | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | ||||||||||||
2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | |||||||||||||
2/13/2019 | 487 | 188,503 | 1,136 | 439,712 |
Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested (1) (#) | Market Value of Shares or Units of Stock that Have Not Vested (2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested (2) ($) | |||
Wesley G. Bush | 2/13/2018 | 9,033 | 2,212,182 | 19,888 | 4,870,571 | |||
2/17/2017 | 12,756 | 3,123,944 | 30,504 | 7,470,430 | ||||
2/17/2016 | 16,478 | 4,035,462 | 36,316 | 8,893,788 | ||||
Kathy J. Warden | 9/19/2018 | 4,943 | 1,210,541 | 13,016 | 3,187,618 | |||
2/13/2018 | 4,516 | 1,105,968 | 9,944 | 2,435,286 | ||||
2/17/2017 | 4,465 | 1,093,479 | 10,676 | 2,614,552 | ||||
2/17/2016 | 5,767 | 1,412,338 | 12,710 | 3,112,679 | ||||
Kenneth L. Bedingfield | 2/13/2018 | 3,161 | 774,129 | 6,961 | 1,704,749 | |||
2/17/2017 | 4,146 | 1,015,355 | 9,914 | 2,427,939 | ||||
2/17/2016 | 4,943 | 1,210,541 | 10,895 | 2,668,186 | ||||
Mark A. Caylor | 12/4/2018 | 1,655 | 405,310 | — | — | |||
2/13/2018 | 3,161 | 774,129 | 6,961 | 1,704,749 | ||||
2/17/2017 | 3,189 | 780,986 | 7,626 | 1,867,607 | ||||
2/17/2016 | 4,120 | 1,008,988 | 9,079 | 2,223,447 | ||||
Blake E. Larson | 6/13/2018 | 8,336 | 2,041,486 | 6,642 | 1,626,626 |
Name | Actual Shares Distributed (#) | ||||
Ms. Warden | |||||
Mr. | |||||
Mr. Caylor | |||||
Mr. Larson | 9,453 | ||||
Ms. Petryszyn | 1,795 |
Stock Awards (1) (2) | ||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Wesley G. Bush | 78,466 | 27,059,129 | ||
Kathy J. Warden | 24,893 | 8,588,938 | ||
Kenneth L. Bedingfield | 23,338 | 8,052,238 | ||
Mark A. Caylor | 13,614 | 4,697,123 | ||
Blake E. Larson | 5,505 | 1,348,175 |
Stock Awards(1)(2) | ||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Kathy J. Warden | 33,567 | 10,050,317 | ||||||
David F. Keffer | — | — | ||||||
Mark A. Caylor | 12,125 | 3,647,882 | ||||||
Blake E. Larson | 13,043 | 4,286,640 | ||||||
Mary D. Petryszyn | 1,725 | 501,646 |
Name(1) | Plan Name | Number of Years Credited Service(2) (#) | Present Value of Accumulated Benefit(3) ($) | Payments During Last Fiscal Year ($) | ||||||||||
Kathy J. Warden | OSERP II | 13.3 | 3,631,463 | — | ||||||||||
Mark A. Caylor | S&MS Pension Plan | 19.5 | 859,178 | — | ||||||||||
SRIP | 19.5 | 2,311,723 | — | |||||||||||
OSERP | 12.5 | 1,328,828 | — | |||||||||||
Blake E. Larson | Pension Plan | 40.5 | 833,132 | — | ||||||||||
NGIS DB SERP | 40.5 | 3,560,186 | — |
Name (1) | Plan Name | Number of Years Credited Service (2) (#) | Present Value of Accumulated Benefit (3) ($) | Payments During Last Fiscal Year ($) |
Wesley G. Bush | Pension Plan | 16.00 | 808,518 | — |
S&MS Pension Plan | 15.67 | 701,314 | — | |
ERISA 2 | 16.00 | 14,662,902 | — | |
SRIP | 15.67 | 13,314,297 | — | |
OSERP | 27.67 | 7,152,879 | — | |
Kathy J. Warden | OSERP II | 10.33 | 1,428,136 | — |
Mark A. Caylor | S&MS Pension Plan | 16.50 | 537,181 | — |
SRIP | 16.50 | 1,102,868 | — | |
OSERP | 12.50 | 896,172 | — | |
Blake E. Larson | OATK P&R Plan | 37.50 | 691,978 | — |
OATK DB SERP | 37.50 | 2,831,663 | — |
Pension Plans and Descriptions |
74 | Northrop Grumman |
Heritage Formulas |
Feature | S&MS Pension Plan | |||||||
Benefit Formula | (Final Average Pay x 1.5% minus Covered Compensation x 0.4%) times | |||||||
Final Average Pay(1) | Average of the highest 5 consecutive years of Eligible Pay; Covered Compensation is specified by the IRS | |||||||
Eligible Pay (limited by Internal Revenue Code section 401(a)(17)) | Salary plus bonus | |||||||
Normal Retirement | Age 65 | |||||||
Early Retirement | Age 55 with 10 years of service | |||||||
Early Retirement Reduction (for retirements occurring between Early Retirement and Normal Retirement) | Benefits are reduced for commencement prior to |
75 |
76 | Northrop Grumman |
Feature | OSERP and OSERP II(1) | NGIS DB SERP(2) | ||||||
Benefit Formula | Final Average Pay times 2% for each year of service up to 10 years, 1.5% for each subsequent year up to 20 years, and 1% for each additional year over 20 and less than 45 | Service times the sum of 11% of Final Average Pay in excess of one-half of the Social Security Wage Base and 5.5% of one-half of the Social Security Wage Base; interest at 4% per annum is applied from July 1, 2013 through commencement | ||||||
Final Average Pay | Average of highest 3 years of Eligible Pay | Average of highest 60 months of Eligible Pay; both Final Average Pay and the Social Security Wage Base were frozen at June 30, 2013 | ||||||
Eligible Pay | Salary and bonus (including amounts above Internal Revenue Code limits and amounts deferred) | Salary and bonus (including amounts above Internal Revenue Code limits and amounts deferred) | ||||||
Normal Retirement | Age 65 | Age 65 | ||||||
Early Retirement | Age 55 with 10 years of service | Age 55 | ||||||
Early Retirement Reduction | Benefits are reduced for commencement prior to the earlier of age 65 or 85 points (age + service) | |||||||
Reductions From Other Plans | Reduced by any other Company pension benefits | Reduced by the Old NGIS Cash Balance benefit |
(1)Ms. Warden participates in OSERP II, which mirrors the benefits provided under the Cash Balance Formula with a pay-based credit percentage of 5.5% (without regard to limits imposed by the Internal Revenue Code sections 401(a)(17) and 415) and OSERP provisions described above. |
Information on Executives Eligible for Early Retirement |
77 |
Name | Plan Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | ||||||||||||||
Kathy J. Warden | Savings Excess | 422,102 | 211,051 | 649,643 | (4,956) | 4,599,423 | ||||||||||||||
ORAC | — | 222,651 | 121,497 | (5,683) | 1,230,853 | |||||||||||||||
David F. Keffer | Savings Excess | 114,281 | 85,711 | 13,948 | — | 213,940 | ||||||||||||||
ORAC | 68,741 | 2,379 | — | 96,505 | ||||||||||||||||
Mark A. Caylor | Savings Excess | — | — | 39,769 | — | 245,198 | ||||||||||||||
ORAC | 83,106 | 60,142 | (2,146) | 684,856 | ||||||||||||||||
Blake E. Larson | Savings Excess | 102,008 | 76,506 | 67,524 | (1,796) | 696,104 | ||||||||||||||
ORAC | 79,605 | 22,709 | (1,955) | 323,339 | ||||||||||||||||
NGIS DC SERP | — | 35,901 | — | 363,167 | ||||||||||||||||
NGIS NQDCP | — | 83,019 | — | 1,171,326 | ||||||||||||||||
Mary D. Petryszyn | Savings Excess | 119,356 | 150,975 | 139,694 | (2,512) | 1,097,821 | ||||||||||||||
ORAC | 71,278 | 43,548 | (1,006) | 401,774 |
Name | Plan Name | Executive Contributions in Last FY (1) ($) | Registrant Contributions in Last FY (2) ($) | Aggregate Earnings in Last FY (3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE (4) ($) |
Wesley G. Bush | Deferred Compensation | — | — | (185,883) | — | 2,930,900 |
Savings Excess | 397,203 | 198,601 | 92,290 | — | 11,244,464 | |
ORAC | — | 209,601 | 19,591 | — | 955,413 | |
Kathy J. Warden | Savings Excess | 139,957 | 69,979 | (101,974) | — | 1,380,453 |
ORAC | — | 80,978 | (28,265) | — | 314,359 | |
Kenneth L. Bedingfield | Savings Excess | 236,573 | 126,172 | (66,625) | — | 1,285,188 |
ORAC | — | 74,086 | (20,322) | — | 389,414 | |
Mark A. Caylor | Savings Excess | — | — | (7,544) | — | 141,797 |
ORAC | — | 64,383 | (12,171) | — | 234,090 | |
Blake E. Larson (5) | OATK NQ Def Comp | — | — | (32,846) | — | 876,135 |
OATK DC SERP | — | — | (12,372) | — | 182,415 | |
ORAC | — | 16,749 | (1,493) | — | 15,256 |
Name | Employee Contributions ($) | ||||
Ms. Petryszyn | 119,356 |
Deferred Compensation Plans and Descriptions |
79 |
Voluntary Termination(3) |
Post-CIC Involuntary or Good Reason Termination | Death or Disability(3) | |||||||||||||
RSRs(1) | Unvested RSRs are forfeited, except in the case of early retirement where the RSRs are prorated and mandatory retirement (age 65) where they will fully vest. Retention awards do not include retirement provisions. | Unvested RSRs are forfeited, except in the case of early retirement where the RSRs are prorated and mandatory retirement (age 65) where they will fully vest. Retention awards do not include retirement provisions. | For certain change in control events as set forth in the 2011 Plan (CIC), unvested RSRs will vest and payment is accelerated, only in the event of a double trigger (CIC and termination other than for cause within the specified period), or if the acquiring company fails to assume the awards; subject to certain limitations to the extent such accelerated payments would otherwise trigger an excise tax. | Unvested RSRs will fully vest and payment is accelerated. | ||||||||||
RPSRs(1)(2) | Unvested RPSRs are forfeited except in the case of | Unvested RPSRs are forfeited except in the case of early retirement where the RPSRs are prorated and mandatory retirement (age 65) where they fully vest. | For a CIC, unvested RPSRs will fully vest and payment is accelerated based on a truncated performance period, only in the event of a double trigger (CIC and termination other than for cause within the specified period), or if the acquiring company fails to assume the awards; subject to certain limitations to the extent such accelerated payments would otherwise trigger an excise tax. | Unvested RPSRs are prorated and payment, at target, is accelerated. | ||||||||||
Cash Severance | No payment. | Lump sum equal to 1.5x base salary and bonus target and a prorated performance bonus for the year of termination. | No payment. | No payment. | ||||||||||
Medical/Dental Continuation | No payment. | Continued medical and dental coverage for the 18-month severance period. | No payment. | No payment. | ||||||||||
Financial Planning/Income Tax | No payment. | Reimbursement of fees for the year of termination and the following year. | No payment. | No payment. | ||||||||||
Outplacement Services | No payment. | Expenses up to 15% of base salary. | No payment. | No payment. |
Northrop Grumman |
RSRs | RPSRs | ||
Name | Acceleration of Vesting ($) | Acceleration of Vesting ($) | Total ($) |
Wesley G. Bush | 9,371,588 | 12,341,001 | 21,712,589 |
Kathy J. Warden | 4,822,326 | 8,237,456 | 13,059,782 |
Kenneth L. Bedingfield | 3,000,025 | 4,132,688 | 7,132,713 |
Mark A. Caylor | 2,969,413 | 3,572,356 | 6,541,769 |
Blake E. Larson | 2,041,486 | 1,626,626 | 3,668,112 |
81 |
Name | Executive Benefits | Voluntary Termination ($) | Involuntary Termination Not For Cause(1) ($) | Post-CIC Involuntary or Good Reason Termination(2) ($) | Death or Disability ($) | ||||||||||||
Kathy J. Warden | RSRs (3) | — | — | 15,659,304 | 15,659,304 | ||||||||||||
RPSRs (3) | — | — | 23,046,922 | 11,173,550 | |||||||||||||
Severance Benefits (4) | |||||||||||||||||
Cash Severance | — | 6,720,000 | — | — | |||||||||||||
Medical/Dental Continuation | — | 15,686 | — | — | |||||||||||||
Financial Planning/Income Tax | — | 30,000 | — | — | |||||||||||||
Outplacement Services | — | 240,000 | — | — | |||||||||||||
David F. Keffer | RSRs (3) | — | — | 2,760,196 | 2,760,196 | ||||||||||||
RPSRs (3) | — | — | 6,183,831 | 3,191,005 | |||||||||||||
Severance Benefits (4) | |||||||||||||||||
Cash Severance | — | 2,400,000 | — | — | |||||||||||||
Medical/Dental Continuation | — | 15,686 | — | — | |||||||||||||
Financial Planning/Income Tax | — | 18,500 | — | — | |||||||||||||
Outplacement Services | — | 120,000 | — | — | |||||||||||||
Mark A. Caylor | RSRs (3) | 2,411,059 | 2,411,059 | 3,738,709 | 3,738,709 | ||||||||||||
RPSRs (3) | 2,482,667 | 2,482,667 | 5,121,711 | 2,482,667 | |||||||||||||
Severance Benefits (4) | |||||||||||||||||
Cash Severance | — | 2,565,000 | — | — | |||||||||||||
Medical/Dental Continuation | — | 5,803 | — | — | |||||||||||||
Financial Planning/Income Tax | — | 18,500 | — | — | |||||||||||||
Outplacement Services | — | 128,250 | — | — | |||||||||||||
Blake E. Larson | RSRs (3) | 2,207,847 | 2,207,847 | 3,526,982 | 3,526,982 | ||||||||||||
RPSRs (3) | 2,482,667 | 2,482,667 | 5,121,711 | 2,482,667 | |||||||||||||
Severance Benefits (4) | |||||||||||||||||
Cash Severance | — | 2,505,000 | — | — | |||||||||||||
Medical/Dental Continuation | — | 12,476 | — | — | |||||||||||||
Financial Planning/Income Tax | — | 18,500 | — | — | |||||||||||||
Outplacement Services | — | 125,250 | — | — | |||||||||||||
Mary D. Petryszyn | RSRs (3) | — | — | 2,444,734 | 2,444,734 | ||||||||||||
RPSRs (3) | — | — | 5,121,711 | 2,482,667 | |||||||||||||
Severance Benefits (4) | |||||||||||||||||
Cash Severance | — | 2,250,000 | — | — | |||||||||||||
Medical/Dental Continuation | — | 5,662 | — | — | |||||||||||||
Financial Planning/Income Tax | — | 18,500 | — | — | |||||||||||||
Outplacement Services | — | 112,500 | — | — |
Name | Executive Benefits | Voluntary Termination ($) | Involuntary Termination Not For Cause (1) ($) | Post-CIC Involuntary or Good Reason Termination (2) ($) | Death or Disability ($) |
Wesley G. Bush | Long-term Incentives (3) | 13,056,844 | 13,056,844 | 21,712,589 | 15,973,847 |
Retiree Medical (4) | 1,350,800 | 1,350,800 | 1,350,800 | 1,350,800 | |
Kathy J. Warden | Long-term Incentives (3) | — | — | 13,059,782 | 8,437,540 |
Severance Benefits (5) | |||||
Cash Severance | — | 3,300,000 | — | — | |
Medical/Dental Continuation | — | 8,635 | — | — | |
Financial Planning/Income Tax | — | 18,500 | — | — | |
Outplacement Services | — | 150,000 | — | — | |
Kenneth L. Bedingfield | Long-term Incentives (3) | — | — | 7,132,713 | 5,186,247 |
Severance Benefits (5) | |||||
Cash Severance | — | 2,445,000 | — | — | |
Medical/Dental Continuation | — | 8,635 | — | — | |
Financial Planning/Income Tax | — | 18,500 | — | — | |
Outplacement Services | — | 122,250 | — | — | |
Mark A. Caylor | Long-term Incentives (3) | — | — | 6,541,769 | 4,782,162 |
Severance Benefits (5) | |||||
Cash Severance | — | 2,490,000 | — | — | |
Medical/Dental Continuation | — | 11,689 | — | — | |
Financial Planning/Income Tax | — | 18,500 | — | — | |
Outplacement Services | — | 124,500 | — | — | |
Blake E. Larson | Long-term Incentives (3) | 669,067 | 2,017,241 | 3,668,112 | 2,582,960 |
Severance Benefits (5) | |||||
Cash Severance | — | 2,227,500 | — | — | |
Medical/Dental Continuation | — | 6,355 | — | — | |
Financial Planning/Income Tax | — | 18,500 | — | — | |
Outplacement Services | — | 111,375 | — | — |
Plan category | Number of shares of common stock to be issued upon exercise of outstanding options and payout of outstanding awards(1) (#) | Weighted-average exercise price of outstanding options(2) ($) | Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column)(3) (#) | |||||||||||
Equity compensation plans approved by shareholders | 1,289,904 | N/A | 4,915,708 | |||||||||||
Equity compensation plans not approved by shareholders | N/A | N/A | N/A | |||||||||||
Total | 1,289,904 | N/A | 4,915,708 | (4) |
![]() | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 3. | ||||
2021 | 2020 | |||||||||||||
Audit Fees(1) | $ | 19,564,000 | $ | 19,464,100 | ||||||||||
Audit-Related Fees(2) | — | 1,575,000 | ||||||||||||
Tax-Related Fees(3) | 235,000 | 596,000 | ||||||||||||
All Other Fees | — | — | ||||||||||||
Total Fees | $ | 19,799,000 | $ | 21,635,100 |
2018 | 2017 | |||
Audit Fees (1) | $ | 18,706,500 | $ | 15,110,000 |
Audit-Related Fees (2) | 500,000 | 803,000 | ||
Tax-Related Fees (3) | 507,000 | 637,000 | ||
All Other Fees | — | — | ||
Total Fees | $ | 19,713,500 | $ | 16,550,000 |
(2)Audit-related fees reflect fees for services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including fees in 2020 related to the IT services divestiture. Audit-related fees exclude fees that totaled $1,419,000 and $1,494,500 for 2021 and 2020, respectively, related to benefit plan audits which are paid for by the plans. (3)Tax-related fees during 2021 and 2020 reflect fees of $235,000 and $596,000, respectively, for services concerning foreign income tax compliance, foreign Value Added Tax compliance and other tax matters. Policy on Audit and Risk Committee Pre-Approval of Audit and Permissible Non-Audit Services |
2022 Proxy Statement | 87 |
Northrop Grumman |
89 |
90 | Northrop Grumman |
![]() | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE | ||||
91 |
92 | Northrop Grumman |
2022 Proxy Statement | 93 |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Class | |||||||||
State Street Corporation One Lincoln Street, Boston, MA 02111 | 14,858,773 | (1) | 9.5% | ||||||||
Capital International Investors 333 South Hope Street, 55th Floor, Los Angeles, CA 90071 | 12,955,596 | (2) | 8.3% | ||||||||
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 11,911,713 | (3) | 7.7% | ||||||||
Wellington Management Group LLP 280 Congress Street, Boston, MA 02210 | 8,692,455 | (4) | 5.6% | ||||||||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 8,631,520 | (5) | 5.5% |
94 | Northrop Grumman |
Shares of Common Stock Beneficially Owned | Share Equivalents(1) | Total | ||||||||||||
Non-Employee Directors | ||||||||||||||
David P. Abney | 447 | 466 | 913 | |||||||||||
Marianne C. Brown | — | 7,428 | 7,428 | |||||||||||
Donald E. Felsinger | — | 39,446 | 39,446 | |||||||||||
Ann M. Fudge | 1,178 | 2,898 | 4,076 | |||||||||||
William H. Hernandez | 1,000 | 6,200 | 7,200 | |||||||||||
Madeleine A. Kleiner | — | 18,519 | 18,519 | |||||||||||
Karl J. Krapek | 1,368 | 21,516 | 22,884 | |||||||||||
Graham N. Robinson | — | 362 | 362 | |||||||||||
Gary Roughead | — | 9,625 | 9,625 | |||||||||||
Thomas M. Schoewe | 3,160 | 10,907 | 14,067 | |||||||||||
James S. Turley | 635 | 3,896 | 4,531 | |||||||||||
Mark A. Welsh III | — | 3,024 | 3,024 | |||||||||||
Named Executive Officers | ||||||||||||||
Kathy J. Warden(2) | 146,518 | — | 146,518 | |||||||||||
David F. Keffer | — | — | — | |||||||||||
Mark A. Caylor | 17,458 | 37 | 17,495 | |||||||||||
Blake E. Larson | 20,064 | — | 20,064 | |||||||||||
Mary D. Petryszyn | 7,283 | — | 7,283 | |||||||||||
Other Executive Officers | 77,178 | 833 | 78,011 | |||||||||||
All Directors and Executive Officers as a Group (26 persons) | 276,289 | 125,157 | 401,446 | (3) |
2022 Proxy Statement | 95 |
96 | Northrop Grumman |
Proposal | Board Recommendation | Vote Required | Abstentions | Broker Non-Votes | Unmarked Proxy Cards | |||||||||||||||||
Election of Directors (Proposal | FOR | Majority of votes cast | No effect | No effect | Voted | |||||||||||||||||
Advisory Vote on Compensation of Named Executive Officers (Proposal | FOR | Majority of votes cast | No effect | No effect | Voted | |||||||||||||||||
Ratification of Appointment of Independent Auditor (Proposal | FOR | Majority of votes cast | No effect | Brokers have discretion to vote | Voted | |||||||||||||||||
Shareholder Proposal to (Proposal | AGAINST | Majority of votes cast | No effect | No effect | Voted | |||||||||||||||||
2022 Proxy Statement | 97 |
![]() | Registered shareholders | |||||||
![]() ![]() | Registered shareholders | |||||||
![]() ![]() | Registered shareholders | |||||||
![]() ![]() | Registered shareholders |
98 | Northrop Grumman |
2022 Proxy Statement | 99 |
Householding Information |
Cost of Soliciting Proxies |
Available Information |
Incorporation by Reference |
100 | Northrop Grumman |
Annual Report |
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102 | Northrop Grumman |
Total Year | ||||||||||
($M, except per share amount) | 2018 | 2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 3,827 | $ | 2,613 | $ | 2,813 | ||||
After-tax discretionary pension contributions impact | 186 | 325 | — | |||||||
Cash provided by operating activities before after-tax discretionary pension contributions | $ | 4,013 | $ | 2,938 | $ | 2,813 | ||||
Net cash provided by operating activities | $ | 3,827 | $ | 2,613 | $ | 2,813 | ||||
Less: capital expenditures | (1,249 | ) | (928 | ) | (920 | ) | ||||
Free cash flow | $ | 2,578 | $ | 1,685 | $ | 1,893 | ||||
After-tax total pension contributions impact | 246 | 376 | 46 | |||||||
After-tax Orbital ATK transaction-related expenses | 36 | — | — | |||||||
Impacts related to the addition of Innovation Systems | (721 | ) | — | — | ||||||
Free cash flow before after-tax total pension contributions | 2,139 | 2,061 | 1,939 | |||||||
Cumulative free cash flow | $ | 6,139 | ||||||||
Sales | 30,095 | 26,004 | 24,706 | |||||||
Operating income | $ | 3,780 | $ | 3,218 | $ | 3,277 | ||||
Operating margin rate | 12.6 | % | 12.4 | % | 13.3 | % | ||||
Reconciliation to segment operating income | ||||||||||
Net FAS (service)/CAS pension adjustment | (613 | ) | (638 | ) | (457 | ) | ||||
Unallocated corporate expenses | 277 | 319 | 39 | |||||||
Other | 3 | 4 | 5 | |||||||
Segment operating income | $ | 3,447 | $ | 2,903 | $ | 2,864 | ||||
Segment operating margin rate | 11.5 | % | 11.2 | % | 11.6 | % | ||||
Net earnings | $ | 3,229 | $ | 2,869 | $ | 2,043 | ||||
MTM expense (benefit) | 655 | (536 | ) | 950 | ||||||
MTM-related deferred state tax (benefit) expense | (29 | ) | 24 | (43 | ) | |||||
Federal tax (benefit) expense of items above | (131 | ) | 108 | (317 | ) | |||||
After-tax MTM adjustment | 495 | (404 | ) | 590 | ||||||
MTM-adjusted net earnings | $ | 3,724 | $ | 2,465 | $ | 2,633 | ||||
Diluted EPS | $ | 18.49 | $ | 16.34 | $ | 11.32 | ||||
MTM expense (benefit) per share | 3.76 | (3.06 | ) | 5.27 | ||||||
MTM-related deferred state tax (benefit) expense per share | (0.17 | ) | 0.14 | (0.24 | ) | |||||
Federal tax (benefit) expense of items above per share | (0.75 | ) | 0.62 | (1.76 | ) | |||||
After-tax MTM adjustment per share | 2.84 | (2.30 | ) | 3.27 | ||||||
MTM-adjusted diluted EPS | $ | 21.33 | $ | 14.04 | $ | 14.59 |
Total Year | ||||||||
($M) | 2018 | |||||||
Cash provided by operating activities before after-tax discretionary pension contributions | $ | 4,013 | ||||||
Impacts related to the addition of Innovation Systems | (862 | ) | ||||||
After-tax Orbital ATK transaction-related expenses | 36 | |||||||
Pension-adjusted cash flow from operations | $ | 3,187 | ||||||
Total sales | $ | 30,095 | ||||||
Less: Innovation Systems sales | (3,149 | ) | ||||||
Sales excluding Innovation Systems | $ | 26,946 | ||||||
Operating income | $ | 3,780 | ||||||
Net FAS (service)/CAS pension adjustment | (613 | ) | ||||||
Innovation Systems operating income | (342 | ) | ||||||
Innovation Systems intangible asset amortization and PP&E step-up depreciation | 208 | |||||||
Orbital ATK transaction-related expenses | 45 | |||||||
Other | (6 | ) | ||||||
Pension-adjusted operating income | $ | 3,072 | ||||||
Pension-adjusted operating margin rate | 11.4 | % | ||||||
Net earnings | $ | 3,229 | ||||||
Net FAS (service)/CAS pension adjustment | (613 | ) | ||||||
Net FAS (non-service) pension benefit | (1,049 | ) | ||||||
Tax effect of net pension adjustment | 349 | |||||||
After-tax net pension adjustment | (1,313 | ) | ||||||
MTM pension expense (1) | 699 | |||||||
Innovation Systems operating income | (342 | ) | ||||||
Innovation Systems intangible asset amortization and PP&E step-up depreciation | 208 | |||||||
Orbital ATK transaction-related expenses | 45 | |||||||
Other | (6 | ) | ||||||
Tax effect of items above | (127 | ) | ||||||
Pension-adjusted net income | $ | 2,393 | ||||||
(1) Represents the MTM expense related to the Company's pension plans only. During 2018, the Company recorded a total MTM expense of $655 million, of which $699 million related to pension and ($44) million related to OPB. |
103 |
104 | Northrop Grumman |
Total Year | ||||||||||||||||||||
($M) | 2021 | 2020 | 2019 | |||||||||||||||||
Adjusted free cash flow metrics | ||||||||||||||||||||
Net cash provided by operating activities | $ | 3,567 | $ | 4,305 | $ | 4,297 | ||||||||||||||
Capital expenditures | (1,415) | (1,420) | (1,264) | |||||||||||||||||
Proceeds from sale of equipment to a customer | 84 | 205 | — | |||||||||||||||||
IT services divestiture transaction costs | 39 | — | — | |||||||||||||||||
IT services divestiture federal and state taxes | 785 | — | — | |||||||||||||||||
After-tax discretionary pension contributions | — | 593 | 95 | |||||||||||||||||
Transaction-adjusted free cash flow | $ | 3,060 | $ | 3,683 | $ | 3,128 | ||||||||||||||
After-tax required pension contributions | 67 | 65 | 70 | |||||||||||||||||
Transaction-adjusted Free Cash Flow before after-tax total pension funding | 3,127 | 3,748 | 3,198 | |||||||||||||||||
Approved cash flow adjustments | 878 | 75 | 57 | |||||||||||||||||
Adjusted cumulative free cash flow | $ | 11,083 |
($M) | 2021 | ||||||||||
Adjusted cash flow metrics | |||||||||||
Net cash provided by operating activities | $ | 3,567 | |||||||||
Capital expenditures | (1,415) | ||||||||||
Proceeds from sale of equipment to a customer | 84 | ||||||||||
IT services divestiture transaction costs | 39 | ||||||||||
IT services divestiture federal and state taxes | 785 | ||||||||||
After-tax discretionary pension contributions | — | ||||||||||
Transaction-adjusted free cash flow | $ | 3,060 | |||||||||
Capital expenditures | |||||||||||
124 | |||||||||||
Gain on sale of business | |||||||||||
(1,980) | |||||||||||
160 | |||||||||||
32 | |||||||||||
Make-whole premium | 54 | ||||||||||
Net interest expense/(income) | 554 | ||||||||||
Depreciation and | |||||||||||
Adjusted Earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) | $ | 6,490 | |||||||||
Adjusted Cash Flow from Operations Conversion | 69.0 | % | |||||||||
Pension-adjusted metrics | |||||||||||
$ | 5,651 | ||||||||||
Net FAS/CAS operating adjustment | (130) | ||||||||||
Orbital ATK intangible asset amortization and PP&E step-up depreciation | 239 | ||||||||||
Gain on sale of business | (1,980) | ||||||||||
160 | |||||||||||
Transaction costs | 32 | ||||||||||
MTM-related deferred state tax expense | 124 | ||||||||||
Pension-adjusted operating income | $ | 4,096 | |||||||||
Pension-adjusted OM Rate | 11.5 | % |
2022 Proxy Statement | 105 |
Total Year | ||||||||||||||||||||
($M) | 2021 | 2020 | ||||||||||||||||||
Organic Sales | ||||||||||||||||||||
Sales | $ | 35,667 | $ | 36,799 | ||||||||||||||||
IT services sales | (162) | (2,329) | ||||||||||||||||||
Organic Sales | $ | 35,505 | $ | 34,470 |
Total Year | ||||||||||||||||||||
($M) | 2021 | 2020 | 2019 | |||||||||||||||||
Segment operating income | ||||||||||||||||||||
Sales | 35,667 | 36,799 | 33,841 | |||||||||||||||||
Operating income | $ | 5,651 | $ | 4,065 | $ | 3,969 | ||||||||||||||
Operating margin rate | 15.8 | % | 11.0 | % | 11.7 | % | ||||||||||||||
Reconciliation to segment operating income | ||||||||||||||||||||
Net FAS/CAS operating adjustment | (130) | (418) | (465) | |||||||||||||||||
Unallocated corporate (income) expense | (1,304) | 541 | 474 | |||||||||||||||||
Segment operating income | $ | 4,217 | $ | 4,188 | $ | 3,978 | ||||||||||||||
Segment operating margin rate | 11.8 | % | 11.4 | % | 11.8 | % |
Total Year | ||||||||||||||||||||
($M, except per share amounts) | 2021 | 2020 | 2019 | |||||||||||||||||
Transaction-adjusted net earnings and Transaction-adjusted EPS | ||||||||||||||||||||
Net earnings | $ | 7,005 | $ | 3,189 | $ | 2,248 | ||||||||||||||
MTM (benefit) expense | (2,355) | 1,034 | 1,800 | |||||||||||||||||
MTM-related deferred state tax expense (benefit)(1) | 124 | (54) | (81) | |||||||||||||||||
Federal tax expense (benefit) of items above(2) | 469 | (206) | (361) | |||||||||||||||||
MTM adjustment, net of tax | (1,762) | 774 | 1,358 | |||||||||||||||||
Gain on sale of business | (1,980) | — | — | |||||||||||||||||
State tax impact(3) | 160 | — | — | |||||||||||||||||
Transaction costs | 32 | — | — | |||||||||||||||||
Make-whole premium | 54 | — | — | |||||||||||||||||
Federal tax impact of items above(4) | 614 | — | — | |||||||||||||||||
Transaction-adjustment, net of tax | (1,120) | — | — | |||||||||||||||||
Transaction-adjusted net earnings | $ | 4,123 | $ | 3,963 | $ | 3,606 | ||||||||||||||
Diluted EPS | $ | 43.54 | $ | 19.03 | $ | 13.22 | ||||||||||||||
MTM (benefit) expense per share | (14.64) | 6.17 | 10.59 | |||||||||||||||||
MTM-related deferred state tax expense (benefit) per share | 0.77 | (0.32) | (0.48) | |||||||||||||||||
Federal tax expense (benefit) of items above per share | 2.92 | (1.23) | (2.12) | |||||||||||||||||
MTM adjustment per share, net of tax | (10.95) | 4.62 | 7.99 | |||||||||||||||||
Gain on sale of business per share | (12.31) | — | — | |||||||||||||||||
State tax impact per share | 0.99 | — | — | |||||||||||||||||
Transaction costs per share | 0.20 | — | — | |||||||||||||||||
Make-whole premium per share | 0.34 | — | — | |||||||||||||||||
Federal tax benefit of items above per share | 3.82 | — | — | |||||||||||||||||
Transaction-adjustment, net of tax per share | (6.96) | — | — | |||||||||||||||||
Transaction-adjusted EPS | $ | 25.63 | $ | 23.65 | $ | 21.21 |
106 | Northrop Grumman |
Total Year | ||||||||
($M) | 2021 | |||||||
Transaction-adjusted net earnings (as reconciled from net income above) | $ | 4,123 | ||||||
Net FAS/CAS operating adjustment | (130) | |||||||
Net FAS (non-service) pension benefit | (1,469) | |||||||
Tax effect of net pension adjustment | 336 | |||||||
After-tax net pension adjustment | (1,263) | |||||||
Orbital ATK intangible asset amortization and PP&E step-up depreciation | 239 | |||||||
Tax effect of items above | (50) | |||||||
After-tax adjustment | 189 | |||||||
Pension-adjusted net income | $ | 3,049 |
Total Year | ||||||||||||||
($M) | 2021 | |||||||||||||
Operating RONA(5) | ||||||||||||||
Operating Income | $ | 5,651 | ||||||||||||
Net FAS/CAS operating adjustment | (130) | |||||||||||||
Unallocated corporate (income) expense | (1,304) | |||||||||||||
Segment operating income | $ | 4,217 | ||||||||||||
Intersegment Eliminations | 272 | |||||||||||||
Orbital ATK intangible asset amortization and PP&E step-up depreciation | 239 | |||||||||||||
Divestiture-related activity | 243 | |||||||||||||
Tax effect of items above | (1,044) | |||||||||||||
Adjusted Net Operating Profit After-Tax (NOPAT) | $ | 3,927 | ||||||||||||
December 31 | ||||||||||||||
($M) | 2021 | 2020 | ||||||||||||
Net Current Assets | ||||||||||||||
Total Current Assets | $ | 12,426 | 15,344 | |||||||||||
Less: Cash | (3,530) | (4,907) | ||||||||||||
Adjusted Total Current Assets | 8,896 | 10,437 | ||||||||||||
Total Current Liabilities | 9,530 | 9,580 | ||||||||||||
Less: Current Maturity of LTD | (6) | (742) | ||||||||||||
Adjusted Total Current Liabilities | 9,524 | 8,838 | ||||||||||||
Adjusted Net Assets | (628) | 1,599 | ||||||||||||
Plus: PPE, net | 7,894 | 7,071 | ||||||||||||
Net Operating Assets | 7,266 | 8,670 | ||||||||||||
Approved balance sheet adjustments | 180 | (1,352) | ||||||||||||
Adjusted Net Operating Assets | 7,446 | 7,318 | ||||||||||||
Average Adjusted Net Operating Assets | 7,382 | |||||||||||||
Operating RONA % | 53.2 | % |
2022 Proxy Statement | 107 |
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