UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant  image7a11.jpg
Filed by a Party other than the Registrant
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
Northrop Grumman Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
Fee:
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table belowin exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.0-11


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Our Values
Our Values form the foundation of our pioneering culture and commitment to deliver on what we promise. Our Values reflect the culture we want to have and define our operating principles as we face an increasingly complex world. They reflect who we are and how we behave, and they articulate what is important to us.
 
 
We Do the
Right Thing
(1)    Title of each class of securities to which the transaction applies:We earn trust, act with ethics, integrity and transparency, treat everyone with respect, value diversity and foster safe and inclusive environments.
 
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.
 (2)    Aggregate number of securities to which the transaction applies:
 
(3)    Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)    Proposed maximum aggregate value of the transaction:
(5)    Total fee paid:
imagg24.jpgWe
Pioneer
Fee paid previouslyWe pioneer with preliminary materials.
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Check box if any part offierce curiosity, dedication and innovation, we seek to solve the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)    Amount Previously Paid:
(2)    Form, Schedule or Registration Statement No.:
(3)    Filing Party:
(4)    Date Filed:
world’s most challenging problems.






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March 29, 2019
On behalf ofLetter from the Board of Directors and management team, we cordially
April 1, 2022
Dear Fellow Shareholders,
We invite you to attend Northrop Grumman Corporation's 2019Corporation’s 2022 Annual Meeting of Shareholders. This year's meeting will be heldShareholders on Wednesday, May 15, 2019 at our principal executive office located at 2980 Fairview Park Drive, Falls Church, Virginia 2204218, 2022 beginning at 8:00 a.m., Eastern Daylight Time. The accompanying Proxy Statement explains more about the matters to be voted on at the Annual Meeting, proxy voting and other information regarding participation. While we currently intend to hold our Annual Meeting in person, we continue to monitor the impact of COVID-19. If necessary, we will announce alternative arrangements.
As we reflect on our Company's 2021 performance, we made significant progress executing our strategy to grow the business, reduce costs to deliver strong margin rates and deploy our capital to create value. Total shareholder return for the year was 29%.
In 2021, our annual sales totaled $35.7 billion, with organic sales* of $35.5 billion, which grew by 3%. Operating margin rate was 15.8% and our segment operating margin rate* was 11.8%, an increase of 40 basis points compared to 2020. Diluted EPS was $43.54 and we grew our transaction-adjusted EPS* by 8% to $25.63. We generated $3.6 billion of net cash provided by operating activities and $3.1 billion of transaction-adjusted free cash flow* for the year.
We continue to execute a robust capital deployment strategy, which prioritizes investments to create new technologies to support our customers and franchise programs, while maintaining a strong balance sheet and returning cash to our shareholders. In 2021, we retired over $2.2 billion of debt with the proceeds of the IT Services divestiture, and achieved an upgraded credit rating. We returned a record $4.7 billion to shareholders through dividends and share repurchases. We increased our dividend by 8%, which is the 18th consecutive annual increase, and we retired nearly 11 million shares as part of our repurchase plans.
Our people, strongly anchored by our Company values, remain at the core of our business. Our team continues to demonstrate unwavering commitment and drive for excellence in all that we do, from how we perform for one another and our customers, to how we continue to define possible despite ongoing challenges related to COVID-19. We have extraordinary talent, and this includes our leadership team. Our Board and management team are focused on ensuring we have the right leaders in place to maintain our culture and position Northrop Grumman for the future.
An important part of our culture is our commitment to diversity, equity and inclusion. We are proud to have been named, once again, as one of DiversityInc's Top 50 Companies for Diversity, as well as a top company for veterans, people with disabilities, employee resource groups and executive diversity councils. We were also recognized as one of Equileap's top 25 companies for gender equality on the S&P 500 and as "Best of the Best" in Top Supplier Diversity Programs by U.S. Veterans Magazine.
We continue to take crucial steps to promote sustainability, including reducing our environmental impact. We have achieved a 44% reduction in greenhouse gas emissions since 2010, exceeding the Company's long-term goal. These actions and more resulted in our Company scoring in the 96th percentile on the S&P Global Corporate Sustainability Index, inclusion in the Dow Jones Sustainability Index for North America for the 6th consecutive year, and the World Index for the first time.
We remain focused on our Company's performance and culture, and on the Board's future leadership. The members of the Board come from diverse backgrounds and experiences, which lends to a strong Board that puts our Company and our shareholders' long-term interests first. In August, we added Graham Robinson, a seasoned global business leader with important technical experience, to the Board.
Our environmental, social and governance programs play an important role in our sustainable, profitable growth, and remain critical to long-term value creation for our shareholders, customers and employees, as well as in the communities where we do business. We encourage you to read our 2021 Sustainability Report for more details about our sustainability progress and milestones.



*    This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."
2022 Proxy Statement1
Letter from the Board of Directors
Your vote is important, and we encourage you to vote as soon as possible. Your proxy or voting instruction card includes specific information regarding the several ways to vote your shares - virtually or by mail.
We look forward to continuing to deliver value to our shareholders, customers, employees and all of our stakeholders. Thank you for your support of Northrop Grumman.
Sincerely,
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David P. AbneyMarianne C. BrownDonald E. Felsinger
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Ann M. FudgeWilliam H. HernandezMadeleine A. Kleiner
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Karl J. KrapekGraham N. RobinsonGary Roughead
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Thomas M. SchoeweJames S. TurleyKathy J. Warden
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Mark A. Welsh III

2Northrop Grumman

Notice of 2022 Annual Meeting of Shareholders
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DATE AND TIME
May 18, 2022
(Wednesday)
8:00 AM Eastern Daylight Time
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LOCATION
Northrop Grumman Corporation,
Principal Executive Office
2980 Fairview Park Drive
Falls Church, Virginia 22042
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WHO CAN VOTE
Shareholders of record at the close of business on March 22, 2022 are entitled to vote at the Annual Meeting
Voting Items
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
Shareholders will also act on any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof by or at the direction of the Board of Directors.
We look forward to meeting those of you who are able to attend the meeting. For those who are unable to attend in person, live coverage of the meeting will be available on the Northrop Grumman website at www.northropgrumman.comwww.northropgrumman.com. .
At thisAdditional details regarding the logistics of the meeting shareholders will vote on matters set forthcan be found in the accompanying NoticeProxy Statement, on the Investor Relations section of 2019our website and www.edocumentview.com/noc.
While we currently intend to hold our Annual Meeting of Shareholdersin person, we are monitoring the situation regarding the COVID-19 pandemic and Proxy Statement. We will also provide a report on our Company and will entertain questions of general interestare sensitive to the shareholders.
2018 was another year of strong performance for our Company. Our acquisition of Orbital ATK in June added a new, fourth business sector to our Company, Innovation Systems, which was immediately accretive to earningspublic health and enhanced our position in the critical space and missile defense domains. Sales rose 16%, operating income increased 17%, and our businesses generated a 19% increase in segment operating profit*. We also generated higher net earnings and earnings per share. These results reflect the addition of Innovation Systems and strong performance from our three legacy Northrop Grumman sectors.
Our capital deployment strategy continues to create shareholder value. In addition to acquiring Orbital ATK, we maintained robust capital expenditures to drive innovation and affordability for our customers. We reduced debt by $2.3 billion, made voluntary contributions to our pension funds, and distributed $2.1 billion totravel concerns our shareholders through share repurchasesmay have and dividends. We increasedthe protocols that federal, state and local governments or we may impose. In the event we conclude it is not advisable to hold our dividend twice, totaling approximately 20%. We repurchased $1.3 billionAnnual Meeting in shares, and early in January,person, we completedwill announce alternative arrangements for the $1 billion accelerated share repurchase we commenced in 2018, retiring 3.84 million shares at an average pricemeeting as promptly as practicable, which may include holding the meeting solely by means of approximately $260 per share.
In 2018, we also announced an important leadership transition. Kathy Warden, who joined Northrop Grumman in 2008, and has assumed positions of increasing responsibility in critical national security domains since then, was elected toremote communication. Please monitor the Board of Directors in July and assumed the CEO role this January. Ms. Warden's deep knowledge and experience, along with her demonstrated leadership across multiple Northrop Grumman businesses, make her particularly well qualified to support the achievementInvestor Relations section of our Company's many value creation opportunities. Mr. Bush continues as Chair of the Board until July 31, 2019.
We also continue to strengthen our corporate citizenshipwebsite (www.northropgrumman.com) and sustainability efforts with leading environmental, social and governance practices. Female representation on our Board has increased to more than 30%. We received a Catalyst Awardwww.edocumentview.com/noc for the significant progress the Company made to increase the number of women and women of color in leadership positions over a sustained period from 2010-2016. Over this period, women on our senior executive team increased from 8% in 2010 to 46% in 2016, and at the vice president level from 15% to 29% over the same time period. DiversityInc named us one of their Top 50 Companies for Diversity for the ninth consecutive year. For the seventh consecutive year, Northrop Grumman earned a leadership score in CDP's 2018 climate change program. We were again included in the Dow Jones Sustainability Index for North America and we also achieved the highest ESG scores from the proxy advisor, ISS.
In 2018, as in prior years, we actively engaged with our shareholders on a variety of matters,updated information, including our strategy for long-term value creation, and ensuring our governance, compensation and sustainability practices are well designed to support long-term profitability growth and value creation.
Your vote is important. Your proxy or voting instruction card includes specific information regarding the several ways to vote your shares. We encourage you to vote as soon as possible, even if you plan to attend the meeting. You may vote over the internet, by telephone or mobile device, by mailing a proxy or voting instruction card or in person at the Annual Meeting.
Thank you for your support and continued interest in Northrop Grumman Corporation.
Wes BushDonald E. Felsinger
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ChairmanLead Independent Director
* This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI


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Notice of 2019 Annual
Meeting of Shareholders

Wednesday, May 15, 2019
8:00 a.m., Eastern Daylight Time
Northrop Grumman Corporation, Principal Executive Office
2980 Fairview Park Drive, Falls Church, Virginia 22042

The 2019 Annual Meeting of Shareholders (Annual Meeting) of Northrop Grumman Corporation (Company) will be held on Wednesday, May 15, 2019 at 8:00 a.m., Eastern Daylight Time, at our principal executive office located at 2980 Fairview Park Drive, Falls Church, Virginia 22042.
Shareholders of record at the close of business on March 19, 2019 are entitled to vote at the Annual Meeting. The following items are on the agenda:
1.The election of the 13 nominees named in the accompanying Proxy Statement;
2.A proposal to approve, on an advisory basis, the compensation of our named executive officers;
3.
A proposal to ratify the appointment of Deloitte & Touche LLP as our independent auditor for the year ending December 31, 2019;
4.A shareholder proposal to provide for a report on management systems and processes for implementing the Company's human rights policy;
5.A shareholder proposal to provide for an independent chair; and
6.Any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
All shareholders are invitedany COVID-19 protocols required to attend the Annual Meeting. To be admittedIf you will need proof of stock ownership and a form of photo identification. If your broker holds your shares in "street name," you will also need proof of beneficial ownership of Northrop Grumman common stock.are planning to attend the Annual Meeting, please check the website prior to the meeting date.
We encourage all shareholders to vote on the matters described in the accompanying Proxy Statement. Please see the section entitled "Questions and Answers About the Annual Meeting" on page 78 for information about voting over the internet, by telephone or mobile device, by mailing a proxy or voting instruction card or by attending in person atStatement prior to the Annual Meeting.
By order of the Board of Directors,
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Jennifer C. McGarey
Corporate Vice President and Secretary
By order of the Board of Directors,
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Jennifer C. McGarey
Corporate Vice President and Secretary

March 29, 2019 
How to Vote
Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on May 15, 2019: 18, 2022:
The Proxy Statement for the 20192022 Annual Meeting of Shareholders and the Annual Report for the year ended December 31, 20182021 are available at: www.edocumentview.com/noc.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI
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INTERNET
www.envisionreports.com/noc
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TELEPHONE
800-652-VOTE
(800-652-8683) (toll-free)

TABLE OF CONTENTSp97_iconxmla.jpg
MAIL

Mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope

PROXY STATEMENT SUMMARY
1
2022 Proxy Statement3

Table of Contents
Our ValuesIFC*
61
2019 Nominees for Director
6
CORPORATE GOVERNANCE
14
Overview
14
3
6
12
13
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14
15
16
23
26
26
1427
28
1529
1630
1933
Meeting Attendance
19
Director Independence
19
Director Election Process
20
Board Composition and Director IndependenceNominations
2034
2135
2140
Board MembershipMemberships and External Relationships
2240
Effect of Failure to Receive the Required Vote or Obtain and Retain Security Clearance
22
Board and Committee Self-Evaluation
22
Succession Planning
23
2341
42
2442
Corporate Responsibility
2443
45
46
 
COMPENSATION OF DIRECTORSa0_p5xiconxtoccheckbluea.jpg
Stock Ownership Requirements and Anti-Hedging and Pledging Policy
25
2018 Director Compensation
26
TRANSACTIONS WITH RELATED PERSONS AND CONTROL PERSONS
2847
Related Person Transactions
28
48
48
Compensation Philosophy and Objectives
48
2021 Compensation Elements
50
2021 Performance Highlights
51
Consideration of Say-On-Pay Vote
51
Our Compensation Best Practices
52
How We Make Executive Compensation Decisions
52
Key Components of Our Executive Compensation Programs
56
Other NEO Benefits
64
Policies and Procedures
66
2868
Indemnification Agreements
29
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
30
VOTING SECURITIES AND PRINCIPAL HOLDERS
31
Stock Ownership of Certain Beneficial Owners
31
Stock Ownership of Officers and Directors
32
EQUITY COMPENSATION PLAN INFORMATION
33
PROPOSAL TWO: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
34

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI i

TABLE OF CONTENTS


4Northrop Grumman
Table of Contents
3569
Executive
3769
Key Principles
Key Components of Our Programs
44
COMPENSATION COMMITTEE REPORT
52
COMPENSATION TABLES
53
Summary Compensation Table
53
2021 Grants of Plan-Based Awards Table
5571
5672
5773
5874
6378
CEO PAY RATIO
6580
TERMINATION PAYMENTS AND BENEFITS
6684
Termination Payment Table
6885
PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
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86
6986
6987
87
 
AUDIT COMMITTEE REPORTp5_iconxtoccrossblue-01a.jpg
89
PROPOSAL FOUR: SHAREHOLDER PROPOSAL
7292
PROPOSAL FIVE: SHAREHOLDER PROPOSALRelated Person Transactions
7592
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Indemnification Agreements
7893
MISCELLANEOUS
81
94
94
95
96
99
Voting on Other Matters
8199
99
8199
Shareholder Nominations for Director Election at the 20202023 Annual Meeting
8199
81100
82100
82100
82100
82101
APPENDIX
A-1102




*    Inside Front Cover
iiINOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

PROXY STATEMENT SUMMARY

2022 Proxy Statement		5


Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement, reflecting business, compensation and corporate governance highlights.Statement. For additional information about these topics, please refer to the discussions contained in this Proxy Statement and in our Annual Report on Form 10-K for the year ended December 31, 2018 (20182021 (2021 Form 10-K) filed with the United States (U.S.) Securities and Exchange Commission (SEC) on January 31, 2019. This Proxy Statement contains certain non-GAAP (accounting principles generally accepted in the United States of America) financial measures,27, 2022. Please also refer to our Sustainability Report which are identified with asterisks. For more information, including definitions, reconciliations to the most directly comparable GAAP measure and why we believe these measures may be useful to investors, see "Appendix A - Use of Non-GAAP Financial Measures." is available on our website at www.northropgrumman.com/corporate-responsibility/sustainability-reports-and-esg-information/.
We intend to mail a Notice of Internet Availability of Proxy Materials to shareholdersShareholders of record and to make this Proxy Statement and accompanying materials available on the internet on or about March 29, 2019.April 1, 2022.
20182021 Performance Highlights (page 38)
Our focus on performance, our portfolio and capital deployment continues to strengthen our foundation for long-term profitable growthvalue creation. Our business remains well aligned to government priority areas in national security and create valuescientific discovery and we continue to see strong demand for our shareholders, customerstechnologies and employees.
2018 wassolutions. We delivered another year of strongsolid operating performance in 2021, won new franchise programs, and have a robust backlog of over $76 billion that provides opportunities for our Company. We strengthened our alignment with critical national security missions with the acquisition of Orbital ATK in June. This added a new, fourth business sector, Innovation Systems. Strong performance from our three legacy Northrop Grumman sectors, along with the contribution of our new sector, drove a 16% sales increase, a 17% increase in operating income, and a 19% increase in segment operating income*. 2018 diluted earnings per share increased to $18.49. We also announced the adoption of the mark-to-market (MTM) method of accounting for our pension and other postretirement benefit plans. Beginning with our fourth quarter 2018 financial results, we are presenting MTM-adjusted earnings* and MTM-adjusted diluted earnings per share* as a supplemental financial measure for measuring the Company's underlying financial performance. MTM-adjusted earnings per share* increased more than 50% to $21.33.
Our operations continued to generate strong cash flow. Cash provided by operations increased $1.2 billion to more than $3.8 billion, and free cash flow* increased by approximately $900 million to $2.6 billion. Our strong cash generation enabled us to continue deploying cash for the benefit of our customers, shareholders and employees. In 2018, our capital expenditures totaled $1.2 billion and we invested $764 million in R&D. Our capital expenditures continue to be elevated as we invest to strengthen the foundation for long-term profitable growth and drive affordability for our customers.
We continued to return cash to shareholders. In October 2018, we commenced a $1 billion accelerated share repurchase (ASR), which was completed in January 2019. This transaction retired 3.84 million shares of our stock at an average price of approximately $260 per share. 2018 share repurchases totaled $1.3 billion. We also announced two dividend increases, which in total increased our quarterly dividend by 20% to $1.20 per share.
In July 2018, after robust and extended succession planning, the Board of Directors elected Kathy Warden to our Board and announced that she would succeed Wesley Bush as CEO, beginning on January 1, 2019. After serving nine years in the CEO role, Mr. Bush remains Chair of the Board until July 31, 2019.
future growth.
 
40% 3-year Total Shareholder Return (2016-2018)
16%Salesincreaseto $30.1 billion

Totalbacklogof $53.5billion
$821millionin dividendspaid

20% totalincreasein quarterlydividend per share
$1.3billioninsharerepurchases

$1 billionacceleratedshare
repurchasecommencedin Oct. 2018
Capitalspending
of $1.2 billion

InternalR&Dspendingof
$764 million
Financial Highlights
 
 
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


*    This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 1

PROXY STATEMENT SUMMARY

6		Northrop Grumman

Proxy Statement Summary

2018 Executive Compensation Highlights (page 37)
We are committed to performance-based executive compensation programs that align with shareholders'our shareholders’ interests, business objectives and our strategy of investing for and delivering long-term profitable growth.
Due to strong financial performance in 2018, our 2018 Annual Incentive Plan (AIP) payout increased to 160%, from 131% in 2017. Our Long-Term Incentive Plan (LTIP) payout is 115% compared to 150% in 2017 for named executive officers (NEOs). We ranked in the 45th percentile for three-year TSR performance relative to the 2016 Performance Peer Group identified on page 42, ranked in the 64th percentile for three-year TSR performance relative to the S&P Industrials and exceeded our target for Cumulative Free Cash Flow* (Cumulative FCF*). Following are some governance principles of our 2018 executive compensation programs:
Compensation Snapshot
CEONEOs
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Paying For Performance
In 2021, we continued to maintain robust pay-for-performance practices. All incentive plan performance payouts reflect our performance against our 2021 goals.
We sustained strong
financial performance
in 2021
130%
2021 ANNUAL INCENTIVE PLAN
(AIP) PAY FOR OUR NAMED
70%EXECUTIVE OFFICERS (NEOs) of Annual LTIP Equity Grant Performance-BasedOUT
122%
2021 LONG-TERM INCENTIVE PLAN
(LTIP) PAYOUT FOR OUR NEOs
These payouts were the result of excellent execution during a period of volatility driven by COVID-19 impacts on the broader market.
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
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People
Diversity | Employee Experience | Safety
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Environment
Environmental Sustainability
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Customer
Quality | Customer Satisfaction

2022 Proxy Statement7
Proxy Statement Summary
High Say-on-Pay
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 Agreementsof Company Stock

Board Nominees (pages 6-12)
NameAge (1)
Director
since
Professional Background      Committee Memberships
Other Public
Company Boards
AuditCompGovPolicy
Wesley G. Bush5709/2009Chairman, Northrop Grumman Corporation————1
Marianne C. Brown6003/2015Co-Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. 
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—
Donald E. Felsinger7102/2007Lead Independent Director, Northrop Grumman Corporation; Former Chairman and CEO, Sempra Energy 
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 2
Ann M. Fudge6703/2016Former Chairman and Chief Executive Officer, Young & Rubicam Brands
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 1
Bruce S. Gordon7310/2008Former President, Retail Markets Group, Verizon Communications Inc.; Former President and CEO, NAACP 
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—

William H. Hernandez7009/2013Former Senior Vice President and CFO, PPG Industries, Inc.
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 2
Madeleine A. Kleiner6710/2008Former Executive Vice President and General Counsel, Hilton Hotels Corporation
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 1
Karl J. Krapek7009/2008Former President and COO, United Technologies Corporation 
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 2
Gary Roughead6702/2012Retired Admiral, United States Navy and Former Chief of Naval Operations 
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—
Thomas M. Schoewe6608/2011Former Executive Vice President and CFO, Wal-Mart Stores, Inc. 
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2
James S. Turley6302/2015Former Chairman and Chief Executive Officer, Ernst & Young
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 3
Kathy J. Warden4707/2018Chief Executive Officer and President, Northrop Grumman Corporation—————
Mark A. Welsh III6512/2016Dean 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
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—
(1)8Northrop Grumman
Proxy Statement Summary
Board Nominee Highlights
Age*Director
Since
Committee Memberships		Other Public
Company
Boards
Name and Professional BackgroundARCGP
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David P. Abney
Former Executive Chairman of the Board of Directors and
Chief Executive Officer of United Parcel Service, Inc. (UPS)
66
06/
2020
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2
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Marianne C. Brown
Former Chief Operating Officer, Global Financial Solutions,
Fidelity National Information Services, Inc.
63
03/
2015
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3
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Donald E. Felsinger
Lead Independent Director, Northrop Grumman Corporation;
Former Chairman and CEO, Sempra Energy
74
02/
2007
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1
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Ann M. Fudge
Former Chairman and Chief Executive Officer,
Young & Rubicam Brands
70
03/
2016
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1
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William H. Hernandez
Former Senior Vice President and CFO, PPG Industries, Inc.
74
09/
2013
graphic_chaira.jpg
graphic_membera.jpg
—
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Madeleine A. Kleiner
Former Executive Vice President and General Counsel,
Hilton Hotels Corporation
70
10/
2008
graphic_membera.jpg
graphic_chaira.jpg
1
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Karl J. Krapek
Former President and COO, United Technologies Corporation
73
09/
2008
graphic_membera.jpg
graphic_membera.jpg
2
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Graham N. Robinson
Senior Vice President, Stanley Black & Decker, Inc., and President of STANLEY Industrial
53
08/
2021
graphic_membera.jpg
graphic_membera.jpg
—
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Gary Roughead
Retired Admiral, United States Navy and
Former Chief of Naval Operations
70
02/
2012
graphic_membera.jpg
graphic_chaira.jpg
—
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Thomas M. Schoewe
Former Executive Vice President and CFO, Wal-Mart Stores, Inc.
69
08/
2011
graphic_chaira.jpg
graphic_membera.jpg
2
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James S. Turley
Former Chairman and Chief Executive Officer, Ernst & Young
66
02/
2015
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graphic_membera.jpg
3
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Kathy J. Warden
Chair, Chief Executive Officer and President, Northrop Grumman Corporation
50
07/
2018
1
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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
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—
ARAudit and Risk CommitteeGGovernance Committee
graphic_chaira.jpg
Chair
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Member
CCompensation CommitteePPolicy Committee
*   Age as of March 29, 2019. image52.gif= Chair image50.gif= MemberApril 1, 2022.

2INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

2022 Proxy Statement9
Proxy Statement Summary
We have a balanced, independent Board of Directors with diversityof age, tenure, gender and race/ethnicity.
AVERAGE AGE
66.6 YEARS
50s
PROXY STATEMENT SUMMARYimage_0a.jpg
2
60s

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5
70s
image_2a.jpg
6

GENDER

4/13
Board Nominee HighlightsFemale
image_bar4of13proxysummarya.jpg
4
The charts below reflect the tenure, independence and broad experience of our board nominees.INDEPENDENT
chart-b30dd4fa3a205ebc92a.jpgchart-f5e8d99d8cdb56a7ae4.jpg
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NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 3

12/13
Independent
PROXY STATEMENT SUMMARYimage_4a.jpg

12


AVERAGE TENURE
7.9 YEARS
Governance Highlights (pages 14-24)≤5
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4
6-10
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4
>10
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5
RACIAL/ ETHNIC DIVERSITY
3/13
Racially/Ethnically Diverse
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3
We are committed to high standards



Our directors’ broad and valuableexperience also helps foster diversity of corporate governance and have a robust corporate governance program intended to promote the long-term success ofthought in our Company. Some highlights of our corporate governance practices are listed below.boardroom through:
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Senior Leadership Experience
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Senior Government/Military Experience
Board Structure and
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Corporate Governance✓ Expertise
The Board is approximately 85% independent.image_13a.jpg
International Experience
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Financial Expertise/Literacy
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Human Capital Strategy/
Talent Management
✓
Each of the Audit, Compensation, Governance and Policy Committees is comprised entirely of independent directors.
image_16a.jpg
✓Risk Oversight
image_17a.jpg
Cyber Expertise
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Aerospace/Defense
Industry Experience
image_19a.jpg
Environmental Sustainability/Corporate Responsibility
10Northrop Grumman
Proxy Statement Summary
Governance Highlights
STRONG INDEPENDENT
OVERSIGHT
COMMITMENT TO BOARD
EFFECTIVENESS
ROBUST SHAREHOLDER
RIGHTS
graphic_checkbga.jpgOur policy   ~92% independent Board
graphic_checkbga.jpglimits the number  Fully independent Board committees
graphic_checkbga.jpg  Lead Independent Director with robust responsibilities and oversight
graphic_checkbga.jpg  Regular executive sessions
graphic_checkbga.jpg  Thorough annual self-assessment of boardsBoard, Committee and individual director performance
graphic_checkbga.jpg  on which our directors serveOverboarding policy (no more than three other public company boards without special approval)
graphic_checkbga.jpg  Annual director elections with majority voting standard in uncontested elections
graphic_checkbga.jpg  Proxy access
graphic_checkbga.jpg  Right to call special meeting
graphic_checkbga.jpgavoid overboarding  Right to act by written consent
graphic_checkbga.jpg.  Shareholder engagement program that provides for shareholder access to management and directors
✓
BOARD REFRESHMENT AND
DIVERSITY
DIRECTOR RECOGNITION
graphic_checkbga.jpg  History of gender and racial/ethnic diversity on our Board, including current slate of directors (6 of 13 nominees)
graphic_checkbga.jpg  Mandatory retirement at 75
graphic_checkbga.jpg  Have added 7 new directors since the beginning of 2015
graphic_checkbga.jpgThe independent  Our directors, Ann Fudge and Graham Robinson, were recognized as two of Savoy Magazine’s Most Influential Black Corporate Directorsregularly hold both executive sessions
graphic_checkbga.jpg  led by our Chairperson and independent sessions led by ourOur Lead Independent Director.
✓
Our Lead Independent Director,appointed annually by the independent directors, is empowered with a robust set of responsibilities and provides additional independent oversight of senior management and Board leadership.
✓
All directors are elected annually based on a majority voting standard in uncontested elections, with a director resignation policy if a director fails to receive a majority of votes cast "for" his or her election.
✓
The Board nominees reflect a balanced mix of directors with deep Company and industry knowledge, and fresh and diverse perspectives, with an average director tenure of 6.5 years.
✓
The Board and each Committee annually conduct a thorough self-assessment process focused on Board or Committee performance, respectively.In addition,each director completes an individual director evaluation for each was previously recognized as Director of the other directorsYear by NACD
graphic_checkbga.jpg  James Turley and receives feedback on his or her own performance.Thomas Schoewe were previously honored as members of the NACD Directors 100
✓
We have agraphic_checkbga.jpg  director retirement policyBill Hernandez was recognized as one of the 15 most Relevant Hispanic Directors
graphic_checkbga.jpg  for directors who reach the age of 75 and are committed to Board refreshment, with the addition of five new directors to the Board in the last five years.
✓Three of our female directors - Marianne Brown, Ann Fudge and Madeleine Kleiner - have previously been honored by Women's Inc. as three of the most influential corporate directors of 2018.
✓One of our directors - William Hernandez - has been recognized by a local chapter of the NACD with a leadership in corporate governance award in 2018.
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
Shareholder Rights✓
The Boardhas adopted a robust proxy access bylaw provision,allowing eligible shareholders to include their own director nominees in the Company's proxy materials.
✓
graphic_checkbga.jpgShareholders holding at least 25% of our common stockhave the right to call a special meeting.
✓
Shareholders holding at least 25% of our common stock have the right to take action by written consent.
Corporate Responsibility and Sustainability✓
We have a strong  Strong ethics program with standards of business conduct that help guide and promote good governance, responsible business practicescorporate culture
graphic_checkbga.jpg  Extensive and the highest standards of integrity throughout the Company.long-standing diversity, equity and inclusion (DEI) programs, widely applauded
graphic_checkbga.jpg  Human Rights Policy and oversight by executive-level Human Rights Working Group
✓
We have robust programs to fulfill our commitment to diversity and inclusiongraphic_checkbga.jpg  throughout the Company.
✓
We publish an annual corporate responsibility report highlighting aspects of our social, environmental and governance performance and engage an independent external review panel to provide feedback and advice on our report.
✓
We integrate environmental sustainability Environmental program integrated into our organizational culture minimizingto reduce our environmental footprint and driving affordability. Our executive officers are accountable for achieving environmental sustainability goals, which are one of our six non-financial corporate performance metrics.
✓
graphic_checkbga.jpgWe disclose our   Transparent political contributions policy and various trade association membershipsactivity aligned with our business objectives and Company values
graphic_checkbga.jpg  Increased focus on climate change and operational efficiency (e.g. water, waste) and hiring of Chief Sustainability Officer to oversee environmental component of ESG
For more information on our website.
✓
We have a robust recoupment policy which provides the Board of Directors with the ability to recoup the incentive compensation of elected officers under certain circumstances.
Stock Ownership✓
We have stock ownership guidelines of 7x base salary for the CEO corporate responsibility and 3x base salary for other named executive officers, as well as stock holding requirements of three years from the vesting date.
✓
We have stock ownership guidelines of 5x the annual cash retainer forsustainability program, see pages 35-39 and our non-employee directors.
✓
We prohibit hedging and pledging of our common stock by directors and executive officers.
latest Sustainability Report

4INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

2022 Proxy Statement11

Management and Shareholder Proposals
PROPOSAL 1
Election of Directors
>  See page 14 for more details
PROXY STATEMENT SUMMARYimage_26a.jpg  The Board of Directors unanimously recommends that you vote “FOR” the 13 nominees for director listed below.




PROPOSAL 2
Advisory Vote on Compensation of
Named Executive Officers
>  See page 47 for more details
Shareholder Engagement
graphic_checka.jpg   The Board of Directors unanimously recommends that you vote “FOR” this proposal.


We regularly engage
PROPOSAL 3
Ratification of Appointment of Independent Auditor
>  See page 86 for more details
graphic_checka.jpg  The Board of Directors unanimously recommends that you vote “FOR” this proposal.


Based on its recent evaluation, the Audit and Risk Committee of the Board of Directors believes that the appointment of Deloitte & Touche LLP (Deloitte) is in the best interests of the Company and its shareholders. Deloitte served as our independent auditor for 2021, and Deloitte or its predecessors have served as the independent auditor for the Company (including certain of its predecessor companies) since 1975.
Additional Proposal
PROPOSAL 4
Shareholder Proposal to Change the Ownership Threshold for Shareholders to Call a Special Meeting
>  See page 89 for more details
pg11_iconxproposalcrossa.jpg  The Board of Directors unanimously recommends that you vote “AGAINST” this proposal.


12Northrop Grumman

Shareholder Engagement
Northrop Grumman has an extensive shareholder outreach program that enables regular, ongoing engagement with our shareholders throughout the year. Our leadership team and key executives participate in these discussions to help us better understand their perspectives on our Company, includingshareholders' priorities, and to inform and shape our strategies, performance, issues of governance and corporate responsibility, and executive compensation. This ongoing dialogue, in which both members of management and directors participate, has helped inform the Board's decision-making, and ensure our interestsas we remain well-aligned with those of our shareholders.to shareholder interests.
Since our 2018 annual meeting, we have offered to engage on governance-related topics with shareholders representing approximately 60% of our outstanding shares. We have met with shareholders representing more than 40% of our outstanding shares to learn their perspectives on the Company and governance-related topics. While a number of our shareholders did not request meetings, we believe it is a best practice to offer engagement to shareholders representing a majority of our shares outstanding. These efforts are in addition to normal course outreach conducted by our Investor Relations team and members of senior management with portfolio managers and analysts, which are primarily focused on strategy and Company performance. We also meet with shareholders at investor conferences held throughout the year.
The Company has a substantialproven record of adopting provisions or modifying practices withas a result of shareholder input. We carefully consider all shareholder input, including the benefitresults of and to reflect,the shareholder input.vote. Examples include provisions regarding proxy access, the right of shareholders to call a special meeting and the right of shareholders to act by written consent, as well as the use of full value shares and performance-based long-term incentives for executive management, and how we reaffirm our executives.
commitment to human rights. As part of our spring and fall proxy related outreach, we offer engagement to our top shareholders. These efforts are in addition to various other ongoing forms of shareholder engagement highlighted below.
Annual Shareholders' Meeting
Time:  May 15, 2019, 8:00 a.m., Eastern Daylight TimeWHO WE
ENGAGED
Record Date:  You can vote if you were a shareholder of record at the close of business on March 19, 2019.
Place:  Northrop Grumman Corporation
             2980 Fairview Park Drive
             Falls Church, Virginia 22042

Admission:  You will need proof of stock ownership and a form of photo identification. All recording devices are prohibited in the meeting.
Voting Matters and Board Recommendations
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 Board Vote RecommendationPage Reference
Proposal One: Election of Directors
FOR each Director Nominee
6
Proposal Two: Advisory Vote on Compensation of Named Executive OfficersFOR34
Proposal Three: Ratification of Appointment of Independent AuditorFOR69
COMPANY
REPRESENTATIVES
Proposal Four: Shareholder Proposal •to Provide forChief Executive Officer
• a Report on Management Systems and Processes for Implementing the Company's Human Rights PolicyChief Financial Officer
•Chief Sustainability Officer
AGAINST72
•General Counsel
•Corporate Secretary
•Treasurer and VP, Investor Relations
Proposal Five:
TOPICS
DISCUSSED
Governance Topics
•Shareholder Proposal to Provide for an Independent ChairProposals/Votes
•Executive Compensation
•Board Structure
AGAINST
Sustainability Topics
•Diversity
•Environmental Goals
•Human Rights
75
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

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 5

PROPOSAL ONE: ELECTION OF DIRECTORS

2022 Proxy Statement		13


2019 Nominees for Director
Proposal 1: Election of Directors
Our Board has nominated 13 directors for election at the Annual Meeting. Each of the director nominees has consented to serve, and we do not know of any reason why any of them would be unable to serve, if elected. If a nominee becomes unavailable or unable to serve before the Annual Meeting (for example, due to serious illness), the Board may determine to leave the position vacant, reduce the number of authorized directors or designate a substitute nominee. If any nominee becomes unavailable for election to the Board, an event which is not anticipated, the proxyholders will have full discretion and authority to vote, or refrain from voting, for any other nominee in accordance with their judgment.
Vote Required
To be elected, a nominee must receive more votes cast “for” than votes cast “against” his or her election. Abstentions and broker non-votes will have no effect on this proposal. If a nominee is not re-elected, he or she will remain in office until a successor is elected or until his or her earlier resignation or removal. See page 25 for additional information on our Director Election Process.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE 13 NOMINEES FOR DIRECTOR LISTED BELOW.
14Northrop Grumman
Proposal 1: Election of Directors
Director Qualifications and Experience
In considering Board nominees, the Governance Committee considers each individual’s background and personal and professional experiences in addition to general qualifications. Nominees are evaluated in the context of the Board as a whole, with a focus on achieving an appropriate mix of skills needed to provide effective governance and oversight, advancing the long-term interests of our shareholders. The Governance Committee regularly assesses and communicates with the Board about the current and future skills and backgrounds to ensure the Board maintains an appropriate mix. These skills are reflected in the following table. Each nominee also possesses additional skills and experience that are not highlighted among those listed below. We believe the combination of the skills and qualifications shown below demonstrates how the Board is well-positioned to provide strategic oversight and guidance to management and serve our shareholders.
Why is this important for Northrop Grumman?
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SENIOR LEADERSHIP EXPERIENCEnnnnnnnnnnnnn13
Directors with this experience possess strong leadership qualities and the ability to identify and develop those qualities in others
pg22_iconxcorpgova.jpg
CORPORATE GOVERNANCEnnnnnnnnnnnnn13
Supports our goals of strong Board and management accountability, transparency and protection of shareholder interests
pg22_iconxfinanciala.jpg
FINANCIAL EXPERTISE/LITERACYnnnnnnnnnnnnn13
Assists directors in understanding and overseeing our financial reporting and internal controls
pg22_iconxriska.jpg
RISK OVERSIGHT/MANAGEMENTnnnnnnnnnnnnn13
Critical to the Board’s role in overseeing the risks facing the Company
pg22_iconxaerospacea.jpg
AEROSPACE/DEFENSE INDUSTRY EXPERIENCEn






n

n


n4
Supports oversight of the Company’s business performance and strategic developments in our industry
pg22_iconxseniorlead-10a.jpg
INTERNATIONAL EXPERIENCEnnnnnnnnnnnnn13
For understanding our business and strategy
pg22_iconxhumancapa.jpg
HUMAN CAPITAL STRATEGY/TALENT MANAGEMENTnnnnnnnnnnnnn13
Helps us attract, motivate and retain top candidates for positions at the Company
icon_cybera.jpg
CYBER EXPERTISEnn




n


n4
Supports our business in enhancing internal operations and navigating the rapidly changing landscape for cybersecurity
icon_environmenta.jpg
ENVIRONMENTAL SUSTAINABILITY/ CORPORATE RESPONSIBILITYnn


nn


nn


n7
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 Statement15
Proposal 1: Election of Directors
2022 Nominees for Director
The following pages contain biographical and other information about each of the nominees. In addition, we have provided information regarding some of the particular experiences, qualifications, attributes and skills that led the Board to conclude that each nominee should serve as a director.
Unless instructed otherwise, the proxyholders will vote the proxies received by them "FOR"“FOR” the election of the director nominees listed below.
WESLEY G. BUSH, 57
 imagg21.jpgpg13_photoxwardenka.jpg
  
Chairman, Northrop Grumman Corporation.
Director since September 2009


Mr. Wesley G. BushMs. Kathy J. Warden has served as Chief Executive Officer of the Company from January 2010 through December 31, 2018. He was elected to the Board of Directors in 2009Chair since August 2019 and elected Chairman of the Board of Directors in July 2011, and continues in his role as Chairman. Mr. Bush served as Chief Executive Officer and President of the Company fromsince January 2010 through December 31, 2017,2019. She has served on the Board of Directors since July 2018. Prior to becoming CEO and President, Ms. Warden served as President and Chief Operating Officer of the Company from March 2007January 2018 through December 2009,2018, as President and Chief Financial Officer from May 2006 through March 2007, and as Corporate Vice President and Chief Financial Officer from March 2005 to May 2006. Following the acquisition of TRW Inc. (TRW) by the Company, he was named Corporate Vice President and President of the Space Technology sector. Mr. Bush joined TRW in 1987 and during his career with that company held various leadership positions, includingCompany’s Mission Systems Sector from 2016 through 2017, as Corporate Vice President and CEO of TRW Aeronautical Systems. He is a memberPresident of the BoardCompany’s former Information Systems Sector from 2013 to 2015, and as Vice President of Directors ofthe Company’s Cyber Intelligence Division from 2011 to 2012. Prior to joining the Company in 2008, Ms. Warden held leadership roles at General Motors CorporationDynamics and Veridian Corporation. Earlier, she was a principal in a venture internet firm and also served asspent nearly a director of Norfolk Southern Corporation during the last five years. He also serves on the boards of several non-profit organizations, including Conservation International and INOVA Health System.
Attributes, Skills and Qualifications
decade with General Electric Company working in commercial industries.
ATTRIBUTES, SKILLS AND QUALIFICATIONS
•SignificantExtensive experience in operational leadership, strategy, performance and business experience with over 35 yearsdevelopment in the aerospacegovernment and defense industrycommercial markets, including cyber expertise
•Prior leadership positions within Northrop Grumman (including as Chief Executive Officer, President, Chief Operating Officer Chief Financial Officer and Sector President)President of two business sectors)
•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
● Age: Extensive international business experience50
Director since:
July 2018
●Extensive leadership roles in community service


6INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

PROPOSAL ONE: ELECTION OF DIRECTORS

16		Northrop Grumman


Proposal 1: Election of Directors
MARIANNE C. BROWN, 60
imagg23.jpgpg14_photoxabneyda.jpg
     
Co-ChiefMr. David P. Abney served as the Executive Chairman of the UPS Board of Directors from March 2016 through September 2020. From September 2014 to June 2020, he was the Chief Executive Officer of UPS. Prior to that, Mr. Abney was UPS’s Chief Operating Officer Global Financial Solutions, Fidelity National Information Services, Inc.,from 2007 to 2014. From 2003 to 2007, he was Senior Vice President and President of UPS International. Mr. Abney began his UPS career in 1974.
ATTRIBUTES, SKILLS AND QUALIFICATIONS
•Extensive leadership and business experience as a financial services technology solutions provider.former Executive Chairman, Chief Executive Officer and Chief Operating Officer of a large multinational enterprise

•Significant expertise in international operations and global logistics
Director since March 2015•Broad experience with talent management and leading global teams

•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, and Policy Committee



pg14_photoxbrownma.jpg
     
Ms. Marianne C. Brown has served as Co-Chiefthe Chief Operating Officer Global Financial Solutions, of Fidelity National Information Services, Inc. since’s (FIS) Global Financial Solutions organization from January 2018.2018 until June 2019. Prior to that, Ms. Brown served as Chief Operating Officer, Institutional and Wholesale Business of Fidelity National Information ServicesFIS since December 2015, when it acquired SunGard Financial Systems. Ms. Brown was the Chief Operating Officer of SunGard Financial Systems, a software and IT services provider, from February 2014 to November 2015. Prior to that, Ms. Brown was the CEO and president of Omgeo, a global financial services technology company, from March 2006 to February 2014. Before joining Omgeo, she was the CEO of the Securities Industry Automation Corporation. Ms. Brown began her career at Automatic Data Processing (ADP) and progressed through a series of positions of increasing responsibility culminating in her role as general manager of ADP’s Brokerage Processing Services business, which was subsequently spun off to become Broadridge Financial Solutions.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Substantial business experience as a former Chief Operating Officer and as a former Chief Executive Officer
●•Significant experience in IT goods and services, cyber protection and business management
● •Community and philanthropic leader

OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS
DONALD E. FELSINGER, 71
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Lead Independent Director•Member of the Board of Directors Northrop Grumman Corporation.of Akamai Technologies, Inc.

Former Chairman and Chief Executive Officer, Sempra Energy, an energy services holding company.

Director since February 2007

•Member of the Compensation Board of Directors of The Charles Schwab Corporation
•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 Statement17
Proposal 1: Election of Directors

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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 Sempra'sSempra’s Chairman and CEO. Prior to that, Mr. Felsinger was President and Chief Operating Officer of Sempra Energy from January 2005 to February 2006 and a member of the Board of Directors. From 1998 through 2004, he was Group President and Chief Executive Officer of Sempra Global. Prior to the merger that formed Sempra Energy, he served as President and Chief Operating Officer of Enova Corporation, the parent company of San Diego Gas & Electric (SDG&E). Prior positions included President and Chief Executive Officer of SDG&E, Executive Vice President of Enova Corporation and Executive Vice President of SDG&E. Mr. Felsinger serves on the Boards of Directors of Archer-Daniels-Midland (Lead Independent Director) and Gannett Co., Inc.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive business experience as Chief Executive Officer, a board member and Chairman of other Fortune 500 companies in regulated industries
●•Significant experience in corporate governance and strategy, and as Lead Independent Director of a Fortune 250 company
● •In-depth knowledge of executive compensation and benefits


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 7
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS
•Lead Independent Director of the Board of Directors of Archer-Daniels-Midland
FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS
•Member of the Board of Directors of Gannett Co., Inc.

PROPOSAL ONE: ELECTION OF DIRECTORS



ANN M. FUDGE, 67
imagg04.jpgDonald E. Felsinger
Former Chairman and Chief Executive Officer, Young & Rubicam Brands, a marketing communications company.Sempra Energy
Age:74
Director since March 2016since:
February 2007
Member of the Audit Committee andmembership:
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. From 1977 to 1986, Ms. Fudge held a variety of marketing positions at General Mills. She is a director of Novartis AG, and served as a director of General Electric Company, Infosys Limited and Unilever N.V. during the last five years. Ms. Fudge is the Chair of the Board of Trustees of WGBH Public Media and a trustee of the Brookings Institution. She also serves on the Advisory Board of the Smithsonian Institution's National Museum of African American History and Culture, and as Chair of the U.S. Programs Advisory Panel of the Gates Foundation.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive business experience as former Chief Executive Officer and former president of leading consumer products business units
●•Substantial international experience through service as an executive and director of a large multinational company and a director of other large multinational companies
● •Significant public company board experience
● •Experience with talent development and acquisition
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


BRUCE S. GORDON, 73
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18
Former President, Retail Markets Group, Verizon Communications Inc., a telecommunications company, and Former President & CEO, NAACP.
Director since October 2008
Member of the Compensation Committee and Policy Committee
Mr. Bruce S. Gordon served as President and Chief Executive Officer of the National Association for the Advancement of Colored People from June 2005 to March 2007. In 2003, Mr. Gordon retired from Verizon Communications Inc., where he had served as President, Retail Markets Group since 2000. Prior to that, Mr. Gordon served as Group President of the Enterprise Business Unit, President of Consumer Services, Vice President of Marketing and Sales and Vice President of Sales for Bell Atlantic Corporation (Verizon's predecessor). He is a member of the board of directors of the Newport Festival Foundation and a member of the Executive Leadership Council. Mr. Gordon served as a director of CBS Corporation and as the Non-Executive Chair of The ADT Corporation during the last five years. He currently serves as a diversity consultant to several Fortune 500 companies.
Attributes, Skills and Qualifications
●  Extensive leadership and business skills acquired from his experience with corporate and non-profit enterprises
● National leader on issues of diversity and inclusion
●Significant board experience, including as non-executive chair
Northrop Grumman


8INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

Proposal 1: Election of Directors
PROPOSAL ONE: ELECTION OF DIRECTORS



WILLIAM H. HERNANDEZ, 70

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Former Senior Vice President and Chief Financial Officer, PPG Industries, Inc., a manufacturer of chemical and industrial products.
Director since September 2013
Member of the Audit Committee (Chair) and Governance Committee
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 PPG'sPPG’s corporate controller from 1990 to 1994. Mr. Hernandez previously held a number of positions with Borg-Warner Corporation and Ford Motor Company. Mr. Hernandez is a certified management accountant and has taught finance and management courses at Marietta College. He is a member of the Boards of Directors of Albemarle Corporation and USG Corporation and served as director of Black Box Corporation during the last five years.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
● •Extensive experience and expertise in areas of finance, accounting and business management acquired as Chief Financial Officer of PPG Industries
●•Significant experience in areas of risk management
●•Audit committee financial expert
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


MADELEINE A. KLEINER, 67

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Former Executive Vice President and General Counsel, Hilton Hotels Corporation, a hotel and resort company.
Director since October 2008
Member of the Audit Committee and Governance Committee (Chair)
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. Ms. Kleiner served as Senior Executive Vice President, Chief Administrative Officer and General Counsel of H.F. Ahmanson & Company and its subsidiary, Home Savings of America, until the company was acquired in 1998, and prior to that was a partner at the law firm of Gibson, Dunn and Crutcher where she advised corporations and their boards primarily in the areas of mergers and acquisitions, corporate governance and securities transactions and compliance. Ms. Kleiner currently serves on the Board of Directors of Jack in the Box Inc.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
● •Expertise in corporate governance, Sarbanes-Oxley controls, risk management, securities transactions and mergers and acquisitions
● •Significant experience from past roles as general counsel for two public companies, outside counsel to numerous public companies and through service on another public company board
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)
●  Audit committee financial expert


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 9

PROPOSAL ONE: ELECTION OF DIRECTORS



KARL J. KRAPEK, 702022 Proxy Statement19
Proposal 1: Election of Directors
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Former President and Chief Operating Officer, United Technologies Corporation, an aerospace and building systems company.
Director since September 2008
Member of the Compensation Committee and Governance Committee
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 positions, including Executive Vice President and director in 1997, President and Chief Executive Officer of Pratt & Whitney in 1992, Chairman, President and Chief Executive Officer of Carrier Corporation in 1990 and President of Otis Elevator Company in 1989. Prior to joining United Technologies Corporation, he was Manager of Car Assembly Operations for the Pontiac Motor Car Division of General Motors Corporation.positions. In 2002, Mr. Krapek became a co-founder of The Keystone Companies, which develops residential and commercial real estate. He serves on the Board of Directors of Trinity Health of New England. Mr. Krapek is a member of the the Boards of Directors of Prudential Financial, Inc. and Pensare Acquisition Corp.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive industry experience and leadership skills
●•Deep operational experience in aerospace and defense, domestic and international business operations and technology and lean manufacturing
●•Significant public company board experience, including serving as Lead Independent Director for two public companies
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



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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


20Northrop Grumman
Proposal 1: Election of Directors
GARY ROUGHEAD, 67
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Admiral, United States Navy (Ret.) and Former Chief of Naval Operations.
Director since February 2012
Member of the Compensation Committee and Policy Committee (Chair)
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 Navy'sNavy’s capability and capacity in ballistic missile defense and unmanned air and underwater systems. He restructured the Navy to address the challenges and opportunities in cyber operations. Prior to becoming the Chief of Naval Operations, he held six operational commands (including commanding both the Atlantic and Pacific Fleets). Admiral Roughead is a Robert and Marion Oster Distinguished Military Fellow at the Hoover Institution. He is a director of Maersk Line, Limited. He also serves as a trustee of the Dodge and Cox Funds. Admiral Roughead serves as a trustee of Johns Hopkins University and serves on the Board of Managers of the Johns Hopkins University Applied Physics Lab. He is a director of the Center for a New American Security.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive career as a senior military officer with the United States Navy, including numerous operational commands, as well as leadership positions, most recently as the 29th Chief of Naval Operations
●•Significant expertise in national security, information warfare, cyber operations and global security issues
● •Broad experience in leadership and matters of global relations, particularly in the Pacific region, Europe and the Middle East
● •Experience with talent development and management
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)








10INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

PROPOSAL ONE: ELECTION OF DIRECTORS



THOMAS M. SCHOEWE, 66
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Former Executive Vice President and Chief Financial Officer, Wal-Mart Stores, Inc., an operator of retail stores.
Director since August 2011
Member of the Compensation Committee (Chair) and Policy Committee
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 and& Decker Corporation, including Senior Vice President and Chief Financial Officer from 1996 to 1999, Vice President and Chief Financial Officer from 1993 to 1999, Vice President of Finance from 1989 to 1993 and Vice President of Business Planning and Analysis from 1986 to 1989. Before joining Black and Decker, Mr. Schoewe worked for Beatrice Companies, where he was Chief Financial Officer and Controller of one of its subsidiaries, Beatrice Consumer Durables Inc. Mr. Schoewe serves on the Boards of Directors of General Motors Corporation and KKR & Co. Inc. Mr. Schoewe also serves on the board of the Ladies Professional Golf Association.
Attributes, Skills and Qualifications
Corporation.
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive financial experience acquired through positions held as the Chief Financial Officer of large public companies, as well as expertise in Sarbanes-Oxley controls, risk management and mergers and acquisitions
●•Significant international experience through his service as an executive of large public companies with substantial international operations
●•Experience at Wal-Mart and Black and& Decker on large-scale transformational enterprise information technology implementations
●•Extensive experience as a member of the audit, risk, compensation and riskpolicy committees of other public companies
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 Statement21
Proposal 1: Election of Directors
JAMES S. TURLEY, 63
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Former Chairman and Chief Executive Officer, Ernst & Young, a professional services organization.
Director since February 2015
Member of the Audit Committee and Governance Committee
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 there until being named regional managing partner for the Upper Midwest in 1994, and for New York in 1998.there. He was named Deputy Chairman in 2000. He currently serves on the Boards of Directors of Citigroup, Emerson Electric Company and Intrexon Corporation. He also serves on the Board of Directors of the Boy Scouts of America. Mr. Turley is a board member of Kohler Co. and serves as Non-Executive Chair of Sita Capital Partners LLP.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
●•Extensive experience and expertise in areas of finance, accounting and business management acquired over 36-year career at Ernst & Young, including serving as Chairman and Chief Executive Officer of Ernst & Young
●•Significant experience in areas of risk management
●•Extensive experience as a member of the audit committee of other public companies
●•Audit committee financial expert


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 11

OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS
PROPOSAL ONE: ELECTION OF DIRECTORS



KATHY J. WARDEN, 47
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Chief Executive Officer and President, Northrop Grumman Corporation.
Director since July 2018

Ms. Kathy J. Warden has served as Chief Executive Officer and President•Member of the Company since January 2019. She was elected to the Board of Directors in July 2018. Ms. Warden served as President and Chief Operating Officer of the Company from January 2018 through December 2018, as Corporate Vice President and President of the Company's Mission Systems Sector from 2016 through 2017, as Corporate Vice President and President of the Company's former Information Systems Sector from 2013 to 2015, and as Vice President of the Company's Cyber Intelligence Division from 2011 to 2012. Prior to joining the Company in 2008, Ms. Warden held leadership roles at General Dynamics and Veridian Corporation. Earlier, she was a principal in a venture internet firm and also spent nearly a decade with General Electric Company working in commercial industries. She is theCitigroup
•Independent Chair of the Board of Directors of the Federal Reserve Bank of Richmond and a memberEmerson Electric Company
•Member of the Board of VisitorsDirectors of James Madison University.Precigen, Inc.
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
Attributes, Skills
James S. Turley
Former Chairman and QualificationsChief Executive Officer, Ernst & Young
Age: 66
Director since:
February 2015
Committee membership:
Audit and Risk Committee, Governance Committee
●Extensive experience in operational leadership, strategy, performance and business development in government and commercial markets, including cyber expertise
●Prior leadership positions within Northrop Grumman (including as President, Chief Operating Officer and President of two business sectors)
● Significant aerospace and defense industry experience

MARK A. WELSH III, 65
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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.
Director since December 2016
Member of the Audit Committee and Policy Committee
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 active-duty,active duty, Guard, Reserve and civilian forces serving in the United States and overseas. During his long career, General Welsh also served as a member of the Joint Chiefs of Staff, Commander of the United States Air Forces in Europe and Commander of NATO'sNATO’s Air Command, Associate Director for Military Affairs at the Central Intelligence Agency and Commandant of the United States Air Force Academy. General Welsh is a member of the Board of Managers of Peak NanoSystems, LLC. He is also a director of the Air Force Association.
Attributes, Skills and Qualifications
ATTRIBUTES, SKILLS AND QUALIFICATIONS
● •Extensive career as a senior military officer and member of the Joint Chiefs of Staff, having held leadership positions at the highest levels of the United States Air Force
● •Extensive experience and in-depth knowledge of issues related to global security and the intelligence community
●•Broad leadership experience and international experience, particularly in Europe
●•Experience with talent development and management
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


12INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

22Northrop Grumman
Proposal 1: Election of Directors
Director Nomination Process
Assessment of Board Composition
The Governance Committee actively considers the composition and diversity of the Board to ensure it is well positioned to serve the best interests of the Company and its shareholders. The Governance Committee regularly assesses what skills, experiences and other attributes can best contribute to the effective operation of the Board, particularly in light of the changing environment and evolving needs of the Company. The Committee also seeks to balance experience and new perspectives. The Governance Committee identifies director candidates from a wide range of sources and often employs a third-party search firm to assist in the process.
Board Changes since 2015Diversity of newly added DirectorsSkills of newly added Directors
7 new directors have been added to the Board
2 new directors are racially/ ethnically diverse
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senior leadership expertise
5 directors have left the Board
3 new directors are female
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operations and logistics
For more details on our Board’s robust self-evaluation process, see page 41.
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senior military experience
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cyber expertise
PROPOSAL ONE: ELECTION OF DIRECTORSAVERAGE AGE

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
Retirement Policy


Vote Required
To be elected,We have a nominee must receive more votes cast "for" than votes cast "against"retirement policy whereby a director will retire at the annual meeting following his or her election. Abstentions75th birthday, unless the Board determines, based on special circumstances, that it is in the Company’s best interest to request that the director serve beyond such date.
2022 Proxy Statement23
Proposal 1: Election of Directors
Identification and broker non-votesConsideration of New Nominees
1ESTABLISH NOMINEE CRITERIAThe 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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2REVIEW OF CANDIDATE’S HISTORYThe 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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3CANDIDATE 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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4RECOMMENDATION FOR ELECTIONThe Governance Committee recommends to the full Board nominees for election.
Commitment to Diversity
In evaluating director candidates, the Governance Committee aims to foster broad diversity of thought and perspective on our Board. The Governance Committee seeks to ensure diversity, including in race and gender, as well as in professional experience, education, skill and other qualities that contribute to our Board and the long-term interests of our Company and our shareholders.

24Northrop Grumman
Proposal 1: Election of Directors
Shareholder Nominations
Shareholders may recommend director candidates for consideration by the Governance Committee pursuant to our Principles of Corporate Governance. The Governance Committee considers such director candidates recommended by shareholders similarly to other potential director candidates brought to the attention of the Governance Committee. Shareholder recommendations for director candidates under our Principles of Corporate Governance must be addressed to the Governance Committee in care of the Corporate Secretary. In addition, and as discussed immediately below, shareholders may also directly nominate director candidates in accordance with our Bylaws.
Proxy Access
In 2015, the Board amended our Bylaws explicitly to provide our shareholders the right to nominate directors through access to our proxy materials. The Board did so consistent with and to reflect shareholder input. Under the Company’s proxy access bylaws, a shareholder, or a group of up to 20 shareholders, that has maintained continuous ownership of 3% or more of the Company’s outstanding common stock for at least three years may include in the Company’s proxy materials director nominees constituting up to the greater of two nominees or nominees constituting 20% of the number of directors in office. Director nominees may receive compensation from third parties for their candidacy, up to the total annual compensation paid to directors of the Company, as well as reimbursement for reasonable expenses, provided there is full disclosure of such compensation. Under the Company’s bylaw provisions, directors are treated similarly, whether nominated through proxy access or otherwise, and held to the same high fiduciary standards to serve all shareholders.
The Company’s Bylaws provide our shareholders with broad and meaningful access to the Company’s proxy materials while enhancing transparency, protecting the interests of all shareholders and ensuring good governance. The terms of the Company’s proxy access bylaw provisions are also broadly consistent with the terms of proxy access bylaws adopted by other Fortune 500 companies, reflecting best practices.
Director Election Process
Our Bylaws and Certificate of Incorporation provide for the annual election of directors. Each director will have no effect on this proposal. If a nominee is not re-elected, he or she will remain inhold office until a successor is electedthe next annual meeting of shareholders or until his or her earlier resignation or removal. Generally, in order to be elected, a director must receive more votes cast “for” than “against” his or her election, unless one or more shareholders provide notice of an intention to nominate one or more candidates to compete with the Board’s nominees for election in accordance with the procedures set forth in the Company’s corporate governance documents.
Effect of Failure to Obtain and Retain Security Clearance or Receive the Required Vote
Each director is required to tender a resignation in the event of and effective upon the failure to obtain top secret security clearance within 12 months of election or appointment to the Board, or the failure to retain a top secret security clearance once obtained. If an incumbent director fails to obtain and retain a top secret security clearance, the Governance Committee will consider whether the Board should accept the director’s resignation and will submit a recommendation for prompt consideration by the Board. In addition, each director is required to tender a resignation in the event of and effective upon the failure to receive the required vote at any future meeting at which such director faces re-election. The Governance Committee and the Board will consider relevant facts in deciding whether to accept a resignation, including, without limitation, any harm to our Company that may result from accepting the resignation.
2022 Proxy Statement25

Corporate Governance
Overview
We are committed to maintaining high standards of corporate governance, reflecting on our values and promoting long-term, profitable growth. With strong oversight from the Board, our corporate governance regime is intended to promote the long-term success of our Company to benefit our shareholders, employees, customers, partners and communities.
Our Company has adopted the following pillars which underlie our strong corporate governance and responsible business practices.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE 13 NOMINEES FOR DIRECTOR LISTED ABOVE.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 13

CORPORATE GOVERNANCE


Overview
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Values
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Principles of
Corporate
Governance
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Standards
of Business
Conduct
Our values provide the foundation for our culture and success:
•We are committedDo The Right Thing - we earn trust, act with ethics, integrity and transparency, treat everyone with respect, value diversity and foster safe and inclusive environments;
•We Do What We Promise - we own the delivery of results, focused on quality outcomes;
•We Commit To Shared Success -we work together to maintaining high standards of corporate governance, aligned with our focus on sustainable performancethe mission and profitable growth, and our core values of ethics and compliance. With strong oversight fromtake accountability for the Board, our corporate governance regime is intended to promote the long-termsustainable success of our Companypeople, customers, shareholders, suppliers and communities; and
•We Pioneer - with fierce curiosity, dedication and innovation, we seek to benefit our shareholders, customers and employees.solve the world’s most challenging problems.
Our Company has adopted Principles of Corporate Governance outline the role and responsibilities of our Board and the high standards our directors maintain. They set forth additional independence requirements for our directors and provide guidelines for Board leadership and Board and Committee membership, among other items. The Board reviews these principles at least annually and considers opportunities for improvement and modification. Our Principles of Corporate Governance are available at  and investor.northropgrumman.com/principles-corporate-governance.
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  towww.northropgrumman.com/corporate-responsibility/ethics-and-business-conduct/standards-of-business-conduct/
help guide and promote our good corporate governance and responsible business practices..
Our Principles of Corporate Governance outline the role and responsibilities of our Board and the high standards our directors maintain. They set forth additional independence requirements for our directors and provide guidelines for Board leadership and Board and Committee membership, among other items. The Board reviews these principles at least annually and considers opportunities for improvement and modification.
Our Standards of Business Conduct reflect and reinforce our commitment to integrity and ethics in all we do. They apply to our directors, officers and all employees.
Among other things, our Standards of Business Conduct:
•require high ethical standards in all aspects of our business;
•require strict adherence to all applicable laws and regulations;
•reflect our commitment to maintaining a culture that values and promotes diversity, equity and inclusion;
•reinforce our commitment to being a responsible corporate citizen;
•reflect our commitment to our work environment and the global communities where we live, work and serve;
•reflect our broad and deep commitment to sustainability, including especially our people and environmental responsibility;
•require a focus on performance and the consistent production of quality results;
•reflect our commitment to the safety of our people and products; and
•call upon all employees to raise any questions or issues of concern (including on an anonymous basis).
We report amendments to provisions of our Standards of Business Conduct on our website.
Role of the Board26Northrop Grumman
Corporate Governance
Role of the Board and Key Areas of Board Oversight
The primary responsibility of our Board is to foster the long-term success of the Company, promoting the interests of our shareholders. Our directors exercise their business judgment in a manner they reasonably believe to be in the best interests of the Company and our shareholders and in a manner consistent with their fiduciary responsibilities. The responsibilitiesrole of the Board include,includes, but areis not limited to, the following:
oversee our long-term business strategies, operations and performance;
execute robust succession planning; select the Chief Executive Officer and elect officers of the Company;
oversee our major risks and risk management activities; including with regard to cyber and other security risks;
oversee senior executive succession planning and our human capital strategy;
ensure effective corporate governance practices;
elect directors to fill vacant positions between Annual Meetings;
review and approve executive compensation;
review and approve significant corporate actions;
oversee and evaluate management and Board performance;
oversee our ethics and compliance programs;
oversee our diversity and inclusion programs; and
provide advice to management.

14INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

CORPORATE GOVERNANCEpg_24-37xiconxnewskills01a.jpg
Strategy and Risk
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Culture and Human Capital
pg_37xiconxgovernance-03a.jpg
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 Statement27
Board's Role in
Corporate Governance
Risk Oversight
As noted above, the Board is responsible for overseeing our enterprise risk management activities, among other duties. Each of our Board committees assists the Board in this role.
The Audit Committee focuses on risks that could impact our financial performance. The Audit Committee periodically receives a report from the Chief Financial Officer and members of the Finance Department addressing our financial risk management processes, systems and internal controls, the nature of the material financial risks the Company faces and how the Company responds to and mitigates these risks. The Audit Committee periodically receives a report from our General Counsel on legal and other compliance risks and how the Company is addressing and mitigating those risks. The Audit Committee receives an annual report from our Chief Compliance Officer on the Company's compliance program overall. The Audit Committee also receives quarterly reports from the Vice President, Global Corporate Responsibility on trends in ethics reporting.
The Compensation Committee 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.
The Policy Committee assists the Board in identifying and evaluating global security, political, public relations, environmental sustainability and budgetary issues and trends that could impact the Company's business. The Policy Committee periodically receives a report from the Vice President, Global Corporate Responsibility on the Company’s ethics and corporate responsibility programs.
The 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.
The Board and its Committees provide oversight of the Company's risk management processes, including the Enterprise Risk Management Council (ERMC). The ERMC is comprised of all members of the Corporate Policy Council, the Chief Accounting Officer, Chief Compliance Officer, Corporate Secretary, head of Internal Audit and Treasurer. The ERMC seeks to ensure that the Company has identified the most significant risks and implemented effective mitigation plans for each. The full Board has responsibility for oversight of cyber and other security risks, and receives periodic briefings from our Vice President and Chief Information Security Officer.
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 COMMITTEECOMPENSATION 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.
Board Leadership Structure28Northrop Grumman
Chairperson
Corporate Governance
Board Leadership Structure
Chair of the Board
Our Bylaws provide that our directors will designate a ChairpersonChair of the Board from among its members. The ChairpersonChair presides at all Board and shareholder meetings. The ChairpersonChair interacts directly with all members of the Board and assists the Board to fulfill its responsibilities. As the Principles of Corporate Governance provide, the Board believes it is in the best interests of the Company and the shareholders for the Board to have flexibility to determine the best director to serve as ChairpersonChair of the Board at the time, based on consideration of all relevant factors.
Following our 2018 Annual MeetingAt least once every year, the Board reviewed its leadership structure and determined that the appropriate leadership structure at the time was for Mr. Bush,considers who was then our Chief Executive Officer, to continue towill best serve as Chairman.Chair and whether that person should be an independent director given the environment and needs of the Company. The Board has concluded that having Ms. Warden, our Chief Executive Officer, serve as Chairman was anChair is the most appropriate leadership structure for the Company at this time, and best positionedpositions the Company to be innovative, compete successfully, present one face to our customercustomers and advance shareholder interests in today'stoday’s environment. The Board continues to believebelieves that Mr. Bush'sMs. Warden’s deep understanding of the Company'sCompany’s business, day-to-day operations, growth opportunities, challenges and risk management practices gained through various leadership positions enables himher to provide strong and effective leadership to the Board and to ensure that the Board is informed of important issues facing the Company. The Board consists entirely of independent directors, other than Mr. Bush and Ms. Warden, and continues to exercise a strong, independent oversight function, with fully independent Board Committees and a strong Lead Independent Director with clearly articulated responsibilities.
In July 2018, the Board elected Ms. Warden to the position of Chief Executive Officer and President, effective January 1, 2019, and elected Ms. Warden to the Board, effective July 12, 2018. The Board determined that Mr. Bush should continue as Chairman of the Board through July 2019, when he will retire from the Company. As required by the Company's Principles of Corporate Governance, Mr. Bush has stated his intent to submit his resignation to the Board of Directors effective upon his retirement from the Company. The Board will continue to review and discuss the leadership structure of the Board and determine the leadership structure, including the Chairperson,Chair, that continues best to meetmeets the needs of the Company.

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CORPORATE GOVERNANCE


Lead Independent Director
If the ChairpersonChair is not independent, the independent directors will designate annually from among them a Lead Independent Director. Following our 20182021 Annual Meeting, the independent directors designated Mr. Felsinger as Lead Independent Director.
Our Principles of Corporate Governance set forth specific duties and responsibilities of the Lead Independent Director, which include the following:
•preside at meetings of the Board at which the ChairpersonChair is not present, including executive sessions of the independent directors, and advise the ChairpersonChair and CEO on decisions reached and suggestions made;
•advise the ChairpersonChair on and approve meeting agendas and information sent to the Board;
•advise the ChairpersonChair on and approve the schedule of Board meetings, assuring there is sufficient time for discussion of all agenda items;
•provide the ChairpersonChair with input as to the preparation of Board and committee meeting agendas, taking into account the requests of the other Board and committee members;
•interview, along with the ChairpersonChair and the ChairpersonChair of the Governance Committee, Board candidates and make recommendations to the Governance Committee and the Board;
•call meetings of the independent directors;
•support and facilitate engagement between the ChairpersonChair and the independent directors; and
•if requested by major shareholders, ensure that he or she is available for consultation and direct communication.
Our Lead Independent Director plays a critical role in reviewing director feedback received through the annual director evaluation process and providing feedback to each director on their individual performance. Our Lead Independent Director is empowered to and does actively engage with our ChairpersonChair and Chief Executive Officer to help enable a strong and effective Board of Directors.
2022 Proxy Statement29
Corporate Governance
Committees of the Board of Directors
The Board has four standing committees: the Audit and Risk Committee, the Compensation Committee, the Governance Committee and the Policy Committee. The membership of these committees is typically determined at the organizational meeting of the Board held in conjunction with the annual meeting. All the committees are composed entirely of independent directors. The primary responsibilities of each of the committees, as of the date of this Proxy Statement, are summarized below, together with a table listing the current membership and chairpersonChair of each committee. The charters for each standing committee can be found on the Investor Relations section of our website (www.northropgrumman.com).

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Audit Committee
Roles and ResponsibilitiesCommittee Members
ROLES AND RESPONSIBILITIES
Assist the Board in overseeing (1) the integrity of the Company'sCompany’s financial statements and the Company's accounting and financial reporting processes; (2) the Company's overall compliance with legal and regulatory requirements; (3) financialenterprise-related risk assessment and management; (4) the qualifications, performance and independence of the Company's independent auditor; (5) the performance of the Company's internal audit function; and (6) the Company's system of disclosure controls and procedures and internal control over financial reporting,activities, including by:
William H. Hernandez (chair)
Ann M. Fudge
Madeleine A. Kleiner
James S. Turley
Mark A. Welsh III
Number of meetings in 2018:•10
Independence, Financial Literacy and Audit Committee Financial Experts
All members are independent and financially literate
Ms. Kleiner and Messrs. Hernandez and Turley each qualifies as an Audit Committee Financial Expert

●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 the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q
●•reviewing and discussing management's assessment of, and report on, the effectiveness of the Company's internal control over financial reporting at least annually and the independent auditor's related report
●•assisting the Board in its oversight of enterprise risk management (including through the different board committees), including reviewing at least annually the overall risk management process at the Company level
•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 Company'sindependent auditor, the Company’s critical accounting policies, and material written communications with management
●•reviewing with the General Counsel, at least annually, the status of significant pending litigation and various other significant legal, compliance or regulatory matters
●•reviewing with the Chief Compliance Officer, at least annually, the Company'sCompany’s compliance program, and implementation of global compliance policies, practices and programs
●•   discussing guidelinesproviding oversight and policies regarding risk assessmentreviewing periodically the Company’s management of its financial risks, as well as the Company’s management of its risks related to cybersecurity, insurance, supplier, nuclear, natural and risk managementenvironmental matters
●•reviewing any significant issues raised by the internal audit function and, as appropriate, management'smanagement’s actions for remediation
● establishingAudit and periodically reviewing and discussing with management the Company's procedures for the receipt, retention and treatmentRisk Committee
COMMITTEE MEMBERS:
William H.
Hernandez* (chair)
Marianne C. Brown
Ann M. Fudge
Graham N. Robinson
James S. Turley*
Mark A. Welsh III
Number of complaints regarding accounting, internal accounting controls or auditing mattersmeetings in 2021: 8
*  Qualifies as Audit Committee Financial Expert; all members are financially literate.

30Northrop Grumman
Corporate Governance
Compensation Committee
Roles and ResponsibilitiesCommittee Members
ROLES AND RESPONSIBILITIES
Assist the Board in overseeing the Company'sCompany’s compensation policies and practices, including by:
Thomas M. Schoewe (chair)
Marianne C. Brown
Donald E. Felsinger
Bruce S. Gordon
Karl J. Krapek
Gary Roughead
Number•overseeing and reviewing at least annually a risk assessment of meetings in 2018: 7the Company’s compensation plans
Independence
All members are independent
●•approving the compensation for elected officers (other than the Chief Executive Officer, whose compensation is recommended by the Committee and approved by all the independent directors)
●•establishing stock ownership guidelines and reviewing ownership levels on an annual basis
●administeringmonitoring the administration of incentive and equity compensation plans, approving financial and non-financial metrics, and approving payments or grants under these plans for elected officers (other than the Chief Executive Officer)Officer, whose payments or grants are recommended by the Committee and approved by all the independent directors)
●•recommending for approval compensation for the non-employee directors, after consultation with the independent compensation consultant
●•overseeing and reviewing the Company’s management of its human capital risk
•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 proxy statementProxy Statement
•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
●providing support to the BoardNumber of meetings in carrying out its overall responsibilities related to executive compensation2021: 5

Compensation Committee Interlocks and Insider Participation

During 2021, Ms. Brown, Ms. Kleiner and Messrs. Abney, Felsinger, Gordon, Krapek, Roughead and Schoewe served as members of the Compensation Committee. During 2021, no member of the Compensation Committee had a relationship with the Company or any of our subsidiaries, other than as directors and shareholders, and no member was an officer or employee of the Company or any of our subsidiaries, a participant in a related person transaction or an executive officer of another entity, where one of our executive officers serves on the board of directors that would constitute a related person transaction or raise concerns of a Compensation Committee interlock.
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CORPORATE GOVERNANCE

2022 Proxy Statement		31

Corporate Governance
Governance Committee
Roles and ResponsibilitiesCommittee Members
ROLES AND RESPONSIBILITIES
Assist the Board in overseeing the Company'sCompany’s corporate governance practices, including by:
Madeleine A. Kleiner (chair)
Donald E. Felsinger
Ann M. Fudge
William H. Hernandez
Karl J. Krapek
James S. Turley
Number•overseeing and reviewing the Company’s management of meetings in 2018:5governance-related risks, including the risks related to corporate culture
Independence
All members are independent

●•regularly reviewing the Company'sCompany’s corporate governance policies and practices, including the Principles of Corporate GovernanceCompany’s Bylaws and the Company's Bylawsother corporate documents
●•regularly reviewing and considering corporate governance developments, emerging trends and best practices and recommending changes to the Board
●•reviewing and making recommendations to the Board with respect to the corporate governance section of the proxy statement, including proposed responses to shareholder proposals
•meeting with shareholders and the resultsproxy advisory groups, as needed, to discuss issues of shareholder proposals, if any, voted on at a shareholders meetingcorporate governance
●•regularly reviewing and making recommendations to the Board regarding the composition and size of the Board and the criteria for Board membership, which should include, among other things, diversity, experience and integrity
●•providing effective board succession planning, identifying and recommending to the Board qualified potential candidates to serve on the Board and its committees and, if applicable, meeting with proxy access nominees nominated through the Company'sCompany’s proxy access bylaw provision
●•reviewing and determining whether a director'sdirector’s service on another board or elsewhere is likely to interfere with the director'sdirector’s duties and responsibilities as a member of the Board
●•reviewing and recommending board, director and committee evaluation processes and coordinating the process for the Board to evaluate its performance
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

Policy Committee
Roles and ResponsibilitiesCommittee Members
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)
Marianne C. BrownDavid P. Abney
Bruce S. GordonWilliam H. Hernandez
Graham N. Robinson
Thomas M. Schoewe
Mark A. Welsh III
Number of meetings in 2018:2021: 4
Independence
All members are independent
●identifying and evaluating global security, political, budgetary and other issues and trends that could impact the Company's business activities and performance
● reviewing and providing oversight over the Company's ethics and corporate responsibility policies and programs
●  reviewing the Company's public relations branding strategy
●reviewing and monitoring the Company's government relations strategy and political action committee
●  reviewing the Company's community relations activities
● reviewing and providing oversight of the Company's environmental sustainability program

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32Northrop Grumman
Corporate Governance
Board Meetings and Executive Sessions
The Board meets no fewer than nine times each year (including via telephonic meetings). Special meetings of the Board may be called from time to time as appropriate. On an annual basis, the Board holds an extended meeting to review our long-term strategy.
The Board often holds its meetings at Company locations other than our corporate headquarters on a regular basis to provide the directors with a first-hand view of different elements of our business and an opportunity to interact with local management.management and employees at various levels.
The Board meets in executive session (with the directors only and then with the independent directors only) following each in-person Board meeting and on other occasions as needed. The non-executive Chairperson or the Lead Independent Director presides over the executive sessions of the independent directors. The Audit and Risk Committee meets in executive session at least five times each in-person Audit Committee meeting,year, and regularly requests separate executive sessions with representatives of our independent auditor and our senior management, including our Chief Financial Officer, General Counsel and our Vice President, Internal Audit. The Compensation Committee also meets in executive session from time to time and regularly receives a report from the Compensation Committee'sCommittee’s independent compensation consultant. The Governance and Policy Committees also meet in executive session as they deem necessary.
Meeting Attendance
chart_attendance-02a.jpg
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.
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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.
Meeting Attendance2022 Proxy Statement33
During 2018, the Board held 10 meetings. Each incumbent director serving in 2018 attended 75% or more of the total number of Board and committee meetings he or she was eligible to attend. 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 attended the 2018 Annual Meeting.
Corporate Governance
Director Independence
The Board has established an objective that at least 75% of our directors be independent directors. The Board and the Governance Committee annually review the relevant relationships or arrangements between the Company and our directors or parties related to the directors in determining whether such directors are independent. No director is considered independent unless the Board has determined that the director meets the independence requirements under applicable New York Stock Exchange (NYSE) and SEC rules and under our categorical independence standards, which are described in our Principles of Corporate Governance. For a director to be considered independent, the Board must determine that a director has no material relationship with the Company other than as a director.
Our Principles of Corporate Governance provide that a director may be found not to qualify as an independent director if the director:
•has within the prior three years been a director, executive officer or trustee of a charitable organization that received annual contributions from the Company exceeding the greater of $1 million or 2% of the charitable organization'sorganization’s annual gross revenues, where the gifts were not normal matching charitable gifts, did not go through normal corporate charitable donation approval processes or were made "on“on behalf of"of” a director;
•has, or has an immediate family member who has, within the prior three years been employed by, a partner in or otherwise affiliated with any law firm or investment bank in which the director'sdirector’s or the immediate family member'smember’s compensation was contingent on the services performed for the Company or in which the director or the immediate family member personally performed services for the Company and the annual fees paid by the Company during the preceding fiscal year exceeded the greater of $1 million or 2% of the gross annual revenues of such firm; or
•has, or has an immediate family member who has, within the prior three years owned, either directly or indirectly as a partner, shareholder or officer of another company, more than 5% of the equity of an organization that has a material business relationship with (including significant purchasers of goods or services), or more than 5% ownership in, the Company.

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CORPORATE GOVERNANCE


Independence Determination
In connection with their annual independence review, the Board and Governance Committee considered the following relationships with organizations to which we have made payments or from which we have received payments in the usual course of our business in 2018.2021.
Mr. Felsinger's•Ms. Brown’s service as a member of the Board of Directors of Archer-Daniels-Midland;VMWare;
•Ms. Fudge’s service as a trustee of the Brookings Institution;
•Mr. Gordon'sRobinson’s service as Senior Vice President, Stanley Black & Decker, Inc. and President of Stanley Industrial;
•Admiral Roughead’s service as a member of the Board of Directors of CBS Corporation;
Mr. Hernandez's service as a member of the Board of Directors of Albemarle Corporation;
Admiral Roughead's service as a member of the Board of Directors of the Center for a New American Security,Maersk Line, Limited, a trustee of Johns Hopkins University and a member of the Board of Managers of Johns Hopkins University Applied Physics Lab;Laboratory;
•Mr. Schoewe'sSchoewe’s service as a member of the Board of Directors of General Motors; and
•Mr. Turley'sTurley’s service as a member of the Board of Directors of Citigroup and Emerson Electric.Citigroup.
The Board of Directors considered that Ms. Fudge, Mr. Gordon, Ms. Kleiner,Admiral Roughead and Mr. Turley and General Welsh served as members of the boards of or are otherwise affiliated with, organizations to which the Company and/or the Northrop Grumman Foundation (Foundation) made contributions during 20182021 in the usual course of our charitable contributions program, as well as in connection with our matching gifts program (which limits the contributions to $10,000 per year per director). The amounts paid were below the applicable thresholds under NYSE rules and our Principles of Corporate Governance.
Following its review and the recommendation of the Governance Committee, the Board affirmatively determined that all of the directors, except Mr. Bush and Ms. Warden, are independent. The independent directors constitute approximately 85%92% of the members of our Board. The Board previously determined that Victor H. Fazio,Bruce S. Gordon, who served as a director until his retirement from the Board effective the date of the 20182021 Annual Meeting, was independent during the time he was a director.
Director Election Process34Northrop Grumman
Corporate Governance
Our BylawsCulture
Our strong culture — founded on our values; reflecting our commitment to ethics, integrity, inclusion and Certificaterespect; and focused on enduring performance, innovation, agility and accountability — enables our success and long-term sustainable growth. Culture is critical to who we are and how we do business. In 2020, we restated the values that guide our Company and provide the foundation for our culture. Our culture is critical to our ability to do business, to attract and retain talent, to perform, to earn trust, to serve our customers and to deliver long-term value for our shareholders. We all have a shared responsibility to maintain and enhance it.
Our culture is reflected in our commitment to corporate responsibility and sustainability. We are proud of Incorporationour long-standing advancement of diversity, equity and inclusion, our service to our communities and the progress we have driven across all aspects of sustainability. Corporate responsibility and sustainability are critical to our business and long-term value creation for our shareholders, customers, employees and suppliers, and the communities we serve.
Management establishes and reinforces the Company’s culture, and our Board is actively engaged in providing oversight. The Board is committed to sustaining and enhancing the Company’s strong culture with an engaged, diverse and inclusive workforce. For example:
•The Company conducts an annual employee engagement survey, which gives our employees the opportunity to provide forfeedback on our Company culture and the annual electionenvironment that enables their success. This survey is managed by a third-party vendor to encourage candor and solicit feedback on many aspects of directors. Each director will hold office until the next annual meetingengagement, including how our employees perceive Company leadership, and issues of shareholders or until his or her earlier resignation or removal. Generally, in orderaccountability, inclusion and career development. The results of this survey are reported to be elected, a director must receive more votes cast "for" than "against" his or her election, unless one or more shareholders provide notice of an intention to nominate one or more candidates to competeand discussed with the full Board annually.
•The Board meets regularly with employees at all levels to reaffirm the health of our culture. The Board meets with employees during site visits that are a critical part of Board meetings, and also during “Sector Days,” when our directors visit the operations across four business sectors without members of senior leadership present.
•Members of our Board often share their time by generously participating as speakers in Company leadership programs.
The Board's nominees for election in accordanceCommittees oversee elements of the Company's culture associated with their respective area of responsibility.
•The Audit and Risk Committee reviews and discusses the Company's global compliance programs with our General Counsel and Chief Compliance Officer, including the tone set by leaders throughout the organization, and they meet quarterly with our Vice President, Global Corporate Responsibility to receive a report on matters that are communicated through the OpenLine reporting system.
•The Compensation Committee reviews with the procedures set forth inChief Human Resources Officer the Company's human capital management, monitors policies and practices with respect to diversity, equity and inclusion, and reviews a risk assessment of the Company's compensation programs.
•The Governance Committee provides the Board oversight of the Company's corporate culture and governance-related risks.
•The Policy Committee receives at least annually a report from our Vice President, Global Corporate Responsibility regarding our ethics and corporate responsibility programs, including our Standards of Business Conduct, and reviews and monitors practices with respect to sustainability and environmental matters, human rights, health and safety, and charitable organizations.
Sustainability
Our strong environmental, social and governance documents.(ESG) programs and practices reflect and build on our culture. They also help us attract and retain the best talent, perform for our customers, serve as responsible corporate citizens in the communities where we live and operate and create long-term value for our stakeholders.
Our annual Sustainability Report provides our stakeholders with detailed information on various ESG programs, goals and achievements. The report, our ESG Performance Data Matrix and other ESG-related disclosures are available at www.northropgrumman.com/corporate-responsibility/sustainability-reports-and-esg-information/. Also available on that website is the report we recently published that includes ESG disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD).

Board Composition and Director Nominations2022 Proxy Statement35
The
Corporate Governance
Environmental
We are proud of our long-standing commitment to environmental stewardship, and our record of setting and achieving robust goals, most recently in 2020. We have reduced our greenhouse gas emissions by more than 44% since 2010. We have decreased our potable water use by more than 20% over the last seven years. With our focus on materials efficiency, we have diverted almost 70% of our solid waste away from landfill disposal. We have also made great strides towards environmental sustainability in other areas. For example, we have invested over $200 million in environmental sustainability projects, including operations and maintenance projects, since 2015; recycled or reused over 90 million gallons of water annually; recomposted over more than 23 tons of food waste each year; entered into an agreement with a utility company to enable construction of a solar facility to increase our renewable energy sourcing; and experienced significant growth in our electric vehicle charging program. In addition to completing our second generation of environmental sustainability goals, we link environmental sustainability performance to our executive compensation, and have an employee resource group dedicated to our environmental stewardship. In 2021, we focused on continuing our progress in preparation for next generation sustainability goals and achieving long-term cost savings through focused investment at our sites. Looking forward, we are implementing projects focused on further reducing carbon emissions from our operations. We have announced a target date of 2035 to achieve net zero carbon emissions from our operations. We are also committed to achieving our other climate change related objectives, which include energy efficiency and renewable energy, water conservation and effective solid waste management.
Social
People are our most valued resource. We work hard to provide an environment in which our employees can thrive and stay safe. We are proud to have long been, and to be, a leader in advancing diversity, equity and inclusion ("DEI"). Indeed, we believe that our success depends on our ability to provide an environment in which our employees are not only enabled, but expected to bring their differing perspectives to work, challenging us all to think more broadly and enhancing outcomes. Among many other initiatives, the Company maintains 14 employee resource groups, including over 25,000 diverse colleagues, which meet regularly to identify and address concerns and opportunities. These networks are an industry-leading example of workforce inclusion and contribute to our overarching DEI strategy.
As described in our 2021 Sustainability Report, our Board of Directors, and the Compensation Committee actively considersin particular, are deeply engaged in our strategy for enhancing DEI, reviewing workforce diversity plans, setting objectives, including non-financial metrics in our compensation programs, and understanding the compositionoutcome of our employee engagement surveys.
During 2021, amidst the continuing COVID-19 pandemic, we focused on keeping our employees safe as we continued to perform, serving our customers and diversity of the Board to ensure it is well positioned to serve the best interests of thestakeholders, helping those most in need, and advancing social justice across our Company and our communities. The Company, our Northrop Grumman Foundation and our employees, individually and together, contributed time, skill and financial resources. We contributed to global, national and local efforts supporting healthcare, addressing food insecurity, advancing opportunity for all, increasing student access to technology, combating systemic discrimination, providing disaster relief, and serving some of our most vulnerable populations.
Governance
We have long enjoyed a robust and progressive governance regime, carefully designed to promote the long-term success of our Company by providing for effective and efficient oversight by a strong board of directors engaged with and informed by our shareholders. The Governance Committee regularly assesses what skills, experiences and other attributes can best contributeWe are committed to the effective operationcontinuing to maintain these high standards of the Board, particularlycorporate governance, in light of the evolving needs of the Company. The Governance Committee identifies director candidates from a wide range of sources and may employ a third-party search firm to assist in the process.  
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. The Committee recommends to the full Board nominees for election.
Shareholders may recommend director candidates for consideration by the Governance Committee pursuantservice to our Principles of Corporate Governance. The Governance Committee considers such director candidates recommended by shareholders, similarly to other potential director candidates brought to the attention of the Governance Committee. Shareholder recommendations for director candidates underemployees and customers.
Our governance policies include our Principles of Corporate Governance, must be addressedour corporate Bylaws, Policy and Procedure Regarding Company Transactions with Related Persons and our Standards of Business Conduct, among others. As discussed in our 2021 Sustainability Report, our exemplary governance practices include:
•A diverse, informed and engaged board of directors who are committed to the Governance Committee in carethoughtful debate and collaboration;
•All board committees are fully comprised of the Corporate Secretary. In addition,independent members;
•A Lead Independent Director with significant and clearly established responsibilities, who also serves as discussed immediately below, shareholders may also directly nominate director candidates in accordancea resource for our CEO, other directors and our shareholders;
•Deliberate and effective ongoing board refreshment and succession planning, with our Bylaws.mandatory retirement at age 75;

20•INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

CORPORATE GOVERNANCE


The Board carefully consideredMultiple and adopted a strong and balanced proxy access framework 
For more than a year, the Board carefully considered the issue of proxy access. The Board and management engaged extensively with shareholders and monitored developments and best practices regarding proxy access. Management solicited and received input from shareholders, our customers and other stakeholders. The Board amended our Bylaws to provide our shareholders thevaried opportunities for shareholder engagement, including: right to act by written consent, right to call a special meeting, and right to nominate through proxy access, reflecting this extensive consideration and input.
Under the Company’s proxy access bylaws, a shareholder, or a group of up to 20 shareholders, that has maintained continuous ownership of 3% or more of the Company's outstanding common stock for at least three years may include in the Company's proxy materials director nominees constituting up to the greater of two nominees or nominees constituting 20% of the number of directors in office. Director nominees may receive compensation from third parties for their candidacy, up to the total annual compensation paid to directors of the Company, as well as reimbursement for reasonable expenses, provided there is full disclosure of such compensation. Underless formal opportunities to meet with management and directors throughout the Company’s bylaw provisions, directors are treated similarly, whether nominated through proxy access or otherwise, and held to the same high fiduciary standards to serve all shareholders. year;
The Company's Bylaws provide our shareholders with broad and meaningful access to the Company’s proxy materials while enhancing transparency, protecting the interests of all shareholders and ensuring good governance. The terms•Annual re-assessments of the Company’s proxy access bylaw provisions are also broadly consistenteffectiveness of the full board, each committee and each director, with the terms of proxy access bylaws adopted by other Fortune 500 companies, reflecting best practices.  
a focus on opportunities for further improvement;
Director Qualifications36Northrop Grumman
Corporate Governance
•Overboarding policy limiting service on more than three other public company boards;
•Robust recoupment policy for incentive compensation;
•Stock ownership requirements for directors and executive officers; and
•Policy prohibiting hedging, pledging and other related actions related to Company stock.
Oversight
Our Board of Directors provides leadership and oversight with respect to ESG practices, and regularly receives reports from management on these varied issues.
•The Audit and Risk Committee assists the Board of Directors in its oversight of effective internal controls; approves auditors; reviews and approves publicly filed data in annual and quarterly reports and earnings releases.
•The Compensation Committee provides oversight of compensation programs, including approving environmental goals and diversity, equity and inclusion goals; and the Company’s management of its human capital and talent, including the Company’s focus on diversity, equity and inclusion.
•The Governance Committee oversees matters related to corporate governance, the board (including diversity, equity and inclusion for board members), shareholder rights, and our corporate culture.
•The Policy Committee reviews, monitors and provides oversight of the Company’s policies and programs for environmental matters and climate change-related risks (including among other things, Scope 1 and 2 greenhouse gas emissions, and targets for emissions reductions); ethics and standards of business conduct, corporate responsibility, human rights, employee health and safety and corporate citizenship and charitable programs. The Committee receives periodic updates from the Chief Sustainability Officer and Vice President, Corporate Responsibility.
The Enterprise Risk Management Council also reviews risks related to sustainability, including risks related to climate change and natural disasters that may affect operations, especially in regions prone to hurricanes, earthquakes, damaging storms and other natural disasters.
Our commitment to strong corporate responsibility and sustainability is responsible for establishingdemonstrated by the criteria for Board membership. In nominating directors,incorporation of non-financial ESG performance metrics into our annual incentive compensation program. See page 58 in the Governance Committee bears in mind that the foremost responsibilityCompensation Discussion and Analysis section. We engage with a variety of a director is to represent the interests of ourstakeholders — including shareholders, as a whole. The activitiesemployees, customers and associations of candidates are reviewed for any legal impediment, conflict of interest or other consideration that might prevent or interfere with servicecommunity advocates — and regularly obtain feedback on our Board.
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 a top secret security clearance.
In evaluating director candidates, the Governance Committee aims to foster diversity of thought on our Board. The Governance Committee seeks to ensure diversity, including in race and gender, as well as in perspective, professional experience, education, skill and other qualities that contribute to our Board and the long-term interests of our Company and shareholders.
ESG performance.
Director Orientation2022 Proxy Statement37
Corporate Governance
Awards and Recognitions
We are proud that our corporate responsibility and sustainability programs received various notable recognitions in 2021. They include:
pg_43xgraphicxawards-01a.jpg
Dow Jones Sustainability North America Index for the sixth consecutive year and Continuing Educationthe World Index for the first time
_____
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
All new directors
38Northrop Grumman
Corporate Governance
Human Rights
Northrop Grumman is committed to maintaining a strong culture with a deep respect for individuals and human rights. The Company has a robust and wide-reaching Human Rights Policy that reflects this commitment. (The Policy is available on the Board receive in-person orientationCompany’s website at www.northropgrumman.com/corporate-responsibility/northrop-grumman-human-rights-policy/). The Company has also established a Human Rights Working Group to help ensure our human rights program is being implemented effectively and training that is individually tailored, taking into account the director's experience, background, education and committee assignments.achieving our goals. The orientation programWorking Group is led by membersthe Company’s General Counsel (or her designee) and includes senior representatives from, among others, the Office of senior managementGlobal Corporate Responsibility, Global Supply Chain, Investor Relations, Treasury, Contracts, Environmental, Health and covers a review of our strategySafety, Global Business Office, Government Relations, Communications and operating plans, financial statements, corporate governance and key policies and practices, as well as the roles and responsibilities of our directors.
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 sectorsSectors. Among other things our Human Rights Policy:
•Makes clear our commitment to people, including our respect for the rights of employees to work in a positive work environment that treats employees with respect and dignity.
•Addresses explicitly the Company’s supply chain, making clear both that we treat our suppliers with respect and dignity, and that we require our suppliers to follow similar policies protecting human rights.
•Addresses various processes the Company follows to consider a wide range of potential risks — including risks to human rights — as a whole. it develops products and determines whether to undertake certain business opportunities. In recent years, for example, the Company has exited or begun to exit legacy programs related to cluster munitions, recognition software, and depleted uranium.
The Board of Directors oversees the Company's commitment to human rights. The Policy Committee has specific responsibility to provide oversight of the Company's human rights program, including reviewing and making recommendations for enhancements, as appropriate. The Policy Committee receives regular reports from our Vice President, Global Corporate Responsibility, and our Corporate Vice President and General Counsel (or her designee), who is chair of the Human Rights Working Group, on how we are implementing our Human Rights Policy and to discuss any areas of concern.
The Policy is also conducts periodic site visits to our facilities as part of its regularly scheduled Board meetings. These visits allow directors to interactreinforced through communications and with a broader group of our executivesrobust training. Our Sustainability Report provides additional background and employees and gain firsthand insights into our operations.
Directors may also attend outside director and other continuing education programs to assist them in staying currentinformation on developments in corporate governance, our industry, the global environment and issues critical to the operation of public company boards.

 human rights program.
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 21

CORPORATE GOVERNANCE


2022 Proxy Statement39
Corporate Governance
Director Orientation and Continuing Education
NEW DIRECTOR
ORIENTATION
•All new directors to the Board Membershipreceive in-person orientation and training that is individually tailored, taking into account the director's experience, background, education and committee assignments. The orientation program is led by members of senior management and covers a review of our strategy and operating plans, financial statements, corporate governance and key policies and practices, as well as the roles and responsibilities of our directors.
•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.
Board Memberships and External Relationships
Directors are required to ensure that their other commitments, including for example, other board memberships, employment, partnerships and consulting arrangements, do not interfere with their duties and responsibilities as members of the Board. Directors provide notice to the General Counsel prior to accepting an invitation to serve on the board of any other organization or agreeing to other new commitments that could interfere with their duties and responsibilities as a member of the Board, and the General Counsel advises the ChairpersonChair of the Governance Committee (or the ChairpersonChair of the Board, if notice is from the ChairpersonChair of the Governance Committee). A director should not accept service on such other board unlessthe new commitment until advised by the ChairpersonChair of the Governance Committee (or ChairpersonChair of the Board, as appropriate) that such engagement will not unacceptably create conflicts of interest or regulatory issues, conflict with Company policies or otherwise interfere with the director'sdirector’s duties and responsibilities as a member of the Board. Directors are also required promptly to inform the General Counsel if an actual or potentiala conflict of interest arises, or they are concerned that a conflict may arise or circumstances could otherwise interfere with their duties and responsibilities as a director. Directors are required to seek to avoid even an appearance of an improper conflict of interest.
Directors may not serve on more than three other boards of publicly traded companies in addition to our Board without the written approval of the Chairperson of the Governance Committee (or Chairperson of the Board, as appropriate). A director who is a full-time employee of our Company may not serve on the board of more than two other public companies unless approved by the Board. When a director's principal occupation or business association changes substantially during his or her tenure as a director, the Board expects the director to tender his or her resignation for consideration by the Governance Committee, which subsequently will recommend to the Board what action to take.
We have a retirement policy whereby a director will retire at the annual meeting following his or her 75th birthday, unless the Board determines, based on special circumstances, that it is in the Company's best interest to request that the director serve beyond such date.
Effect of Failure to Receive the Required Vote or Obtain and Retain Security Clearance
Each director is required to tender a resignation that will be effective upon (i) the failure to receive the required vote at any future meeting at which such director faces re-election, the failure to obtain top secret security clearance within 12 months of election or appointment to the Board or the failure to retain a top secret security clearance once obtained and (ii) the Board's acceptance of such resignation. If an incumbent director fails to receive the required vote for re-election or fails to obtain and retain a top secret security clearance, the Governance Committee will consider whether the Board should accept the director's resignation and will submit a recommendation for prompt consideration by the Board. The Board will decide whether to accept or reject a resignation within 90 days, unless the Board determines that compelling circumstances require additional time. The Governance Committee and the Board may consider any factor they deem relevant in deciding whether to accept a resignation, including, without limitation, any harm to our Company that may result from accepting the resignation, and the underlying reasons for the action at issue.
Director Overboarding Policy
Directors may not serve on more than three other boards of publicly traded companies in addition to our Board andwithout the written approval of the Chair of the Governance Committee Self-Evaluation(or Chair of the Board, as appropriate). A director who is a full-time employee of our Company may not serve on the board of more than one other public company unless approved by the Board. When a director’s principal occupation or business association changes substantially during his or her tenure as a director, the Board expects the director to tender his or her resignation for consideration by the Governance Committee, which subsequently will recommend to the Board what action to take.
40Northrop Grumman
Corporate Governance
Annual Self-Assessment Process
The Board and each Committee conductconducts annually thorough self-assessment processes.processes at each of the full Board level, within each committee, and at the individual director level. These processes are intended to ensure and enhance the effective operation of the Board.
The self-assessment of the Board is overseen by the Governance Committee. As part of this assessment, the Lead Independent Director and Chairperson 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;

22INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

CORPORATE GOVERNANCEBOARD

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.

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.
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 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 Chairperson 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. The Lead Independent Director or the Chairperson 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.
Each of the Committees also conducts an annual self-assessment. During an executive session led by the Committee chairperson, the 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.
2022 Proxy Statement41
Corporate Governance
Succession Planning
The Board believes that providing for strong and effective continuity of leadership is critical to the success of our Company. The Board commits significant resources to ongoing succession planning, with processes in place for the Board:
•to evaluate the Chief Executive Officer annually based on a specific set of performance objectives;
•to work with the Chief Executive Officer to support and ensure the development of potential succession candidates for the Chief Executive Officer and other leadership positions;
•to discuss with the Chief Executive Officer annually an assessment of persons considered potential successors to various senior management positions; and
•robustly to consider, plan for and ensure successful transitions of leadership.
Departure and Election of Directors
Victor H. Fazio, a director who served during 2018, did not stand for re-election at the 2018 Annual Meeting and retired from the Board effective the date of the 2018 Annual Meeting.
On July 12, 2018, Kathy J. Warden was appointed to the Board.
Mr. Bush has announced that he will retire from the Company on July 31, 2019. ConsistentCommunications with the requirements of the Company's Principles of Corporate Governance, Mr. Bush has stated his intention to submit his resignation from the Board of Directors at the time of his retirement from the Company. The Board has approved the reduction in the number of directors from 13 to 12 effective upon Mr. Bush's resignation.


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 23

CORPORATE GOVERNANCE


Communications with the Board of Directors
Any interested person may communicate with any of our directors, our Board as a group, our non-employee directors as a group or our Lead Independent Director through the Corporate Secretary by writing to the following address: Office of the Corporate Secretary, Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042.22042. The Corporate Secretary will forward correspondence to the director or directors to whom it is addressed, except for job inquiries, surveys, business solicitations or advertisements and other inappropriate material. The Corporate Secretary may forward certain correspondence elsewhere within our Company for review and possible response.
The Board has met with, and looks forward to the opportunity to meet with, interested shareholders to address concerns and to receive input.
Interested persons may also report any concerns relating to accounting matters, internal accounting controls or auditing matters to non-management directors (including anonymously) by writing directly to the ChairpersonChair of the Audit and Risk Committee,,Northrop Grumman Board of Directors c/o Corporate Ethics Office, 2980 Fairview Park Drive, Falls Church, Virginia 22042.
22042.
Corporate Responsibility42Northrop Grumman
Corporate responsibility

Compensation of Directors
In May 2021, the Compensation Committee recommended to the Board, and sustainability are criticalthe Board approved, the current non-employee director fee structure, effective May 19, 2021. The table below lists the annual fees payable to our businessnon-employee directors from January 1, 2021 to May 18, 2021 under the prior fee structure and long-term value creation for our shareholders, customers and employees. Our strong culture — founded in ethics, integrity, diversity and inclusion, and focused on sustainable performance, profitable growth, accountability,the annual fees payable under the current fee structure effective governance and responsible citizenship — enables our success. Strong environmental, social and governance (ESG) programs and practices help us attract and maintain the best talent, perform for our customers and create value for our shareholders.since May 19, 2021.
The Policy Committee of our Board provides leadership and oversight of our ESG practices. The Committee provides oversight of our policies and programs related to both corporate responsibility and sustainability, and regularly reviews our community relations activities, among other responsibilities. We engage with a variety of stakeholders and regularly obtain feedback on our ESG performance.
Name
Amount ($)
(1/1/21 - 5/18/21)
Amount ($)
(5/19/21 - 12/31/21)
Annual Cash Retainer130,000135,000
Lead Independent Director Retainer35,00050,000
Committee Chair Retainer20,00025,000
Audit and Risk Committee Retainer10,00015,000
Annual Equity Grant(1)
160,000170,000
In 2018, we published our tenth(1)The annual corporate responsibility report (CRR). Using the GRI G4 Sustainability Reporting Guidelines, we continued to report to our stakeholders on our progress in meeting various environmental, social and governance performance indicators. You may viewequity grant is deferred into a copy of our annual CRR at crreport.northropgrumman.com. For the eighth consecutive year, we incorporated non-financial sustainability performance metrics into our annual incentive compensation program. See page 45 in the Compensation Discussion and Analysis section.
We are proud that our corporate responsibility and sustainability programs received various notable recognitions in 2018. They include:
a leadership score of A- in CDP’s 2018 climate change program for the seventh consecutive year;
the Catalyst award for our “Build the Best Culture, Leverage the Power of Women” campaign which drove significant increases in the percentage of women in our executive ranks;
an A rating from MSCI for environmental, social and governance management and performance;
Dow Jones Sustainability North America Index for the third consecutive year; and
one of DiversityInc's Top 50 Companies for Diversity for the ninth year in a row.
Aligned with, and an integral part of, our commitmentstock unit account pursuant to the highest standards of ethical conduct, is our respect2011 Long-Term Incentive Stock Plan (2011 Plan) as described below. The Northrop Grumman Equity Grant Program for human rights. This respect is embedded in our culture,Non-Employee Directors (Director Program) sets forth the terms and reflected in the Company’s Human Rights Policy, which was adopted in 2013 and is available on the Company’s website at www.northropgrumman.com/CorporateResponsibility/Pages/HumanRightsPolicy.aspx. 
The Human Rights Policy provides, among other things, that the Company treats employees, suppliers, customers and competitors with dignity and respect. The Company does not tolerate any discrimination in employment based on an individual’s protected status. We do not tolerate the use of child labor, forced labor, bonded labor, human trafficking or other violations of human rights.  The Human Rights Policy provides employees with a well-defined reporting channel when they believe there may have been a violationconditions of the Policy.
Our policy is further implemented through various of our human resources, contracting, and compliance programs. It is reinforced through communications and robust training at all levels of our Company. Bothequity awards granted to non-employee directors under the Company’s policy and commitment are also implemented and enforced through our Standards of Business Conduct and our Supplier Standards of Business Conduct, which clearly articulates our requirement for ethical conduct and social responsibility at all tiers of our supply base.

24INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT2011 Plan.

Current Non-Employee Director FeesCurrent Additional Annual Fees
COMPENSATION OF DIRECTORSpg_44xpiechartxnonemployeea.jpg

image_02a.jpg
Retainer fees are paid on a quarterly basis at the end of each quarter.

To encourage directors to have a direct and material investment in shares of our common stock, non-employee directors are awarded an annual equity grant of $170,000 in the form of deferred stock units (Automatic Stock Units).
The Compensation Committee, with the assistance of its independent compensation consultant, is responsible for reviewing and recommending for Board approval the compensation of the non-employee directors. At the request of the Compensation Committee, the independent compensation consultant prepares annually a comprehensive benchmarking of our non-employee director compensation program against the compensation programs offered by our Target Industry Peer Group (the same peer group against which executive compensation is compared). Consistent with this benchmarking, the overarching approach for non-employee director compensation is to target approximately the 50th percentile of the Target Industry Peer Group and to align our director compensation with our shareholders'shareholders’ interests.
In May 2018, the Compensation Committee recommended to the Board, and the Board approved, the current non-employee director fee structure, effective May 16, 2018. The table below lists the annual fees payable to our non-employee directors from January 1, 2018 to May 15, 2018 under the prior fee structure and the annual fees payable under the current fee structure effective May 16, 2018.
Compensation Element 
Amount ($)
(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 Statement43
Retainer fees are paid on a quarterly basis at the end
Compensation of each quarter. To encourage directors to have a direct and material investment in shares of our common stock, non-employee directors are awarded an annual equity grant of $155,000 in the form of deferred stock units (Automatic Stock Units).Directors
The Director Program was amended and restated effective January 1, 2016 (the Amended Director Program). DirectorsNon-employee directors other than Mr. Abney and Mr. Robinson received an annual equity grant of Automatic Stock Units on May 17, 2017,20, 2020, which vested on May 17, 2018,20, 2021; and non-employee directors other than Mr. Robinson received an annual equity grant of Automatic Stock Units on May 16, 201819, 2021 which will vest on May 16, 2019.19, 2022. Mr. Abney received an annual equity grant of Automatic Stock Units upon his election to the Board on June 10, 2020 which vested on May 20, 2021. Mr. Robinson received an annual equity grant of Automatic Stock Units on August 11, 2021 which will vest on May 19, 2022. Under the Amended Director Program, directors may elect to have all or any portion of their Automatic Stock Units paid on (A) the earlier of (i) the beginning of a specified calendar year after the vesting date or (ii) their separation from service as a member of the Board, or (B) the vesting date. Directors may elect to defer to a later year all or a portion of their remaining cash retainer or committee retainer fees into a stock unit account as Elective Stock Units or in alternative investment options. Elective Stock Units are awarded on a calendar quarterly basis. Directors may elect to have all or a portion of their Elective Stock Units paid on the earlier of (i) the beginning of a specified calendar year or (ii) their separation from service as a member of the Board. Stock units awarded under the Amended Director Program will be paid out in an equivalent number of shares of our common stock. Deferral elections are made prior to the beginning of the year for which the retainer fees will be paid. Directors are credited with dividend equivalents in connection with the accumulated stock units until the shares of common stock related to such stock units are issued.
Non-employee directors are eligible to participate in our Matching Gifts Program for Education. Under this program, the Northrop Grumman Foundation matches director contributions, up to $10,000 per year per director, to eligible educational programs in accordance with the program.
Stock Ownership Requirements and Anti-Hedging and Pledging Policy
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.
Company policy prohibits members of the Board of Directors from pledging or engaging in hedging transactions with respect to any of their Company stock, continuing to align the interests of our Board of Directors with those of our shareholders. None of the shares of Company common stock held by our directors are pledged or subject to any hedging transaction.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 25

COMPENSATION OF DIRECTORSStock Ownership Requirements

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.

201844Northrop Grumman
Compensation of Directors
2021 Director Compensation
The table below provides information on the compensation of our non-employee directors for the year ended December 31, 2018.2021.
Name
Fees Earned or
Paid in Cash(1)
 ($)
Stock
Awards(2)
 ($)
All Other
Compensation(3)
($)
Total
($)
David P. Abney136,925 170,000 15 306,940 
Marianne C. Brown146,150 170,000 12,227 328,377 
Donald E. Felsinger177,300 170,000 41,662 388,962 
Ann M. Fudge146,150 170,000 11,191 327,341 
Bruce S. Gordon(4)
50,050 — 14,082 64,132 
William H. Hernandez169,225 170,000 7,620 346,845 
Madeleine A. Kleiner156,150 170,000 22,652 348,802 
Karl J. Krapek133,075 170,000 31,718 334,793 
Graham N. Robinson58,126 130,900 2 189,028 
Gary Roughead156,150 170,000 15,578 341,728 
Thomas M. Schoewe156,150 170,000 6,896 333,046 
James S. Turley146,150 170,000 1,280 317,430 
Mark A. Welsh III146,150 170,000 733 316,883 
(1)Amounts reflect the annual cash retainer paid to each director, including any applicable annual committee and committee chair retainers and any applicable Lead Independent Director or Chair retainer. As described above, a director may elect to defer all or a portion of his or her annual cash retainer into a deferred stock unit account or alternative investment options. Amounts deferred as Elective Stock Units or deferred into alternative investment options are reflected in this column.
(2)Amounts represent the target value of Automatic Stock Units awarded to each of our non-employee directors in 2021 under the 2011 Plan pursuant to the Amended Director Program. The amount reported for each director reflects the aggregate fair value of the Automatic Stock Units on the grant date, as determined under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation, excluding any assumed forfeitures. The grant date fair value assumes the value of dividend equivalents accrued directly on the awarded units. The aggregate number of Automatic Stock Units and Elective Stock Units held by each director as of December 31, 2021 is provided in the Deferred Stock Units table below.
(3)Amounts reflect (i) the estimated dollar value of additional stock units credited to each non-employee director as a result of dividend equivalents earned, directly or indirectly, on reinvested dividend equivalents as such amounts are not assumed in the grant date fair value of the Automatic Stock Units shown in the “Stock Awards” column, and (ii) matching contributions made through our Matching Gifts Program for Education discussed above as follows: Ms. Brown, $10,000; Ms. Fudge, $10,000; Mr. Gordon, $10,000; Mr. Hernandez, $5,000; Ms. Kleiner, $5,000; Mr. Krapek, $10,000; and Mr. Roughead, $10,000.
(4)Mr. Gordon reached the age of 75 prior to the 2021 Annual Meeting and, in accordance with our director retirement policy, did not stand for reelection at the 2021 Annual Meeting.
Name 
Fees Earned or Paid in Cash (1)
($)
 
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

(1)2022 Proxy StatementAmounts reflect the annual cash retainer paid to each director, including any applicable annual committee and committee chair retainers and any applicable Lead Independent Director or Chairperson retainer. As described above, a director may elect to defer all or a portion of his or her annual cash retainer into a deferred stock unit account. Amounts deferred as Elective Stock Units or deferred into alternative investment options are reflected in this column.45
(2)
Amounts represent the target value of Automatic Stock Units awarded to each of our non-employee directors in 2018 under the 2011 Plan pursuant to the Amended Director Program. The amount reported for each director reflects the aggregate fair value of the Automatic Stock Units on the grant date, as determined under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation, excluding any assumed forfeitures. The grant date fair value assumes the value of dividend equivalents accrued directly on the awarded units. The aggregate number of Automatic Stock Units and Elective Stock Units held by each director as of December 31, 2018 is provided in the Deferred Stock Units table below.
(3)
Amounts reflect (i) the estimated dollar value of additional stock units credited to each non-employee director as a result of dividend equivalents earned, directly or indirectly, on reinvested dividend equivalents as such amounts are not assumed in the grant date fair value of the Automatic Stock Units shown in the "Stock Awards" column, and (ii) matching contributions made through our Matching Gifts Program for Education discussed above as follows: Ms. Fudge, $10,000; Mr. Gordon, $10,000; Mr. Hernandez, $10,000; Ms. Kleiner, $10,000; and Mr. Krapek, $10,000. Amounts shown also include perquisites and other personal benefits provided to certain of the directors in 2018, including airfare for spouses and certain activities in conjunction with a Company board meeting.
(4)Mr. Fazio did not stand for reelection at the 2018 Annual Meeting.







26INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

Compensation of Directors
COMPENSATION OF DIRECTORS


Deferred Stock Units
As of December 31, 2018,2021, the non-employee directors had the following aggregate number of deferred stock units accumulated in their deferral accounts for all years of service as a director, including additional stock units credited as a result of dividend equivalents earned on the stock units.
Name
Automatic Stock
Units
Elective Stock
Units
Total
David P. Abney465 — 465 
Marianne C. Brown4,468 2,934 7,402 
Donald E. Felsinger23,089 16,218 39,307 
Ann M. Fudge3,464 508 3,972 
Bruce S. Gordon(1)
— — — 
William H. Hernandez6,178 — 6,178 
Madeleine A. Kleiner18,454 — 18,454 
Karl J. Krapek17,841 4,581 22,422 
Graham N. Robinson361 — 361 
Gary Roughead9,590 — 9,590 
Thomas M. Schoewe10,869 — 10,869 
James S. Turley3,883 — 3,883 
Mark A. Welsh III3,013 — 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.

Director Equity Plan
Under(1)Mr. Gordon reached the Northrop Grumman Non-Employee Directors Equity Participation Plan (Director Equity Plan), non-employee directors had an amount equalage of 75 prior to 50% of their annual retainer credited to an equity participation accountthe 2021 Annual Meeting and, converted intoin accordance with our director retirement policy, did not stand for reelection at the 2021 Annual Meeting. All stock units based on the then fair market value (as definedwere paid out to Mr. Gordon in the Director Equity Plan)form of our common stock. No new participants have been added to the Director Equity Plan since May 31, 2005, and no new annual accruals have been credited to the then-existing participants in the Director Equity Plan since that time. However, directors that served onstock after his retirement from the Board in and before 2005 continue to be credited with dividend equivalents on the cumulative stock units held in their equity participation accounts until the director terminates service on the Board. Mr. Fazio, who retired from the Board of Directors in May 2018, was the only director who earned dividend equivalents under the Director Equity Plan. No current director participates in the Director Equity Plan.
Generally, if a participating non-employee director terminates service on the Board after completion of at least three consecutive years of service or retires from the Board as a result of a total disability or a debilitating illness as defined in the Director Equity Plan, the participant will be entitled to receive the full balance of the participant's equity participant account in annual installments. Upon a change in control of the Company, as defined in the Director Equity Plan, the participant will immediately be entitled to receive the full balance of the equity participation account under the Director Equity Plan regardless of the number of years of consecutive service, although payment of his or her benefits will not commence until the termination of his or her service.


2021.
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 27

TRANSACTIONS WITH RELATED PERSONS AND CONTROL PERSONS


Related Person Transactions
The Company has a written policy approved by the Board, for the review, approval and ratification of transactions between our Company and our directors, executive officers and other related persons (Related Person Transactions Policy). A copy of the policy is available on the Investor Relations section of our website (www.northropgrumman.com). The policy provides for related person transactions to be reviewed in advance and approved or ratified, as applicable, by the Board of Directors, the Governance Committee or the Chairperson of the Governance Committee. A related person transaction may be approved if, after reviewing the relevant facts and circumstances, the reviewing party concludes that approving the related person transaction is in the best interests of the Company and its shareholders.
The policy defines a related person transaction as any transaction in which the Company was, is or will be a participant, where the amount involved exceeds $120,000, and in which a related person had, has or is expected to have a direct or indirect material interest. A "related person" includes:
any of our directors or executive officers;
any person who is known to be the beneficial owner of more than 5% of our common stock;
an immediate family member of any such persons; or
any firm, corporation, or other entity controlled by any such persons.
The Corporate Secretary may determine that, based on facts and circumstances, a transaction in an amount less than $120,000 should nonetheless be deemed a related person transaction. If this occurs, the transaction would be submitted for review and approval or ratification in accordance with the policy. Under exceptional circumstances, if a related person transaction has not been approved in advance, the Governance Committee will recommend to the Board of Directors such action as the Governance Committee deems appropriate, including ratification, amendment or termination of the transaction.
The policy requires each director and executive officer to complete an annual questionnaire to identify his or her related interests and to notify the Corporate Secretary of any changes in their information.
During 2018, the Company employed one family member of an executive officer who received compensation in excess of the reporting threshold. The spouse of our Corporate Vice President and President, Enterprise Services, Shawn Purvis, was employed by the Company as a Consulting Computer Systems Architect in our Technology Services sector. He received cash compensation (base salary and bonus) of approximately $230,000 and participated in the Company’s benefit plans, commensurate with his position at the Company.
State Street Corporation (State Street), acting in various fiduciary capacities, filed a Schedule 13G/A with the SEC reporting that as of December 31, 2018, State Street and certain of its subsidiaries collectively were the beneficial owners of more than 5% of our outstanding common stock. A subsidiary of State Street is the trustee for various Northrop Grumman defined benefit and defined contribution plan trusts. Two other State Street subsidiaries provide investment management services. During 2018, those State Street subsidiaries received approximately $9.5 million for such services, with over 99% of that amount paid by the plan trusts.
BlackRock, Inc. (BlackRock) filed a Schedule 13G/A with the SEC reporting that as of December 31, 2018, BlackRock and certain of its subsidiaries collectively were the beneficial owners of more than 5% of our outstanding common stock. A subsidiary of BlackRock provides investment management services for the Northrop Grumman Rabbi Trust II and certain assets within various Northrop Grumman defined benefit and defined contribution plan trusts. During 2018, the trusts paid that BlackRock subsidiary approximately $3.2 million for such services.
At the request of our Chief Executive Officer and as authorized by the Board of Directors, Wesley G. Bush has agreed to provide limited consulting service to the Company after his retirement as our Chairman in July 2019, for an initial period of five years. Consulting fees are not expected to exceed $200,000 per year.
Compensation Committee Interlocks and Insider Participation
During 2018, Ms. Brown and Messrs. Felsinger, Gordon, Krapek, Roughead and Schoewe served as members of the Compensation Committee. During 2018, no member of the Compensation Committee had a relationship with the Company or any of our subsidiaries, other than as directors and shareholders, and no member was an officer or employee of the Company or any of our subsidiaries, a participant in a related person transaction or an executive officer of another entity, where one of our executive officers serves on the board of directors that would constitute a related person transaction or raise concerns of a Compensation Committee interlock.

28INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

TRANSACTIONS WITH RELATED PERSONS AND CONTROL PERSONS


Indemnification Agreements
Our Bylaws require us generally to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. Additionally, as permitted by Delaware law, we have entered into indemnification agreements with each of our directors and elected officers. Under the indemnification agreements, we have agreed to hold harmless and indemnify each indemnitee, generally to the fullest extent permitted by Delaware law, against expenses, liabilities and loss incurred in connection with threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative to which the indemnitee is made a party by reason of the fact that the indemnitee is or was a director or officer of the Company or any other entity at our request, provided however, that the indemnitee acted in good faith and in a manner reasonably believed to be in the best interests of our Company.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 29

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors and executive officers, and persons who own more than ten percent of our common stock, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC.
Based on our review of Forms 3, 4 and 5 we have received or have filed on behalf of our executive officers and directors, and written representations from those persons that they were not required to file a Form 5, we believe that all required filings were made on a timely basis during the year ended December 31, 2018, other than a delayed filing of one day for each of Mr. Pamiljans and Ms. Purvis and a delayed filing for Ms. Kalan relating to the sale of shares indirectly held through family members.

30INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

VOTING SECURITIES AND PRINCIPAL HOLDERS


Stock Ownership of Certain Beneficial Owners
The following entities beneficially owned, to the best of our knowledge, more than five percent of the outstanding common stock as of December 31, 2018. All information shown is based on information reported by the filer on a Schedule 13G filed with the SEC on the dates indicated in the footnotes below.
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%

(1)46
This information was provided by State Street Corporation (State Street) in a Schedule 13G filed with the SEC on February 13, 2019. According to State Street, as of December 31, 2018, State Street had shared voting power over 17,171,242 shares and shared dispositive power over 17,678,111 shares. This total includes 11,130,319 shares held as of December 31, 2018 in the Defined Contribution Plans Master Trust for the Northrop Grumman Savings Plan and the Northrop Grumman Financial Security and Savings Program, for which State Street Bank and Trust Company acts as trustee and State Street Global Advisors Trust Company acts as investment manager.
(2)
This information was provided by The Vanguard Group (Vanguard) in a Schedule 13G/A filed with the SEC on February 11, 2019. According to Vanguard, as of December 31, 2018, Vanguard had sole voting power over 204,053 shares, shared voting power over 19,712 shares, sole dispositive power over 13,752,660 shares and shared dispositive power over 223,356 shares.
(3)
This information was provided by BlackRock, Inc. (BlackRock) in a Schedule 13G/A filed with the SEC on February 6, 2019. According to BlackRock, as of December 31, 2018, BlackRock had sole voting power over 10,581,017 shares and sole dispositive power over 11,613,939 shares.
(4)
This information was provided by T. Rowe Price Associates, Inc. (T. Rowe Price) in a Schedule 13G filed with the SEC on February 14, 2019. According to T. Rowe Price, as of December 31, 2018, T. Rowe Price had sole voting power over 4,534,110 shares and sole dispositive power over 11,449,975 shares.
(5)
This information was provided by Capital International Investors (Capital International), a division of Capital Research and Management Company, in a Schedule 13G filed with the SEC on February 14, 2019. According to Capital International, as of December 31, 2018, Capital International had sole voting power over 10,347,176 shares and sole dispositive power over 10,452,149 shares.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 31

VOTING SECURITIES AND PRINCIPAL HOLDERS


Stock Ownership of Officers and Directors
The following table shows beneficial ownership

Proposal 2: Advisory Vote on Compensation of our common stock as of March 19, 2019 by each of our current directors, our named executive officers and all directors and executive officers as a group. As of March 19, 2019, there were 169,959,030 shares of our common stock outstanding. None of the persons named below beneficially owns in excess of 1% of our outstanding common stock. Unless otherwise indicated, each individual has sole investment power and sole voting power with respect to the shares owned by such person.
  
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)

(1)Share equivalents for directors represent non-voting deferred stock units acquired under the 2011 Plan, some of which are paid out in shares of common stock at the conclusion of a director-specified deferral period, and others are paid out upon termination of the director's service on the Board. Certain of the NEOs hold share equivalents with pass-through voting rights in the Northrop Grumman Savings Plan or the Northrop Grumman Financial Security and Savings Program.
(2)On January 1, 2019, Wesley G. Bush was succeeded as Chief Executive Officer by Kathy J. Warden. Mr. Bush will remain an employee of the Company and continue to serve as Chairman of the Board until his retirement on July 31, 2019.
(3)Includes 207,161 shares held in the W.G. and N.F. Bush Family Trust, 20,036 shares held in the Bush Trust Number 4 Trust, and 19,089 shares held in the Wesley G. Bush Revocable Trust, each of which Mr. Bush and his wife serve as trustees.
(4)Ms. Warden also serves on the Company's Board of Directors.
(5)
Total represents 0.45% of the outstanding common stock as of March 19, 2019.

32INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

EQUITY COMPENSATION PLAN INFORMATION


We currently maintain two equity compensation plans: the 2011 Plan and the 1993 Stock Plan for Non-Employee Directors, as amended (1993 Directors Plan). Each of these plans has been approved by our shareholders.
The following table sets forth the number of shares of our common stock to be issued upon payout of outstanding awards and the number of shares remaining available for future award grants under these equity compensation plans as of December 31, 2018.
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)

(1)
This number includes 796,354 shares that were subject to outstanding stock awards granted under the 2011 Plan, 463,648 awards earned at year end but pending distribution subject to final performance adjustments, 122,674 shares subject to outstanding stock unit credited under the 2011 Plan and 1993 Directors Plan, and additional performance shares of 340,884, which reflect the number of shares deliverable under payment of outstanding restricted performance stock rights, assuming maximum performance criteria have been achieved.
(2)
There were no options outstanding as of December 31, 2018.
(3)
Of the aggregate number of shares that remained available for future issuance, 5,927,560 were available under the 2011 Plan as of December 31, 2018. No new awards may be granted under the 1993 Directors Plan.
(4)
After giving effect to our February 2019 awards, the number of shares of common stock remaining available for future issuance would be 5,412,262 (assuming maximum payout of such awards).


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 33

PROPOSAL TWO: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS

Named Executive Officers
Consistent with Section 14A of the Exchange Act, we are providing our shareholders with the opportunity to cast a non-binding, advisory vote on the compensation of our NEOs. This advisory vote, commonly known as "say-on-pay,"“say-on-pay,” gives our shareholders the opportunity to express their viewviews on our 20182021 executive compensation programs and policies for our NEOs. The vote does not address any specific item of compensation and is not binding on the Board; however, as an expression of our shareholders'shareholders’ views, the Compensation Committee seriously considers the vote when making future executive compensation decisions. The Board has adopted a policy of providing for annual advisory votes on the compensation of our NEOs.
We believe our compensation programs reflect responsible, measured practices that effectively incentivize our executives to dedicate themselves fully to value creation for our shareholders, customers and employees. Our pay practices are aligned with our shareholders'shareholders’ interests and with leading industry practice and are governed by a set of strong policies. Examples include:
•Double-trigger provisions for change in control situations, and no excise tax gross-ups for payments upon termination after a change in control;
•A recoupment policy applicable to cash and equity incentive compensation payments;
•Stock ownership guidelines of 7x base salary for the CEO and 3x base salary for other NEOs, and stock holding requirements of three years from the vesting date for equity awards; and
•Prohibitions on hedging or pledging of Company stock.
For a more extensive list of our best practices, refer to page 3752 of this Proxy Statement. In addition, our Compensation Discussion and Analysis (CD&A) provides a detailed discussion of our performance-based approach to executive compensation. We encourage you to read the CD&A, the rest of this Proxy Statement and our 20182021 Form 10-K, which describes our business and 20182021 results in more detail.
Recommendation
The compensation of our executives is aligned to performance, is sensitive to shareholder returns, appropriately motivates and retains our executives, and is a competitive advantage in attracting and retaining the high caliber talent necessary to drive our business forward and build sustainable value for our shareholders. Accordingly, the Board recommends that shareholders approve the following resolution:
"“RESOLVED, that, as an advisory matter, the shareholders of Northrop Grumman Corporation approve the compensation paid to the Company'sCompany’s named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion."”
Vote Required
Approval of this proposal requires that the votes cast "for"“for” the proposal exceed the votes cast "against"“against” the proposal. Abstentions and broker non-votes will have no effect on this proposal.
a0_pgx12xproposalarrowa.jpg
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" “FOR” PROPOSAL TWO.

34INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT2.

COMPENSATION DISCUSSION AND ANALYSIS


Compensation Discussion and Analysis2022 Proxy Statement47
In this CD&A, we provide an overview of our executive compensation programs and the underlying philosophy used to develop the programs. We describe the material components of our executive compensation programs for our 2018 NEOs and explain how and why our Board's Compensation Committee arrived at certain specific compensation policies and decisions. We refer to certain non-GAAP (accounting principles generally accepted in the United States of America) financial measures, which are identified with asterisks. For more information, including definitions, reconciliations to the most directly comparable GAAP measure and why we believe these measures may be useful to investors, see "Appendix A - Use of Non-GAAP Financial Measures." The 2018 NEO compensation is provided in the Summary Compensation Table on page 53 and other compensation tables contained in this Proxy Statement.
2018 NEOs
WESLEY G. BUSH
KATHY J. WARDEN
KENNETH L. BEDINGFIELD
MARK A. CAYLOR
BLAKE E. LARSON (1)
(1) Mr. Larson was elected Corporate Vice President and President, Innovation Systems (President, Innovation Systems) effective as of June 6, 2018 (the "Merger Date"). The "Compensation Tables" of this CD&A include compensation Mr. Larson earned relative to his service as an elected officer of Northrop Grumman (i.e., from the Merger Date - December 31, 2018), except as otherwise discussed in the CD&A.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 35

COMPENSATION DISCUSSION AND ANALYSIS


Executive Compensation
Compensation Discussion & Analysis
2021 Named Executive Officers
CEO Transition
The Company executed a smooth transition in executive leadership, announcing in July 2018 that Kathy Warden would become our Chief Executive Officer on January 1, 2019. Ms. Warden joined Northrop Grumman in 2008, and has been in operating roles of increasing responsibility, spanning much of our technology portfolio and customer base. Ms. Warden led the Company’s cybersecurity business and the former Information Systems sector. She also led the integration of two sectors to stand up a new operating model for our Mission Systems sector, and is leading the integration of the legacy Orbital ATK business. Most recently, she was appointed Chief Operating Officer in January 2018, and the Board elected Ms. Warden to the Board of Directors on July 12, 2018. To reflect the strength of leadership already demonstrated by Ms. Warden and the Board’s confidence in the succession transition and future performance, the Board of Directors approved for Ms. Warden a one-time promotion long-term incentive grant of $5,000,000. The grant is comprised of 70% Restricted Performance Stock Rights (RPSRs) for the 2018-2020 performance period and 30% Restricted Stock Rights (RSRs).
Wesley Bush will continue to serve as Chairman until his retirement on July 31, 2019. Mr. Bush has presided as CEO since January 2010, through numerous business restructuring and business divestitures which have grown shareholder value and strategically positioned the Company for future growth and success. The Board of Directors approved continued vesting of the two long-term incentive grants, previously awarded to Mr. Bush in 2017 and 2018, and as a result, these grants will continue to vest through the applicable performance and vesting periods. These grants will have the same holding requirements as described on page 50 and the modifications extend post-employment covenants, including non-competition and non-solicitation of customers and employees, to July 31, 2022.
At the request of Ms. Warden and as authorized by the Board of Directors, Mr. Bush has agreed to provide limited consulting service to the Company after July 2019, for an initial period of five years. Consulting fees are not expected to exceed $200,000 per year.
All references to CEO compensation in this CD&A reflect Mr. Bush's compensation in connection with his service as CEO during all of 2018.
New Sector Leadership
On June 6, 2018, Northrop Grumman completed a strategic acquisition of Orbital ATK to expand capabilities and accelerate innovation in critical global security domains. The legacy Orbital ATK business became a wholly-owned subsidiary of the Company and its name was changed to Northrop Grumman Innovation Systems, Inc., which we established as a new, fourth business sector (Innovation Systems). We elected Blake Larson, previously the Chief Operating Officer of Orbital ATK, as the President of the new operating sector.
Pursuant to the Agreement and Plan of Merger dated September 17, 2017 (the "Merger Agreement"), the majority of the value of Mr. Larson's 2018 legacy Orbital ATK long-term grants was forfeited. In recognition of Mr. Larson’s proven leadership and his election as an officer of the Company, the Board approved a new, long-term incentive grant of $3,000,000 for the 2018-2020 performance period, comprised of 70% RPSRs and 30% RSRs.
Former executives of the legacy Orbital ATK company participated in change-in-control plans, the Income Security Plans (ISPs). Upon joining Northrop Grumman, Mr. Larson agreed to waive any rights to further compensation and benefits under the ISPs and the Merger Agreement retention grant. In recognition of this forfeited value, the Company provided Mr. Larson a one-time RSR award of $3,500,000. The terms of this award are reported in the Grants of Plan-Based Awards Table on page 55.


36INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY


Summary of Our Executive Compensation Programs
Our executive compensation philosophy is to provide a complementary set of compensation programs to our NEOs with attractive, flexible and market-based total compensation tied to annual and long-term performance and aligned with the interests of our shareholders. The key elements of our compensation programs for our NEOs are summarized below.
Compensation ElementPurposeKey Characteristics
Fixed ComponentBase SalaryCompensate fairly and competitivelyDetermined by level of responsibility, competitive market pay assessment and individual performance
Long-Term Incentive Plan (LTIP) RSRsLink the interests of our executive officers to shareholders and retain executive talent
pg49_photoxwardenka.jpg
30% of annual LTIP grantKathy J. Warden
Three-year cliff vestingChair, Chief Executive Officer and President
pg49_photoxkefferda.jpg
David F. Keffer
Corporate Vice President and Chief Financial Officer
pg49_photoxcaylorma.jpg
Mark A. Caylor
Corporate Vice President and President, Mission Systems
  
Performance-based ComponentAnnual Incentive Plan (AIP)Motivate and reward achievement of annual business objectives
Financial Metrics
1/3 Pension-adjusted Operating Margin (OM) Rate*
1/3 Pension-adjusted Cash Flow from Operations*
1/3 Pension-adjusted Net Income* Growth

Subject to downward adjustment for failure to achieve non-financial objectives
LTIP RPSRsLink 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
Actual shares earned are weighted 50% to relative TSR and 50% to Cumulative Free Cash Flow* (Cumulative FCF*)
* This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."
Our Compensation Pay Practices (pages 40 - 51)
Our compensation programs incorporate best practices, including the following:
Best Practices
• Pay for Performance
• Above Target and Maximum Annual Incentive Payouts Only When We Outperform Our Peer Benchmarks
• Long-Term Incentives Focused on Performance
• Cap on Annual Bonuses and Performance-Based Long-Term Incentive Share Payouts
•Compensation Elements Benchmarked at Market Medianpg49_photoxlarsonba.jpg
Blake E. Larson
Former Corporate Vice President and President, Space Systems
• Annual Peer Group Review
• Independent Consultant Reports Directly to Compensation Committee
• Double Trigger Provisions for Change in Control
•    No Individual Change in Control Agreements
•No Excise Tax Gross-ups for Payments Received Upon Termination After a Change in Controlpg49_photoxpetryszynm-01a.jpg
Mary D. Petryszyn
Corporate Vice President and President, Defense Systems
• No Hedging or Pledging of Company Stock
• Dividends Paid Upon Vesting
• Recoupment Policy on Incentive Compensation Payments
• Stock Ownership Guidelines and Stock Holding Requirements
• Regular Risk Assessments Performed
• No Employment Contracts for CEO or other NEOs

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 37

COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY



2018 Performance Highlights
We continued to generate strong financial results in 2018, including higher sales, operating income, segment operating income*, net earnings, cash from operations and free cash flow*. 2018 mark-to-market (MTM)-adjusted diluted earnings per share* increased to $21.33. Our strong cash generation allowed us to invest $1.25 billion in our business and return approximately $2.1 billion to our shareholders through share repurchases and dividends.
Earnings Per Share
chart-7f843f46f40eb8aae44.jpg
* This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."
Total Shareholder Return (1) (3-Year Average)
chart-3bd1f3c58e4d4075111.jpg
(1) The TSR calculation is based on a 30 calendar day average from the start of the performance period through the end of the performance period.

38INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY


Management and the Compensation Committee believe our executive compensation programs are competitive and support achieving strong financial performance while investing for profitable growth and value creation over the long-term. A 97% shareholder majority approved last year's say-on-pay proposal, and our ongoing shareholder engagement indicates continued support for the structure and elements of our executive incentive compensation programs.
Compensation Mix and Incentive Metrics
We have a balanced pay for performance compensation structure that places an appropriate level of compensation at risk, based on our financial and non-financial performance measures and relative TSR. The following charts show performance-based compensation elements at target values.

compensationmix.jpg
(1) The chart above excludes the sign-on RSR award granted to Mr. Larson, as it was a one-time compensation event.
For AIP, following are the results for 2018 performance, which have been adjusted to exclude the impacts of the addition of Innovation Systems, certain Orbital ATK transaction-related expenses and certain impacts related to the Company's 2018 adoption of the MTM method of accounting for its pension and other postretirement benefit (OPB) plans as detailed in "Appendix A - Use of Non-GAAP Financial Measures":
Pension-adjusted OM Rate*: 11.4%
Pension-adjusted Cash Flow from Operations*: $3.2B
Pension-adjusted Net Income* Growth: $2.4B
For the LTIP, our score covering the three-year 2016-2018 performance period was weighted 70% to relative TSR and 30% to Cumulative FCF*, maintaining strong alignment to shareholder interest and increased emphasis on operational performance. The combined weighted score for the metrics generated an overall performance score of 115%.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 39

COMPENSATION DISCUSSION AND ANALYSIS | KEY PRINCIPLES


Compensation Philosophy and Objectives
We provide an attractive, flexiblerobust and market-based total compensation programprograms tied to performance and aligned with the interests of our shareholders. Our objective is to recruit and retain the caliber of executives and other key employees capable of achieving top performance and generating value for our shareholders, customers and employees.
Our goal is to lead our industry in sustainable performance while maintainingand build on our strong, enduring values. The targets and thresholds ofFor our AIP are based on the performance of our peers and the market. Our 2018 LTIP metrics are based on (1) TSR relative to our Performance Peer Group and the S&P Industrials and (2) Cumulative FCF*. For each plan,performance-based plans, we selectedselect metrics that drive shareholder value and benchmark our performance against peers, the market and our peers and the market.long-range strategic plan (LRSP). Our executive compensation and benefit programs are guided by the following principles:
pg_49xiconxpayperfa.jpg
Pay for Performance
•Our incentive plans are based on peer performance and benchmarks, the market, benchmarked performance metrics.and our LRSP.
•Above-target incentive payouts are awarded when we outperform our peers, market and LRSP benchmarks.
 
pg_49xiconxleadrecruita.jpg
Leadership Recruitment, Retention and Succession
•Compensation is designed to be competitive withinwith our industrypeers and retain top talent.
•Programs are designedstructured to attract, motivate and reward NEOs for delivering operational and strategic performance over time.
Sustainable Performance
icon_executivecompxoption3a.jpg
Sustainable Performance
•Our AIPAnnual Incentive Plan (AIP) includes both financial and non-financial metrics to ensure we are building a strong foundation for long-term sustainable performance and shareholder value creation.
48Northrop Grumman
Executive Compensation
pg_50xiconxalignmenta.jpg
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 TSR.Total Shareholder Return (TSR). Payouts under the TSR portion of the plan are capped at target if the Company's TSR is negative over the performance period.
•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
pg_50xiconxbenchmarka.jpg
Benchmarking
• Compensation programOur compensation programs' provisions and financial objectives are evaluated on an annual basis and modified inaccordance with industry and business conditions.conditions (e.g., unforeseen impacts, divestitures, etc.).
•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 42)54).
•We use a Target Industry Peer Group (TIPG) (identified on page 43)54) for broader market executive compensation analyses that includes companies based on a peer-of-peers analysis.
In the Compensation Discussion and Analysis (CD&A), we provide an overview of our executive compensation programs and the underlying philosophy used to develop the programs. We describe the material components of our executive compensation programs for our 2021 Named Executive Officers (NEOs) and explain how and why our Board’s Compensation Committee determined certain compensation policies and decisions.
We refer to certain non-GAAP financial measures, which are identified with asterisks. For more information, including definitions, reconciliations to the most directly comparable GAAP measure and why these measures may be useful to investors, see “Appendix A - Use of Non-GAAP Financial Measures.” The 2021 NEO compensation is in the Summary Compensation Table on page 69 and other compensation tables contained in this Proxy Statement.
2022 Proxy Statement49
Executive Compensation
2021 Compensation Elements
Our executive compensation philosophy provides our NEOs with attractive, robust and market-based total compensation tied to annual and long-term performance and aligned with the interests of our shareholders and our business objectives. The key elements of our compensation programs for our NEOs are summarized below.
Compensation ElementCEO
Other NEOs
(Average)
PurposeKey Characteristics
Fixed9%18%
Base Salary
pg53_piechartxbaseceo-01a.jpg
pg53_piechartxbaseneo-01a.jpg
Compensate equitably and competitively
•Determined by level of responsibility, competitive market pay assessment and individual performance
Variable91%82%
Annual Incentive Plan (AIP)
pg53_piechartxannualceo-01a.jpg
pg53_piechartxannualneo-01a.jpg
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)
pg53_piechartxltipceo-01a.jpg
pg53_piechartxltipneo-01a.jpg
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)
pg53_piechartxrpsceo-01a.jpg
pg53_piechartxrpsrneo-01a.jpg
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
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”
50Northrop Grumman
Executive Compensation
2021 Performance Highlights
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 Share3-Year Total Shareholder Return
pg52_barchartxepsa.jpg
pg52_barchartx3yeartsra.jpg
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”
Consideration of Say-On-Pay Vote
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.
pg51_piechartxsayonpaya.jpg
% of votes in favor of
Say-on-Pay Proposal in 2021

2022 Proxy Statement51
Executive Compensation
Our Compensation Best Practices
Our compensation programs incorporate best practices, including the following:
What We DoWhat We Don't Do
Pay for PerformanceAnnual 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 ManagementAssessments Performed
Cap on Annual Bonuses and RPSR Payouts
No Hedging or Pledging of Company Stock
How We Make Executive Compensation Decisions
Our Compensation Committee leads a rigorous and continuous process evaluating our thoughtfully designed programs throughout the year to ensure that we maintain executive compensation programs that align with the interests of our shareholders.
AssessEstablish
•TheFeedback from annual say-on-pay vote from shareholder outreach
•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
ApproveMonitor
•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

52Northrop Grumman
Executive Compensation
Roles and Responsibilities



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 together with its independentReport for inclusion in the proxy statement.



INDEPENDENT
DIRECTORS
•Evaluate the performance and determine the compensation consultant, conducts an annual assessment of the CEO (upon recommendation of the Compensation Committee).
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, programscompensation-related risk management and areas for program design to determine if there are potential material risksmost appropriately support the Company’s business strategy and organizational values.
•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)
•BothMakes compensation-related recommendations for elected officers, other than the CEO, to the Compensation Committee for its review and its independent compensation consultant evaluate the mix of at-risk compensation linked to stock appreciation.approval.
•The assessment isAssesses each executive’s performance, skills and industry knowledge, market compensation benchmarks, and succession and retention considerations.
•Provides recommendations to confirm there is an appropriate balance in the Compensation Committee regarding executive compensation programs, practicesincentive and policies.benefit plan designs and strategies. These recommendations include financial and non-financial operational goals and criteria for our annual and long-term incentive plans.

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COMPENSATION DISCUSSION AND ANALYSIS | KEY PRINCIPLES


How We Make Compensation Decisions2022 Proxy Statement53
Role
Executive Compensation
Use of the Compensation CommitteeCompetitive Data
The Compensation Committee is responsible for overseeing our compensation policies, incentive and equity compensation plans and approving payments or grants under these plans for elected officers (other than the CEO). The Compensation Committee recommends the compensation for our CEO to the independent directors of the Board for approval and approves the compensation for the other NEOs. In performing its duties, the Compensation Committee:
receives advice from an independent compensation consultant who reports directly to the Compensation Committee and is discussed further below;
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; and
evaluates the competitiveness of each elected officer's total compensation package.
In addition, the Compensation Committee annually reviews and discusses with management the CD&A and provides a Compensation Committee Report for inclusion in the proxy statement.
For more information regarding the composition of the Compensation Committee and its duties and responsibilities, see "Corporate Governance – Committees of the Board of Directors – Compensation Committee."
Role of the Independent Compensation Consultant
The Compensation Committee retains an independent compensation consultant, Frederic W. Cook & Co. (the Compensation Consultant). The Compensation Consultant reports directly to the Compensation Committee, and the Compensation Committee may replace the Compensation Consultant or hire additional consultants at any time. A representative of the Compensation Consultant regularly participates in meetings of the Compensation Committee and communicates with the Compensation Committee Chairperson between meetings as needed; however, the Compensation Committee and the independent directors of the Board make final decisions on the compensation actions for the NEOs. The Compensation Consultant also participates in executive session with the Compensation Committee. Other than the fees paid to the Compensation Consultant pursuant to its engagement by the Compensation Committee for its advice on executive and director compensation, the Compensation Consultant does not receive any fees or income from the Company.
The Compensation Consultant provides an independent 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. The Compensation Consultant utilizes aerospace and defense industry market data and conducts an independent review of publicly available data.
The roles of the Compensation Consultant include:
reviewing and advising the Compensation Committee on our total compensation philosophy, peer groups and target competitive positioning;
identifying market trends and practices and advising the Compensation Committee on program design implications;
providing proactive advice to the Compensation Committee on best practices for Board governance of executive compensation, compensation-related risk management, and any areas for program design to most appropriately support the Company's business strategy and organizational values; and
serving as a resource to the Compensation Committee Chairperson on setting agenda items for Compensation Committee meetings and undertaking special projects.
In February 2019, the Compensation Committee determined that there were no relationships between the Compensation Consultant and the Company or any of the Company's directors or executive officers that raised a conflict of interest.
Role of Management
Our CEO makes compensation-related recommendations for elected officers to the Compensation Committee for its review and approval. The CEO's evaluation is based on each officer's compensation relative to market and the overall framework, philosophy and objectives for our executive compensation programs set by the Compensation Committee.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERSPERFORMANCE PEER GROUP: SET PERFORMANCE TARGETS AND PROXY STATEMENTI 41

COMPENSATION DISCUSSION AND ANALYSIS | KEY PRINCIPLES


The recommendations for elected officers are based on an assessment of each executive's performance, skills and industry knowledge, market compensation benchmarks, and succession and retention considerations. The Chief Human Resources Officer provides a summary of historical compensation and benefits-related data when compensation decisions are considered by the Compensation Committee to ensure compensation decisions are made within our total compensation framework.
Management also provides recommendations to the Compensation Committee regarding executive incentive and benefit plan designs and strategies. These recommendations include financial and non-financial operational goals and criteria for our annual and long-term incentive plans.
Use of Competitive Data
Performance Peer Group: Set Performance Targets and Evaluate PerformanceEVALUATE PERFORMANCE
The Compensation Committee uses the Performance Peer Group and LRSP data for purposesthe purpose of setting performance targets and evaluating performance forof our AIP and LTIP. The Performance Peer Group is comprised ofencompasses the largest global defense companies by government revenues within the aerospace and defense market space. AIP goals for 2018The LRSP is our five-year strategic operating and goalsfinancial plan. In order to better align our performance objectives, the Performance Peer Group companies may vary in a particular performance year. In 2021, the Compensation Committee used the following peer group data for the LTIP grants made during 2018 that will vest in 2020 were established based on the 2018 Performance Peer Group.
purpose of setting AIP performance targets.
2018 2021 PERFORMANCE PEER GROUP
BAE SystemsHarris CorporationLockheed Martin Corporation
The Boeing Company
L3 Technologies, Inc.Raytheon Company
Booz Allen Hamilton Holding CorporationLeidos Holdings, Inc.Thales Group
General Dynamics Corporation
Leonardo
Performance targets for the LTIP grants for the three-year performance period vesting in 2018 were established in 2016, based on the 2016 Performance Peer Group.
2016 PERFORMANCE PEER GROUP
BAE SystemsHarris CorporationLockheed Martin Corporation
The Boeing CompanyL3L3Harris Technologies, Inc.Raytheon CompanyTechnologies Corporation
TSR PEER GROUP: 2019-2021 LONG-TERM INCENTIVE AWARDS
Earned awards from the 2019-2021 performance cycle were contingent on our ranking compared to the S&P Industrials and the following TSR peer group:
Booz Allen Hamilton Holding 2019 TSR PEER GROUP
BAE SystemsL3Harris Technologies, Inc.
Raytheon Technologies Corporation(2)
The Boeing CompanyLeidos Holdings, Inc.Thales Group
Booz Allen Hamilton Holding Corporation(1)
Leonardo
General Dynamics CorporationLeonardoLockheed Martin Corporation
Target Industry Peer Group: Benchmark Executive Compensation Practices(1)For the 2021-2023 performance cycle, Booz Allen Hamilton Holding Corporation was replaced by Huntington Ingalls Industries, Inc.
(2)Raytheon Company merged with United Technologies in 2020, forming Raytheon Technologies Corporation.
TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES
The Compensation Committee benchmarks our executive compensation levels and practices against a Target Industry Peer Groupthe TIPG of 1413 companies, as well as againstincluding a subset of the Target Industry Peer Group containing six direct peers. Prior to the beginning of the year, the Compensation Committee sets the Target Industry Peer Group and the subset of direct peersTIPG used to benchmark compensation for the following year. To identify peer companies for compensation benchmarking purposes, the Independent Compensation Consultant employedemploys an objective criteria-based methodology where:
•the companyCompany was identified as a peer by at least two aerospace and defense peers or proxy advisory services;
•the companyCompany participated in the annual Aon Hewitt executive compensation study; and
•revenues, total employees and market capitalization of the peer company were broadly similar to those of the Company.

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COMPENSATION DISCUSSION AND ANALYSIS | KEY PRINCIPLES

54		Northrop Grumman
Executive Compensation

While the Target Industry Peer Group is reviewed annually by the Compensation Committee reviews the TIPG annually with the Independent Compensation Consultant, our goal is to keep it as consistent as reasonably possible on a year-over-year basis. The companies that comprise the 2018 Target Industry Peer Group2021 TIPG are listed in the following table:
20182021 TARGET INDUSTRY PEER GROUP
3M CompanyJohnson Controls International
The Boeing Company(1)
L3L3Harris Technologies, Inc.(1)
Caterpillar, Inc.
Lockheed Martin Corporation(1)
Eaton Corporation
Raytheon Company (1)
Parker-Hannifin Corporation
Emerson Electric CompanyRockwell Collins, Inc.
Raytheon Technologies Corporation(1)
General Dynamics Corporation(1)
Textron, Inc.
Honeywell International, Inc.(1)
United Technologies Corporation
(1)Included in the subset of six direct peers also used for compensation benchmarking
It is the Company'sCompany’s pay philosophy to provide the CEO a compensation package that comprisesincludes competitive elements of base salary and target variable pay relative to the Target Industry Peer Group.TIPG and the direct six peers noted in the table above. In 2018,2021, the CEO'sCEO’s target total direct compensation approximated the median of the Target Industry Peer Group.TIPG and direct six peers.
Another element of the Company'sCompany’s pay philosophy is to tie a significant portion of the CEO'sCEO’s pay to performance. As a result, the CEO'sCEO’s actual compensation may differ from thisthe market median based on the Company'sCompany’s actual performance.
In determining the base salary and target variable pay elements for the other NEOs, the Compensation Committee does not set any specific benchmark relative toestablishes the Target Industry Peer Group; rather,TIPG median as the benchmark. The Compensation Committee also considers several factors in determining their compensation, including executive compensation levels and practices of the Target Industry Peer Group,TIPG, NEO individual experience, growth in job as demonstrated through sustained performance, leadership impact, retention and pay relative to the CEO. Actual annual incentive awards and long-term incentive award opportunities reflect these factors, as well as Company performance.


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 43

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS


Annual Incentive Compensation2022 Proxy Statement55
Under
Executive Compensation
Key Components of Our Executive Compensation Programs
Base Salary
The Compensation Committee believes that competitive base salaries are necessary to attract and retain our NEOs. Base salaries are evaluated each year and determined by level of responsibility, competitive market pay assessment and individual performance.
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 %
Annual Incentive Compensation
Our NEOs are eligible to receive annual cash bonuses under our shareholder-approved 2002 Incentive Compensation Plan (the Plan), the(AIP). We use a balance of financial and non-financial performance metrics aligned with our long-term strategy.
TARGET AWARD LEVELS FOR 2021 AIP
The Compensation Committee approves the annual incentive compensation target payout percentage for each NEO, other than the CEO. For the CEO, such percentage is approved by the independent directors of the Board.
The target incentive award (target bonus) represents a percentage of each NEO'sNEO’s base salary. Following the completion of the fiscal year, the target bonus is used by the Compensation Committee, together with its assessment of Company performance against pre-determinedestablished performance criteria, to determine the final bonus award amount.
2018 Annual Incentive
The 20182021 target bonus for the CEO wasis 180% of base salary, which was unchanged from 2017. The 20182020. For each of the other NEOs, the 2021 target bonus for the COO was 120% of base salary andis 100% of base salary, for the CFO and other NEOs, including Mr. Larson, as the new Innovation Systems sector president. Mr. Larson’s final bonus award reflects the time he served in his role as an elected officer of Orbital ATK and of Northrop Grumman.unchanged from 2020.
NameTarget Bonus (% of Base Salary)
Kathy J. Warden180 %
David F. Keffer100 %
Mark A. Caylor100 %
Blake E. Larson100 %
Mary D. Petryszyn100 %
Final bonus awards for each NEO were determined by multiplying the Northrop Grumman Company Performance Factor (CPF) by the target bonus. The CPF can range from 0% to 200%.
Annual Incentive Formula for 2018 (1):
56Northrop Grumman
Executive Compensation
ANNUAL INCENTIVE FORMULA FOR 2021:
X=
BASE SALARYTARGET PAYOUT %TARGET BONUS

Base Salary

X

Target Payout %

=

Target Bonus

TARGET BONUSCOMPANY PERFORMANCE FACTOR

Target Bonus

X

CPF

=

Final Bonus Award

FINAL BONUS AWARD
(1)The final bonus award for Mr. Larson was determined utilizing previously established 2018 annual incentive performance goals under the legacy Orbital ATK Executive Officer Incentive Plan (EOIP), discussed in greater detail on page 46.
Annual performance evaluations are conducted by the CEO for each NEO, other than the CEO, and reviewed with the Compensation Committee. The Compensation Committee considers this performance information as well as the comparison to market data.
2021 AIP METRICS
For the 2021 AIP, we used a mix of financial and non-financial metrics to measure our performance. Our AIP metrics reflect our commitment to investing for and achieving long-term profitable growth; maintaining alignment with shareholders’ interests; and incentivizing top performance against our industry peers.
Financial Metrics
For 2021, the Compensation Committee selected Adjusted Cash Flow from Operations Conversion*and Segment Operating Income* Growth, each weighted at 35%, and Pension-adjusted Net Income* Growth and Pension-adjusted OM Rate*, each weighted at 15%. The metrics are defined as follows:
Financial MetricsHow CalculatedRationale
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.
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”

2022 Proxy Statement57
Executive Compensation
Non-Financial Metrics
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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.
For 2021, we selected the following non-financial metrics:
Non-Financial MetricHow Measured
People
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Representation of females and people of color in all management level positions with respect to internal and external benchmarks.
DIVERSITY
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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
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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
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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
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Program-specific objectives, including defect rates, process quality, supplier quality, planning quality or other appropriate criteria for program type and phase.
QUALITY
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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.
Payout Levels
Our AIP provides for payout levels from 0% to 200% of target. The minimum, target and maximum performance levels are derived based on an analysis of the historical and forecasted performance of our Performance Peer Group, and LRSP data for the Adjusted Cash Flow from Operations Conversion* and Segment Operating Income* Growth metrics. The Pension-adjusted Net Income* Growth and Pension-adjusted OM Rate* metric performance levels are derived using LRSP data. Specific values are identified for each metric at selected points in the range between minimum and maximum and other values are determined by linear interpolation between these points. No payout is made if performance is below the minimum. Above-target payouts can be earned only if the Company’s performance exceeds the performance threshold noted in the table on the following page. The maximum payout of 200% is achieved if the Company’s performance is above the approximate top quartile performance target. This structure aligns above-target payouts with superior performance and provides reduced awards for below-target performance.
58Northrop Grumman
Executive Compensation
2021 AIP PERFORMANCE RESULTS
In determining the CPF, both financial and non-financial performance against goals are assessed. The 2021 Company financial performance for the four metrics shown in the table below was 130%. As approved by the Compensation Committee, Company performance calculations were adjusted, as applicable, to include proceeds from sale of equipment to a customer, and to exclude Orbital ATK intangible asset amortization and property, plant and equipment (PP&E) step-up depreciation expense, certain accounting impacts related to the Company’s pension and OPB plans, and impacts related to the Company's IT services divestiture, including the gain on sale of the business, associated federal and state income tax expenses, transaction costs, and the make-whole premium for early debt redemption.
FINANCIAL METRICS
Consistent with prior years, GAAP earnings were adjusted for the after-tax impact of the Company’s FAS/CAS pension adjustment recorded during the year and MTM pension and OPB expense and related tax impacts recognized at the end of the year. As such, during 2021 we removed $1,263M from earnings related to our FAS/CAS pension adjustment and earnings of $1,762M associated with our MTM pension and OPB expense and related tax impacts. The adjustments allowed us to more effectively compare the Company’s financial performance against our peers. Details are outlined in Appendix A - Use of Non-GAAP Financial Measures.
Metric/GoalWeightingPerformance to Achieve Target Payout2021 Performance2021 Financial Score
Adjusted Cash Flow from Operations Conversion*35%69.0%69.0%35%
Segment Operating Income* Growth35%$4.15B$4.22B35%
Pension-adjusted Net Income* Growth15%$2.77B$3.05B30%
Pension-adjusted OM Rate*15%10.6%11.5%30%
130%
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”

2022 Proxy Statement59
Executive Compensation
NON-FINANCIAL METRICS
Performance against the annual non-financial metrics cannot exceed 100% and can result only in a downward adjustment to the financial performance score. The Company demonstrated strong performance in 2021 overall against the non-financial goals and the Compensation Committee approved a non-financial score of 100%.
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We met or exceeded our employee diversity goals in 2021, and since 2010, have made significant progress towards our long-term goals.
DIVERSITY
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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
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The Company exceeded the annual target in 2021.
SAFETY
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The Company exceeded the annual target for the year, driving further progress towards our multi-year environmental sustainability goals.
ENVIRONMENTAL SUSTAINABILITY
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Corporate quality metric was at target for the year.
QUALITY
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Customer satisfaction metric was at target for the year.
CUSTOMER
SATISFACTION
60Northrop Grumman
Executive Compensation
Compensation Committee Discretion
The Compensation Committee approves bonus amounts for all NEOs except the CEO, whose annual bonus is recommended by the Compensation Committee to the independent members of the Board for approval. The Compensation Committee has discretion to make adjustments to the annual bonus payouts for NEOs, exceptother than the CEO, if it determines such adjustment is warranted. For example, in instances where Company performance has been impacted bywarranted due to unforeseen or unusual events,events. In 2021, the Compensation Committee has exercised its authority to increase the final awards as necessary to preserve the intended incentives and benefits. The Compensation Committee has also adjusted payouts downward in the past, despite performance targets having been met, when it determined that particular circumstances had a negative impact on the Company but were not reflected in the performance calculation.made no such adjustments.

2021 AIP PAYOUTS
44INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS


2018 Annual Incentive Goals and Results
For the AIP, we use a mix of financial and non-financial metrics to measure our performance. Our AIP metrics reflect our commitment to investing for and achieving long-term profitable growth; maintaining alignment with shareholders' interests; and incentivizing top performance against our industry peers. For 2018, the Compensation Committee again selected Pension-adjusted OM Rate* and Pension-adjusted Net Income* Growth and refined the cash performance metric to Pension-adjusted Cash Flow from Operations* from the previous metric of Pension-adjusted Cash Flow from Operations Conversion*. The financial metrics are each weighted at 1/3 and are defined as follows:
Pension-adjusted OM Rate*: establishes high program performance expectations for the Company and is calculated as OM rate (operating margin divided by sales) before net FAS (service)/CAS pension adjustment (the difference between pension expense charged to contracts and included as cost in segment operating income* in accordance with U.S. Government Cost Accounting Standards (CAS) and the service component of pension expense determined in accordance with GAAP (FAS)).
Pension-adjusted Cash Flow from Operations*: recognizes the importance of converting net income into cash. The metric is calculated as cash provided by operating activities before the after-tax impact of discretionary pension contributions*. Pension-adjusted Cash Flow from Operations* enables management to make capital investment decisions that support long-term profitable growth without impacting performance-based incentive compensation.
Pension-adjusted Net Income* Growth: incentivizes management to achieve relative long-term profitable growth greater than a projected industry growth rate. Pension-adjusted Net Income* Growth is calculated as net income before the after-tax impact of the total net FAS/CAS pension adjustment.
In addition to these financial goals, we established non-financial goals to align our objectives with all our stakeholders. Performance against non-financial metrics can result only in a downward adjustment to the financial metric score. For 2018, we selected the following non-financial metrics:
Customer Satisfaction: measured in terms of customer feedback, including customer-generated performance scores, award fees and verbal and written feedback.
Diversity:measured in terms of improving representation of females and people of color in all management level positions with respect to internal and external benchmarks.
Engagement & Inclusion: measured based on performance at or above the global high performing norm for engagement and inclusion indices and an accountability metric (as reported in a company-wide employee survey).
Environmental Sustainability: measured in terms of reductions in absolute greenhouse gas emissions and potable water use consumption, and improvement in solid waste diversion (i.e., waste diverted from landfill disposal).
Quality: measured using program-specific objectives, including defect rates, process quality, supplier quality, planning quality or other appropriate criteria for program type and phase.
Safety: measured by total case rate, defined as the number of Occupational Safety & Health Administration recordable injuries as well as by lost work day rate associated with those injuries.
Our AIP provides for payout levels from 0% to 200% of target. The minimum, target and maximum performance levels are derived based on an analysis of the past performance of our Performance Peer Group (Pension-adjusted Net Income* Growth is based on projected market growth rates). Specific values are identified for each metric at selected points in the range between minimum and maximum and other values are determined by linear interpolation between these points. No payout is made if performance is below the minimum. Above target payout can be earned only if the Company’s performance exceeds the performance threshold noted in the table below. The maximum 200% payout is based upon top quartile past performance of the Performance Peer Group. This structure rewards superior performance by aligning above-target payouts to outperforming our peer benchmarks and provides reduced awards for below target performance.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 45

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS


In determining the Company Performance Factor, both financial and non-financial performance against goals is assessed. The Company financial performance for the three metrics shown in the table below was 166%. As approved by the Compensation Committee, Company performance calculations exclude the impacts of the addition of Innovation Systems, certain Orbital ATK transaction-related expenses and certain impacts related to the Company's 2018 adoption of the MTM method of accounting for its pension and OPB plans as detailed in "Appendix A - Use of Non-GAAP Financial Measures".
Metric/GoalWeightingPerformance to Achieve Target Payout2018 Performance2018 Financial Score
Pension-adjusted OM Rate*1/39.9%11.4%67%
Pension-adjusted Cash Flow from Operations*1/3$3.4B$3.2B32%
Pension-adjusted Net Income* Growth1/3$1.9B$2.4B67%
 
  166%
* This metric is a non-GAAP financial measure. For more information, see "Appendix A - Use of Non-GAAP Financial Measures."
Performance against the annual non-financial metrics cannot exceed 100% and can result only in a downward adjustment to the financial performance score. The Company demonstrated strong performance in 2018 overall against the non-financial goals, and the Compensation Committee approved a non-financial score of 96.5%. In consideration of both the financial and non-financial performance, the 20182021 Company Performance Factor was determined to be 160%130%.
Consistent with Mr. Larson’s continued leadership of the legacy Orbital ATK business in the newly established Innovation Systems sector, Mr. Larson’s 2018 final bonus award was determined based on the pre-established annual incentive goals under the Executive Officer Incentive Plan, 75% based on financial metrics and 25% based on operational objectives. For Mr. Larson, the Compensation Committee approved a performance range of 0%-200%. For 2018, the Orbital ATK financial metrics and targets consisted of Earnings before Interest and Taxes (EBIT) ($540M), Revenue ($4.8B), Free Cash Flow ($226M), equally weighted at 30% and Orders ($4.7B) weighted at 10%. The 2018 operational objectives were aimed at improving company processes and business systems, achieving certain cost reductions, and providing strong support to business group initiatives. The Compensation Committee assessed the 2018 performance and approved a score of 160%. In 2019, Mr. Larson will participate in the same AIP applicable to Northrop Grumman elected officers.
Decisions for 2018
In February 2019,2022, the Compensation Committee recommended, and the independent members of ourthe Board approved, a 20182021 annual incentive award of $4,562,000$3,744,000 for Mr. Bush and a 2018 annual incentive award of $1,920,000 forthe CEO, Ms. Warden. As CEO,Based on the CPF, Ms. Warden recommended, and the Compensation Committee approved, the other NEOs'NEOs’ annual incentive awards.
NameAIP Target % of SalaryAIP Payout Range %Performance Payout
Actual Payout (1)
Kathy J. Warden180 %0% - 200%130 %$3,744,000 
David F. Keffer100 %0% - 200%130 %$1,040,000 
Mark A. Caylor100 %0% - 200%130 %$1,112,000 
Blake E. Larson100 %0% - 200%130 %$1,086,000 
Mary D. Petryszyn100 %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.

46(1)INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMSThe potential range of bonus payouts based on 2021 performance is disclosed in the Grants of Plan-Based Awards Table. Actual bonus payouts for 2021 performance are disclosed in this table and in the Summary Compensation Table.


Long-Term Incentive Compensation
2018 Long-Term Incentive ProgramCompensation
In determining the amount of the individual long-term incentive award for an NEO (other than the CEO), the Compensation Committee considers an elected officer's individual performance during the preceding year, growth in job as demonstrated through sustained performance, leadership impact, retention and pay relative to the CEO, as well as market data for the elected officer's position based on the Target Industry Peer Group analysis.
In 2018, after determining the award value for the NEOs as described above,2021, the Compensation Committee granted awards in the form of RPSRs to ensure sustainability and achievement of business goals over time and RSRs to provide retention value.RSRs. The awards were comprised of 70% RPSRs and 30% RSRs. The Compensation Committee determined this long-term incentive mix would appropriately motivate and reward the NEOs to achieve our long-term objectives and further reinforce the link between their interests and the interests of our shareholders.
The RPSRs will vest and be distributed following the completion of the three-year performance period (commencing January 1, 2018 and ending December 31, 2020) if goals are met. The RSRs generally vest 100% after three years.
2022 Proxy Statement61
Executive Compensation
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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.
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Restricted Stock Rights (RSRs)
The RSRs provide retentive value and generally vest 100% after three years.
Earned RPSRs and RSRs may be paid in shares, cash or a combination of shares and cash at the Compensation Committee'sCommittee’s discretion. An executive generally must remain employed through the vesting period to earn an award. Vesting for termination due to death, disability, retirement or change in control is discussed in the "Termination“Termination Payments and Benefits"Benefits” section on page 66.80. Dividend equivalents accrue on both RPSR and RSR awards earned and will be paid upon distribution of the RPSRs and RSRs.
RESTRICTED PERFORMANCE STOCK RIGHTS
The Compensation Committee evaluates RPSR performance requirements each year to ensure they are aligned with our business objectives. For the 20182021 RPSR grant, the Compensation Committee determined that for the NEOs, performance metrics willwould continue to be relative TSRRelative Total Shareholder Return, Adjusted Cumulative FCF* and Cumulative FCF*Operating RONA*, each equally weighted at 50%.1/3. The current metrics and weightings reflect the Company'sCompany’s continued emphasis on operational performance directly impacted by management decisions and behaviors, while maintaining strong alignment with shareholder interests. Based on the performance against these metrics, shares earned for 20182021 RPSR grants can vary from 0% to 150%200% of the rights awarded.
TSR is measured by comparing cumulative stock price appreciation with reinvestment of dividends over a three-year period to the Performance 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 30 calendar days immediately prior to the start of the performance period and the last 30 calendar 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.
Cumulative FCF* focuses
MetricWeightingRationale
Relative Total Shareholder Return1/3Aligns the interests of executives with shareholders.
Adjusted Cumulative FCF*1/3Focuses on cash generation after capital investments and is calculated as the aggregate free cash flow before the after-tax impact of total pension funding* over a three-year period. Free cash flow* includes funds available to create shareholder value after investing in the business through capital expenditures.
Operating RONA*1/3Drives operational productivity through the efficient use of capital resources.
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”
62Northrop Grumman
Executive Compensation
2021 RPSR Performance Measures
RPSR MetricsCalculation
Relative Total Shareholder ReturnRelative 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**.
* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”
**    Divestiture-related activity impacting RPSRs is comprised of financial statement adjustments, where applicable, related to the completion of the IT services divestiture that were not known at the grant date. The divestiture-related activities include the gain, fees and taxes associated with the sale of IT services, held for sale reversal in 2020, and differential impacts related to the IT services divestiture in 2021. Differential impacts represent 11 months of plan-based margin and free cash flow estimates and plan-based net operating assets of the IT services business in 2021 that were included in the setting of the 2019 grant.
Recently Completed RPSR Performance Period (2016 – 2018)(2019-2021)
In February 2016,2019, when granting RPSRs to NEOs who were elected officers at the time of the grant, the Compensation Committee selected relative TSR, Adjusted Cumulative FCF* and Operating RONA*, equally weighted at 70% and Cumulative FCF* weighted at 30%1/3, as the performance metrics for the awards and established the performance criteria for the awards as set forth in the table below.
 Performance Required to Score  
Metric/GoalWeighting0%100%150%2018 Actual Performance2018 Score
Relative TSR - 2016 Performance Peer Group35%25th50th80th45th29%
Relative TSR - S&P Industrials35%25th50th80th64th43%
Cumulative FCF*30%$4.8B$5.5B$6.2B$6.1B43%
RPSR Performance Factor     115%

NOTICE OF Based on the performance against these metrics, shares earned for 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 47RPSR grants can vary from 0% to 150% of the rights awarded.

Performance Required to Score
RPSR MetricsWeighting
Threshold
0%
Target
100%
Maximum
150%
2021 Score
COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS

Relative TSR - 2019 Performance Peer Group1/3
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25%


Relative TSR - S&P Industrials
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11%


Adjusted Cumulative FCF*1/3
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50%
Operating RONA*1/3
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36%
RPSR Performance Factor

122%

* This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”
In February 2019,2022, the Compensation Committee reviewed performance for the January 1, 20162019 to December 31, 20182021 RPSR performance period. The combined weighted score for the metrics generated an overall performance score of 115% (excluding the impact of Innovation Systems as detailed in "Appendix A - Use of Non-GAAP Financial Measures")122%.
2022 Proxy Statement63
Executive Compensation
In February 2019,2022, the NEOs received payouts in stock with respect to the outstanding RPSR awards that were granted in February 20162019 for the three-year performance period ending December 31, 20182021 (as described further in footnote 3 toof the Outstanding Equity Awards Table on page 56)72).
Other NEO Benefits
This section describes other benefits the NEOs receive. These benefits are not performance related and are designed to provide a competitive package for purposes of attracting and retaining the executive talent needed to achieve our business objectives. These benefits include retirement benefits, certain perquisites and severance arrangements.
Retirement Benefits
We maintain tax-qualified retirement plans (both defined benefit pension plans and defined contribution savings plans) that cover most of our workforce, including the NEOs. We also maintain nonqualified retirement plans that are available to our NEOs, which are designed to restore benefits that were limited under the tax-qualified plans or to provide supplemental benefits. Compensation, age and years of service factor into the amount of benefits provided under the plans. Thus, the plans are structured to reward and retain employees of long service and recognize higher performance levels as evidenced by increases in annual pay. Additional information about these retirementThe nonqualified supplemental defined benefit plans in which our NEOs participate were frozen as to pay and the NEO benefits under these plans can be found in the Pension Benefits Table and Nonqualified Deferred Compensation Table, on pages 58 and 63, respectively.service as of December 31, 2014.
The Compensation Committee assesses aggregate benefits available to the NEOs and has previously imposed an overall cap, generally limited to no more than 60% of final average pay, on pension benefits for the NEOs (except for small variations due to contractual restrictions under the plans). The nonqualified supplemental defined benefitAdditional information about these retirement plans in which our NEOs participate were frozen as to pay and service as of December 31, 2014.
Retiree Medical Arrangement
The Special Officer Retiree Medical Plan (SORMP) was closed to new participants in 2007 and the life insurance benefit was removed in 2018. ParticipantsNEO benefits under these plans can be found in the SORMP are entitled to retiree medical benefits pursuant to the terms of the Plan. Mr. Bush is eligible for SORMP benefits due to his date of hirePension Benefits Table and years of service as an executive. The other NEOs became elected officers after the SORMP was closed to new participantsNonqualified Deferred Compensation Table, on pages 74 and are not eligible for SORMP benefits. The estimated cost of the SORMP benefit reflected in the Termination Payment Table is the present value of the estimated cost to provide future benefits using actuarial calculations and assumptions.78, respectively.
Perquisites
Our NEOs are eligible for certain limited executive perquisites that include financial planning and income tax preparation, physical exams and personal liability insurance. The Compensation Committee believes these perquisites are common within the competitive market for total compensation packages for executives and are useful in attracting, retaining and motivating talented executives. Perquisites provided to the NEOs in 20182021 are detailed in the Summary Compensation Table on page 53.69.
Security Arrangements
Given the nature of our business, we maintain a comprehensive security program. As a component of that program, we provideExecutive protection, including residential and/or travel, protection that we consider necessaryis based on a risk assessment and may change based on the individual's profile. These security requirements are continuously assessed for each member and provided to address our security requirements.the Board for informational purposes every three years. In selecting the level and form of protection, we and the Board consider security risks faced by those in our industry in general and security risks specific to our Company and its individuals. Based on security threat information obtained and an ongoing dialogue with law enforcement officials,and security specialists, the Board has required that Mr. BushMs. Warden and other NEOs receive varying levels of residential and travel protection.
Since we require this protection under a comprehensive security program and it is not designed to provide a personal benefit (other than the intended security), we do not view these security arrangements as compensation to the individuals. We report these security arrangements as perquisites as required under applicable SEC rules. In addition, we would report them as taxable compensation to the individuals if they wereare not excludable from income as working condition fringe benefits under Section 132 of the Internal Revenue Code.
The Board has determined that the CEO should avoid traveling by commercial aircraft for purposes of security, rapid availability and communications connectivity during travel, and should use Company-provided aircraft for all air travel. If, as a result, the CEO uses Company-provided aircraft for personal travel, the costs of such travel are imputed as income and are subject to the appropriate tax reporting according to Internal Revenue Code regulations.

48INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS


We regularly review the nature of the security threat and associated vulnerabilities with law enforcement and security specialists and will continue to reviseadapt our security program as appropriate.
In September 2018, the Board of Directors approved security protection for Ms. Warden as the incoming CEO, at the same level that such security protection is currently provided to the CEO, effective immediately.
Severance Benefits
We maintain the Severance Plan for Elected and Appointed Officers of Northrop Grumman Corporation (Severance Plan), which is available to ourMs. Warden and other NEOs who qualify and are approved to receive such benefits. Mr. Bush is not eligible to participate in the Severance Plan. The purpose of
64Northrop Grumman
Executive Compensation
the Severance Plan is to help bridge the gap in an executive'sexecutive’s income and health coverage during a period of unemployment following termination, and to ensure certain benefits for the Company.
We do not maintain any change in control (CIC) severance plans. In addition, we do not provide excise tax gross-ups for any payments received upon termination after a change in control.
Upon a "qualifying termination"“qualifying termination” (defined below) the Company will provide severance benefits to eligible NEOs under the Severance Plan. Provided the NEO signs a release and agrees to certain restrictions, he or she may receive: (i) a lump sum severance benefit equal to one and one-half times annual base salary and target bonus, (ii) a prorated performance bonus for the year of termination, (iii) continued medical and dental coverage for the eighteen-month18-month severance period, (iv) income tax preparation/financial planning fees for the year of termination and the following year and (v) outplacement expenses up to 15% of salary, all subject to management approval. The cost of providing continued medical and dental coverage is based upon current premium costs. The cost of providing income tax preparation and financial planning is capped at $18,500 for the year of termination and $18,500 for the year following termination. The annual cap for the CEO is $30,000 and for the rest of the NEOs is $18,500.
A "qualifying termination"“qualifying termination” includes one of the following:
•involuntary termination, other than for cause or mandatory retirement; or
•election to terminate in lieu of accepting a downgrade to a non-officer position (i.e., good reason).
Change in Control Benefits
We do not maintain separate change in controlCIC programs or agreements. The only change in controlCIC benefits available to the NEOs are those described in the terms and conditions of the grants under the 2011 Long-Term Incentive Stock Plan (2011 Plan).
2022 Proxy Statement65
Executive Compensation
Policies and Procedures
Stock Ownership Guidelines
We maintain stock ownership guidelines for our NEOs to further promote alignment of management and shareholder interests. These guidelines require that NEOs own Company stock with a value denominated as a multiple of their annual salaries, which can be accumulated over a five-year period from the date of hire or promotion into an elected officer position.
The guidelines are as follows:
PositionStock Value as a Multiple of Base Salary
Chairman
Chair and Chief Executive Officer7x base salary
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Other NEOs3x base salary
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Shares that satisfy the stock ownership guidelines include:
•Company stock owned outright;
•unvested RSRs; and
•the value of shares held in the Northrop Grumman Savings Plan or Northrop Grumman Financial Security and Savings Program.
Unvested RPSRs are not included in calculating ownership until they are converted to actual shares owned.
The Compensation Committee reviews compliance with our stock ownership guidelines on an annual basis. As of December 31, 2018,2021, all NEOs were in compliance with the ownership guidelines. The Compensation Committee continues to monitor compliance and will conduct a full review again in 2019.2022.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 49

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS


Stock Holding Requirements
We have a holding period requirementrequirements for payouts from long-term incentive grants, further emphasizing the importance of sustainable performance and appropriate risk-management behaviors. Under this policy, NEOs are required to hold, for a period of three years, 50% of their net after-tax shares received from RPSR distributions and RSR vestings.distributions. These restrictions generally continue following termination and retirement; however, shares acquired from RPSR distributions following termination or retirement occurring more than one year after separation from the Company are not subject to the holding requirement.
SHAREHOLDER ALIGNMENT
AND FOCUS ON LONG-TERM,
SUSTAINABLE GROWTH
STOCK OWNERSHIP+STOCK HOLDING=
Anti-Hedging and PledgingAnti-Pledging Policy
Company policy prohibits our NEOs and other elected officers from hedging or entering into margin transactions involving Company stock, and pledging Company securities as collateral for loans or other transactions. Additional information about our policy can be found in “Compensation of Directors - Stock Ownership Requirements and Anti-Hedging and Pledging Policy” on page 44.
Recoupment Policy
The Company'sCompany’s recoupment policy provides that:
•the Board has discretion to recoup incentive compensation paid to an elected officer in the event of a restatement or if an elected officer engages in illegal conduct that causes significant financial or reputational harm to the Company;
66Northrop Grumman
Executive Compensation
•the Board has discretion to recoup incentive compensation paid to the elected officer in the event the elected officer fails to report such misconduct of another, or is grossly negligent in fulfilling his or her supervisory responsibilities to prevent such misconduct; and
•the CEO has discretion to recoup under similar circumstances incentive compensation provided to non-elected officers or other employees.
The Company’s recoupment policy applies to a three-year look back of performance-based short-annual or long-term, cash or equity incentive payments. It provides for certain disclosure in the event of recoupment, consistent with SEC and other legal requirements.
Risk Management
The Compensation Committee annually reviews our compensation programprograms and together with the independent compensation consultantIndependent Compensation Consultant assesses potential compensation-related risks to the Company. Based on this assessment for 2018,2021, the Compensation Committee determined that the risk profile is appropriate and substantial risk management features are incorporated into our compensation program.programs. This determination reflects the following conclusions from the detailed risk assessment:
•there is appropriate balance to mitigate compensation-related risk in the executive compensation program's designprograms' designs between fixed and variable pay, cash and stock components, short-annual and long-term measures, financial and non-financial measures and formulaic and discretionary decisions;
•there are appropriate policies in place to mitigate compensation-related risk, including the Compensation Committee'sCommittee’s and its advisor'sadvisor’s independence, transparent disclosure, officer stock ownership guidelines and holding period requirements, and hedging and recoupment policies; and
•there are no incentive or commission arrangements below the executive level that potentially encourage excessive risk-taking behavior.
Grant Date for Equity Awards
Annual grant cycles for equity awards occur in February at the same time salary increases and annual incentive targets are determined. This timing allows the Compensation Committee to make decisions on each of these compensation components at the same time, utilizing a total compensation philosophy. The Compensation Committee reviews and approves annual long-term incentive grants during its scheduled meeting, which occurs following announcement of our year-end financial results. Equity grants may also be granted on an interim basis throughout the year for special situations, such as new executive hires, promotions or retention.
Tax Deductibility of Pay
Under prior law, Section 162(m) of the Internal Revenue Code generally limitedlimits the annual tax deduction to $1 million per person for compensation paid to the Company'sCompany’s "covered employees," defined to include the CEO, CFO, and the next three highest-paid NEOs other thanexcluding the Chief Financial Officer (collectively, covered employees). Certain compensation, including qualified performance-based compensation, was not subjectCEO and CFO. The limitation also applies to the deduction limit if certain requirementsindividuals who were met.
The 2017 Tax Act enacted on December 22, 2017, modified Section 162(m). The 2017 Tax Act expanded the definition of covered employees to include the Company's Chief Financial Officer andin any employee who was a covered employee for any taxable year

after 2016.
50INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS | KEY COMPONENTSOF OUR PROGRAMS

2022 Proxy Statement		67
Executive Compensation

beginning after December 31, 2016. The 2017 Tax Act also repealed the performance-based compensation exception to the deduction limit. These amendments, effective January 1, 2018, do not apply to compensation paid pursuant to a written binding contract in effect on November 2, 2017, that was not materially modified after such date.
Say-on-Pay
Our shareholders are asked annually to approve, on an advisory basis, the compensation paid to our NEOs. We regularly engage with our shareholders to understand their concerns regarding executive compensation. The Compensation Committee annually reviews and discusses the results of the say-on-pay vote. In 2018, our executive compensation programs continued to receive strong support from shareholders with 97% approval at our 2018 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.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 51

COMPENSATION COMMITTEE REPORT

Report
The Compensation Committee reviewed and discussed the CD&A with management. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement. The Board has approved the recommendation.
COMPENSATION COMMITTEE
THOMASThomas M. SCHOEWE, CHAIRPERSON
MARIANNE C. BROWN
DONALDSchoewe, Chair
David P. Abney
Donald E. FELSINGER
BRUCE S. GORDON
KARLFelsinger
Madeleine A. Kleiner
Karl J. KRAPEK
GARY ROUGHEAD
Krapek

Gary Roughead
52INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | SUMMARY COMPENSATION TABLE


2018 Summary Compensation Table
Name & Principal PositionYear 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. Bush2018 1,578,039 16,924,462 4,562,000 — 1,120,758 24,185,259
Chairman and Chief Executive Officer2017 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. Warden2018 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. Bedingfield2018 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  
 
 
 
 
 
  
 
 
 
 
 
(1)68
Includes amounts deferred under qualified savings and nonqualified deferred compensation plans. Amounts shown for Mr. Larson include salary earned since the Merger Date and payments for vacation days sold under the Orbital ATK vacation buy/sell benefit program ($7,489).
Northrop Grumman

Compensation Tables
Summary Compensation Table
Name & Principal PositionYear
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
20211,589,439 — 13,500,119 3,744,000 371,464 671,745 19,876,767 
20201,536,346 — 13,499,889 3,977,000 1,144,248 649,661 20,807,144 
20191,488,462 — 13,000,159 4,509,000 687,615 623,484 20,308,720 
David F. Keffer
Corporate Vice President and Chief Financial Officer
2021790,392 — 3,000,038 1,040,000 — 195,335 5,025,765 
2020634,616 — 4,000,102 928,000 — 71,494 5,634,212 
Mark A. Caylor
Corporate Vice President and President, Mission Systems
2021855,002 — 3,000,038 1,112,000 206,044 138,474 5,311,558 
2020855,000 — 3,000,212 1,223,000 870,818 144,715 6,093,745 
2019850,192 — 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
2021830,398 — 3,499,978 1,086,000 154,294 203,163 5,773,833 
2020802,154 — 3,500,217 1,160,000 326,767 217,676 6,006,814 
2019746,394 — 3,000,163 1,278,000 388,000 189,586 5,602,143 
Mary D. Petryszyn (7)
Corporate Vice President and President, Defense Systems
2021745,198 — 3,000,038 975,000 — 268,498 4,988,734 
(1)Includes amounts deferred under qualified savings and nonqualified deferred compensation plans.
(2)Represents the grant date aggregate fair value of RPSRs and RSRs granted during the periods presented. The fair value of awards was computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, excluding any assumed forfeitures. Assumptions used in the calculation of these amounts are disclosed in Note 14 of the Company’s 2021 Form 10-K. The maximum grant date fair values of the 2021 RPSRs are as follows (grants assume a 200% maximum payout):
(2)
Represents the grant date aggregate fair value of RPSRs and RSRs granted during the periods presented. The 2018 value shown for Mr. Bush includes the value of his annual grant issued in February 2018 of $10,000,294 and the incremental amount that must be recognized in accordance with accounting standards for the modification to the 2017 and 2018 long-term incentive grants. The modification recognized Mr. Bush’s significant business contributions and continuing role with the Company as Chairman as well as the extension of the post-employment covenants. The fair value of awards was computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. Assumptions used in the calculation of these amounts are disclosed in Note 14 of the Company's 2018 Form 10-K. The maximum grant date fair values of the 2018 RPSRs are as follows, noting the grants assume a 150% maximum payout:
NameMaximum Grant Date Fair Value
($)
Mr. Bush (a)
14,487,375
Ms. Warden10,499,97918,900,330 
Mr. BedingfieldKeffer3,675,2074,199,853 
Mr. Caylor3,675,2074,199,853 
Mr. Larson3,150,0744,199,853 
Ms. Petryszyn4,199,853 
(a) (3)Includes the modificationThese amounts were paid pursuant to the 2018 RPSR. For additional details refer toCompany’s AIP and includes amounts deferred under the Grants of Plan-Based Awards Table on page 55.qualified savings and nonqualified deferred compensation plans.
(3)2022 Proxy StatementThese amounts were paid based on the CPF and the NEO’s target bonus, with the exception of Mr. Larson whose payout was based on EOIP performance metrics and prorated target bonus. Includes amounts deferred under the qualified savings and nonqualified deferred compensation plans.69
(4)
Compensation Tables
(4)These amounts relate solely to the increased present value of the NEO's pension plan benefits using mandatory SEC assumptions (see the descriptions of these plans under the Pension Benefits table on page 58). The amount accrued in each year differs from the amount accrued in prior years due to an increase in age, service and pay (salary and bonus).The change in pension value is also highly sensitive to changes in the interest rate used to determine the present value of the payments to be made over the life of the executive.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 53

COMPENSATION TABLES | SUMMARY COMPENSATION TABLE


In 2018, the aggregate change in actuarial present value of the NEO’s pension plan benefits using mandatory SEC assumptions (see the descriptions of these plans under the Pension Benefits table on page 74). The amount accrued in each year differs from the amount accrued in prior years due to an increase in age, service and pay (salary and bonus). The change in pension value is a negative amount for Mr. Bush (-$2,645,152), Ms. Warden (-$25,448) and Mr. Caylor (-$32,265) due primarilyalso highly sensitive to increased interest rates. In accordance with SEC rules, the negative amounts are reported as $0changes in the above table.interest rate used to determine the present value of the payments to be made over the life of the executive.
Mr. Bedingfield wasKeffer and Ms. Petryszyn were hired after the Company'sCompany’s defined benefit pension plans were closed to new entrants, and as a result, he doesthey do not participate in any defined benefit pension plans.
Mr. Larson is a participant in the Orbital ATK Pension and Retirement Plan and Defined Benefit Supplemental Executive Retirement Plan. In 2018, the aggregate change in actuarial present value of his pension benefit is due to an increase in interest rates, benefits and age.
There were no above-market earnings in the nonqualified deferred compensation plans (see the descriptions of these plans under the Nonqualified Deferred Compensation table on page 63)78).
(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 2018
(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.
Perquisites and Personal Benefits - – Perquisites and other personal benefits provided to certain NEOs are as follows: security, travel-related perquisites (including use of Company aircraft or ground transportation services for personal travel and incidental expenses for family members if accompanying the NEO while on business travel), financial planning/income tax preparation services, insurance premiums paid by the Company on the NEO'sNEO’s behalf, executive physicals and other nominal perquisites or personal benefits. We determine the incremental cost for perquisites and personal benefits based on costs or charges incurred by the Company for the benefits.
As discussed in "Key“Key Components of Our Executive Compensation Programs - Security Arrangements,"” the Company provides NEOs with certain residential and travel security protection due to the nature of our business and security threat information. The amounts reflected in the "All“All Other Compensation"Compensation” column include expenses for certain residential and travel security that we treat as perquisites under relevant SEC guidance, even though the need for such expenses arises from the risks attendantassociated with their positions with the Company. The Company calculates the cost of travel security coverage based on the hourly rates and overhead fees charged directly to the Company by the firms providing security personnel. If Company security personnel are used, their hourly rates are used to calculate the cost of coverage. The Company calculates the value of personal use of Company aircraft based on the incremental cost of each element. Fixed costs that would be incurred in any event to operate Company aircraft (e.g., aircraft purchase costs, maintenance not related to personal trips and flight crew salaries) are not included.
The cost of any category of the listed perquisites and personal benefits did not exceed the greater of $25,000 or 10% of total perquisites and personal benefits for any NEO in 2018,2021, except for the following: (i)
i.Ms. Warden: costs attributable to security protection for Mr. Bush ($654,674)174,933), which includes personal travel on Company aircraft consistent with the Company'sCompany’s security program ($418,746)164,934), financial planning ($30,000); (ii)
ii.Mr. Keffer: costs attributable to financial planning ($13,750), executive physical benefit ($2,250);
iii.Mr. Caylor: costs attributable to security protection for Ms. Warden ($252,625)12,443), which includes personal travel on Company aircraft consistent with the Company's security programfinancial planning ($68,963)13,275), long-term disability (LTD) employer contributions ($4,035); and (iii)
iv.Mr. Larson: costs attributable to security protection for Mr. Bedingfieldfinancial planning ($49,603). The amount of the Company's security16,444), LTD employer contributions ($3,474); and
v.Ms. Petryszyn: costs for Mr. Bush has been reduced by $82,578, which reflects the portion of the security perquisite that Mr. Bush voluntarily reimbursedattributable to the Company for himself and his family related to personal travel on the corporate aircraftfinancial planning ($76,619) and other security related costs18,500), LTD employer contributions ($5,959)3,017).
Contributions to Plans -– In 2018,2021, we made the following Company contributions to the defined contribution and deferred compensation plans:
Name
Company Contributions
($)
Mr. Bush419,203
Ms. Warden161,957445,302
Mr. BedingfieldKeffer222,259166,052
Mr. Caylor75,38394,706
Mr. Larson (a)
16,749169,161
Ms. Petryszyn231,653
(a) Amounts represent(6)    Mr. Larson retired from the Company contributions from the Merger Date.on February 4, 2022.
(7)    Ms. Petryszyn was appointed Corporate Vice President and President Defense Systems January 1, 2020.
(6)70
Mr. Caylor and Mr. Larson were not NEOs for 2017 and 2016; therefore, data for these years is not reflected.

54INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | GRANTS OF PLAN-BASED AWARDS TABLE

Northrop Grumman
Compensation Tables

20182021 Grants of Plan-Based Awards
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)
($)
NameGrant TypeGrant Date
Threshold
($)
Target
($)
Maximum
($)
  
Threshold
(#)
Target
(#)
Maximum
(#)
Kathy J. WardenIncentive Plan— 2,880,000 5,760,000 
RPSR2/16/2021— 32,505 65,010 9,450,165 
RSR2/16/202114,776 4,049,954 
David F. KefferIncentive Plan— 800,000 1,600,000 
RPSR2/16/2021— 7,223 14,446 2,099,926 
RSR2/16/20213,284 900,112 
Mark A. CaylorIncentive Plan— 855,0001,710,000
RPSR2/16/2021— 7,223 14,446 2,099,926 
RSR2/16/20213,284 900,112 
Blake E. LarsonIncentive Plan— 835,000 1,670,000 
RPSR2/16/2021— 7,223 14,446 2,099,926 
RSR2/16/20213,284 900,112 
RSR (5)2/16/20211,824 499,940 
Mary D. PetryszynIncentive Plan— 750,000 1,500,000 
RPSR2/16/2021— 7,223 14,446 2,099,926 
RSR2/16/20213,284 900,112 
(1)Represents the potential range of payouts under the Company’s AIP. Actual payouts are shown in the Summary Compensation Table column entitled “Non-Equity Incentive Plan Compensation” on page 69.
(2)These amounts relate to RPSRs granted in 2021 under the 2011 Plan. For additional details on our RPSRs, refer to “Key Components of Our Executive Compensation Programs - Long-Term Incentive Compensation” on page 61.
(3)These amounts relate to RSRs granted in 2021 under the 2011 Plan. For additional details on our RSRs, refer to “Key Components of Our Executive Compensation Programs - Long-Term Incentive Compensation” on page 61.
(4)The fair value of awards was computed in accordance with FASB ASC Topic 718.
(5)Mr. Larson was granted a retention RSR award on February 16, 2021. The award does not include retirement provisions and vested on September 30, 2021.
   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)
($)
NameGrant TypeGrant DateThreshold
($)		Target
($)		Maximum
($)		 Threshold
(#)		Target
(#)		Maximum
(#)
Wesley G. BushIncentive Plan —2,851,2005,702,400      
RPSR2/13/2018    —19,88829,832 7,000,145
RSR2/13/2018       9,0333,000,149
RPSR (5)9/19/2018    —13,68120,522 4,807,271
RSR (5)9/19/2018       6,9762,116,897
Kathy J. WardenIncentive Plan —1,200,0002,400,000      
RPSR2/13/2018    —9,94414,916 3,500,072
RSR2/13/2018       4,5161,499,909
RPSR9/19/2018    —13,01619,524 3,499,914
RSR9/19/2018       4,9431,499,974
Kenneth L. BedingfieldIncentive Plan —815,0001,630,000      
RPSR2/13/2018    —6,96110,442 2,450,138
RSR2/13/2018       3,1611,049,870
Mark A. CaylorIncentive Plan —830,0001,660,000      
RPSR2/13/2018    —6,96110,442 2,450,138
RSR2/13/2018       3,1611,049,870
RSR (6)12/4/2018       1,655400,088
Blake E. LarsonIncentive Plan —704,4231,408,846      
RPSR6/13/2018    —6,6429,963 2,100,049
RSR6/13/2018       2,831899,938
RSR (7)6/13/2018       11,0103,499,936
(1)2022 Proxy Statement
Represents the potential range of payouts under the Company's AIP, except for Mr. Larson whose range reflects the potential payout under the EOIP. Actual payouts are shown in the Summary Compensation Table column entitled "Non-Equity Incentive Plan Compensation" on page 53.
(2)
These amounts relate to RPSRs granted in 2018 under the 2011 Plan. For additional details on our RPSRs, refer to "Key Components of Our Programs - Long-Term Incentive Compensation" on page 47.
(3)
These amounts relate to RSRs granted in 2018 under the 2011 Plan. For additional details on our RSRs, refer to "Key Components of Our Programs - Long-Term Incentive Compensation" on page 47.
(4)The fair value of awards was computed in accordance with FASB ASC Topic 718.
(5)These amounts relate to the modification of RPSRs and RSRs that were granted in 2017 and 2018 to provide for vesting following retirement, subject to compliance with post-employment covenants and other requirements. In accordance with SEC rules, these are reported in the table as new grants of the awards. The grant date fair value reported reflects the incremental fair value of the modified award as of the modification date.
(6)
In recognition of Mr. Caylor's increased responsibilities as Corporate Vice President and President, Mission Systems, Mr. Caylor was granted a one-time RSR award, which will vest three years from the date of grant. Mr. Caylor must remain employed through the vesting period to earn the award, although full vesting will result if his employment terminates earlier due to death, disability or a change in control qualifying termination.
(7)
In recognition of the value forfeited by waiving any rights to further compensation and benefits under the legacy Orbital ATK Income Security Plans and the Merger Agreement retention grant, Mr. Larson was granted a sign-on RSR award in June 2018. Half of the RSR award vested on December 31, 2018 and the other half will vest on December 31, 2019. Mr. Larson must remain employed through the vesting period to earn the award, although full vesting will result if his employment terminates earlier due to death, disability, involuntary termination other than for cause or a change in control qualifying termination.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 55

COMPENSATION TABLES | OUTSTANDING EQUITY AWARDS TABLE

71
Compensation Tables

Outstanding Equity Awards at 20182021 Fiscal Year End
NameGrant 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. Warden2/16/202114,776 5,719,346 32,505 12,581,710 
2/12/202011,453 4,433,113 27,037 10,465,212 
2/13/201914,227 5,506,845 33,572 12,994,714 
David F. Keffer2/16/20213,284 1,271,138 7,223 2,795,807 
5/5/20203,847 1,489,058 8,753 3,388,024 
Mark A. Caylor2/16/20213,284 1,271,138 7,223 2,795,807 
2/12/20202,545 985,093 6,009 2,325,904 
2/13/20193,830 1,482,478 9,038 3,498,339 
Blake E. Larson2/16/20213,284 1,271,138 7,223 2,795,807 
2/12/20202,545 985,093 6,009 2,325,904 
2/13/20193,283 1,270,751 7,748 2,999,018 
Mary D. Petryszyn2/16/20213,284 1,271,138 7,223 2,795,807 
2/12/20202,545 985,093 6,009 2,325,904 
2/13/2019487 188,503 1,136 439,712 
 NameGrant DateNumber 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. Bush2/13/20189,033 2,212,182 19,888 4,870,571
2/17/201712,756 3,123,944 30,504 7,470,430
2/17/201616,478 4,035,462 36,316 8,893,788
Kathy J. Warden9/19/20184,943 1,210,541 13,016 3,187,618
2/13/20184,516 1,105,968 9,944 2,435,286
2/17/20174,465 1,093,479 10,676 2,614,552
2/17/20165,767 1,412,338 12,710 3,112,679
Kenneth L. Bedingfield2/13/20183,161 774,129 6,961 1,704,749
2/17/20174,146 1,015,355 9,914 2,427,939
2/17/20164,943 1,210,541 10,895 2,668,186
Mark A. Caylor12/4/20181,655 405,310 — —
2/13/20183,161 774,129 6,961 1,704,749
2/17/20173,189 780,986 7,626 1,867,607
2/17/20164,120 1,008,988 9,079 2,223,447
Blake E. Larson6/13/20188,336 2,041,486 6,642 1,626,626
(1)Outstanding RSRs generally vest three years from date of grant.
(2)The value listed is based on the closing price of the Company’s stock of $387.07 on December 31, 2021, the last trading day of the year.
(3)Outstanding RPSRs granted in 2021, 2020 and 2019 vest based on performance for the three-year performance period ending on December 31, 2023, 2022 and 2021 respectively. All RPSR grants are subject to the Compensation Committee’s approval of the performance-based earn-out percentage applicable to the grant following the end of the performance period. Amounts presented assume target level performance. The 2019 RPSRs were distributed in February 2022 upon the Compensation Committee’s approval. The actual number of shares distributed to the NEOs in February 2022 as a result of the vesting was as follows:
(1)
Outstanding RSRs generally vest three years from date of grant. Mr. Larson's June 13, 2018 RSR grants are comprised of an annual grant (2,831 shares) and a sign-on grant (11,010 shares). Half of Mr. Larson's 2018 sign-on grant vested on December 31, 2018 and the other half will vest on December 31, 2019.
(2)
The value listed is based on the closing price of the Company's stock of $244.90 on December 31, 2018, the last trading day of the year.
(3)
Outstanding RPSRs granted in 2018, 2017 and 2016 generally vest based on performance for the three-year performance period ending on December 31, 2020, 2019 and 2018, respectively. All RPSR grants are subject to the Compensation Committee's approval of the performance-based earnout percentage applicable to the grant following the end of the performance period. Amounts presented assume target level performance. The 2016 RPSRs were distributed in February 2019 upon the Compensation Committee's approval. The actual number of shares distributed to the NEOs in February 2019 as a result of the vesting RPSRs was as follows:
NameActual Shares Distributed
(#)
Mr. Bush41,763
Ms. Warden14,61740,958 
Mr. BedingfieldKeffer12,529— 
Mr. Caylor10,44111,026 
Mr. Larson9,453 
Ms. Petryszyn1,795 

56INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | STOCK VESTED TABLE


2018 Stock Vested
  Stock Awards (1) (2)
Name Number of Shares Acquired on Vesting
(#)		 Value Realized on Vesting
($)
Wesley G. Bush 78,466 27,059,129
Kathy J. Warden 24,893 8,588,938
Kenneth L. Bedingfield 23,338 8,052,238
Mark A. Caylor 13,614 4,697,123
Blake E. Larson 5,505 1,348,175
(1)72Number of shares and amounts reflected in the table are reported on an aggregate basis and do not reflect shares sold or withheld to pay withholding taxes.Northrop Grumman
Compensation Tables
2021 Stock Vested
Stock Awards(1)(2)
Name
Number of Shares Acquired on Vesting
(#)
Value Realized on Vesting
($)
Kathy J. Warden33,567 10,050,317 
David F. Keffer— — 
Mark A. Caylor12,125 3,647,882 
Blake E. Larson13,043 4,286,640 
Mary D. Petryszyn1,725 501,646 
(1)The number of shares and the amounts reflected in the table are reported on an aggregate basis and do not reflect shares sold or withheld to pay withholding taxes.
(2)Consists of RPSRs and RSRs granted in 2018. The 2018 RPSRs vested based on the three-year performance period which ended on December 31, 2020 and were distributed in February 2021. The 2018 RSRs vested three years from the date of grant and were distributed in February 2021. In addition to the 2018 grants, the table includes Mr. Larson's RSR retention awards granted in February 2020 and February 2021, which vested in December 2021 and September 2021, respectively.
(2)2022 Proxy Statement
Consists of RPSRs granted in 2015 and RSRs granted in 2015 and 2018. The 2015 RPSRs vested based on the three-year performance period which ended on December 31, 2017 and were distributed in February 2018. The 2015 RSRs vested three years from the date of grant. Half of Mr. Larson's 2018 sign-on RSR grant vested on December 31, 2018 and was distributed in January 2019.


NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 57

COMPENSATION TABLES | PENSION BENEFITS

73
Compensation Tables

20182021 Pension Benefits
The following table provides information about the pension plans in which the NEOs participate (described in more detail on the following pages), including the present value of each NEO'sNEO’s accumulated benefits as of December 31, 2018,2021, calculated pursuant to SEC specifications for this table. Our policy generally limits an executive'sexecutive’s total benefit under these plans to be no more than 60% of final average pay.
Name(1)
Plan Name
Number of Years
Credited Service(2)
(#)
Present Value of
Accumulated
Benefit(3)
($)
Payments
During Last
Fiscal Year
($)
Kathy J. WardenOSERP II13.3 3,631,463 — 
Mark A. CaylorS&MS Pension Plan19.5 859,178 — 
SRIP19.5 2,311,723 — 
OSERP12.5 1,328,828 — 
Blake E. LarsonPension Plan40.5 833,132 — 
NGIS DB SERP40.5 3,560,186 — 
(1)Mr. Bush has voluntarily electedKeffer and Ms. Petryszyn were hired after the Company’s defined benefit pension plans were closed to limit hisnew entrants and as a result, they do not participate in any defined benefit pension plans.
(2)Credited service under OSERP benefit to no morefor Mr. Caylor is less than 50%actual service because credited service under this plan stopped as of final average pay.December 31, 2014. Each NEO’s actual service is as follows: Ms. Warden: 13.3 years; Mr. Caylor: 19.5 years; Mr. Larson: 40.5 years.
(3)Amounts are calculated using the following assumptions:
Name (1)Plan NameNumber of Years Credited Service (2)
(#)		Present Value of
Accumulated
Benefit (3)
($)		Payments
During Last
Fiscal Year
($)
Wesley G. BushPension Plan16.00808,518—
S&MS Pension Plan15.67701,314—
ERISA 216.0014,662,902—
SRIP15.6713,314,297—
OSERP27.677,152,879—
Kathy J. WardenOSERP II10.331,428,136—
Mark A. CaylorS&MS Pension Plan16.50537,181—
SRIP16.501,102,868—
OSERP12.50896,172—
Blake E. LarsonOATK P&R Plan37.50691,978—
OATK DB SERP37.502,831,663—
(1)Mr. Bedingfield was hired after •the Company's defined benefit pension plans were closed to new entrants, and as a result he does not participate in any defined benefit pension plans.
(2)
Credited service under OSERP for Mr. Bush and Mr. Caylor is less than actual service because credited service under this plan stopped as of December 31, 2014. In addition, Mr. Bush's credited service under his other plans is less because of his transfers among those plans due to Company acquisitions. Each NEO's actual service is as follows: Mr. Bush: 31.67; Ms. Warden: 10.33; Mr. Caylor: 16.5; Mr. Larson: 37.5.
(3)Amounts are calculated using the following assumptions:
The NEO retires on the earliest date he/she could receive an unreduced benefit under each plan;
The•the form of payment is a single life annuity except for Mr. Larson whose OATKLarson's NGIS DB SERP benefit which is paid as a lump sum; and
The•the discount rate is 4.30%2.97% for the Pension Plan, 4.33%3.01% for the S&MS Pension Plan and 4.31%2.98% for all other plans. The mortality tables aretable is the RP-2014 annuitantPri-2012 White Collar mortality tables adjusted for actual experience andtable projected generationally with an adjusted version of Scale MP-2018 for the OATK P&R Plan and RP-2006 annuitant mortality tables projected generationally with an adjusted version of Scale MP-2018MP-2021 for all other plans except the OATKNGIS DB SERP which uses no mortality.mortality because the form of payment is a lump sum. These are the same assumptions used for the valuation of benefits in the Company'sCompany’s financial statements.

58INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | PENSION BENEFITS


Pension Plans and Descriptions
Most of the pension plans were closed to new hires in 2008.2008 or earlier. Prior to that time, the Company consolidated the pension plan provisions from diverse Heritage Formulas to avarious Cash Balance Formula.Formulas. Over time, the Company also transitioned officers, including NEOs, from SERPs to a deferred compensation plan, called the Officers Retirement Account Contribution Plan.Plan (ORAC). In addition, all final average pay formulas were frozen as of December 31, 2014.
Due to the acquisition of Orbital ATK and the inclusion of Mr. Larson as an NEO, this summary includes information relating to the Orbital ATK plans in which Mr. Larson participates. These plans were closed to new hires in 2006. They also transitioned to a Cash Balance Formula and the portion of Mr. Larson's benefit that is based on a final average pay formula was frozen on June 30, 2013.2014 or earlier.
The pension plans in which NEOs participate are listed below in alphabetical order.
ERISA 2•NGIS DB SERP is the ERISANorthrop Grumman Innovation Systems Defined Benefit Supplemental Program 2.Executive Retirement Plan. This plan provides a supplemental pension benefit for certain heritage NGIS executives. In addition, the plan makes NGIS participants whole for benefits they lose under the Pension Plan due to certain Internal Revenue Code limits.
OATK DB SERP•OSERP is the Orbital ATK Defined Benefit Supplemental Executive Retirement Plan. This plan provides a supplement pension benefit for certain heritage Orbital ATK executives. In addition, the plan makes participants whole for benefits they lose under the Orbital ATK P&R Plan due to certain Internal Revenue Code limits.
OATK P&R Plan is the Orbital ATK Pension and Retirement Plan. This is a tax qualified pension plan covering a broad base of heritage Orbital ATK employees.
OSERP is the Officers Supplemental Executive Retirement Program.Program. This plan provides a supplemental pension benefit for certain Company officers.
•OSERP II is the Officers Supplemental Executive Retirement Program II. This plan provides a pension benefit for certain Company officers.
74Northrop Grumman
Compensation Tables
•Pension Plan is the Northrop Grumman Pension Plan. This is a tax qualified pension plan covering a broad base of Company employees.
•S&MS Pension Plan is the Northrop Grumman Space & Mission Systems Salaried Pension Plan (former TRW plan).Plan. This is a tax qualified pension plan covering a broad base of Company employees.
SRIP•SRIP is the Northrop Grumman Supplementary Retirement Income Plan (former TRW plan).Plan. This plan makes participants whole for benefits they lose under the S&MS Pension Plan due to certain Internal Revenue Code limits.
Pension Plan and S&MS Pension Plan (Tax Qualified Plans)
The Pension Plan provides two distinct Cash Balance Formulas: the Old NGIS Cash Balance Formula, which includes pay-based credits from April 1, 1992 through June 30, 2013, and the New NGIS Cash Balance Formula from July 1, 2013. The value of any pension benefit accrued prior to April 1, 1992 was converted to an opening balance in the Old NGIS Cash Balance Formula. Details of these two cash balance formulas are noted in the Cash Balance Formulas section below.
Pension Plan, S&MS Pension Plan and OATK P&R Plan (Tax Qualified Plans)
Due to acquisitions, the Company acquired variousThe S&MS Pension Plan has a heritage (non-cash balance) pension plans with different types of pension formulasformula (Heritage Formulas)Formula). These areThis is described in detail in the Heritage FormulasFormula table that follows. Prior to 2005, the Company transitioned the various Heritage FormulasFormula in these plansthis plan to a Cash Balance Formula. The Cash Balance Formula is a percentage of pay credited to a hypothetical account, which grows with interest. At retirement, the Cash Balance Account is converted to a monthly pension benefit (further information is included in the Cash Balance FormulaFormulas section below). Except as provided below, theThe final benefit from each planthe S&MS Pension Plan is the sum of the two formulas: the Heritage Formula benefit plus the Cash Balance Formula benefit.
The OATK P&R Plan also transitioned to a Cash Balance Formula, details of which are noted below and in the Cash Balance Formulas section.
The following explains the formulas applicable to each NEO:
Mr. Bush• receives a benefit under a Heritage Formula and a Cash Balance Formula in the Northrop Grumman Retirement Plan, a subplan of the Pension Plan (NGR Subplan). He receives a separate benefit under a Heritage Formula in the S&MS Pension Plan due to his TRW-related service. He ceased to be eligible for future service growth under this plan and the SRIP when he began participating in the NGR Subplan.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 59

COMPENSATION TABLES | PENSION BENEFITS


Mr. Caylor receives a benefit under a Heritage Formula and a Cash Balance Formula in the S&MS Pension Plan.
•Mr. Larson does not have a Heritage Formula benefit. He receives benefits from two distinct Cash Balance Formulas: the Old NGIS Cash Balance Formula which includes pay-based credits from April 1, 1992 through June 30, 2013 and the New NGIS Cash Balance Formula from July 1, 2013. The value of his pension benefit accrued prior to April 1, 1992 was converted to an opening balance in the Old NGIS Cash Balance Formula.
Heritage Formulas
The following table summarizes the key features of the Heritage FormulasFormula applicable to the eligible NEOs.
NEO.
FeatureNGR SubplanS&MS Pension Plan
Benefit FormulaFinal Average Pay x 1.6667% times Pre-July 1, 2003 service(Final Average Pay x 1.5% minus Covered Compensation x 0.4%) times Pre- JanuaryPre-January 1, 2005 service
Final Average Pay(1)
Average of highest 3 years of Eligible Pay
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 bonusSalary plus bonus
Normal RetirementAge 65Age 65
Early RetirementAge 55 with 10 years of serviceAge 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 the earlier of age 65 and 85 points (age + service)
Benefits are reduced for
commencement prior to age 60 (age 62 for participants hired after 1999)
(1)Final average payAverage Pay was frozen for the NGR SubplanPension Plan and the S&MS Pension Plan as of December 31, 2014.
Cash Balance Formulas2022 Proxy Statement75
The
Compensation Tables
Cash Balance Formula in the Pension Plan and the S&MS Pension Plan is a hypothetical account balance consisting of pay credits plus interest. It has the following features:
Pay credits are a percentage of pay that vary based on an employee's "points" (age plus service) and are credited monthly. The range of percentages applicable to the NEOs on December 31, 2018 was 5.5% – 9.0%.
Interest is credited at the 30-year U.S. Treasury bond rate. The December 31, 2018 interest credit rate was 3.04%.
Eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17).
Eligibility for early retirement occurs at age 55 with 10 years of service. Benefits may be reduced if commenced prior to Normal Retirement Age (65).Formulas
The OATK P&RPension Plan Cash Balance Formulas are also hypothetical account balances consisting of pay credits plus interest. The features of the Old and New NGIS Cash Balance Formulas are as follows:
Old NGIS Cash Balance Formula (pay credits ceased on June 30, 2013)
Pay•pay credits are a percentage of pay that vary based on an employee'semployee’s service. Due to Mr. Larson'sLarson’s service of more than 25 years at June 30, 2013, he was receiving 8.5% of pensionable earnings and an additional 5.5% of earnings in excess of the Social Security Wage Base at that time.
Interest•interest is credited at one-twelfth of the average of the one-year Treasury Constant Maturities during the 12 months ending September 30 of the prior calendar year. The minimum annual interest crediting rate is 3.06%. After June 30, 2013, interest credits continue to apply to this benefit. The post-2018post-2021 interest credit rate is assumed to be 3.50%3.5% (this is consistent with the valuation of the Old NGIS Cash Balance benefit in the Company'sCompany’s financial statements).
Eligible•eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17).
Eligibility•eligibility for early retirement occurs at age 55 with five years of service. Benefits may be reduced if commenced prior to Normal Retirement Age (65).

60INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | PENSION BENEFITS


New NGIS Cash Balance Formula (pay credits commenced on July 1, 2013)
Pay•pay credits are a percentage of pay that vary based on an employee'semployee’s age plus service and are credited annually at the end of each calendar year or earlier termination. The percentage applicable to Mr. Larson as of December 31, 2018 2021 is 4.0%.
Interest•interest is credited at the end of each year at 4.0%. Interest is prorated for commencements during the calendar year.
Eligible•eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17).
After•after termination of employment, a participant'sparticipant’s New NGIS Cash Balance benefit may be distributed immediately, regardless of age, in a variety of actuarially equivalent monthly annuities or as a lump sum.
S&MS Pension Plan
ERISA 2, SRIP and OATK DB SERP (Nonqualified Restoration Plans)
The Cash Balance Formula in the S&MS Pension Plan is a hypothetical account balance consisting of pay credits plus interest. It has the following features:
ERISA 2,•pay credits are a percentage of pay that vary based on an employee's "points" (age plus service) and are credited monthly. The percentage applicable to the NEOs on December 31, 2021 was 7.5%.
•interest is credited at the 30-year U.S. Treasury bond rate subject to a minimum annual interest rate of 2.25%. The December 31, 2021 interest credit rate was 2.25%.
•eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17).
•eligibility for early retirement occurs at age 55 with 10 years of service. Benefits may be reduced if commenced prior to Normal Retirement Age (65).
NGIS DB SERP and SRIP and a(Nonqualified Restoration Plans)
A portion of OATKthe NGIS DB SERP and the SRIP are nonqualified plans that restore benefits provided for under the Pension Plan and the S&MS Pension Plan and OATK P&R Plan, respectively, but for the limits on eligible pay imposed by Internal Revenue Code section 401(a)(17) and the overall benefit limitation of Internal Revenue Code section 415. Benefits and features in these restoration plans otherwise are generally the same as described above for the underlying tax qualified plan.
OSERP, OSERP II and OATKOSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)
These plans provide supplemental pension benefits. They were closed to new hires on or before 2009. In addition, final average pay and associated service under these plans were frozen as of December 31, 2014, or earlier, as noted below.
76Northrop Grumman
Compensation Tables
The following chart highlights the key features of these plans applicable to eligible NEOs.
Feature
OSERP and OSERP II(1)
OATK
NGIS DB SERP(2)
Benefit FormulaFinal 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 45Service 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 PayAverage of highest 3 years of Eligible PayAverage of highest 60 months of Eligible Pay; both Final Average Pay and the Social Security Wage Base were frozen at June 30, 2013
Eligible PaySalary 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 RetirementAge 65Age 65
Early RetirementAge 55 with 10 years of serviceAge 55
Early Retirement ReductionBenefits are reduced for commencement prior to the earlier of age 65 or 85 points (age + service)N/ANot Applicable
Reductions From Other PlansReduced by any other Company pension benefitsReduced by the Old NGIS Cash Balance benefit from the OATK P&R Plan
(1)
Ms. Warden participates in OSERP II, which mirrors the benefits provided under the Cash Balance Formula, ERISA 2
(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.
(2)
Mr. Larson participates in the OATK DB SERP which provides the greater of the Final Average Pay benefit noted above and the Old Cash Balance benefit based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17) limits. In addition, the OATK DB SERP pays a benefit equal the New Cash Balance formula based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17) limits.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT(2)I 61

COMPENSATION TABLES | PENSION BENEFITSMr. Larson participates in the NGIS DB SERP, which provides the greater of the Final Average Pay benefit noted in the chart above and the Old NGIS Cash Balance benefit based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17) limits. In addition, the NGIS DB SERP pays a benefit equal to the New NGIS Cash Balance formula based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17).


Information on Executives Eligible for Early Retirement
The following NEOs were eligible for early retirement as of December 31, 20182021 (timing below excludes delays imposed by Internal Revenue Code section 409A):
•If Mr. BushCaylor had retired on December 31, 2018,2021, he would have been eligible to receive an estimated total annual pension benefit of $2,466,855$251,113 (commencing January 1, 2019) plus a supplemental benefit payable from retirement to age 62 of $5,687.2022).
•If Mr. Larson had retired on December 31, 2018,2021, he would have been eligible to receive an estimated total annual pension from the OATK P&RPension Plan of $51,064$50,601 (commencing January 1, 2019)2022) and a lump sum from the OATKNGIS DB SERP of $2,865,214.$3,453,377.

62INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

COMPENSATION TABLES | NONQUALIFIED DEFERRED COMPENSATION TABLE

2022 Proxy Statement		77
Compensation Tables

20182021 Nonqualified Deferred Compensation
NamePlan 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)
($)
Kathy J. WardenSavings Excess422,102 211,051 649,643 (4,956)4,599,423 
ORAC— 222,651 121,497 (5,683)1,230,853 
David F. KefferSavings Excess114,281 85,711 13,948 — 213,940 
ORAC68,741 2,379 — 96,505 
Mark A. CaylorSavings Excess— — 39,769 — 245,198 
ORAC83,106 60,142 (2,146)684,856 
Blake E. LarsonSavings Excess102,008 76,506 67,524 (1,796)696,104 
ORAC79,605 22,709 (1,955)323,339 
NGIS DC SERP— 35,901 — 363,167 
NGIS NQDCP— 83,019 — 1,171,326 
Mary D. PetryszynSavings Excess119,356 150,975 139,694 (2,512)1,097,821 
ORAC71,278 43,548 (1,006)401,774 
NamePlan Name
Executive
Contributions
in Last FY (1)
($)
Registrant
Contributions
in Last FY (2)
($)
Aggregate
Earnings
in Last FY (3)
($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last FYE (4)
($)
Wesley G. BushDeferred Compensation——(185,883)—2,930,900
Savings Excess397,203198,60192,290—11,244,464
ORAC—209,60119,591—955,413
Kathy J. WardenSavings Excess139,95769,979(101,974)—1,380,453
ORAC—80,978(28,265)—314,359
Kenneth L. BedingfieldSavings Excess236,573126,172(66,625)—1,285,188
ORAC—74,086(20,322)—389,414
Mark A. CaylorSavings 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
(1)NEO contributions in this column are also included in the 2021 Summary Compensation Table on page 69, under the columns entitled “Salary” and “Non-Equity Incentive Plan Compensation.”
(2)Company contributions in this column are included in the 2021 Summary Compensation Table, under the column entitled “All Other Compensation.”
(3)Aggregate earnings in the last fiscal year are not included in the 2021 Summary Compensation Table because they are not above market or preferential.
(4)NEO and Company contributions in this column may include balances for merged plans.
Employee contributions by Ms. Warden, Mr. Keffer and Mr. Larson for the years ended December 31, 2021, 2020 and 2019, collectively, previously reported as compensation in the Summary Compensation tables, were as follows:
(1)
NEO contributions in this column are also included in the 2018 Summary Compensation Table on page 53, under the columns entitled "Salary" and "Non-Equity Incentive Plan Compensation."
(2)
Company contributions in this column are included in the 2018 Summary Compensation Table, under the column entitled "All Other Compensation."
(3)
Aggregate earnings in the last fiscal year are not included in the 2018 Summary Compensation Table because they are not above market or preferential.
(4)
NEO and Company contributions in this column may include balances for merged plans. Employee contributions by Mr. Bush, Ms. Warden and Mr. Bedingfield for the years ended December 31, 2018, 2017 and 2016, collectively, previously reported as compensation in the Summary Compensation tables, were as follows:
NameEmployee Contributions
($)
Wesley G. BushMs. Warden1,217,5851,133,207 
Kathy J. WardenMr. Keffer390,406114,281 
Kenneth L. BedingfieldMr. Larson483,271305,294 
Ms. Petryszyn119,356 
There were no employee contributions made by Mr. Caylor for the years ended December 31, 2021, 2020 and 2019. Employee contributions by Mr. CaylorMs. Petryszyn for the year ended December 31, 20182021 are presented in the table above. Because Mr. CaylorMs. Petryszyn was not an NEO for the years ended December 31, 20172020 and 2016,2019, employee contribution data for these years is not presented.
(5)78
Amounts for Mr. Larson represent activity since the Merger Date.
Northrop Grumman
Compensation Tables
Deferred Compensation Plans and Descriptions
The deferred compensation plans in which the NEOs participate are listed below in alphabetical order:
Deferred Compensation Plan •NGIS DC SERP is the Northrop Grumman Deferred Compensation Plan. In 2010, this plan was closed to new hires and existing participants ceased to be able to make contributions. Before 2011, eligible executives were allowed to defer a portion of their salary and bonus. No Company contributions were made to the plan.
OATK DC SERP is the Orbital ATK NonqualifiedInnovation Systems Defined Contribution Supplemental Executive Retirement Plan. ThisIn 2019, this plan provides contribution credits on behalf ofwas closed and contributions ceased to be made to plan participants. Before 2019, certain heritage Orbital ATK executives including Mr. Larson. Mr. Larson is eligible forreceived an annual match allocation of 4.5% of compensation in excess of the IRS compensation limit, assuming he hasthe executive made the maximum allowable before-tax or Roth 401(k) contributions to the 401(k) Planplan for the calendar year.
OATK NQ Def Comp•NGIS NQDCP is the Orbital ATKNorthrop Grumman Innovation Systems Nonqualified Deferred Compensation Plan. TheIn 2019, this plan allows eligible employees, including Mr. Larson,was closed and contributions ceased to be made to plan participants. Prior to 2019, certain heritage Orbital ATK executives could defer up to 70% of salary and 100% of cash or equity incentive compensation. TheIn addition, the Company maycould credit to participants' accounts under the plan certain additional amounts relating to matching contributions foregone under the 401(k) Plan due to IRS compensation limits in that plan. The Company maycould also make additional discretionary contributions to participants'participants’ accounts.

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COMPENSATION TABLES | NONQUALIFIED DEFERRED COMPENSATION TABLE


Officers Retirement Account Contribution Plan• (ORAC) ORAC is the Northrop Grumman Officers Retirement Account Contribution Plan. This plan allows eligible executives, including NEOs, to receive a Company contribution of 4% of base salary and bonus.
•Savings Excess Plan (SEP) is the Northrop Grumman Savings Excess Plan.This plan allows eligible employees, including the NEOs, to (i) defer up to 50% of their salary and bonus beyond the compensation limits of the tax qualified plans and receive a Company matching contribution of up to 4% on a maximum of 8%6% of pay and (ii) receive RAC contributionsRetirement Account Contributions (RAC) beyond the compensation limits in the qualified plans.plan.



64INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

CEO PAY RATIO

2018 CEO Pay Ratio2022 Proxy Statement79
Consistent with Section 953(b)
Compensation Tables
Termination Payments and Benefits
The following table summarizes certain payments and benefits the NEOs may receive upon termination, subject to the referenced plans and terms and conditions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (the pay ratio rule), we are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our Chief Executive Officer (CEO), Mr. Bush, as of our fiscal year-end December 31, 2018. We believe the pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.awards.
In June 2018, we acquired Orbital ATK. The approximately 15,000 Orbital ATK employees are not included in our pay ratio for 2018, as permitted by SEC rules. Excluding the acquisition, there were no significant changes to our global employee population and, our compensation plans remained consistent with the prior year. As such, we do not reasonably believe there have been changes that would result in a significant change to our pay ratio disclosure and, accordingly, are using the same median employee to calculate this year's pay ratio.
We calculated the median employee’s annual total compensation in the same manner as the CEO’s annual total compensation was calculated in the Summary Compensation Table on page 53. The median employee’s annual total compensation was $105,191, which includes other forms of compensation such as financial and wellness benefits. The CEO’s annual total compensation was $24,185,259, as reported in the “Total” column of the Summary Compensation Table. Based on this information, for 2018 the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee was 230 : 1.
Because the CEO pay ratio is intended to provide greater transparency to annual CEO pay and how it compares to the pay of the median employee, we are providing a supplemental ratio that excludes the one-time modification of Mr. Bush's 2017 and 2018 long-term incentive awards from his total annual compensation. The resulting 2018 supplemental ratio was 164 : 1, which we believe allows for better comparability to the prior year.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 65

TERMINATION PAYMENTS AND BENEFITS
Voluntary Termination(3)

Involuntary Termination
Not For Cause(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.
Terms
RPSRs(1)(2)
Unvested RPSRs are forfeited except in the case of Equity Awardsearly retirement where the RPSRs are prorated and mandatory retirement (age 65) where they fully vest.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 SeveranceNo 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 ContinuationNo payment.Continued medical and dental coverage for the 18-month severance period.No payment.No payment.
Financial Planning/Income TaxNo payment.Reimbursement of fees for the year of termination and the following year.No payment.No payment.
Outplacement ServicesNo payment.Expenses up to 15% of base salary.No payment.No payment.
The terms(1)Terms of equity awards granted to the NEOs under the 2011 Plan provide for accelerated vesting if an NEO's employment terminates for certain reasons.Plan.
Generally for RPSRs, vesting of a prorated portion of each award occurs from termination due to early retirement, death or disability, and full vesting occurs upon normal retirement (mandatory at age 65), all subject(2)Subject to the Compensation Committee'sCommittee’s approval of the earnoutearn-out percentage based on the RPSR performance metricsmetrics.
(3)Any retirement treatment requires employment for at least six months following the three-yeargrant date with respect to RSRs and at least six months of the performance period.
Generally for RSRs, vesting of a prorated portion of each award occurs from termination dueperiod with respect to early retirement, and full vesting occurs upon normal retirement (mandatory at age 65), death or disability.RPSRs.
Possible Accelerated Equity Vesting Due to Change in Control80Northrop Grumman
The terms of equity awards to the NEOs under the 2011 Plan provide for possible accelerated vesting of RPSRs and RSRs when the Company is involved in certain types of change in control events, which are more fully described in the 2011 Plan (e.g., certain business combinations after which the Company is not the surviving entity and the surviving entity does not assume the awards). Possible acceleration would occur with respect to RPSRs and RSRs in certain change in control events that result in a termination of the NEO (other than for cause) within the specified period (double trigger). The acceleration of awards requires this double trigger, unless an acquiring company fails to assume the awards. The award terms provide that acceleration will not occur to the extent that it would result in an excise tax that decreases the after-tax value of the awards to an NEO.
Compensation Tables
In cases where acceleration would occur under these limited change in control provisions, distributions for RPSRs and RSRs would be in full.
The table below provides the estimated value of accelerated equity vesting if such a change in control had occurred on December 31, 2018. The estimated value is computed by multiplying unvested shares as of December 31, 2018 by the closing market price of the Company's common stock on December 31, 2018, the last trading day of the year ($244.90). For RPSRs, Company performance is assumed to be at target levels through the close of each three-year performance period.
 RSRsRPSRs 
NameAcceleration
of Vesting
($)		Acceleration
of Vesting
($)		Total
($)
Wesley G. Bush9,371,58812,341,00121,712,589
Kathy J. Warden4,822,3268,237,45613,059,782
Kenneth L. Bedingfield3,000,0254,132,6887,132,713
Mark A. Caylor2,969,4133,572,3566,541,769
Blake E. Larson2,041,4861,626,6263,668,112

66INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

TERMINATION PAYMENTS AND BENEFITS

Termination Payments and Benefits
The following tablePotential Termination Payments Table provides estimated payments and benefits that the Company would have provided to each NEO if his or her employment had terminated on December 31, 20182021 for the reasons set forth in the table below. The Company stock price is assumed to be $244.90,$ 387.07, the closing market price on December 31, 2018,2021, the last trading day of the year. These payments and benefits are payable based on:
•the Severance Plan; and
•the 2011 Plan and the terms and conditions of equity awards made pursuant to the plan; andplan.
the SORMP (Retiree Medical).
Due to the many factors that affect the nature and amount of any benefits provided upon termination events, actual amounts paid or distributed to NEOs may be different from the values shown in the table. Factors that may affect these amounts include timing during the year of the occurrence of the event, our stock price, the NEO’s age and the NEO's age.terms and circumstances of the event. The amounts described below are in addition to an NEO'sNEO’s benefits described in the Pension Benefits and Nonqualified Deferred Compensation Tables on pages 5874 and 63,78, respectively, as well as benefits generally available to our employees such as distributions under our savings plan, disability or life insurance benefits and accrued vacation.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 67

TERMINATION PAYMENTS AND BENEFITS | TERMINATION PAYMENT TABLE

2022 Proxy Statement		81
Compensation Tables

Termination Payment Table
Potential Termination Payments
NameExecutive Benefits
Voluntary
Termination
($)
Involuntary
Termination
Not For Cause(1)
($)
Post-CIC
Involuntary
or Good Reason
Termination(2)
($)
Death or
Disability
($)
Kathy J. WardenRSRs (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. KefferRSRs (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. CaylorRSRs (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. LarsonRSRs (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. PetryszynRSRs (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 — — 
NameExecutive BenefitsVoluntary
Termination
($)		Involuntary Termination
Not For Cause (1)
($)		Post-CIC
Involuntary
or Good Reason
Termination (2)
($)		Death or
Disability
($)
Wesley G. BushLong-term Incentives (3)13,056,84413,056,84421,712,58915,973,847
Retiree Medical (4)1,350,8001,350,8001,350,8001,350,800
Kathy J. WardenLong-term Incentives (3)——13,059,7828,437,540
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. BedingfieldLong-term Incentives (3)——7,132,7135,186,247
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. CaylorLong-term Incentives (3)——6,541,7694,782,162
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. LarsonLong-term Incentives (3)669,0672,017,2413,668,1122,582,960
Severance Benefits (5)    
Cash Severance—2,227,500——
Medical/Dental Continuation—6,355——
Financial Planning/Income Tax—18,500——
Outplacement Services—111,375——
(1)82
Similar treatment provided for certain "good reason" terminations, as described in "Key Components of Our Programs - Severance Benefits" found on page 49; however, there would be no termination payment in the event of an involuntary termination for cause.
Northrop Grumman
Compensation Tables
(1)Similar treatment provided for certain “good reason” terminations, as described in “Key Components of Our Executive Compensation Programs - Severance Benefits” found on page 64; however, there would be no termination payment in the event of an involuntary termination for cause.
(2)The amounts assume full acceleration, which, as discussed above, may not occur to the extent that it would result in an excise tax that decreases the after-tax value of the awards to an NEO.
(3)Long-term Incentive awards result in a benefit under Voluntary Termination and Involuntary Termination Not for Cause only if eligible for retirement treatment under the terms and conditions of the grants.
(4)Represents the following benefits under the Severance Plan, assuming a termination date of December 31, 2021: (i) cash severance equivalent to one and a half times the sum of the annual base salary and target annual bonus, (ii) continued medical/dental coverage for the severance period, (iii) financial planning/income tax preparation fees for the year following termination and (iv) outplacement services up to 15% of salary.
(2)2022 Proxy StatementThe amounts assume full acceleration, which, as discussed above, may not occur to the extent that it would result in an excise tax that decreases the after-tax value of the awards to an NEO.83

2021 CEO Pay Ratio
We are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our CEO, Ms. Warden, as of our fiscal year end December 31, 2021. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
In 2020, we identified the median employee by including the global employee population. Since the filing of the prior year's proxy, the median employee is no longer employed at the Company. In accordance with SEC rules, we re-identified a similarly compensated median employee in 2021. There were no changes to our global employee population or our compensation plans that would result in a significant change to our pay ratio.
We calculated the median employee’s annual total compensation in the same manner as the CEO’s annual total compensation is calculated in the Summary Compensation Table on page 69. The median employee’s annual total compensation was $119,721, which includes other forms of compensation such as financial and wellness benefits. The CEO’s annual total compensation was $19,876,767. Based on this information, for 2021 the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee was 166:1.
(3)84Long-term Incentives include grants of RPSRs and RSRs. Results in a benefit under Voluntary Termination only if eligible for retirement treatment under the terms and conditions of the grants.Northrop Grumman

Equity Compensation Plan Information
We currently maintain two equity compensation plans: the 2011 Plan and the 1993 Stock Plan for Non-Employee Directors, as amended (1993 Directors Plan). Each of these plans has been approved by our shareholders.
The following table sets forth the number of shares of our common stock to be issued upon payout of outstanding awards and the number of shares remaining available for future award grants under these equity compensation plans as of December 31, 2021.
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		1,289,904N/A4,915,708
Equity compensation plans not
approved by shareholders		N/AN/AN/A
Total1,289,904N/A4,915,708(4)
(1)This number includes 581,763 shares that were subject to outstanding stock awards granted under the 2011 Plan, 265,057 awards earned at year end but pending distribution subject to final performance adjustments, 125,916 shares subject to outstanding stock units credited under the 2011 Plan and 1993 Directors Plan, and additional performance shares of 317,168, which reflect the number of shares deliverable under payment of outstanding restricted performance stock rights, assuming maximum performance criteria have been achieved.
(2)There were no options outstanding as of December 31, 2021.
(3)Of the aggregate number of shares that remained available for future issuance, 4,915,708 were available under the 2011 Plan as of December 31, 2021. No new awards may be granted under the 1993 Directors Plan.
(4)After giving effect to our February 2022 awards, the number of shares of common stock remaining available for future issuance would be 4,538,420 (assuming maximum payout of such awards).
(4)2022 Proxy Statement
Represents SORMP benefits outlined in "Key Components of Our Programs - Retiree Medical Arrangement." Mr. Bush is the only NEO eligible for benefits under this plan due to his date of hire and years of service as an executive. Retiree medical values for Mr. Bush reflect cost associated with disability. If termination results from death, the retiree medical insurance expense would be less than the disability amount indicated.
(5)
Represents the following benefits under the Severance Plan, assuming a termination date of December 31, 2018: (i) cash severance equivalent to one and a half times the sum of the annual base salary and target annual bonus, (ii) continued medical/dental coverage for the severance period, (iii) financial planning/income tax preparation fees for the year following termination and (iv) outplacement services up to 15% of salary.
Mr. Bush does not receive severance benefits as he is not eligible to participate in the Severance Plan.

68INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR85


Proposal 3: Ratification of Appointment of Independent Auditor
The Audit and Risk Committee believes that the appointment of Deloitte & Touche LLP (Deloitte) is in the best interests of the Company and its shareholders, and proposes and recommends that the shareholders ratify the Audit Committee'sand Risk Committee’s appointment of Deloitte as our independent auditor for 2019.2022. Deloitte served as our independent auditor for 2018,2021, and Deloitte or its predecessors have served as the independent auditor for the Company (including certain of its predecessor companies) since 1975. The Audit and Risk Committee is responsible for the appointment, compensation, retention, oversight, evaluation and termination, if necessary, of our independent auditor. The Audit and Risk Committee is responsible for reviewing and pre-approving audit and non-audit services and related fees for the independent auditor. In addition, the Audit and Risk Committee, at least annually, reviews and evaluates with management and our internal auditors Deloitte’s performanceperformance. The Audit and periodically considers whether to change the independent auditor. The AuditRisk Committee also reviews the performance of Deloitte’s lead audit partner, and the Audit and Risk Committee and its ChairpersonChair oversee the rotation of Deloitte’s lead audit partner and are involved in the selection and approval of the lead audit partner.
Although ratification is not required by our Bylaws or otherwise, the Audit and Risk Committee is submitting the selection of Deloitte to shareholders as a matter of good corporate governance. If the shareholders fail to ratify the appointment of Deloitte, the Audit and Risk Committee will consider this in its selection of auditor for the following year. A representative from Deloitte will attend the Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions.
Vote Required
Approval of this proposal requires that the votes cast “for” the proposal exceed the votes cast “against” the proposal. Abstentions and broker non-votes will have no effect on this proposal.
a0_pgx12xproposalarrowa.jpg
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 3.
Audit Fees and All Other Fees
The following table summarizes aggregate fees billedincurred for professional audit services for the audit of the Company’s consolidated financial statement audits for the years ended December 31, 20182021 and 20172020, and fees billed for other services in fiscal years 2021 and 2020, in each case by Deloitte, the member firms of Deloitte Touche Tohmatsu Limited and their respective affiliates:
20212020
Audit Fees(1)
$19,564,000$19,464,100
Audit-Related Fees(2)
—1,575,000
Tax-Related Fees(3)
235,000596,000
All Other Fees——
Total Fees$19,799,000$21,635,100
(1)Audit fees for 2021 and 2020 reflect fees of $17,535,000 and $17,175,000, respectively, for the consolidated financial statement audits and include the audit of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Audit fees for 2021 and 2020 also include $1,935,000 and $1,920,000, respectively, for foreign statutory audits. Fees for foreign statutory audits are reported in the year in which the audits are performed. For example, foreign statutory audit fees reported in 2021 relate to audits of the Company’s foreign entities for the fiscal year ended 2020. The remaining 2021 audit fees primarily relate to audit services associated with the Company's Form 8-K filing in connection with its debt exchange in September 2021. The remaining 2020 audit fees primarily relate to audit services associated with the Company’s Form 8-K filing in connection with its sector realignment in April 2020, fees related to the Company’s Form 8-K filing in connection with its debt offering in March 2020, fees related to the Company’s shelf registration statement on Form S-3, and fees related to the recasting of certain unallowable costs as disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
  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

(1)86
Audit fees for 2018 and 2017 reflect fees of $15,400,000 and $12,900,000, respectively, for the consolidated financial statement audits and include the audit of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Audit fees for 2018 and 2017 also include $1,834,000 and $1,544,000, respectively, for foreign statutory audits. Fees for foreign statutory audits are reported in the year in which the audits are performed. For example, foreign statutory audit fees reported in 2018 relate to audits of the Company's foreign entities for the fiscal year ended 2017. The remaining 2018 audit fees primarily relate to audit services associated with the Company's acquisition of Orbital ATK, services associated with the Company's adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), and adoption of ASU 2016-02, Leases (Topic 842), and services associated with the pension accounting method change and Preferability Letter.
Northrop Grumman
(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 related to independent assessment of controls concerning outsourcing activities. Audit-related fees exclude fees that totaled $1,377,000 and $1,423,000 for 2018 and 2017, respectively, related to benefit plan audits which are paid for by the plans.
(3)
Tax-related fees during 2018 and 2017 reflect fees of $507,000 and $637,000, respectively, for services concerning foreign income tax compliance, foreign Value Added Tax compliance and other tax matters.
Proposal 3: Ratification of Appointment of Independent Auditor
(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
It is the Audit Committee'sand Risk Committee’s policy to pre-approve all audit and permitted non-audit services provided by our independent auditor in order to provide reasonable assurance that the provision of these services does not impair the auditor'sauditor’s independence. Pre-approval may be given at any time. The Audit and Risk Committee has delegated pre-approval authority for any individual project up to $100,000 to the ChairpersonChair of the Audit and Risk Committee.
The decisions of the ChairpersonChair to pre-approve a permitted service are reported to the Audit and Risk Committee at its next meeting. The independent auditor is required to periodically report to the full Audit and Risk Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval policy, as well as the fees for the services performed to date.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 69

PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR

The Audit and Risk Committee approved all audit and non-audit services provided by Deloitte, the member firms of Deloitte Touche Tohmatsu Limited and their respective affiliates during 20182021 and 2017,2020, in each case before being engaged to provide those services.
Vote Required
Approval of this proposal requires that the votes cast "for" the proposal exceed the votes cast "against" the proposal. AbstentionsAudit and broker non-votes will have no effect on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL THREE.



70INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

AUDIT COMMITTEE REPORT


Risk Committee Report
The Audit and Risk Committee of the Board of Directors is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities over the Company'sCompany’s accounting, auditing and financial reporting processes and financial risk assessment and management process, and for monitoring compliance with certain regulatory and compliance matters. The Audit Committee'sand Risk Committee’s written charter describes the Audit Committee'sand Risk Committee’s responsibilities and has been approved by the Board of Directors.
Management is responsible for preparing the Company'sCompany’s financial statements and for the financial reporting process, including evaluating the effectiveness of the Company'sCompany’s disclosure controls and procedures and internal control over financial reporting.
Deloitte & Touche LLP (Deloitte), the Company'sCompany’s independent auditor, is responsible for performing an independent audit of the Company'sCompany’s consolidated financial statements and expressing an opinion on the conformity of the financial statements with accounting principles generally accepted in the United States of America, and on the effectiveness of the Company'sCompany’s internal control over financial reporting.
In connection with the preparation of the Company'sCompany’s financial statements as of and for the year ended December 31, 2018,2021, the Audit and Risk Committee reviewed and discussed the audited financial statements with the Company'sCompany’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Deloitte. The Audit and Risk Committee also discussed with Deloitte the communications required under applicable professional auditing standardsrequirements of the Public Company Accounting Oversight Board (PCAOB) and regulations,the SEC, including the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (PCAOB)PCAOB, and, with and without management present, discussed and reviewed the results of Deloitte'sDeloitte’s examination of the financial statements. Additionally, the Audit and Risk Committee discussed with the Company'sCompany’s internal auditors the results of their audits completed during 2018.2021.
The Audit and Risk Committee received the written disclosures and the letter from Deloitte required by the applicable requirements of the PCAOB regarding the independent auditor'sauditor’s communications with the Audit and Risk Committee concerning independence. In addition, the Audit and Risk Committee discussed with Deloitte that firm'sfirm’s independence from the Company.
2022 Proxy Statement87
Proposal 3: Ratification of Appointment of Independent Auditor
Based on the Audit Committee'sand Risk Committee’s review and discussions described in this report, the Audit and Risk Committee recommended to the Board of Directors that the audited financial statements for the year ended December 31, 20182021 be included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 20182021 for filing with the SEC. The Audit and Risk Committee also reappointed Deloitte to serve as the Company'sCompany’s independent auditor for 2019,2022, and requested that this appointment be submitted to shareholders for ratification at the Annual Meeting.

AUDIT AND RISK COMMITTEE
WILLIAM
William H. HERNANDEZ, CHAIRPERSON
ANNHernandez, Chair
Marianne C. Brown
Ann M. FUDGE
MADELEINEFudge
Graham N. Robinson
James S. Turley
Mark A. KLEINER
JAMES S. TURLEY
MARK A. WELSHWelsh III



NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 71

PROPOSAL FOUR: SHAREHOLDER PROPOSAL

The Sisters of St. Dominic of Caldwell New Jersey, 75 South Fullerton Avenue, Montclair, NJ 07042, a beneficial owner of 137 shares of common stock of the Company, the Sisters of St. Francis of Philadelphia, 609 S. Convent Road, Aston, PA 19014, a beneficial owner of 46 shares of common stock of the Company, and the School Sisters of Notre Dame Cooperative Investment Fund, 345 Belden Hill Road, Wilton, CT 06897, a beneficial owner of 88 shares of common stock of the Company, the co-proponents of a shareholder proposal, have each stated that it intends to present a proposal at the Annual Meeting. The proposal and supporting statement, for which the Board of Directors accepts no responsibility, is set forth below. The Board of Directors opposes the shareholder proposal for the reasons stated below.
Proposal Four: Shareholder Proposal Regarding Human Rights Policy
Report on Implementation of Human Rights Policy
2019 - Northrop Grumman Corporation
Whereas: Corporations have a responsibility to respect human rights within company-owned operations and through business relationships under the UN Guiding Principles on Business and Human Rights (UNGPs). To meet this responsibility, companies are expected to conduct human rights due diligence to assess, identify, prevent, mitigate, and remedy adverse human rights impacts. Due diligence should address any human rights impacts a company causes or contributes to through its own business activities and those which are directly linked to its products or services. Meaningful implementation of a human rights policy requires effective due diligence systems.
Northrop Grumman is the third largest government contractor in the United States, and the U.S. Government accounts for 85% of the company’s 2017 sales. Developing products and services for the Department of Defense (DoD), the Intelligence Community, and other agencies whose activities may be linked to human rights violations may expose Northrop Grumman to legal, financial, and reputational risks. Therefore, it is essential for the company to conduct human rights due diligence to evaluate and mitigate human rights risks associated with its government contracts.
In February 2018, Northrop Grumman was awarded a $95 million contract with the Department of Homeland Security’s (DHS) Office of Biometric Identity Management to develop technology for the Homeland Advanced Recognition Technology (HART) database.1 This database will expand the capacity of DHS to collect, store, and share biometric data, such as facial images, fingerprints, iris images, and voice, as well as biographical data, including personal identification numbers, citizenship status, and nationality.2 There are concerns that the algorithms used to identify facial images that may be stored in the database have inherent racial bias.3 The HART database will amplify the surveillance capabilities of government agencies, presenting risks to privacy and First Amendment rights and causing harm to immigrant communities. Through the provision of services through the DHS contract, Northrop Grumman may be linked or contribute to these adverse human rights impacts.
While Northrop Grumman adopted a Human Rights Policy in 2013, it does not disclose how the policy is operationalized to reduce the risks that the company may cause or contribute to adverse human rights impacts. Investors are unable to assess how Northrop Grumman embeds respect for human rights into the process for vetting and implementing contracts with the U.S. Government or foreign governments, or the effectiveness of any systems which may be in place to prevent or mitigate human rights risks.
Resolved: Shareholders request that the Board of Directors prepare a report, at reasonable cost and omitting proprietary information, on Northrop Grumman’s management systems and processes to implement its Human Rights Policy.
Supporting Statement: We recommend the report include:
The company’s human rights due diligence process and indicators used to assess effectiveness;
The role of the Board in oversight of human rights risks; and
Systems to embed respect for human rights into business decision-making processes for its operations, contracts, and supply chain.
____________________________
1 https://news.northropgrumman.com/news/releases/northrop-grumman-wins-95-million-award-from-department-of-homeland-security-to-develop-next-generation-biometric-identification-services-system
2 https://www.federalregister.gov/documents/2018/04/24/2018-08453/privacy-act-of-1974-system-of-records
3 https://www.aclu.org/blog/privacy-technology/surveillance-technologies/amazons-face-recognition-falsely-matched-28
Board of Directors' Statement in Opposition to Proposal Four
The Board of Directors recommends a vote AGAINST Proposal Four.

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PROPOSAL FOUR: SHAREHOLDER PROPOSAL

The Company is strongly committed to supporting and maintaining the highest standards of ethical conduct and respect for human rights. This respect is embedded in the Company’s culture, and reflected in the Company’s Human Rights Policy adopted in 2013.
The Human Rights Policy, by its nature, reflects our policies and addresses how they are implemented. For example, the Policy provides that:
The Company treats employees, suppliers, customers and competitors with dignity and respect. The Company does not tolerate any discrimination in employment based on an individual’s protected status. Northrop Grumman does not tolerate the use of child labor, forced labor, bonded labor, or human trafficking.
Northrop Grumman is committed to the highest standards of ethical and business conduct as it relates to the procurement of goods and services. The Company expects suppliers to conduct themselves in a manner consistent with the values set forth in our Standards of Business Conduct.
Employees who believe there may have been a violation of this policy should report it through established channels, including to their supervisor, Business Conduct Officer, the Law Department or Human Resources, or the OpenLine.
Northrop Grumman will periodically review this policy to determine whether revisions are appropriate.
The Company’s Standards of Business Conduct also reflect our commitment to human rights. Our Standards of Business Conduct, which applies to our directors, officers, employees, consultants and contractors, provide, among other things, for:
The Company’s commitment to a culture that values and fosters diversity and inclusion.
The Company will not tolerate discrimination on the basis of race or ethnicity, color, national origin, ancestry, sex, gender, identity or expression, sexual orientation, marital or parental status, pregnancy or childbirth or related conditions, religion, creed, age, disability, genetic information, veteran status or any other protected status.
Reasonable accommodations for qualified persons based on disabilities, religious beliefs and pregnancy/childbirth.
A workplace where everyone is treated with dignity and respect.
Protecting the privacy of others, including the protection of personal information of our employees, contractors, customers and suppliers.
Supporting and enhancing the communities in which our employees live and work, including maintaining outreach programs and partnering with local organizations. The Company does not provide funding or support to organizations that improperly discriminate against others or take positions or actions contrary to our Company values.
Our policies, practices and procedures reflect a strong commitment to human rights as set forth in the Universal Declaration of Human Rights. The Company does not condone the use of child or forced labor, indentured servitude, human trafficking or other violations of human rights. The Company expects its partners and suppliers to share this commitment and adopt and enforce principles similar to those in our Human Rights Policy.
Like Proponents, the Board of Directors recognizes the importance of working to ensure that those seeking to do business with the Company also respect basic human rights. The Company states as follows in its most recent Corporate Responsibility Report:
We expect our suppliers will treat others with dignity and respect, encourage diversity, remain receptive to diverse opinions, promote equal opportunity and foster an inclusive and ethical culture. They must refrain from violating the rights of others and address any adverse human rights impact on their operations. This includes child labor, human trafficking, harassment, nondiscrimination, wage and benefit compensation and social dialog.
The Company maintains a Supplier Standards of Business Conduct that also makes clear our commitment to ethical conduct and social responsibility at all tiers of our supply base. These standards are based, in part, on the supplier codes from the Defense Industry Initiative and the International Forum on Business Ethical Conduct. The Company’s suppliers receive an annual notification about our policies and values. The Company asks our suppliers and those who work with them, including employees and subcontractors, to comply with our Supplier Standards of Business Conduct. The Company regularly communicates our commitments to our suppliers regarding social responsibility and regulatory areas, including EEO/Affirmative Action, conflict minerals, counterfeit parts, anti-human trafficking and cybersecurity.
The Company also publishes several times a year an Ethics Newsletter that is disseminated to all employees. In June 2018, the focus of the newsletter was Human Rights, and the importance of human rights to all aspects of our business.
The Company continued to win numerous awards in 2018 recognizing our outstanding ethical culture and respect for human rights. They included:
Catalyst Award for Northrop Grumman’s “Building the Best Culture, Leveraging the Power of Women” Initiative;
Among Top 50 Companies for Diversity, No. 1 for Veterans and No. 2 for Diversity Councils and People with Disabilities as recognized by DiversityInc;

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PROPOSAL FOUR: SHAREHOLDER PROPOSAL

Among the Best Place to Work for People with Disabilities Employer of the Year: Inspire Award from the Disability Equality Index;
Among the Best for Vets Employers by Military Times;
Among Best Places to Work for LGBT Equality by the Human Rights Campaign;
Among the “Best of the Best” for Top Veteran-Friendly Companies and Top Supplier Diversity Programs by U.S. Veterans Magazine; and
Among the 100 Best Corporate Citizens by Corporate Responsibility Magazine.
The Company is committed to respecting human rights and has been transparent about both the Company’s policies and how they are implemented. Management holds all employees accountable for protecting and enhancing our culture, including the respect for human rights, and does so subject to active oversight by our Board of Directors.
The Board of Directors believes, however, that this Proposal Four is both unnecessary (we are already committed to robust human rights policies and transparency in how they are implemented) and inappropriate, suggesting unworkable requirements on the day-to-day operations - of the Company and our customers - through a shareholder proposal.
The essence of this proposal appears to us to be aimed not so much at our conduct, but rather at the conduct of the US Government. The focus of Proponents' concern seems to be how our customers will or might use the products we provide and the indirect consequences of the manner in which the US Government deploys them at a given point in time and under various circumstances. To be sure, the Company can and does take seriously the potential consequences of its products and the identity of the customers to whom we can and will sell them. The Company’s management systems and processes (on which Proponents seek a report) cannot, however, resolve Proponents’ apparent underlying concerns that the Government might use our products in a way that is unacceptable to Proponents.
In addition, we note that much of the relevant information regarding our human rights policy is already publicly available on our website for shareholders to review. Such information includes, for example, our Corporate Responsibility Report, as well as information regarding:
Environmental, Social and Governance Performance Data
Anti-Human Trafficking and Slavery Statement
Anti-Corruption Compliance
Conflicts Minerals Statement
Environmental Sustainability
Environmental Recognition
Global Supplier Diversity Program
Supplier Standards of Business Conduct
Operation IMPACT
It is also important to note that the specific management systems and processes on which Proponents seek a report implicate daily operations and a wide array of business considerations. By seeking to micromanage these processes, the Proposal would infringe on the Company’s ability to run its day-to-day business operations.
The Board of Directors and Company management share Proponents’ concern for human rights. The Company has previously adopted a strong human rights policy and continually evaluates our programs to implement that policy. The Board of Directors has considered this proposal and appreciates the feedback from Proponents. However, the Board does not believe that the report proposed by Proponents will provide any enhancements to our current human rights policies. To the contrary, the Board believes that this Proposal Four is neither necessary nor an appropriate way to ensure the Company meets its responsibilities. The Board believes strongly that the proposal is not in the best interests of the Company and our shareholders. The Board therefore opposes this proposal and recommends that it should not be adopted.
Vote Required
Approval of this proposal requires that the votes cast "for" the proposal exceed the votes cast "against" the proposal. Abstentions and broker non-votes will have no effect on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL FOUR.88Northrop Grumman

74INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

PROPOSAL FIVE: SHAREHOLDER PROPOSAL


Proposal 4: Shareholder Proposal
Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, a beneficial owner of 5010 shares of common stock of the Company, the proponent of a shareholder proposal, has stated that he intends to present a proposal at the Annual Meeting. The proposal and supporting statement, for which the Board of Directors accepts no responsibility, is set forth below. The Board of Directors opposes the shareholder proposal for the reasons stated below.
Proposal 4: Shareholder Proposal to Change the Ownership Threshold to Call a Special Meeting
Proposal Five: Shareholder Proposal Regarding Independent Board Chairman
Proposal 4 – Special Shareholder Meeting Improvement
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Shareholders requestask our Board of Directorsboard to adopt as a policy, andtake the steps necessary to amend ourthe appropriate company governing documents as necessary, to require henceforthgive the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.
It is important for a reasonable 10% of shares to have the right to call for a special shareholder meeting to help make up for our totally useless right to act by written consent. It is worse to have no right at all than to find that the Chairright that is technically on the Northrop Grumman books is totally useless. Southwest Airlines and Target are companies that do not provide for shareholder written consent and yet provide for 10% of shares to call for a special shareholder meeting.
Why would any group of shareholders, who own 25% of our company, find it attractive to do so little as to ask management to look a calendar and come up with a record date for written consent when the owners of the Board25% of Directors, whenever possible,our company can compel management to be an independent memberhold a special shareholder meeting?
To initiate written consent at NOC, 25% of shares now must petition management for the baby step of obtaining a record date.
Once a record date is obtained then shareholders are on a tight schedule to obtain the consent of 51% of shares outstanding which is equal to 60% of the Board. The Boardshares that vote at the annual meeting. It would be hopeless to expect that shares that do not have time to vote would have the discretiontime to phasego through the special steps to act by written consent.
This turns into giving NOC shareholders a classic Catch-22 dilemma. In order to get a record date, 25% of shares must give their contact information to management. Thus it is easier than shooting fish in this policya barrel for NOC management, with free access to the next Chief Executive Officer transition, implemented so it does not violate any existing agreement.corporate war chest and professional proxy solicitors, to pester the 25% of shares with messages and telephone calls to change their mind and revoke their support for acting by written consent.

IfThus while the Board determines that a Chairman, who was independent when selectedbase of 25% of shares in favor of acting by written consent is no longer independent,easily venerable to management attack with deep pockets company money, these shareholders have the Board shall select a new Chairman who satisfies the requirementsformidable task of doubling their number to 51% of shares (which equals 60% of the policy withinshares that vote at the annual meeting) in a reasonable amountlimited time period with money out of time. Compliance with this policytheir own pockets.
This is waived if no independent director is available and willing to serve as Chairman. This proposal requests that all the necessary steps be takenworse at NOC because NOC shareholders gave impressive 54% support for a real right to accomplish the above.act by written consent and NOC management gave shareholders in return a useless right to act by written consent.

This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix. These 5 majority votes would have been still higher if all shareholders had accessWe need a right for 10% of shares to independent proxy voting advice.

An independent Chairman is best positionedcall for a special shareholder meeting to buildhelp make up the strategic planning capabilities offor our directors while our CEO addresses the challenging day-to-day issues facing the company. The roles of Chairman and CEO are fundamentally different and should be helduseless right to act by 2 directors, a CEO and a Chairman who is completely independent.

This proposal is particularly important now because during the Chairman/CEO tenure of Wesley Bush the role of Lead Director was neglected. Donald Felsinger, the former Chairman/CEO of Sempra Energy, was Lead Director and was also on the executive pay committee while Mr. Bush was realizing as much as $41 million in annual pay.

A former Chairman/CEO is inclined to be friendly to a person in the same shoes as he was recently in - but this conflict of interest is not good for shareholders. It is noteable that just before Mr. Felsinger left Sempra Energy (as its Chairman and CEO) that this proposal topic received 55% support from Sempra shareholders.

An independent Chairman is best positioned to build up the strategic planning capabilities of our directors while our CEO addresses the challenging day-to-day issues facing the company.written consent.
Please vote yes:
Independent Board Chairman - Proposal 54 – Special Shareholder Meeting Improvement
Board of Directors'2022 Proxy Statement in Opposition to Proposal Five89
The Company’s shareholders have considered, and declined
Proposal 4: Shareholder Proposal
Board of Directors' Statement in Opposition to provide majority support to, similar independent board chairman proposals five times since 2007, with only approximately 25% of votes cast in favor of the proposal when it was last presented at the 2015 Annual Meeting. Proposal 4
The Board of Directors continues to opposeunanimously recommends that shareholders vote against this Proposal 4. After careful consideration, including a review of market practices and trends, continuing investor feedback and our shareholders’ rejection by a substantial margin of an essentially identical proposal because it deprivesfrom Mr. Chevedden in 2018, the Board of important flexibility to determinehas determined that the most effective leadership structure to serveaction requested by this shareholder proposal is neither necessary nor in the best interests of theNorthrop Grumman or our shareholders:
•Northrop Grumman shareholders already have a meaningful and balanced right to call a special meeting.
•Northrop Grumman has strong corporate governance policies and practices that help ensure our Company and itsBoard act to advance the long-term interests of our shareholders.
•Our current 25% special meeting threshold is consistent with that of other large public companies and our peers.
•Special meetings require and divert substantial time and financial resources, and our shareholders have significant other opportunities to engage with management and the Board throughout the year, in ways that are more efficient and effective.
Northrop Grumman shareholders already have a meaningful and balanced right to call a special meeting.
Northrop Grumman has long been committed to robust shareholder engagement. Our Board recognizes the importance of giving shareholders a meaningful right to call special meetings in appropriate circumstances. In 2010, after thoughtful deliberation, the Board recommended, and shareholders overwhelmingly approved, amendments to the Company’s Certificate of Incorporation and Bylaws to adopt robust and well-balanced special meeting provisions. Those provisions give shareholders holding 25% or more of the Company’s outstanding shares of common stock the right to call special meetings, provided certain limited requirements are met. In framing the special meeting provisions, the Board sought and was guided by extensive input from our shareholders and other stakeholders. The Board was mindful that our shareholders both expressed support for special meeting provisions generally and cautioned that the framework should be balanced and ensure adequate protections for all shareholders. The Board believes the Company and its shareholders are best served when the Board retains the opportunity to utilize its experience, knowledge and judgment, together with ongoing feedback fromCompany’s current provisions accomplish those goals. In 2018, our shareholders reaffirmed that position, rejecting an almost identical proposal submitted by this proponent seeking to determine which director is best suited to serve as Chair in lightreduce the special meeting threshold. Approximately 62% of the facts and circumstances at the time, allowing the Board to operate efficiently and effectively to protect and enhance long-term success and shareholder value.
Under our Principles of Corporate Governance, the Board has the authority to determine whether the positions of Chair and Chief Executive Officer should be held by the same or different persons. The Board has the flexibility to consider what is best for the Company and its shareholders, in light of all facts and circumstances known to the Board at the time. The Board considers a wide range of factors when determining the most effective leadership structure for the Board. These factors include:
the role of the Board and the responsibilities of the Lead Independent Director and the Chair;
the experience of the management team;
the particular challenges facing the Company, both at the time and in the near future;
the evolving environment in which we operate and the requirements on management and the Board;

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PROPOSAL FIVE: SHAREHOLDER PROPOSAL


the importance of presenting one leadership “face” to our customers; and
the importance of promoting a clear, unified strategic vision for the Company, assuringvotes cast were against that strategies adopted by the Board are well-positioned for execution by management.proposal.
The Board has previouslycontinues to believe that our special meeting provisions are well aligned with our shareholders’ perspectives, best practices and effectively used this flexibilitythe Company’s best interests. They balance and promote the interests of all our shareholders, particularly in the context of our broader governance construct. For example, because our shareholders have the right to separate the rolepropose business for consideration at our annual meeting of Chair and CEO during leadership transitions, and most recently, with the CEO transition from Mr. Bushshareholders, special meetings are needed, if at all, only to Ms. Warden, with Mr. Bush continuing as Board Chair. The practiceconsider extraordinary events that are of separating the roles during leadership transitions so that a company’s former CEO or another experienced director can continue to provide perspectiveinterest to a new CEObroad base of our shareholders and need to be addressed on an expedited basis. The proponent’s shareholder Proposal 4, if adopted, would permit a small minority of shareholders, potentially with narrow, short-term interests, calling a special meeting to pursue matters that the overwhelming majority (almost 90%) of our shareholders do not support and/or do not view as requiring immediate attention, without regard to the costs and other burdens of the meeting, or their impact on the Company.
Our current 25% special meeting threshold is a proven, successful approach amongconsistent with best practices at other large public companies, and can help to facilitate a seamless leadership transition. It is one example of the advantages toalso our Company and shareholders of our current Bylaws, which enable the Board to determine the best construct for the Company for the time. Under today’s circumstances, and considering in particular Mr. Bush’s recent service as our CEO, the Board has determined the Company is best served if Mr. Bush continues as Chairman and if Mr. Felsinger continues as Lead Independent Director, further enhancing the Board’s effective exercise of independent judgment and oversight of management. Prior to Mr. Bush’s retirement as Chair in July 2019, the Board will re-evaluate and, based on the circumstances as they have evolved, determine the appropriate Board leadership structure.peers.
When the Chair is not independent, the Company’s Bylaws specifically provide that the independent directors of the Board may designate a Lead Independent Director from among them. The Board has repeatedly exercised that authority and Mr. Felsinger currently serves as our Lead Independent Director. During his tenure as Lead Independent Director, Mr. Felsinger has engaged with investors and demonstrated strong leadership skills, independent thinking and a deep understanding of our businessalso considered best practices among other large, publicly traded companies, and our shareholders’ interests. Indeed, he was recognized by the NACD as the Directorpeers in particular. Approximately half of the Year for 2016, during his service as our Lead Independent Director.
Our Principles of Corporate Governance prescribethose S&P 500 companies that explicitly provide their shareholders with a strong role for our Lead Independent Director, who has significant authority with respect to the operation and functioning of the Board. Among other duties, the Principles of Corporate Governance specify that the Lead Independent Director shall:
approve meeting agendas and information sent to the Board;
approve the schedule of Board meetings;
call and chair meetings of the independent directors (a regular occurrence at our in-person meetings);
interview Board candidates (along with the Chair and the Chair of the Governance Committee) and help ensure a robust succession plan for Board committees and Board composition;
preside at all meetings of the Board at which the Chair is not present, including executive sessions of the independent directors;
serve as a liaison between the Chair and the independent directors; and
meet with major shareholders, as requested. Any shareholder is able to communicate directly with the Lead Independent Director as described on page 24 of this Proxy Statement and on the Company’s website.
In addition to the above responsibilities, the Lead Independent Director has in practice performed additional duties beyond those described in the Principles of Corporate Governance. The Lead Independent Director:
serves as a significant advisor to the Chair, providing guidance and direction to the Chair on a range of significant matters, including strategy, CEO succession, Board succession, shareholder communications and the content/nature of Board meetings;
has discussions on a regular basis with the Chair between Board meetings;
supports and facilitates engagement between the CEO/senior management and independent directors; and
chairs an executive session of independent directors at Board meetings.
The designation of a Lead Independent Director by the independent directors of the Board demonstrates the Board’s continuing commitment to strong corporate governance, Board independence and the important role of the Lead Independent Director. In addition, there are several other structural safeguards that provide effective independent oversight by the Board. Eleven of the Company’s thirteen directors are independent, and the Board regularly holds scheduled sessions of the independent directors at each Board meeting, which are led by the Lead Independent Director. The Chairs and all members of the Committees - Audit, Compensation, Governance and Policy - are independent directors. The independent directors have ample opportunity to, and regularly do, assess the performance of the CEO and provide meaningful direction. The Board is responsible for the election of the CEO and oversees a robust succession planning process, closely involved in identifying and developing potential successors and effecting orderly CEO transitions.
The Company has adopted numerous other governance practices that further demonstrate our commitment to good corporate governance for our shareholders. We have adopted significant stock ownership guidelines for both our employees and our directors, eliminated change of control agreements, prohibited the hedging and pledging of Company stock, and implemented a strong recoupment policy, to name a few such examples. Our shareholders have approved separate management proposals granting the

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PROPOSAL FIVE: SHAREHOLDER PROPOSAL


right to call a special meeting, require that those seeking to require a special meeting have combined ownership holdings at least 25%, if not more. Indeed, 25% is the single most common threshold. The 25% threshold is also the most common standard among Northrop Grumman’s peers.
Special meetings require substantial resources.
Special meetings can be an important option for shareholders. But they require significant financial expenditures, preparing for and to act by written consent. Management routinely communicates with shareholders to understandhosting the meeting, and seek to address any concerns they may have or suggestions as to how we can continue to enhancesignificant human capital resources, taking critical time and attention from our governance practices.
In addition, the Board has successfully recruited,directors, officers and our shareholders have approved, a diverse group of accomplished, independent directors who bring a wide range of experiences to benefit the Company. The average tenure of our independent directors is 6.5 years, reflecting a healthy mix of tenure and new perspective. As part of its ongoing and active Board refreshment efforts, the Board has added four new independent directors, two of whom were women, in the last four years.
other employees, diverting their focus from other priorities. The Board believes that the Company’s balancedexisting 25% threshold strikes an appropriate balance: enabling shareholders to call a vote on important and flexible corporate governance structure, includingtime-sensitive matters that may arise between annual meetings, while also protecting against the risk that a Lead Independent Director with well-defined, comprehensivesmall group of shareholders demand and meaningful duties,divert significant attention and resources to a narrow agenda not supported by or in the interests of the overwhelming majority of shareholders. The proponent’s shareholder Proposal 4 to lower the threshold to call a special meeting to 10% would undermine the balance our Board sought to preserve and impose needless costs and disruption on the Company.
90Northrop Grumman
Proposal 4: Shareholder Proposal
We are committed to receiving and acting on shareholder input; and our strong corporate governance practices make ithelp to ensure our board acts to promote the long-term interests of our shareholders with ample opportunity for their input.
We value deeply the views of our shareholders, with both management and our Board engaging regularly with shareholders. Our extensive shareholder outreach program provides ongoing, year-round opportunities for shareholders to share concerns, perspectives and objectives with members of management and our Board, efficiently and effectively. And we have a proud record of adopting provisions and modifying practices in response to shareholder feedback. In addition to the right shareholders already have to call a special meeting, our shareholders have the right to act by written consent and to nominate directors through proxy access. Shareholders also have the ability to submit proposals to be considered at our annual meeting, and to vote annually on the advisory “say-on-pay” vote on executive compensation. These and other corporate governance best practices that we have in place, protect the rights of all shareholders and help enable our Board to serve their interests.
*                       *                       *                       *
As we continue to engage with our shareholders, we remain confident that our special meeting provisions, including the 25% ownership threshold, are consistent with industry practices, provide our shareholders with a meaningful and appropriate right to call special meetings, and balance the need to protect the interests of all our shareholders. The Board believes that adoption of shareholder Proposal 4 — and a threshold of 10% — is not only unnecessary, but ill-advisedcontrary to adopt a policy that would mandate that the Chair be an independent director. The Board believes that adopting such a rule would only limit the Board’s ability to select the director it believes is best suited to serve as Chair of the Board, and is not in the best interests of the Company and itsour shareholders.
Vote Required
Approval of this proposal requires that the votes cast "for"“for” the proposal exceed the votes cast "against"“against” the proposal. Abstentions and broker non-votes will have no effect on this proposal.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST"“AGAINST” PROPOSAL FIVE.4.


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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

2022 Proxy Statement		91

Transactions with Related Persons and Control Persons
Related Person Transactions
The Company has a written policy approved by the Board, for the review, approval and ratification of transactions between our Company and our directors, executive officers and other related persons (Related Person Transactions Policy). A copy of the policy is available on the Investor Relations section of our website (www.northropgrumman.com). The policy provides for related person transactions to be reviewed in advance and approved or ratified, as applicable, by the Board of Directors, the Governance Committee or the Chair of the Governance Committee. A related person transaction may be approved if, after reviewing the relevant facts and circumstances, the reviewing party concludes that approving the related person transaction is in the best interests of the Company and its shareholders.
The policy defines a related person transaction as any transaction in which the Company was, is or will be a participant, where the amount involved exceeds $120,000, and in which a related person had, has or is expected to have a direct or indirect material interest. A “related person” includes:
•any of our directors or executive officers;
•any person who is known to be the beneficial owner of more than 5% of our common stock;
•an immediate family member of any such persons; or
•any firm, corporation, or other entity controlled by any such persons.
The Corporate Secretary may determine that, based on facts and circumstances, a transaction in an amount less than $120,000 should nonetheless be deemed a related person transaction. If this occurs, the transaction would be submitted for review and approval or ratification in accordance with the policy. Under exceptional circumstances, if a related person transaction has not been approved in advance, the Governance Committee will recommend to the Board of Directors such action as the Governance Committee deems appropriate, including ratification, amendment or termination of the transaction.
The policy requires each director and executive officer to complete an annual questionnaire to identify his or her related interests and to notify the Corporate Secretary of any changes in their information.
In the ordinary course of business and in connection with various subcontractor agreements, the Company makes payments to and receives payments from CACI International Inc. The spouse of our Corporate Vice President and Chief Human Resources Officer, Ann Addison, is the President and Chief Executive Officer and a member of the Board of Directors of CACI. In 2021, the Company made payments to CACI of approximately $23.4 million and received payments from CACI of approximately $2.2 million.
In the ordinary course of business, the Company purchases goods from Stanley Black & Decker, Inc. One of our directors, Graham N. Robinson, is a Senior Vice President of Stanley Black & Decker and the President of STANLEY Industrial, one of Stanley Black & Decker's business segments. For the year ended December 31, 2021, the Company paid Stanley Black and Decker and certain of its subsidiaries approximately $1.1 million for these goods, which accounted for less than 0.1% of either company's revenues for the 2021 fiscal year.
State Street Corporation (State Street), acting in various fiduciary capacities, filed a Schedule 13G/A with the SEC reporting that as of December 31, 2021, State Street and certain of its subsidiaries collectively were the beneficial owners of more than 5% of our outstanding common stock. A subsidiary of State Street is the trustee for various Northrop Grumman defined benefit and defined contribution plan trusts. Two other State Street subsidiaries provide investment management services. During 2021, those State Street subsidiaries received approximately $6.2 million for such services, with over 99% of that amount paid by the plan trusts.
BlackRock, Inc. (BlackRock) filed a Schedule 13G/A with the SEC reporting that as of December 31, 2021, BlackRock and certain of its subsidiaries collectively were the beneficial owners of more than 5% of our outstanding common stock. A subsidiary of BlackRock provides investment management services for the Northrop Grumman Rabbi Trust II and certain assets within various Northrop Grumman defined benefit trusts. During 2021, the trusts paid that BlackRock subsidiary approximately $651,000 for such services.
Wellington Management Group LLP (Wellington) filed a Schedule 13G/A with the SEC reporting that as of December 31, 2021, Wellington and certain of its subsidiaries collectively were the beneficial owners of more than 5% of our outstanding
92Northrop Grumman
Transactions with Related Persons and Control Persons
common stock. A subsidiary of Wellington provides investment management services for certain assets within various Northrop Grumman defined benefit and defined contribution plan trusts. During 2021, the trusts paid that Wellington subsidiary approximately $1.2 million for such services.
Indemnification Agreements
Our Bylaws require us generally to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. Additionally, as permitted by Delaware law, we have entered into indemnification agreements with each of our directors and elected officers. Under the indemnification agreements, we have agreed to hold harmless and indemnify each indemnitee, generally to the fullest extent permitted by Delaware law, against expenses, liabilities and loss incurred in connection with threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative to which the indemnitee is made a party by reason of the fact that the indemnitee is or was a director or officer of the Company or any other entity at our request, provided however, that the indemnitee acted in good faith and in a manner reasonably believed to be in the best interests of our Company.
2022 Proxy Statement93

VotingSecuritiesandPrincipal Holders
Stock Ownership of Certain Beneficial Holders
The following entities beneficially owned, to the best of our knowledge, more than five percent of the outstanding common stock as of the dates indicated in the footnotes below. All information shown is based on information reported by the filer on a Schedule 13G filed with the SEC on the dates indicated in the footnotes below.
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%
(1)This information was provided in a Schedule 13G/A jointly filed with the SEC on February 14, 2022 by State Street Corporation (State Street) and State Street's subsidiaries State Street Bank and Trust Company (State Street Bank) and State Street Global Advisors Trust Company (State Street Global). According to State Street, as of December 31, 2021, it had shared voting power over 14,499,094 shares and shared dispositive power over 14,857,478 shares. According to State Street Bank, as of December 31, 2021, it beneficially owned 8,967,831 shares and had shared voting power over 8,967,831 shares and shared dispositive power over 602 shares. According to State Street Global, as of December 31, 2021, it beneficially owned 12,553,563 shares and had shared voting power over 3,340,374 shares and shared dispositive power over 12,553,063 shares. These totals include 8,967,229 shares held as of December 31, 2021 in the Defined Contribution Plans Master Trust for the Northrop Grumman Savings Plan and the Northrop Grumman Financial Security and Savings Program, for which State Street Bank acts as trustee and State Street Global acts as investment manager.
(2)This information was provided by Capital International Investors (Capital International), a division of Capital Research and Management Company, in a Schedule 13G/A filed with the SEC on February 11, 2022. According to Capital International, as of December 31, 2021, Capital International had sole voting power over 12,918,505 shares and sole dispositive power over 12,955,596 shares.
(3)This information was provided by The Vanguard Group (Vanguard) in a Schedule 13G/A filed with the SEC on February 10, 2022. According to Vanguard, as of December 31, 2021, Vanguard had shared voting power over 225,557 shares, sole dispositive power over 11,331,373 shares and shared dispositive power over 580,340 shares.
(4)This information was provided in a Schedule 13G/A jointly filed with the SEC on February 4, 2022 by Wellington Management Group LLP, a parent holding company, and three of its affiliates: Wellington Group Holdings LLP, owned by Wellington Management Group LLP; Wellington Investment Advisors Holdings LLP, owned by Wellington Group Holdings LLP; and Wellington Management Company LLP, an investment adviser controlled by Wellington Investment Advisors Holdings LLP (the four joint filers collectively, “Wellington”). Wellington reported that the shares as to which the Schedule 13G/A was filed are owned of record by clients of Wellington Management Company LLP. According to Wellington, as of December 31, 2021, each of the joint filers except Wellington Management Company LLP had shared voting power over 8,550,792 shares and shared dispositive power over 8,692,455 shares; and Wellington Management Company LLP had shared voting power over 8,459,883 shares and shared dispositive power over 8,501,417 shares.
(5)This information was provided by BlackRock, Inc. (BlackRock) in a Schedule 13G/A filed with the SEC on February 3, 2022. According to BlackRock, as of December 31, 2021, BlackRock had sole voting power over 7,783,310 shares and sole dispositive power over 8,631,520 shares.
94Northrop Grumman
Voting Securities and Principal Holders
Stock Ownership of Officers and Directors
The following table shows beneficial ownership of our common stock as of March 22, 2022 by each of our current directors, our named executive officers and all directors and executive officers as a group. As of March 22, 2022, there were 155,703,868 shares of our common stock outstanding. None of the persons named below beneficially owns in excess of 1% of our outstanding common stock. Unless otherwise indicated, each individual has sole investment power and sole voting power with respect to the shares owned by such person.
Shares of Common Stock
Beneficially Owned
Share
Equivalents(1)
Total
Non-Employee Directors
David P. Abney447 466 913 
Marianne C. Brown— 7,428 7,428 
Donald E. Felsinger— 39,446 39,446 
Ann M. Fudge1,178 2,898 4,076 
William H. Hernandez1,000 6,200 7,200 
Madeleine A. Kleiner— 18,519 18,519 
Karl J. Krapek1,368 21,516 22,884 
Graham N. Robinson— 362 362 
Gary Roughead— 9,625 9,625 
Thomas M. Schoewe3,160 10,907 14,067 
James S. Turley635 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. Caylor17,458 37 17,495 
Blake E. Larson20,064 — 20,064 
Mary D. Petryszyn7,283 — 7,283 
Other Executive Officers77,178 833 78,011 
All Directors and Executive Officers as a Group
(26 persons)		276,289 125,157 401,446 (3)
(1)Share equivalents for directors represent non-voting deferred stock units acquired under the 2011 Plan, some of which are paid out in shares of common stock at the conclusion of a director-specified deferral period, and others are paid out upon termination of the director’s service on the Board. Certain of the NEOs hold share equivalents with pass-through voting rights in the Northrop Grumman Savings Plan or the Northrop Grumman Financial Security and Savings Program.
(2)Ms. Warden also serves on the Company’s Board of Directors.
(3)Total represents 0.26% of the outstanding common stock as of March 22, 2022.
2022 Proxy Statement95

Questions and Answers About
the Annual Meeting
Why did I receive a "Notice“Notice of Internet Availability of Proxy Materials"Materials” but not a full set of proxy materials?
We distribute our proxy materials to shareholders via the internet under the "Notice“Notice and Access"Access” approach permitted by the rules of the SEC. This approach reduces the environmental impact of the Annual Meeting and our distribution costs, while providing a timely and convenient method of accessing the proxy materials and voting. On March 29, 2019,April 1, 2022, we mailed a "Notice“Notice of Internet Availability of Proxy Materials"Materials” to participating shareholders, containing instructions on how to access the proxy materials on the internet.materials.
Who is entitled to vote at the Annual Meeting?
You may vote your shares of our common stock if you owned your shares as of the close of business on March 19, 201922, 2022 (Record Date). As of the Record Date, there were 169,959,030155,703,868 shares of our common stock outstanding. You may cast one vote for each share of common stock you hold as of the Record Date on all matters presented.
How many votes must be present to hold the Annual Meeting?
The presence in person or by proxy of the holders of a majority of the shares entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting. Persons returning executed proxy cards will be counted as present for purposes of establishing a quorum even if they abstain from voting on any or all proposals. Shares held by brokers who vote such shares on any proposal and broker non-votes will be counted as present for purposes of establishing a quorum.
How can I receive a paper copy of the proxy materials?
Instead of mailing a printed copy of this Proxy Statement and accompanying materials to each shareholder of record, we have elected to provide a Notice of Internet Availability of Proxy Materials (Notice) as permitted by the rules of the SEC. The Notice instructs you as to how you may access and review all of the proxy materials and how you may provide your proxy. If you would like to receive a printed or electronic copy of this Proxy Statement and accompanying materials, you must follow the instructions for requesting such materials included in the Notice.
96Northrop Grumman
Questions and Answers About the Annual Meeting
What am I being asked to vote on and what are the Board of Directors'Directors’ recommendations?
The following table lists the proposals scheduled to be voted on, the vote required for approval of each proposal and the effect of abstentions and broker non-votes:
Proposal
Board
Recommendation
Board Recommendation
Vote
Required
Abstentions
Broker
Non-Votes
Broker Non-Votes
Unmarked
Proxy Cards
Election of Directors
(Proposal One)1)
FORMajority of votes castNo effectNo effectNo effectVoted "FOR"“FOR“
Advisory Vote on Compensation of Named Executive Officers
(Proposal Two)2)
FORMajority of votes castNo effectNo effectNo effectVoted "FOR"“FOR“
Ratification of Appointment of Independent Auditor
(Proposal Three)3)
FORMajority of votes castNo effectNo effectBrokers have discretion to voteVoted "FOR"“FOR“
Shareholder Proposal to Provide forChange the Ownership Threshold to Call a Report on Management Systems and Processes for Implementing the Company's Human Rights PolicySpecial Meeting
(Proposal Four)4)
AGAINSTMajority of votes castNo effectNo effectNo effectVoted "AGAINST"
Shareholder Proposal to Provide for an Independent Chair
(Proposal Five)
AGAINSTMajority of votes castNo effectNo effectVoted "AGAINST"“AGAINST“

78INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING


What is a broker non-vote?
Brokers who hold shares of common stock for the accounts of their clients may vote these shares either as directed by their clients or in their own discretion if permitted by the stock exchanges or other organizations of which they are members. Members of the New York Stock Exchange (NYSE) are permitted to vote their clients'clients’ proxies in their own discretion on certain matters if the clients have not furnished voting instructions within ten days of the meeting. However, NYSE Rule 452 defines various matters as "non-routine,"“non-routine,” and brokers who have not received instructions from their clients do not have discretion to vote their client'sclient’s shares on such "non-routine"“non-routine” matters, resulting in a "broker“broker non-vote."”
If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares, without instructions from you, on the ratification of the appointment of Deloitte & Touche LLP as independent auditor. However, your broker does not have discretionary authority to vote your shares, without instructions from you, on the election of directors, the advisory vote to approve the compensation of our NEOs or the shareholder proposals,proposal, in which case a broker non-vote will occur and your shares will not be voted on these matters.
How do I vote my shares?shares if they are registered directly in my name?
If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (Computershare), you holdare considered the “registered shareholder” of those shares, as a record holder,and you may vote by proxy prior to the Annual Meeting, as discussed below, or you may vote in person at the Annual Meeting. Shares represented by a properly executed proxy will be voted at the Annual Meeting in accordance with the shareholder'sshareholder’s instructions. If no instructions are given, the shares will be voted according to the recommendations of the Board. Registered shareholders and plan participants may go to www.envisionreports.com/noc to view this Proxy Statement and the Annual Report.
2022 Proxy Statement97
Questions and Answers About the Annual Meeting
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By InternetBY INTERNET
Registered shareholders and plan participants may vote on the internet, as well as view the documents, by logging on to www.envisionreports.com/nocand following the instructions given.
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By TelephoneBY TELEPHONERegistered shareholders and plan participants may grant a proxy by calling 800-652-VOTE (800-652-8683) (toll-free) with a touch-tone telephone and following the recorded instructions.
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ByBY QR CodeCODERegistered shareholders and plan participants may vote by scanning the QR code on their proxy card or notice with their mobile device.
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By MailBY MAIL
Registered shareholders and plan participants must request a paper copy of the proxy materials to receive a proxy card and may vote by marking the voting instructions on the proxy card and following the instructions given for mailing. A paper copy of the proxy materials may be obtained by logging on to www.envisionreports.com/noc and following the instructions given.
If any other matters are properly brought before the Annual Meeting, the proxy card gives discretionary authority to the proxyholders named on the card to vote the shares in their best judgment. A shareholder who executes a proxy may revoke it at any time before its exercise by delivering a written notice of revocation to the Corporate Secretary or by delivering a valid, later-dated proxy, or a later-dated vote by telephone or on the internet, in a timely manner. In addition, a shareholder attending the Annual Meeting in person may revoke the proxy by giving notice of revocation to the inspector of election at the meeting or by voting by ballot at the meeting.
How do I vote my shares if they are held by a bank, broker or other agent?nominee?
Persons who ownIf your shares are held in a stock beneficially throughbrokerage account or by a bank broker or other agent may notnominee (that is, in street name), you are considered the “beneficial owner” of the shares that are registered in the street name. You are able to vote directlythose shares, to attend the Annual Meeting as a shareholder, and to ask questions at the meeting. You will need to instruct the record ownerbank, broker or other nominee how to vote theirthese shares using the procedure identified by the bank, broker or other agent. Beneficial owners who hold our common stock in "street name" through a brokernominee. You should receive voting instruction forms from their broker. Mostyour bank, broker or other nominee. We expect most banks, brokers and other nominees to enable beneficial owners will be able to provide voting instructions by telephone or on the internet by following the instructions on the form they receive from their broker.internet. Beneficial owners may view this Proxy Statement and the Annual Report on the internet by logging on to www.edocumentview.com/noc. A person who beneficially owns shares of our common stock through a bank, broker or other agentnominee can vote his or her shares in person at the Annual Meeting only if he or she obtains from the bank, broker or other nominee a proxy, often referred to as a "legal“legal proxy,"” to vote those shares, and presents the proxy to the inspector of election at the meeting together with his or her ballot.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 79

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING


Beneficial owners who hold shares in "street name"“street name” may revoke a proxy or change a vote by submitting a new, later-dated voting instruction form, contacting the bank, broker or other agentnominee or by voting in person at the Annual Meeting by obtaining a legal proxy as described above.
How do I vote my shares held under a Northrop Grumman savings plan?
If shares are held on an individual'sindividual’s behalf under any of our savings plans, the proxy will serve to provide confidential instructions to the plan Trustee or Voting Manager who then votes the participant'sparticipant’s shares in accordance with the individual'sindividual’s instructions. For those participants who do not vote their plan shares, the applicable Trustee or Voting Manager will vote their plan shares in the same proportion as shares held under the plan for which voting directions have been received, unless the Employee Retirement Income Security Act requires a different procedure.
VotingSavings plan participants may submit their voting instructions by the same methods as registered shareholders (see “How do I vote my shares if they are registered directly in my name?” above) but voting instructions from savings plan participants must be received by the applicable plan Trustee or Voting Manager by 11:59 p.m. Eastern Daylight Time on May 12, 201915, 2022 in order to be used by the plan Trustee or Voting Manager to determine the votes cast with respect to plan shares.

80INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

MISCELLANEOUS


98Northrop Grumman

Miscellaneous
Voting on Other Matters
We are not aware of any other business to be transacted at the Annual Meeting. Our Bylaws outline procedures, including minimum notice provisions, for shareholder nominations of directors and submission of other shareholder business to be transacted at the Annual Meeting. A copy of the pertinent Bylaw provisions is available on request to the Corporate Secretary, Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042.22042. Our Bylaws are also available in the Investor Relations section of our website at www.northropgrumman.com. If any other business properly comes before the Annual Meeting, the shares represented by proxies will be voted in accordance with the judgment of the persons authorized to vote them.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors and executive officers, and persons who own more than ten percent of our common stock, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC.
Based solely on a review of Forms 3, 4 and 5 that are publicly available on the SEC's EDGAR filing system and written representations from reporting persons, we believe that all required filings were made on a timely basis during the year ended December 31, 2021, other than: a Form 4 filed on February 18, 2021 on behalf of Shawn N. Purvis, our former Corporate Vice President and President, Enterprise Services, which included a delayed report of the disposition of common stock on February 3, 2021 relating to her spouse's transfer of his investment in the Northrop Grumman Stock Fund in the Northrop Grumman Savings Plan, a qualified defined contribution plan, to a different investment option in the plan; and the inadvertent omission of 938 shares of common stock from a Form 3 that was timely filed on behalf of Thomas H. Jones, Corporate Vice President and President, Aeronautics Systems on January 7, 2021, which shares were reported on an amended Form 3 filed on February 14, 2022.
Shareholder Proposals for the 2020Shareholder Proposals for the 2023 Annual Meeting
Any shareholder who intends to present a proposal at the 20202023 Annual Meeting must deliver the proposal to the Corporate Secretary at Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042:
•not later than November 30, 2019,December 2, 2022, if the proposal is submitted for inclusion in the Company'sCompany’s proxy materials for that meeting pursuant to Rule 14a-8 under the Exchange Act; and
•not earlier than November 30, 2019December 2, 2022 and not later than December 30, 2019,January 1, 2023, if the proposal is submitted pursuant to the Bylaws, but not pursuant to Rule 14a-8, in which case we are not required to include the proposal in our proxy materials. If the 20202023 Annual Meeting is convened more than 30 days prior to or delayed by more than 30 days after the one-year anniversary of the Annual Meeting, our Bylaws provide different notice requirements.
Any shareholder who wishes to introduce a proposal should review our Bylaws and applicable proxy rules of the SEC.
Shareholder Nominations for Director Election at the 2020Shareholder Nominations for Director Elections at the 2023 Annual Meeting
Any shareholder who intends to nominate a person for election as a director at the 20202023 Annual Meeting must deliver a notice of such nomination (along with certain other information required by our Bylaws) to the Corporate Secretary at Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042:
•not earlier than October 31, 2019November 2, 2022 and not later than November 30, 2019,December 2, 2022, if the nomination is submitted for inclusion in the Company'sCompany’s proxy materials for that meeting pursuant to the Company'sCompany’s proxy access provision, as set forth in our Bylaws, which nomination and supporting materials must comply with the requirements in our Bylaws; and
2022 Proxy Statement99
Miscellaneous
•not earlier than November 30, 2019December 2, 2022 and not later than December 30, 2019,January 1, 2023, if the nomination is submitted pursuant to the Bylaws, but not pursuant to our proxy access provision, in which case we are not required to include the nomination in our proxy materials. If the 20202023 Annual Meeting is convened more than 30 days prior to or delayed by more than 30 days after the one-year anniversary of the Annual Meeting, our Bylaws provide different notice requirements.
Any shareholder who wishes to nominate a person for election as a director should review our Bylaws.
Householding Information
Some banks, brokers and other nominee record holders may be participating in the practice of "householding."“householding.” This means that only one copy of the Notice of Internet Availability of Proxy Materials may have been sent to multiple shareholders in a household. We will promptly deliver a separate copy to a shareholder upon written or oral request to the Corporate Secretary at the following address and phone number: Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042, (703) 280-2900. To receive separate copies of the notice in the future, or if a shareholder is receiving multiple copies and would like to receive only one copy for the household, the shareholder should contact his or her bank, broker or other nominee record holder, or may contact the Corporate Secretary at the above address or phone number.

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI 81

MISCELLANEOUS


Cost of Soliciting Proxies
We will pay all costs of soliciting proxies. We have made arrangements with brokerage houses and other custodians, nominees and fiduciaries to make proxy materials available to beneficial owners. We will, upon request, reimburse them for reasonable expenses incurred. We have retained D.F. King & Co., Inc. of New York at an estimated fee of $20,000, plus reasonable disbursements to solicit proxies on our behalf. Our officers, directors and regular employees may solicit proxies personally, by means of materials prepared for shareholders and employee-shareholders or by telephone or other methods to the extent deemed appropriate by the Board.
No additional compensation will be paid to such individuals for this activity. The extent to which this solicitation will be necessary will depend upon how promptly proxies are received. We therefore urge shareholders to give voting instructions without delay.
Available Information
You may obtain a copy of the following corporate governance materials on the Investor Relations section of our website (www.northropgrumman.com) under Corporate Governance:
•Bylaws;
•Principles of Corporate Governance;
•Standards of Business Conduct;
•Policy and Procedure Regarding Company Transactions with Related Persons; and
•Board Committee Charters.
Copies of these documents are also available without charge to any shareholder upon written request to the Corporate Secretary, Northrop Grumman Corporation, 2980 Fairview Park Drive, Falls Church, Virginia 22042.
We disclose amendments to provisions of our Standards of Business Conduct by posting amendments on our website.
Incorporation by Reference
In accordance with SEC rules, notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate this Proxy Statement or future filings made by the Company under those statutes, the information included under the section entitled "Compensation“Compensation Committee Report"Report” and those portions of the information included under the section entitled "Audit“Audit and Risk Committee Report"Report” required by the SEC'sSEC’s rules to be included therein, shall not be deemed to be "soliciting material"“soliciting material” nor shall the information included under the section entitled “Compensation of Directors - Stock Ownership Requirements and Anti-Hedging and Pledging Policy,” the information included under the section entitled “Compensation Committee Report,” or "filed"those portions of the information included under the section entitled “Audit and Risk Committee Report” required by the SEC’s rules to be included
100Northrop Grumman
Miscellaneous
therein, be “filed” with the SEC and shall notor be deemed incorporated by reference into any of those prior filings or into any future filings made by the Company under those statutes, except to the extent we specifically incorporate these items by reference.
Web links throughout this document are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement.
Annual Report
March 29, 2019April 1, 2022
NOTICE: THE COMPANY FILED AN ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 20182021 ON JANUARY 31, 2019.27, 2022. SHAREHOLDERS OF RECORD ON MARCH 19, 201922, 2022 MAY OBTAIN A COPY OF THIS REPORT WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, NORTHROP GRUMMAN CORPORATION, 2980 FAIRVIEW PARK DRIVE, FALLS CHURCH, VIRGINIA 22042.
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Jennifer C. McGarey
Corporate Vice President and Secretary
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2022 Proxy Statement
Jennifer C. McGarey
Corporate Vice President and Secretary101



82INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

APPENDIX A - USE OF NON-GAAP FINANCIAL MEASURES

Appendix A – Use of Non-GAAP Financial Measures
This Proxy Statement contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures, as defined by SEC Regulation G and indicated by an asterisk in this Proxy Statement. While we believe investors and other users of our financial statements may find these non-GAAP financial measures useful in evaluating our financial performance and operational trends, they should be considered as supplemental in nature, and therefore, should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. Definitions and reconciliations for the non-GAAP financial measures contained in this Proxy Statement are provided below.below and the reconciliations of non-GAAP financial measures presented in this Proxy Statement are located on pages 105 to 107 of this Appendix A. Other companies, including companies in our industry, may define these measures differently or may utilize different non-GAAP financial measures.measures, limiting the usefulness of those measures for comparative purposes between companies.
Certain of the non-GAAP financial measures below are used as internal measures for performance-based compensation decisions, as further discussed in the “Key Components of ourOur Executive Compensation Programs” section of the Compensation Discussion and Analysis. The Compensation Committee has discretion to make adjustments to these measures in instances where the Company’s performance has been impacted by unforeseen or unusual events. For 2018,2021, 2020 and 2019, the Compensation Committee adjusted the calculation of certain of these measures in order to exclude the impact of certain events or transactions that were not contemplated when the performance metrics were established.
Cash flow metrics:We use cash flow metrics as internal measures of financial performance and for performance-basedperformance based compensation decisions. We also use these measures as a key factor in our planning for, and consideration of, acquisitions, payments of dividends and share repurchases. The following cash flow metrics may be useful to investors and other users of our financial statements as a supplemental measure of our cash performance, but should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. All cash flow metrics are reconciled below.
Adjusted Cash Provided by Operating Activities: Defined as Net cash provided by operating activities, before after-tax discretionary pension contribution: Cashadjusted to include proceeds from sale of equipment to a customer (not otherwise included in net cash provided by operating activities beforeactivities) and, exclude the after-tax impact of discretionary pension contributions. Cashcontributions, and cash paid for federal and state taxes and transaction costs associated with the IT services divestiture, as approved by the Compensation Committee. Adjusted cash provided by operating activities before after-tax discretionary pension contributions is reconciled below.
Pension-adjusted cash flowincludes proceeds from operations:Cash provided by operating activities beforethe sale of equipment to a customer as such proceeds were generated in a customer sales transaction. It also includes the after-tax impact of discretionary pension contributions. Ascontributions and cash paid for federal and state taxes and transaction costs associated with the IT services divestiture for consistency and comparability of financial performance.
Adjusted Earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA): Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding mark-to-market (MTM) expense and the MTM-related deferred state tax expense and excluding impacts related to the Company's IT services divestiture, including the gain on sale of the business, associated federal and state income tax expenses, transaction costs, and the make-whole premium for early debt redemption, as approved by the Compensation Committee, this metric has been adjusted to exclude the impacts of the addition of Innovation Systems and Orbital ATK transaction-related expenses. Orbital ATK transaction-related expenses are primarily comprised of advisory, legal and other costs related to the completion of the transaction. Pension-adjusted cash flow from operations is reconciled below.Committee.
Free cash flowAdjusted Cash Flow from Operations Conversion: Defined as Adjusted Cash Provided by Operating Activities, divided by Adjusted EBITDA, as defined above.
Transaction-adjusted free cash flow:Net cash provided by operating activities less capital expenditures. Freeexpenditures, plus proceeds from the sale of equipment to a customer (not otherwise included in net cash provided by or used in operating activities), the after-tax impact of discretionary pension contributions and cash paid for federal and state taxes and transaction costs associated with the IT services divestiture. Transaction-adjusted free cash flow is reconciled below.includes proceeds from the sale of equipment to a customer as such proceeds were generated in a customer sales transaction. It also includes the after-tax impact of discretionary pension contributions and cash paid for federal and state taxes and transaction costs associated with the IT services divestiture for consistency and comparability of financial performance.
Transaction-adjusted Free cash flowCash Flow before after-tax total pension funding: FreeDefined as Transaction-adjusted free cash flow, as defined above, before the after-tax impact of required pension funding, as approved by the Compensation Committee.
Adjusted Cumulative Free Cash Flow (Adjusted Cumulative FCF): Defined as the aggregate Transaction-adjusted Free Cash Flow before after-tax total pension funding. Asfunding, as defined above, and approved cash flow adjustments over a three-year period. These cash flow adjustments, as approved by the Compensation Committee, this metric has been adjustedadjust for unanticipated impacts to exclude the impacts of the addition of Innovation Systems and Orbital ATK transaction-related expenses. Orbital ATK transaction-related expenses are primarily comprised of advisory, legal and other costs related to the completion of the transaction.Transaction-adjusted Free cash flowCash Flow before after-tax total pension funding, is reconciled below.including the impact
Cumulative
102Northrop Grumman
Appendix A – Use of Non-GAAP Financial Measures
from lower 2021 CAS pension reimbursements due to favorable plan asset returns in 2020 as well as plan-based differences in free cash flow: The aggregate free cash flow before due to the after-tax impactacquisition of total pension funding over a three-year period.Orbital ATK and the IT services divestiture.
Pension-adjusted metrics: For financial statement purposes, we account for our employee pension plans in accordance with GAAP (FAS). However, the cost of these plans is charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS) that govern such plans. We use pension-adjusted metrics as internal measures of financial performance and for performance-based compensation decisions.
The net FAS/CAS operating adjustment referred to below reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income. The total net FAS/CAS pension adjustment referred to below reflects the combined net FAS/CAS operating adjustment and net FAS (non-service) pension benefit. The following pension-adjusted measures may be useful to investors and other users of our financial statements in evaluating our performance based upon the pension costs charged to our contracts.
Net FAS (service)/CAS pension adjustment: The difference between pension expense charged to contracts and included as cost in segment operating income in accordance with CAS and the service cost component of pension expense determined in accordance with FAS. Net FAS (service)/CAS pension adjustment is presented All pension-adjusted metrics are reconciled below.
Pension-adjusted operating income: Operating income before the net FAS (service)/FAS/CAS pensionoperating adjustment as defined above.above and the MTM-related deferred state tax expense. As approved by the Compensation Committee, this metric has been adjusted to exclude Innovation Systems operating income,Orbital ATK intangible asset amortization and PP&Eproperty, plant and equipment (PP&E) step-up depreciation, and Orbital ATK transaction-related expenses, which were not contemplated when the performance metrics were established for 2018. Orbital ATK transaction-related expenses are primarily comprised of advisory, legal and other coststo exclude impacts related to the completionCompany's IT services divestiture, including the gain on sale of the transaction. Pension-adjusted operatingbusiness, associated state income is reconciled below.tax expenses, and transaction costs.
Pension-adjusted operating margin rateOperating Margin (OM) Rate: Pension-adjusted operating income as defined above, divided by sales (excluding Innovation Systems sales). Pension-adjusted operating margin rate is reconciled below.

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APPENDIX A - USE OF NON-GAAP FINANCIAL MEASURES

Total net FAS/CAS pension adjustment: The combined net FAS (service)/CAS pension adjustment and net FAS (non-service) pension benefit.sales.
After-tax net pension adjustment:The net income impact, after taxafter-tax at the federal statutory rate of 21 percent, of the net FAS (service)/CAS/CAS pension adjustment, and net FAS (non-service) pension benefit as defined above. After-tax net pension adjustment is presented below.
Pension-adjusted net income:Net income Transaction-adjusted net earnings, as defined below, before the after-tax net pension adjustment as defined above. As approved by the Compensation Committee, this metric has been adjusted to exclude the impact of the Company’s 2018 MTM pension expense, Innovation Systems operating income,Orbital ATK intangible asset amortization and PP&E step-up depreciation and Orbital ATK transaction-related expenses. Orbital ATK transaction-related expenses are primarily comprised of advisory, legal and other costsas well as impacts related to the completionCompany's IT services divestiture, including the gain on sale of the transaction. Pension-adjusted netbusiness, associated federal and state income is reconciled below.tax expenses, transaction costs, and the make-whole premium for early debt redemption.
Segment operating incomeOrganic sales:: Total earnings from our four segments including allocated pension expense recognized under CAS, andsales excluding unallocated corporate items andsales attributable to the service cost component of FAS pension expense.Company's IT services divestiture. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the financial performance and operational trendsCompany’s underlying sales growth as well as in providing an understanding of our sectors. Segment operating income is reconciled below.ongoing business and future sales trends by presenting the Company’s sales before the impact of divestiture activity.
Segment operating income and segment operating margin raterate:: Segment operating income as defined above, and reconciled below,segment operating margin rate (segment operating income divided by sales) reflect the combined operating income of our four segments less the operating income associated with intersegment sales. This measureSegment operating income includes pension expense allocated to our sectors under FAR and CAS and excludes FAS pension service expense and unallocated corporate items. These measures may be useful to investors and other users of our financial statements as a supplemental measuremeasures in evaluating the financial performance and operational trends of our sectors. These measures should not be considered in isolation or as alternatives to operating results presented in accordance with GAAP.
MTM-adjustedTransaction-adjusted net earnings: Net earnings excluding impacts related to the company’s IT services divestiture, including the gain on sale of the business, associated federal and state income tax expenses, transaction costs, and the make-whole premium for early debt redemption, as well as MTM benefit (expense) benefit and related tax impacts. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the Company’s underlying financial performance by presenting the Company’s operating results before the non-operational impact of divestiture activity and pension and OPB actuarial gains and losses. This measure is also consistent with how management views the underlying performance of the business as the impact of the IT services divestiture and MTM accounting is not considered in management’s assessment of the Company'sCompany’s operating performance or in its determination of incentive compensation awards. MTM-adjusted net earnings is reconciled below.
MTM-adjusted diluted EPSTransaction-adjusted EPS:: Diluted earnings per share excluding the per share impactimpacts related to the Company’s IT services divestiture, including the gain on sale of the business, associated federal and state income tax expenses, transaction costs, and the make-whole premium for early debt redemption, as well as MTM benefit (expense) benefit and related tax impacts. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the Company’s underlying financial performance per share by presenting the Company’s diluted earnings per share results before the non-operational impact of the IT services divestiture and pension and OPB actuarial gains and losses. MTM-adjusted diluted EPS is reconciled below.

Operating Return on Net Assets (Operating RONA): Calculated as Adjusted Net Operating Profit After-Tax (adjusted NOPAT), as defined below, divided by the two-year average of net operating assets. Net operating assets are defined as net total current assets, excluding cash and cash equivalents, less total current liabilities, excluding short-term
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENTI A-2

APPENDIX A - USE OF NON-GAAP FINANCIAL MEASURES

Reconciliation of Non-GAAP Financial Measures
  Total Year
($M, except per share amount) 201820172016
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

A-3INOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

APPENDIX A - USE OF NON-GAAP FINANCIAL MEASURES

  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.


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AProposals - The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
1. Election of Directors:2022 Proxy Statement103
Appendix A – Use of Non-GAAP Financial Measures
debt, plus net PP&E, adjusted for balance sheet items approved by the Compensation Committee. Approved balance sheet adjustments are comprised of adjustments to working capital and net PP&E associated with the IT services business in 2020 and 2021 and retroactively applies a change in tax revenue recognition on certain long-term contracts made during 2021.
Adjusted Net Operating Profit After-Tax: Calculated as the after-tax sum of segment operating income, as defined above, adjusted to exclude intercompany eliminations and Orbital ATK intangible asset amortization and PP&E step-up depreciation, and adjusted for divestiture-related activity, as approved by the Compensation Committee. Intercompany eliminations are excluded to objectively evaluate the operational performance of the business segments. In the context of Adjusted Net Operating Profit After-Tax, divestiture-related activity is comprised of 11 months of plan-based differential segment margin dollars.
104Northrop Grumman
Appendix A – Use of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
 Total Year
($M)202120202019
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 taxes785 — — 
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 adjustments878 75 57 
Adjusted cumulative free cash flow$11,083 
 For Against AbstainTotal Year
($M)2021
Adjusted cash flow metrics For Against Abstain
Net cash provided by operating activities$3,567
Capital expenditures(1,415)
Proceeds from sale of equipment to a customer84 
IT services divestiture transaction costs39 
IT services divestiture federal and state taxes785 
After-tax discretionary pension contributions— 
Transaction-adjusted free cash flow$3,060
Capital expenditures For Against Abstain1,415 
01 - Wesley G. BushAdjusted Cash Provided by Operating Activities
□____□____□
$		06 - William H. Hernandez4,475
□____□____□
10 - Thomas M. Schoewe
□____□____□
02 - Marianne C. Brown
□____□____□
07 - Madeleine A. Kleiner
□____□____□
11 - James S. Turley
□____□____□
03 - Donald E. FelsingerEarnings before income taxes
□____□____□
08 - Karl J. Krapek8,938
□____□____□
12 - Kathy J. Warden
□____□____□
04 - Ann M. FudgeMTM (benefit) expense
□____□____□
09 - Gary Roughead(2,355)
□____□____□
13 - Mark A. Welsh III
□____□____□
05 - Bruce S. Gordon
□MTM-related deferred state tax expense____□____□(1)
 124 
Gain on sale of business 
(1,980)For Against Abstain
2. Proposal to approve, on an advisory basis, the compensation of the Company's Named Executive Officers.
□____□____□
For Against Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the Company's Independent Auditor for fiscal year ending December 31, 2019.
□____□____□
The BoardState tax impact from sale of Directors recommends a vote businessAGAINST Proposals 4 and 5.(3)
For Against Abstain160 
4. Shareholder proposal to provide for a report on management systemsTransaction costs32 
Make-whole premium54 
Net interest expense/(income)554 
Depreciation and processes for implementing the Company's human rights policy.amortization 
□____□____□
963 
Adjusted Earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)$6,490
Adjusted Cash Flow from Operations Conversion 69.0 %
Pension-adjusted metrics For Against Abstain
5. Shareholder proposal to provide for an independent chair.Operating income$5,651
Net FAS/CAS operating adjustment (130)
Orbital ATK intangible asset amortization and PP&E step-up depreciation239 
Gain on sale of business(1,980)
□State tax impact from sale of business____□____□(3)
160 
Transaction costs32 
MTM-related deferred state tax expense124 
Pension-adjusted operating income$4,096
Pension-adjusted OM Rate11.5 %
2022 Proxy Statement105
Appendix A – Use of Non-GAAP Financial Measures
B
Authorized Signatures - This section must be completed for your vote
Total Year
($M)20212020
Organic Sales
Sales$35,667 $36,799 
IT services sales(162)(2,329)
Organic Sales$35,505 $34,470 
 Total Year
($M)202120202019
Segment operating income
Sales35,667 36,799  33,841 
Operating income$5,651 $4,065 $3,969 
Operating margin rate15.8 %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 $3,978 
Segment operating margin rate11.8 %11.4 %11.8 %
Total Year
($M, except per share amounts)202120202019
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 costs32 — — 
Make-whole premium54 — — 
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 share0.77 (0.32) (0.48)
Federal tax expense (benefit) of items above per share2.92 (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 share0.99 — — 
Transaction costs per share0.20 — — 
Make-whole premium per share0.34 — — 
Federal tax benefit of items above per share3.82 — — 
Transaction-adjustment, net of tax per share(6.96)— — 
Transaction-adjusted EPS$25.63 $23.65 $21.21 
106Northrop Grumman
Appendix A – Use of Non-GAAP Financial Measures
 Total Year
($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 adjustment336
After-tax net pension adjustment(1,263)
Orbital ATK intangible asset amortization and PP&E step-up depreciation239
Tax effect of items above(50)
After-tax adjustment189
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 Eliminations272 
Orbital ATK intangible asset amortization and PP&E step-up depreciation239 
Divestiture-related activity243 
Tax effect of items above(1,044)
Adjusted Net Operating Profit After-Tax (NOPAT)$3,927 
December 31
($M)20212020
Net Current Assets
Total Current Assets$12,426 15,344 
Less: Cash(3,530)(4,907)
Adjusted Total Current Assets8,896 10,437 
Total Current Liabilities9,530 9,580 
Less: Current Maturity of LTD(6)(742)
Adjusted Total Current Liabilities9,524 8,838 
Adjusted Net Assets(628)1,599 
Plus: PPE, net7,894 7,071 
Net Operating Assets7,266 8,670 
Approved balance sheet adjustments180 (1,352)
Adjusted Net Operating Assets7,446 7,318 
Average Adjusted Net Operating Assets7,382 
Operating RONA %53.2 %
(1)MTM expense is expected to be counted. Please datedeductible on our future state tax returns. The deferred state tax benefit was calculated using the Company’s blended state tax rate of 5.25% in 2021 and sign below.2020 and 4.50% in 2019 and included in Unallocated corporate (income) expense within operating income.
Please sign exactly(2)The federal tax impact in each period was calculated by subtracting the deferred state tax impact from MTM benefit (expense) and applying the 21 percent federal statutory rate.
(3)The state tax impact includes $62 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
(4)The federal tax impact was calculated by applying the 21 percent federal statutory rate to the adjustment items and also includes $250 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
(5)Operating RONA % is calculated as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.Adjusted NOPAT divided by the two-year average of Adjusted Net Operating Assets.
2022 Proxy Statement107

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Date (mm/dd/yyyy) - Please print date below.Signature 1 - Please keep signature within the box.Signature 2 - Please keep signature within the box.







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ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 2019, 8:00 A.M.
Northrop Grumman Corporation Headquarters
2980 Fairview Park Drive, Falls Church, Virginia 22042

This Proxy/Voting Instruction Card is Solicited on Behalf of The Board of Directors for the 2019 Annual Meeting of Shareholders
The undersigned hereby constitutes and appoints Sheila C. Cheston and Jennifer C. McGarey, and each of them, attorneys and proxies with full power of substitution, to represent the undersigned and to vote all shares of Common Stock, $1.00 par value, of Northrop Grumman Corporation (the “Company”), that the undersigned would be entitled to vote if personally present at the 2019 Annual Meeting of Shareholders of the Company to be held on Wednesday, May 15, 2019, at 8:00 a.m. (Eastern Daylight Time) at the Northrop Grumman Corporation Headquarters, 2980 Fairview Park Drive, Falls Church, Virginia 22042, and at any and all adjournments or postponements thereof (the “Meeting”), as herein specified and in such proxyholder’s discretion upon any other matter that may properly come before the Meeting including without limitation to vote on the election of such substitute nominees as such proxies may select in the event nominee(s) named on their card become(s) unable to serve as director. By granting this proxy, the undersigned hereby revokes any proxy previously granted by the undersigned.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED UNDER PROPOSAL 1, “FOR” PROPOSALS 2 AND 3 AND “AGAINST” PROPOSALS 4 AND 5.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
If shares are held on your behalf under any of the Company Savings Plans, the proxy serves to provide confidential instructions to the plan Trustee or Voting Manager who then votes the shares. Instructions must be received by 11:59 p.m. Eastern Time on May 12, 2019 to be included in the tabulation to the plan Trustee or Voting Manager. For shares represented by proxies not received by this date, the applicable plan Trustee or Voting Manager will treat the received proxies as instructions to vote the respective plan shares in the same proportion as shares held under the plan for which voting instructions have been received, unless contrary to the Employment Retirement Income Security Act.
(Continued and to be signed on the other side)
CNon-Voting Items
Change of Address - Please print new address below.

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AProposals - The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
1. Election of Directors:
For Against AbstainFor Against AbstainFor Against Abstain
01 - Wesley G. Bush
□____□____□Dear [Shareholder],
Northrop Grumman Corporation's 2022 Annual Meeting of Shareholders will be held on May 18, 2022 at 8:00 a.m., Eastern Time. You can now access the meeting materials and vote your shares online.
06 - William H. Hernandez
□____□____□
10 - Thomas M. Schoewe
□____□____□
02 - Marianne C. Brown
□____□____□
07 - Madeleine A. Kleiner
□____□____□
11 - James S. Turley
□____□____□
03 - Donald E. Felsinger
□____□____□
08 - Karl J. Krapek
□____□____□
12 - Kathy J. Warden
□____□____□
04 - Ann M. Fudge
□____□____□
09 - Gary Roughead
□____□____□
13 - Mark A. Welsh III
□____□____□
05 - Bruce S. Gordon
□____□____□
For Against Abstain
2. Proposal to approve, on an advisory basis, the compensation of the Company's Named Executive Officers.
□____□____□
For Against Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the Company's Independent Auditor for fiscal year ending December 31, 2019.
□____□____□
The Board of Directors recommends a vote AGAINST Proposals 4 and 5.
For Against Abstain
4. Shareholder proposal to provide for a report on management systems and processes for implementing the Company's human rights policy.
□____□____□
For Against Abstain
5. Shareholder proposal to provide for an independent chair.
□____□____□
BAuthorized Signatures - This section must be completed for your vote to be counted. Please date and sign below.
Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) - Please print date below.
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Signature 1 - Please keep signature within the box.
Review meeting materials and proposals
Signature 2 - Please keep signature within the box.







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ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 2019, 8:00 A.M.
Northrop Grumman Corporation Headquarters
2980 Fairview Park Drive, Falls Church, Virginia 22042

This Proxy/Voting Instruction Card is Solicited on Behalf of The Board of Directors for the 2019 Annual Meeting of Shareholders
The undersigned hereby constitutes and appoints Sheila C. Cheston and Jennifer C. McGarey, and each of them, attorneys and proxies with full power of substitution, to represent the undersigned and to vote all shares of Common Stock, $1.00 par value, of Northrop Grumman Corporation (the “Company”), that the undersigned would be entitled to vote if personally present at the 2019 Annual Meeting of Shareholders of the Company to be held on Wednesday, May 15, 2019, at 8:00 a.m. (Eastern Daylight Time) at the Northrop Grumman Corporation Headquarters, 2980 Fairview Park Drive, Falls Church, Virginia 22042, and at any and all adjournments or postponements thereof (the “Meeting”), as herein specified and in such proxyholder’s discretion upon any other matter that may properly come before the Meeting including without limitation to vote on the election of such substitute nominees as such proxies may select in the event nominee(s) named on their card become(s) unable to serve as director. By granting this proxy, the undersigned hereby revokes any proxy previously granted by the undersigned.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED UNDER PROPOSAL 1, “FOR” PROPOSALS 2 AND 3 AND “AGAINST” PROPOSALS 4 AND 5.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
If shares are held on your behalf under any of the Company Savings Plans, the proxy serves to provide confidential instructions to the plan Trustee or Voting Manager who then votes the shares. Instructions must be received by 11:59 p.m. Eastern Time on May 12, 2019 to be included in the tabulation to the plan Trustee or Voting Manager. For shares represented by proxies not received by this date, the applicable plan Trustee or Voting Manager will treat the received proxies as instructions to vote the respective plan shares in the same proportion as shares held under the plan for which voting instructions have been received, unless contrary to the Employment Retirement Income Security Act.
(Continued and to be signed on the other side)

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Important Notice Regarding the Availability of Proxy Materials for the
Northrop Grumman Corporation Meeting of Shareholders to be Held on May 15, 2019
Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual shareholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement and annual report to shareholders are available at:
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Northrop Grumman Corporation’s Annual Meeting of Shareholders will be held on May 15, 2019 at Northrop Grumman Corporation Headquarters, 2980 Fairview Park Drive, Falls Church, Virginia 22042, at 8:00 a.m. Eastern Daylight Time.

Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations.

The Board of Directors recommends that you vote FOR proposals 1-3.

1.Election of the following 13 nominees as Directors:
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Cast your vote
Wesley G. Bush, Marianne C. Brown, Donald E. Felsinger, Ann M. Fudge, Bruce S. Gordon, William H. Hernandez,
Madeleine A. Kleiner, Karl J. Krapek, Gary Roughead, Thomas M. Schoewe, James S. Turley, Kathy J. Warden and Mark A. Welsh III.

2.Proposal to approve,
Votes submitted online must be received by 1:00 a.m., Eastern Time, on an advisory basis, the compensationMay 18, 2022.
If shares are held on your behalf under any of the Company’s Named Executive Officers.Company Savings Plans, voting instructions must be received by 11:59 p.m., Eastern Time, on May 15, 2022.
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE.
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Control # 

3.Proposal to ratify the appointment of Deloitte & Touche LLP as the Company’s Independent Auditor for fiscal year ending December 31, 2019.

The Board of Directors recommends that you vote AGAINST proposals 4 and 5.

4.Shareholder proposal
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response.
5.Shareholder proposal to provide for an independent chair.


PLEASE NOTE - YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or by telephone or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you.



Directions to the 2019 annual meeting are available in the proxy statement,image_01a.jpg
which can be viewed at www.envisionreports.com/NOC.


April 1, 2022
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March 29, 2019
CA 19 - 09

Important Information Regarding Your
Northrop Grumman Shares -— Your Vote Is Important

To Northrop Grumman Employees:

Northrop Grumman filed its proxy statement today for the 20192022 Annual Meeting of Shareholders. The 2019meeting will be held on May 18, 2022. The 2022 proxy statement and 20182021 annual report are now available online.

Many of you hold Northrop Grumman shares through one of the company’s savings plans. As shareholders, you have the right to vote on matters that impact the company. Your vote on these matters is important and Northrop Grumman encourages you are encouraged to vote your shares.

Northrop Grumman employees who hold Northrop Grummanthese shares as participants in the Northrop Grumman Savings Plan or the Northrop Grumman Financial Security and Savings Program willshould receive an email tonight from the company’s transfer agent, Computershare. This email which will be sent to theyour email address on record (either personal or company email), will and contain important instructions for viewing the proxy statement and annual report and for voting your shares.

This email is an important communication approved by Northrop Grumman. The subject line of the email will read, “Northrop Grumman Corporation Proxy Meeting MaterialsMaterials..” Note that the “EXT” warning tag, which appears in the subject line of emails originating outside of Northrop Grumman, will be removed for this message coming directly from Computershare. If you do not receive this email, or if you have any questions, please contact Computershare at 877-498-8861 or the company’s shareholder services at 703-280-4702.877-498-8861.

Northrop Grumman values your input as shareholders. Please ensure that your shares are represented at the 20192022 Annual Meeting.

Thank you for your attention to this matter.












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