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| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive |
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Soliciting Material under |
| ☒ | No fee required. | |||
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| ☐ | Fee paid previously with preliminary materials. | |||
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HUNTINGTON INGALLS INDUSTRIES NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
Letter to Our Stockholders
Dear Fellow Stockholders:
On behalf of the Board of Directors and management team of Huntington Ingalls Industries, |
I would like to invite you to attend the 2023 Annual Meeting
|
Letter to Our Stockholders
March 18, 2021
Dear Fellow Stockholders:
On behalf of the Board of Directors and management team of Huntington Ingalls Industries, I would like to invite you to attend the 2021 Annual Meeting of Stockholders. Due to the ongoing public health impact of COVID-19 and to support the health and well-being of our stockholders and employees and their families, our annual meeting will be held virtually on Thursday, April 29, 2021, at 11:00 a.m. Eastern Daylight Time, via live webcast. You will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting.
The accompanying Notice of 2021The accompanying Notice of 2023 Annual Meeting and Proxy Statement describe the matters on which you, as a stockholder, may vote at the annual meeting, and include details of the business to be conducted at the meeting.
As a way to conserve natural resources and reduce annual meeting costs, we are electronically distributing proxy materials as permitted under rules of the Securities and Exchange Commission. Many of you will receive a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy materials via the Internet. You can also request mailed paper copies if preferred.you prefer. You can expedite delivery and reduce our mailing expenses by confirming in advance your preference for electronic delivery of future proxy materials. For more information on how to take advantage of this cost-saving service, please see page 14 of the proxy statement.
If you plan to attend the annual meeting virtually via live webcast, you must register by followingfollow the instructions contained in the Notice and on page pages 11 (for record stockholders), 12 (for beneficial stockholders) and 101 of the proxy statement.
Your vote is very important. Whether or not you plan to attend the annual meeting, I encourage you to vote your shares in advance. Stockholders can submit their votes over the Internet at the web address included in the Notice of Internet Availability of Proxy Materials. If you received a proxy card, you can submit your votes over the Internet at the web address included in the proxy card, by telephone through the number included in the proxy card, or by signing and dating your proxy card and mailing it in the prepaid and addressed envelope.
Thank you for your interest in and support of Huntington Ingalls Industries. I look forward to seeing you at the annual meeting.HII.
Sincerely,
Admiral Kirkland H. Donald
U.S. Navy (Ret.)
Chairman of the Board |
Notice of 20212023 Annual Meeting of Stockholders
Huntington Ingalls Industries, Inc.
4101 Washington Avenue
Newport News, Virginia 23607
| DATE AND TIME |
| |||
| PLACE | Virtually at
There is no physical location for the annual meeting. | |||
| ITEMS OF BUSINESS | •Elect 11 directors | |||
•Approve the company’s executive compensation on an advisory basis | ||||
•Ratify the appointment of Deloitte & Touche LLP as our independent auditors for | ||||
• Consider a stockholder proposal requesting that HII disclose on its website an | ||||
•Transact any other business that properly comes before the annual meeting | ||||
| RECORD DATE
| Stockholders of record at the close of business on March | |||
| PROXY VOTING | It is important you vote your shares so they are counted at the annual meeting. You can vote your shares over the Internet at the web address included in the Notice of Internet Availability of Proxy Materials and included in the proxy card (if you received a proxy card), by telephone through the number included in the proxy card (if you received a proxy card), or by signing and dating your proxy card (if you received a proxy card) and mailing it in the prepaid and addressed envelope. | |||
Charles R. Monroe, Jr.
Corporate Vice President,
Associate General Counsel and Secretary
March 18, 202120, 2023
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 29, 2021May 2, 2023: The Notice of 20212023 Annual Meeting and Proxy Statement, and 2020the 2022 Annual Report and the form of proxy card are available as of today’s date, March 18, 2021,20, 2023, atwww.envisionreports.com/HII.
Virtual Meeting Format: Due to COVID-19-related public health restrictions and for the safety and well-being of our stockholders, the 2021Format: The 2023 annual meeting will be conducted virtually.virtually by live webcast. You will be able to attend the annual meeting, as well as vote and submit questions during the meeting, by visiting www.meetingcenter.io/247295942 https://meetnow.global/MKKD465 and entering your control number and the password for the meeting, HII2021.number. Please refer to the additional logistical details inbeginning on page 101 of the accompanying proxy statement for additional information on how to participate in the annual meeting.
Participation in the meeting is limited due to the capacity of the host platform, and access to the meeting will be accepted on a first come, first served basis. Electronic entry to the meeting will begin at 10:45 a.m., Eastern Daylight Time, and theThe meeting will begin promptly at 11:00 a.m., Eastern Daylight Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.meetingcenter.io/247295942.
A list of registered stockholders will be available to record stockholders during the annual meeting at the same website.1-888-724-2416.
| Huntington Ingalls Industries, Inc. | 2023 Notice and Proxy Statement | |
Proxy Statement—Table of Contents
i
20212023 Proxy Statement Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all the information you should consider, and you should read the entire proxy statement carefully before voting.
Annual Meeting Information
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Date and Time: |
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Place: |
Virtually at | |
Record Date: |
March | |
Voting: |
Holders of our common stock are entitled to one vote per share | |
Admission: |
To attend the meeting, you will need to follow the instructions included on | |
Items to be Voted at the Annual Meeting
|
Board Vote Recommendation | Page Reference (for more information) | |||||
| 1. | Elect 11 directors | FOR | 94 | |||
| 2. | Approve the company’s executive compensation on an advisory basis | FOR | 95 | |||
| 3. | Ratify the appointment of our independent auditors | FOR | 96 | |||
| 4. | Consider a stockholder proposal requesting that HII disclose on its website an annual report of HII’s direct and indirect lobbying activities and expenditures, if properly presented at the annual meeting | AGAINST | 97 | |||
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2021 Notice and Proxy Statement 1
20212023 Proxy Statement Summary
Huntington Ingalls Industries, Inc. (“HII”, the “company”, “we”, “us” or “our”) is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. For more than a century, our Ingalls Shipbuilding segment in Mississippi and Newport News Shipbuilding segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making us America’s largest shipbuilder. Our Mission Technologies segment delivers high-value engineering and technology solutions to enable multi-domain distributed operations in the government and commercial markets. Our mission is to deliver the world’s most powerful ships and all domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world.
In 2022, HII delivered stable execution in a challenging operating environment. We delivered or re-delivered four critical assets to the U.S. Navy, including the amphibious transport dock Fort Lauderdale (LPD 28), the delivery of guided-missile destroyer Lenah Sutcliffe Higbee (DDG 123), the delivery of Virginia-class submarine Montana (SSN 794) and the re-delivery of Los Angeles-class submarine USS Helena (SSN 725) after its completion of maintenance and modernization. While we executed on current program milestones, we also were awarded contracts for new work totaling $9.3 billion in 2022, resulting in backlog of $47.1 billion at year-end, representing years of future work. At Mission Technologies, the integration of Alion Science and Technology (“Alion”), acquired in 2021, is substantially complete, and the segment achieved significant programmatic wins that would not have been possible without the capabilities added from Alion. HII made meaningful progress in 2022 while aggressively managing through labor market shortages, accelerating inflation and continuing supply chain pressures.
Corporate Governance Highlights |
Huntington Ingalls Industries, Inc. (“HII” the “company,” “we,” “us” or “our”) is committed to corporate governance best practices, which we believe promote the long-term interests of stockholders, strengthen accountability of the Board of Directors (the “Board”) and management and build public trust in the company. Highlights of our corporate governance practices include:
| Board
Structure and Governance | • | Diverse independent Board with mix of tenures | ||
| • | All standing Board committees comprised of independent directors | |||
| • | Regular executive sessions of independent directors, without management present, at Board and committee meetings | |||
| • | Independent non-executive Chairman of the Board | |||
| • | Robust annual Board and committee self-evaluation process | |||
| • | Director term limits | |||
| • | Mandatory director retirement age | |||
| • | Limits on outside public company board service by directors to prevent overboarding | |||
| • | Active stockholder outreach and engagement | |||
Stockholder Rights | • | Annual election of all directors | ||
| • | ||||
| • | Ability of eligible stockholders to include their own director nominees in our proxy materials (proxy access) | |||
| • | Ability of stockholders to call a special meeting of stockholders | |||
| • | No supermajority voting requirements | |||
| • | Annual advisory vote on named executive officer compensation | |||
| • | No stockholder rights plan (poison pill) | |||
| Stock
Ownership | • | Robust stock ownership guidelines and holding requirements for non-employee directors and executive officers | ||
| • | Clawback policy for all performance-based compensation | |||
| • | Prohibition on directors, |
Stockholder Engagement |
We believe stockholder outreach and engagement is an essential element of stronga corporate governance.governance best practice. Accordingly, we actively engage with our investors so management and the Board can better understandreceive stockholder perspectives on matters that are important to themstockholders and assess emerging issues
| 2 | Huntington Ingalls Industries, Inc. |
2023 Proxy Statement Summary
that may shape our governance practices and enhance our corporate disclosures. We strive for a collaborative approach to stockholder engagement and value the variety of stockholder perspectives we receive. Management and, in some cases, members of the Board actively engage with our investors through telephonic meetings, in-person meetings and email to understand theirinvestor perspectives on our company, including our strategy, performance, corporate governance practices and executive compensation. During 2020,2022 and early 2023, management contacted the corporate governance teams of our largest stockholders, collectively representing approximately 49%50% of our outstanding shares, and met with those stockholders that accepted our meeting invitations. We are committed to understanding the perspectives of our stockholders and responding as appropriate.
2 Huntington Ingalls Industries, Inc.
2021 Proxy Statement Summary
The following sections of this proxy statement summary describe the matters on which our stockholders will vote at the 20212023 annual meeting of stockholders.
ELECT 11 DIRECTOR NOMINEES |
Director Nominees
The Board is asking you to elect, for one-year terms ending in 2022,2024, the 11 nominees for director named below, each of whom is currently serving as a member of the Board. Detailed information about this proposal can be found beginning on page 94.
The following table provides summary information about the nominees for director, including their names, ages and occupations, whether they are independent directors under the regulations of the Securities and Exchange Commission, the corporate governance listing standards of the New York Stock Exchange (“NYSE”), and the Board committees on which they currently serve. The directorsEach director will be elected by a plurality vote, but any director who receives a greaterif the number of votes “withheld” from his or her election than votes “for”shares voted in favor of such election must tender todirector exceeds the number of shares voted against such director.
Stephen R. Wilson, a current member of the Board his or her offerand Chairman of resignation.the Audit Committee, will retire from the Board effective at the time of the 2023 annual meeting.
| Board Committees |
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Name | Age | Director Since | Principal Occupation | Independent Director | A | C | CS | F | GP | Age | Director Since | Principal Occupation | Independent Director | A | C | CS | F | GP | ||||||||||||||||||
Philip M. Bilden | 56 | 2017 | Retired Senior Advisor and Co-Founding Member of HarbourVest Partners, LLC | ü | ü | CH | ü | |||||||||||||||||||||||||||||
Augustus L. Collins | 65 | 2016 | Chief Executive Officer of MINACT, Inc. | ü | ü | ü | ||||||||||||||||||||||||||||||
Augustus L. Collins | 63 | 2016 | Chief Executive Officer of MINACT Incorporated | ü | ü | ü | ||||||||||||||||||||||||||||||
Leo P. Denault | 63 | 2022 | Retired Chairman and Chief Executive Officer of Entergy Corporation | ü | ü | ü | ||||||||||||||||||||||||||||||
Kirkland H. Donald | 67 | 2017 | Chairman of the Board | ü | ü | ü | 69 | 2017 | Chairman of the Board | ü |
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| ü | ü |
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Victoria D. Harker | 56 | 2012 | Executive Officer and Chief Financial Officer of Tegna, Inc. | ü | CH | ü | 58 | 2012 | Executive Vice President and Chief Financial Officer of Tegna, Inc. | ü | CH | ü | ||||||||||||||||||||||||
Frank R. Jimenez | 58 | 2022 | General Counsel and Corporate Secretary, GE HealthCare | ü | ü | ü | ||||||||||||||||||||||||||||||
Christopher D. Kastner | 59 | 2022 | President and Chief Executive Officer of Huntington Ingalls Industries, Inc. | |||||||||||||||||||||||||||||||||
Anastasia D. Kelly | 71 | 2011 | Executive Director of Client Relations and US Managing Partner Emeritus of DLA Piper | ü | ü | ü | 73 | 2011 | Senior Advisor to the Chair and Executive Director of Client Relations of DLA Piper | ü | ü | ü | ||||||||||||||||||||||||
Tracy B. McKibben | 51 | 2018 | Founder and Chief Executive Officer of MAC Energy Advisors LLC | ü | ü | ü | 53 | 2018 | Founder and Chief Executive Officer of MAC Energy Advisors LLC | ü | ü | ü | ||||||||||||||||||||||||
Stephanie L. O’Sullivan | 61 | 2021 | Independent Business Consultant | ü | ü | ü | 63 | 2021 | Independent Business Consultant | ü |
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| CH | ü |
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C. Michael Petters | 61 | 2011 | President and Chief Executive Officer of Huntington Ingalls Industries, Inc. | |||||||||||||||||||||||||||||||||
Thomas C. Schievelbein | 67 | 2011 | Retired Chairman and Chief Executive Officer of The Brink’s Company | ü | ü | CH | 69 | 2011 | Retired Chairman, President and Chief Executive Officer of The Brink’s Company | ü | ü | CH | ||||||||||||||||||||||||
John K. Welch | 71 | 2015 | Retired President and Chief Executive Officer of Centrus Energy Corp. | ü | ü | CH | 73 | 2015 | Retired President and Chief Executive Officer of Centrus Energy Corp. | ü | ü | CH | ||||||||||||||||||||||||
Stephen R. Wilson | 74 | 2015 | Independent Business Consultant and Retired Executive Vice President and Chief Financial Officer of RJR Nabisco, Inc. | ü | CH | ü | ||||||||||||||||||||||||||||||
CH = Chairperson
A = Audit Committee
C = Compensation Committee
CS = Cybersecurity Committee
F = Finance Committee
GP = Governance and Policy Committee
2021 Notice and Proxy Statement 3
| 2023 Notice and Proxy Statement | 3 |
20212023 Proxy Statement Summary
Board Composition
Our Board continues to reflect a diverse and highly engaged group of directors with a wide range of skills, experiences, attributes and perspectives, which continue to evolve. FiveFour of our 11 directorsdirector nominees have joined the Board in the last five years. The following charts and graphs highlight the current composition of our Board:
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4 Huntington Ingalls Industries, Inc.
20212023 Proxy Statement Summary
Director Experience and Skills
2021 Notice and Proxy Statement 5
2021 Proxy Statement Summary
The Board,As part of the Board’s continuous director succession process, implemented through the Governance and Policy Committee, manages Board succession on a continuous basis. The committee’s process includes evaluation of director attributes, including professionalthe committee regularly assesses the experience, skills, diversity, independence, tenurequalifications and age,attributes of Board members relative to the skills, experience and diversityappropriate mix of these qualities the Committeecommittee believes the Board needs to effectively oversee the company’sHII’s business and execution of its business strategy. While each Board member possesses a broad range of experience and skills, the Board believes each director has particular strategic strengths that he or she brings to the Board. The following table shows the experience, skills and knowledge constituting the strategic strengths of each of our 11 director nominees.
| Experience and Skills | Collins | Denault | Donald | Harker | Jimenez | Kastner | Kelly | McKibben | O’Sullivan | Schievelbein | Welch | |||||||||||||
| Chief Executive Leadership and Strategy Experience as Chief Executive Officer of a public company or Chief Executive Officer of a private organization | · | · | · | · | · | · | · | · | |||||||||||||||
| Chief Financial Officer and Accounting Experience as Chief Financial Officer of public company or large private organization or private equity executive leadership experience | · | · | · | · | · | ||||||||||||||||||
| Investment Strategy, Corporate Development and M&A Experience in executive leadership of private equity, other strategic investment firm or investment bank; experience in corporate development function; or oversight leadership experience in corporate development and transactional M&A | · | · | · | · | · | · | · | ||||||||||||||||
| Shipbuilding and Manufacturing Operations/Leadership Experience in executive leadership of shipyard operations or other manufacturing operations | · | · | · | ||||||||||||||||||||
| Technical Services Executive Leadership Experience in executive leadership of technical services business organization or significant technical services leadership or customer experience | · | · | · | ||||||||||||||||||||
| Military and Government Relations Experience as Admiral or other significant Naval career experience; significant federal government experience and relationships (e.g., Pentagon, Congress, White House); or significant military leadership role or leadership role in military associations | · | · | · | · | · | · | · | · | |||||||||||||||
| Corporate Governance Current member of multiple public company boards; experience as public company board chair or public company committee chair; prior member of multiple public company boards; or corporate secretary experience | · | · | · | · | · | · | · | · | · | · | |||||||||||||
| Aerospace & Defense Industry Knowledge Significant direct Naval industry experience or significant direct general aerospace & defense experience | · | · | · | · | · | · | · | ||||||||||||||||
| Compliance, Legal and Regulatory Experience as General Counsel, Chief Legal Officer or Chief Compliance Officer of large business organization or other significant legal or regulatory experience | · | · | · | · | · | · | |||||||||||||||||
| Nuclear Experience in Navy nuclear executive leadership; executive leadership of Naval nuclear shipyard operations; or oversight of nuclear operations | · | · | · | · | · | ||||||||||||||||||
| Advanced Technology (Future Warfare) and Innovation Experience as Chief Technology Officer or equivalent of large aerospace & defense company; Chief Technology Officer or equivalent of other large organization; or engineering/technology/innovation functional lead | · | · | · | · | |||||||||||||||||||
| Cyber and IT Risk Management Experience as Chief Information Officer, Chief Information Security Officer or equivalent operational experience; management experience in cyber operations; or experience on a corporate cyber risk committee | · | · | · | · | |||||||||||||||||||
| Human Resources and Labor Relations Experience as Chief Human Resources Officer or equivalent of a large business organization or significant human resources or labor relations experience | · | · | |||||||||||||||||||||
| 2023 Notice and Proxy Statement | 5 |
2023 Proxy Statement Summary
APPROVE EXECUTIVE COMPENSATION ON AN ADVISORY BASIS |
The Board is asking you to approve, on an advisory basis, the compensation of our named executive officers for 2020.2022. Detailed information about this proposal can be found beginning on page 95.
Our stockholders have voted on our executive compensation, on an advisory basis, since 2012, and we have consistently received exceptionally strong stockholder support. The following table sets forth the voting results for our “say-on-pay” proposal for the last five years:
Annual Meeting | 2020 | 2019 | 2018 | 2017 | 2016 | 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Votes Cast “FOR” Say-On-Pay Proposal |
| 98 | % |
| 98 | % |
| 99 | % |
| 98 | % |
| 99 | % | |||||||||||||||||||||||||
Votes Cast “FOR” Say-On-Pay Proposal* |
| 97 | % |
| 97 | % |
| 98 | % |
| 98 | % |
| 99 | % | |||||||||||||||||||||||||
* Excludes broker non-votes
Executive Compensation
We have designed our executive compensation program to attract, motivate and retain highly qualified executives, incentivize our executives to achieve business objectives, reward performance and align the interests of our executives with the interests of our stockholders and customers. The fundamental philosophy of our executive compensation program, set by the Compensation Committee of the Board, is pay-for-performance. We have included below our financial performance and stockholder returns in 2020.2022.
20202022 Financial Performance
In one of the mostManaging through a challenging business environments HII has ever had to navigate,operating environment in 2022, we continued to achieve significantachieved operating milestonessuccesses and delivered a solidconsistent financial performanceperformance. We have included in 2020. Thethe following table includes several of our 20202022 financial highlights:
($ in millions, except per share data) | |||||
Contract Awards |
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Revenues |
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Operating Income |
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Operating Margin |
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Segment Operating Income* |
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Segment Operating Margin* |
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Net Earnings |
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Diluted Earnings Per Share |
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Net Cash |
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Free Cash Flow* |
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Our full year revenues of $10.7 billion in 2022 increased 12.1% over 2021. Operating income was $565 million, 10.1% higher than 2021, and segment operating income* was $712 million, 4.2% higher than 2021. Diluted earnings per share of $14.44 increased 7.0% over 2021, and free cash flow* was 10.0% higher than 2021.
| * | Non-GAAP financial measures. See Annex A for definitions of these non-GAAP financial measures and reconciliations to comparable GAAP financial measures. |
Our full year revenues of $9.4 billion in 2020 increased 5.2% over 2019. Operating income was $799 million and operating margin was 8.5%, compared to $736 million and 8.3%, respectively, in 2019. New contract awards in 2020 totaled $8.8 billion, resulting in a backlog of $46.0 billion at the end of the year.
6 Huntington Ingalls Industries, Inc.
| 6 | Huntington Ingalls Industries, Inc. |
20212023 Proxy Statement Summary
20202022 Stockholder Returns
HII’s total stockholder return in 20202022 was a 34% loss.26.3%. We increased dividends approximately 17%4%, from $3.61$4.60 per share in 20192021 to $4.23$4.78 per share in 2020,2022, and repurchased 390,904 million244,561 shares during 2020,2022, returning $256$244 million to our stockholders in 2020.2022.
The following graph and chart show total stockholder return for HII in 20202022 compared to benchmark total stockholder returns and total cash returned to stockholders in 2020,2022, respectively.
1-YEAR TOTAL STOCKHOLDER RETURN | RETURNED STOCKHOLDERS IN | |
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Elements of Our Executive Compensation Program
Our compensation program for each of the individuals who served as our Chief Executive Officer, our Chief Financial Officer during 2020 and our three other most highly compensated executive officers in 20202022 (collectively, our “NEOs”) consisted primarily of the following direct compensation elements in 2020:elements:
Base salary, to provide a minimum fixed level of compensation.
| • | Base salary, to provide a minimum fixed level of compensation. |
Annual incentive awards, generally paid in cash, under our Annual Incentive Plan (“AIP”), to motivate our executives to achieve pre-determined annual financial and operational targets that are aligned with our strategic goals.
| • | Annual incentive awards, generally paid in cash, under our Annual Incentive Plan (“AIP”), to motivate our executives to achieve pre-determined annual financial and operational targets that are aligned with our strategic goals. |
Long-term equity-based incentive awards, paid under our Long-Term Incentive Plan (“LTIP”), to promote achievement of pre-determined three-year performance goals aligned with long-term stockholder interests.
| • | Long-term equity-based incentive awards, paid under our Long-Term Incentive Plan (“LTIP”), to promote achievement of pre-determined three-year performance goals aligned with long-term stockholder interests. |
Our executive compensation program is rounded out with certain perquisites and other executive benefits.
A significant portion of the potential compensation of our executives is at risk, and that risk increases with corresponding increases in an executive’s level of responsibility. We have designed our compensation program to balance performance-based compensation over the short- and long-term to incentivize decisions and actions that promote stockholder value and focus our executives on performance that benefits our stockholders and customers, while discouraging inappropriate risk-taking behaviors.
2021 Notice and Proxy Statement 7
| 2023 Notice and Proxy Statement | 7 |
20212023 Proxy Statement Summary
20202022 Total Direct Compensation Mix
The pay-for-performance philosophy of our executive compensation program is demonstrated by the compensation mix of our NEOs. Of the three primary elements of total direct compensation, our executive compensation is heavily weighted toward the variable, performance-based elements and toward the long-term and equity-based elements, as reflected in the following charts, which set forth the percentage of total compensation corresponding to each compensation element received by our CEO and by our other NEOs collectively in 2020.2022.
CEO Compensation Mix1
| Other NEOs Compensation Mix2
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Compensation Best Practices
We believe our compensation practices are aligned with and reinforce our pay-for-performance philosophy and our related executive compensation principles.
What We Do the Following
| ✓ | Consideration of annual stockholder “say-on-pay” advisory vote on executive compensation. |
| ✓ | Pay for performance compensation program heavily weighted toward variable, performance-based elements and toward long-term and equity-based elements. |
| ✓ | Annual assessment of potential risk posed by our compensation programs. |
| ✓ | Executive compensation “clawback” policy. |
| ✓ | Targeted external compensation benchmarking. |
| ✓ | Independent compensation consultant engaged by Compensation Committee. |
| ✓ | Executive stock ownership guidelines based upon multiple of executive’s base salary. |
| ✓ | Executive stock holding requirements, which require executives to hold one-half of their equity awards for three additional years after they vest. |
What We Don’t Do the Following
| ✗ | No employment agreements for executives. |
| ✗ | No change-in-control agreements for executives or related executive tax gross-up benefits. |
| ✗ | Prohibitions against speculative transactions in our securities, pledging our securities as collateral and hedging transactions involving our securities. |
| ✗ | No dividends or dividend equivalents paid on restricted performance stock rights during performance period. |
8 Huntington Ingalls Industries, Inc.
| 8 | Huntington Ingalls Industries, Inc. |
20212023 Proxy Statement Summary
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
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The Board is asking you to ratify the selection of Deloitte & Touche LLP as our independent auditors for 2021. 2023. Detailed information about this proposal can be found beginning on page 96.
The following table contains summary information with respect to fees billed to us in 20202022 by Deloitte & Touche for professional services.
($ in thousands)
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Audit Fees |
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All Other Fees |
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Total |
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You are being asked to consider a proposal to amend our Restated Certificaterequesting that HII disclose on its website an annual report of Incorporation to eliminate remaining supermajority voting requirements.HII’s direct and indirect lobbying activities and expenditures. Detailed information about this proposal can be found beginning on page 97. The Board is recommending a vote foragainst this proposal.
| 2023 Notice and Proxy Statement | 9 |
2021 Notice and Proxy Statement 9
General Information About the Annual Meeting and Voting
The Board is providing you with these proxy materials in connection with its solicitation of proxies to be voted at our 2021 Annual Meeting2023 annual meeting of Stockholdersstockholders and at any postponement or adjournment of the annual meeting. In this proxy statement, Huntington Ingalls Industries, Inc. may also be referred to as “we,” “our,” “us,” “HII” or “the company.”
You will be able to attend the annual meeting, as well as vote and submit questions during the meeting, by following the instructions set forth under the headings “Record Date and Voting,” beginning on page [14],pages 11 and 12, and “Attending the Annual Meeting,” beginning on page [90],101, of this proxy statement.
ParticipationThe virtual annual meeting is supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Please note that Internet Explorer is not a supported browser. Participants should ensure that they have a strong internet connection wherever they intend to participate in the meeting is limited due to the capacity of the host platform, and access to the meeting will be accepted on a first come, first served basis. Electronic entry to the meeting will begin at 10:45 a.m., Eastern Daylight Time, and themeeting. The meeting will begin promptly at 11:00 a.m., Eastern Daylight Time. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.meetingcenter.io/247295942.1-888-724-2416 or International 1-781-575-2748.
ITEMS OF BUSINESS TO BE CONSIDERED AT THE ANNUAL MEETING
The Board is asking you to vote on the following items at the annual meeting:
elect 11 directors;
| • | elect 11 directors; |
approve the company’s executive compensation on an advisory basis;
| • | approve the company’s executive compensation on an advisory basis; |
ratify the appointment of our independent auditors; and
| • | ratify the appointment of Deloitte & Touche LLP as our independent auditors; and |
| • | consider a stockholder proposal requesting that HII disclose on its website an annual report of HII’s direct and indirect lobbying activities and expenditures, if properly presented at the annual meeting. |
approve an amendment to our Restated Certificate of Incorporation to eliminate remaining supermajority voting requirements.
The Board asks you to appoint Chad N. Boudreaux and Charles R. Monroe, Jr. as your proxy holders to vote your shares at the annual meeting. You make this appointment by submitting your proxy using one of the voting methods described below.
If appointed by you, the proxy holders will vote your shares as you direct on the matters described in this proxy statement. If you received a proxy card and you complete and return the proxy card but do not provide voting directions, they will vote your shares as recommended by the Board on all of the matters described in this proxy statement that are presented at the annual meeting.
The Board is not aware of any business that may properly be presented at the annual meeting other than those matters described in this proxy statement. If any other matters are properly presented at the annual meeting, your proxy gives discretionary authority to the proxy holders to vote the shares in their best judgment.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we are permitted to furnish our proxy materials to our stockholders over the Internet by delivering a Notice of Internet
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General Information About the Annual Meeting and Voting
Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials instructs you on how to access and review the proxy statement and 20202022 Annual Report over the Internet. The Notice of Internet Availability of Proxy Materials also instructs you on how you may submit your proxy over the
10 Huntington Ingalls Industries, Inc.
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Internet. We believe this This e-proxy process expedites receipt of proxy materials by stockholders, while also lowering our costs and reducing the environmental impact of our annual meeting. We have used this e-proxy process to furnish proxy materials over the Internet to certain of our stockholders over the Internet.who have so elected.
If you received a Notice of Internet Availability of Proxy Materials in the mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials provided in the Notice of Internet Availability of Proxy Materials.
Stockholders owning our common stock at the close of business on March 5, 2021,8, 2023, the record date, or their legal proxy holders, are entitled to vote at the annual meeting. The Board strongly encourages you to vote. Your vote is important. Voting early helps ensure we receive a quorum of shares necessary to hold the annual meeting. ManyWhen stockholders do not vote, meaning the stockholders who do vote influence the outcome of the matters on which they vote in greater proportion than their percentage ownership of HII shares.
We have two types of stockholders: stockholders of record and “street name” stockholders. Stockholders of record are stockholders who own their shares in their own names on the company’s books. Street name stockholders are stockholders who own their shares through a bank, broker or other holder of record.
Voting by Stockholders of Record. If you are a stockholder of record, you have four voting options. You may vote:
| • | over the Internet at www.envisionreports.com/HII, the web address included in the Notice of Internet Availability of Proxy Materials and in the proxy card (if you received a proxy card); |
by telephone through the number included in the proxy card (if you received a proxy card);
| • | by telephone through the number included in the proxy card (if you received a proxy card); |
by signing and dating your proxy card (if you received a proxy card) and mailing it in the prepaid and addressed envelope; or
| • | by signing and dating your proxy card (if you received a proxy card) and mailing it in the prepaid and addressed envelope; or |
by virtually attending the annual meeting and voting (there is no physical location for the annual meeting).
| • | by virtually attending the annual meeting and voting (there is no physical location for the annual meeting). |
If you have Internet access, we encourage you to vote over the Internet. It is convenient and it saves us significant postage and processing costs. In addition, when you vote by proxy over the Internet or by telephone prior to the meeting date, your proxy vote is recorded immediately, and there is noeliminating the risk that postal delays will cause your proxy vote to arrive late and therefore not be counted.
Internet and telephone voting facilities for stockholders of record are available 24 hours a day. The Internet and telephone voting procedures verify you are a stockholder of record by use of a control number and enable you to confirm your voting instructions have been properly recorded. If you vote by Internet or telephone, you do not need to return your proxy card (if you received a proxy card).
You will also be able to attend, participate and vote your shares electronically at the annual meeting online by visiting: www.meetingcenter.io/247295942. The password for the meeting is HII2021.https://meetnow.global/MKKD465. If you are a stockholder of record (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attendparticipate in the annual meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received.
Whether or not you plan to attend the virtual annual meeting, we urge you to have your proxy vote recorded in advance of the meeting. If you attend the annual meeting and vote at the annual meeting,
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2021 Notice and Proxy Statement 11
General Information About the Annual Meeting and Voting
any prior proxy votes you submitted, whether by Internet, telephone or mail, will be superseded by the vote you cast at the annual meeting. In any event, the method by which you vote your proxy will not limit your right to vote at the annual meeting if you decide to virtually attend.
Revoking Your Proxy for Stockholders of Record. If you are a stockholder of record and you vote by proxy using any method, you may revoke your proxy later and change your vote at any time before the polls close at the annual meeting. You may do this by:
sending a written statement to that effect to Huntington Ingalls Industries, Inc., Attn: Corporate Secretary, 4101 Washington Avenue, Newport News, Virginia 23607, provided we receive your written statement before the annual meeting date; or
voting again over the Internet or by telephone; or
signing and returning another proxy card with a later date, provided we receive the later proxy card before the annual meeting date; or
virtually attending the annual meeting and voting.
Only the most recent proxy vote will be counted, and all others will be discarded regardless of the method of voting.
Voting by Street Name Stockholders. If your shares are held in “street name” through a broker, bank or other nominee, please refer to the instructions they provide regarding how to vote your shares or to revoke your voting instructions. The availability of telephone and Internet voting depends upon the voting processes of the broker, bank or other nominee.
If you are a street name stockholder, you must register with Computershare no later than 5:00 p.m., Eastern Daylight Time, on April 26, 2021, to participate in the annual meeting. To do so you must submit proof of your proxy power (legal proxy) reflecting your HII share holdings, along with your name and email address, to Computershare. Requests for registration must be labeled as “Legal Proxy.” You will receive a confirmation of your registration by email after we receive your registration materials. Requests for registration should be directed to us as follows:
By email: Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
By mail:
Computershare
Huntington Ingalls Industries, Inc. Legal Proxy
P.O. Box 505008
Louisville, KY 40233-9814
Whether or not you plan to attend the virtual annual meeting, we urge you to have your proxy vote recorded in advance of the meeting. If you attend the annual meeting and vote at the annual meeting, any prior proxy votes you submitted, whether by Internet, telephone or mail, will be superseded by the vote you cast at the annual meeting. In any event, the method by which you vote your proxy will not limit your right to vote at the annual meeting if you decide to virtually attend.
Revoking Your Proxy for Stockholders of Record. If you are a stockholder of record and you vote by proxy using any method, you may revoke your proxy later and change your vote at any time before the polls close at the annual meeting. You may do this by:
| • | sending a written statement to that effect to Huntington Ingalls Industries, Inc., Attn: Corporate Secretary, 4101 Washington Avenue, Newport News, Virginia 23607, provided we receive your written statement before the annual meeting date; or |
| • | voting again over the Internet or by telephone; or |
| • | signing and returning another proxy card with a later date, provided we receive the later proxy card before the annual meeting date; or |
| • | virtually attending the annual meeting and voting. |
Only the most recent proxy vote will be counted, and all others will be discarded regardless of the method of voting.
Voting by Street Name Stockholders. If your shares are held in “street name” through a broker, bank or other nominee, please refer to the instructions they provide regarding how to vote your shares or to revoke your voting instructions. The availability of telephone and Internet voting depends upon the voting processes of the broker, bank or other nominee.
If you are a street name stockholder, you must register with Computershare no later than 5:00 p.m., Eastern Daylight Time, on April 27, 2023, to participate in the annual meeting. To do so you must submit proof of your proxy power (legal proxy) reflecting your HII share holdings, along with your name and email address, to Computershare. Requests for registration must be labeled as “Legal Proxy.” You will receive a confirmation of your registration by email after we receive your registration materials. Requests for registration should be directed to us as follows:
By email: Forward the email from your broker, or attach an image of your legal proxy, to
legalproxy@computershare.com
By mail:
Computershare
Huntington Ingalls Industries, Inc. Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Whether or not you plan to attend the virtual annual meeting, we urge you to have your proxy vote recorded in advance of the meeting. If you attend the annual meeting and vote at the annual meeting, any prior proxy votes you submitted, whether by Internet, telephone or mail, will be superseded by the vote you cast at the annual meeting. In any event, the method by which you vote your proxy will not limit your right to vote at the annual meeting if you decide to virtually attend.
Confidential Voting. We treat your vote as confidential to protect the privacy of our stockholder votes. Proxies and voting instructions provided to banks, brokers and other holders of record are kept confidential. Only the proxy solicitor, the proxy tabulator and the inspector of elections have access to the proxies and voting instructions.
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QUORUM, VOTE REQUIRED AND METHOD OF COUNTING
At the close of business on the record date, 39,925,745 shares of our common stock were outstanding and entitled to vote at the annual meeting. Each outstanding share is entitled to one vote.
A quorum must be present to transact business at the annual meeting. A quorum will be present if a majority of the outstanding shares entitled to vote as of the record date are present, in person or by proxy. If you indicate an abstention as your voting preference on all matters, your shares will be counted toward a quorum but will not be voted on any matter. If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record may vote your shares on the proposal to ratify the appointment of our independent auditors, which is known as a routine matter. Votes by a bank, broker or other holder of record on any routine matter will count for purposes of determining a quorum. In the absence of a quorum, the chairperson of the meeting may adjourn the meeting, and, at any reconvened meeting following such an adjournment at which a quorum is present, any business that might have been transacted at the original meeting may be transacted.
If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record can vote your shares in its discretion only on Item 3 described in this proxy statement. If you do not give your bank, broker or other holder of record instructions on how to vote your shares on Items 1, 2 and 4 described in this proxy statement, your shares will not be voted on those matters. Such “broker non-votes” will have no impact on the results of the vote on Items 1, and 2 and will have the effect of a vote against Item 4.
If you hold shares through an HII employee benefit plan, you cannot vote your shares directly. Instead, you can provide voting instructions to the plan trustee, who will vote the shares on your behalf. HII employee benefit plans that hold HII shares provide for pass-through voting to plan participants and designate that plan participants are “named fiduciaries” under ERISAthe Employee Retirement Income Security Act of 1974 (“ERISA”) for purposes of voting their shares and those shares for which plan participants do not provide voting directions. If you are a plan participant and do not vote your shares, your trustee will vote your shares in accordance with the terms of the relevant plan. As such, your trustee may vote your shares in the same proportion as shares held by the plan for which voting instructions have been received from other participants, which are “named fiduciaries,” unless contrary to ERISA.
The required vote and method of calculation for the matters to be presented at the annual meeting are as follows:
Item 1—Proposal to Elect Directors
Directors will be elected by a pluralitymajority of the shares present in person or by proxy at the annual meeting or any adjournment thereof and entitled to vote on the election of directors. Plurality voting means the 11votes cast—that is, a director nominees receiving the most votes will be elected toif the Board. If you do not want your shares to be voted with respect to a particular director nominee, you may “withhold” your vote with respect to that nominee. If a director nominee receives a greater number of votes “withheld” for his or her election than votes cast “for” his or her election,shares voted in favor of such nomineedirector exceeds the number of shares voted against such director. Abstentions will be required underhave no effect on the majority vote director resignation policy included in our Corporate Governance Guidelines to submit an offerresults of resignation to the Board for its consideration.vote. If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record cannot vote your shares on this item, and broker non-votes will have no effect on the outcome of the vote.
Item 2—Proposal to Approve Executive Compensation on an Advisory Basis
The executive compensation of our NEOs will be approved as an advisory recommendation to the Board if the number of shares voted in favor exceeds the number of shares voted against. Abstentions will have no effect on the results of the vote. If you are a street name stockholder and do not vote your
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General Information About the Annual Meeting and Voting
shares, your bank, broker or other holder of record cannot vote your shares on this item, and broker non-votes will have no effect on the outcome of the vote. Although the vote on this item is non-binding, the Compensation Committee will review the results of the vote, undertake to determine why stockholders voted against the company’s executive compensation and consider itthe reasons in making future decisions concerning executive compensation.
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General Information About the Annual Meeting and Voting
Item 3—Proposal to Ratify Appointment of Our Independent Auditors
Ratification of the appointment of Deloitte & Touche LLP as our independent auditors will be approved if the number of shares voted in favor exceeds the number of shares voted against. Abstentions will have no effect on the results of the vote. If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record can vote your shares at its discretion on this item.
Item 4—Stockholder Proposal to Amend Our Restated CertificateRequesting that HII Disclose on its Website an Annual Report of Incorporation to Eliminate Remaining Supermajority Voting RequirementsHII’s Direct and Indirect Lobbying Activities and Expenditures
The stockholder proposal requesting that HII disclose on its website an annual report of HII’s direct and indirect lobbying activities and expenditures will be approved as an advisory recommendation to amend our Restated Certificatethe Board if the number of Incorporation to eliminate remaining supermajority voting requirements requiresshares voted in favor exceeds the affirmative votenumber of 662⁄3% in voting power ofshares voted against the issued and outstanding shares of our common stock.proposal. Abstentions will have no effect on the effectresults of a vote against this proposal.the vote. If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record cannot vote your shares on this item, and broker non-votes will have no effect on the effectoutcome of a vote against this proposal.the vote.
IMPORTANT REMINDER OF EFFECT OF NOT CASTING YOUR VOTE IF YOU ARE A STREET NAME STOCKHOLDER
If you are a street name stockholder, it is critical you vote your shares if you want your vote to count on Items 1, 2 and 4. Your bank, broker or other holder of record is not permitted to vote your shares on Items 1, 2 orand 4, unless you instruct them how you wish to vote. Such “broker non-votes” will have no impact on the results of the vote on Items 1, and 2 and will have the effect of a vote against Item 4.
SOLICITING AND TABULATING VOTES
The Board has made these materials available to you in connection with its solicitation of proxies for use at our annual meeting. We will bear the costs of soliciting and tabulating your votes. OurIn addition to solicitation by mail, our directors, officers and employees may solicit proxies personally, by telephone, by email or otherwise,otherwise. These directors, officers and employees will not receive additional compensation for the solicitation, but may solicit your votes without additional compensation.be reimbursed for out-of-pocket expenses incurred in connection with the solicitation. In addition, we have retained MacKenzie Partners, Inc. to assist in the solicitation of proxies for the 20212023 annual meeting for a fee of $15,000, plus associated costs and expenses.
Copies of solicitation materials will be furnished to brokerage firms, fiduciaries and other custodians that hold shares of our common stock of record for beneficial owners, for forwarding to such beneficial owners. We willmay also reimburse banks, brokers and other holders of record for reasonable, out-of-pocket expenses for forwarding these proxy materials to you, according to certain regulatory fee schedules. See “Electronic Access to Proxy Statement and Annual Report” below for information on how you can help reduce printing and mailing costs.
ELECTRONIC ACCESS TO PROXY STATEMENT AND ANNUAL REPORT
You can elect in advance to receive future proxy materials by email. If you choose to receive future proxy materials by email, you will receive an email with instructions containing a link to the website where those materials are available, as well as a link to the proxy voting website.
If you are a stockholder of record, you may enroll in the electronic delivery service by going directly to www.envisionreports.com/HII. You may revoke your electronic delivery election at this sitewebsite at any time and request a paper copy of the proxy statement and annual report.
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If you are a street name stockholder, you may also be able to receive copies of the proxy statement and annual report electronically. Please check the information provided in the proxy materials you received from your bank, broker or other holder of record concerning the availability of this service.
We have adopted a procedure called “householding.” Under this procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Notice of Internet Availability of Proxy Materials or the printed proxy materials, unless we have received contrary instructions from one or bothall of such stockholders. This procedure reduces our printing costs and postage fees and is environmentally friendly.
If you and another stockholder of record with whom you share an address are receiving multiple copies of the Notice of Internet Availability of Proxy Materials or the printed proxy materials, you can request to receive a single copy of the printed proxy materials in the future by calling our transfer agent, Computershare, at 1-888-665-9610, or writing to usComputershare at www-us.computershare.com/Investor/ or HII at Investor Relations, 4101 Washington Avenue, Newport News, VA 23607. If you and another stockholder of record with whom you share an address wish to receive a separate Notice of Internet Availability of Proxy Materials or separate printed proxy materials, we will promptly deliver them to you if you request them by contacting Computershare by phone or Investor Relations in writing in the same manner described above.
Stockholders who participate in householding and who receive printed proxy materials will continue to receive separate proxy cards. If you are a street name stockholder, you can request householding by contacting your bank, broker or other holder of record through which you hold your shares.
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2021 Notice and Proxy Statement 15
OVERVIEW OF CORPORATE GOVERNANCE
Corporate governance addresses the relationships among the Board, company management and the company’s stockholders, with the objectives of promoting the company’s long-term success, improving corporate performance, strengthening Board and management accountability and promoting the long-term interests of our stockholders. The Board and senior management are committed to corporate governance best practices. We believe governance best practices are important not only to our stockholders, but also to our customers, employees, suppliers and other stakeholders.stakeholders as well.
The following sections provide an overview of our corporate governance model and practices. Among other topics, we describe the responsibilities of the Board, how directors are selected and certain important aspects of Board operations.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS
We believe the foundation of sound corporate governance is a board of directors whose independence, skills, experience and judgment enable the board to effectively oversee management of the company and to provide constructive advice and counsel to management. TheIn addition to its general oversight of management, the Board and its committees perform a number of important functions for the company and its stockholders, including:
overseeing and providing advice on the company’s strategic plan developed by management;
| • | evaluating, approving and overseeing the company’s strategic plan developed by management; |
assessing the significant enterprise risks to which the company is subject and overseeing management of those enterprise risks;
| • | reviewing and approving operating, financial and other corporate plans; |
selecting our chief executive officer and evaluating the performance of the chief executive officer and other executive officers;
| • | understanding and assessing the significant enterprise risks to which the company is subject and overseeing management of those enterprise risks; |
overseeing development and succession plans for our executive officers;
| • | selecting our chief executive officer and evaluating the performance of the chief executive officer and other executive officers; |
monitoring the company’s financial performance and evaluating and approving significant corporate actions;
| • | overseeing succession plans for our CEO and other senior executives; |
overseeing processes that protect the integrity of the company, including the integrity of the company’s financial statements and compliance with legal requirements and the company’s ethics and business conduct standards; and
| • | monitoring and evaluating the performance of the company and management; |
| • | evaluating and approving significant corporate transactions and commitments not entered into in the ordinary course; |
evaluating the effectiveness of the Board and its committees.
| • | overseeing processes that protect the integrity of the company, including the integrity of the company’s financial statements, and compliance with legal requirements and the company’s ethics and business conduct standards; |
| • | providing advice and counsel to management; and |
| • | evaluating the effectiveness of the Board and its committees. |
The Board’s oversight role is also effected through the Board’s five standing committees—the Audit Committee, the Compensation Committee, the Cybersecurity Committee, the Governance and Policy Committee and the Finance Committee. Each of these committees operates under a separate written charter to promote clarity in their responsibilities and to ensure the committees function in coordination with each other and with the full Board. Our committees are discussed in greater detail beginning on page __21 of this proxy statement.
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Governance of the Company
CRITERIA FOR BOARD MEMBERSHIP
The Board believes all director candidates must possess certain fundamental qualifications and that specialized skills and experiencesexperience should be contributed to the Board by individual directors. The Board and the Governance and Policy Committee consider the qualifications of directors and director
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candidates individually and in the broader context of the Board’s collective skills and experiencesexperience measured against the current and future needs of the Board.
Qualifications for All Directors. The Board believes all its members must possess the following fundamental qualifications:
high personal and professional integrity and ethical standards;
| • | high personal and professional integrity and ethical standards; |
significant educational, business, military or professional achievements in leading organizations;
| • | significant educational, business, military or professional achievements in leading organizations; |
ability to represent the best interests of all stockholders; and
| • | ability to represent the best interests of all stockholders; and |
demonstrated leadership ability and sound judgment.
| • | demonstrated leadership ability and sound judgment. |
Prospective directors must also be willing to submit to a background check necessary for a security clearance.
Selection of Individual Candidates. In addition to the qualifications applicable to all director candidates, the Board and the Governance and Policy Committee consider, among other matters, a candidate’s experience and skills in such areas as:
senior leadership
| • | executive leadership and strategy |
corporate development and strategy
| • | investment strategy, corporate development and mergers and acquisitions |
corporate governance
| • | corporate governance |
global operations
| • | advanced technology and innovation |
finance, accounting and capital markets
| • | executive finance and accounting |
government relations
| • | human resources and labor relations |
human resources
| • | compliance, legal and regulatory |
legal and regulatory matters
| • | shipbuilding and manufacturing operations |
manufacturing operations
| • | nuclear |
mergers and acquisitions
| • | military and government relations |
military and government
| • | cyber and IT risk management |
risk management
| • | technical services executive leadership |
| • | aerospace and defense industries |
technology
the industries in which the company competes
WeThe Board also considerconsiders whether a candidate can commit sufficient time and attention to Board activities, as well as any potential conflicts with the company’s interests. Our objective is to havefor the
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Governance of the Company
collective skills, experiences, attributes and perspectives thatof Board members to create an outstanding, dynamic and effective Board and strengthen the Board’s ability to oversee the company’s business, enhance its performance and represent the long-term interests of stockholders. All of our non-employee directors are expected to serve on Board committees, supporting the Board’s mission by providing expertise to those committees, and the needsoversight responsibilities of those committees are considered when evaluating director candidates. The Board and the
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Governance of the Company
Governance and Policy Committee also consider other attributes, including diversity factors, when selecting director nominees, seeking representation of a range of experiences, backgrounds and perspectives.
Service on Other Boards. In accordance with our Corporate Governance Guidelines, the Board considers the number of boards of other public companies and audit committees of those boardsother public companies on which a director candidate serves. Under our Corporate Governance Guidelines, directors should not serve on more than fivefour boards of publicly traded companies, including our Board, and our directors who also serve as chief executive officers or in equivalent positions of other companies should not serve on more than twoone other boardsboard of a publicly traded companies,company, in each case without the approval of the chairmanChairman of our Governance and Policy Committee.the Board. A director who is a full-time employee of our company may not serve on the board of directors of more than two other publicly traded companies, unless approved by the Board. No member of our Audit Committee may serve on the audit committees of more than three publicly traded companies (including our company) without the approval of the Board, which must determine annually that such simultaneous service would not impair the ability of the member to effectively serve on our Audit Committee.
Retirement Policy. Under the retirement policy of our Corporate Governance Guidelines, a director will not be re-nominated at the annual meeting following the earlier of his or her 76th birthday or 15 years of service on the Board. Upon the recommendation of the Governance and Policy Committee, the Board may waive either of these requirements as to any director, if the Board deems a waiver to be in the best interests of the company. Stephen R. Wilson, the current Chairman of our Audit Committee, has turned 76 since our last annual meeting of stockholders and is therefore not standing for election at the 2023 annual meeting of stockholders.
In addition to our retirement policy, when a director’s principal occupation or business association changes substantially during his or her tenure as a director, the Board expects the affected director to tender his or her resignation for consideration by the Governance and Policy Committee and the Board, as provided in our Corporate Governance Guidelines.
Conclusion.Conclusion. Satisfaction of the foregoing criteria for Board membership is implemented and assessedmonitored through a continuous director succession process administered by the Governance and Policy Committee and the Board, as well as through the Board’s self-evaluation process. The Board and the Governance and Policy Committee believe that, individually and collectively, the company’s current directors possess the necessary qualifications, skills, experience and experiencesattributes to provide effective oversight of the company’sHII’s business and contribute constructive advice and counsel to the company’s management.
The Governance and Policy Committee is responsible under its charter for recommending director nominees to the full Board director nominees for election by our stockholders and for identifying and recommending candidates to fill any vacancies that may occur on the Board. The Governance and Policy Committee may use a variety of sources to identify candidates, including recommendations from independent directors or members of management, search firms, communications with other persons who may know of suitable candidates to serve on the Board and stockholder recommendations.
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Governance of the Company
Evaluations of director candidates who would be new to the Board (other than nominees recommended by our stockholders, as described below) include evaluations of the candidate’s background and qualifications by the Governance and Policy Committee, interviews with the Chairman of the Board, members of the Governance and Policy Committee and one or more other members of the Board who so desire, and deliberations of the Governance and Policy Committee and the full Board. The Governance and Policy Committee then recommends the candidate(s) to the full Board, with the full Board selecting the candidate(s) to be nominated for election by our stockholders or to be elected by the Board to fill a vacancy.
In connection with its recommendations of director nominees to the Board of director nominees for election at each annual meeting, the Governance and Policy Committee considers the size of the Board and the criteria set
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forth above to recommend nominees who, individually and as a group and collectively with directors who are already serving onother director nominees, the Board, the Governance and Policy Committeecommittee believes comprise the skills, experiencesexperience and qualifications the Board needs to achieve its mission. Accordingly, in connection with the annual meeting director nomination process, the Governance and Policy Committee annually reviews the composition of the Board as a whole and makes recommendations if necessary, to achieve the optimal mix of experience, expertise, skills, specialized knowledge, diversity and other factors.
Stockholders who wish to recommend director candidates for consideration by the Governance and Policy Committee must submit the name and relevant information about the candidate in writing to the Corporate Secretary. All director candidates recommended by stockholders are required to meet the criteria for directors described above, and candidates who meet such criteria will be evaluated by the Governance and Policy Committee. In accordance with our Corporate Governance Guidelines, the Governance and Policy Committee will evaluate director candidates recommended by stockholders in the same manner as candidates identified through other means.
Stockholders who wish to nominate a person for election as a director at an annual meeting must follow the procedures set forth in our bylaws, as described beginning on page __30 of this proxy statement. Additionally, our bylaws include a proxy access right, which enables a stockholder or a group of up to 20 stockholders owning continuously for at least three years an amount of shares that constitutes 3% or more of our outstanding common stock as of the date of nomination to nominate and include in our proxy materials director candidates constituting up to the greater of 25% of the number of directors then in office or two directors, subject to the requirements specified in our bylaws. Stockholders who wish to nominate director candidates for inclusion in our proxy materials under our proxy access bylaw provisions must satisfy the requirements in our bylaws, as described under the heading “Communications and Company Documents—Future Stockholder Proposals and Nominations of Directors” of this proxy statement. The Board expects to evaluate any director candidates nominated through the proxy access process in athe same manner similar to that applied toas other director candidates.candidates are evaluated.
MAJORITY VOTE DIRECTOR RESIGNATION POLICY
Our Corporate Governance Guidelines include a majority vote director resignation policy. Under such policy, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withhold Vote”) in an uncontested election of directors must tender to the Board his or her offer of resignation within five days following certification of the stockholder vote. The Governance and Policy Committee will promptly consider the resignation offer and make a recommendation to the Board to accept or reject the tendered offer of resignation. The Board will act on the Governance and Policy Committee’s recommendation within 90 days following certification of the stockholder vote. The Board will then promptly disclose its decision to accept or reject the director’s resignation offer, including its rationale, in a report furnished to or filed with the SEC.
The Governance and Policy Committee in making its recommendation, and the Board in making its decision, will consider the best interests of the company and our stockholders and may consider any other factors or other information that it considers appropriate and relevant, including but not limited to:
the stated reasons, if any, why stockholders withheld their votes;
possible alternatives for curing the underlying cause of the withheld votes;
the director’s tenure;
the director’s qualifications;
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Governance of the Company
the director’s past and expected future contributions to the company; and
the overall composition of the Board and its committees, including whether, if the offer of resignation is accepted, the company will no longer be in compliance with any applicable law, rule, regulation or governing document.
Any director who tenders his or her offer of resignation under our majority vote director resignation policy will not participate in the Governance and Policy Committee deliberation or recommendation or Board deliberation or action to accept or reject the resignation offer. If a majority of the Governance and Policy Committee received a Majority Withhold Vote at the same election, then the independent directors (other than those who received a Majority Withhold Vote in that election) will instead appoint a committee among themselves to consider the resignation offers and recommend to the Board whether to accept them. If, however, the independent directors who did not receive a Majority Withhold Vote constitute two or fewer directors, all independent directors may participate in the action to accept or reject the resignation offers, except that each director who has tendered his or her offer of resignation will recuse himself or herself from the deliberations and voting with respect to his or her individual offer to resign.
If a director’s resignation offer is not accepted by the Board, that director will continue to serve for the term for which he or she was elected and until his or her successor is duly elected, or his or her earlier resignation or removal. If a director’s resignation offer is accepted by the Board, then the Board, in its sole discretion in accordance with our bylaws, may fill any resulting vacancy or may decrease the size of the Board.
STOCKHOLDERS RIGHT TO NOMINATE PROXY ACCESS NOMINEES
Our bylaws provide our stockholders proxy access rights. Under Section 2.15 of our bylaws, we are required to include in our proxy materials for an annual meeting any stockholder nominee who is nominated by an “Eligible Stockholder.” An “Eligible Stockholder” is any stockholder or group of up to 20 stockholders that has beneficially owned continuously for at least three years an amount of shares that constitutes 3% or more of our outstanding common stock as of the date of nomination. Eligible Stockholders must provide proof of ownership of the requisite amount of stock for the three-year time period and represent that the shares were acquired in the ordinary course of business and not to change or influence control of the company. Eligible Stockholders must also provide certain other written representations, warranties and agreements to the company, including an agreement to assume liability from any legal or regulatory violation arising out of the Eligible Stockholder’s communication with our stockholders and to comply with all applicable laws and regulations, as described in more detail in Section 2.15 of the bylaws.
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Governance of the Company
The maximum number of directors who can be nominated by Eligible Stockholders, referred to as “Stockholder Nominees,” at any annual meeting is the greater of 25% of the number of directors then in office or two directors. Section 2.15 of our bylaws includes procedures to prioritize nominations if the number of Stockholder Nominees exceeds the maximum number of Stockholder Nominees we are required to include in our proxy materials for any annual meeting. Stockholder Nominees must provide written notice to the company, which must include specific information, including information similar to the information required from stockholders to propose business and director nominations through the advance notice provisions included in Section 2.08 of our bylaws. As described in Section 2.15 of our bylaws, this notice must include an express consent to be named as a director nominee in our proxy materials and to serve as a director if elected, as well as required disclosures and information about, and representations, undertakings and consents by, the Stockholder Nominee to enable the Board to determine whether the Stockholder Nominee meets the independence and other general requirements for directors set forth in our bylaws and our Corporate Governance Guidelines.
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Governance of the Company
Stockholders who would like to nominate candidates using proxy access should refer to Section 2.15 of our bylaws, which sets forth all the requirements for proxy access nominations. The Board may exclude any Stockholder Nominee from our proxy materials if the Stockholder Nominee or Eligible Stockholder(s) fail to meet the requirements or provide the undertakings set forth in our bylaws or Corporate Governance Guidelines and for other reasons set forth in our bylaws. See “Communications and Company Documents—Future Stockholder Proposals and Nominations of Directors.”
The Board makes determinations regarding the independence of our directors on an annual basis, based upon the Governance and Policy Committee’s evaluation of director independence and related recommendations to the Board. Under our Corporate Governance Guidelines, to be considered independent: (i) a director must be independent as determined under Section 303(A).02(b) ofin accordance with the NYSE Listed Company Manual and (ii) in the Board’s judgment, the director must not have a material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).
The Board has considered relevant relationships between the company and each non-employee director to determine compliance with the independence requirements included in our Corporate Governance Guidelines. Based upon its review, the Board has determined that Mr. Bilden, General Collins, Mr. Denault, Admiral Donald, Ms. Harker, Mr. Jimenez, Ms. Kelly, Ms. McKibben, Ms. O’Sullivan, Mr. Schievelbein, Mr. Welch and Mr. Wilson, who currently comprise the Board’s non-employee directors, are independent. The Board has also determined that each current member of the Audit Committee satisfies the additional SEC independence requirements applicable to audit committee members, and that each current member of the Compensation Committee satisfies the enhanced independence requirements of the NYSE listing standards.
The Board believes one of its primary responsibilities is to evaluate and determine from time to time the optimal Board leadership structure to provide effective oversight of the company. Our bylaws establish the position of Chairman of the Board and ourdirect that the Board will designate the Chairman. Our Corporate Governance Guidelines stateprovide further that the Board believes it is in the best interests of the company and its stockholders for the Board to have the flexibility to determine the best director to serve as Chairman. The independent directors address the Chairman role on at least an annual basis,annually, comparing the advantages and disadvantages of a combined chairman and chief executive officer role and separate chairman and chief executive officer roles in the context of our operating and governance environment over time.
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Governance of the Company
Non-Executive Chairman. The Board has considered Board leadership and determined an independent, non-executive chairman is the optimal model for the companyHII at this time. A non-executive chairman provides the Board with independent leadership and allowsfacilitates the chief executive officer toofficer’s focus on the company’s business operations. The Board elected Admiral Donald as our non-executive Chairman of the Board in April 2020, and has continued to succeed Admiral Thomas B. Fargo, who served as our Chairman from the time the company began operating as an independent stand-alone company in 2011 until his retirement from the Board in 2020.elect him on annual basis since that time.
Our non-executive Chairman has the following responsibilities under our Corporate Governance Guidelines:
chair all Board and stockholder meetings, including executive sessions of the independent directors;
| • | chair all Board and stockholder meetings, including executive sessions of the independent directors; |
serve as a liaison between the chief executive officer and the independent directors;
| • | serve as a liaison between the chief executive officer and the independent directors; |
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Governance of the Company
| • | ensure the quality, quantity and timeliness of the flow of information from management to the Board (although management is responsible for the preparation of materials for the Board, the non-executive Chairman may specifically request the inclusion of certain materials); |
ensure the quality, quantity and timeliness of the flow of information from management to the Board; although management is responsible for the preparation of materials for the Board, the non-executive Chairman may specifically request the inclusion of certain materials;
| • | prepare the agendas of the Board meetings and assist the chairperson of each standing committee with preparation of agendas for the respective committee meetings, taking into account the requests of other Board and committee members; |
prepare the agendas of the Board meetings and assist the chairperson of each standing committee with preparation of agendas for the respective committee meetings, taking into account the requests of other Board and committee members;
| • | set an appropriate schedule for Board meetings to assure there is sufficient time for discussion of all agenda items; |
set an appropriate schedule for Board meetings to assure there is sufficient time for discussion of all agenda items;
| • | along with the chairman of the Governance and Policy Committee, interview all Board candidates and make recommendations to the Governance and Policy Committee and the Board; |
along with the chair of the Governance and Policy Committee, interview all Board candidates and make recommendations to the Governance and Policy Committee and the Board;
| • | have the authority to call meetings of the Board and meetings of the independent directors; and |
| • | if requested by the chief executive officer, be available for consultation and direct communication with stockholders. |
have the authority to call meetings of the Board and meetings of the independent directors; and
if requested by the chief executive officer, be available for consultation and direct communication with stockholders.
Conclusion.Conclusion. All of our directors play an active role overseeing the companyHII at both the Board and committee levels. The Board is currently comprised of 11 independent directors and one non-independent director, who serves as our Chief Executive Officer and ten independent directors.Officer. Our independent directors are skilled and experienced leaders in business, industry, the military and government. Our independent directors are effective in collaboratingeffectively collaborate with management and thoroughly evaluatingevaluate management proposals, made by management, and an independent Board leader facilitates this relationship. We therefore believe a non-executive Chairman of the Board, along with nine10 other strong independent directors, is an appropriate and effective model at this time to oversee the companymanagement of HII and to provide advice and counsel to the Chief Executive Officer and other executive management of the company.
BOARD COMMITTEE FUNCTIONS AND MEMBERSHIP
The Board has five standing committees: Audit, Compensation, Cybersecurity, Governance and Policy and Finance. Each of the Audit, Compensation and Governance and Policy Committees is constituted and operated in accordance with SEC requirements and the NYSE’s corporate governance listing standards; thestandards. The Cybersecurity Committee and Finance CommitteesCommittee are not required by the SEC or the NYSE listing standards and are therefore not subject to any such requirements or standards. Each Board committee is governed by a written charter, which sets forth the responsibilities of the committee, including the responsibilities described in this section. Each charter can be viewed on our website at www.huntingtoningalls.com www.hii.com and is available in print to any stockholder requesting a copy. All members of each Board committee are independent, as determined under the corporate governance listing standards of the NYSE.
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Governance of the Company
Audit Committee. The Audit Committee’s responsibilities include:
Overseeing HII’s relationship with its independent auditor, including (i) reviewing and pre-approving each service and related fees considered to be auditing services and non-prohibited non-audit services and (ii) meeting with the independent auditor to review, among other things, all critical accounting policies, all material alternative accounting treatments discussed with management, and all material written communications with management
| • | Overseeing HII’s relationship with its independent auditor, including (i) reviewing and pre-approving each service and related fees considered to be auditing services and non-prohibited non-audit services and (ii) meeting with the independent auditor to review, among other things, all critical accounting policies, all material alternative accounting treatments discussed with management, and all material written communications with management |
Overseeing our internal audit function
| • | Overseeing our internal audit function |
Overseeing financial statement and disclosure matters, including meeting with management, the internal auditors and the independent auditor to review and discuss the content of our periodic reports, including financial information, and management’s assessment of internal control over financial reporting
| • | Overseeing financial statement and disclosure matters, including meeting with management, the internal auditors and the independent auditor to review and discuss the content of our periodic reports, including financial information, and management’s assessment of internal control over financial reporting |
Overseeing other matters, including our major financial risk exposures and our compliance program.
| • | Reviewing and overseeing HII’s policies and practices relating to corporate sustainability matters relative to environmental stewardship |
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Governance of the Company
| • | Overseeing other matters, including our major financial risk exposures and our compliance program |
The current members of the Audit Committee are Mr. Wilson (chairman), General Collins, Mr. Denault, Mr. Schievelbein and Mr. Welch. Mr. Wilson will be retiring from the Board effective upon the election of directors at the 2023 annual meeting. Mr. Denault was appointed to the Audit Committee in December 2022 upon his election to the Board. The Board has determined, in accordance with NYSE requirements, that each member of the Audit Committee is financially literate and that Mr.each of Messrs. Wilson and Denault possesses accounting or related financial management expertise. The Board has also determined that Mr.each of Messrs. Wilson and Denault qualifies as an “audit committee financial expert,” as defined under applicable SEC rules.
Compensation Committee. The Compensation Committee’s responsibilities include:
Establishing annual and long-term performance goals and objectives for the Chief Executive Officer and all other elected officers, and evaluating those officers against their goals and objectives
| • | Establishing annual and long-term performance goals and objectives for the Chief Executive Officer and all other elected officers, and evaluating those officers against their goals and objectives |
| • | Reviewing, approving and submitting for ratification by the independent members of the Board the Chief Executive Officer’s compensation |
| • | Reviewing and approving the direct and indirect compensation of all other elected officers |
| • | Reviewing and recommending to the Board matters concerning compensation of Board members |
| • | Reviewing the succession of qualified executive management |
| • | Identifying, in consultation with management, the appropriate peer group for competitive comparisons and relative position of pay levels versus peers |
| • | Overseeing our policy regarding the recovery of performance-based short- or long-term cash or equity incentive compensation payments in certain circumstances |
| • | Reviewing and overseeing HII’s policies and practices relating to its human capital management function |
Delegation: The Compensation Committee does not delegate its responsibilities with respect to compensation that is specific to the executive officers. For other employees and for broad-based compensation plans, the Compensation Committee may delegate authority to a subcommittee consisting of not less than two members of the BoardCompensation Committee.
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Governance of the Chief Executive Officer’s compensationCompany
Reviewing and approving the direct and indirect compensation of all other elected officers
Reviewing and recommending to the Board matters concerning compensation of Board members
Reviewing the succession of qualified executive management
Identifying, in consultation with management, the appropriate peer group for competitive comparisons and relative position of pay levels versus peers
Overseeing our policy regarding the recovery of performance-based short- or long-term cash or equity incentive compensation payments in certain circumstances.
The current members of the Compensation Committee are Ms. Harker (chairwoman), Mr. BildenJimenez and Ms. Kelly. Philip M. Bilden was a member of the Compensation Committee until he resigned from the Board in July 2022. The Board has determined that each member of the Compensation Committee qualifies as a non-employee director under SEC Rule 16b-3. None of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee. Accordingly, no interlocks with other companies, within the meaning of the SEC’s proxy rules, existed during 2020.
Cybersecurity Committee. The Cybersecurity Committee’s responsibilities include:
Reviewing the company’s enterprise cybersecurity strategy and framework, including the company’s assessment of cybersecurity threats and risk, data security programs and the company’s management and mitigation of cybersecurity and information technology risks and potential breach incidents
| • | Reviewing the company’s enterprise cybersecurity strategy and framework, including the company’s assessment of cybersecurity threats and risk, data security programs and the company’s management and mitigation of cybersecurity and information technology risks and potential breach incidents |
Reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto and steps that have been taken to mitigate against reoccurrence
| • | Reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto and steps that have been taken to mitigate against reoccurrence |
Evaluating the effectiveness of the company’s cyber risk management and data security programs measured against the company’s cybersecurity threat landscape
| • | Evaluating the effectiveness of the company’s cyber risk management and data security programs measured against the company’s cybersecurity threat landscape |
Assessing the effectiveness of the company’s data breach incident response plan
| • | Assessing the effectiveness of the company’s data breach incident response plan |
Reviewing and assessing the company’s information technology disaster recovery capabilities
| • | Reviewing and assessing the company’s information technology disaster recovery capabilities |
Reviewing the company’s assessment of cybersecurity threats and risk associated with the company’s supply chain and actions the company is taking to address such threats and risks.
| • | Reviewing the company’s assessment of cybersecurity threats and risk associated with the company’s supply chain and actions the company is taking to address such threats and risks |
The current members of the Cybersecurity Committee are Mr. Bilden (chairman)Ms. O’Sullivan (chairwoman), General Collins, Admiral Donald Ms. O’Sullivan and Mr. Wilson. Ms. O’SullivanMr. Bilden was appointed tothe Chairman of the Cybersecurity Committee until he resigned from the Board in January 2021 upon her election to the Board.July 2022.
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Governance of the Company
Governance and Policy Committee. The Governance and Policy Committee’s responsibilities include:
Developing and recommending to the Board criteria for Board membership
| • | Identifying candidates qualified to serve on the Board and recommending nominees for election to the Board |
Identifying and reviewing the qualifications of director candidates
| • | Identifying and recommending committee member appointments to the Board |
Assessing the contributions and independence of incumbent directors in determining whether to recommend them for reelection to the Board
| • | Reviewing stockholder proposals and recommending any Board responses |
Identifying and recommending committee member appointments to the Board
| • | Reviewing and overseeing HII’s policies and practices with respect to significant public policy and corporate citizenship and responsibility matters |
Reviewing stockholder proposals and recommending any Board response
| • | Reviewing and overseeing HII’s policies and practices relating to significant corporate sustainability matters other than human capital matters and energy management matters |
Considering and making recommendations to the Board regarding transactions with related persons and corporate governance matters generally
| • | Overseeing the company’s policies and procedures for related party transactions and reviewing and overseeing related party transactions for potential conflicts of interest |
| • | Overseeing the evaluation of the Board |
| • | Generally monitoring the Board’s oversight of risk |
The current members of the Governance and Policy Committee are Mr. Welch (chairman), Mr. Jimenez and Mses. Kelly and McKibben.
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Governance of the Company
Finance Committee. The Finance Committee’s responsibilities include:
| • | Overseeing and reviewing our financial affairs, strategies and policies |
| • | Reviewing and making recommendations to the Board regarding: |
| • | our financial policies and strategies, capital structure and financial condition |
| • | our issuances of debt and equity securities and significant borrowing transactions |
| • | strategic transactions |
| • | employee benefit plan assets |
| • | our dividend policy and stock repurchase programs |
| • | significant capital expenditures |
| • | Providing oversight to ensure that our financial policies and strategies are consistent with our capital budget, annual operating plan and strategic plan |
| • | Overseeing discrete operational matters that could have a significant impact on the
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The current members of the Finance Committee are Mr. Schievelbein (chairman), Mr. Denault, Admiral Donald and Mses. Harker, McKibben and O’Sullivan. Mr. Denault was appointed to the Finance Committee in December 2022 upon his election to the Board. Mr. Bilden was a member of the Finance Committee until he resigned from the Board in July 2022.
BOARD STRUCTURE
HII directors serve one-year terms. Accordingly, the terms of the 11 directors nominated to stand for election at our 2023 annual meeting will expire at the 2024 annual meeting of stockholders.
EXECUTIVE SESSIONS OF NON-EMPLOYEE DIRECTORS
In accordance with our Corporate Governance Guidelines, our directors, with no members of management present (including directors who are also officers of the company), have the opportunity to meet in executive session at each regularly scheduled Board meeting. In addition, our Corporate Governance Guidelines provide that at least one executive session of independent directors will be held each year. In 2022, all of our directors, other than our Chief Executive Officer and the Executive Vice Chairman of the Board, were independent under NYSE corporate governance listing standards. The independent directors met in executive session at all six regular Board meetings during the year. Our non-executive Chairman, Admiral Donald, presided over the executive sessions.
The Audit Committee meets at each of its regular meetings in separate executive sessions with management, with our independent auditor, with our Vice President of Internal Audit and with only committee members present. The Compensation Committee, the Cybersecurity Committee, the Governance and Policy Committee and the Finance Committee also meet in executive session on a routine basis, with only members of the committee and other attending Board members present.
THE BOARD’S ROLE IN RISK OVERSIGHT
The Board’s responsibilities include oversight of risk management, which includes overseeing our system of financial and operational internal controls, our compliance with applicable laws and regulations, data and cybersecurity risks and our processes for identifying, assessing and mitigating
Governance of the Company
generally presented by internal counsel, external counsel or other experts from outside the company. We track the education programs, both external and internal, that individual directors attend, and the Governance and Policy Committee reviews those reports on at least an annual basis.
POLICY AGAINST HEDGING AND PLEDGING COMPANY SECURITIES
Our insider trading policy prohibits Board members, officers, director-level employees and certain other designated employees from engaging in any of the following transactions:
| • | speculative transactions in company securities (including trades in puts, calls or other derivative securities or short sales of company securities), |
| • | holding company securities in a margin account or pledging company securities as collateral for a loan or other transaction, or |
| • | hedging transactions involving company securities (including zero cost collar transactions and forward sale contracts).
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CODE OF ETHICS AND BUSINESS CONDUCT
Our Board of Directors has adopted a Code of Ethics and Business Conduct, which applies to our directors, officers and employees. This code identifies core values, standards and behaviors that guide our officers, directors and employees in the discharge of their duties and responsibilities on behalf of HII. The code also includes the commitments the company has made to its employees, customers, stockholders, communities and suppliers. The code addresses, among other matters, conflicts of interest, corporate opportunities, trading in company securities, political contributions and confidential information. Employees are required to report any conduct they believe in good faith is an actual or apparent violation of the code. The Code of Ethics and Business Conduct includes provisions applicable to our senior financial officers, as required by SEC rules.
Our Code of Ethics and Business Conduct is available on our website at www.hii.com and available in print to any stockholder requesting a copy. We post any amendments to our Code of Ethics and Business Conduct on our website and/or disclose the amendments in a filing with the SEC. If we waive a provision of the Code of Ethics and Business Conduct with respect to our chief executive officer, chief financial officer or principal accounting officer, we will post information about the waiver at the same location on our website.
MEETINGS AND ATTENDANCE
The Board held six meetings in 2022, including five regular meetings and one special meetings. All of the regularly scheduled meetings included an executive session of independent directors. In addition, the Board held 27 committee meetings, comprised of six Audit Committee, five Compensation Committee, six Cybersecurity Committee, five Governance and Policy Committee and five Finance Committee meetings. Each director attended 75% or more of the meetings of the Board and the committees on which he or she served during 2022.
Our Corporate Governance Guidelines include an expectation that all directors will attend our annual meetings of stockholders. All of our directors who were directors or nominees at the time of the 2022 annual meeting of stockholders attended the annual meeting.
INDEMNIFICATION
We indemnify our directors and our elected officers to the fullest extent permitted by law, so they can be free from undue concern about personal liability in connection with their service to HII. Our bylaws require this indemnification, and we have also entered into agreements with each director and elected officer contractually obligating us to provide this indemnification to him or her.
2021 Notice and Proxy Statement 29
Communications and Company Documents
We welcome communications from our stockholders and other stakeholders, and we make information important to our stockholders and other stakeholders available on our website. The following sections describe: how stockholders and other stakeholders can communicate with the Board; the information we make available to our stockholders and other stakeholders and where you can find that information; and the procedures that stockholders must follow to propose matters for consideration at our annual meetings or to nominate persons for election as directors at our annual meetings.
COMMUNICATIONS AND COMPANY DOCUMENTS
Stockholders and other stakeholders can communicate with the Board, our non-executive Chairman, our independent directors as a group, individual directors or any of the standing Board committees in care of the Corporate Secretary,
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Communications and Company Documents
We welcome communications from our stockholders and other stakeholders, and we make information important to our stockholders and other stakeholders available on our website. The following sections describe: how stockholders and other stakeholders can communicate with the Board; the information we make available to our stockholders and other stakeholders and where you can find that information; and the procedures that stockholders must follow to propose matters for consideration at our annual meetings or to nominate persons for election as directors at our annual meetings.
COMMUNICATIONS AND COMPANY DOCUMENTS
Stockholders and other stakeholders can communicate with the Board, our non-executive Chairman, our independent directors as a group, individual directors or any of the standing Board committees in care of the Corporate Secretary, Huntington Ingalls Industries, Inc., 4101 Washington Avenue, Newport News, Virginia 23607. At the direction of the Board, all mail received may be opened and screened for security purposes.
Communications from stockholders and other stakeholders are distributed to the Board, the applicable Board committee or an individual director or directors, as appropriate, depending on the facts and circumstances of the communication. The Board has requested that certain items unrelated to the duties and responsibilities of the Board be excluded or redirected, as appropriate, such as: business solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; and surveys. In addition, communications that are unduly hostile, threatening or similarly unsuitable will be excluded. Notwithstanding the foregoing, any communication will be made available to any director upon his or her request.
Our website contains our Restated Certificate of Incorporation, Certificates of Amendment of Restated Certificate of Incorporation, Restated Bylaws, Corporate Governance Guidelines, standing Board committee charters and Code of Ethics and Business Conduct. To view these documents, go to www.hii.com, click on “Investors,” the “Company” drop-down box and then “Corporate Governance.” We post any amendments to our Code of Ethics and Business Conduct on our website and/or disclose the amendments in a filing with the SEC. If we waive a provision of the Code of Ethics and Business Conduct with respect to our chief executive officer, chief financial officer or principal accounting officer, we will post information about the waiver at the same location on our website. To view our SEC filings and Forms 3, 4 and 5 filed by our directors and executive officers, go to www.hii.com, click on “Investors,” the “Financials” drop-down box and then “SEC Filings.”
We will promptly deliver free of charge to any requesting stockholder a copy of our Annual Report on Form 10-K for the year ended December 31, 2022 (without exhibits), Corporate Governance Guidelines, standing Board committee charters and Code of Ethics and Business Conduct. Requests should be directed to: Corporate Secretary, Huntington Ingalls Industries, Inc., 4101 Washington Avenue, Newport News, Virginia 23607.
You can also print copies of these documents from our website at www.hii.com. We include our website address in the proxy statement only as an inactive textual reference and do not intend it to be an active link to our website. The information on our website is not a part of this proxy statement.
FUTURE STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS
Stockholders may present proposals for consideration at a future meeting of stockholders only if they comply with the requirements of the proxy rules established by the SEC and the requirements of our bylaws.
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30 Huntington Ingalls Industries, Inc.
Communications and Company Documents
Under SEC Rule 14a-8, if a stockholder wants us to include a proposal in our proxy statement and form of proxy for presentation at our 20222024 annual meeting of stockholders, the proposal must be received by us by November , 2021,21, 2023, at our principal executive offices located at Huntington Ingalls Industries, Inc., 4101 Washington Avenue, Newport News, Virginia 23607. The proposal should be sent to the attention of the Corporate Secretary.
Article II, Section 2.08 of our bylaws contains the procedures that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders outside of SEC Rule 14a-8. Assuming that our 20222024 annual meeting is held within 30 days before or after the anniversary of the 20212023 annual meeting (April 29, 2021)(May 2, 2023), we must receive the notice of your intention to introduce a nomination or to propose an item of business at our 20222024 annual meeting not less than 90 days nor more than 120 days in advance of the anniversary of the date on which we first mailed the proxy materials for our 20212023 annual meeting (March 18, 2021)20, 2023), or between November, 2021 21, 2023 and December , 2021.21, 2023.
The notice must be submitted in writing to our principal executive offices located at Huntington Ingalls Industries, Inc., 4101 Washington Avenue, Newport News, Virginia 23607. The notice should be sent to the attention of the Corporate Secretary. Our bylaws specify the information that must be contained in the notice. Our bylaws are posted on our website, www.huntingtoningalls.com www.hii.com, and can be accessed by clicking “Investors,” the “Company Information”“Company” drop-down box and then “Leadership &“Corporate Governance.”
Article II, Section 2.15 of our bylaws contains the procedures eligible stockholders must follow to nominate persons for election as directors and to have those candidates included in our proxy materials (proxy access). Assuming that our 20222024 annual meeting of stockholders is held within 30 days before or after the anniversary of the 20212023 annual meeting (April 29, 2021)(May 2, 2023), we must receive the notice of your intention to make a proxy access nomination not less than 120 days nor more than 150 days in advance of the anniversary of the date on which we first mailed the proxy materials for our 20212023 annual meeting (March 18, 2021)20, 2023), or between October , 202122, 2023 and November , 2021.
2021 Notice and Proxy Statement 31
HII is guided by the following values, which describe our company as we want it to be. We want our decisions and actions to demonstrate the highest standards of professional and ethical behavior, and we believe that putting our values into practice creates long-term benefits for our employees, customers, stockholders, communities and suppliers.
Integrity
Integrity is at the heart of who we are and what we do. We are each personally accountable for the highest standards of ethics and integrity, and we strive to fulfill our commitments as responsible citizens and employees. We are committed to consistently treating customers and company resources with the respect they deserve.
Safety
We greatly value our employees and will not compromise on maintaining a safe and healthy work environment for them. We expect everyone to actively participate and take responsibility for their own safety and the safety of those around them. Employees can report safety concerns without fear of reprisal and are empowered to stop work if an operation presents significant risk or danger. We continuously evaluate and improve our operations to understand and mitigate safety risk.
Respect
We value people, knowing we must show fairness and equal treatment for all. We will continuously build a collaborative culture of inclusion, where treating each other with empathy, dignity and compassion is the expected behavior. We do this by actively listening to all perspectives and treating everyone in a courteous and professional manner.
Engagement
We are committed to an engaged workforce. Our employees are very engaged in their work and take ownership of their work and their work processes. Engagement is a heightened level of ownership whereby employees endeavor to do whatever they can for the benefit of their internal and external customers, and for the success of the organization as a whole.
Responsibility
We seek and accept personal responsibility for our actions and results. We keep promises and commitments made to others. We are responsible for ensuring quality is a component of everything we do. We take pride in providing outstanding customer service.
Performance
We hold ourselves to a very high standard of performance. We are committed to improving our company performance while upholding our strong values. Superior performance and quality ensure future trust and confidence in our products. We promote continuous improvement, innovation and creativity.
32 Huntington Ingalls Industries, Inc.
Corporate Responsibility
As a company, HII is committed to:21, 2023.
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Sustainability |
HII’s mission is to deliver the world’s most powerful ships and all domain solutions in service of the nation, creating the advantage for its customers to protect peace and freedom around the world. On March 31, 2011, HII formed as an independent, publicly-traded company when two legacy shipyards joined forces to become the nation’s largest shipbuilder. Since then, HII’s portfolio has expanded further with the establishment of |
We have a longthird division that delivers all-domain technology solutions to civil, commercial and distinguished historydefense customers both domestically and internationally. HII is the largest industrial employer in both Virginia, where the company is headquartered, and in Mississippi.
At HII, the mission is always the primary focus and point of corporate responsibility, including corporate sustainability and corporate citizenship. HII’s motto of “Hard Stuff Done Right” is directed at the difficult work we do, but, even more importantly, it conveys ourconvergence. Since its inception, HII has articulated its commitment to always do the right thing. Doing the right thing includes being a responsible corporation that prioritizes operating in a manner that is consistent with its values—integrity, safety, respect, engagement, responsibility and performance.
Board Oversight
The Board and its committees seek to ensure that environmental, social and governance (“ESG”) principles are integrated into our values and considering the interests of all of our stakeholders.business strategy in ways that optimize opportunities to make positive impacts while advancing long-term goals. We are committed to conducting our business in a culturesafe, environmentally responsible and sustainable manner, and in a way that provides a mutually beneficial relationship withreflects our suppliers, a culture that gives back while still meeting the expectations of our stockholders and a culture dedicated to delivering products of exceptional qualityresponsibilities to our customers. Westakeholders.
In 2022, we formalized our sustainability commitment to our stakeholders and appointed our first-ever chief sustainability officer to develop and execute an enterprise-wide sustainability strategy, in which ESG issues converge. The chief sustainability officer chairs HII’s Corporate Sustainability Committee, and is supported on a day-to-day basis by a director-level and cross-functional Sustainability Management Team. The chief sustainability officer is a member of the company’s senior leadership team and reports directly to HII’s CEO on sustainability program performance.
Key Stakeholders
Our key stakeholders are our employees, customers, stockholders, communities and suppliers, and our commitment to key stakeholders is articulated in our sustainability strategy.
Employees – Today, HII is a global, all-domain defense provider with a contract backlog of more than $47 billion and approximately 43,000 employees. HII is committed to a values-driven culture of ethics that puts employees’ safety and well-being first. HII is committed to building a diverse and inclusive environment, offering opportunities for training and career growth, where the least empowered person in the room feels free to speak up. HII is committed to a safe and respectful culture for all employees, united in the company’s mission of service.
Customers – HII supports its highly-valued and ever-growing customer base by seeking to ensure the company meets or exceeds customer interests, delivering quality products and services on time, and always fostering continuous improvement.
Stockholders – HII sustains long-term value and growth in the company through improved performance and intense focus on delivering excellent results.
Communities – HII strives to be an active, visible and positive corporate citizen in every community in which it does business, because its employees make up those communities.
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Sustainability
Suppliers – HII engages with its suppliers in a transparent and respectful manner, recognizing that suppliers are an integral part the HII team—essential to the company’s ability to achieve its business objectives.
Because of and through these commitments, sustainability at HII is more than a buzzword; it describes HII’s values-based business model and reflects HII’s long and distinguished history of corporate responsibility, including corporate citizenship and corporate sustainability. Grounded in the company’s mission, values and purpose (together known as “MVP”), HII’s MVP approach to sustainability guides its strategy, structural polices and programming, and animates its culture of service and ethics. These principles come to life in HII’s daily decision-making and behaviors, and in its formal frameworks and processes. With HII’s values as its north star, the company’s sustainability strategy is optimized to yield long-term competitive advantages, stockholder value, and positive impact for its people, facilities, communities and environment – all in service of its mission. To carry true meaning, HII’s sustainability strategy relies on public reporting standards widely recognized as ESG. Given this usage, HII refers to ESG as its framework for reporting on the initiatives it undertakes as a company, the goals it sets and the progress it has made. HII’s values-based approach connects its performance in priority areas to who it is as a company.
Sustainability Focus Areas
Through interviews, surveys and intensive document and resource reviews, together referred to as “HII’s priority assessment,” the following sustainability focus areas emerged:
| ➣ | Diversity and inclusion, including Board of Directors and workforce diversity, supplier diversity and company culture. |
| ➣ | Energy management, including the management of GHG emissions, efficiencies focused on current energy use, renewable energy deployment and the types and ways that fuel is consumed. |
| ➣ | Supply chain management, including how HII engages with its suppliers through a Supplier Code of Conduct and supplier standards, supply chain transparency, risk assessments and audits, as well as how we maintain supply chain continuity and resiliency. |
| ➣ | Ethical conduct, including ethics guidelines and Code of Ethics and Business Conduct training, compliance with regulations and laws, grievance and whistleblower mechanisms, and anti-corruption, anti-bribery and anti-money laundering policies and risk analysis. |
| ➣ | Product quality and safety, including product lifecycle management, improper product usage, environmental impact considerations of products, efforts to ensure product safety, compliance with product safety laws and regulations and product end-of-life management. |
| ➣ | Cybersecurity, including cybersecurity investments, compliance, risk assessments and awareness (such as phishing, social engineering and advanced cyber tactics), as well as the company’s responses to cyber-attacks and degradation. |
| ➣ | Community relations, including how we engage with and support the communities in which we operate through employee volunteering, relationship-building with local communities, local economic impact, philanthropy, future workforce development and community education programming. |
| ➣ | Employee engagement, including company culture, employee turnover, recruitment and retention, compensation and benefits and employee satisfaction. |
| ➣ | Health and safety, including occupational health and safety initiatives, policies and training, as well as adherence to safety laws and regulations, health and wellness programs and workplace culture. |
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Sustainability
| ➣ | Environmental compliance, including how HII supports and engages with its regulators, efforts to ensure compliance, and adherence to environmental laws and regulations. |
HII’s sustainability strategy further enhances the company’s longstanding commitment to performing with integrity. HII’s award-winning ethics and compliance program ensures adequate controls are in place to reduce the opportunity for misconduct. Furthermore, HII is committed to working with suppliers who share the company’s values and conduct their business in a legal and ethical manner. HII expects its suppliers to comply with the company’s guidelines and Code of Ethics and Business Conduct, and suppliers are expected to comply with applicable laws and regulations, including those relating to labor and employment practices, health and safety, and environmental protection.
HII uses the concept of “responsible sourcing” in supply chain management. This approach reflects HII’s voluntary commitment to account for social and environmental risks when managing relationships with its suppliers. When contracting with a supplier, HII is explicit in expressing its expectation that the supplier will comply with all applicable laws and regulations, specifically including labor and environmental laws. HII has implemented and maintains several policies in these areas of supply chain risk, including: conflict minerals (HII’s policy mandates that supplier terms and conditions require suppliers to disclose information about any conflict minerals contained in components or items purchased by HII for inclusion in HII’s products sold to third parties, and ensures the collection and maintenance of product information from suppliers and vendors); human trafficking (HII recognizes slavery in the supply chain can take many forms, including human trafficking, child labor and debt bondage. It is HII policy to support unequivocally the elimination of human trafficking and slavery. HII is also committed to complying with the health, welfare and developmentU.K. Modern Slavery Act of our employees2015 and the continuous improvementAustralian Commonwealth Modern Slavery Act of 2018); and transformationdiversity of our communities.suppliers (HII uses best efforts to enhance subcontracting opportunities for specially defined classes of small business as subcontractors, in compliance with all laws and regulations, as stated in the Small Business Act, Federal Acquisition Regulations (FAR), Public Laws 95-507, 105-35, 106-50, and 15 U.S.C § 631, et. seq.).
We encourage youConsistent with HII’s commitment to review our Corporateprovide stakeholders with transparency into its sustainability objectives, performance and progress, HII’s 2022 Sustainability Reportreferences to Global Reporting Initiative (“GRI”) Standards, including a GRI Standards Index, as well as the Sustainability Accounting Standards Board (SASB) Standard framework. HII will consider other reporting standards and frameworks in the future, as its sustainability program continues to mature.
For more detailed information on HII’s sustainability program and HII’s 2022 Sustainability Report availableand other ESG-related resources, go to hii.com, click on our website at [website], to learn more about our approach to human capital management, diversitythe “Company” drop-down box and inclusion, ethics and compliance, product safety and quality, data and cyber security, energy management, hazardous waste management, supply chain management and community engagement. Our website also provides related performance metrics. The information on our website is not a part of this proxy statement.then “Sustainability.”
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2021 Notice and Proxy Statement 33
We believe the qualifications, skills, experience and experiencesattributes of our directors are consistent with our criteria for the selection of directors and that, collectively, our directors have functioned effectively overseeing the businessmanagement of the companyHII over the last year.
Ms. O’SullivanMr. Denault was elected by the Board on January 15, 2021, to fill a vacancy created when the Board increased its size to 11 directors. SheDecember 5, 2022. He was recommended as a candidate for director by a non-management director. The remaining ten10 directors nominated to stand for election at our 20212023 annual meeting have served on the Board since our last annual meeting. All 11 director nominees, if elected, will be voted upon to serve one-year terms expiring at our 20222024 annual meeting.
2021Our former CEO, C. Michael Petters, retired from his position as Executive Vice Chairman of the Board effective January 1, 2023, and Stephen R. Wilson, a current member of the Board and Chairman of the Audit Committee, will retire from the Board effective at the time directors are elected at the 2023 annual meeting.
2022 DIRECTOR NOMINEES
Chief Executive Officer of MINACT, Inc. Director since November 2016 | ||
Current Public Company Directorships: General Collins serves on the board of directors of Trustmark Corporation, a bank holding company, and is a member of its Audit Committee, Enterprise Risk Committee and Human Resources Committee. Other Directorships and Memberships and Education:
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Experience, Qualifications, |
34 Huntington Ingalls Industries, Inc.
The Board of Directors
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General Collins, age 63, has served as Chief Executive Officer of MINACT, Inc. since September 2016.
Positions Held: From January 2012 to August 2016, General Collins was a Major General in the Mississippi National Guard, serving as Adjutant General of both the Mississippi Army National Guard and the Mississippi Air National Guard. From July 2010 to January 2012, General Collins served as Executive Vice President for Strategic Planning of MINACT. From August 2007 to July 2010, he served on Mississippi’s Workers’ Compensation Commission as the commission’s representative of labor. General Collins served more than 35 years in the U.S. Army and Mississippi National Guard, which included command of the 155th Brigade Combat Team of the Mississippi National Guard, deploying to Iraq, where he was responsible for security operations in the southern and western provinces.
Current Public Company Directorships: General Collins serves on the board of directors of Trustmark Corp and its Audit & Finance Committee and its Enterprise Risk Committee.
Other Directorships and Memberships and Education: General Collins serves on the board of directors of MINACT, Inc., a privately owned corporation in Mississippi, Trustmark National Bank, and Armed Forces Benefits Association 5Star Life Insurance. He also serves on the Friends of Mississippi Veterans, a nonprofit entity serving veterans in Mississippi. He is Past President of the University of Mississippi Alumni Association. General Collins received a B.S. in Business Administration from the University of Mississippi, an M.B.A. from Jackson State University and a Master’s Degree in strategic studies from the U.S. Army War College.
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The Board of Directors
LEO P. DENAULT Retired Chairman and Chief Executive Officer of Entergy Corporation Director since December 2022 | Business Experience: From February 2013 until November 2022, Mr. Denault served as Chairman of the Board and Chief Executive Officer of Entergy Corporation. From February 2004 until January 2013, he served as Executive Vice President and Chief Financial Officer of Entergy Corporation. Mr. Denault served as Vice President, Corporate Development for Entergy Corporation from March 1999 until February 2004. Prior to that, he was Vice President, Corporate Development for Cinergy Corporation (now Duke Energy), an energy company. Other Directorships and Memberships and Education: Mr. Denault currently serves on the board of directors of Jobs for America’s Graduates. He received a B.S. from Ball State University and a M.B.A. from Indiana University. Experience, Qualifications, Attributes and Skills: We believe Mr. Denault is qualified to serve as a director based upon his chief executive leadership of a Fortune 500 public company for nearly ten years, as well as his executive experience in the chief financial officer role and, before that, the corporate development role of the same company. We believe Mr. Denault’s multiple executive leadership roles in a public company will add valuable experience and skills to the Board. We also expect his public company chief financial officer experience will be an asset as the Audit Committee transitions to a new chairperson upon the retirement of Mr. Wilson later in 2023. | |
KIRKLAND H. DONALD Chairman of the Board of HII Director since January 2017 |
Business Experience:Admiral Donald age 67, is Chairman of the Board and has served in that capacity since April 2020.
Positions Held: Prior to serving as Chairman of the Board and from January 2013, Admiral Donald worked as a business consultant and served on the executive advisory board of Moelis Capital Partners LLC/NexPhase Capital, LP. He serves as a technical advisory board member for NuScale Power, LLC, a CFIUS Security Monitor for LANXESS AG and a member of the Submarine Advisory Committee for the Government of Australia. From January 2014 to October 2015, Admiral Donald served as President and Chief Executive Officer, and from June 2013 to January 2014 as Chief Operating Officer, of Systems Planning and Analysis, Inc. Prior to that, Admiral Donald served 37 years in the U.S. Navy. In his last assignment, he served as director of the Board of HII since April 2020. Prior to serving as Chairman of the Board, he worked as a business consultant. From June 2013 to October 2015, Admiral Donald served as Chief Operating Officer and then President and Chief Executive Officer of Systems Planning and Analysis, Inc., a technical professional services company. Prior to that, Admiral Donald served 37 years in the U.S. Navy, including in his last assignment, as Director, Naval Nuclear Propulsion Program from November 2004 to November 2012.
Current Public Company Directorships: Admiral Donald has served on the board of directors of Entergy Corporation since June 2013. He is Chairman of its Nuclear Committee and a member of its Finance Committee.
Other Directorships and Memberships and Education: Admiral Donald currently serves on the boards of directors of Battelle Memorial Institute, CyberCore Technologies, LLC and the Naval Submarine League. He is also an outside director of Rolls-Royce North America. Admiral Donald is a graduate of the U.S. Naval Academy, holding a B.S. in Ocean Engineering. Admiral Donald also received an M.B.A. from the University of Phoenix and completed Harvard University’s John F. Kennedy School of Government Senior Executive Fellows Program.
Current Public Company Directorships: Admiral Donald has served on the board of directors of Entergy Corporation since June 2013. He is Chairman of its Nuclear Committee and a member of its Finance Committee. He has also served on the board of directors of Centrus Energy Corporation, a nuclear energy company, since June 2021 and is a member of its Technology, Competition and Regulatory Committee.
Other Directorships and Memberships and Education: Admiral Donald currently serves on the boards of directors of Battelle Memorial Institute, CyberCore Technologies, LLC, a secure supply chain solutions company, and the Naval Submarine League. He is also an outside director (on a “proxy” board) of Rolls-Royce North America and Sauer Compressors USA and a CFIUS security monitor for LANXESS Corporation, all of which are suppliers to HII. Admiral Donald is a graduate of the U.S. Naval Academy, holding a B.S. in Ocean Engineering. Admiral Donald also received an M.B.A. from the University of Phoenix and completed Harvard University’s John F. Kennedy School of Government Senior Executive Fellows Program. He holds the CERT certificate in cybersecurity oversight from Carnegie Mellon University. Experience, Qualifications, |
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2021 Notice and Proxy Statement 35
The Board of Directors
VICTORIA D. HARKER Executive Vice President and Chief Financial Officer of Tegna, Inc. Director since August 2012 | Business Experience: Ms. Harker has served as Executive Vice President and Chief Financial Officer of Tegna, Inc. (“Tegna”), a media company, since June 2015. She began serving in her current position when Tegna separated from Gannett Co., Inc. (“Gannett”). Prior to that and from July 2012, she served as Chief Financial Officer of Gannett. Ms. Harker served as Chief Financial Officer from 2006 to 2012 and as President of Global Business Services from 2011 to 2012 of The AES Corporation (“AES”), a multinational power company. Before joining AES, she was the acting Chief Financial Officer and Treasurer of MCI, Inc., a telecommunications company, from November 2002 through January 2006, and Chief Financial Officer of MCI Group, a unit of Worldcom, Inc., a communications company, from 1998 to 2002.
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Ms. Harker, age 56, is an Executive Vice President and the Chief Financial Officer of Tegna, Inc. (“Tegna”).
Positions Held: Ms. Harker began serving in her current position in June 2015, when Tegna separated from Gannett Co., Inc. (“Gannett”). Prior to that and from July 2012, she served as Chief Financial Officer of Gannett. Ms. Harker served as Chief Financial Officer from 2006 to 2012 and as President of Global Business Services from 2011 to 2012 of The AES Corporation (“AES”), a multinational power company. Before joining AES, she was the acting Chief Financial Officer and Treasurer of MCI, Inc. from November 2002 through January 2006, and Chief Financial Officer of MCI Group, a unit of Worldcom, Inc., from 1998 to 2002.
Current Public Company Directorships: Ms. Harker serves on the board of directors of Xylem, Inc. (formerly ITT Corporation), a global water infrastructure company, and as Chair of its Audit & Finance Committee and a member of its Nominating and Governance Committee. She also serves on the board of directors of Stride, Inc. and on its Audit Committee.
Prior Public Company Directorships: Ms. Harker served on the board of directors and as a member of the Finance and Audit Committees of the Board of Darden Restaurants, Inc. from 2009 to 2014.
Other Directorships and Memberships and Education:
Current Public Company Directorships: Ms. Harker serves on the board of directors of Xylem, Inc. (formerly ITT Corporation), a global water infrastructure company, and as Chair of its Audit & Finance Committee and a member of its Nominating and Governance Committee.
Prior Public Company Directorships: Ms. Harker served on the board of directors and as a member of the Audit Committee of Stride, Inc., an education company, from 2020 to 2022. She served on the board of directors and as a member of the Finance and Audit Committees of the Board of Darden Restaurants, Inc., a restaurants company, from 2009 to 2014.
Other Directorships and Memberships and Education:Ms. Harker is a member of the University of Virginia’s Board of Visitors, where she chairs the Finance Committee and serves as a member of the Executive Committee, the Special Committee on Governance and the Committee on the University of Virginia’s College at Wise. She is a trustee of the University of Virginia Alumni Association’s $250M Jefferson Trust and participates as an emeritus society member of the Board of Wolf Trap Foundation for the Performing Arts. Ms. Harker received a B.A. from the University of Virginia and an M.B.A. from American University.
Experience, Qualifications, | ||
FRANK R. JIMENEZ General Counsel and Corporate Secretary of GE HealthCare Director since January 2022 | Business Experience: Mr. Jimenez has served as General Counsel of GE HealthCare, a medical device manufacturing and pharmaceuticals company, since February 2022 and additionally as Corporate Secretary since January 2023 following GE HealthCare’s spin-off from the General Electric Company. From April 2020 until he assumed his current position, Mr. Jimenez served as Executive Vice President and General Counsel (April 2020 to December 2021) and Special Advisor to the Chairman and CEO (December 2021 to February 2022) of Raytheon Technologies Corporation. From January 2015 until its merger with United Technologies Corporation in April 2020, he served as Vice President, General Counsel and Corporate Secretary of Raytheon Company. From July 2012 until January 2015, Mr. Jimenez served as General Counsel, Secretary and Managing Director, Corporate Affairs of Bunge Limited, an agribusiness and food company. Previously, he served as Vice President and General Counsel of ITT Corporation and as Senior Vice President, General Counsel and Corporate Secretary of Xylem Inc., a spin-off of ITT Corporation. In prior public service, Mr. Jimenez served as the 21st General Counsel of the Navy, Deputy General Counsel (Legal Counsel) for the U.S. Department of Defense, Principal Deputy General Counsel of the Navy, Chief of Staff at the U.S. Department of Housing and Urban Development for Secretary Mel Martinez, and Deputy Chief of Staff and Acting General Counsel for Florida Governor Jeb Bush. Before entering government service, Mr. Jimenez was a litigation partner at Steel Hector and Davis LLP (now Squire Patton Boggs LLP). He began his legal career with a clerkship in the chambers of Judge Pamela Ann Rymer of the U.S. Court of Appeals for the Ninth Circuit in Pasadena, California. Other Directorships and Memberships and Education: Mr. Jimenez’s past and present civic service includes membership on the boards of the University of Miami, Equal Justice Works, the Pro Bono Partnership, the Atlantic Legal Foundation, the Columbia University Mailman School of Public Health, the Yale Law School Fund, the Yale Law School Association, the Yale Law School Center for the Study of Corporate Law, PioneerLegal and the Miami Christian School. Mr. Jimenez received a B.S. from the University of Miami and a J.D. from Yale Law School. He also received an M.B.A. in finance and strategic management from the University of Pennsylvania’s Wharton School and an M.A. in national security and strategic studies from the U.S. Naval War College, with an emphasis in the law of armed conflict. Mr. Jimenez is admitted to the bars of Florida, the District of Columbia, New York and the U.S. Supreme Court. Experience, Qualifications, Attributes and Skills: We believe Mr. Jimenez is qualified to serve as a director based upon his experience as the most senior legal officer of one of the largest aerospace and defense companies in the United States, as well as the most senior legal officer of three other S&P 500 companies. We believe Mr. Jimenez will also add skills and experience to the Board as a result of his significant experience inside the federal government, including his service as General Counsel of the Navy, our largest customer, and Deputy General Counsel for the Department of Defense. |
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The Board of Directors
CHRISTOPHER D. KASTNER President and Chief Executive Officer of Huntington Ingalls Industries, Inc. Director since March 2022 | Business Experience: Mr. Kastner was elected President and Chief Executive Officer of HII effective March 1, 2022. Prior to that, he was Executive Vice President and Chief Operating Officer from February 2021. In that role, he oversaw operations at HII’s three business segments and worked closely with segment management to drive execution on the company’s historic backlog. Mr. Kastner served as Executive Vice President and Chief Financial Officer from March 2016 to February 2021. In that role, he was responsible for directing the business strategy and processes in support of business growth and profitability goals. Mr. Kastner also had responsibility for corporate business management functions, including investor relations, treasury, internal audit, contracts, accounting, financial reporting, planning and analysis, rates and budgets and mergers and acquisitions. He also provided oversight for segment business management, contracts and estimating and pricing. From August 2012 until he became Chief Financial Officer of HII, Mr. Kastner served as Corporate Vice President and General Manager, Corporate Development, responsible for strategy and development activities, including the development and integration of strategic planning efforts, as well as the analysis and entrance into new adjacent markets. Prior to that and from March 2011, he served as Vice President and Chief Financial Officer of our Ingalls Shipbuilding segment. Before that and from 2008, Mr. Kastner served as Vice President, Business Management and Chief Financial Officer of Northrop Grumman Shipbuilding, Gulf Coast, and served as Vice President, Contracts and Risk Management of Northrop Grumman Ship Systems from 2006 to 2008. Prior to that, he held several positions at other Northrop Grumman businesses, including Corporate Director of Strategic Transactions. Other Directorships and Memberships and Education: Mr. Kastner holds a B.A. in Political Science from the University of California at Santa Barbara and an M.B.A. from Pepperdine University. He serves on the board of directors of WHRO, the only public broadcasting station in the United States owned by a collaboration of 19 local public school districts, and on the board of trustees for Eastern Virginia Medical School. Experience, Qualifications, Attributes and Skills: We believe Mr. Kastner is qualified to serve as a director based upon his experience as HII’s Chief Operating Officer, Chief Financial Officer and head of corporate strategy and development, as well as his experience in operations at our Ingalls Shipbuilding segment and its predecessor company as Chief Financial Officer and, before that, Vice President, Contracts and Risk Management. | |
ANASTASIA D. KELLY Senior Advisor to the Chair and Executive Director of Client Relations of DLA Piper Director since March 2011 | Business Experience: Ms. Kelly has served as Senior Advisor to the Chair and Executive Director of Client Relations of DLA Piper, a law firm, since April 2020. Prior to assuming her current position, Ms. Kelly served as Managing Partner of DLA Piper Americas from 2018, as Co-Managing Partner from 2013 to 2018 and as a partner since 2010. Prior to joining DLA Piper, Ms. Kelly was an executive officer of American International Group, Inc., a finance and insurance company, from 2006 to 2010, serving as Executive Vice President and General Counsel from 2006 to January 2009 and as Vice Chairman until December 2009, positions for which she was responsible for addressing legal, regulatory, corporate governance and risk management issues. Prior to joining American International Group, Ms. Kelly was an executive and general counsel of several large, publicly traded companies, including MCI WorldCom, Inc., Sears, Roebuck and Co., a department store company, and Federal National Mortgage Association, a finance company.
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Ms. Kelly, age 71, is Executive Director of Client Relations and U.S. Managing Partner Emeritus of DLA Piper.
Positions Held: Ms. Kelly has served as Executive Director of Client Relations and U.S. Managing Partner Emeritus of DLA Piper since April 2020. Prior to that, she served as Managing Partner of DLA Piper Americas from 2018, as Co-Managing Partner from 2013 to 2018 and as a partner since 2010. Prior to joining DLA Piper, Ms. Kelly was an executive officer of American International Group, Inc. from 2006 to 2010, serving as Executive Vice President and General Counsel from 2006 to January 2009 and as Vice Chairman until December 2009, positions for which she was responsible for addressing legal, regulatory, corporate governance and risk management issues. Prior to joining American International Group, Ms. Kelly was an executive and general counsel of several large, publicly traded companies, including MCI WorldCom, Sears, Roebuck and Co. and Fannie Mae.
Current Public Company Directorships: Ms. Kelly serves as a director and Chair of the Governance and Nominating Committee and member of the Risk Committee of Owens-Illinois, Inc., the world’s largest manufacturer of glass containers.
Other Directorships and Memberships and Education:
Prior Public Company Directorships: Ms. Kelly served as a director and Chair of the Governance and Nominating Committee and a member of the Risk Committee of Owens- Illinois, Inc., the world’s largest manufacturer of glass containers, from 1992 until 2022.
Other Directorships and Memberships and Education:Ms. Kelly serves on the boards of numerous philanthropic organizations and serves as a director of George Washington University Medical Faculty Associates. She is also past Chair of Equal Justice Works and a director of Lawyers for Children America. She was a director of Saxon Capital from 2005 to 2007. Ms. Kelly received a B.A., cum laude, from Trinity University and a J.D., magna cum laude, from The George Washington University Law School. She is a member of the Texas Bar and the District of Columbia Bar and a Fellow of the American Bar Foundation.
Experience, Qualifications, |
| 2023 Notice and Proxy Statement | 37 |
36 Huntington Ingalls Industries, Inc.
The Board of Directors
TRACY B. MCKIBBEN Founder & Chief Executive Officer of MAC Energy Advisors LLC Director since December 2018 | ||
Business Experience:Ms. McKibben
Current Public Company Directorships:Ms. McKibben serves on the board of directors of Ecolab Inc., a chemicals company, and serves as a member of its Audit Committee and Finance Committee.
Other Directorships and Memberships and Education:Ms. McKibben serves on the Board of Directors of United Services Automobile Association (USAA), a financial services company, and the Board of Trustees of the New York Power Authority. She is a member of the Council on Foreign Relations. Ms. McKibben
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Experience, Qualifications, |
STEPHANIE L. O’SULLIVAN Independent Business Consultant Director since January 2021 | ||
Business Experience:Ms. O’Sullivan
Other Directorships and Memberships and Education: Ms. O’Sullivan currently serves on the boards of directors of The Aerospace Corporation, Battelle Memorial Institute and HRL Laboratories (formerly Hughes Research Laboratories), the board of trustees of IQT (In-Q-Tel), the Accenture Federal Services proxy board and the CIA Officers Memorial
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Experience, Qualifications, environment of private organizations. |
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2021 Notice and Proxy Statement 37
The Board of Directors
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THOMAS C. SCHIEVELBEIN Retired Chairman, President and Chief Executive Officer of
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Director since March 2011 | |
Business Experience:Mr. Schievelbein
Current Public Company Directorships:Mr. Schievelbein has served on the board of directors of New York Life Insurance Co. since 2006 and currently serves as the Lead Director, as well as a member of the Compensation Committee, the Investment Committee and the Governance and Policy Committee.
Prior Public Company Directorships:Mr. Schievelbein previously served on the board of directors of The Brink’s Company from March 2009 until his retirement in May 2016, serving as Chairman of that board from June 2012. Before serving as Chairman, he served as a member of its Audit and Compensation Committees. Mr. Schievelbein served on the board of directors of McDermott International Inc., an engineering company, from 2004 to 2012.
Other Directorships and Memberships and Education:Mr. Schievelbein is a past member of the Secretary of the Navy’s Advisory Panel and was a director of the U.S. Naval Academy Foundation from 2004 through 2012. He received a B.S. in Marine Engineering from the U.S. Naval Academy and a Master’s Degree in Nuclear Engineering from the University of Virginia.
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Experience, Qualifications, |
38 Huntington Ingalls Industries, Inc.
The Board of Directors
JOHN K. WELCH Retired President and Chief Executive Officer of Centrus Energy Corp. Director since February 2015 | ||
Business Experience:Mr. Welch
Prior Public Company Directorships:Mr. Welch served on the board of directors of Centrus Energy Corp. and its predecessor, USEC Inc., from 2005 until 2013.
Other Directorships and Memberships and Education:Mr. Welch is retired Chairman of the Board of Battelle Memorial Institute and serves on the boards of Novawall Systems Incorporated and Mount St. Joseph High School. He received a B.S. in Aerospace Engineering from the U.S. Naval Academy, a Master’s Degree in Aeronautical Engineering from the Naval Postgraduate School and an M.B.A. from Loyola College.
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Experience, Qualifications,
Additional Information. Mr. Welch is the retired President and Chief Executive Officer of Centrus Energy Corp. (formerly USEC Inc.). Centrus Energy filed a voluntary petition under Chapter 11 of the federal bankruptcy code on March 5, 2014. On September 30, 2014, Centrus Energy emerged from Chapter 11, prior to Mr. Welch’s retirement from the company. |
Additional Information. Mr. Welch is the retired President and Chief Executive Officer of Centrus Energy Corp. (formerly USEC Inc.). Centrus Energy filed a voluntary petition under Chapter 11 of the federal bankruptcy code on March 5, 2014. On September 30, 2014, Centrus Energy emerged from Chapter 11, prior to Mr. Welch’s retirement from the company.
2021 Notice and Proxy Statement 39
The Board of Directors
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| 2023 Notice and | 39 |
40 Huntington Ingalls Industries, Inc.
Compensation elements for the Board of Directors are designed to:
promote alignment with long-term stockholder interests;
| • | promote alignment with long-term stockholder interests; |
enable us to attract and retain outstanding directors who meet the criteria described under “Governance of the Company” above;
| • | enable us to attract and retain outstanding directors who meet the criteria described under “Governance of the Company” above; |
recognize the substantial time commitments necessary to oversee the business of our company; and
| • | recognize the substantial time commitments necessary to oversee HII’s business; and |
| • | support the independence of thought and action expected of directors. |
support the independence of thought and action expected of directors.
Non-employee director compensation is evaluated annually by the Compensation Committee, which makes recommendations to the full Board for consideration and approval. In 2020,2022, the Compensation Committee’s independent compensation consultant, Exequity LLP (“Exequity”), conducted an assessment of the competitive market with respect to outside director compensation. Exequity’s assessment considered the following director compensation elements: board-related pay, committee-related pay, equity pay, total director compensation and chairman of the board compensation. Based upon an analysis of the 14 companies that comprise the peer group for our 20202022 NEO compensation analysis, as well as supplemental general industry data gathered from Fortune 500 companies, Exequity concluded that HII’s outside director total compensation is competitive within its market. Our CEO is not paid additional compensation for his service on ourthe Board.
Our director compensation program for non-employee directors is comprised of both cash retainers and equity awards in the form of either restricted stock units or shares of our common stock, in each case granted under our 20122022 Long-Term Incentive Stock Plan.
Non-employee directors receive an annual cash retainer of $100,000. Our non-executive Chairman ofThe following table sets forth the Board receives an additional annual cash retainer of $250,000. The additional annual cash retainers for serving as chairpersons of our standing Board committees are: $25,000 for Audit; $20,000 for Compensation; $20,000 for Cybersecurity; $20,000 for Governance and Policy; and $20,000 for Finance. The additional annual cash retainers for serving as members (but not as chairpersons) of the Board committees are: $17,500 for Audit; $7,500 for Compensation; $7,500 for Cybersecurity; $7,500 for Governance and Policy; and $7,500 for Finance. Cash retainers are paid on a quarterly basis at the end of each quarter in arrears.members:
| Annual Cash Retainer* | |||||
| Non-employee Directors | $ | 100,000 | |||
| Non-Executive Chairman of the Board | $ | 350,000 | |||
| Chairpersons of our Standing Board Committees | |||||
Audit | $ | 25,000 | |||
Compensation | $ | 20,000 | |||
Cybersecurity | $ | 20,000 | |||
Governance and Policy | $ | 20,000 | |||
Finance | $ | 20,000 | |||
| Other Members of our Standing Board Committees | |||||
Audit | $ | 17,500 | |||
Compensation | $ | 7,500 | |||
Cybersecurity | $ | 7,500 | |||
Governance and Policy | $ | 7,500 | |||
Finance | $ | 7,500 | |||
| * | Cash retainers are paid on a quarterly basis at the end of each quarter in arrears. |
Non-employee directors may elect to receive their annual cash retainers in the form of stock units payable upon termination of the director’s board service. Non-employee directors who elect to receive their annual cash retainers in the form of stock units and own shares of our common stock having a value at least five times the director’s annual cash retainer may elect to receive stock units for the following calendar year either shares of our common stock or stock units that are payable in the fifth calendar year after the year in which the stock units are earned (or, if earlier, upon termination of the director’s board service). The stock units are fully vested on the date of grant.
Non-employee directors also receive an annual equity award of restricted stock units or shares of our common stock, valued at $130,000. On the first trading day of each quarter, each non-employee director is granted a number of restricted stock units or shares determined by dividing $32,500 by the per share closing price of our common stock on the NYSE on the date of grant, rounded down to the nearest whole unit or share.
| 40 | Huntington Ingalls Industries, Inc. |
2021 Notice and Proxy Statement 41
Director Compensation
year after the year in which the stock units are earned (or, if earlier, upon termination of the director’s board service). The common stock or stock units are fully vested on the date of grant.
Non-employee directors also receive an annual equity award of restricted stock units or shares of our common stock, valued at $160,000. On the first trading day of each quarter, each non-employee director is granted a number of restricted stock units or shares determined by dividing $40,000 by the per share closing price of our common stock on the NYSE on the date of grant, rounded down to the nearest whole unit or share.
Restricted stock unit awards are fully vested at date of grant but do not generally become payable until 30 days following the date a non-employee director ceases to serve on the Board. Non-employee directors receive dividend equivalents on their outstanding and unpaid restricted stock units. Dividend equivalents are paid in the form of a credit of additional restricted stock units and are subject to the same vesting, payment and other provisions as the underlying restricted stock units.
If a non-employee director owns shares of our common stock having a value at least five times the director’s annual cash retainer, the director may elect to receive his or her annual equity award in the form of either shares of our common stock or stock units that are payable in the fifth calendar year after the year in which the annual equity award is earned (or, if earlier, upon termination of the director’s board service). The common stock or stock units are fully vested on the date of grant.
20202022 DIRECTOR COMPENSATION TABLE
The following table sets forth the compensation for the year ended December 31, 2020,2022, of our non-employee directors who served during any part of 2020.2022.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | ||||||||||||||||||||||||||
Philip M. Bilden | 127,594 | 129,833 | — | 257,427 | — | (3) | 187,159 | (4) |
| — | 187,159 | |||||||||||||||||||||||
Augustus L. Collins |
| — | (2) | 254,668 | (3) | — | 254,668 |
| — | (3) | 284,350 | (5) |
| — | 284,350 | |||||||||||||||||||
Leo P. Denault | 9,171 | — |
| — | 9,171 | |||||||||||||||||||||||||||||
Kirkland H. Donald | 279,710 | 129,833 | — | 409,543 | 350,000 | 159,876 |
| — | 509,876 | |||||||||||||||||||||||||
Thomas B. Fargo (4) | 114,422 | 64,870 | — | 179,292 | ||||||||||||||||||||||||||||||
Victoria D. Harker |
| 127,500 |
| 129,833 | — | 257,333 |
| 127,500 | 159,876 |
| — | 287,376 | ||||||||||||||||||||||
Frank R. Jimenez | 106,693 | 159,825 |
| — | 266,518 | |||||||||||||||||||||||||||||
Anastasia D. Kelly | 116,923 | 129,833 | — | 246,756 | 115,000 | 159,876 |
| — | 274,876 | |||||||||||||||||||||||||
Tracy B. McKibben | 110,557 | 129,833 | — | 240,390 |
| 115,000 | 159,876 |
| — | 274,876 | ||||||||||||||||||||||||
Stephanie L. O’Sullivan | 120,196 | 159,876 |
| — | 280,072 | |||||||||||||||||||||||||||||
Thomas C. Schievelbein |
| 137,500 |
| 129,833 | — | 267,333 |
| 137,500 | 159,876 |
| 4,849 | 302,225 | ||||||||||||||||||||||
John K. Welch | 135,576 | 129,833 | — | 265,409 | 137,500 | 159,876 |
| — | 297,376 | |||||||||||||||||||||||||
Stephen R. Wilson | 132,500 | 129,833 | — | 262,333 | 132,500 | 159,876 |
| — | 292,376 | |||||||||||||||||||||||||
| (1) | The values for stock awards represent the grant date fair values of restricted stock units or shares of common stock granted in |
| (2) | Represents value of spousal travel to board- or company-related events. |
| (3) | Mr. Bilden and Gen. Collins elected to receive |
$ |
| (5) | $124,474 of this amount represents stock units issued to Gen. Collins in lieu of his |
| ||||||
| 2023 Notice and Proxy Statement | 41 |
42 Huntington Ingalls Industries, Inc.
INTRODUCTION
This section provides information about our executive compensation program with respect to the 20202022 compensation of each of the individuals who served as our Principal Executive Officer, our Chief Financial Officer during 2020 and our three other most highly compensated executive officers in 20202022 (our “NEOs”). OurC. Michael Petters served as Chief FinancialExecutive Officer for alluntil March 1, 2022, when his retirement from that position and his appointment as Executive Vice Chairman of 2020 wasthe Board became effective. Christopher D. Kastner. Mr. Kastner was electedserved as our Chief Operating Officer effective February 12, 2021.until March 1, 2022, when his election to Chief Executive Officer became effective. This section includes biographies of our NEOs, the Compensation Discussion and Analysis, which explains how and why the Compensation Committee made its compensation decisions for the NEOs, the Report of our Compensation Committee, and the detailed executive compensation tables required by the SEC, with related narrative disclosure.
NAMED EXECUTIVE OFFICER BIOGRAPHIES
The following biographies provide information regarding the experience and education of our NEOs.
C. Michael Petters,Christopher D. Kastner, President and Chief Executive Officer (formerly Chief Operating Officer)
Mr. Petters has served asKastner, age 59, was elected President and Chief Executive Officer, of HII sinceeffective March 2011, when Huntington Ingalls Industries began operating1, 2022, after serving as a stand-alone public company following a spin-off from Northrop Grumman Corporation. Mr. Petters is also a member of our Board.
Mr. Petters is responsible for leading the design, construction and overhaul of conventionally powered surface combatants, amphibious and auxiliary ships and nuclear-powered submarines and aircraft carriers, as well as business opportunities in adjacent markets. From 2008 until he assumed his current position, he served as president of Northrop Grumman Shipbuilding. Prior to that, he served as president of the Newport News sector of Northrop Grumman Corporation.
Mr. Petters joined Newport News Shipbuilding in 1987 in the Los Angeles-class submarine construction division. He subsequently held a number of positions of increasing responsibility throughout the organization, including production supervisor for submarines, marketing manager for submarines and carriers, vice president for aircraft carrier programs, vice president for contracts and pricing, and vice president for human resources.
A native of Florida, Mr. Petters earned a B.S. in Physics from the U.S. Naval Academy in 1982, served aboard the nuclear-powered submarine USS George Bancroft and spent five years in the Naval Reserve. He earned an M.B.A. from the College of William and Mary.
Mr. Petters serves as Vice Chairman of the Aerospace Industries Association and as a trustee of the Committee for Economic Development. He also serves on the boards of directors of the National Association of Manufacturers and the U.S. Naval Academy Foundation. Mr. Petters is a member of the Board of Advisors to the Center for a New American Security.
Christopher D. Kastner, Executive Vice President and Chief Operating Officer (formerly Chief Financial Officer)
Mr. Kastner was elected Executive Vice President andbeginning February 2021. As Chief Operating Officer, effective February 12, 2021.Mr. Kastner oversaw HII’s three operating segments and worked closely with the segment presidents to drive execution on HII’s historic backlog. Prior to that (and for all of 2020),serving as Chief Operating Officer, he served as Executive Vice President and Chief Financial Officer from March 2016. In that role, Mr. Kastner was responsible for directing the business strategy and processes in support of business growth and profitability goals. He also had responsibility for corporate business management functions, including investor relations, treasury, internal audit, contracts, accounting, financial reporting, planning and analysis, rates and budgets and mergers and acquisitions. Mr. Kastner also provided oversight for segment business management, contracts and estimating and pricing.
2021 Notice and Proxy Statement 43
Executive Compensation
From August 2012 until he became Chief Financial Officer of HII, Mr. Kastner served as Corporate Vice President and General Manager, Corporate Development, responsible for strategy and development activities, including the development and integration of strategic planning efforts, as well as the analysis and entrance into new adjacent markets. Prior to that and from March 2011, he served as Vice President and Chief Financial Officer of our Ingalls Shipbuilding segment. Before that and from 2008, Mr. Kastner served as Vice President, Business Management and Chief Financial Officer of Northrop Grumman Shipbuilding, Gulf Coast, and served as Vice President, Contracts and Risk Management of Northrop Grumman Ship Systems from 2006 to 2008. Prior to that, he held several positions at other Northrop Grumman businesses, including Corporate Director of Strategic Transactions.
Mr. Kastner holds a B.A. in Political Science from the University of California at Santa Barbara and an M.B.AM.B.A. from Pepperdine University. He serves on the board of directors of WHRO, the only public broadcasting station in the United States owned by a collaboration of 19 local public school districts, and on the board of trustees for Eastern Virginia Medical School.
Brian J. Cuccias,C. Michael Petters, Executive Vice Chairman of the Board (formerly President and Chief Executive Officer)
Mr. Petters, age 63, served as President and Chief Executive Officer of HII from March 2011, when Huntington Ingalls Industries began operating as a stand-alone public company following a spin-off
| 42 | Huntington Ingalls Industries, Inc. |
Executive Compensation
from Northrop Grumman Corporation, until March 1, 2022, when he retired as President and CEO. He was appointed Executive Vice Chairman of the Board effective March 1, 2022, and retired from that position effective January 1, 2023.
Thomas E. Stiehle, Executive Vice President and Chief Financial Officer
Mr. Stiehle, age 57, was elected Executive Vice President and Chief Financial Officer effective February 2021. In this role, he is responsible for directing HII’s processes in support of business growth and profitability goals. Mr. Stiehle also has responsibility for corporate business management functions, including investor relations, treasury, internal audit, contracts, accounting, financial reporting, planning and analysis, rates and budgets and mergers and acquisitions.
From October 2012 until Mr. Stiehle assumed his current position, he served as Vice President and Chief Financial Officer of our Ingalls Shipbuilding segment. Prior to that, he served as Vice President, Contracts and Pricing, for Ingalls Shipbuilding. Prior to joining HII in 2011, Mr. Stiehle worked for Northrop Grumman, Aerospace Sector, for 24 years. He holds a B.S. in Mechanical Engineering from Hofstra University, an M.B.A. from Adelphi University and a Master’s Degree in Acquisition and Contract Management from Florida Institute of Technology.
Chad N. Boudreaux, Executive Vice President and Chief Legal Officer
Mr. Boudreaux, age 49, was appointed Executive Vice President and Chief Legal Officer effective April 2020. In this position, he has overall leadership responsibility for our law department and outside counsel, which provide a broad range of legal advice and support for our business activities, including corporate governance matters, compliance, litigation management, and mergers and acquisitions. Prior to his current position, Mr. Boudreaux managed our litigation docket and oversaw our nationally recognized compliance program as our first chief compliance officer. He joined HII in 2011 as Corporate Vice President for Litigation, Investigations and Compliance.
Before joining HII, Mr. Boudreaux practiced law at Baker Botts LLP, where he established the law firm’s Global Security and Corporate Risk Counseling practice group. Prior to that, he held various high-ranking positions in the U.S. government, including deputy chief of staff of the U.S. Department of Homeland Security and leadership positions at the U.S. Department of Justice. Mr. Boudreaux earned a B.A. from Baylor University and a J.D. from the University of Memphis School of Law. He is a recipient of the U.S. Justice Department’s Special Commendation for Outstanding Service for his work on high-stakes litigation for the United States.
Kara R. Wilkinson, Executive Vice President and President, Ingalls Shipbuilding
Mr. CucciasMs. Wilkinson, age 48, has served as Executive Vice President and President, of Ingalls Shipbuilding, since April 2014. He is responsible for all programs and operations1, 2021.
From May 2016 until she assumed her current position, Ms. Wilkinson served as Vice President of Program Management at Ingalls including U.S. Navy destroyers, amphibious assault and surface combatant programs, and the U.S. Coast Guard cutter program.
Shipbuilding. Prior to his current positionthat, she held various positions in Business Development and from February 2011, Mr. Cuccias served in several different positionsEngineering at our Ingalls Shipbuilding, segment, including vice president, program management, vice president, amphibious ship programs, and vice president, large deck amphibious ships. From 2008 to February 2011, he was vice president, surface combatants for Northrop Grumman Shipbuilding. After joiningafter beginning her career at Ingalls Shipbuilding in 1996 as a predecessor of Northrop Grumman in 1979, he held a variety of positions, including assistant to the group vice president of Avondale Industries, sector vice president, material, for Northrop Grumman Ship Systems, and DDG(X) and DDG 1000 program manager and vice president.naval architect.
Mr. Cuccias earnedMs. Wilkinson holds a B.S. in AccountingNaval Architecture and Marine Engineering from the University of South AlabamaMichigan and has attended executive education programs at Harvard Business School and the University of Pennsylvania’s Wharton School. He is a member of the Executive Committee of the Mississippi Gulf Coast Business Council and serves on the boards of directors of the Mississippi Economic Council (the state’s chamber of commerce), the Jackson County Economic Development Foundation and the Salvation Army of Mobile.an M.B.A. from Temple University.
Jennifer R. Boykin, Executive Vice President and President, Newport News Shipbuilding
Ms. Boykin, age 58, has served as Executive Vice President and President, Newport News Shipbuilding, since July 2017.
| 2023 Notice and Proxy Statement | 43 |
Executive Compensation
From 2012 until she assumed her current position, Ms. Boykin was Vice President, Engineering and Design for Newport News Shipbuilding. Since joining Newport News Shipbuilding in the Nuclear Division in 1987, Ms. Boykin has had a variety of responsibilities, including serving as Vice President of Quality and Process Excellence, Director of Facilities and Waterfront Support, and program manager for the Nuclear Engineering Division. Ms. Boykin also served as a construction superintendent for the aircraft carrier program during construction of USS John C. Stennis and USS Harry S. Truman.
Ms. Boykin holds a B.S. in Marine Engineering from the U.S. Merchant Marine Academy and a Master’s Degree in Engineering Management from The George Washington University.
44 Huntington Ingalls Industries, Inc.
Executive Compensation
Edgar A. Green III, Executive Vice President and President, Technical Solutions
Mr. Green has served as Executive Vice President and President, Technical Solutions since December 2016.
Prior to his current position and from January 2015, Mr. Green served as Corporate Vice President, Corporate Development. From January 2013 to January 2015, he served as Vice President, Component Manufacturing, for Newport News Shipbuilding, and, from March 2011 to January 2013, he served as Corporate Vice President, Investor Relations, of HII. Prior to joining HII in 2011, Mr. Green served as Vice President of Investor Relations at Celanese Corp. Before that he was an investment banker and research analyst at Wells Fargo, where he covered the defense and aerospace industry, and a manufacturing plant engineer and maintenance manager at Eaton Corp.’s Truck Components Division.
Mr. Green served as a U.S. Navy nuclear submarine officer. He holds a B.S. in Systems Engineering from the U.S. Naval Academy and an M.B.A. from Duke University.
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis, or CD&A, provides information relevant to understanding the 20202022 compensation of our Named Executive Officers.
Huntington Ingalls IndustriesHII is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s largest military shipbuilding companyseas, sky, land, space and a provider of professional services to partners in government and industry.cyber. For more than a century, HII’s Newport News Shipbuilding segment in Virginia and Ingalls Shipbuilding segment in Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical SolutionsOur Mission Technologies segment provides a wide range of professional services, including defensedelivers high-value engineering and federaltechnology solutions to enable multi-domain distributed operations in the government and nuclear and environmental services, and unmanned systems.commercial markets. Headquartered in Newport News, Virginia, HII employs approximately 42,00043,000 people both domestically and internationally. The goal of our executive compensation program is to support a pay-for-performance culture by implementing compensation programs that are market competitive, customer-focused and fair to our stockholders.
Our 20202022 NEOs are:
| • | President and Chief Executive Officer (formerly Executive Vice President and Chief Operating Officer) | |
| • | Executive Vice Chairman of the Board (formerly President and Chief Executive Officer) | |
| • Thomas E. Stiehle | Executive Vice President and Chief Financial Officer | |
| • | Executive Vice President and Chief Legal Officer | |
| • Kara R. Wilkinson | Executive Vice President and President, Ingalls Shipbuilding | |
| • | ||
| Executive Vice President and President, Newport News Shipbuilding |
Executive Summary
Our executive compensation program and practices are described in detail over the following pages. We have designed our executive compensation program to attract, motivate and retain highly qualified executives, incentivize our executives to achieve business objectives, reward performance and align the interests of our executives with the interests of our stockholders and customers. The fundamental philosophy of our executive compensation program, set by the Compensation Committee of the Board, is pay for performance. We have also designed our compensation program to balance performance-based compensation over the short-short-term and long-term to incentivize decisions and actions that promote stockholder value and focus our executives on performance that benefits our stockholders and customers, while discouraging inappropriate risk-taking behaviors.
2021 Notice and Proxy Statement 45
Executive Compensation
The pay-for-performance philosophy of our executive compensation program is demonstrated by the compensation mix of our NEOs. Of the three primary elements of total direct compensation, our executive compensation is heavily weighted toward the variable, performance-based elements, and
| 44 | Huntington Ingalls Industries, Inc. |
Executive Compensation
toward the long-term and equity-based elements, as reflected in the following charts, which set forth the percentage of total compensation corresponding to each compensation element received by our CEO and by our other NEOs collectively in 2020.2022.
| CEO1 | Other NEOs2 | |
|
|
| (1) |
|
| (2) |
|
100%78% of Mr. Petters’Kastner’s total direct compensation in 20202022 was directly linked to our performance through his annual and long-term incentive awards. 69%An average of 75% of the total direct compensation of our other NEOs was comprised of performance-based incentive awards.
Our underlying philosophy of pay for performance focuses us consistentlyincentivizes our constant focus on achieving our financial and operational goals. Above all, these goals are customer-focused, rewarding safety, quality, cost and schedule performance, and stockholder-friendly, rewarding consistent achievement of strong financial results and increasingcreation of long-term sustainable stockholder value.
20202022 Business Highlights
2022 was a year of stable execution in the face of broader operating environment challenges. In 2022 we delivered or re-delivered four critical assets to the U.S. Navy, including the delivery of amphibious transport dock Fort Lauderdale (LPD 28), the delivery of guided-missile destroyer Lenah Sutcliffe Higbee (DDG 123), the re-delivery of Los Angeles-class submarine USS Helena (SSN 725) and the delivery of Virginia-class submarine Montana (SSN 794). While 2020 was onewe executed on current program milestones, we also were awarded new contracts totaling $9.3 billion in 2022, resulting in backlog of $47.1 billion at year-end, representing many years of future work. At Mission Technologies, the mostintegration of Alion is substantially complete, and the segment achieved significant programmatic wins that would not have been possible without the capabilities added from Alion. 2022 successes were achieved while we aggressively managed through a difficult environment, including a challenging business environments HII has ever had to navigate, we endured the difficulties and uncertainties of the COVID-19 pandemiclabor market, accelerating inflation and continued to achieve significant milestones on our programs and continued making meaningful contributions to United States national security. supply chain pressures.
Our financial achievements in 20202022 included:
$8.9
| • | $9.3 billion in new contract awards.
Executive Compensation
Our operational achievements in 2022 included:
Commitment to Compensation Best Practices We highlight below certain executive compensation practices we have implemented to drive performance, as well as certain practices we have avoided
Executive Compensation
Executive Compensation Principles The Compensation Committee of the Board (which we refer to as the “Committee” in this CD&A) is comprised exclusively of independent directors, as determined under NYSE corporate governance listing standards, including the enhanced independence
Executive Compensation
Pay for Performance The fundamental philosophy of our executive compensation program is pay for performance. Our pay-for-performance philosophy and compensation principles are designed to attract, motivate and retain highly-qualified executives, incentivize our executives to achieve business objectives, reward performance and align the interests of our executives with the interests of our stockholders and customers. As such, we provide significant reward opportunities to our NEOs linked to achievement of our financial and operational goals. Above all, these goals are customer-focused, rewarding achievement of safety, quality, cost and schedule goals, and stockholder-friendly, rewarding consistent achievement of strong financial results and building or increasing stockholder value. Performance-based compensation is balanced over the
Executive Compensation This focus on performance is demonstrated in the compensation mix of our NEOs. Our executive compensation is heavily weighted toward the variable, performance-based elements, and toward the long-term and equity-based elements, as reflected in the following charts, which set forth the percentage of total target compensation corresponding to each compensation element for our CEO and for our other NEOs collectively for
The design of our incentive compensation plans also supports our pay-for-performance philosophy. A significant portion of the potential compensation of our executives is at risk, and that risk corresponds with each executive’s level of responsibility. Exceeding our financial and operational targets can result in a payout of up to 200% of the original award target, while failure to meet our targets can result in no
Consistent with our goal of supporting a pay-for-performance philosophy by implementing compensation programs that reward performance, are market competitive and align the interests of our executives with the interests of our stockholders and customers, we seek the views of our stockholders annually on the design, effectiveness and results of our executive compensation program.
At our Retention of Independent Compensation Consultant The Committee continued in
Executive Compensation Exequity attended several Committee meetings during Compensation Consultant Independence Assessment In accordance with SEC rules and NYSE listing standards, the Committee requested and received information from Exequity relating to the consultant’s independence and potential conflicts of interest, including information regarding the following: (1) other services provided to us by the consultant; (2) fees paid by us as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the Committee; (5) any company stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement. Based upon an assessment of these factors, including information gathered from our directors and executive officers relating to business or personal relationships with the consulting firm or the individual consultants, the Committee concluded that the consultant is independent and that the work of the consultant did not raise any conflict of interest. Peer Group Development The Committee believes our total compensation program (base salary, target annual cash incentive awards, target long-term incentive awards and benefits) should provide aggregate compensation at approximately the 50th percentile of the relevant market. Based upon an analysis conducted by Exequity and reviewed with the Committee, the Committee determined that our NEO base pay generally approximates the median and long-term incentive compensation is generally in the third or fourth quartile among the peer companies. This compensation mix is consistent with both management’s and the Committee’s philosophy that a significant portion of an executive’s overall compensation package should be based on the performance of the company and therefore at risk. HII is a unique business with few directly comparable peer companies. As such, our current peer group is comprised of heavy manufacturing, engineering and defense companies that have annual revenues generally between $5 billion and $20 billion and that most closely match our company in terms of market cap, strategic interest, workforce similarities and/or business type. The median annual revenues for peer
group companies was
Executive Compensation Compensation Risk Assessment The Board actively oversees our overall risk profile, including the potential risk posed by our compensation programs. During the third quarter of The following factors are key components of our executive compensation risk mitigation efforts:
The direct compensation elements for executives under our compensation program consist primarily of base salaries, annual incentive awards and long-term incentive awards. Annual base salary provides a fixed minimum level of compensation that is competitive within the relevant market and helps us attract and retain highly qualified executives. Annual incentive awards are generally paid in cash and intended to motivate executives to achieve pre-determined annual financial and operational goals that are aligned with our strategic goals. Long-term incentive awards are generally equity-based and intended to promote achievement of pre-determined three-year financial performance goals aligned with long-term stockholder interests.
Key compensation decisions for our NEOs for
Base Salaries
Base salaries for our NEOs for
Creation of Annual Incentive Plan The Committee approved financial metric goals under our AIP for the corporate office, as well as a combination of financial and operational metric goals for each of our three operating divisions. The guiding principle behind all of our performance metrics is that they drive the desired outcomes to promote customer satisfaction and increase stockholder value.
Executive Compensation Division operational goals based on clear and measurable results were developed collaboratively between division management and corporate management. Shipbuilding division operational goals fall into the categories of safety, quality, cost, schedule, diversity and inclusion, division-specific challenges and opportunities and cross-shipbuilding collaboration.
division-specific challenges. The Committee approved financial goals for the LTIP to reward performance in three-year increments. The performance metrics for all participants under the LTIP for ROIC is a measure of our ability to use cash flows to generate returns. ROIC is calculated as Adjusted Free Cash Flow divided by average Invested Capital. Adjusted Free Cash Flow represents cash flow available to HII’s equity and debt stakeholders, calculated as Free Cash Flow (cash from operations less capital expenditures net of related grant proceeds) plus after-tax interest. Average Invested Capital is equal to total debt, plus equity, less goodwill and the impact of any Accumulated Other Comprehensive Income/Loss. EBITDAP is a key indicator of our financial Relative EBITDAP growth is defined as our EBITDAP ending balance less our EBITDAP beginning balance, divided by the EBITDAP beginning balance, measured against EBITDAP growth of the S&P Aerospace and Defense Select Index (SPSIAD), which consists of more than 30 companies. Annual Incentive Compensation Awards The Committee approves annual incentive compensation targets as a percentage of base salary for each NEO position. Targets vary with relevant benchmark market levels, individual job level, job scope and overall influence on our business results. The Committee considers both the recommendations of its compensation consultant and those of management in determining appropriate annual incentive
Annual incentive awards for
Executive Compensation Achievement of the maximum performance criteria results in a CPF of 2.0. If the CPF for the corporate office is less than 0.5, no annual incentive award is paid. The IPF can range from 0 to 1.5. No annual incentive award can exceed 200% of an individual’s Target Bonus. The annual incentive award formula for the corporate office for the Base Salary x Target % = Target Bonus Target Bonus x CPF x IPF = Final Bonus Award Upon Mr. Kastner’s election as President and Chief Executive Officer, his base salary was increased from $721,000 to $1,100,000 and his AIP target as a percentage of salary was increased from 90% to 125%. As a result, his AIP target value was prorated for 2022 based on the amount of time he served as Chief Operating Officer and as President and CEO during the year. Upon Mr. Petters’ retirement as President and Chief Executive Officer and his appointment as Executive Vice Chairman of the Board, his base salary was increased from $1 to $770,000. His AIP target as a percentage of salary remained the same at 125%. As President and Chief Executive Officer, Mr. Petters’ base salary used for incentive compensation purposes was $1,100,000. As a result of his base salary increase, his AIP target value was prorated for 2022 based on the amount of time he served as President and CEO and as Executive Vice Chairman of the Board during the year. The
Achievement of the Base Salary x Target % = Target Bonus Target Bonus x DPF x IPF = Final Bonus Award At the conclusion of each calendar year, our CEO conducts an annual performance evaluation for each NEO
The Committee reviews and considers the recommendations from the CEO and all performance information, including a comparison to the Target Bonus Amounts Based on analyses of relevant market benchmarks and peer group data,
Executive Compensation
For The corporate AIP score The Ingalls Shipbuilding division and the Newport News Shipbuilding division performance scores
Executive Compensation The Mission Technologies division performance score was based 40% on the division operational score and
*The
All of the AIP goals for our NEOs are recommended by our CEO and then approved by the Committee. AIP goals are plan-based, with minimum and maximum limits based on clear targets connected to our annual operating Corporate
Executive Compensation
Ingalls Shipbuilding
Newport News Shipbuilding
2022 AIP payouts for the NEOs at the Ingalls Shipbuilding and Newport News Shipbuilding divisions were made at the performance scores reflected in the
Executive Compensation 2023 Annual Incentive Plan Performance Metric Changes For 2023, the Committee approved a change to the metrics utilized to measure performance for the corporate office and division annual incentive awards. For AIP awards covering the performance period of January 1, 2023 through December 31, 2023, a metric related to strategic leadership, comprised of leadership, sustainability, cybersecurity and compliance goals, will be added to the AIP. Long-Term Incentive Compensation Awards Our long-term incentive compensation goals are intended to reward three-year performance increments based primarily upon the achievement of financial metrics. Long-term incentive compensation for our NEOs is provided in the form of Restricted Performance Stock Rights (“RPSRs”). Each RPSR represents the right to receive one share of our common stock, or cash of equivalent value, subject to vesting as provided in the award. Vesting occurs The Committee determines long-term incentive compensation target values for our NEOs based upon a peer group analysis, applying value-based guidelines that focus on the award value, rather than the number of shares granted (share-based guidelines). The Committee believes value-based guidelines more effectively deliver long-term incentive compensation awards that are consistent with awards received by individuals holding comparable positions at peer companies.
Long-term incentive compensation awards in
and evaluate RPSR performance goals to ensure they are aligned with our long-term objectives. For the For
Executive Compensation The target dollar amounts are grant date theoretical values and not based upon any actual calculation or estimate of payout. An NEO is not guaranteed to receive any payout as a result of the
During the first quarter of each year, the Committee reviews our financial performance over the prior three years against approved long-term incentive compensation goals to determine payout multiples for RPSRs with a performance period that ended December 31 of the prior year. At the
The
Additional Benefits We provide additional benefits to our NEOs through various plans that are also available to some or all of our other employees. Although these plans are not directly overseen by the Committee, the Committee considers benefits under these plans when considering an executive’s total annual compensation and determining the annual and long-term compensation components. These benefits are not performance-related and are designed to provide a market competitive compensation package to attract, motivate and retain the executive talent we need to achieve our business objectives. The plans include broad-based retirement plans, as well as additional supplemental executive Defined Benefit Retirement Plans. We maintain tax-qualified defined benefit pension plans that cover all but one of our NEOs and the majority of our workforce. These plans are structured to retain and reward employees for long service and to recognize higher performance levels through annual pay increases. Compensation, age and service factor into the amount of the benefits provided under the plans. We also maintain non-tax-qualified supplemental defined benefit pension plans that cover all but one of our NEOs. These plans provide benefits that would have been provided under the tax-qualified plans if no limits applied to such plans under the Internal Revenue
Executive Compensation Defined Contribution Savings Plans. We maintain tax-qualified defined contribution savings plans that cover our NEOs and the majority of our workforce. Participating employees contribute portions of their pay to the plans, and the company generally provides a matching contribution. We also maintain two non-tax-qualified supplemental savings plans that cover all eligible employees, including our NEOs. The Savings Excess Plan (“SEP”) allows eligible employees to defer compensation beyond the IRC limits of the tax-qualified plans and receive a matching company contribution. Eligibility begins when annual income, including base pay and bonuses, equals or exceeds The Officers Retirement Account Contribution Plan (“ORAC”) covers the majority of the company’s elected and appointed officers hired on or after July 1, 2008, who are not eligible for defined benefit pension plans. Enrollment is automatic, and the company contributes an amount equal to 4% of the officer’s eligible compensation. Because Mr. Special Officer Retiree Medical Plan.
Perquisites. Our NEOs are eligible for certain executive perquisites, which include financial planning, dental coverage, physical exams, personal liability insurance and relocation benefits. These perquisites are common within our industry and comprise an important component of our total compensation package. Management and the Committee review perquisites and benefits on an annual basis to ensure they are appropriate. Severance Benefits. Management and the Committee believe severance benefits are appropriate for a reasonable amount of time following certain terminations of employment, including a termination without cause. In addition to providing a severance plan for all employees, we maintain The Severance Plan for Elected and Appointed Officers of Huntington Ingalls Industries. Benefits under this plan for our NEOs include the following:
Additional Compensation Policies Total Compensation—Tally Sheet Management provides the Committee with a total compensation and benefits perspective for each NEO, which includes a tally sheet that captures each element of total compensation and benefits. In conjunction with the Committee’s consideration of NEO compensation compared to the company’s peer group, this tally sheet ensures that compensation decisions are made within a total compensation framework. The tally sheet provides a broad perspective that covers basic annual compensation components, as well as an annualized value of the benefits and perquisites each NEO receives. Accordingly, the values of nonqualified deferred compensation, outstanding equity awards, health and welfare benefits, pension benefits and perquisites are included. Tax Deductibility of Prior to January 1, 2018, Section 162(m) of the Internal Revenue Code generally limited the deductibility of non-performance based compensation to $1 million each for a public company’s CEO and next three highest-paid executive officers (other than the CFO). Among the provisions included in the Tax
Grant Date for Equity Compensation Awards Our annual grant cycle for long-term incentive compensation equity awards occurs simultaneously with annual salary increases and annual incentive compensation awards. We expect this to occur in the first two and one-half months of each year. This timing allows management and the Committee to make decisions on all three compensation elements at the same time to promote a total compensation approach. Stock Ownership Guidelines To promote ownership of our common stock by our executives and alignment of management and stockholder interests, we have adopted stock ownership guidelines that prescribe pre-determined stock ownership levels for certain executives, expressed as a multiple of the executive’s base salary. The stock ownership guidelines prescribe the following ownership levels:
The ownership guidelines may be satisfied in one or more of the following ways:
As of February 28,
Stock Holding Requirement To supplement our stock ownership guidelines, we adopted stock holding requirements for our NEOs and other officers. Under the holding requirements, our NEOs and other officers must hold at least 50% of the total number of shares of our common stock received as compensation until the earlier of (a) the third anniversary of the date such shares are issued or (b) the date that employment terminates due to death or disability. The holding requirement continues upon termination or retirement for a one-year period after separation from the company and applies to any equity compensation award vesting in that one-year period. Any equity compensation award vesting or stock options exercised after the one-year anniversary of retirement or termination are not subject to the holding requirement.
Executive Compensation Recoupment The Committee has adopted the Policy Regarding the Recoupment of Certain Performance-Based Compensation Payments (“clawback policy”), which requires reimbursement of all or a portion of any performance-based Trading Restrictions and Policy Against Hedging and Pledging Our insider trading policy prohibits directors, officers and employees from buying or selling securities of any company while aware of material non-public information about that company, subject to certain limited exceptions involving pre-arranged trading plans, and from providing such material non-public information to any person who may trade on the basis of such information. This policy also prohibits directors, officers
Executive Compensation COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management this Compensation Discussion and Analysis and, based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, Submitted by members of the Compensation Committee: Victoria D. Harker, Chairwoman
Anastasia D. Kelly
Executive Compensation
The following table summarizes the compensation for our Summary Compensation Table
Executive Compensation
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K promulgated under the Securities For
We determined that, as of December 31, Our practice is to Once we identified the median employee, we calculated annual total compensation for such employee using the same methodology we use for reporting compensation of our NEOs on the
Executive Compensation
2022 Grants of Plan Based Awards The following table provides additional information about equity and non-equity incentive compensation awards we granted to our NEOs during the year ended December 31,
Executive Compensation
Outstanding Equity Awards at The following table summarizes the equity compensation awards made to our NEOs that were outstanding as of December 31, Outstanding Equity Awards at
Executive Compensation
Option Exercises and Stock Vested in The following table provides additional information about the value realized by our NEOs on vesting of stock awards during the year ended December 31,
Executive Compensation
The following table shows the present value of accumulated benefits payable to each of our NEOs under the qualified defined benefit pension plans and nonqualified defined benefit pension plans that we sponsor.
The pension values represent the present values of the benefits expected to be paid in the future. They do not represent actual lump sum values that may be paid from a plan. The amount of future payments is based on the current accrued pension benefit as of December 31,
Executive Compensation
General Explanation of the Pension Benefits Table Individual employees may be covered by several different pension plans as a result of our history as a division of Northrop Grumman. However, an executive’s total benefit under the pension plans is essentially limited to 60% of his or her final average pay. The accrued tax qualified pension benefit cannot be reduced or taken away under applicable law, so all historical pension plans have been maintained. Pension plans provide income during retirement, as well as benefits in special circumstances, including death and disability. In general, the plans are structured to reward and retain employees of long service and recognize higher achievement levels through increases in annual pay. The term “qualified plan” generally means a plan that qualifies for favorable tax treatment under The amounts in the table are based upon the specific provisions of each plan, which are described in more detail below. Two basic types of pension benefits are reflected in the Pension Benefits table: traditional benefits and cash balance benefits. For purposes of computing amounts in the table, traditional benefits are determined based on the annual pension earned as of December 31,
Effective December 31, 2014, the following plans in which our NEOs participate were consolidated to form the Huntington Ingalls Industries Omnibus Supplemental Retirement Plan: HII Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan, The changes in pension values shown in the Summary Compensation Table include the effect of:
Executive Compensation
Description of Qualified Plans Huntington Ingalls Industries Retirement Plan “B” and HII Newport News Shipbuilding Inc. Retirement Plan. The general benefit structure of these plans is similar except for the historical benefit formulas, the transition benefit formulas and the timing of the transition period, all of which are described below. The plans are qualified under IRC Section 401 and provide up to three component pieces of benefits depending on when a participant is hired and terminates. The following chart illustrates the component pieces (described in more detail after the chart):
The components are the historical benefit (the Part A benefit), the transition benefit (the greater of the Part B benefit or the Part C benefit) and the cash balance benefit (the Part D benefit). Eligible employees who joined a plan after the transition date associated with their pension plan accrue only the cash balance benefit (Part D) from their first date of participation. The qualified benefit for each NEO is the sum of these three benefits (Part A + Max (Part B or C) + Part D) The cash balance formula (Parts C and D benefits) uses a participant’s points (age plus years of service) to determine a pay-based credit amount (a percentage of eligible pay) on a monthly basis. Interest is credited monthly on the amount in the participant’s hypothetical individual account. At normal retirement age, a participant’s balance in the hypothetical account is converted into an annuity payable for life, using specified factors. There are various forms of annuities from which the participant can choose, including a single-life annuity or a joint-and-survivor annuity. Specific Elements of the Plans. The following paragraphs describe specific elements of the qualified plans in which our NEOs participate.
Executive Compensation
Ms. Wilkinson has historical (Part A) benefits under this formula. Part B is determined using the
Executive Compensation
Table 1 (Part C Formula)
Table 2 (Part D Formula)
Messrs. Petters,
Description of Nonqualified Plans Huntington Ingalls Industries Supplemental Plan 2—ERISA Supplemental Program 2. This plan is a nonqualified plan that provides benefits that would have been paid under the Huntington Ingalls Industries Retirement Plan “B” but for the IRC Section 401(a)(17) limit on the amount of compensation that must be taken into account under a qualified plan. The definition of compensation under this plan also includes compensation under deferred compensation plans. Benefits under this plan are subject to a general limitation of 60% of final average pay (reduced for early retirement, if applicable, according to the rules of the OSERP) for all company pension benefits. Optional forms of payment are generally the same as those from the qualified plan, plus a 13-month delayed lump sum option on a portion of the benefit. Reductions for early retirement apply in the same manner as under the associated qualified plan.
HII Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan. This plan is a nonqualified plan that provides benefits that would have been paid under the HII Newport News Shipbuilding Inc. Retirement Plan but for the IRC Section 401(a)(17) limit on the amount of compensation that must be taken into account under a qualified plan and the IRC Section 415 limit on benefits that may be paid under a qualified plan. The definition of compensation under this plan also includes compensation under deferred compensation plans. Benefits under the HII Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan are subject to a general limitation of 60% of final average pay (reduced for early retirement, if applicable, according to the rules of the OSERP for all pension benefits). Optional forms of payment are the same as those under the HII Newport News Shipbuilding Inc. Retirement Plan. Reductions for early retirement apply in the same manner as under the HII Newport News Shipbuilding Inc. Retirement Plan.
Executive Compensation Mr. Petters and Ms. Boykin began participating in the HII Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan when they reached applicable pay grades for inclusion in the plan. HII Litton Industries, Inc. Restoration Plan. This plan is a nonqualified plan that provides benefits that would have been paid under the Huntington Ingalls Industries Retirement Plan “B” but for the IRC Section 401(a)(17) limit on the amount of compensation that must be taken into account under a qualified plan. The definition of compensation under this plan also includes compensation under deferred compensation plans. Benefits under this plan are subject to a general limitation for all company pension benefits of 60% of final average pay (reduced for early retirement, if applicable, according to the rules of the OSERP). Optional forms of payment are generally the same as those
Officers Supplemental Executive Retirement Program. The Messrs. The
Special Officer Supplemental Executive Retirement Plan. The Special Officer Supplemental Executive Retirement Plan is a nonqualified plan, limited to the Chief Executive Officer of the company
Executive Compensation as of March 31, 2011. Mr. Petters is eligible to participate in the Special Officer Supplemental Executive Retirement Plan, which provides a pension equal to the greater of the amount accrued under the OSERP formula or the benefit calculated using the Special Officer Supplemental Executive Retirement Plan provisions. The Special Officer Supplemental Executive Retirement Plan provides a total pension benefit equal to a percentage of final average pay (the average pay without the IRC Section 401(a)(17) limit and including deferred compensation of the three highest-paid plan years after 1996) where the percentage is determined by the following formula: 3.33% for each year of service up to ten years, 1.5% for each subsequent year up to 20 years and 1% for each additional year over 20, less any other HII pension benefits accrued while a participant in the Special Officer Supplemental Executive Retirement Plan. Only service while a participant in the Special Officer Supplemental Executive Retirement Plan is used to determine the final percentage.
The Special Officer Supplemental Executive Retirement Plan benefit, when combined with all pension benefits, cannot exceed the general limit of 60% of final average pay (reduced for early retirement, if applicable), according to the rules of the Special Officer Supplemental Executive Retirement Plan. Optional forms of payment are generally the same as those under the qualified plan, plus a 13-month delayed lump sum option on a portion of the Special Officer Supplemental Executive Retirement Plan benefit.
Huntington Ingalls Industries Section 409A Restrictions on Timing and Optional Forms of Payment. Under IRC Section 409A, employees who participate in company-sponsored nonqualified plans, such as the HII Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan, the HII Litton Industries, Inc. Restoration Plan, the
Executive Compensation Specific Assumptions Used to Estimate Present Values. The following assumptions were used to estimate the present values in the Pension Benefits table:
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