What are the key changes in executive compensation for 2010?

For 2010, key executives received adjusted base salaries. For example, CEO Wesley G. Bush's salary is $1,350,000. Cash bonuses for 2009 performance were also detailed for several officers. The 2010 Incentive Compensation Plan (ICP) was approved, setting performance goals based on new business awards, operating margin, and cash flow conversion, alongside non-financial metrics. Additionally, stock holding requirements for equity awards and the closure of the Deferred Compensation Plan to new contributions were announced.

What significant changes were made to Northrop Grumman's Bylaws?

The company's Bylaws were amended and restated to align with current Delaware law and corporate governance practices. Key changes include updating provisions for stockholder meetings by outlining procedures and requiring more advance information from stockholders. The requirement for a specific percentage of directors to be independent was removed in favor of maintaining the existing expectation of 75% independence. A provision for appointing a Lead Independent Director was added, and restrictions on securities repurchases previously designed to prevent 'greenmail' were deleted.

What is the impact of the new stock holding requirement on executives?

A new stock holding requirement mandates that elected and appointed officers must hold 50% of the net shares received upon the exercise or payment of Restricted Performance Stock Rights, Restricted Stock Rights, and Options for at least three years following such exercise or payment. This requirement applies to awards granted in 2010 and subsequent years, with exceptions for awards exercised or paid more than one year after termination of employment.

Why were the 'greenmail' provisions removed from the Bylaws?

The Board of Directors concluded that the provisions prohibiting the company from purchasing shares from 'interested persons' at a premium without stockholder approval were no longer necessary. They cited changes in tax law that provide a stronger deterrent against 'greenmail' tactics than these specific bylaw provisions.

NOC 8-K: Leadership Changes & Corporate Changes

Summary

Northrop Grumman Corporation (NOC) filed an 8-K on February 22, 2010, detailing significant changes in executive compensation and amendments to its corporate bylaws. The filing outlines the 2010 base salaries and 2009 cash bonus compensation for key named executive officers, including the new CEO, Wesley G. Bush, whose salary became effective upon his appointment. Additionally, the company updated its Incentive Compensation Plan (ICP) for 2010, introducing new financial metrics and retaining non-financial ones. It also introduced stock holding requirements for certain equity awards and closed its Deferred Compensation Plan to new contributions effective January 1, 2011. The report also covers amendments to the company's Bylaws, approved on February 17, 2010. Key changes include updating provisions for stockholder meetings, modifying director independence requirements, reflecting the appointment of a Lead Independent Director, and removing restrictions on securities repurchases previously aimed at preventing greenmail. These amendments are largely aimed at modernizing the bylaws to comply with Delaware law and corporate governance best practices.

Key Highlights

1Executive compensation adjustments for 2010 base salaries and 2009 cash bonuses were approved for key officers, including new CEO Wesley G. Bush.
2Wesley G. Bush's base salary as CEO and President is $1,350,000, with a 2009 cash bonus of $1,068,750.
3The 2010 Incentive Compensation Plan (ICP) includes new financial performance metrics: new business awards, operating margin rate (pre-pension expense), and net income to free cash flow conversion.
4A new stock holding requirement mandates officers to hold 50% of net shares from certain equity awards for at least three years post-exercise/payment.
5The Deferred Compensation Plan will be closed to future contributions effective January 1, 2011.
6Amendments to the Bylaws were approved, including updating stockholder meeting procedures and director independence expectations.
7Greenmail-related restrictions on securities repurchases were removed from the Bylaws, citing changes in tax law as a sufficient deterrent.

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Executive Changes (Feb 22, 2010)

Summary

Key Highlights

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