8-KLeadership ChangesExhibits & Filings

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Executive Changes (Feb 20, 2015)

Filed February 20, 2015For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) filed an 8-K on February 20, 2015, detailing executive compensation actions approved by its Compensation Committee and Board of Directors on February 17-18, 2015. The filing primarily concerns the approval of the 2015 Incentive Compensation Plan (ICP) goals and the awarding of new equity-based compensation to named executive officers. Investors should note that the core financial metrics for the ICP remain largely consistent with the prior year, emphasizing pension-adjusted operating margin, free cash flow conversion, book to bill ratio, and pension-adjusted net income. The company also awarded Restricted Performance Stock Rights (RPSRs) and Restricted Stock Rights (RSRs) for the 2015-2017 performance period. The majority of these awards (70%) were performance-based RPSRs, tied to relative total shareholder return, with the remainder being time-vesting RSRs. Notably, the company continues its practice of not awarding stock options to named executive officers, a trend consistent with prior years. The terms of these 2015 awards are substantially similar to those granted in 2014.

Key Highlights

  • 1Northrop Grumman approved 2015 Incentive Compensation Plan (ICP) goals, maintaining financial metrics similar to 2014.
  • 2Key ICP financial metrics for 2015 include pension-adjusted operating margin (35%), free cash flow conversion (35%), book to bill ratio (15%), and pension-adjusted net income (15%).
  • 3The company awarded Restricted Performance Stock Rights (RPSRs) for the 2015-2017 performance period, with metrics based on relative total shareholder return.
  • 4Restricted Stock Rights (RSRs) were also awarded, vesting on February 18, 2018.
  • 5Approximately 70% of the total awards granted to named executive officers were RPSRs, with 30% being RSRs (with a slight variation for Mr. Bush).
  • 6Northrop Grumman did not award any stock options to named executive officers for 2015, continuing a previous practice.
  • 7The terms and conditions for the 2015 RPSR and RSR awards are materially consistent with the 2014 awards.

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