Summary
Northrop Grumman Corporation (NOC) filed an 8-K on February 22, 2016, detailing compensation arrangements for its named executive officers and updates to its corporate bylaws. The company's Compensation Committee and Board of Directors approved the 2016 Incentive Compensation Plan (ICP) goals, which will be weighted across pension-adjusted operating margin rate, cash flow conversion, pension-adjusted net income growth, and book to bill ratio. Additionally, the company awarded Restricted Performance Stock Rights (RPSR) and Restricted Stock Rights (RSR) for the 2016-2018 performance period, with metrics focused on relative total shareholder return and cumulative free cash flow. Notably, there were no material changes from 2015 in the terms of these awards, and the company continues to refrain from awarding stock options.
Key Highlights
- 12016 Incentive Compensation Plan (ICP) goals approved with a focus on operating margin, cash flow, net income growth, and book to bill ratio.
- 2Restricted Performance Stock Rights (RPSR) and Restricted Stock Rights (RSR) awarded for 2016-2018 performance period.
- 3RPSR metrics include relative total shareholder return (70%) and cumulative free cash flow (30%).
- 4No material changes from 2015 in RPSR and RSR award terms for named executive officers.
- 5Northrop Grumman continues to not award stock options to its named executive officers.
- 6Bylaws amended to provide for proxy access, allowing stockholders to include director nominees in proxy materials.
- 7Bylaw amendments also expand permissible third-party compensation and expense reimbursement for director nominees.