Summary
Northrop Grumman Corporation (NOC) filed an 8-K on February 22, 2017, disclosing compensatory arrangements for its named executive officers. The report details the approval of the 2017 Incentive Compensation Plan (ICP) goals and the award of Restricted Performance Stock Rights (RPSR) and Restricted Stock Rights (RSR) for the 2017-2019 performance period. These compensation actions are largely consistent with prior years, indicating a stable executive compensation strategy. Key financial metrics for the 2017 ICP include pension-adjusted operating margin rate, cash flow from operations conversion, and pension-adjusted net income growth, each weighted equally. The RPSR awards, comprising 70% of the total awards, will be measured based on relative total shareholder return and cumulative free cash flow, both weighted at 50%. The remaining 30% are RSRs that vest on February 17, 2020. Notably, the company continues its practice of not awarding stock options, a factor investors may wish to consider when evaluating executive incentives.
Key Highlights
- 1Approved 2017 goals for the Incentive Compensation Plans (ICP) with equal weighting for pension-adjusted operating margin rate, cash flow from operations conversion, and pension-adjusted net income growth.
- 2Awarded Restricted Performance Stock Rights (RPSR) for the 2017-2019 performance period, with metrics of relative total shareholder return (50%) and cumulative free cash flow before pension funding (50%).
- 3Awarded Restricted Stock Rights (RSR) that will vest on February 17, 2020.
- 4RPSR awards constitute 70% of the total awards, with RSRs making up the remaining 30%.
- 5No material change from 2016 in the terms of the 2017 RPSR and RSR awards for named executive officers.
- 6The Compensation Committee did not award any stock options for the current performance period.