8-KLeadership Changes

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Executive Changes (Feb 15, 2018)

Filed February 15, 2018For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) filed an 8-K on February 15, 2018, detailing compensation adjustments for its named executive officers. The key focus of this filing is the approval of 2018 goals under the Incentive Compensation Plans (ICP) and the awarding of Restricted Performance Stock Rights (RPSR) and Restricted Stock Rights (RSR). The 2018 ICP will measure performance based on a balanced weighting of pension-adjusted operating margin rate, cash flow from operations before discretionary pension funding, and pension-adjusted net income growth. For the 2018-2020 performance period, RPSRs will be measured by relative total shareholder return and cumulative free cash flow before pension funding, with these metrics remaining consistent with 2017. The company also approved RSRs vesting in 2021, with a significant portion (70%) of the total awards comprising RPSRs.

Key Highlights

  • 1Northrop Grumman approved 2018 goals for its Incentive Compensation Plans (ICP).
  • 2The ICP's financial metrics are equally weighted: pension-adjusted operating margin rate (1/3), cash flow from operations before discretionary pension funding (1/3), and pension-adjusted net income growth (1/3).
  • 3Restricted Performance Stock Rights (RPSR) for the 2018-2020 period were awarded.
  • 4RPSR metrics are relative total shareholder return (50%) and cumulative free cash flow before pension funding (50%), unchanged from 2017.
  • 5Restricted Stock Rights (RSR) were also awarded, set to vest on February 13, 2021.
  • 6Awards consisted of 70% RPSRs and 30% RSRs.
  • 7No stock options were awarded, consistent with prior practice.

Frequently Asked Questions

The 2018 Incentive Compensation Plans will be measured by three equally weighted financial metrics: pension-adjusted operating margin rate (1/3), cash flow from operations before discretionary pension funding (1/3), and pension-adjusted net income growth (1/3).

The RPSRs for the 2018-2020 performance period will be measured based on relative total shareholder return (50%) and cumulative free cash flow before pension funding (50%). These metrics are the same as those used for 2017 awards.

The awards granted consisted of 70% Restricted Performance Stock Rights (RPSRs) and 30% Restricted Stock Rights (RSRs). Notably, no stock options were awarded, aligning with previous years.

The filing indicates no material changes from 2017 in the terms of the 2018 RPSR and RSR awards for the named executive officers. The performance metrics for RPSRs also remain consistent.