DEF 14A of Northrop Grumman Corp /De/, Apr 1, 2022

DEF 14A of Northrop Grumman Corp /De/

Filed Apr 1, 2022 · FY20210001133421-22-000009

Open on EDGAR

  1. Table of Contents

    | Compensation Tables | | 69 | | Summary Compensation Table | | 69 | | 2021 Grants of Plan-Based Awards | | 71 | | Outstanding Equity Awards at 2021 Fiscal Year End | | 72 | | 2021 Stock Vested | | 73 | | 2021 Pension Benefits | | 74 | | 2021 Nonqualified Deferred Compensation | | 78 | | Termination Payments and Benefits | | 80 | | 2021 CEO Pay Ratio | | 84 | | Equity Compensation Plan Information | | 85 | | | Proposal 3: Ratification of Appointment of Independent Auditor | 86 | | Audit Fees and All Other Fees | | 86 | | Policy on Audit and Risk Committee Pre-Approval of Audit and Permissible Non-Audit Services | | 87 | | Audit and Risk Committee Report | | 87 | | | Proposal 4: Shareholder Proposal | 89 | | Transactions with Related Persons and Control Persons | | 92 | | Related Person Transactions | | 92 | | Indemnification Agreements | | 93 | | Voting Securities and Principal Holders | | 94 | | Stock Ownership of Certain Beneficial Holders | | 94 | | Stock Ownership of Officers and Directors | | 95 | | Questions and Answers About the Annual Meeting | | 96 | | Miscellaneous | | 99 | | Voting on Other Matters | | 99 | | Delinquent Section 16(a) Reports | | 99 | | Shareholder Proposals for the 2023 Annual Meeting | | 99 | | Shareholder Nominations for Director Election at the 2023 Annual Meeting | | 99 | | Householding Information | | 100 | | Cost of Soliciting Proxies | | 100 | | Available Information | | 100 | | Incorporation by Reference | | 100 | | Annual Report | | 101 | | Appendix A – Use of Non-GAAP Financial Measures | | 102 |

  2. 2022 Nominees for Director

    2022 Nominees for Director The following pages contain biographical and other information about each of the nominees. In addition, we have provided information regarding some of the particular experiences, qualifications, attributes and skills that led the Board to conclude that each nominee should serve as a director. Unless instructed otherwise, the proxyholders will vote the proxies received by them “FOR” the election of the director nominees listed below.

  3. 2022 Nominees for Director

    | | Ms. Kathy J. Warden has served as Chair since August 2019 and as Chief Executive Officer and President of the Company since January 2019. She has served on the Board of Directors since July 2018. Prior to becoming CEO and President, Ms. Warden served as President and Chief Operating Officer of the Company from January 2018 through December 2018, as Corporate Vice President and President of the Company’s Mission Systems Sector from 2016 through 2017, as Corporate Vice President and President of the Company’s former Information Systems Sector from 2013 to 2015, and as Vice President of the Company’s Cyber Intelligence Division from 2011 to 2012. Prior to joining the Company in 2008, Ms. Warden held leadership roles at General Dynamics and Veridian Corporation. Earlier, she was a principal in a venture internet firm and also spent nearly a decade with General Electric Company working in commercial industries. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive experience in operational leadership, strategy, performance and business development in government and commercial markets, including cyber expertise •Prior leadership positions within Northrop Grumman (including as President, Chief Operating Officer and President of two business sectors) •Significant aerospace and defense industry experience OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Merck & Co., Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member and former Chair of the Aerospace Industries Association •Member of the Board of Directors of Catalyst •Former Chair of the Board of Directors of the Federal Reserve Bank of Richmond •Member of the Board of Visitors of James Madison University | | Kathy J. Warden Chair, Chief Executive Officer and President, Northrop Grumman Corporation Age: 50 Director since: July 2018 | |

  4. 2022 Nominees for Director

    | 16 | Northrop Grumman |

  5. 2022 Nominees for Director

    | | Mr. David P. Abney served as the Executive Chairman of the UPS Board of Directors from March 2016 through September 2020. From September 2014 to June 2020, he was the Chief Executive Officer of UPS. Prior to that, Mr. Abney was UPS’s Chief Operating Officer from 2007 to 2014. From 2003 to 2007, he was Senior Vice President and President of UPS International. Mr. Abney began his UPS career in 1974. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive leadership and business experience as a former Executive Chairman, Chief Executive Officer and Chief Operating Officer of a large multinational enterprise •Significant expertise in international operations and global logistics •Broad experience with talent management and leading global teams •Significant board experience, including as non-executive chair OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Freeport-McMoRan Inc. •Member of the Board of Directors of Target Corporation FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Executive Chairman of the Board of Directors of UPS •Member of the Board of Directors of Johnson Controls International plc •Member of the Board of Directors of Macy's, Inc. | | David P. Abney Former Executive Chairman of the Board of Directors and Chief Executive Officer of United Parcel Service, Inc. (UPS) Age: 66 Director since: June 2020 Committee membership: Compensation Committee, Policy Committee | |

  6. 2022 Nominees for Director

    | | Ms. Marianne C. Brown served as the Chief Operating Officer of Fidelity National Information Services, Inc.’s (FIS) Global Financial Solutions organization from January 2018 until June 2019. Prior to that, Ms. Brown served as Chief Operating Officer, Institutional and Wholesale Business of FIS since December 2015, when it acquired SunGard Financial Systems. Ms. Brown was the Chief Operating Officer of SunGard Financial Systems, a software and IT services provider, from February 2014 to November 2015. Prior to that, Ms. Brown was the CEO and president of Omgeo, a global financial services technology company, from March 2006 to February 2014. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Substantial business experience as a former Chief Operating Officer and Chief Executive Officer •Significant experience in IT goods and services, cyber protection and business management •Community and philanthropic leader OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Akamai Technologies, Inc. •Member of the Board of Directors of The Charles Schwab Corporation •Member of the Board of Directors of VMWare, Inc. | | Marianne C. Brown Former Chief Operating Officer, Global Financial Solutions, Fidelity National Information Services, Inc. Age: 63 Director since: March 2015 Committee membership: Audit and Risk Committee, Governance Committee | |

  7. 2022 Nominees for Director

    | 2022 Proxy Statement | 17 |

  8. 2022 Nominees for Director

    | | Mr. Donald E. Felsinger is the former Chairman and Chief Executive Officer of Sempra Energy. From July 2011 through his retirement in November 2012, he served as Executive Chairman of the Board of Directors of Sempra Energy, and from February 2006 through June 2011, he was Sempra’s Chairman and CEO. Prior to that, Mr. Felsinger was President and Chief Operating Officer of Sempra Energy from January 2005 to February 2006 and a member of the Board of Directors. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive business experience as Chief Executive Officer, a board member and Chairman of other Fortune 500 companies in regulated industries •Significant experience in corporate governance and strategy, and as Lead Independent Director of a Fortune 250 company •In-depth knowledge of executive compensation and benefits OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Lead Independent Director of the Board of Directors of Archer-Daniels-Midland FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Member of the Board of Directors of Gannett Co., Inc. | | Donald E. Felsinger Former Chairman and Chief Executive Officer, Sempra Energy Age: 74 Director since: February 2007 Committee membership: Compensation Committee, Governance Committee | |

  9. 2022 Nominees for Director

    | | Ms. Ann M. Fudge served as Chairman and Chief Executive Officer of Young & Rubicam Brands at WPP Group PLC from May 2003 to December 2006. Prior to that, she served in various leadership positions at Kraft Foods from 1986 to 2001, including President of Beverages, Desserts and Post Divisions, and President of Maxwell House Coffee and Kraft General Foods. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive business experience as former Chief Executive Officer and former president of leading consumer products business units •Substantial international experience through service as an executive and director of a large multinational company and a director of other large multinational companies •Significant public company board experience •Experience with talent development and acquisition OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Catalyst Partners Acquisition Corp. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Chair of the Board of Trustees of WGBH Public Media •Senior trustee of the Brookings Institution FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Member of the Board of Directors of Novartis AG •Member of the Board of Directors of Unilever | | Ann M. Fudge Former Chairman and Chief Executive Officer, Young & Rubicam Brands Age: 70 Director since: March 2016 Committee membership: Audit and Risk Committee, Governance Committee | |

  10. 2022 Nominees for Director

    | 18 | Northrop Grumman |

  11. 2022 Nominees for Director

    | | Mr. William H. Hernandez served as Senior Vice President, Finance, and Chief Financial Officer of PPG Industries, Inc. (PPG), from 1995 until his retirement in 2009. Prior to that, he was PPG’s corporate controller from 1990 to 1994. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive experience and expertise in areas of finance, accounting and business management acquired as Chief Financial Officer of PPG Industries •Significant experience in areas of risk management •Audit committee financial expert FORMER PUBLIC COMPANY DIRECTORSHIPS WITHIN THE LAST FIVE YEARS •Member of the Board of Directors of Albemarle Corporation •Member of the Board of Directors of Black Box Corporation •Member of the Board of Directors of USG Corporation | | William H. Hernandez Former Senior Vice President and Chief Financial Officer, PPG Industries, Inc. Age: 74 Director since: September 2013 Committee membership: Audit and Risk Committee (Chair), Policy Committee | |

  12. 2022 Nominees for Director

    | | Ms. Madeleine A. Kleiner served as Executive Vice President, General Counsel and Corporate Secretary for Hilton Hotels Corporation from January 2001 until February 2008. From 1999 through 2001, she served as a director of a number of Merrill Lynch mutual funds operating under the Hotchkis and Wiley name. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Expertise in corporate governance, Sarbanes-Oxley controls, risk management, securities transactions and mergers and acquisitions •Significant experience from past roles as general counsel for two public companies, outside counsel to numerous public companies and through service on another public company board OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Jack in the Box Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of the Ladies Professional Golf Association | | Madeleine A. Kleiner Former Executive Vice President and General Counsel, Hilton Hotels Corporation Age: 70 Director since: October 2008 Committee membership: Compensation Committee, Governance Committee (Chair) | |

  13. 2022 Nominees for Director

    | 2022 Proxy Statement | 19 |

  14. 2022 Nominees for Director

    | | Mr. Karl J. Krapek served as President and Chief Operating Officer of United Technologies Corporation from 1999 until his retirement in January 2002. At United Technologies Corporation, he served for 20 years in various leadership positions. In 2002, Mr. Krapek became a co-founder of The Keystone Companies, which develops residential and commercial real estate. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive industry experience and leadership skills •Deep operational experience in aerospace and defense, domestic and international business operations and technology and lean manufacturing •Significant public company board experience, including serving as Lead Independent Director for two public companies OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Prudential Financial, Inc. •Member of the Board of Directors of American Virtual Cloud Technologies, Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of Trinity Health of New England | | Karl J. Krapek Former President and Chief Operating Officer, United Technologies Corporation Age: 73 Director since: September 2008 Committee membership: Compensation Committee, Governance Committee | |

  15. 2022 Nominees for Director

    | | Mr. Graham N. Robinson has served as Senior Vice President & President of STANLEY Industrial, a business segment of Stanley Black & Decker, Inc., since April 2020. Prior to joining Stanley Black & Decker, Mr. Robinson served as an executive with Honeywell for seven years, including roles as President of Honeywell Industrial Safety from 2018 to 2020, President of Honeywell Sensing and Internet of Things from 2016 to 2018, and Chief Marketing Officer of Honeywell’s Automation and Controls Solution division from 2014 to 2016. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Broad industrial and technical experience, including his current and former roles as President of divisions of large public companies •Significant international experience as an executive of large multinational companies •Extensive senior leadership skills SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of the Connecticut Business & Industry Association •Member of the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation | | Graham N. Robinson Senior Vice President, Stanley Black & Decker, Inc., and President of STANLEY Industrial Age: 53 Director since: August 2021 Committee membership: Audit and Risk Committee, Policy Committee | |

  16. 2022 Nominees for Director

    | 20 | Northrop Grumman |

  17. 2022 Nominees for Director

    | | Admiral Gary Roughead retired from his position as the 29th Chief of Naval Operations in September 2011, after serving in that position for four years. The Chief of Naval Operations is the senior military position in the United States Navy. As Chief of Naval Operations, Admiral Roughead stabilized and accelerated ship and aircraft procurement plans and the Navy’s capability and capacity in ballistic missile defense and unmanned air and underwater systems. He restructured the Navy to address the challenges and opportunities in cyber operations. Prior to becoming the Chief of Naval Operations, he held six operational commands (including commanding both the Atlantic and Pacific Fleets). Admiral Roughead is a Robert and Marion Oster Distinguished Military Fellow at the Hoover Institution. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive career as a senior military officer with the United States Navy, including numerous operational commands, as well as leadership positions, most recently as the 29th Chief of Naval Operations •Significant expertise in national security, information warfare, cyber operations and global security issues •Broad experience in leadership and matters of global relations, particularly in the Pacific region, Europe and the Middle East •Experience with talent development and management SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of Maersk Line, Limited •Chairman of the Board of Directors of Fincantieri Marinette Marine Corporation •Trustee of the Dodge and Cox Funds •Trustee of Johns Hopkins University •Member of the Board of Managers of the Johns Hopkins University Applied Physics Laboratory | | Gary Roughead Admiral, United States Navy (Ret.) and Former Chief of Naval Operations Age: 70 Director since: February 2012 Committee membership: Compensation Committee, Policy Committee (Chair) | |

  18. 2022 Nominees for Director

    | | Mr. Thomas M. Schoewe was Executive Vice President and Chief Financial Officer of Wal-Mart Stores, Inc. from 2000 to 2011. Prior to his employment with Wal-Mart, he held several leadership roles at the Black & Decker Corporation. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive financial experience acquired through positions held as the Chief Financial Officer of large public companies, as well as expertise in Sarbanes-Oxley controls, risk management and mergers and acquisitions •Significant international experience through his service as an executive of large public companies with substantial international operations •Experience at Wal-Mart and Black & Decker on large-scale transformational enterprise information technology •Extensive experience as a member of the audit, risk, compensation and policy committees of other public companies OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of General Motors Corporation •Member of the Board of Directors of KKR & Co. Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of the Ladies Professional Golf Association | | Thomas M. Schoewe Former Executive Vice President and Chief Financial Officer, Wal-Mart Stores, Inc. Age: 69 Director since: August 2011 Committee membership: Compensation Committee (Chair), Policy Committee | |

  19. 2022 Nominees for Director

    | 2022 Proxy Statement | 21 |

  20. 2022 Nominees for Director

    | | Mr. James S. Turley served as Chairman and Chief Executive Officer of Ernst & Young from 2001 until his retirement in 2013. Mr. Turley joined Ernst & Young in 1977 and held various positions there. He was named Deputy Chairman in 2000. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive experience and expertise in areas of finance, accounting and business management acquired over 36-year career at Ernst & Young, including serving as Chairman and Chief Executive Officer of Ernst & Young •Significant experience in areas of risk management •Extensive experience as a member of the audit committee of other public companies •Audit committee financial expert OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS •Member of the Board of Directors of Citigroup •Independent Chair of the Board of Directors of Emerson Electric Company •Member of the Board of Directors of Precigen, Inc. SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Directors of the Boy Scouts of America •Member of the Board of Directors of Kohler Co. •Member of the Board of Directors of St. Louis Trust Company •Non-Executive Chair of Sita Capital Partners LLP | | James S. Turley Former Chairman and Chief Executive Officer, Ernst & Young Age: 66 Director since: February 2015 Committee membership: Audit and Risk Committee, Governance Committee | |

  21. 2022 Nominees for Director

    | | General Mark A. Welsh III has been the Dean of the Bush School of Government and Public Service at Texas A&M University since August 2016. Prior to his current position, General Welsh served as Chief of Staff of the United States Air Force, the senior uniformed Air Force officer responsible for the organization, training and equipping of active duty, Guard, Reserve and civilian forces serving in the United States and overseas. During his long career, General Welsh also served as a member of the Joint Chiefs of Staff, Commander of the United States Air Forces in Europe and Commander of NATO’s Air Command, Associate Director for Military Affairs at the Central Intelligence Agency and Commandant of the United States Air Force Academy. ATTRIBUTES, SKILLS AND QUALIFICATIONS •Extensive career as a senior military officer and member of the Joint Chiefs of Staff, having held leadership positions at the highest levels of the United States Air Force •Extensive experience and in-depth knowledge of issues related to global security and the intelligence community •Broad leadership experience and international experience, particularly in Europe •Experience with talent development and management SELECTED DIRECTORSHIPS AND MEMBERSHIPS •Member of the Board of Managers of Peak NanoSystems, LLC | | Mark A. Welsh III Dean of the Bush School of Government and Public Service, Texas A&M University; General, United States Air Force (Ret.); Former Chief of Staff, United States Air Force Age: 68 Director since: December 2016 Committee membership: Audit and Risk Committee, Policy Committee | |

  22. 2022 Nominees for Director

    | 22 | Northrop Grumman |

  23. 2021 Director Compensation

    2021 Director Compensation The table below provides information on the compensation of our non-employee directors for the year ended December 31, 2021.

  24. 2021 Director Compensation

    | Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | David P. Abney | 136,925 | 170,000 | 15 | 306,940 | | Marianne C. Brown | 146,150 | 170,000 | 12,227 | 328,377 | | Donald E. Felsinger | 177,300 | 170,000 | 41,662 | 388,962 | | Ann M. Fudge | 146,150 | 170,000 | 11,191 | 327,341 | | Bruce S. Gordon(4) | 50,050 | — | 14,082 | 64,132 | | William H. Hernandez | 169,225 | 170,000 | 7,620 | 346,845 | | Madeleine A. Kleiner | 156,150 | 170,000 | 22,652 | 348,802 | | Karl J. Krapek | 133,075 | 170,000 | 31,718 | 334,793 | | Graham N. Robinson | 58,126 | 130,900 | 2 | 189,028 | | Gary Roughead | 156,150 | 170,000 | 15,578 | 341,728 | | Thomas M. Schoewe | 156,150 | 170,000 | 6,896 | 333,046 | | James S. Turley | 146,150 | 170,000 | 1,280 | 317,430 | | Mark A. Welsh III | 146,150 | 170,000 | 733 | 316,883 |

  25. 2021 Director Compensation

    (1)Amounts reflect the annual cash retainer paid to each director, including any applicable annual committee and committee chair retainers and any applicable Lead Independent Director or Chair retainer. As described above, a director may elect to defer all or a portion of his or her annual cash retainer into a deferred stock unit account or alternative investment options. Amounts deferred as Elective Stock Units or deferred into alternative investment options are reflected in this column. (2)Amounts represent the target value of Automatic Stock Units awarded to each of our non-employee directors in 2021 under the 2011 Plan pursuant to the Amended Director Program. The amount reported for each director reflects the aggregate fair value of the Automatic Stock Units on the grant date, as determined under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation, excluding any assumed forfeitures. The grant date fair value assumes the value of dividend equivalents accrued directly on the awarded units. The aggregate number of Automatic Stock Units and Elective Stock Units held by each director as of December 31, 2021 is provided in the Deferred Stock Units table below. (3)Amounts reflect (i) the estimated dollar value of additional stock units credited to each non-employee director as a result of dividend equivalents earned, directly or indirectly, on reinvested dividend equivalents as such amounts are not assumed in the grant date fair value of the Automatic Stock Units shown in the “Stock Awards” column, and (ii) matching contributions made through our Matching Gifts Program for Education discussed above as follows: Ms. Brown, $10,000; Ms. Fudge, $10,000; Mr. Gordon, $10,000; Mr. Hernandez, $5,000; Ms. Kleiner, $5,000; Mr. Krapek, $10,000; and Mr. Roughead, $10,000. (4)Mr. Gordon reached the age of 75 prior to the 2021 Annual Meeting and, in accordance with our director retirement policy, did not stand for reelection at the 2021 Annual Meeting.

  26. 2021 Director Compensation

    | 2022 Proxy Statement | 45 |

  27. Compensation Philosophy and Objectives

    | | Pay for Performance •Our incentive plans are based on peer performance and benchmarks, the market, and our LRSP. •Above-target incentive payouts are awarded when we outperform our peers, market and LRSP benchmarks. | | | Leadership Recruitment, Retention and Succession •Compensation is designed to be competitive with our peers and retain top talent. •Programs are structured to attract, motivate and reward NEOs for delivering operational and strategic performance over time. | | | Sustainable Performance •Our Annual Incentive Plan (AIP) includes both financial and non-financial metrics to ensure we are building a strong foundation for long-term sustainable performance and shareholder value creation. |

  28. Compensation Philosophy and Objectives

    | | Alignment with Shareholder Interests •Our compensation structure places an appropriate amount of compensation at risk based on annual and long-term results. •At-risk compensation is based on financial and non-financial performance measures and relative Total Shareholder Return (TSR). Payouts under the TSR portion of the plan are capped at target if the Company's TSR is negative over the performance period. •A significant portion of compensation is delivered in equity, the vesting and value of which provides alignment with shareholder returns. •Stock ownership guidelines, holding requirements for equity awards and our recoupment policy further align executive and shareholder interests. | | | Benchmarking •Our compensation programs' provisions and financial objectives are evaluated on an annual basis and modified in accordance with industry and business conditions (e.g., unforeseen impacts, divestitures, etc.). •Benchmarks are set using a hybrid approach of peer, market and LRSP data. •We seek to outperform our peers (a group of top global defense companies identified as the Performance Peer Group on page 54). •We use a Target Industry Peer Group (TIPG) (identified on page 54) for broader market executive compensation analyses that includes companies based on a peer-of-peers analysis. |

  29. 2021 Compensation Elements

    | Compensation Element | CEO | Other NEOs (Average) | Purpose | Key Characteristics | | Fixed | 9% | 18% | | | | Base Salary | | | Compensate equitably and competitively | •Determined by level of responsibility, competitive market pay assessment and individual performance | | Variable | 91% | 82% | | | | Annual Incentive Plan (AIP) | | | Motivate and reward achievement of annual business objectives | •Financial Metrics •35% Adjusted Cash Flow from Operations Conversion* •35% Segment Operating Income* Growth •15% Pension-adjusted Net Income* Growth •15% Pension-adjusted Operating Margin (OM) Rate* •Non-financial metrics | | Long-Term Incentive Plan (LTIP) Restricted Stock Rights (RSRs) | | | Tie our executive officers’ priorities to shareholders and retain executive talent | •30% of annual LTIP grant •Three-year cliff vesting | | LTIP Restricted Performance Stock Rights (RPSRs) | | | Link the interests of our executive officers to shareholders, motivate and reward achievement of long-term strategic goals and retain executive talent | •70% of annual LTIP grant •Three-year performance period •Equally weighted metrics of relative TSR, Adjusted Cumulative Free Cash Flow* (Adjusted Cumulative FCF*) and Operating Return on Net Assets* (Operating RONA |

  30. Our Compensation Best Practices

    | What We Do | | | What We Don't Do | | Pay for Performance | Annual Peer Group Review | Long-Term Incentives Focused on Performance | No Individual Change in Control Agreements | | Compensation Elements Benchmarked at Market Median | Above-Target Annual Incentive Payouts Only When We Outperform Our Peer Benchmarks | Independent Consultant Reports Directly to Compensation Committee | No Employment Contracts for Chief Executive Officer (CEO) or Other NEOs | | Recoupment Policy on Cash and Equity Incentive Compensation Payments | Dividends Paid Upon Vesting of Equity Awards | Stock Ownership Guidelines and Stock Holding Requirements | No Excise Tax Gross-ups for Payments Received Upon Termination After a Change in Control | | LTIP Double Trigger Provisions for Change in Control | Regular Risk Assessments Performed | Cap on Annual Bonuses and RPSR Payouts | No Hedging or Pledging of Company Stock |

  31. How We Make Executive Compensation Decisions

    | Assess | Establish | | •Feedback from annual say-on-pay vote from shareholder outreach •Market data with Independent Compensation Consultant •Alignment of our financial and non-financial performance metrics with our overall strategy •Annual independent risk review of compensation structure | •Performance metrics for AIP and RPSRs •Relevant compensation and performance peer groups •Annual salary, target AIP and target LTIP awards | | Rigorous Committee Oversight | | | Approve | Monitor | | •AIP and RPSR performance metric results •Final total compensation for NEOs (recommend CEO compensation to independent board members for approval) | •Progress against AIP and RPSR performance metrics •NEO performance •Company policies and practices with respect to human capital risks |

  32. How We Make Executive Compensation Decisions

    | COMPENSATION COMMITTEE | •Oversees our compensation policies, incentive and equity compensation plans and approves payments or grants under these plans and the compensation for the elected officers, other than the CEO. •Recommends the base, bonus, and equity compensation for our CEO to the independent directors of the Board for approval. •Reviews market data and other input from its Independent Compensation Consultant. •Reviews and approves incentive goals and objectives (CEO goals and objectives are reviewed and approved by the independent directors). •Evaluates and approves executive benefit and perquisite programs. •Evaluates the competitiveness of each elected officer’s total compensation package. •Reviews and monitors the results of the Company’s diversity, equity and inclusion programs. •Oversees the Company's management of its human capital risk. •Conducts an annual evaluation of the Independent Compensation Consultant. •Evaluates the performance of elected officers against their respective goals and objectives. •Reviews and discusses with management the CD&A and provides a Compensation Committee Report for inclusion in the proxy statement. | | INDEPENDENT DIRECTORS | •Evaluate the performance and determine the compensation of the CEO (upon recommendation of the Compensation Committee). | | INDEPENDENT COMPENSATION CONSULTANT (Frederic W. Cook & Co.) | •Reports directly to the Compensation Committee. •Regularly participates in meetings of the Compensation Committee and communicates with the Compensation Committee Chair between meetings as needed. •Participates in executive session with the Compensation Committee. •Provides proactive advice to the Compensation Committee on best practices for Board governance of executive compensation, compensation-related risk management and areas for program design to most appropriately support the Company’s business strategy and organizational values. •Provides a review of market data and advises the Compensation Committee on the levels and structure of our executive compensation policies and procedures, including compensation matters for NEOs. •Reviews and advises the Compensation Committee on our total compensation philosophy, peer groups and target competitive positioning. •Identifies market trends and practices and advises the Compensation Committee on program design implications. •Serves as a resource to the Compensation Committee Chair on setting agenda items for Compensation Committee meetings and researches special projects. •Receives compensation only for engagement with the Compensation Committee and does not receive any fees or income from the Company. | | MANAGEMENT (CEO with assistance from the Corporate Vice President and Chief Human Resources Officer and other Company employees) | •Makes compensation-related recommendations for elected officers, other than the CEO, to the Compensation Committee for its review and approval. •Assesses each executive’s performance, skills and industry knowledge, market compensation benchmarks, and succession and retention considerations. •Provides recommendations to the Compensation Committee regarding executive incentive and benefit plan designs and strategies. These recommendations include financial and non-financial operational goals and criteria for our annual and long-term incentive plans. |

  33. PERFORMANCE PEER GROUP: SET PERFORMANCE TARGETS AND EVALUATE PERFORMANCE

    PERFORMANCE PEER GROUP: SET PERFORMANCE TARGETS AND EVALUATE PERFORMANCE The Compensation Committee uses the Performance Peer Group and LRSP data for the purpose of setting performance targets and evaluating performance of our AIP and LTIP. The Performance Peer Group encompasses the largest global defense companies by government revenues within the aerospace and defense market space. The LRSP is our five-year strategic operating and financial plan. In order to better align our performance objectives, the Performance Peer Group companies may vary in a particular performance year. In 2021, the Compensation Committee used the following peer group data for the purpose of setting AIP performance targets.

  34. PERFORMANCE PEER GROUP: SET PERFORMANCE TARGETS AND EVALUATE PERFORMANCE

    | 2021 PERFORMANCE PEER GROUP | | | | BAE Systems | General Dynamics Corporation | Lockheed Martin Corporation | | The Boeing Company | L3Harris Technologies, Inc. | Raytheon Technologies Corporation |

  35. TSR PEER GROUP: 2019-2021 LONG-TERM INCENTIVE AWARDS

    TSR PEER GROUP: 2019-2021 LONG-TERM INCENTIVE AWARDS Earned awards from the 2019-2021 performance cycle were contingent on our ranking compared to the S&P Industrials and the following TSR peer group:

  36. TSR PEER GROUP: 2019-2021 LONG-TERM INCENTIVE AWARDS

    | 2019 TSR PEER GROUP | | | | BAE Systems | L3Harris Technologies, Inc. | Raytheon Technologies Corporation(2) | | The Boeing Company | Leidos Holdings, Inc. | Thales Group | | Booz Allen Hamilton Holding Corporation(1) | Leonardo | | | General Dynamics Corporation | Lockheed Martin Corporation | |

  37. TSR PEER GROUP: 2019-2021 LONG-TERM INCENTIVE AWARDS

    (1)For the 2021-2023 performance cycle, Booz Allen Hamilton Holding Corporation was replaced by Huntington Ingalls Industries, Inc. (2)Raytheon Company merged with United Technologies in 2020, forming Raytheon Technologies Corporation.

  38. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES The Compensation Committee benchmarks our executive compensation levels and practices against the TIPG of 13 companies, including a subset containing six direct peers. Prior to the beginning of the year, the Compensation Committee sets the TIPG used to benchmark compensation for the following year. To identify peer companies for compensation benchmarking purposes, the Independent Compensation Consultant employs an objective criteria-based methodology where: •the Company was identified as a peer by at least two aerospace and defense peers or proxy advisory services; •the Company participated in the annual Aon executive compensation study; and •revenues, total employees and market capitalization of the peer company were broadly similar to those of the Company.

  39. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    | 54 | Northrop Grumman |

  40. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    While the Compensation Committee reviews the TIPG annually with the Independent Compensation Consultant, our goal is to keep it as consistent as reasonably possible on a year-over-year basis. The companies that comprise the 2021 TIPG are listed in the following table:

  41. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    | 2021 TARGET INDUSTRY PEER GROUP | | | 3M Company | Johnson Controls International | | The Boeing Company(1) | L3Harris Technologies, Inc.(1) | | Caterpillar, Inc. | Lockheed Martin Corporation(1) | | Eaton Corporation | Parker-Hannifin Corporation | | Emerson Electric Company | Raytheon Technologies Corporation(1) | | General Dynamics Corporation(1) | Textron, Inc. | | Honeywell International, Inc.(1) | |

  42. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    (1)Included in the subset of six direct peers also used for compensation benchmarking It is the Company’s pay philosophy to provide the CEO a compensation package that includes competitive elements of base salary and target variable pay relative to the TIPG and the direct six peers noted in the table above. In 2021, the CEO’s target total direct compensation approximated the median of the TIPG and direct six peers. Another element of the Company’s pay philosophy is to tie a significant portion of the CEO’s pay to performance. As a result, the CEO’s actual compensation may differ from the market median based on the Company’s actual performance. In determining the base salary and target variable pay elements for the other NEOs, the Compensation Committee establishes the TIPG median as the benchmark. The Compensation Committee also considers several factors in determining their compensation, including executive compensation levels and practices of the TIPG, NEO individual experience, growth in job as demonstrated through sustained performance, leadership impact, retention and pay relative to the CEO. Actual annual incentive awards and long-term incentive award opportunities reflect these factors, as well as Company performance.

  43. TARGET INDUSTRY PEER GROUP: BENCHMARK EXECUTIVE COMPENSATION PRACTICES

    | 2022 Proxy Statement | 55 |

  44. Key Components of Our Executive Compensation Programs

    Annual Incentive Compensation Our NEOs are eligible to receive annual cash bonuses under our shareholder-approved 2002 Incentive Compensation Plan (AIP). We use a balance of financial and non-financial performance metrics aligned with our long-term strategy.

  45. TARGET AWARD LEVELS FOR 2021 AIP

    TARGET AWARD LEVELS FOR 2021 AIP The Compensation Committee approves the annual incentive compensation target payout percentage for each NEO, other than the CEO. For the CEO, such percentage is approved by the independent directors of the Board. The target incentive award (target bonus) represents a percentage of each NEO’s base salary. Following the completion of the fiscal year, the target bonus is used by the Compensation Committee, together with its assessment of Company performance against established performance criteria, to determine the final bonus award amount. The 2021 target bonus for the CEO is 180% of base salary, which was unchanged from 2020. For each of the other NEOs, the 2021 target bonus is 100% of base salary, unchanged from 2020.

  46. TARGET AWARD LEVELS FOR 2021 AIP

    | Name | Target Bonus (% of Base Salary) | | Kathy J. Warden | 180% | | David F. Keffer | 100% | | Mark A. Caylor | 100% | | Blake E. Larson | 100% | | Mary D. Petryszyn | 100% |

  47. TARGET AWARD LEVELS FOR 2021 AIP

    Final bonus awards for each NEO were determined by multiplying the Northrop Grumman Company Performance Factor (CPF) by the target bonus. The CPF can range from 0% to 200%.

  48. TARGET AWARD LEVELS FOR 2021 AIP

    | 56 | Northrop Grumman |

  49. TARGET AWARD LEVELS FOR 2021 AIP

    ANNUAL INCENTIVE FORMULA FOR 2021:

  50. TARGET AWARD LEVELS FOR 2021 AIP

    | X | | = | | | BASE SALARY | TARGET PAYOUT % | | TARGET BONUS | | X | | = | | | TARGET BONUS | COMPANY PERFORMANCE FACTOR | | FINAL BONUS AWARD |

  51. TARGET AWARD LEVELS FOR 2021 AIP

    Annual performance evaluations are conducted by the CEO for each NEO, other than the CEO, and reviewed with the Compensation Committee. The Compensation Committee considers this performance information as well as the comparison to market data.

  52. 2021 AIP METRICS

    2021 AIP METRICS For the 2021 AIP, we used a mix of financial and non-financial metrics to measure our performance. Our AIP metrics reflect our commitment to investing for and achieving long-term profitable growth; maintaining alignment with shareholders’ interests; and incentivizing top performance against our industry peers. Financial Metrics For 2021, the Compensation Committee selected Adjusted Cash Flow from Operations Conversion*and Segment Operating Income* Growth, each weighted at 35%, and Pension-adjusted Net Income* Growth and Pension-adjusted OM Rate*, each weighted at 15%. The metrics are defined as follows:

  53. 2021 AIP METRICS

    | Financial Metrics | How Calculated | Rationale | | ADJUSTED CASH FLOW FROM OPERATIONS CONVERSION* (35%) | Calculated as Adjusted cash provided by operating activities* divided by earnings before interest, taxes, depreciation and amortization, excluding mark-to-market (MTM) expense and the MTM-related deferred state tax benefit (Adjusted EBITDA*). | Emphasizes the importance of converting earnings into cash and enables management to make capital investment decisions that support long-term profitable growth without impacting performance-based incentive compensation. | | SEGMENT OPERATING INCOME* GROWTH (35%) | Calculated as segment operating income* multiplied by an average of peer-based growth rates. | Incentivizes management to focus on profitable growth and enables management to evaluate the financial performance and operational trends of our sectors. | | PENSION-ADJUSTED NET INCOME* GROWTH (15%) | Calculated as net income before the after-tax impact of the total net FAS/CAS pension adjustment multiplied by a market-based growth rate. | Incentivizes management to achieve relative long-term profitable growth greater than a projected industry growth rate. | | PENSION-ADJUSTED OM RATE* (15%) | Calculated as OM rate (operating margin divided by sales) before FAS/CAS operating adjustment. | Establishes high program performance expectations for the Company and incentivizes sound core operational business decisions. |

  54. 2021 AIP METRICS

    * This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”

  55. 2021 AIP METRICS

    | 2022 Proxy Statement | 57 |

  56. 2021 AIP METRICS

    Non-Financial Metrics

  57. 2021 AIP METRICS

    | | In addition to the financial goals, various non-financial goals are used to align our objectives with our stakeholders. Performance against these non-financial metrics can result only in a downward adjustment to the financial metric score. |

  58. 2021 AIP METRICS

    For 2021, we selected the following non-financial metrics:

  59. 2021 AIP METRICS

    | Non-Financial Metric | | How Measured | | People | | Representation of females and people of color in all management level positions with respect to internal and external benchmarks. | | | DIVERSITY | | | | | Perform at or above the Global High Performance (GHP) Norm, a Willis Towers Watson (WTW) index, with a focus on inclusion and engagement. Results are derived from the annual employee survey with a "percent favorable response" measurement scale. | | | EMPLOYEE EXPERIENCE | | | | | Total case rate, defined as the number of Occupational Safety & Health Administration recordable injuries as well as lost work day rate associated with those injuries. | | | SAFETY | | | Environment | | Reductions in absolute greenhouse gas emissions and potable water consumption, and improvement in solid waste diversion (i.e., waste diverted from landfill disposal). | | | ENVIRONMENTAL SUSTAINABILITY | | | Customer | | Program-specific objectives, including defect rates, process quality, supplier quality, planning quality or other appropriate criteria for program type and phase. | | | QUALITY | | | | | Customer feedback, including customer-generated performance scores, award fees and verbal and written feedback. | | | CUSTOMER SATISFACTION | |

  60. 2021 AIP METRICS

    | 2022 NON-FINANCIAL METRIC CHANGES In February 2022, the Compensation Committee approved changes to the non-financial metrics in the AIP design. The Company revised the metric from a negative-only modifier by embedding it in our core metrics to reflect our continued focus on ESG and to bring greater alignment for employees, shareholders and other stakeholders. The non-financial metrics account for 10% of the overall 2022 annual incentive plan goals. |

  61. 2021 AIP METRICS

    Payout Levels Our AIP provides for payout levels from 0% to 200% of target. The minimum, target and maximum performance levels are derived based on an analysis of the historical and forecasted performance of our Performance Peer Group, and LRSP data for the Adjusted Cash Flow from Operations Conversion* and Segment Operating Income* Growth metrics. The Pension-adjusted Net Income* Growth and Pension-adjusted OM Rate* metric performance levels are derived using LRSP data. Specific values are identified for each metric at selected points in the range between minimum and maximum and other values are determined by linear interpolation between these points. No payout is made if performance is below the minimum. Above-target payouts can be earned only if the Company’s performance exceeds the performance threshold noted in the table on the following page. The maximum payout of 200% is achieved if the Company’s performance is above the approximate top quartile performance target. This structure aligns above-target payouts with superior performance and provides reduced awards for below-target performance.

  62. 2021 AIP METRICS

    | 58 | Northrop Grumman |

  63. 2021 AIP METRICS

    2021 AIP PERFORMANCE RESULTS In determining the CPF, both financial and non-financial performance against goals are assessed. The 2021 Company financial performance for the four metrics shown in the table below was 130%. As approved by the Compensation Committee, Company performance calculations were adjusted, as applicable, to include proceeds from sale of equipment to a customer, and to exclude Orbital ATK intangible asset amortization and property, plant and equipment (PP&E) step-up depreciation expense, certain accounting impacts related to the Company’s pension and OPB plans, and impacts related to the Company's IT services divestiture, including the gain on sale of the business, associated federal and state income tax expenses, transaction costs, and the make-whole premium for early debt redemption.

  64. FINANCIAL METRICS

    | Metric/Goal | Weighting | Performance to Achieve Target Payout | 2021 Performance | 2021 Financial Score | | Adjusted Cash Flow from Operations Conversion* | 35% | 69.0% | 69.0% | 35% | | Segment Operating Income* Growth | 35% | $4.15B | $4.22B | 35% | | Pension-adjusted Net Income* Growth | 15% | $2.77B | $3.05B | 30% | | Pension-adjusted OM Rate* | 15% | 10.6% | 11.5% | 30% | | | | | | 130% |

  65. NON-FINANCIAL METRICS

    | | We met or exceeded our employee diversity goals in 2021, and since 2010, have made significant progress towards our long-term goals. | | DIVERSITY | | | | Met the 2021 target goals against the GHP norm. We achieved the designation of a High Performing Company by WTW, a selective classification for participants. | | EMPLOYEE EXPERIENCE | | | | The Company exceeded the annual target in 2021. | | SAFETY | | | | The Company exceeded the annual target for the year, driving further progress towards our multi-year environmental sustainability goals. | | ENVIRONMENTAL SUSTAINABILITY | | | | Corporate quality metric was at target for the year. | | QUALITY | | | | Customer satisfaction metric was at target for the year. | | CUSTOMER SATISFACTION | |

  66. Compensation Committee Discretion

    Compensation Committee Discretion The Compensation Committee approves bonus amounts for all NEOs except the CEO, whose annual bonus is recommended by the Compensation Committee to the independent members of the Board for approval. The Compensation Committee has discretion to make adjustments to the annual bonus payouts for NEOs, other than the CEO, if it determines such adjustment is warranted due to unforeseen or unusual events. In 2021, the Compensation Committee made no such adjustments.

  67. 2021 AIP PAYOUTS

    2021 AIP PAYOUTS In consideration of both the financial and non-financial performance, the 2021 Company Performance Factor was determined to be 130%. In February 2022, the Compensation Committee recommended, and the independent members of the Board approved, a 2021 annual incentive award of $3,744,000 for the CEO, Ms. Warden. Based on the CPF, Ms. Warden recommended, and the Compensation Committee approved, the other NEOs’ annual incentive awards.

  68. 2021 AIP PAYOUTS

    | Name | AIP Target % of Salary | AIP Payout Range % | Performance Payout | Actual Payout (1) | | Kathy J. Warden | 180% | 0% - 200% | 130% | $3,744,000 | | David F. Keffer | 100% | 0% - 200% | 130% | $1,040,000 | | Mark A. Caylor | 100% | 0% - 200% | 130% | $1,112,000 | | Blake E. Larson | 100% | 0% - 200% | 130% | $1,086,000 | | Mary D. Petryszyn | 100% | 0% - 200% | 130% | $975,000 |

  69. 2021 AIP PAYOUTS

    (1)The potential range of bonus payouts based on 2021 performance is disclosed in the Grants of Plan-Based Awards Table. Actual bonus payouts for 2021 performance are disclosed in this table and in the Summary Compensation Table. Long-Term Incentive Compensation In 2021, the Compensation Committee granted awards in the form of RPSRs and RSRs. The awards were comprised of 70% RPSRs and 30% RSRs. The Compensation Committee determined this long-term incentive mix would appropriately motivate and reward the NEOs to achieve our long-term objectives and further reinforce the link between their interests and the interests of our shareholders.

  70. 2021 AIP PAYOUTS

    | 2022 Proxy Statement | 61 |

  71. 2021 AIP PAYOUTS

    | | Restricted Performance Stock Rights (RPSRs) The RPSRs ensure sustainability and achievement of business goals over time. The RPSRs will vest and be distributed following the completion of the three-year performance period (commencing January 1, 2021, and ending December 31, 2023) if goals are met. | | | Restricted Stock Rights (RSRs) The RSRs provide retentive value and generally vest 100% after three years. |

  72. 2021 AIP PAYOUTS

    Earned RPSRs and RSRs may be paid in shares, cash or a combination of shares and cash at the Compensation Committee’s discretion. An executive generally must remain employed through the vesting period to earn an award. Vesting for termination due to death, disability, retirement or change in control is discussed in the “Termination Payments and Benefits” section on page 80. Dividend equivalents accrue on both RPSR and RSR awards earned and will be paid upon distribution of the RPSRs and RSRs.

  73. RESTRICTED PERFORMANCE STOCK RIGHTS

    RESTRICTED PERFORMANCE STOCK RIGHTS The Compensation Committee evaluates RPSR performance requirements each year to ensure they are aligned with our business objectives. For the 2021 RPSR grant, the Compensation Committee determined that for the NEOs, performance metrics would continue to be Relative Total Shareholder Return, Adjusted Cumulative FCF* and Operating RONA*, each equally weighted at 1/3. The current metrics and weightings reflect the Company’s continued emphasis on operational performance directly impacted by management decisions and behaviors, while maintaining strong alignment with shareholder interests. Based on the performance against these metrics, shares earned for 2021 RPSR grants can vary from 0% to 200% of the rights awarded.

  74. RESTRICTED PERFORMANCE STOCK RIGHTS

    | Metric | Weighting | Rationale | | Relative Total Shareholder Return | 1/3 | Aligns the interests of executives with shareholders. | | Adjusted Cumulative FCF* | 1/3 | Focuses on cash generation to create shareholder value after investing in the business through capital expenditures. | | Operating RONA* | 1/3 | Drives operational productivity through the efficient use of capital resources. |

  75. RESTRICTED PERFORMANCE STOCK RIGHTS

    * This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.”

  76. RESTRICTED PERFORMANCE STOCK RIGHTS

    | 62 | Northrop Grumman |

  77. 2021 RPSR Performance Measures

    2021 RPSR Performance Measures

  78. 2021 RPSR Performance Measures

    | RPSR Metrics | Calculation | | Relative Total Shareholder Return | Relative TSR is measured by comparing cumulative stock price appreciation with reinvestment of dividends over the three-year period to the TSR Peer Group (50% of relative TSR portion of award) and to the S&P Industrials (50% of relative TSR portion of award), which comprises companies within the S&P 500 classified as Industrials, reflecting the range of similar investment alternatives available to our shareholders. To smooth volatility in the market, the TSR calculation is based on the average of the three-year returns for each of the 30 calendar days, starting from the grant date, to the last 30 days of the performance period. The maximum relative TSR payout is capped at 100% of target shares if the absolute TSR is negative, even if the relative TSR would have resulted in a higher score. | | Adjusted Cumulative FCF* | Adjusted Cumulative FCF* focuses on cash generation after capital investments and is calculated as the aggregate Transaction-Adjusted Free Cash Flow before after-tax total pension funding*, which is adjusted to exclude unplanned reductions in CAS pension reimbursement, and include divestiture-related activity**, over a three-year period. | | Operating RONA* | Operating RONA* is calculated as Adjusted Net Operating Profit After-Tax* (adjusted NOPAT*) divided by the two-year average of net operating assets, adjusted for a 2020 balance sheet change made in tax revenue recognition on certain long-term contracts, and divestiture-related activity**. |

  79. 2021 RPSR Performance Measures

    * This metric is a non-GAAP financial measure. For more information, see “Appendix A - Use of Non-GAAP Financial Measures.” ** Divestiture-related activity impacting RPSRs is comprised of financial statement adjustments, where applicable, related to the completion of the IT services divestiture that were not known at the grant date. The divestiture-related activities include the gain, fees and taxes associated with the sale of IT services, held for sale reversal in 2020, and differential impacts related to the IT services divestiture in 2021. Differential impacts represent 11 months of plan-based margin and free cash flow estimates and plan-based net operating assets of the IT services business in 2021 that were included in the setting of the 2019 grant.

  80. Recently Completed RPSR Performance Period (2019-2021)

    | | | Performance Required to Score | | | | | RPSR Metrics | Weighting | Threshold 0% | Target 100% | Maximum 150% | 2021 Score | | Relative TSR - 2019 Performance Peer Group | 1/3 | | | | 25% | | Relative TSR - S&P Industrials | | | | | 11% | | Adjusted Cumulative FCF* | 1/3 | | | | 50% | | Operating RONA* | 1/3 | | | | 36% | | RPSR Performance Factor | | | | | 122% |

  81. Other NEO Benefits

    Other NEO Benefits This section describes other benefits the NEOs receive. These benefits are not performance related and are designed to provide a competitive package for purposes of attracting and retaining the executive talent needed to achieve our business objectives. These benefits include retirement benefits, certain perquisites and severance arrangements. Retirement Benefits We maintain tax-qualified retirement plans (both defined benefit pension plans and defined contribution savings plans) that cover most of our workforce, including the NEOs. We also maintain nonqualified retirement plans that are available to our NEOs, which are designed to restore benefits that were limited under the tax-qualified plans or to provide supplemental benefits. Compensation, age and years of service factor into the amount of benefits provided under the plans. Thus, the plans are structured to reward and retain employees of long service and recognize higher performance levels as evidenced by increases in annual pay. The nonqualified supplemental defined benefit plans in which our NEOs participate were frozen as to pay and service as of December 31, 2014. The Compensation Committee assesses aggregate benefits available to the NEOs and has previously imposed an overall cap, generally limited to no more than 60% of final average pay, on pension benefits for the NEOs (except for small variations due to contractual restrictions under the plans). Additional information about these retirement plans and the NEO benefits under these plans can be found in the Pension Benefits Table and Nonqualified Deferred Compensation Table, on pages 74 and 78, respectively. Perquisites Our NEOs are eligible for certain limited executive perquisites that include financial planning and income tax preparation, physical exams and personal liability insurance. The Compensation Committee believes these perquisites are common within the competitive market for total compensation packages for executives and are useful in attracting, retaining and motivating talented executives. Perquisites provided to the NEOs in 2021 are detailed in the Summary Compensation Table on page 69. Security Arrangements Given the nature of our business, we maintain a comprehensive security program. Executive protection, including residential and/or travel, is based on a risk assessment and may change based on the individual's profile. These security requirements are continuously assessed for each member and provided to the Board for informational purposes every three years. In selecting the level and form of protection, we and the Board consider security risks faced by those in our industry in general and security risks specific to our Company and its individuals. Based on security threat information obtained and an ongoing dialogue with law enforcement and security specialists, the Board has required that Ms. Warden and other NEOs receive varying levels of residential and travel protection. Since we require this protection under a comprehensive security program and it is not designed to provide a personal benefit (other than the intended security), we do not view these security arrangements as compensation to the individuals. We report these security arrangements as perquisites as required under applicable SEC rules. In addition, we report them as taxable compensation to the individuals if they are not excludable from income as working condition fringe benefits under Section 132 of the Internal Revenue Code. The Board has determined that the CEO should avoid traveling by commercial aircraft for purposes of security, rapid availability and communications connectivity during travel, and should use Company-provided aircraft for all air travel. If, as a result, the CEO uses Company-provided aircraft for personal travel, the costs of such travel are imputed as income and are subject to the appropriate tax reporting according to Internal Revenue Code regulations. We regularly review the nature of the security threat and associated vulnerabilities with law enforcement and security specialists and will continue to adapt our security program as appropriate. Severance Benefits We maintain the Severance Plan for Elected and Appointed Officers of Northrop Grumman Corporation (Severance Plan), which is available to Ms. Warden and other NEOs who qualify and are approved to receive such benefits. The purpose of

  82. Other NEO Benefits

    the Severance Plan is to help bridge the gap in an executive’s income and health coverage during a period of unemployment following termination, and to ensure certain benefits for the Company. We do not maintain any change in control (CIC) severance plans. In addition, we do not provide excise tax gross-ups for any payments received upon termination after a change in control. Upon a “qualifying termination” (defined below) the Company will provide severance benefits to eligible NEOs under the Severance Plan. Provided the NEO signs a release and agrees to certain restrictions, he or she may receive: (i) a lump sum severance benefit equal to one and one-half times annual base salary and target bonus, (ii) a prorated performance bonus for the year of termination, (iii) continued medical and dental coverage for the 18-month severance period, (iv) income tax preparation/financial planning fees for the year of termination and the following year and (v) outplacement expenses up to 15% of salary, all subject to management approval. The cost of providing continued medical and dental coverage is based upon current premium costs. The cost of providing income tax preparation and financial planning is capped for the year of termination and for the year following termination. The annual cap for the CEO is $30,000 and for the rest of the NEOs is $18,500. A “qualifying termination” includes one of the following: •involuntary termination, other than for cause or mandatory retirement; or •election to terminate in lieu of accepting a downgrade to a non-officer position (i.e., good reason). Change in Control Benefits We do not maintain separate CIC programs or agreements. The only CIC benefits available to the NEOs are those described in the terms and conditions of the grants under the 2011 Long-Term Incentive Stock Plan (2011 Plan).

  83. Policies and Procedures

    | | | | | SHAREHOLDER ALIGNMENT AND FOCUS ON LONG-TERM, SUSTAINABLE GROWTH | | STOCK OWNERSHIP | + | STOCK HOLDING | = | |

  84. Summary Compensation Table

    Summary Compensation Table

  85. Summary Compensation Table

    | Name & Principal Position | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total ($) | | Kathy J. Warden Chair, Chief Executive Officer and President | 2021 | 1,589,439 | — | 13,500,119 | 3,744,000 | 371,464 | 671,745 | 19,876,767 | | | 2020 | 1,536,346 | — | 13,499,889 | 3,977,000 | 1,144,248 | 649,661 | 20,807,144 | | | 2019 | 1,488,462 | — | 13,000,159 | 4,509,000 | 687,615 | 623,484 | 20,308,720 | | David F. Keffer Corporate Vice President and Chief Financial Officer | 2021 | 790,392 | — | 3,000,038 | 1,040,000 | — | 195,335 | 5,025,765 | | | 2020 | 634,616 | — | 4,000,102 | 928,000 | — | 71,494 | 5,634,212 | | Mark A. Caylor Corporate Vice President and President, Mission Systems | 2021 | 855,002 | — | 3,000,038 | 1,112,000 | 206,044 | 138,474 | 5,311,558 | | | 2020 | 855,000 | — | 3,000,212 | 1,223,000 | 870,818 | 144,715 | 6,093,745 | | | 2019 | 850,192 | — | 3,499,779 | 1,428,000 | 886,646 | 129,727 | 6,794,344 | | Blake E. Larson (6) Former Corporate Vice President and President, Space Systems | 2021 | 830,398 | — | 3,499,978 | 1,086,000 | 154,294 | 203,163 | 5,773,833 | | | 2020 | 802,154 | — | 3,500,217 | 1,160,000 | 326,767 | 217,676 | 6,006,814 | | | 2019 | 746,394 | — | 3,000,163 | 1,278,000 | 388,000 | 189,586 | 5,602,143 | | Mary D. Petryszyn (7) Corporate Vice President and President, Defense Systems | 2021 | 745,198 | — | 3,000,038 | 975,000 | — | 268,498 | 4,988,734 |

  86. Summary Compensation Table

    (1)Includes amounts deferred under qualified savings and nonqualified deferred compensation plans. (2)Represents the grant date aggregate fair value of RPSRs and RSRs granted during the periods presented. The fair value of awards was computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, excluding any assumed forfeitures. Assumptions used in the calculation of these amounts are disclosed in Note 14 of the Company’s 2021 Form 10-K. The maximum grant date fair values of the 2021 RPSRs are as follows (grants assume a 200% maximum payout):

  87. Summary Compensation Table

    | Name | Maximum Grant Date Fair Value ($) | | Ms. Warden | 18,900,330 | | Mr. Keffer | 4,199,853 | | Mr. Caylor | 4,199,853 | | Mr. Larson | 4,199,853 | | Ms. Petryszyn | 4,199,853 |

  88. Summary Compensation Table

    (3)These amounts were paid pursuant to the Company’s AIP and includes amounts deferred under the qualified savings and nonqualified deferred compensation plans.

  89. Summary Compensation Table

    | 2022 Proxy Statement | 69 |

  90. Summary Compensation Table

    (4)These amounts relate solely to the increased present value of the NEO’s pension plan benefits using mandatory SEC assumptions (see the descriptions of these plans under the Pension Benefits table on page 74). The amount accrued in each year differs from the amount accrued in prior years due to an increase in age, service and pay (salary and bonus). The change in pension value is also highly sensitive to changes in the interest rate used to determine the present value of the payments to be made over the life of the executive. Mr. Keffer and Ms. Petryszyn were hired after the Company’s defined benefit pension plans were closed to new entrants, and as a result, they do not participate in any defined benefit pension plans. There were no above-market earnings in the nonqualified deferred compensation plans (see the descriptions of these plans under the Nonqualified Deferred Compensation table on page 78). (5) Amounts include, as applicable, (a) the value of perquisites and personal benefits, (b) basic life insurance premiums, (c) matching contributions through the Northrop Grumman Foundation made to eligible educational institutions and to non-profit organizations under a Company program, and (d) Company contributions to defined contribution and deferred compensation plans. Where the value of the items reported in a particular category for an NEO exceeded $10,000 in 2021 (other than perquisites and personal benefits, which are subject to different thresholds as described below), those items are identified and quantified below. Perquisites and Personal Benefits – Perquisites and other personal benefits provided to certain NEOs are as follows: security, travel-related perquisites (including use of Company aircraft or ground transportation services for personal travel and incidental expenses for family members if accompanying the NEO while on business travel), financial planning/income tax preparation services, insurance premiums paid by the Company on the NEO’s behalf, executive physicals and other nominal perquisites or personal benefits. We determine the incremental cost for perquisites and personal benefits based on costs or charges incurred by the Company for the benefits. As discussed in “Key Components of Our Executive Compensation Programs - Security Arrangements,” the Company provides NEOs with certain residential and travel security protection due to the nature of our business and security threat information. The amounts reflected in the “All Other Compensation” column include expenses for certain residential and travel security that we treat as perquisites under relevant SEC guidance, even though the need for such expenses arises from the risks associated with their positions with the Company. The Company calculates the cost of travel security coverage based on the hourly rates and overhead fees charged directly to the Company by the firms providing security personnel. If Company security personnel are used, their hourly rates are used to calculate the cost of coverage. The Company calculates the value of personal use of Company aircraft based on the incremental cost of each element. Fixed costs that would be incurred in any event to operate Company aircraft (e.g., aircraft purchase costs, maintenance not related to personal trips and flight crew salaries) are not included. The cost of any category of the listed perquisites and personal benefits did not exceed the greater of $25,000 or 10% of total perquisites and personal benefits for any NEO in 2021, except for the following: i.Ms. Warden: costs attributable to security protection ($174,933), which includes personal travel on Company aircraft consistent with the Company’s security program ($164,934), financial planning ($30,000); ii.Mr. Keffer: costs attributable to financial planning ($13,750), executive physical benefit ($2,250); iii.Mr. Caylor: costs attributable to security protection ($12,443), financial planning ($13,275), long-term disability (LTD) employer contributions ($4,035); iv.Mr. Larson: costs attributable to financial planning ($16,444), LTD employer contributions ($3,474); and v.Ms. Petryszyn: costs attributable to financial planning ($18,500), LTD employer contributions ($3,017). Contributions to Plans – In 2021, we made the following Company contributions to the defined contribution and deferred compensation plans:

  91. Summary Compensation Table

    | Name | Company Contributions ($) | | Ms. Warden | 445,302 | | Mr. Keffer | 166,052 | | Mr. Caylor | 94,706 | | Mr. Larson | 169,161 | | Ms. Petryszyn | 231,653 |

  92. Summary Compensation Table

    (6) Mr. Larson retired from the Company on February 4, 2022. (7) Ms. Petryszyn was appointed Corporate Vice President and President Defense Systems January 1, 2020.

  93. Summary Compensation Table

    | 70 | Northrop Grumman |

  94. 2021 Grants of Plan-Based Awards

    2021 Grants of Plan-Based Awards

  95. 2021 Grants of Plan-Based Awards

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock Awards(4) ($) | | Name | Grant Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Kathy J. Warden | Incentive Plan | | — | 2,880,000 | 5,760,000 | | | | | | | | RPSR | 2/16/2021 | | | | — | 32,505 | 65,010 | | 9,450,165 | | | RSR | 2/16/2021 | | | | | | | 14,776 | 4,049,954 | | David F. Keffer | Incentive Plan | | — | 800,000 | 1,600,000 | | | | | | | | RPSR | 2/16/2021 | | | | — | 7,223 | 14,446 | | 2,099,926 | | | RSR | 2/16/2021 | | | | | | | 3,284 | 900,112 | | Mark A. Caylor | Incentive Plan | | — | 855,000 | 1,710,000 | | | | | | | | RPSR | 2/16/2021 | | | | — | 7,223 | 14,446 | | 2,099,926 | | | RSR | 2/16/2021 | | | | | | | 3,284 | 900,112 | | Blake E. Larson | Incentive Plan | | — | 835,000 | 1,670,000 | | | | | | | | RPSR | 2/16/2021 | | | | — | 7,223 | 14,446 | | 2,099,926 | | | RSR | 2/16/2021 | | | | | | | 3,284 | 900,112 | | | RSR (5) | 2/16/2021 | | | | | | | 1,824 | 499,940 | | Mary D. Petryszyn | Incentive Plan | | — | 750,000 | 1,500,000 | | | | | | | | RPSR | 2/16/2021 | | | | — | 7,223 | 14,446 | | 2,099,926 | | | RSR | 2/16/2021 | | | | | | | 3,284 | 900,112 |

  96. 2021 Grants of Plan-Based Awards

    (1)Represents the potential range of payouts under the Company’s AIP. Actual payouts are shown in the Summary Compensation Table column entitled “Non-Equity Incentive Plan Compensation” on page 69. (2)These amounts relate to RPSRs granted in 2021 under the 2011 Plan. For additional details on our RPSRs, refer to “Key Components of Our Executive Compensation Programs - Long-Term Incentive Compensation” on page 61. (3)These amounts relate to RSRs granted in 2021 under the 2011 Plan. For additional details on our RSRs, refer to “Key Components of Our Executive Compensation Programs - Long-Term Incentive Compensation” on page 61. (4)The fair value of awards was computed in accordance with FASB ASC Topic 718. (5)Mr. Larson was granted a retention RSR award on February 16, 2021. The award does not include retirement provisions and vested on September 30, 2021.

  97. 2021 Grants of Plan-Based Awards

    | 2022 Proxy Statement | 71 |

  98. Outstanding Equity Awards at 2021 Fiscal Year End

    Outstanding Equity Awards at 2021 Fiscal Year End

  99. Outstanding Equity Awards at 2021 Fiscal Year End

    | Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested(1) (#) | Market Value of Shares or Units of Stock that Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(2) ($) | | Kathy J. Warden | 2/16/2021 | 14,776 | 5,719,346 | 32,505 | 12,581,710 | | | 2/12/2020 | 11,453 | 4,433,113 | 27,037 | 10,465,212 | | | 2/13/2019 | 14,227 | 5,506,845 | 33,572 | 12,994,714 | | David F. Keffer | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | | | 5/5/2020 | 3,847 | 1,489,058 | 8,753 | 3,388,024 | | Mark A. Caylor | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | | | 2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | | | 2/13/2019 | 3,830 | 1,482,478 | 9,038 | 3,498,339 | | Blake E. Larson | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | | | 2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | | | 2/13/2019 | 3,283 | 1,270,751 | 7,748 | 2,999,018 | | Mary D. Petryszyn | 2/16/2021 | 3,284 | 1,271,138 | 7,223 | 2,795,807 | | | 2/12/2020 | 2,545 | 985,093 | 6,009 | 2,325,904 | | | 2/13/2019 | 487 | 188,503 | 1,136 | 439,712 |

  100. Outstanding Equity Awards at 2021 Fiscal Year End

    (1)Outstanding RSRs generally vest three years from date of grant. (2)The value listed is based on the closing price of the Company’s stock of $387.07 on December 31, 2021, the last trading day of the year. (3)Outstanding RPSRs granted in 2021, 2020 and 2019 vest based on performance for the three-year performance period ending on December 31, 2023, 2022 and 2021 respectively. All RPSR grants are subject to the Compensation Committee’s approval of the performance-based earn-out percentage applicable to the grant following the end of the performance period. Amounts presented assume target level performance. The 2019 RPSRs were distributed in February 2022 upon the Compensation Committee’s approval. The actual number of shares distributed to the NEOs in February 2022 as a result of the vesting was as follows:

  101. Outstanding Equity Awards at 2021 Fiscal Year End

    | Name | Actual Shares Distributed (#) | | Ms. Warden | 40,958 | | Mr. Keffer | — | | Mr. Caylor | 11,026 | | Mr. Larson | 9,453 | | Ms. Petryszyn | 1,795 |

  102. Outstanding Equity Awards at 2021 Fiscal Year End

    | 72 | Northrop Grumman |

  103. 2021 Stock Vested

    2021 Stock Vested

  104. 2021 Stock Vested

    | | Stock Awards(1)(2) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Kathy J. Warden | 33,567 | 10,050,317 | | David F. Keffer | — | — | | Mark A. Caylor | 12,125 | 3,647,882 | | Blake E. Larson | 13,043 | 4,286,640 | | Mary D. Petryszyn | 1,725 | 501,646 |

  105. 2021 Stock Vested

    (1)The number of shares and the amounts reflected in the table are reported on an aggregate basis and do not reflect shares sold or withheld to pay withholding taxes. (2)Consists of RPSRs and RSRs granted in 2018. The 2018 RPSRs vested based on the three-year performance period which ended on December 31, 2020 and were distributed in February 2021. The 2018 RSRs vested three years from the date of grant and were distributed in February 2021. In addition to the 2018 grants, the table includes Mr. Larson's RSR retention awards granted in February 2020 and February 2021, which vested in December 2021 and September 2021, respectively.

  106. 2021 Stock Vested

    | 2022 Proxy Statement | 73 |

  107. 2021 Pension Benefits

    2021 Pension Benefits The following table provides information about the pension plans in which the NEOs participate (described in more detail on the following pages), including the present value of each NEO’s accumulated benefits as of December 31, 2021, calculated pursuant to SEC specifications for this table. Our policy generally limits an executive’s total benefit under these plans to be no more than 60% of final average pay.

  108. 2021 Pension Benefits

    | Name(1) | Plan Name | Number of Years Credited Service(2) (#) | Present Value of Accumulated Benefit(3) ($) | Payments During Last Fiscal Year ($) | | Kathy J. Warden | OSERP II | 13.3 | 3,631,463 | — | | Mark A. Caylor | S&MS Pension Plan | 19.5 | 859,178 | — | | | SRIP | 19.5 | 2,311,723 | — | | | OSERP | 12.5 | 1,328,828 | — | | Blake E. Larson | Pension Plan | 40.5 | 833,132 | — | | | NGIS DB SERP | 40.5 | 3,560,186 | — |

  109. 2021 Pension Benefits

    (1)Mr. Keffer and Ms. Petryszyn were hired after the Company’s defined benefit pension plans were closed to new entrants and as a result, they do not participate in any defined benefit pension plans. (2)Credited service under OSERP for Mr. Caylor is less than actual service because credited service under this plan stopped as of December 31, 2014. Each NEO’s actual service is as follows: Ms. Warden: 13.3 years; Mr. Caylor: 19.5 years; Mr. Larson: 40.5 years. (3)Amounts are calculated using the following assumptions: •the NEO retires on the earliest date he/she could receive an unreduced benefit under each plan; •the form of payment is a single life annuity except for Mr. Larson's NGIS DB SERP benefit which is paid as a lump sum; and •the discount rate is 2.97% for the Pension Plan, 3.01% for the S&MS Pension Plan and 2.98% for all other plans. The mortality table is the Pri-2012 White Collar mortality table projected generationally with Scale MP-2021 for all plans except the NGIS DB SERP which uses no mortality because the form of payment is a lump sum. These are the same assumptions used for the valuation of benefits in the Company’s financial statements.

  110. Heritage Formulas

    Heritage Formulas The following table summarizes the key features of the Heritage Formula applicable to the eligible NEO.

  111. Heritage Formulas

    | Feature | S&MS Pension Plan | | Benefit Formula | (Final Average Pay x 1.5% minus Covered Compensation x 0.4%) times Pre-January 1, 2005 service | | Final Average Pay(1) | Average of the highest 5 consecutive years of Eligible Pay; Covered Compensation is specified by the IRS | | Eligible Pay (limited by Internal Revenue Code section 401(a)(17)) | Salary plus bonus | | Normal Retirement | Age 65 | | Early Retirement | Age 55 with 10 years of service | | Early Retirement Reduction (for retirements occurring between Early Retirement and Normal Retirement) | Benefits are reduced for commencement prior to age 62 |

  112. Heritage Formulas

    (1)Final Average Pay was frozen for the Pension Plan and the S&MS Pension Plan as of December 31, 2014.

  113. Heritage Formulas

    | 2022 Proxy Statement | 75 |

  114. Cash Balance Formulas

    Cash Balance Formulas The Pension Plan Cash Balance Formulas are hypothetical account balances consisting of pay credits plus interest. The features of the Old and New NGIS Cash Balance Formulas are as follows: Old NGIS Cash Balance Formula (pay credits ceased on June 30, 2013) •pay credits are a percentage of pay that vary based on an employee’s service. Due to Mr. Larson’s service of more than 25 years at June 30, 2013, he was receiving 8.5% of pensionable earnings and an additional 5.5% of earnings in excess of the Social Security Wage Base at that time. •interest is credited at one-twelfth of the average of the one-year Treasury Constant Maturities during the 12 months ending September 30 of the prior calendar year. The minimum annual interest crediting rate is 3.06%. After June 30, 2013, interest credits continue to apply to this benefit. The post-2021 interest credit rate is assumed to be 3.5% (this is consistent with the valuation of the Old NGIS Cash Balance benefit in the Company’s financial statements). •eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17). •eligibility for early retirement occurs at age 55 with five years of service. Benefits may be reduced if commenced prior to Normal Retirement Age (65). New NGIS Cash Balance Formula (pay credits commenced on July 1, 2013) •pay credits are a percentage of pay that vary based on an employee’s age plus service and are credited annually at the end of each calendar year or earlier termination. The percentage applicable to Mr. Larson as of December 31, 2021 is 4.0%. •interest is credited at the end of each year at 4.0%. Interest is prorated for commencements during the calendar year. •eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17). •after termination of employment, a participant’s New NGIS Cash Balance benefit may be distributed immediately, regardless of age, in a variety of actuarially equivalent monthly annuities or as a lump sum. S&MS Pension Plan The Cash Balance Formula in the S&MS Pension Plan is a hypothetical account balance consisting of pay credits plus interest. It has the following features: •pay credits are a percentage of pay that vary based on an employee's "points" (age plus service) and are credited monthly. The percentage applicable to the NEOs on December 31, 2021 was 7.5%. •interest is credited at the 30-year U.S. Treasury bond rate subject to a minimum annual interest rate of 2.25%. The December 31, 2021 interest credit rate was 2.25%. •eligible pay is salary plus bonus, as limited by Internal Revenue Code section 401(a)(17). •eligibility for early retirement occurs at age 55 with 10 years of service. Benefits may be reduced if commenced prior to Normal Retirement Age (65).

  115. NGIS DB SERP and SRIP (Nonqualified Restoration Plans)

    NGIS DB SERP and SRIP (Nonqualified Restoration Plans) A portion of the NGIS DB SERP and the SRIP are nonqualified plans that restore benefits provided for under the Pension Plan and the S&MS Pension Plan, respectively, but for the limits on eligible pay imposed by Internal Revenue Code section 401(a)(17) and the overall benefit limitation of Internal Revenue Code section 415. Benefits and features in these restoration plans otherwise are generally the same as described above for the underlying tax qualified plan.

  116. OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)

    OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans) These plans provide supplemental pension benefits. They were closed to new hires on or before 2009. In addition, final average pay and associated service under these plans were frozen as of December 31, 2014, or earlier, as noted below.

  117. OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)

    | 76 | Northrop Grumman |

  118. OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)

    The following chart highlights the key features of these plans applicable to eligible NEOs.

  119. OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)

    | Feature | OSERP and OSERP II(1) | NGIS DB SERP(2) | | Benefit Formula | Final Average Pay times 2% for each year of service up to 10 years, 1.5% for each subsequent year up to 20 years, and 1% for each additional year over 20 and less than 45 | Service times the sum of 11% of Final Average Pay in excess of one-half of the Social Security Wage Base and 5.5% of one-half of the Social Security Wage Base; interest at 4% per annum is applied from July 1, 2013 through commencement | | Final Average Pay | Average of highest 3 years of Eligible Pay | Average of highest 60 months of Eligible Pay; both Final Average Pay and the Social Security Wage Base were frozen at June 30, 2013 | | Eligible Pay | Salary and bonus (including amounts above Internal Revenue Code limits and amounts deferred) | Salary and bonus (including amounts above Internal Revenue Code limits and amounts deferred) | | Normal Retirement | Age 65 | Age 65 | | Early Retirement | Age 55 with 10 years of service | Age 55 | | Early Retirement Reduction | Benefits are reduced for commencement prior to the earlier of age 65 or 85 points (age + service) | Not Applicable | | Reductions From Other Plans | Reduced by any other Company pension benefits | Reduced by the Old NGIS Cash Balance benefit |

  120. OSERP, OSERP II, and NGIS DB SERP (Nonqualified Supplemental Executive Retirement Plans)

    (1)Ms. Warden participates in OSERP II, which mirrors the benefits provided under the Cash Balance Formula with a pay-based credit percentage of 5.5% (without regard to limits imposed by the Internal Revenue Code sections 401(a)(17) and 415) and OSERP provisions described above. (2)Mr. Larson participates in the NGIS DB SERP, which provides the greater of the Final Average Pay benefit noted in the chart above and the Old NGIS Cash Balance benefit based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17) limits. In addition, the NGIS DB SERP pays a benefit equal to the New NGIS Cash Balance formula based on Eligible Pay in excess of the Internal Revenue Code section 401(a)(17).

  121. 2021 Nonqualified Deferred Compensation

    2021 Nonqualified Deferred Compensation

  122. 2021 Nonqualified Deferred Compensation

    | Name | Plan Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | | Kathy J. Warden | Savings Excess | 422,102 | 211,051 | 649,643 | (4,956) | 4,599,423 | | | ORAC | — | 222,651 | 121,497 | (5,683) | 1,230,853 | | David F. Keffer | Savings Excess | 114,281 | 85,711 | 13,948 | — | 213,940 | | | ORAC | | 68,741 | 2,379 | — | 96,505 | | Mark A. Caylor | Savings Excess | — | — | 39,769 | — | 245,198 | | | ORAC | | 83,106 | 60,142 | (2,146) | 684,856 | | Blake E. Larson | Savings Excess | 102,008 | 76,506 | 67,524 | (1,796) | 696,104 | | | ORAC | | 79,605 | 22,709 | (1,955) | 323,339 | | | NGIS DC SERP | | — | 35,901 | — | 363,167 | | | NGIS NQDCP | | — | 83,019 | — | 1,171,326 | | Mary D. Petryszyn | Savings Excess | 119,356 | 150,975 | 139,694 | (2,512) | 1,097,821 | | | ORAC | | 71,278 | 43,548 | (1,006) | 401,774 |

  123. 2021 Nonqualified Deferred Compensation

    (1)NEO contributions in this column are also included in the 2021 Summary Compensation Table on page 69, under the columns entitled “Salary” and “Non-Equity Incentive Plan Compensation.” (2)Company contributions in this column are included in the 2021 Summary Compensation Table, under the column entitled “All Other Compensation.” (3)Aggregate earnings in the last fiscal year are not included in the 2021 Summary Compensation Table because they are not above market or preferential. (4)NEO and Company contributions in this column may include balances for merged plans. Employee contributions by Ms. Warden, Mr. Keffer and Mr. Larson for the years ended December 31, 2021, 2020 and 2019, collectively, previously reported as compensation in the Summary Compensation tables, were as follows:

  124. 2021 Nonqualified Deferred Compensation

    | Name | Employee Contributions ($) | | Ms. Warden | 1,133,207 | | Mr. Keffer | 114,281 | | Mr. Larson | 305,294 | | Ms. Petryszyn | 119,356 |

  125. 2021 Nonqualified Deferred Compensation

    There were no employee contributions made by Mr. Caylor for the years ended December 31, 2021, 2020 and 2019. Employee contributions by Ms. Petryszyn for the year ended December 31, 2021 are presented in the table above. Because Ms. Petryszyn was not an NEO for the years ended December 31, 2020 and 2019, employee contribution data for these years is not presented.

  126. 2021 Nonqualified Deferred Compensation

    | 78 | Northrop Grumman |

  127. Termination Payments and Benefits

    Termination Payments and Benefits The following table summarizes certain payments and benefits the NEOs may receive upon termination, subject to the referenced plans and terms and conditions of the awards.

  128. Termination Payments and Benefits

    | | Voluntary Termination(3) | Involuntary Termination Not For Cause(3) | Post-CIC Involuntary or Good Reason Termination | Death or Disability(3) | | RSRs(1) | Unvested RSRs are forfeited, except in the case of early retirement where the RSRs are prorated and mandatory retirement (age 65) where they will fully vest. Retention awards do not include retirement provisions. | Unvested RSRs are forfeited, except in the case of early retirement where the RSRs are prorated and mandatory retirement (age 65) where they will fully vest. Retention awards do not include retirement provisions. | For certain change in control events as set forth in the 2011 Plan (CIC), unvested RSRs will vest and payment is accelerated, only in the event of a double trigger (CIC and termination other than for cause within the specified period), or if the acquiring company fails to assume the awards; subject to certain limitations to the extent such accelerated payments would otherwise trigger an excise tax. | Unvested RSRs will fully vest and payment is accelerated. | | RPSRs(1)(2) | Unvested RPSRs are forfeited except in the case of early retirement where the RPSRs are prorated and mandatory retirement (age 65) where they fully vest. | Unvested RPSRs are forfeited except in the case of early retirement where the RPSRs are prorated and mandatory retirement (age 65) where they fully vest. | For a CIC, unvested RPSRs will fully vest and payment is accelerated based on a truncated performance period, only in the event of a double trigger (CIC and termination other than for cause within the specified period), or if the acquiring company fails to assume the awards; subject to certain limitations to the extent such accelerated payments would otherwise trigger an excise tax. | Unvested RPSRs are prorated and payment, at target, is accelerated. | | Cash Severance | No payment. | Lump sum equal to 1.5x base salary and bonus target and a prorated performance bonus for the year of termination. | No payment. | No payment. | | Medical/Dental Continuation | No payment. | Continued medical and dental coverage for the 18-month severance period. | No payment. | No payment. | | Financial Planning/Income Tax | No payment. | Reimbursement of fees for the year of termination and the following year. | No payment. | No payment. | | Outplacement Services | No payment. | Expenses up to 15% of base salary. | No payment. | No payment. |

  129. Termination Payments and Benefits

    (1)Terms of equity awards granted to the NEOs under the 2011 Plan. (2)Subject to the Compensation Committee’s approval of the earn-out percentage based on the RPSR performance metrics. (3)Any retirement treatment requires employment for at least six months following the grant date with respect to RSRs and at least six months of the performance period with respect to RPSRs.

  130. Termination Payments and Benefits

    | 80 | Northrop Grumman |

  131. Termination Payments and Benefits

    The Potential Termination Payments Table provides estimated payments and benefits that the Company would have provided to each NEO if his or her employment had terminated on December 31, 2021 for the reasons set forth in the table below. The Company stock price is assumed to be $ 387.07, the closing market price on December 31, 2021, the last trading day of the year. These payments and benefits are payable based on: •the Severance Plan; and •the 2011 Plan and the terms and conditions of equity awards made pursuant to the plan. Due to the many factors that affect the nature and amount of any benefits provided upon termination events, actual amounts paid or distributed to NEOs may be different from the values shown in the table. Factors that may affect these amounts include timing during the year of the occurrence of the event, our stock price, the NEO’s age and the terms and circumstances of the event. The amounts described below are in addition to an NEO’s benefits described in the Pension Benefits and Nonqualified Deferred Compensation Tables on pages 74 and 78, respectively, as well as benefits generally available to our employees such as distributions under our savings plan, disability or life insurance benefits and accrued vacation.

  132. Termination Payments and Benefits

    | 2022 Proxy Statement | 81 |

  133. 2021 CEO Pay Ratio

    2021 CEO Pay Ratio We are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our CEO, Ms. Warden, as of our fiscal year end December 31, 2021. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In 2020, we identified the median employee by including the global employee population. Since the filing of the prior year's proxy, the median employee is no longer employed at the Company. In accordance with SEC rules, we re-identified a similarly compensated median employee in 2021. There were no changes to our global employee population or our compensation plans that would result in a significant change to our pay ratio. We calculated the median employee’s annual total compensation in the same manner as the CEO’s annual total compensation is calculated in the Summary Compensation Table on page 69. The median employee’s annual total compensation was $119,721, which includes other forms of compensation such as financial and wellness benefits. The CEO’s annual total compensation was $19,876,767. Based on this information, for 2021 the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee was 166:1.

  134. 2021 CEO Pay Ratio

    | 84 | Northrop Grumman |