Company: NOC
Filing Date: 2025-04-04
Form Type: DEF 14A
Source: 0001133421-25-000016
Chunk: 79

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-04-04
Form: DEF 14A
Chunk 79
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 the executive officer’s personal culpability, in the event the Company is required to prepare an accounting restatement due to, among other things, the material noncompliance of the Company with any financial reporting requirement under U.S. federal securities laws . This ensures that all executive officers, including the named executive officers, are held accountable for material inaccuracies in previously issued financial statements without the burden of proving fault – a lower threshold than the “conduct or negligence” threshold requested by the proposal. As mentioned above, these provisions meet the required recoupment provisions under NYSE and SEC rules.

The Company Recoupment Policy goes beyond the required recoupment provisions by also permitting the Board to seek recovery of incentive payments from all elected officers, not just NEOs, due to certain conduct, including fraud, bribery or illegal acts that caused significant financial or reputational harm to the Company. In addition, the Company Recoupment Policy further provides for the right to recover incentive payments from elected officers for certain instances of gross negligence in failing to supervise other employees and failure to report certain misconduct of others. Finally, the Company Recoupment Policy permits the CEO to require reimbursement of incentive payments made to non-executive employees in certain circumstances. These provisions, along with the no-fault provision described above, provide a comprehensive system of accountability that addresses a broad range of actions by executive officers and other employees and provide a framework that we believe is better for our Company and shareholders than the provisions proposed in Proposal 4.

Implementation of Proposal 4 could also result in actions that would not be in the best interests of shareholders. Proposal 4 seeks to amend the Company Recoupment Policy to trigger recoupment of incentive pay whenever an NEO has engaged in “conduct or negligence” – terms that are incredibly broad and subject to any number of interpretations with no guidance from the proposal as to how this should be implemented. By mandating recoupment for almost any conduct by an NEO, even neutral conduct or conduct beneficial to the Company and its shareholders, Proposal 4 could discourage executive officers from exercising the business judgment necessary to evaluate complex business decisions and deliver shareholder value, causing a chilling effect on the executive decision-making necessary to deliver the best results for our shareholders. In addition, given the overly broad and uncertain terms used in the proposal, such as “conduct” and “negligence”, confusion in the application of the resulting recoupment policy could also harm the Company’s ability to attract and retain qualified executives.

The Company Recoupment Policy is carefully designed to promote clarity around