Company: NOC
Filing Date: 2025-04-04
Form Type: DEF 14A
Source: 0001133421-25-000016
Chunk: 71

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-04-04
Form: DEF 14A
Chunk 71
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-term objectives. The metrics reinforce the link between the Company’s interests and the interests of our shareholders. For more detail, see the “Key Components of Our Executive Compensation Programs” section. These performance measures align to the Company’s “Compensation Philosophy and Objectives” as described in the CD&A, on page 49.

In addition, absolute TSR, which reflects our Company's stock value, is another important measure because it has a significant impact on our executives’ required CAP calculation. It is important to note, if absolute TSR is negative, the relative TSR (rTSR) RPSR metric is capped at 100%. Lastly, Adjusted Cash Flow from Operations*, the CSM, focuses on generating cash for strategy execution and enables leaders to make capital investment decisions that support long-term growth. The metric is an important driver for assessing the Company's AIP performance.

These key financial performance measures are as follows:

| Performance Measures                |     | Type           |
| Adjusted Cumulative FCF*            |     | RPSR Metric    |
| Relative TSR                        |     | RPSR Metric    |
| Return on Invested Capital* (ROIC)  |     | RPSR Metric    |
| Absolute TSR                        |     | Value of LTI   |
| Adjusted Cash Flow from Operations* |     | CSM/AIP Metric |

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

#### 86Northrop Grumman

#### Pay Versus Performance

### Relationship Between CAP and Financial Performance Measures
As shown in the chart below, the Company’s three-year cumulative TSR outperformed the companies included in the S&P A&D Index. The PEO and other non-PEO NEOs’ CAP amounts are aligned with the Company’s TSR. This is due primarily to the Company’s use of equity incentives, which are tied directly to stock price in addition to the Company’s financial performance.

Adjusted Cash Flow from Operations* was selected as the CSM to focus on an annual metric, per SEC guidance. This metric emphasizes the importance of generating cash for strategy execution and enables management to make capital investment decisions, which were impacted by lower net tax payments in 2024 as compared to 2023. Since it has a stronger focus on our annual performance rather than long-term performance, the impact of Adjusted Cash Flow from Operations* on CAP is moderate compared to the LTI plan metrics.

While the Company