Exhibit 10.1
NORTHROP GRUMMAN CORPORATION
1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(As Amended and Restated January 1, 2010)
1.       Purpose; Effect of Plan Restatement
          (a)        The purpose of the Northrop Grumman Corporation 1993 Stock
Plan for Non-Employee Directors (the “Plan”) is to promote the long-term growth
and financial success of Northrop Grumman Corporation (the “Company”) by
attracting and retaining non-employee directors of outstanding ability and
assisting the Company in promoting a greater identity of interest between the
Company’s non-employee directors and its stockholders.
          (b)        The Plan is amended and restated as set forth herein
effective as of January 1, 2010. The terms of the Plan as in effect on
December 31, 2004 shall continue to apply to any benefits “earned and vested”
within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”)
under the Plan on such date, including any Stock Units that are subject to
deferral elections made under the Plan, prior to such date. The term “Stock
Units” as used in this restatement of the Plan and any provisions of the Plan
applicable to such Stock Units refers only to Stock Units that are credited
under the Plan on or after June 1, 2005.
2.       Term
          The Plan originally became effective upon the approval by the
stockholders of the Company. The Plan shall operate and shall remain in effect
until terminated by action of the Company’s Board of Directors (the “Board”).
3.       Plan Operation
          The Plan and transactions hereunder in respect of Company equity
securities are intended to be exempt from Section 16(b) of the Securities
Exchange Act of 1934 (the “1934 Act”) to the maximum extent possible under
Rule 16b-3 promulgated thereunder. Except as specifically provided for herein,
the Plan requires no discretionary action by any administrative body with regard
to any transaction under the Plan. To the extent, if any, that any
administrative or interpretive actions are required under the Plan, such actions
shall be undertaken by the Compensation Committee (or any successor committee)
of the Board (the “Committee”).
4.       Eligibility
          Only directors of the Company who are not employees of the Company or
any subsidiary of the Company (“Eligible Directors”) shall participate in the
Plan.
5.       Shares of Common Stock Subject to the Plan
          The maximum number of shares of common stock of the Company (“Common
Stock”) that shall be reserved for issuance under the Plan shall be 175,000
shares, subject to adjustment upon changes in the capitalization of the Company
as provided in Section 6 of the Plan. The

1

--------------------------------------------------------------------------------

 

shares of Common Stock to be issued pursuant to the Plan may be, at the election
of the Company, either authorized and unissued shares or treasury shares, and no
fractional shares shall be issued under the Plan. Shares of Common Stock that
are paid in settlement of (i) Stock Units (as defined herein) automatically
credited in respect of fifty percent (50%) of the amount of an Eligible
Director’s Annual Retainer (as defined herein) scheduled to be paid on any
Crediting Date (as defined herein) and (ii) Stock Units credited in respect of
any remaining amount of an Eligible Director’s Annual Retainer that the Eligible
Director elects to have credited as Stock Units in lieu of receiving a cash
payment shall be applied to reduce the maximum number of shares of Common Stock
remaining available for issuance under the Plan. Shares of Common Stock that are
paid in settlement of any Stock Units credited to an Eligible Director’s account
other than those Stock Units described in the preceding sentence shall be
applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Company’s 1995 Stock Plan for Non-Employee
Directors, as amended (or such other equity plan of the Company that permits the
grant of Stock Units to be paid from the shares of Common Stock available
thereunder to Eligible Directors).
6.       Adjustments and Reorganizations
          (a)        Upon (or, as may be necessary to effect the adjustment,
immediately prior to): any reclassification, recapitalization, stock split
(including a stock split in the form of a stock dividend) or reverse stock
split; any merger, combination, consolidation, or other reorganization; any
spin-off, split-up, or similar extraordinary dividend distribution in respect of
the Common Stock; or any exchange of shares of Common Stock or other securities
of the Company, or any similar, unusual or extraordinary corporate transaction
in respect of the Common Stock; then the Board shall equitably and
proportionately adjust (1) the number and type of shares of Common Stock (or
other securities) that thereafter may be made the subject of Stock Units
(including the specific maximum share limit set forth in Section 5 above),
(2) the number, amount and type of shares of Common Stock (or other securities
or property) subject to any outstanding Stock Units, and/or (3) the securities,
cash or other property deliverable upon payment of any outstanding Stock Units,
in each case to the extent necessary to preserve (but not increase) the level of
incentives intended by this Plan and the then-outstanding Stock Units. The Board
may also prospectively make such similar appropriate adjustment in the
calculation of Fair Market Value (as defined in Section 7) as it deems necessary
to preserve (but not increase) Eligible Directors’ rights under the Plan.
          (b)        It is intended that, if possible, any adjustments
contemplated by the preceding Section 6(a) be made in a manner that satisfies
applicable legal, tax (including, without limitation and as applicable in the
circumstances, Section 409A of the Code) and accounting (so as to not trigger
any charge to earnings with respect to such adjustment) requirements. Any good
faith determination by the Board as to whether an adjustment is required in the
circumstances pursuant to Section 6(a), and the extent and nature of any such
adjustment, shall be conclusive and binding on all persons.
7.       Fair Market Value
          Fair Market Value for all purposes under the Plan shall mean the
average (rounded up to the nearest cent) of the closing price on the last day of
the month of a share of Common Stock

2

--------------------------------------------------------------------------------

 

for each of the preceding twelve calendar months, or shorter period as may be
applicable, as reported on the composite tape for securities listed on the New
York Stock Exchange.
8.       Grants of Stock Units
          (a)        The annual cash retainer payable to each Eligible Director
for services as a director (the “Annual Retainer”) and, for any Eligible
Director who so elects pursuant to Section 8(b), any fees payable for service on
Board committees, for service as lead independent director or for extraordinary
services (the “Other Annual Retainers”), shall be payable in the form of a
credit of Stock Units under the Plan pursuant to and to the extent provided by
the Plan. As used herein, a “Stock Unit” is a non-voting unit of measurement
which is credited to a bookkeeping account and deemed for purposes of the Plan
to be equivalent in value to one outstanding share of Common Stock. The Stock
Units shall be used solely as a device for the determination of any payment to
eventually be made to the Eligible Director pursuant to Section 9.
          (b)        On or as soon as practicable after any date on or after
June 1, 2005 on which a quarterly payment of the Annual Retainer or Other Annual
Retainers is to be paid (each, a “Crediting Date”), each Eligible Director’s
account under the Plan will be automatically credited with a number of Stock
Units equal to fifty percent (50%), or such greater percentage as may be
established by the Committee for any calendar year prior to the beginning of
such calendar year, of the amount of the Annual Retainer scheduled to be paid to
such Eligible Director on such Crediting Date, divided by the Fair Market Value
of a share of Common Stock on the Crediting Date (the “Automatic Stock Units”).
The remaining amount of the Annual Retainer and one hundred percent (100%) of
the amount of any Other Annual Retainers scheduled to be paid to such Eligible
Director on such Crediting Date will be paid to the Eligible Director in cash;
provided, however, that the Eligible Director may elect in advance to have all
or any portion of the remaining Annual Retainer and all or any portion of such
Other Annual Retainers credited as Stock Units to his or her account under the
Plan in lieu of such cash payment (the “Elective Stock Units”). Any such
election to receive Elective Stock Units in lieu of a cash payment under the
foregoing proviso must be made, on a form and in a manner prescribed by the
Committee, prior to the beginning of the calendar year to which such Annual
Retainer or any Other Annual Retainers relate. The number of Elective Stock
Units to be credited pursuant to such election shall be determined based on the
Fair Market Value of a share of Common Stock on the Crediting Date.
9.       Payment of Stock Units
          (a)        All Stock Units shall be paid in an equivalent number of
shares of Common Stock. All Stock Units shall be paid on or within 30 days after
the Eligible Director’s Separation from Service; provided, however, that the
Eligible Director may elect in advance to have all or any portion of any
Automatic Stock Units credited for calendar years following the calendar year in
which the Eligible Director has received at least five (5) years worth of
Automatic Stock Units and all or any portion of any Elective Stock Units paid
upon the earlier of (i) the Eligible Director’s Separation from Service or
(ii) a calendar year specified by the Eligible Director in his or her election
(which year may be no earlier than the year after the calendar year to which the
deferred Annual Retainer or Other Annual Retainers, as the case may be, relate).
Any such election to receive payment of an Annual Retainer or Other Annual
Retainer upon the earlier of a

3

--------------------------------------------------------------------------------

 

Separation from Service or a specified calendar year under the foregoing proviso
must be made, on a form and in a manner prescribed by the Committee, prior to
the beginning of the calendar year to which such Annual Retainer or any Other
Annual Retainers relate. If the Eligible Director makes such an election to
receive payment upon the earlier of a Separation from Service or a specified
calendar year and payment is triggered (1) by the occurrence of the specified
calendar year, the applicable Stock Units will generally be paid in January of
such calendar year, and shall in all cases be paid prior to the end of such
calendar year, or (2) by the Separation from Service, the applicable Stock Units
shall be paid on or within 30 days of the Separation from Service.
          (b)        Notwithstanding the foregoing Section 9(a), if an Eligible
Director is a Key Employee as of his Separation from Service, any payment
triggered by the Eligible Director’s Separation from Service shall be made on
the first day of the seventh month following the date of his or her Separation
from Service (or, if earlier, the date of his or her death). Such payment shall
be subject to adjustment as provided in Section 6 and shall be in complete
satisfaction of such Stock Units. For the avoidance of doubt, an Eligible
Director shall continue to be eligible to receive additional credits of Stock
Units as dividend equivalents pursuant to Section 10 during any period of time
payment of the Eligible Director’s Stock Units is delayed pursuant to this
Section 9(b).
          (c)        For purposes of this Section, the following terms shall
have the meanings indicated below:
Affiliated Company. The Company and any other entity related to the Company
under the rules of section 414 of the Code. The Affiliated Companies include
Northrop Grumman Corporation and its 80%-owned subsidiaries and may include
other entities as well.
Code. The Internal Revenue Code of 1986, as amended.
Key Employee. An employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or an Affiliated Company (i.e., a key employee
(as defined in Code section 416(i) without regard to paragraph (5) thereof)) if
the Company’s or an Affiliated Company’s stock is publicly traded on an
established securities market or otherwise. The Company shall determine in
accordance with a uniform Company policy which participants are Key Employees as
of each December 31 in accordance with IRS regulations or other guidance under
Code section 409A, provided that in determining the compensation of individuals
for this purpose, the definition of compensation in Treas. Reg. §
1.415(c)-2(d)(3) shall be used. Such determination shall be effective for the
twelve (12) month period commencing on April 1 of the following year.
Separation from Service. A “separation from service” within the meaning of Code
section 409A.
10.     Dividend Equivalents
          No later than sixty (60) days following each date that the Company
pays an ordinary cash dividend on its outstanding Common Stock (if any ordinary
cash dividends are paid), for which

4

--------------------------------------------------------------------------------

 

the related record date occurs on or after June 1, 2005 and prior to all of the
Eligible Director’s Stock Units being paid pursuant to Section 9, the Eligible
Director’s Stock Unit account shall be credited with additional Stock Units
equal to (i) the number of outstanding and unpaid Stock Units credited to such
account as of such record date, multiplied by (ii) the amount of the ordinary
cash dividend paid by the Company on a share of Common Stock, divided by
(iii) the Fair Market Value of a share of the Common Stock as of such record
date.
11.     Restrictions on Transfer
          Stock Units shall be nontransferable and shall not be assignable,
alienable, saleable or otherwise transferable by an Eligible Director other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order. An Eligible Director may designate a beneficiary or
beneficiaries to receive any distributions under the Plan upon the death of the
Eligible Director.
12.     Issuance of Certificates
          (a)       On each payment date described in Section 9, the Company
shall issue stock certificates registered in the name of the Eligible Director
representing the number of shares of Common Stock equivalent to Stock Units
which are payable under the Plan with respect to such payment date.
          (b)       Whenever under the terms of the Plan a fractional share
would be required to be issued, the fractional share shall be rounded up to the
next full share.
          (c)       All shares of Common Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Company may
deem advisable or legally necessary under any laws, statutes, rules, regulations
and other legal requirements, including those of any stock exchange upon which
the Common Stock is then listed and any applicable Federal, state or foreign
securities law.
          (d)       Anything to the contrary herein notwithstanding, the Company
shall not be required to issue any shares of Common Stock under the Plan if, in
the opinion of legal counsel, the issuance and delivery of such shares would
constitute a violation by the Eligible Director or the Company of any applicable
law or regulation of any governmental authority, including, without limitation,
Federal and state securities laws, or the regulations of any stock exchange on
which the Company’s securities may then be listed.
13.     Plan Amendment
          The Board or Committee may suspend or terminate the Plan or any
portion of the Plan. The Board or Committee may also amend the Plan if deemed to
be in the best interests of the Company and its stockholders; provided, however,
that (a) no such amendment may impair any Eligible Director’s right regarding
any outstanding grants or Stock Units or other right to receive shares or cash
payments under the Plan without his or her consent, and (b) no such amendment
may cause the Plan not to comply with Rule 16b-3, or any successor rule, under
the 1934 Act.

5

--------------------------------------------------------------------------------

 

14.     Unfunded Plan
          The Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Eligible Director or other
person. To the extent any person holds any rights by virtue of an award granted
under the Plan, such rights (unless otherwise determined by the Committee) shall
be no greater than the rights of an unsecured general creditor of the Company.
15.     Future Rights
          Neither the Plan, nor the granting of Common Stock nor any other
action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain an
Eligible Director for any period of time, or at any particular rate of
compensation. Nothing in this Plan shall in any way limit or affect the right of
the Board or the stockholders of the Company to remove any Eligible Director or
otherwise terminate his or her service as a director of the Company.
16.     Governing Law
          The Plan and all rights and obligations under the Plan shall be
governed by, and construed in accordance with, the laws of the State of
California and applicable Federal law.
17.     Successors and Assigns
          The Plan shall be binding on all successors and assigns of an Eligible
Director, including, without limitation, the estate of such Eligible Director
and the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Eligible Director’s creditors.
18.     Rights as a Stockholder
          The Eligible Director in whose name the certificates are registered
shall have all of the rights of a stockholder with respect to such shares,
including the right to vote the Common Stock and receive dividends and other
distributions made on the Common Stock. Shares of Common Stock issued in respect
of Stock Units credited under the Plan shall be fully paid and non-assessable.
19.     Construction
          The Plan shall be construed and interpreted to comply with, and avoid
any tax or penalty or interest under, Section 409A. Notwithstanding Section 13
above, the Company reserves the right to amend the Plan and any outstanding
grants under the Plan to the extent it reasonably determines is consistent with
and necessary in order to preserve the intended tax consequences of the Stock
Units, in light of Section 409A and any regulations or other guidance
promulgated thereunder.

6