HIGHLIGHTS OF OUR GOVERNANCE PRACTICES
- Number of independent directors: 13 of 14 as of December 31, 2016.
- All Board committees comprised entirely of independent directors.
- Annual election of all directors.
- Lead independent director.
- Majority voting for directors in uncontested elections.
- Proxy access bylaw.
- Annual Board and committee self-evaluations.
- Ability of shareholders to act by written consent.
- Ability of shareholders to call a special meeting.
- Annual advisory vote on executive compensation.
- Recoupment policy for incentive compensation.
- Stock ownership guidelines for directors and executive officers.
- Policy prohibiting hedging and pledging of Northrop Grumman stock by directors and executive officers.
Board Composition and Tenure
As of December 31, 2016, the Board was comprised of 14 directors, 13 of whom are independent. The Board represents a diverse group of accomplished directors who bring a wide range of experience. The average tenure on our Board is 6.7 years. Three of the directors are women, and three are people of color. We believe our directors possess the reputation, education, professional background and skills highly beneficial to the Board and to our shareholders.
Each year the full Board, as well as each of its committees, conducts an assessment of performance and discusses the results and opportunities for improvement in executive session. In addition, the directors conduct an annual assessment of each individual director’s performance. The Lead Independent Director or Chairperson discusses the results of this assessment with each director individually.
Our directors are required to have a significant financial interest in Northrop Grumman to help reaffirm that their interests align with those of the company’s shareholders.
- Focuses on risks that could affect financial performance.
- Reviews management reports on material financial risks and how we respond to, and mitigate, these risks.
- Reviews the company’s periodic reports filed with the Securities and Exchange Commission.
- Reviews risk assessment of Northrop Grumman compensation programs.
- With input from its independent compensation consultant, evaluates the mix of at-risk compensation linked to stock performance and the alignment of compensation programs with shareholder value creation.
- Regularly reviews corporate governance policies and practices.
- Makes recommendation to the Board regarding Board composition and succession planning.
- Assists the Board in identifying and evaluating global security; political, budgetary, environmental and sustainability issues; health and safety matters; and trends that could impact Northrop Grumman business.
- Reviews management reports on ethics and corporate responsibility programs including a review of this annual Corporate Responsibility Report.