Board Oversight of Risk

AUDIT COMMITTEE

  • 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 periodic Northrop Grumman reports filed with the Securities and Exchange Commission.
  • Annually reviews the company’s compliance program and discusses with management implementation of the company’s global compliance policies, practices and programs.

COMPENSATION COMMITTEE

  • 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.

GOVERNANCE COMMITTEE

  • Regularly reviews corporate governance policies and practices.
  • Makes recommendations to the Board regarding Board composition and succession planning.

POLICY COMMITTEE

  • 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.

BOARD OVERSIGHT OF RISK

The Board has four standing committees*: audit, compensation, governance and policy. Among other duties, the Board oversees our risk management activities. Each of our Board committees assists the Board in this role. The Board also receives regular reports on the activities of our Enterprise Risk Management Council, which seeks to ensure effective mitigation programs are in place for each of the most significant risks to our business.

*Our 2018 Proxy Statement provides a summary of the duties of each committee. The committee charters are posted on the Northrop Grumman website.

HUMAN RIGHTS

At Northrop Grumman, our business practices reflect our strong commitment to human rights. Our Human Rights policy highlights our commitment to treat employees, suppliers, customers and competitors with dignity and respect and prohibits unlawful discrimination, harassment or retaliation. Additionally, our policy covers freedom of association, fair working conditions, ethical procurement practices, health and safety and protection of the environment. We also have established policies to combat human trafficking.

POLITICAL PARTICIPATION DISCLOSURE

Political activities at Northrop Grumman are consistent with Northrop Grumman principles of good governance and the highest standard of ethics. We publish an annual report detailing political contributions on the Northrop Grumman website.