Wes Bush - CEO and President

2017 CEO MESSAGE

Global corporate responsibility, environmental sustainability, and social and corporate governance are fundamental to our business and our interactions with customers, employees, suppliers and the communities where we operate.

We had strong business performance in 2017, and we announced our agreement to acquire Orbital ATK. As we continue to focus on profitable growth over the long term, we are committed to maintaining the highest ethical standards, embracing diversity and inclusion, and exemplifying strong corporate citizenship.

This corporate responsibility report describes our goals and progress in 2017, and highlights many of our employees’ impactful and innovative activities that are driving sustainability.

2017 Highlights

DIVERSITY We continue to make progress toward achieving the goals of our five-year diversity plan. Female leaders increased from 25.2 percent in 2016 to 26.3 percent in 2017. People of Color in leadership increased from 23.7 percent in 2016 to 25.2 percent in 2017. And in 2017, more than 50 percent of college hires were diverse, strengthening our future leadership pipeline. People with Disabilities increased from six percent in 2016 to 7.1 percent in 2017. People with Disabilities were 10.8 percent of all hires in 2017, and veterans were 24.6 percent.

ENVIRONMENT As we grow our business, we do so with sustainability in mind. In 2017, we exceeded our greenhouse gas emissions reduction goal, and we maintained our commitment to achieve a 30 percent reduction by 2020. Additionally, we achieved Leadership in Energy and Environmental Design certification for two additional buildings.

ETHICS Our annual training and ethics communications support our values-based ethics program that allows our Northrop Grumman employees to maximize both individual and company success.

SUPPLY CHAIN Northrop Grumman has exceeded the 23 percent statutory small business goal for more than 10 straight years, and more than 32 percent of our suppliers are small, women-, veteran- and minority-owned firms. For example, through the Department of Defense Mentor-Protégé program, we partnered with Digit All City, a small minority business located in Baltimore, Maryland, to certify students from Morgan State University and Coppin State University in cybersecurity. We also entered into a partnership to provide training and certifications for using 3-D printers with S&K Electronics, a Native American-owned company that collaborated with Salish Kootenai College, a tribal college in Pablo, Montana.

STEM EDUCATION Northrop Grumman and the Northrop Grumman Foundation continued their commitment to education by investing more than $20 million in STEM programs. For the first time, the Northrop Grumman Foundation partnered with EarthEcho International, whose mission is to inspire young people worldwide to act now for a sustainable future. We sponsored 25 U.S. middle school teachers to complete a week-long expedition examining water scarcity. Led by Philippe Cousteau Jr., grandson of Jacques Cousteau, the teachers received field experience in engineering and technology solutions addressing water scarcity issues. From there, the teachers created lesson plans, videos and other classroom resources to share with students and other teachers.

Building a best culture remains our objective and we achieve this by making continual progress on engagement, diversity and inclusion; staying true to our corporate values; and maintaining our steadfast commitment to high standards of ethics, integrity, compliance and exemplary corporate governance. I am proud of our progress documented in this report, and grateful for the significant contributions of our employees, who make it all possible.

Wes Bush Chairman and Chief Executive Officer