Business Context and Reporting Period
This Form 8-K Current Report was filed by Northrop Grumman Corporation on February 15, 2006. The filing details actions taken by the Compensation and Management Development Committee and the Independent Members of the Board of Directors regarding executive compensation adjustments and performance goals.
Key Financial Metrics
The filing does not report consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics. It focuses exclusively on executive compensation figures:
- Base Salary Adjustments: Effective March 4, 2006, for Named Executive Officers (NEOs).
- Cash Bonus Compensation: Approved for performance in the 2005 fiscal year.
Material Changes and Executive Compensation Details
The Board authorized specific base salary adjustments and approved 2005 cash bonuses for the following Named Executive Officers:
| Name | Position | New Base Salary | 2005 Cash Bonus |
|---|---|---|---|
| Ronald D. Sugar | Chairman, CEO, and President | $1,450,000 | $3,500,000 |
| Wesley G. Bush | CVP and CFO | $600,000 | $775,000 |
| Scott J. Seymour | CVP and President, Integrated Systems | $580,000 | $750,000 |
| W. Burks Terry | CVP and General Counsel | $575,000 | $720,000 |
| James R. O'Neill | CVP and President, Information Technology | $520,000 | $650,000 |
Guidance, Outlook, and Performance Goals
The Board approved 2006 goals under the 2002 Incentive Compensation Plan. Key elements include:
- Performance Metrics: Cash bonus compensation is based on individual performance and specific measures, including year-over-year growth, operating margin goals, and cash from operations goals.
- Supplemental Goals: Sector-specific priorities for the organization.
- Target Award Percentages (of Base Salary):
- Dr. Sugar: 120%
- Messrs. Bush, Seymour, and O'Neill: 70%
- Mr. Terry: 60%
Investor Verification Checklist
- Verify the effective date of the new base salaries (March 4, 2006) against payroll records.
- Confirm the payout status of the approved 2005 cash bonuses.
- Review the specific definitions of the "year-over-year growth," "operating margin," and "cash from operations" metrics used for the 2006 incentive plan.
- Check subsequent filings for actual 2006 performance results against the established targets.