NORTHROP GRUMMAN CORP /DE/ 8-K

What Happened

• Northrop Grumman filed an 8-K on Feb. 13, 2026 announcing that the Board elected Admiral Christopher W. Grady to the Board effective Feb. 12, 2026. Admiral Grady, who served as the 12th Vice Chairman of the Joint Chiefs of Staff until retiring from active duty in Oct. 2025 after a 40+ year Navy career, was appointed to the Audit and Risk Committee and the Policy Committee.
• The Board increased its size from 12 to 13 members and on Feb. 11, 2026 designated James S. Turley as Lead Independent Director effective May 20, 2026; Madeleine A. Kleiner will retire at the 2026 Annual Meeting upon reaching the Board's retirement age.
• Admiral Grady’s compensation for board service was set at a $145,000 annual cash retainer plus an additional $15,000 for Audit and Risk Committee service, and an annual equity grant of $182,500 in deferred stock units (prorated for 2026); the equity is payable at the conclusion of his Board service or earlier as he specifies.

Key Details

• Board change date: Admiral Christopher W. Grady elected Feb. 12, 2026; Board size increased to 13.
• Board pay: $145,000 annual cash retainer; $15,000 additional for Audit & Risk Committee; $182,500 annual deferred stock units (prorated for 2026).
• Executive compensation decisions: 2026 ICP financial metrics and weightings — cash flow from operations before discretionary pension funding (20%); segment operating income (25%); sales (25%); strategic performance metrics (30%) — strategic metrics include Quality, Customer Satisfaction, On-Time Delivery, Scaling/Production Capacity, Belonging and Sustainability.
• Long-term awards: Restricted Performance Stock Rights (RPSR) for 2026–2028 with equally weighted metrics — cumulative free cash flow (1/3), return on invested capital (1/3), and relative TSR vs. S&P 500 (1/3); Restricted Stock Rights vesting Feb. 12, 2029; no stock options awarded and terms are materially unchanged from 2025.

Why It Matters

• Board composition: Adding Admiral Grady brings recent senior defense leadership and operational experience to the Board and to the Audit and Risk Committee, which could influence oversight of programs and risk management important to a defense contractor.
• Executive pay alignment: The approved 2026 incentive metrics emphasize cash flow, operating income and sales plus specific strategic goals (quality, delivery, capacity, DEI and sustainability), clarifying how management performance will be measured and tied to pay for the coming year.
• Governance transition: The Lead Independent Director change and Kleiner’s planned retirement reflect planned board succession and governance updates investors should note for oversight continuity.