Form 4: Northrop Grumman CEO's Equity Transactions Revealed

Kathy J. Warden, Northrop Grumman's Chair, CEO, and President, reported significant equity transactions including the vesting and settlement of performance stock rights and new grants.

Summary

• Kathy J. Warden, Chair, CEO, and President of Northrop Grumman Corp, reported multiple equity transactions on February 11, 2026.
• Acquired 34,546.16 shares of common stock upon the exercise/conversion of derivative securities.
• Disposed of 15,371 shares of common stock at $678.83 per share to cover tax liabilities.
• Received a new grant of 28,785.16 Restricted Performance Stock Rights (RPSRs) and 8,113 Restricted Stock Rights (RSRs).
• The RPSRs acquired include 11,204.16 vested RPSRs from a 2023 grant, which settled at 148% of the target award, and 17,581 unvested RPSRs granted under the 2024 Long-Term Incentive Stock Plan (LTISP).
• The 34,546.16 shares issued in settlement were from 2023 RPSRs with a measurement period ending 12/31/25.
• Following these transactions, Warden beneficially owns 190,777.56 shares of common stock, 102,064.16 RPSRs (before the M transaction), and 41,780 RSRs.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively as it reflects the successful vesting of performance-based awards at a strong payout rate (148% of target) and the continued grant of long-term incentives, aligning executive interests with shareholder value, despite the routine tax-related share disposal.

Positives

• Successful vesting of 11,204.16 Restricted Performance Stock Rights (RPSRs) from a 2023 grant, settling at 148% of the target award, indicating strong company performance against set metrics.
• Acquisition of 34,546.16 shares of common stock through the settlement of derivative securities, increasing direct equity ownership.
• Grant of new equity awards, including 17,581 unvested RPSRs and 8,113 RSRs, demonstrating continued long-term incentive alignment with company performance.

Negatives

• Disposal of 15,371 shares of common stock at $678.83 per share to satisfy tax withholding obligations, reducing direct share count.

Future Outlook

The grants of Restricted Performance Stock Rights (RPSRs) and Restricted Stock Rights (RSRs) indicate a continued long-term incentive structure for executive compensation, with vesting and measurement periods extending through December 31, 2028, and February 12, 2029, respectively. The settlement of RPSRs at 148% of target suggests positive past performance against internal metrics.

Industry Context

StockSavvy.ai notes that executive equity compensation, particularly through performance-based awards like RPSRs and time-based RSRs, is a standard practice across the defense and aerospace industry. This structure aims to align executive incentives with long-term shareholder value creation and operational performance, similar to practices observed at peers like Lockheed Martin (LMT) and Raytheon Technologies (RTX).

Comparison to Industry Standards

• The settlement of RPSRs at 148% of the target award for the measurement period ended 12/31/25 suggests strong performance relative to internal company goals, which is a positive indicator for executive incentive plan effectiveness. This level of payout is generally considered robust when compared to typical performance-based compensation outcomes in the defense sector, where achieving 100% of target is common, and exceeding it significantly indicates strong operational execution.
• The mix of performance-based (RPSRs) and time-based (RSRs) equity awards is consistent with best practices in corporate governance for executive compensation within large industrial and defense companies, mirroring structures seen at companies such as Boeing (BA) and General Dynamics (GD).

Stakeholder Impact

• Shareholders: The successful vesting of performance-based awards at 148% of target suggests strong company performance, which is generally positive for shareholders. The grant of new long-term incentives aligns executive interests with shareholder value creation.
• Employees: No direct impact on general employees is indicated by this executive compensation filing.

Next Steps

• Vesting of 10,760 RSRs on 2/17/26.
• End of measurement period for 24,309 RPSRs on 12/31/26.
• Vesting of 11,155 RSRs on 2/16/27.
• End of measurement period for 25,628 RPSRs on 12/31/27.
• Vesting of 11,752 RSRs on 2/18/28.
• End of measurement period for 17,581 RPSRs on 12/31/28.
• Vesting of 8,113 RSRs on 2/12/29.

Key Dates

Recommendation

The filing details routine executive compensation activities, including the vesting of performance awards and new grants, alongside a tax-related share disposal. While the strong performance payout (148% of target) is positive, these transactions are expected and do not present new information that would fundamentally alter the investment thesis for Northrop Grumman. Therefore, a 'hold' recommendation is appropriate, maintaining current positions based on broader company fundamentals rather than these specific insider transactions.

Keywords

Northrop Grumman, NOC, SEC Form 4, Insider Trading, Equity Compensation, Restricted Stock Rights, Performance Stock Rights, Executive Compensation, Kathy J. Warden, Stock Grant, Stock Vesting, Tax Withholding