Northrop Grumman 2012 Annual Report Download - page 84

Download and view the complete annual report

Please find page 84 of the 2012 Northrop Grumman annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

NORTHROP GRUMMAN CORPORATION
-74-
Stock award activity for the years ended December 31, 2012, 2011, and 2010, is presented in the table below. Vested
awards include stock awards fully vested during the year and net adjustments to reflect the final performance
measure for issued shares.
Stock
Awards
(in thousands)
Weighted-
Average
Grant Date
Fair Value
Weighted-
Average
Remaining
Contractual
Term (in years)
Outstanding at January 1, 2010 3,658 $58 1.6
Granted 2,317 60
Vested (1,319) 79
Forfeited (356) 56
Outstanding at December 31, 2010 4,300 $53 1.5
Granted 1,748 63
Vested (1,824) 42
Forfeited (350) 50
Shipbuilding spin-off adjustments (252) $47
Outstanding at December 31, 2011 3,622 $58 1.6
Granted 1,860 60
Vested (1,800) 55
Forfeited (204) 59
Outstanding at December 31, 2012 3,478 $61 1.6
The company issued 2.8 million, 1.4 million, and 1.3 million shares to employees in settlement of prior year stock
awards that were fully vested, which had total fair values at issuance of $172 million, $87 million, and $76 million
and grant date fair values of $75 million, $101 million, and $91 million during the years ended December 31, 2012,
2011, and 2010, respectively. The differences between the fair values at issuance and the grant date fair values
reflect the effects of the performance adjustments and changes in the fair market value of the company’s common
stock.
On February 15, 2012, the company granted certain employees 0.5 million restricted stock rights (RSRs) and 1.2
million restricted performance stocks rights (RPSRs) under the company's long-term incentive stock plan, with a
grant date aggregate fair value of $102 million. The RSRs will vest on the third anniversary of the grant date, while
the RPSRs will vest and pay out based on the achievement of financial metrics for the three-year period ending
December 31, 2014.
In 2013, the company expects to issue to employees 3.4 million shares of common stock from the 2010 stock award
grant that vested as of December 31, 2012, with a grant date fair value of $96 million. The ultimate amount of shares
to be paid out is subject to approval by the Compensation Committee of the Board of Directors and may vary from
this estimate.
Cash Awards
On February 15, 2012, the company granted certain employees 0.6 million cash units (CUs) and 1.3 million cash
performance units (CPUs) with a minimum aggregate payout amount of $34 million and a maximum aggregate
payout amount of $190 million. The CUs will vest and settle in cash on the third anniversary of the grant date, while
the CPUs will vest and pay out based on the achievement of financial metrics for the three-year period ending
December 31, 2014. At December 31, 2012, there was $125 million of unrecognized compensation expense related
to cash awards.