Northrop Grumman 2014 Annual Report Download - page 80

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NORTHROP GRUMMAN CORPORATION
-71-
Stock award activity for the years ended December 31, 2014, 2013 and 2012, is presented in the table below. Vested
awards do not include any 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, 2012 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
Granted 1,577 64
Vested (1,323) 60
Forfeited (312) 62
Outstanding at December 31, 2013 3,420 $ 61 1.5
Granted 763 118
Vested (1,217) 58
Forfeited (158) 70
Outstanding at December 31, 2014 2,808 $ 77 1.1
The company issued 2.6 million, 3.4 million and 2.8 million shares to employees in settlement of fully vested stock
awards, which had total fair values at issuance of $305 million, $226 million and $172 million and grant date fair
values of $80 million, $105 million and $75 million during the years ended December 31, 2014, 2013 and 2012,
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.
In 2014, the company granted certain employees 0.2 million RSRs and 0.6 million RPSRs under the company's
long-term incentive stock plan, with a grant date aggregate fair value of $90 million. The majority of stock awards
were granted in February 2014. The RSRs will typically 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, 2016.
In 2015, the company expects to issue to employees approximately 2.6 million shares of common stock with a grant
date fair value of $107 million, principally related to the 2012 RPSR awards that vested as of December 31, 2014.
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
In 2014, the company granted certain employees cash units (CUs) and cash performance units (CPUs) with a
minimum aggregate payout amount of $32 million and a maximum aggregate payout amount of $179 million. The
majority of cash awards were granted in February 2014. The CUs will vest and settle in cash on the third anniversary
of the grant date, while the CPUs will vest and settle in cash based on the achievement of financial metrics for the
three-year period ending December 31, 2016. At December 31, 2014, there was $122 million of unrecognized
compensation expense related to cash awards.
14. UNAUDITED SELECTED QUARTERLY DATA
Unaudited quarterly financial results are set forth in the following tables. It is the company’s long-standing practice
to establish actual interim closing dates using a “fiscal” calendar in which we close our books on a Friday near each
quarter-end date, in order to normalize the potentially disruptive effects of quarterly closings on business processes.