Total pay for Falls Church-based defense contractor Northrop Grumman’s chairman and chief executive fell in 2013, in part because of a cut in his incentive-based compensation, according proxy statement the company filed with the Securities and Exchange Commission last week.
Wes Bush’s total pay package, including the change in the value of his pension, was $18.6 million in 2013, down from $24.5 million in 2012, and $26.3 million in 2011, according to the SEC filing. Excluding the change in value of his pension, Bush earned about $14.3 million in 2013, down from about $15.6 million the year before. His salary and stock awards remained steady at about $1.5 million and $8 million, respectively.
Bush’s incentive-based compensation fell from about $4.1 million in 2012 to $3.2 million (still about 216 percent of his salary).
Northrup faced a “challenging and uncertain budget environment for our primary customer, the U.S. government,” the company, which declined to comment further, said in its proxy statement.
In addition to customer satisfaction and environmental sustainability, Bush’s incentive-based pay was tied to the company’s performance on a few financial metrics: pension-adjusted operating margin rate, a cashflow measure, pension-adjusted net income and the number of contracts awarded to the company. Northrop exceeded target in the first three metrics but lagged in the fourth, the proxy statement showed.
The adjustment in Bush’s pay package comes as total pay for Phebe Novakovic, chief executive of Falls Church-based General Dynamics, tripled in 2013, to more than $19 million. Lockheed Martin’s Marillyn Hewson received $25.2 million in 2013, more than double what she received the previous year, according to a recent regulatory filing by the Bethesda-based defense giant.
Bush probably did not receive a similar boost because he has served as chief executive longer than Novakovic and Hewson, who both completed their first years as CEO, said Aaron Boyd, director of governance research at compensation bench-marking firm Equilar. Hewson and Novakovic were promoted internally at the beginning of 2013. Bush has served as president and chief executive since the beginning of 2010, and as chairman since July 2011. He was previously president and chief operating officer between 2007 and 2009.
Boyd speculated that General Dynamics and Lockheed improved its performance between 2012 and 2013 more than Northrop did; Novakovic’s cash bonus grew to $4 million, from $2 million the previous year, and Hewson received incentive-based pay of almost $6 million.
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