Thomas H. Jones
NORTHROP GRUMMAN CORP /DE/About Thomas H. Jones
Thomas H. Jones is Corporate Vice President and President, Aeronautics Systems at Northrop Grumman (NOC), leading flagship air platforms and autonomy initiatives, including the B‑21 Raider flight test progression and the “Beacon” open-access autonomous mission testbed ecosystem . Under Jones’s leadership context, NOC delivered strong 2024 performance: backlog ≥$91.5B, sales $41.0B (+4.4% YoY), operating cash flow $4.4B, adjusted FCF $2.6B (+25% YoY), AIP payout 148%, and LTIP payout 107% for NEOs, reflecting pay-for-performance alignment . In 2023, NOC reported a 61% cumulative 3‑year TSR, record $84.2B backlog, and adjusted FCF $2.1B (+30% YoY), reinforcing multi‑year value creation .
Fixed Compensation
Multi-year NEO compensation (Thomas H. Jones)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | $762,117 | $785,192 | $810,192 |
| Stock Awards ($) | $2,999,816 | $3,200,380 | $3,399,814 |
| Non-Equity Incentive Plan Compensation ($) | $1,025,100 | $1,240,300 | $1,206,200 |
| All Other Compensation ($) | $282,197 | $270,042 | $273,695 |
| Total ($) | $5,069,230 | $5,495,914 | $5,689,901 |
Base salary and target bonus
| Item | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $790,000 | $815,000 |
| Target Bonus (% of Salary) | 100% | 100% |
Performance Compensation
Annual Incentive Plan (AIP) – Company metrics and outcomes
| Item | 2023 Outcome | 2024 Outcome |
|---|---|---|
| Company Performance Factor (CPF) | 157% | 148% |
| Jones’s AIP Payout ($) | $1,240,300 | $1,206,200 |
2024 AIP metric framework
| Metric | Weighting | Definition/Focus | 2024 Weighted Payout Contribution |
|---|---|---|---|
| Adjusted Cash Flow from Operations* | 35% | Net cash from ops with approved adjustments; emphasizes cash generation | 63% contribution to total weighted payout |
| Segment Operating Income* Growth | 35% | Combined segment operating income (ex-intersegment); incentivizes profitable growth | 42% contribution to total weighted payout |
| Pension-Adjusted OM Rate* | 20% | OM before FAS/CAS and certain adjustments divided by sales; core program performance | 30% contribution to total weighted payout |
| Non-Financial (People, Environment, Quality, Customer) | 10% | Inclusion/belonging, sustainability, quality, customer satisfaction | 13% weighted payout; non-financial score 132% |
*Non-GAAP metrics per Appendix A .
LTIP structure, metrics, vesting
| Item | 2023 Grants | 2024 Grants |
|---|---|---|
| Instrument Mix | 70% RPSRs; 30% RSRs | 70% RPSRs; 30% RSRs |
| RPSR Metrics (equal weight) | rTSR vs S&P Industrials & TSR peer group; Adjusted Cumulative FCF*; ROIC* | Adjusted Cumulative FCF*; ROIC*; rTSR (50% vs S&P Industrials, 50% vs TSR peer group) |
| Vesting | 3-year performance period (e.g., 2021–2023; 2022–2024; 2023–2025) | 3-year performance period (2024–2026) |
| Holding Requirement | 50% of net after-tax shares held for 3 years | 50% of net after-tax shares held for 3 years |
Jones’s LTIP grants and vesting activity
| Grant Detail | 2022 Grant | 2023 Grant | 2024 Grant |
|---|---|---|---|
| Unvested RSRs (# at 12/31/24) | 2,457 | 2,152 | 2,356 |
| Unvested RSRs Market Value ($ at $469.29) | $1,153,046 | $1,009,912 | $1,105,647 |
| Unearned RPSRs (# at 12/31/24) | 5,381 | 4,669 | 5,133 |
| Unearned RPSRs Market/Payout Value ($ at $469.29) | $2,525,249 | $2,191,115 | $2,408,866 |
| 2024 Plan-Based Awards (RPSR Target # / RSR #; Grant Date; Fair Value) | — | — | 5,133 RPSR (2/14/24; $2,379,713); 2,356 RSR (2/14/24; $1,020,101) |
| 2024 Stock Vested (Total Shares; Value Realized) | — | — | 13,468 shares; $6,026,977 |
| 2022–2024 RPSR Actual Shares Earned | — | — | 5,758 shares (payout in Feb 2025) |
| LTIP Payout for Cycle | 2021–2023: 141% | — | 2022–2024: 107% |
Notes: Company did not grant stock options in 2024 .
Equity Ownership & Alignment
| Ownership Item | Value |
|---|---|
| Beneficial Shares Owned (as of 3/21/2025) | 9,010 shares |
| Shares Outstanding (as of 3/21/2025) | 144,138,702 shares |
| Ownership as % of SO | ~0.006% (9,010 / 144,138,702) |
| Unvested RSRs (#; Market Value at $469.29) | 2,356; $1,105,647 |
| Unearned RPSRs (#; Market/Payout Value at $469.29) | 5,133; $2,408,866 |
| 2024 Stock Vested (Shares; Value Realized) | 13,468; $6,026,977 |
| Ownership Guidelines | CEO 7x salary; Other NEOs 3x salary |
| Compliance Status (as of 12/31/2024) | All NEOs in compliance or on track |
| Holding Requirement | 50% of net after-tax shares held for 3 years |
| Hedging/Pledging | Prohibited for NEOs; anti-hedging/pledging policy |
Employment Terms
Severance and Change-of-Control Economics
| Provision | Term |
|---|---|
| Severance Plan eligibility | NEOs under Severance Plan; no separate CIC severance plan |
| Cash Severance (qualifying termination) | 1.5x annual base salary + target bonus (lump sum) |
| Other Severance Benefits | Prorated bonus for year of termination; up to 18 months medical/dental; tax prep/financial planning (cap $18,500 for NEOs); outplacement up to 15% of salary |
| CIC Treatment | Only equity-plan terms; LTIP double-trigger provisions; no excise tax gross-ups |
Potential termination payments (estimated at 12/31/2024 for Jones; stock at $469.29)
| Scenario | RSRs ($) | RPSRs ($) | Cash Severance ($) | Med/Dental ($) | Tax/Financial ($) | Outplacement ($) |
|---|---|---|---|---|---|---|
| Voluntary Termination | $2,058,775 | $2,265,732 | — | — | — | — |
| Involuntary Termination Not For Cause | $2,058,775 | $2,265,732 | $2,445,000 | $7,569 | $18,500 | $122,250 |
| Post-CIC Involuntary or Good Reason | $3,268,605 | $4,599,981 | — | — | — | — |
| Death or Disability | $3,268,605 | $2,265,732 | — | — | — | — |
Clawback / Recoupment and Policies
- Recoupment policy: recovery of erroneously awarded compensation upon restatement; discretionary recoupment for illegal conduct causing significant harm; failure to report misconduct; 3-year lookback; disclosure consistent with SEC requirements .
- Insider trading policy with anti-hedging and anti-pledging; holding requirement reinforces alignment .
- Defined benefit pension participation: Jones does not participate (plans closed to new entrants); relies on defined contribution/deferred comp .
Deferred Compensation (2024)
| Plan | Exec Contributions ($) | Company Contributions ($) | Aggregate Earnings ($) | Aggregate Balance ($) |
|---|---|---|---|---|
| Savings Excess | $66,966 | $138,349 | $88,530 | $1,252,317 |
| ORAC | — | $82,020 | $52,034 | $673,909 |
Performance & Track Record
- B‑21 Raider: Flight test performance aligns with digital model predictions; multiple flight test events executed within a week; structural static testing complete; fatigue testing commenced—validating model-based approach and scaling into production .
- Autonomy ecosystem: “Beacon” platform launched to accelerate autonomous mission capabilities via open-access partnerships (e.g., Merlin, Red 6’s ATARS integration), enhancing speed, scale, and innovation in autonomous systems .
Compensation Committee Analysis
- Committee members: David P. Abney (Chair), Madeleine A. Kleiner, Arvind Krishna, Graham N. Robinson, Gary Roughead, Mary A. Winston .
- Independent compensation consultant: Frederic W. Cook & Co.; reports directly to the Committee; advises on peer groups, program design, and competitiveness .
- Peer groups and benchmarking:
- Performance Peer Group: Boeing, General Dynamics, L3Harris, Lockheed Martin, RTX (for setting performance targets) .
- TSR Peer Group (examples across cycles): BAE, Boeing, GD, HII, Leonardo, L3Harris, Lockheed, RTX, Leidos, Thales, etc. .
- Target Industry Peer Group (TIPG) for executive pay benchmarking (22 companies incl. direct peers): 3M, Boeing, Caterpillar, Deere, Eaton, Emerson, GD, Honeywell, ITW, JCI, L3Harris, Lam Research, Lockheed, Medtronic, PACCAR, Parker-Hannifin, QUALCOMM, RTX, Cisco, Applied Materials, Cummins .
- Program design: Majority variable; capped rTSR payouts if absolute TSR negative; double-trigger LTIP change-in-control; no CIC agreements or excise tax gross‑ups; robust holding/ownership and recoupment policies .
- Say-on-pay: 94% approval in 2024; 3‑year average ~96% .
Investment Implications
- Alignment: High variable pay mix tied to cash generation, margins, ROIC, and rTSR, plus 3‑year mandatory holding on 50% of vested shares and anti‑hedging/pledging—strong structural alignment with shareholders and reduced propensity for near‑term selling pressure following vesting .
- Retention risk: Severance at 1.5x salary+target bonus and continuation benefits provide retention ballast without outsized CIC cash parachutes; equity acceleration under double‑trigger CIC preserves value alignment while limiting guaranteed outcomes .
- Execution signals: B‑21 program execution and Beacon autonomy partnerships highlight operational delivery in Jones’s portfolio—favorable for long-term incentive outcomes (RPSR metrics) and strategic positioning in high‑priority missions .
- Governance support: Persistent high say‑on‑pay approval and independent compensation oversight reduce headline risk around pay practices; benchmarking vs robust TIPG mitigates pay inflation risk while maintaining competitiveness .