Hello, and welcome to the 2025 Annual Meeting of Shareholders of Northrop Grumman Corporation. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Kathy Warden, Chair, Chief Executive Officer, and President of Northrop Grumman Corporation.
Good morning, everyone. Thank you for joining us today for our 2025 Annual Meeting of Shareholders. On behalf of the Board of Directors, it's my pleasure to welcome you to our meeting. I will serve as Chair of this meeting and would now like to call the meeting to order. Before turning to the business portion of today's meeting, I'd like to provide a brief update on our company. As we navigate the complex global security environment, Northrop Grumman remains steadfast in delivering the strategic advantages the U.S. and our allies need to deter aggression and achieve peace through strength. Backed by our team of nearly 100,000 people and more than 30 million sq ft of manufacturing space, we have the innovation and scale needed to deliver national security solutions at the speed of relevance.
Our strategy, which starts with technology leadership and a laser focus on performance, continues to create value for our customers and shareholders. We are competing and winning in global markets through technology differentiation, offering solutions beyond what others can provide. Global demand for our robust portfolio has led to a record backlog of $92.8 billion, and we continue to see significant opportunities ahead as our portfolio remains well aligned with our customer spending priorities. To further our ability to innovate and deliver, last year we invested $2.8 billion in R&D and capital investments, totaling $13.5 billion over the last five years. These industry-leading investments enable our company to scale design and production and field new capabilities at speed while reducing costs. Strategic investments in our business also drove value for our shareholders.
In 2024, we returned $3.7 billion to shareholders through share repurchases and dividends as part of our disciplined approach to capital deployment, and we continue to return capital to shareholders. Yesterday, our board authorized a 12% increase to our quarterly dividend. Looking ahead, we're focused on driving innovation, expanding our global impact, and optimizing performance to deliver profitable, sustainable growth. We remain committed to our long-term vision of creating value for our shareholders and keeping our customers ahead in an ever-evolving global landscape. Let's now turn to the conduct of today's meeting. I'd like to introduce Jennifer McGarry, Corporate Vice President and Secretary, who is the Secretary for the meeting, and Kathryn Simpson, our Corporate Vice President and General Counsel. Jennifer?
Thank you, Kathy. It is now 8:05 A.M., and the polls for voting are currently open. If you haven't voted, or if you want to change your vote, you may do so now online by clicking on the Vote Here button on your virtual shareholder meeting screen. The polls will close following the presentation proposals. Following the closing of the polls, we will also address shareholder questions. Shareholders may submit questions electronically during the meeting by typing a question in the Ask a Question field on your virtual shareholder meeting screen and clicking Submit. Questions should relate to the official business of the meeting. We have set an agenda and established rules of conduct to help ensure a fair and orderly proceeding. Both the agenda and the meeting procedures are available on our investor relations website and our meeting website.
In the unlikely event that we experience technical challenges causing us to lose our audio or webcast connections, the meeting will be adjourned and reconvened at 10:00 A.M. Eastern Time today at the company's headquarters in Falls Church, Virginia, for the sole purpose of accepting ballots submitted by email and closing the polls. In the event of such an adjournment, shareholders and proxy holders can email ocs@ngc.com to request a ballot. To be counted, ballots must be submitted by email to this email address before 10:00 A.M. Eastern Time. Information regarding the adjournment and reconvening of the meeting will, if possible, be displayed on the annual meeting website and our investor relations website. Broadridge Financial Solutions Inc has been appointed the Inspector of Election for this meeting.
Each shareholder of record, as of the record date, has been given proper notice of this meeting and has been furnished with a written copy of, or was provided electronic access to, the proxy statement dated April 4, 2025, a proxy card, and a 2024 Annual Report. On the record date, there were 144,138,702 common shares outstanding. I'm able to report that the shares represented at this meeting represent a majority of the shares entitled to vote and that a quorum is present. I'll turn it over to Kathy to introduce the items of business.
Thank you, Jennifer. We will now present and vote on the items of business set forth in our proxy statement, after which we'll close the polls, address any shareholder questions, and then review the preliminary vote report from the Inspector of Election. The first order of business is the election of the 12 directors of the company, each of whom will hold office until the 2026 Annual Meeting of Shareholders or until his or her earlier resignation or removal. I would now like to introduce Maddie Kleiner, the company's lead independent director, and other nominees for the board of directors who are here in person today: David Abney, Marianne Brown, Ann Fudge, Arvind Krishna, Kimberly Ross, Gary Roughead, Tom Schoewe, Jim Turley, Mark Welsh, and Mary Winston. All of the nominees are currently members of the board of directors.
They have consented to serve if elected, and their names and short bios appear in the proxy statement for this meeting. We would also like to thank Graham Robinson for his service on the board and for his support of management and his fellow directors over the last several years. The second item on the agenda is the proposal to approve, on an advisory basis, the compensation of the named executive officers. The third item on the agenda is the proposal to ratify the appointment of Deloitte & Touche as the independent auditor for the company for the year ending December 31, 2025. We have in attendance at this meeting a representative of Deloitte & Touche. The fourth item on the agenda is a shareholder proposal requesting an amendment to our company's policy regarding the recoupment of certain incentive compensation payments.
We were told that John Chevedden is on the line to present this proposal, so Operator, please open the line for Mr. Chevedden. Welcome, Mr. Chevedden. Please introduce yourself and make your statement, and I ask that you limit your comments to three minutes.
Hello, this is John Chevedden. Proposal four: improve clawback policy regarding unearned executive pay. [Schols] asked the board of directors to amend the company policy on recoupment of unearned incentive pay to apply to each named executive officer and to state that conduct or negligence, not merely misconduct, shall trigger mandatory application of the policy. Also, the board shall report to shareholders in each annual meeting proxy the results of any deliberations regarding the policy, including the board's reason for applying or not applying the policy. This improved clawback policy shall at least be included in the governance guidelines of the company and be easily accessible on the company website. A number of companies, including Northrop , which used a billion-dollar law firm, claimed that they had already adopted this 2025 shareholder proposal and asked the Securities and Exchange Commission to validate the claim of adoption.
The Securities and Exchange Commission refused in every instance. Wells Fargo offers a prime example of why Northrop Grumman needs a stronger policy. After congressional hearings, Wells Fargo agreed to pay $185 million to resolve claims of fraudulent sales practices. The Wells Fargo board then moved to claw back $136 million from two top executives. Wells Fargo unfortunately concluded that a top executive had only turned a blind eye to the practice of opening fraudulent accounts and thus failed to attempt any clawback and left $136 million on the table. At minimum, this proposal alerts Northrop Grumman shareholders that Northrop Grumman executives can now be rewarded even when they are negligent. This is a wrong incentive for Northrop Grumman executives at a time when the best incentives for Northrop Grumman executives should be adopted, especially due to the recent massive cost overruns in the B-21 stealth bomber program.
Please vote yes, improve clawback policy regarding unearned executive pay proposal four.
Thank you, Mr. Chevedden. For the reasons stated in our proxy statement, we believe that the implementation of this proposal is unnecessary given that the company already has a comprehensive recoupment policy which promotes executive accountability and protects our shareholder interests. This concludes the proposal scheduled to come before this meeting. It is 8:12 A.M., and the polls are now closed. We are now happy to address questions relating to the business of this meeting that have been submitted to us in advance or during the meeting. Due to time constraints, we might not be able to answer all your questions, and if there are multiple questions related to a single topic, we'll address those together. Kathryn, are there any questions that have been submitted for us to address?
Yes, we do have a couple of questions in our queue. The first is from a shareholder who would like to know how tariffs will impact Northrop Grumman.
Thank you. We continue to monitor closely the trade policies and related tariffs, and we are already taking actions to account for and mitigate the risks that may result from them. The vast majority of our supply chain is sourced domestically, including in our lower levels of supply chain, and we do directly source a small portion of our supply chain, approximately 5% of our total spend, which is less than $1 billion from companies outside the U.S. That is primarily in Europe. However, more broadly, when we look across our supply chain, changes to trade policy might also increase costs for certain components and materials if there is related disruption to the availability of that supply. We are monitoring all of these risks. Based on our current assessment, we believe most of these costs would be recoverable on our contract.
As I said, we'll continue to monitor the situation closely and take action to mitigate the risks that I've outlined.
Thank you. We also have a question from a shareholder who would like to have some information on when subcontracting on the F-18 program will come to an end.
Yes, we are proud to be a supplier on the F-18 program, and that production line is scheduled to continue to operate through 2026. We have been winding down, so year-over-year sales on the program are declining as a result, but it is a small portion, less than 1% of our company sales.
Thank you. At this time, we have no other questions that have not already been answered in our proxy or recent filings.
Thanks, Kathy. With no further questions, we'll move to the announcement of the preliminary voting results. Jennifer, please proceed.
Thank you, Kathy. I have voted the shares represented by the proxies that have been given to management for this meeting. These votes have been tallied by the Inspector of Election. Any votes that were properly submitted at this virtual meeting will be included in the final tally once the Inspector of Election has had an opportunity to verify the shares. We have received the preliminary results of the meeting from the Inspector of Election, and based on their preliminary report, each of the 12 nominees for director received the requisite number of votes and has been elected director of the company until the 2026 Annual Meeting of Shareholders or until his or her earlier resignation or removal. Based on the preliminary results, proposal to approve on an advisory basis the compensation of our named executive officers has passed.
Based on the preliminary results, proposal to ratify the appointment of Deloitte & Touche as the company's auditor for 2025 has passed. Based on the preliminary results, the shareholder proposal requesting an amendment to our company's policy regarding the recoupment of certain incentive compensation payments has not passed. That concludes proposals put to a vote at this meeting.
Thank you, Jennifer. The Board of Directors very much appreciates and will carefully consider the inputs of our shareholders in its discussions over the coming year. There being no further business to come before this meeting, I hereby declare the meeting adjourned. We thank you all for your attendance and your continued interest in our company.
This concludes the meeting. You may now disconnect.
The host has ended this call. Goodbye.