Hello and welcome to the twenty twenty Annual Meeting of Shareholders of Norfolk Grumman Corporation. Please note today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Kathy Warden, Chairman and Chief Executive Officer of
Northrop Corporation. Ms. Warden, the floor is yours. Thank you and good morning everyone. I'm Kathy Warden, Chairman and Chief Executive Officer of Northrop
Grumman Corporation. Thank you for joining us today for our virtual twenty twenty Annual Meeting of Shareholders. We are holding the twenty twenty meeting virtually due to COVID-nineteen and its related public health concerns. We hope everyone on the call this morning is safe and well.
I will serve as chair of this meeting and would now like to call the meeting to order. It is May 20 at 08:01AM, and the polls for voting are currently open. To vote, click on the cast your vote button on the webcast. Before turning to the business portion of today's meeting, I want to thank those who have been working to keep our nation safe during these challenging times, particularly those on the front lines in the healthcare and first responder communities. I also want to thank our employees, many of whom are also Northrop Grumman shareholders.
Our team's dedication to the mission is allowing us to continue providing critical national security products and services to our customers. We have worked hard, and we will continue to work hard, to protect the health, safety, and well-being of our employees and to enable them to continue to perform so well. They remain our first priority. Let me turn now to the conduct of our meeting. As you know, this is our first virtual annual meeting.
We hope you will find it productive. We have set an agenda and established rules of conduct to help ensure a fair and orderly proceeding that is inclusive and affords our shareholders opportunities to participate that are broadly similar to those they have enjoyed in the past. In particular, we've taken steps to ensure that our shareholders can ask questions on the proposal, present shareholder proposals that have been included in the proxy statement, and view documents relevant to the meeting. Both the agenda and the meeting procedures are available on the virtual meeting website, and I intend to conduct this meeting in accordance with both. We do not expect any technical difficulties today.
However, in the unlikely event that we do experience technical challenges, we ask you to refer to our Investor Relations website for updates. If we lose our audio or webcast connection, we have experts on standby to try to help. However, if we're unable to resume our audio and webcast connections within fifteen minutes, we will end the webcast, but we will keep the polls open until ten a. M. Eastern Daylight Time today.
We will declare the polls closed at that time and adjourn the meeting. Under these circumstances, we would then announce the results of the meeting in an SEC filing. I would now like to introduce Don Feltzinger, the company's lead independent director since May 2012, and the other nominees for the board of directors who are joining us virtually today. Mary Anne Brown, Anne Fudge, Bruce Gordon, Bill Hernandez, Maddie Kleiner, Carl Krapik, Gary Ruffhead, Tom Shoei, Jim Turley, and Mark Welsh. 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. Our Board of Directors fixed 03/24/2020 as the record date for determining the shareholders of record who were entitled to receive notice of and who may vote at this meeting. Computershare Trust Company has been appointed the Inspector of Election for this meeting. And Jennifer McGarry, Corporate Vice President and Secretary, is the Secretary for the meeting. Jennifer, will you please give the secretary's report?
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 has provided electronic access to the proxy statement dated 04/03/2020, a proxy card and the 2019 annual report. Affidavits relating to the mailing and electronic availability of the notice and report and proxy statement will be filed with the records of this meeting. The holders of common stock have one vote per share. On the record date, there were 167,293,201 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.
Thank you, Jennifer. We will now review the matters to be voted on and I'd like to ask Jennifer to please proceed with the transaction of business.
Before we proceed, there are a few ground rules I'd like to mention. First, according to the company's bylaws, any matters which were to be put to the vote of the shareholders have already been submitted according to notice requirements and were set forth in the proxy statement. No other matters may be put to a vote at this meeting. If you have not already voted for shares or wish to change your vote, you may do so by clicking on the Cast Your Vote button on the virtual meeting webcast. Shareholders can also vote by using the voting instructions you previously received at your notice of meeting.
Shareholders may continue to submit questions electronically during the meeting by clicking on the message icon at the top of the webcast screen and typing a question in the ask a question field. Questions should relate to the official business of the meeting and management and shareholder proposals in particular. This function has been open since
the
fourteenth. Shareholders can continue to submit questions up until the time the relevant proposal is presented. We intend to address shareholder questions when the relevant agenda item is up for consideration. I'll now turn it over to Kathy to introduce the items of business.
We will now present, address questions on, and vote on the items of business set forth in our proxy statement, after which we will receive the report of the Inspector of Election on the vote and then adjourn. The first order of business is the election of the 12 directors of the company, each of whom will hold office until the twenty twenty one Annual Meeting of Shareholders or until his or her earlier resignation for removal. The nominees in their bios were listed in the proxy statement. Sheila, are there any questions that have been properly submitted on the first management proposal for us to address?
There are a couple of questions that arguably relate to the matter at hand, which is the election of the directors. They go to, first of all, when was the last in person board meeting? And more broadly, what's the impact of COVID-nineteen been on the company?
Thank you. The last in person board meeting for our board of directors was February, and since that time we've held a number of telephonic meetings approximately every three weeks, and yesterday held a full virtual meeting with myself and our lead independent director together in person and the other members of the board participating telephonically. With regards to the COVID impacts on our company, we have been very focused on monitoring COVID-nineteen impacts not only to our company and employees, but also to our customers, our suppliers, and more broadly our communities. Our first priority has been and remains the health, safety, and well-being of our employees. And we've taken and continue to take significant actions to help protect the health and safety of our employees.
We also have taken actions to support our suppliers and our local communities. And through it all, we have continued to serve our customers. Our goals have certainly been to lessen the immediate potential adverse effects of the pandemic, but we also continue to position the company for its long term success. And I'll say that while many state and local jurisdictions have implemented mandatory stay at home or shelter in place orders to date, most of those orders have exempted some or all of the defense industrial base, including Northrop Grumman. So our facilities have largely remained open, and many of our employees who cannot work remotely are continuing to come to work.
And we have taken steps, as I said, to work toward their safety and well-being during this time. And those steps have included things like implementing social distancing. We have implemented employee and visitor health protocols. We've enhanced our cleaning and disinfecting procedures at facilities. We work to distribute personal protective equipment to all of our employees, including mandating facial coverings.
And we've implemented telework to the extent possible. Now, as states start to slowly open things up, we are being equally careful as we think about bringing more people back into our facilities and taking into consideration the health standards and guidelines that have been published within each state and local jurisdiction as we do so. Sheila, are there any other questions related to that matter of business?
Well, there's just one other question that arguably does, and that goes more to the conduct and attendance at this meeting. And the question is, how many are attending this meeting? And the answer is that so far, it's approximately 100.
Thank you very much.
And we have not received any other questions related to this proposal.
Good. We'll move on to the next item of business. And the second item on the agenda is the proposal to approve on an advisory basis the compensation of the named executive officers. Sheila, are there any questions that have been properly submitted on the second management proposal for you?
There are not.
Thank you. We'll move on to the next item of business. The third item on the agenda is the proposal to ratify the appointment of Deloitte and Touche as the independent auditor for the company for the year ending 12/31/2020. We have in virtual attendance at this meeting representatives of Deloitte and Touche. Sheila, are there any questions on this matter?
There are not.
Thank you. We'll move on to the next item of business. The fourth item on the agenda is the shareholder proposal that the company assess and report on potential human rights impacts that could result from government's use of our products and services. We have been told that Mary Beth Gallagher will be presenting this proposal on behalf of the proponent. Out of respect for the other shareholders in attendance and to allow time for questions on this proposal, we remind you, Ms.
Gallagher, to please limit your comments to three minutes. Welcome, Ms. Gallagher. We're glad you could join us. Operator, please open the line for Ms.
Gallagher to present the proposal.
Ms. Gallagher, your line is now open.
Thank you. Good morning. My name is Mary Beth Gallagher. I'm the Executive Director of Investor Advocates for Social Justice. On the line today on behalf of the Sisters of St.
Francis of Philadelphia, the School Sisters of Notre Dame, and the Sisters of Saint Dominic of Caldwell, New Jersey. I move the proposal encouraging Northrop Grumman to conduct a human rights impact assessment that examines the actual and potential human rights impacts associated with the company's high risk products and services. As a leading defense contractor, it is likely that Northrop Grumman's business activities cause or contribute to human rights violations. The proponents believe the company should identify and assess its human rights impacts, whether due to the nature of the products that are sold or the customers who are who are using them, so that it may take steps to address impacts and prioritize actions to reduce the risk of harm. The risks that we are concerned about include the production of nuclear weapons, the sale of controversial weapons and arms in conflict affected areas that may be used against civilians or in ways that violate international humanitarian law, training of troops, including Saudi military operating in Yemen, a large humanitarian crisis, the development of biometric surveillance database for The US Immigration And Customs enforcement that presents risk to privacy and discrimination.
Notwithstanding the role of government, Northrop Grumman has a responsibility to respect human rights. The company is exposed to legal, financial, regulatory, and reputational risks as a result of human rights impacting its operations and supply chain. These risks and steps taken to mitigate them should be explained to investors in a human rights impact assessment. But instead, the company publishes no information about the implementation and effectiveness of its human rights policy and has been unable to speak to these issues in an effective way in the court in the course of our shareholder engagement. We urge all shareholders to support this proposal, and we encourage the board and senior management to act meaningfully to improve human rights due diligence to reduce the likelihood that the company will cause or contribute to human rights violations.
Thank you for the opportunity to present today. Thank you.
Thank you, Ms. Gallagher. And we appreciate your input and your passion for human rights. I assure you that the Board and management continue to share the proponent's commitment to human rights. That commitment is reflected in our culture, our policies, our practices, and indeed, as you know, we've recently enhanced our policies and practices, as well as our Board oversight and our disclosures, in part to reflect the valuable input we've received from the proponents and other shareholders.
But as detailed in the proxy, we do not believe this particular proposal and the impact assessment that is requested would enhance our human rights program or serve the interests of our shareholders. Sheila, are there any other questions that have been properly submitted on this proposal for us to address?
Yes, we have received a question from the Sisters of St. Francis of Philadelphia. And let me read it. In collaboration with members of ICCR, Northrop Grumman adopted a human rights policy in 2013. But seven years later, it still does not disclose its salient human rights issues or how the policy is implemented to prevent, mitigate, or remediate adverse human rights impacts associated with its government contracts.
In 2019, 31% of shareholders voted in favor of increased reporting on the implementation of the company's human rights policy. Yet investors are still unable to assess how it evaluates and mitigates risks accompanying specific activities,
such
as weapon contracts, military training, biometrics, and emerging technologies, or with governments engaged in conflict. When will Northrop commit to implementing a human rights impact assessment, especially in light of the fact that the EC will introduce legislation in 'twenty one to make human rights due diligence mandatory for EU companies?
Well, thank you, sisters, for joining us today. And as I stated to Ms. Gallagher, we share your commitment to human rights and we appreciate the input that you've given to our company over the years on this matter. I do want to point out that since 2013 we've taken a number of steps to enhance our policy, including changes that we implemented this year and disclosed. We also have strengthened our oversight of our policies, including having our policy committee of the board review the policy on a regular basis.
And in addition, in this last year, we created a Human Rights Working Group that is in place to oversee the implementation not only of our policy but the practices that ensure compliance with that policy and to report back to the policy committee of the board on their findings. So I assure you that we continue to appreciate the input and seek to further strengthen our human rights policies and procedures and believe that we have done so over the course of the many years since we've put the policy in place. Sheila, any other questions on this matter of business?
There are no more that have been submitted.
Thank you. We'll move on to the next matter of business. And the fifth item on the agenda is the shareholder proposal to move to a three percent ownership threshold for shareholders to request action by written consent. We have been told that John Chavezin will be presenting this proposal. Out of respect for the other shareholders in attendance and to allow time for questions, we remind you, Mr.
Chiveden, to please limit your comments to three minutes. Welcome, Mr. Chiveden. We are glad you could join us. Operator, could you please open the line of Mr.
Chiveden?
Mister Chavetin, your line is now open.
Hello. This is John Chavetin. Can you hear me okay?
Yes, John. Please proceed.
Proposal five, make shareholder written consent a meaningful right. Shareholders request our board of directors take the steps necessary to change the 25% figure in section 2.13 of the bylaws to 3%. Thus, 3% of shares would have the right to ask management to set a date for shareholders to act by written consent. Northrop Grumman now has a version of written consent that makes no sense and appears to be 100% excess baggage. Under the current Northrop Grumman written consent, it takes 25% of Northrop Grumman stock or $13,000,000,000 to just get management to look at a calendar and set a date.
Why would anyone gather together 25% of Northrop Grumman stock or $13,000,000,000 just to have management look at a calendar when the same 25% of Northrop Grumman stock could obligate management to call a special shareholder meeting. Northrop Grumman's current written consent is thus inferior to its long standing shareholder right to call a special shareholder meeting. It also makes no sense to require 25% of shares, $13,000,000,000 in Northrop Grumman stock, to only get a date from management when 3% of Northrop Grumman shares can put proxy access candidates on our annual meeting ballot. A real right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special shareholder meeting. This seems to be the conclusion of the Intel Corporation shareholder vote at the twenty nineteen Intel annual meeting.
The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel shareholders responded with greater support for written consent in 2019 compared to 2018. Please vote yes. Make shareholder written consent a meaningful right proposal five. And I just wanted to add as a as a separate matter that the proxy advisor, Glass Lewis, has some concerns about the executive pay at, Northrop Grumman.
Thank you.
Thank you, Mr. Schweden. As always, we appreciate your input. And we have long been committed to ensuring that our shareholders have meaningful rights to provide input and to influence the direction of the company, and to do so in a way that respects the interests of all shareholders and enhances the company's ability to create our long term shareholder value. And we think we are towards the forefront of best practices in providing our shareholders the right to act by written consent, to call a special meeting, and to proxy access, as well as the more informal opportunities to engage with our Board and management.
When the company proposed to adopt action by written consent in 2012, almost 80% of our shareholders supported the proposal at the 25% threshold, And we continue to believe and have had conversations with shareholders that our written consent right is consistent with industry best practice, and it provides our shareholders with meaningful and appropriate rights while balancing and advancing the interests of all of our shareholders. Thank you for your input. Sheila, are there any other questions on this matter?
We do not. We have not received any other questions on this proposal.
Thank you. And this completes the formal business that was scheduled to come before this meeting except for voting. Jennifer has voted the shares represented by the proxies that have been given to management before this meeting. These votes have been tallied by the Inspector of Election. Any votes that were 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.
The time is now 08:22 a. M. I declare that the polls are now closed. We have received the preliminary results of the meeting from the Inspector of Election. Jennifer, can you provide the voting results?
Based on the preliminary report of the Inspector of Election, each of the 12 nominees for director received at least 132,785,750 votes and has been elected director of the company till the twenty twenty one annual meeting of shareholders until his or her early resignation or removal. Proposal to approve on an advisory basis the compensation of our named executive officers received 133,107,383 votes and has passed. Proposal to ratify the appointment of Deloitte and Touche as the company's auditor for 2020 received 149,850,547 votes and has not and has passed. The shareholder proposal that the company assess and report on potential human rights impacts that could result from government's use of our products and services received 33,123,948 votes and has not passed. The shareholder proposal to move to a 3% ownership threshold for shareholders to request action by written consent received 38,450,058 votes and has not passed.
That concludes my report.
Thank you, Jennifer. The Board of Directors will carefully consider the inputs of shareholders in its discussions over the coming year. And we thank all of you for your attendance and your continued interest in our company. There being no further business to come before the meeting, I hereby declare the meeting adjourned. This concludes today's webcast.
This concludes the meeting. You may now disconnect.