Hello and welcome to the 2026 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 2026 Annual Meeting of Shareholders. On behalf of our Board of Directors, it's my pleasure to welcome you to our meeting. I will serve as Chair of this meeting, and I'd 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. In a dynamic and increasingly complex global security environment, Northrop Grumman remains steadfast in our mission to deliver advanced cutting-edge solutions to the United States and its allies. Our customers around the world are increasing their investments in national security programs in response to the global security challenges we are facing. We share in the responsibility and urgency of our customers to provide our nation and allies with the best technologies in the world.
To enable this, over the past several years, we have invested across our business, from the manufacturing floor to enterprise operations, to ensure we have the capability, capacity, and technological edge to meet our customers' needs today and for years to come. Centered on technology leadership, a laser focus on performance, and deploying capital in value-creating ways, our business strategy is designed to generate sustained growth and long-term value by aligning our diverse portfolio of capabilities with our customers' national security priorities. Underpinning our ability to deliver is a dedicated team, nearly 100,000 strong, who are inspired and motivated every day by our customers' most urgent global security missions. Our team's technological breadth and depth enables us to develop and produce the most advanced systems in the world and then apply that expertise to quickly design and deploy cost-effective solutions at scale.
Northrop Grumman has the foundation to meet this moment with the investments, portfolio, speed, and scale to address the needs of the U.S. and our international customers. We are proud to build on this momentum as we continue to deliver the solutions shaping global security today and for generations to come. Let's now turn to the conduct of today's meeting. I would like to introduce Kathryn Simpson, our Corporate Vice President and General Counsel, and Jennifer C. McGarey, our Corporate Vice President and Secretary, who is the secretary for this meeting.
Thank you, Kathy. It is now 8:03 A.M., 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 of the 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 on our meeting website.
In the unlikely event that we experience technical challenges causing us to lose our audio or webcast connection, the meeting will be adjourned and reconvene 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 submitted by email must be sent 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. The Carideo Group, on behalf of 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 3, 2026, a proxy card, and the 2025 annual report. On the record date, there were 142,033,159 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 now turn it over to Kathy to introduce the items of business.
Thank you, Jennifer. We'll now present and vote on the items of business set forth in our proxy statement. After which, we will 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 11 directors of the company. Each of whom will hold office until the 2027 annual meeting of shareholders or until his or her earlier resignation or removal. First, I'd like to introduce Maddie Kleiner, the company's lead independent director who is completing her tenure today as both a Member of our Board and as Lead Independent Director. In addition to Maddie, Ann Fudge will also complete her tenure as director today. We'd like to thank Maddie and Anne for their years of dedicated service to the Board and our company.
Their contributions have made a lasting impact, and we wish them both the best in their retirement. Jim Turley has been designated by the Board of Directors to serve as Lead Independent Director as of this meeting. Now I'd like to introduce the nominees for the Board of Directors who are here in person. David Abney, Marianne Brown, Christopher Grady, Arvind Krishna, Kimberly Ross, Gary Roughead, Tom Schoewe, Jim Turley, Mark Welsh, Mary Winston, and myself. 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. The second item on the agenda is a 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 31st, 2026, and we have in attendance at this meeting a representative of Deloitte & Touche. The fourth item on the agenda is a shareholder proposal to provide for an Independent Board Chair. We were told that John Chevedden is on the line to present this proposal. Operator, please open the line for Mr. Chevedden. Welcome, Mr. Chevedden. Please introduce yourself and make your statement, and I do ask that you limit your comments to three minutes.
Hello, this is John Chevedden, proposal for Independent Board Chairman. Shares request that the Board of Directors adopt an enduring policy amend the governing documents in order that two separate people hold the office of Chairman and the office of the CEO as soon as possible. The Chairman of the Board shall be an Independent Director. A Lead Director shall not be a substitute for an Independent Board Chairman. Board shall have the discretion to select an Interim Chairman of the Board who's not an Independent Director to serve while the Board is required to seek an Independent Chairman of the Board on an accelerated basis. An Independent Board Chairman at all times improves corporate governance by bringing impartiality, objective oversight, and external expertise to Board decisions, mitigating conflicts of interest, enhancing transparency, and boosting shareholder confidence.
This detached perspective allows the Chairman to focus on shareholder interests, strengthen management accountability, and provide critical checks and balances, ultimately contributing to long-term sustainability and profitability. Independent board chairman could help Northrop Grumman deal with relative plateau in the stock price. The Northrop Grumman stock price was at $556 in 2022 and only at $546 now in spite of a robust stock market. Independent Board Chairman can also help Northrop Grumman deal with challenges like these. Fixed price development contracts for highly complex programs have led to significant financial charges. The Sentinel Intercontinental Ballistic Missile program and the B-21 stealth bomber have faced protracted cost pressures, squeezing profit margins. The defense sector is a low margin, absorbing unpredicted spikes in labor and material costs on fixed price contracts, projects heavily impacts profitability.
The shift towards software-defined capabilities and modular open system architectures has intensified competition, allowing smaller tech-focused firms to vie for lucrative mission system and payload contracts. Please vote yes, Independent Board Chairman, proposal four.
Thank you, Mr. Chevedden. For the reasons stated in our proxy statement, we recommend a vote against this proposal. The Board remains consistent in its view that the company and its shareholders are best served when the Board retains the flexibility to utilize its experience, knowledge, and judgment, informed by ongoing input from our shareholders and other stakeholders to determine which Director is best suited to serve as chair and as Lead Independent Director, considering the full breadth of facts and circumstances. This concludes the proposal scheduled to come before the meeting. It is 8:13 A.M., and the polls are now closed. We are now happy to address questions relating to the business of the meeting that have been submitted to us in advance or during the meeting.
Due to time constraints, we may not be able to answer all the questions, and multiple questions related to a single topic will be addressed together in the interest of time. Kathryn, are there any questions that have been submitted for us to address?
Yes, we do have one question in the queue, and the question is whether federal defense budgets are a deciding factor for the growth of the company.
Defense budgets are certainly one factor in determining the growth for the company. We are currently with a significant backlog, nearing $100 billion of backlog that will generate sales for years to come. We also see solid U.S. and allied budgets that we expect to continue to grow through the decade, given the environment in which our militaries are operating. We also expect to see our growth supported by numerous franchise programs that the company has, including the B-21, the Sentinel Project, and many others.
Thank you. We have no other questions in the queue.
Thank you, Kathy. We have no other questions, I'd like to move on to the announcement of preliminary voting results. Jennifer, will you share those with us, please?
Thank you, Kathy. I have 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 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 this meeting from the Inspector of Election. Based on their preliminary report, each of the 11 nominees for Director received a requisite number of votes, has been elected Director of the company until the 2027 annual meeting of shareholders or until his or her earlier resignation or removal. Based on the preliminary results, the 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 2026 has passed. Based on preliminary results, the shareholder proposal to provide for an Independent Board Chair has not passed. That concludes proposals put to vote at this meeting.
Thank you, Jennifer. The Board of Directors very much appreciates and will carefully consider the inputs of the shareholders in this discussion over the coming year. There being no further business to come before the meeting, I hereby declare the meeting adjourned. We thank all of you for your attendance and your continued interest in our company.
This concludes the meeting. You may now disconnect.