Northrop Grumman Corporation, a leading provider of solutions that protect our national security, is engaged in the democratic process at the federal, state and local level. All of the company's activities are in keeping with our principles of good governance and the highest standard of ethics. The company engages in the following activities: educates elected officials on key public policy issues related to its business, administers a political action committee that enables our employees to support candidates for public office, provides limited direct corporate political contributions to national-level gubernatorial associations and is a member of several trade associations which support its business objectives. The company engages on public policy issues in support of the company's objectives, including in the areas of national defense and aerospace, STEM (science, technology, engineering and mathematics), tax and international trade policy. The company's policy with respect to independent political expenditures is provided below.
Governance and Reporting
The Policy Committee of the Northrop Grumman Board of Directors provides oversight of the company's government relations strategy and the manner in which the company conducts its government relations activities, including the governance and compliance of the political action committee, the company's policies and practices with respect to political contributions, and the company's lobbying activities. The Policy Committee receives regular reports on government relations activities. Management of the company's participation in the political process is the responsibility of the Corporate Vice President of Government Relations who reports directly to the CEO.
All political activities, including financial contributions, are made in the best interest of the company, not based on the opinions of individual employees, executives or board members. Northrop Grumman publishes annual reports for its political action committee, corporate contributions and trade association memberships on its corporate website.
Employee Political Action Committee
Employees of Northrop Grumman Corporation meeting certain FEC eligibility requirements may voluntarily join the company's political action committee, Employees of Northrop Grumman Political Action Committee ("ENGPAC" or "the PAC"). In addition to supporting the campaigns of congressional and state/local candidates, ENGPAC supports national political organizations and leadership Political Action Committees. Participation in ENGPAC offers our employees the opportunity to pool their resources to support candidates for office who are supportive of national security. ENGPAC contributions are made on a bi-cameral and bipartisan basis. PAC membership is both voluntary and disclosed inside the corporation only to those involved in PAC administration.
There are two levels of governance for the company's political action committee. The Steering Committee, comprised of Corporate Vice Presidents, reviews ENGPAC activity and votes to make changes to ENGPAC policies and procedures. The Advisory Committee comprised of representatives from corporate and each sector, meets every other month to provide support for ENGPAC activities. The PAC is administered by the corporate Government Relations office. To ensure compliance with all applicable election laws and regulations, robust internal controls are in place and an external firm acts as a final review before any contribution is made using ENGPAC funds.
Direct Political Contributions
In 2015, Northrop Grumman Corporation did not make direct contributions to organizations classified under the Internal Revenue Code as a section 527 or 501(c)4 organization. In addition, Northrop Grumman did not make any corporate contributions to political candidates, parties, committees or make payments to influence the outcome of ballot measures.
Policy Regarding Independent Political Expenditures
The U.S. Supreme Court determined in 2010 that corporations may make unlimited expenditures for independent communications to the general public in support of federal elections. Northrop Grumman has no plans to spend corporate funds directly on such communications. Should a future situation warrant Northrop Grumman's participation in such independent expenditures, the decision would require approval of the Policy Committee of the Northrop Grumman Board of Directors; would have to be consistent with the interests of Northrop Grumman's shareowners; and would have to conform to applicable laws.
Northrop Grumman would be transparent with its disclosure of these expenditures, as it is with other political expenditures. This includes making all legally required filings, including with the Federal Election Commission, as well as disclosing various expenditures on our external website. Such independent expenditures would receive the same scrutiny as all of Northrop Grumman's other corporate political expenditures, which includes an annual update with the Policy Committee of the Board of Directors.