Participation in the public policy process is important to
enhancing shareholder value. Northrop Grumman Corporation, a leading provider
of solutions that protect our national security, is engaged in the democratic process to support
leaders and participate in the political environment at the federal and state
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 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 expenditures that advocate the election or defeat of federal
candidates 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 and this position reports directly to the CEO. Northrop
Grumman publishes annual spending 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 can voluntarily join the company’s political
action committee, Employees of Northrop Grumman Political Action Committee
("ENGPAC" or "the PAC"). In addition to supporting the
federal election campaigns of congressional 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 each sector, meets monthly to provide support for ENGPAC activities within
the sectors. The PAC is administered by the corporation's Government Relations
department. All PAC expenditures and contributions are made following an
internal review process in our 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.
2012 ENGPAC
2012 Federal Campaign Contributions
Direct Political Contributions
At the state and local level, the Company has concluded that
as a matter of policy, it will not make any direct contributions to candidates
or their political action committees. The Company makes contributions to
national-level gubernatorial associations to help ensure that its perspective
is represented on matters of state and local policy. In 2012, Northrop Grumman
contributed to three organizations that are classified under the Internal
Revenue Code as section 527 organizations. These are the Democratic Governors
Association, the Republican Governors Association and the National Governors
Association. Contributions were made in the following amounts to these
organizations, respectively, in 2012: $30,000; $60,000; and $25,000.
Policy Regarding Independent Expenditures that Advocate the Election or Defeat of Federal Candidates
The U.S. Supreme Court determined in 2010 that corporations may make unlimited expenditures for independent communications to the general public that expressly advocate the election or defeat of a clearly identified federal candidate.
Northrop Grumman has no plans to spend corporate funds directly on such communications.
Should a future situation warrant Northrop Grumman's participation in independent expenditures that expressly advocate the election or defeat of a clearly identified federal candidate, 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.