Northrop Grumman CEO compensation in 2026
Kathy Warden has been the CEO of Northrop Grumman since 2019, overseeing the defense giant through a period of significant growth driven by the B-21 Raider stealth bomber, the Sentinel ICBM program, and expanding space capabilities. Her 2024 total compensation of $24.4 million places her among the highest-paid defense industry executives — and the structure of that pay reveals how defense CEO compensation actually works.
This guide breaks down Warden's pay package, compares it to peer defense CEOs, and explains what the numbers mean in the context of executive compensation practices and recent government scrutiny.
Compensation breakdown (FY 2024)
Kathy Warden's total compensation for fiscal year 2024 was $24,359,199 — a 2% increase from the $23.53 million she earned in 2023. The breakdown reveals that the vast majority of her pay comes from equity and performance incentives rather than cash salary.
| Component | Amount | % of Total |
|---|---|---|
| Base salary | $1,790,385 | 7.3% |
| Annual incentive bonus | $5,194,800 | 21.3% |
| Stock awards | $16,099,810 | 66.1% |
| Stock options | $0 | 0% |
| Other compensation | $1,007,512 | 4.1% |
| Change in pension value | $266,692 | 1.1% |
| Total | $24,359,199 | 100% |
Base salary: $1.79 million
The base salary is the smallest component, representing just 7.3% of total pay. Warden's base salary has been relatively flat for several years, inching up with modest annual increases. Base salary serves as the foundation for calculating other compensation elements — bonus targets and long-term incentive awards are typically expressed as multiples of base salary.
Annual incentive bonus: $5.19 million
The annual incentive plan (AIP) ties a portion of the CEO's pay to one-year financial performance metrics. For Northrop Grumman, the AIP is typically based on segment operating income, free cash flow, and revenue targets. The target bonus for the CEO is usually 150-200% of base salary, with actual payout ranging from 0% (if minimum thresholds are not met) to 200% of target (if maximum performance is achieved).
Warden's $5.19 million AIP payout for 2024 suggests performance came in above target, consistent with Northrop Grumman's strong operational results.
Stock awards: $16.1 million
Stock awards comprise the largest portion of Warden's compensation at 66.1% of total pay. These are typically a combination of:
- Performance Stock Units (PSUs): Shares that vest based on achieving specific financial metrics over a 3-year period. Common metrics include cumulative earnings per share, return on invested capital, and total shareholder return relative to a peer group.
- Restricted Stock Units (RSUs): Shares that vest based on continued employment over a 3-4 year period, providing a retention incentive.
The heavy weighting toward stock awards means that the majority of Warden's pay is contingent on Northrop Grumman's stock price performance. If the stock declines, the realized value of these awards falls proportionally. Conversely, if the stock appreciates, the realized value can exceed the grant-date fair value reported in the proxy statement.
Other compensation: $1.01 million
This category typically includes perquisites such as personal use of corporate aircraft, executive health benefits, financial planning services, security-related expenses, and company contributions to retirement plans. Defense CEO perquisites are modest compared to some industries — corporate aircraft use for security and scheduling reasons accounts for the bulk of this category.
The $16.1 million in stock awards is the grant-date fair value — what the shares were worth on the day they were awarded. Warden does not receive $16.1 million in cash. Instead, she receives shares that vest over 3-4 years and whose actual value depends on Northrop Grumman's stock price at vesting. If the stock doubles, she could realize $32 million. If it drops 50%, she could realize $8 million. This structure aligns CEO interests with shareholder interests — a core principle of modern executive compensation design.
Historical compensation trend
| Year | Total Compensation | YoY Change | NOC Stock Performance |
|---|---|---|---|
| 2020 | $19.9M | -- | -2.3% |
| 2021 | $20.8M | +4.5% | +30.4% |
| 2022 | $22.3M | +7.2% | +40.2% |
| 2023 | $23.5M | +5.4% | -9.5% |
| 2024 | $24.4M | +2.0% | +8.1% |
Warden's compensation has grown steadily from $19.9 million in 2020 to $24.4 million in 2024, a cumulative increase of 22.6% over five years. This growth rate is consistent with the broader defense industry executive compensation trend and reflects Northrop Grumman's revenue growth from approximately $36 billion in 2020 to $41 billion in 2024.
Performance context
Understanding Warden's compensation requires context on Northrop Grumman's performance under her leadership:
Revenue growth: Sales increased from $33.8 billion in 2019 (her first year as CEO) to approximately $41 billion in 2024, a 21% increase driven by the B-21 Raider production ramp, Sentinel ICBM development, and space systems growth.
Key program wins: The B-21 Raider (the next-generation stealth bomber) completed its first flight in 2023 and is progressing through flight testing. The Sentinel ICBM program was won by Northrop Grumman under Warden's leadership, representing a $100+ billion multi-decade franchise. Space systems, including the James Webb Space Telescope (built by Northrop) and military satellite programs, have expanded significantly.
Backlog growth: Northrop Grumman's contract backlog has grown substantially, providing revenue visibility for years into the future.
The board of directors sets CEO compensation based on these performance outcomes, using a compensation committee that benchmarks pay against a peer group of similarly sized defense and aerospace companies.
Comparison with other defense CEOs
| CEO | Company | 2024 Total Comp | Base Salary | Stock Awards |
|---|---|---|---|---|
| Kathy Warden | Northrop Grumman | $24.4M | $1.79M | $16.1M |
| Jim Taiclet | Lockheed Martin | $23.8M | $1.75M | $13.0M |
| Kelly Ortberg* | Boeing | $18.4M | $525K (partial yr) | $16.0M |
| Chris Calio | RTX Corporation | $18.0M | $1.18M | $8.3M |
| Phebe Novakovic | General Dynamics | $23.5M (est.) | $1.90M | $14.0M (est.) |
*Ortberg's 2024 figure represents approximately 5 months of employment. His annualized compensation would be approximately $19.5 million.
Warden's $24.4 million places her at the top of the defense CEO compensation range, slightly above Lockheed Martin's Jim Taiclet ($23.8 million) and well above Boeing's Kelly Ortberg and RTX's Chris Calio. The higher pay relative to Taiclet is notable given that Lockheed Martin ($71 billion revenue) is nearly twice the size of Northrop Grumman ($41 billion revenue). The difference is partly explained by Northrop Grumman's strong stock performance and program execution during the compensation evaluation period.
Defense companies are required to disclose the ratio of CEO pay to median employee compensation. At Boeing, Kelly Ortberg's annualized pay is approximately 183 times the $106,624 median employee salary. Northrop Grumman's ratio is typically in the 200-250 range. While these ratios generate public attention, they are lower than many technology companies (some Silicon Valley CEOs have ratios exceeding 1,000:1) and reflect the structured compensation practices of the defense industry.
Government scrutiny and the Trump executive order
Defense CEO compensation has come under increased scrutiny in 2026. In January 2026, President Trump issued an executive order that prohibits defense companies from making share repurchases, paying dividends to shareholders, and places restrictions on executive compensation unless companies invest in modernizing weapons production facilities.
The executive order targets what the administration describes as excessive allocation of defense contract revenue to shareholder returns and executive pay rather than production capacity. All major defense contractors — including Northrop Grumman, Lockheed Martin, Boeing, RTX, General Dynamics, and L3Harris — are affected.
The specific impact on CEO compensation is still being defined through regulatory implementation, but the order signals that future proxy statements may show structural changes to how defense executive pay is determined. Potential outcomes include:
- Caps or restrictions on total CEO compensation funded by government contracts
- Requirements to tie executive incentives more explicitly to production facility investment
- Increased disclosure requirements for how contract revenue flows to executive pay vs. capital expenditure
Warden's 2025 and 2026 compensation packages may be affected by these new restrictions, though the exact magnitude depends on how the executive order is implemented.
Warden's background and tenure
Kathy Warden became CEO of Northrop Grumman in January 2019, also serving as President and Chair of the Board. She joined Northrop Grumman in 2008 and held leadership roles in the company's cybersecurity, information systems, and Mission Systems sectors before being named CEO.
Under her leadership, Northrop Grumman has:
- Won the B-21 Raider and Sentinel ICBM programs — two of the largest defense programs in U.S. history
- Successfully launched the James Webb Space Telescope
- Expanded space capabilities through the acquisition of Orbital ATK (completed before her CEO tenure but integrated under her leadership)
- Grown revenue from $33.8 billion to $41 billion
- Maintained the company's position as the fifth-largest defense contractor globally
What the compensation numbers mean
Defense CEO compensation is a topic that generates strong opinions. Context helps:
The structure is heavily performance-based. Only 7.3% of Warden's pay is guaranteed cash salary. The remaining 92.7% is tied to company performance through bonuses and stock awards that can increase or decrease in value. This is intentional — boards design CEO pay to align executive incentives with shareholder returns.
The numbers are grant-date values, not cash received. The $24.4 million figure represents the theoretical value of the total compensation package at the time of grant. Actual realized compensation depends on stock price performance over the vesting period. In a bad year, realized pay can be significantly less than reported compensation.
The peer benchmarking process drives convergence. Each defense company's compensation committee benchmarks CEO pay against a peer group. This creates a ratchet effect where above-median performance at one company raises the benchmark for all others, gradually pushing compensation upward across the industry.
Government contract revenue funds the pay. A significant portion of defense company revenue comes from taxpayer-funded contracts. This creates a legitimate public interest in how that revenue is allocated between executive compensation, worker pay, shareholder returns, and capital investment. The Trump executive order is the most direct government intervention in this area in decades.
For more on Northrop Grumman careers and compensation, see our guides on Northrop Grumman salaries, Northrop Grumman careers, and Northrop Grumman engineer salary. You can browse current Northrop Grumman openings on Zero G Talent.
FAQ
How much does the Northrop Grumman CEO make?
Kathy Warden received $24,359,199 in total compensation for fiscal year 2024. This includes a $1.79 million base salary, $5.19 million annual incentive bonus, $16.1 million in stock awards, and $1.01 million in other compensation. The total represents a 2% increase over 2023.
What percentage of the CEO pay is base salary?
Base salary accounts for only 7.3% of Kathy Warden's total compensation. The remaining 92.7% comes from performance-based incentives — primarily stock awards (66.1%) and annual bonus (21.3%). This structure is standard for large-cap defense companies and is designed to tie CEO pay to company performance and stock price.
How does Kathy Warden's pay compare to other defense CEOs?
Warden's $24.4 million is the highest among the Big Five defense CEOs for 2024. Lockheed Martin's Jim Taiclet earned $23.8 million, Boeing's Kelly Ortberg received $18.4 million (for a partial year), and RTX's Chris Calio earned $18.0 million. Warden's higher pay is notable given that Northrop Grumman's revenue ($41B) is smaller than Lockheed Martin's ($71B), reflecting strong stock and program performance during the evaluation period.
Has government policy affected defense CEO compensation?
Yes. In January 2026, President Trump issued an executive order restricting defense companies from share buybacks, dividends, and executive compensation unless they invest in modernizing weapons production. The full impact on CEO pay is still being determined through regulatory implementation, but the order signals increased government scrutiny of how defense contract revenue flows to executive compensation.
How much of the CEO's pay comes from stock?
Stock awards comprise 66.1% of Kathy Warden's total compensation ($16.1 million). These are a mix of Performance Stock Units (PSUs) that vest based on financial metrics over 3 years and Restricted Stock Units (RSUs) that vest based on continued employment. The actual cash value realized depends on Northrop Grumman's stock price when the shares vest, which can be more or less than the grant-date value reported in the proxy statement.
What is the CEO-to-worker pay ratio at Northrop Grumman?
The CEO-to-median-employee pay ratio at Northrop Grumman is typically in the 200-250 range, meaning Warden earns approximately 200-250 times the median employee salary. This is consistent with other large defense contractors and lower than many technology companies. The ratio is required to be disclosed in the annual proxy statement.
