Calvin Biesecker
Defense Daily
Northrop Grumman made a surprise announcement last week that Chairman and CEO Wes Bush will step down from the CEO role next year and be succeeded by Kathy Warden, the company’s current president and chief operating officer, who has been groomed to take over leadership of the company.
Prior to becoming president and COO on Jan. 1 of this year, Warden led Northrop Grumman’s $11.4 billion Mission Systems sector, overseeing programs that include cyber, self-protection and targeting, air and missile defense.
“The smooth performance of the Mission Systems segment under Ms. Warden’s leadership should provide some reassurance,” Sheila Kahyaoglu, an aerospace and defense analyst with the investment banking firm Jefferies, said in a client note late last week. She added that even though Warden doesn’t have the “major program experience” that is resident in Northrop Grumman’s Aerospace Systems segment, “during her tenure operational performance within mission Systems has been solid.”
Seth Seifman, J.P. Morgan’s aerospace and defense analyst, also in a client not on Thursday night noted that Warden was the “heir apparent” but that Wes Bush’s departure was unexpected.
“Nevertheless, Bush’s strategic decisions have proven highly successful and so there is a basis to think the CEO transition might be among these as well,” Seifman said. “Moreover, there is a clear path forward for Northrop in the coming years.”
The clear path forward includes guiding the Air Force’s B-21 stealth bomber program from development to production and integrating Orbital ATK, which was acquired in June, Seifman said. He added that winning the Ground Based Strategic Deterrent is a “key upside opportunity” for the company.
Northrop Grumman is competing against Boeing for GBSD and a decision is expected from the Air Force in 2020 on a winner.
The Orbital ATK acquisition also gave Northrop a presence at the National Nuclear Security Administration’s main weapons-production sites, the Pantex Plant in Amarillo, Texas, and the Y-12 National Security Complex in Oak Ridge, Tenn. Orbital ATK was one of the partners on Consolidated Nuclear Security, which manages both sites under a contract awarded in 2014.
