|
| Certain Company-related events may include meetings and receptions with our customers, executive management or Board attended by the named executive officer and a spouse or guest. If the Harris-owned aircraft is used and a spouse or guest travels with the named executive officer, no amounts are included because there is no incremental cost to us. We also have Harris-purchased tickets to athletic or other events generally for business purposes. In limited instances, executives, including our named executive officers, may have personal use of Harris-purchased event tickets. No amounts are included because there is no incremental cost to us of such personal use. For a discussion of perquisites and other personal benefits provided to our named executive officers, see the “Compensation Discussion and Analysis” section of this proxy statement. | | (e) | Reflects reimbursement for taxes on imputed income associated with relocation-related benefits, in accordance with our relocation policiescustomers, executive management or Board attended by the named executive officer and a spouse or guest. If the Company-owned aircraft is used and a spouse or guest travels with the named executive officer, no amounts are included because there is no incremental cost to us. We also have Company-purchased tickets to athletic or other events generally for salaried employees.business purposes. In limited instances, executives, including our named executive officers, may have personal use of Company-purchased event tickets. No amounts are included because there is no incremental cost to us of such personal use. For a discussion of perquisites and other personal benefits provided to our named executive officers, see the “Compensation Discussion and Analysis” section of this proxy statement. |
| | (f)(e) | Reflects the dollar value of dividend equivalents paid in cash to our named executive officers with respect to performance share units ultimately earned forand restricted stock units, which vested at the fiscal 2015-2017 three-year performance period.time of the Merger. The value of such dividend equivalents was not factored into the grant date fair value of the underlying performance share units and restricted stock units. |
| (f) | Reflects payouts to Messrs. Kubasik and Gautier of cash amounts under legacy L3 multi-year performance cash and annual cash incentive plans as a result of the change in control due to the Merger, based on payout determinations made shortly before the Merger by the compensation committee of the board of directors of L3 after consultation with Harris. For Mr. Gautier, also reflects his cash distribution under the legacy L3 Supplemental Executive Retirement Plan, a non-qualified, unfunded, defined benefit pension plan, as a result of the change in control due to the Merger. |
(6)(8) | Mr. Ghai joined us on March 2, 2015Kubasik was employed with L3 at the time of the Merger and was not a named executive officer inof L3Harris prior to the fiscal 2015. Mr. Ghai was named Senior Vice President and Chief Financial Officer effective February 11, 2016.transition period. |
| (9) | Mr. Malave joined L3Harris on June 29, 2019 and was not a named executive officer of L3Harris prior to the fiscal transition period. |
| (10) | Mr. Gautier was employed with L3 at the time of the Merger and was not a named executive officer of L3Harris prior to the fiscal transition period. |
| (11) | Mr. Zoiss was not a named executive officer of L3Harris prior to the fiscal transition period. |
Salary and Bonus as a Proportion of Fiscal 2017Transition Period Total Compensation Using the amounts shown under the “Salary” and “Bonus” and “Total” columns in the Fiscal 2017Transition Period Summary Compensation Table, the salary and bonus of each of our named executive officers as a proportion of such named executive officer’s fiscal 2017transition period total compensation was as follows: Mr. Brown-9.92%; Mr. Ghai-20.23%; Mr. Fox-23.15%; Mr. Mehnert-23.22%; and Mr. Mikuen-24.31%. | Name | | Salary and Bonus as Proportion of Fiscal Transition Period Total Compensation | | | William M. Brown | | | 4.8
| % | Christopher E. Kubasik | | | 5.0
| % | Jesus Malave, Jr. | | | 13.2
| % | Todd W. Gautier | | | 5.7
| % | Edward J. Zoiss | | | 8.6
| % |
| L3HARRIS 2020 PROXY STATEMENT 64
|
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2017TRANSITION PERIOD TABLE The following table provides information about cash (non-equity) and equity incentive compensation plan-based awards granted to our named executive officers in our fiscal 2017,transition period, including: (1) the grant date and approval date of equity awards; (2) the range of cash payouts that were possible in respect of awards under our Annual Incentive Plan and our Performance Reward Plan; (3) the range of performance share units that may be earned in respect of grants under performance share unit awards; (4) grants under restricted stock unit awards; (5) the number of shares underlying, and exercise price of, stock option grants; and (5)(6) the grant date fair value of grants under performance share unit and restricted stock unit awards and stock options grants computed under ASC 718. | | | | | | | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1) |
| Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) | | All Other
Stock
Awards:
Number of
Shares of
| |
All Other Option
Awards:
Number of
Securities
Underlying
| | Exercise
or Base
Price of
Option | | Grant Date
Fair Value of
Stock and
Option
| | | Name/Type of Award | | Grant
Date | | Approval
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Stock or
Units (#)(3) | | Options
(#)
| | Awards
($/Share)(4)
| | Awards
($)(5)
| | | William M. Brown | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Plan | | — | | — | | $ | 125,000 | | $ | 1,250,000 | | $ | 2,500,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted stock units | | 8/1/19 | | 7/23/19 | |
|
| |
|
| |
|
| | | — | | | — | | | — | | | 25,019 | | | — | | | — | | $ | 5,125,142 | | | Performance share units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | 3,051 | | | 12,205 | | | 48,820 | | | — | | | — | | | — | | $ | 2,500,194 | | | Performance stock options | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | 129,501 | | | — | | | — | | | — | | $ | 204.85 | | $ | 5,000,034 | | | Christopher E. Kubasik | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Plan | | — | | — | | $ | 125,000 | | $ | 1,250,000 | | $ | 2,500,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Performance share units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | 3,051 | | | 12,205 | | | 48,820 | | | — | | | — | | | — | | $ | 2,500,194 | | | Performance Stock options | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | 129,501 | | | — | | | — | | | — | | $ | 204.85 | | $ | 5,000,034 | | | Jesus Malave, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Plan | | — | | — | | $ | 31,250 | | $ | 312,500 | | $ | 625,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted stock units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | — | | | — | | | 4,638 | | | — | | | — | | $ | 950,094 | | | Performance share units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | 806 | | | 3,222 | | | 12,888 | | | — | | | — | | | — | | $ | 660,027 | | | Performance stock options | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | 34,707 | | | — | | | — | | | — | | $ | 204.85 | | $ | 1,340,037 | | | Todd W. Gautier | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Plan | | — | | — | | $ | 15,000 | | $ | 300,000 | | $ | 600,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Performance share units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | 806 | | | 3,222 | | | 12,888 | | | — | | | — | | | — | | $ | 660,027 | | | Performance Stock options | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | 34,707 | | | — | | | — | | | — | | $ | 204.85 | | $ | 1,340,037 | | | Edward J. Zoiss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Plan | | — | | — | | $ | 15,000 | | $ | 300,000 | | $ | 600,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Restricted stock units | | 8/1/19 | | 7/23/19 | |
|
| |
|
| |
|
| | | — | | | — | | | — | | | 3,906 | | | — | | | — | | $
| 800,144 | | | Performance share units | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | 806 | | | 3,222 | | | 12,888 | | | — | | | — | | | — | | $ | 660,027 | | | Performance stock options | | 8/1/19 | | 7/23/19 | | | | | | | | | | | | — | | | 34,707 | | | — | |
| — | | | — | | $
| 204.85 | | $ | 1,340,037 | |
65 L3HARRIS 2020 PROXY STATEMENT |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Type of Award | Grant
Date | Approval
Date | Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(1) | Estimated Future Payouts
Under Equity Incentive Plan
Awards(2) | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3) | Exercise
or Base
Price of
Option
Awards
($/Share)
(4) | Grant
Date
Fair
Value of
Stock and
Option
Awards
($)(5) | Threshold
($) | Target
($) | Maximum
($) | Threshold
(#) | Target
(#) | Maximum
(#) | | William M. Brown | Annual Incentive Plan | — |
| — |
| $ | 210,000 |
| $ | 2,100,000 |
| $ | 4,200,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance Reward Plan | — |
| — |
| $ | 0 |
| $ | 0 |
| $ | 430,912 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance share units | 8/27/16 |
| 8/27/16 |
| | | | 7,856 |
| 46,900 |
| 93,800 |
| — |
| — |
| — |
| $ | 4,492,551 |
| | | Stock options | 8/27/16 |
| 8/27/16 |
| | | | | | | | 303,820 |
| $ | 90.84 |
| $ | 4,198,276 |
| | Rahul Ghai | Annual Incentive Plan | — |
| — |
| $ | 37,500 |
| $ | 375,000 |
| $ | 750,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance Reward Plan | — |
| — |
| $ | 0 |
| $ | 0 |
| $ | 94,912 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance share units | 8/26/16 |
| 8/26/16 |
| | | | 1,182 |
| 7,055 |
| 14,110 |
| — |
| — |
| — |
| $ | 675,798 |
| | | Stock options | 8/26/16 |
| 8/26/16 |
| | | | | | | | 45,680 |
| $ | 90.84 |
| $ | 631,220 |
| | Sheldon J. Fox | Annual Incentive Plan | — |
| — |
| $ | 40,500 |
| $ | 405,000 |
| $ | 810,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance Reward Plan | — |
| — |
| $ | 0 |
| $ | 0 |
| $ | 102,912 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance share units | 8/26/16 |
| 8/26/16 |
| | | | 1,182 |
| 7,055 |
| 14,110 |
| — |
| — |
| — |
| $ | 675,798 |
| | | Stock options | 8/26/16 |
| 8/26/16 |
| | | | | | | | 45,680 |
| $ | 90.84 |
| $ | 631,220 |
| | Dana A. Mehnert | Annual Incentive Plan | — |
| — |
| $ | 40,500 |
| $ | 405,000 |
| $ | 810,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance Reward Plan | — |
| — |
| $ | 0 |
| $ | 0 |
| $ | 102,912 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance share units | 8/26/16 |
| 8/26/16 |
| | | | 1,182 |
| 7,055 |
| 14,110 |
| — |
| — |
| — |
| $ | 675,798 |
| | | Stock options | 8/26/16 |
| 8/26/16 |
| | | | | | | | 45,680 |
| $ | 90.84 |
| $ | 631,220 |
| | Scott T. Mikuen | Annual Incentive Plan | — |
| — |
| $ | 36,750 |
| $ | 367,500 |
| $ | 735,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance Reward Plan | — |
| — |
| $ | 0 |
| $ | 0 |
| $ | 95,712 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | | Performance share units | 8/26/16 |
| 8/26/16 |
| | | | 1,028 |
| 6,135 |
| 12,270 |
| — |
| — |
| — |
| $ | 587,672 |
| | | Stock options | 8/26/16 |
| 8/26/16 |
| | | | | | | | 39,720 |
| $ | 90.84 |
| $ | 548,863 |
|
 | | | (1) | The “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” column shows the range of cash payouts that were possible in respect of awards under our Annual Incentive Plan (for(no payout is made for performance below threshold, no amount is paid) and our Performance Reward Planthreshold) in respect of our fiscal 2017 performance (for performance at or below target, no amount is paid).transition period performance. Amounts actually earned under our Annual Incentive Plan for our fiscal 2017transition period were determined and approved by our independent directors, in the case of Mr.Messrs. Brown and Kubasik, and our Compensation Committee, in the case of our other named executive officers, in August 2017February 2020 and paid shortlysoon thereafter and are reported under the “Non-Equity Incentive Plan Compensation” column in the Fiscal 2017Transition Period Summary Compensation Table on page 52.62. For additional information related to our Annual Incentive Plan and our Performance Reward Plan,these payouts, including financial performance measures and associated weighting and targets, see the “Compensation Discussion and Analysis” section of this proxy statement. |
| | | (2) | The “Estimated Future Payouts Under Equity Incentive Plan Awards” column shows the range of shares that may be earnedwere possible to earn and the range of options that were possible to earn and vest at the time of grant in respect of the grants underof performance share unitunits and performance stock options, respectively, comprising the special, one-time integration-related awards under our Equity Incentive Plan in our fiscal 2017 for the three-year performance period of fiscal 2017-2019.transition period. |
With respect to
| For these grants under performance share unit awards in fiscal 2017, the number of shares that may be earned will range from 0% to a maximum of 200% of the target number of performance share units, and will be based on the extent of weighted achievement of targets for three-year earnings per share compound annual growth rate for the performance period and average annual ROIC for the same period, subject to possible adjustment based on our relative TSR compared with companies in the Standard & Poor’s 500. For additional information related to the performance measures and associated weighing and targets, see the “Compensation Discussion and Analysis” section of this proxy statement. Cash dividend equivalents are not paid during the performance period on performance share units. The performance share units granted in fiscal 2017 provide that each performance share unit earned and paid out will receive accrued dividend equivalents in an amount per share equal to the cash dividends or other distributions, if any, which are paid with respect to an issued and outstanding share of our common stock during the performance period, and that payment of such dividend equivalents will be made in cash at the time of the actual payout of performance share units ultimately earned as determined after completion of the performance period. For performance share units granted in fiscal 2017, an executive officer must remain employed with us through the last day of the performance period to earn an award, although, subject to a minimum holding period ending on the last day of the first fiscal year of the three-year performance period, a pro-rata portion of the award will be earned if employment terminates as a result of death, disability or retirement after age 55 with 10 or more years of full-time
service. For employment termination as a result of death or disability, performance share units granted in fiscal 2017 are pro-rated based on target and the period worked during the performance period and paid out promptly. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 62 for the treatment of performance share units in these situations and upon a change in control.
| | (3) | The “All Other Option Awards: Number of Securities Underlying Options” column shows the number of shares that were possible to earn at the time of grant ranged from 0% to a maximum of 400% of the target number of performance share units based on an award payout formula of 0% to 200% for L3Harris achievement, as of December 31, 2021, relative to a target level of $500 million for full-year run rate gross synergies from the Merger (with a minimum threshold set at 80% of target performance), with a 50% to 200% modifier (i.e., downward or upward) for L3Harris achievement, as of December 31, 2021, relative to a target for cumulative earnings per share. For additional information related to the performance measures and associated weighting and targets, see the “Compensation Discussion and Analysis” section of this proxy statement. For these grants, cash dividend equivalents are not payable during the performance period on performance share units, and instead, each performance share unit earned and paid out receives accrued dividend equivalents in an amount per share equal to the cash dividends or other distributions, if any, paid with respect to an issued and outstanding share of our common stock underlyingduring the performance period, with payment of such dividend equivalents to be made in cash at the time of the actual payout of performance share units ultimately earned as determined after completion of the performance period. For these grants, an executive officer must remain employed with us through June 29, 2022 to earn an award. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 72 for the treatment of these performance share units upon a termination of employment or change in control. |
| For these grants of performance stock options, granted in fiscal 2017. Stockthe number of options granted in fiscal 2017that were possible to earn and vest in equal installmentsat the time of one-third eachgrant were either 0% or 100% of the target number of performance stock options based on the first, second and third anniversaryperformance vesting condition of L3Harris achievement by December 31, 2021 of a threshold level for full-year run rate gross synergies from the grant date, subjectMerger. For additional information related to the recipient’s continuedperformance measure and associated target, see the “Compensation Discussion and Analysis” section of this proxy statement. For these grants, an executive officer must remain employed with us through June 29, 2022 for these options to be earned and to vest. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 72 for the treatment of these performance stock options and upon a termination of employment through the applicable vesting date. In the case of death or disability, subject to a minimum one-year holding period, or in the case of a change in control,control. These performance stock options granted in fiscal 2017 will immediately vest and become exercisable. Stock options granted in fiscal 2017 expire no later than 10 years from the grant date. For additional information related to the terms and conditions of thethese performance stock options, granted by us, see the Outstanding Equity Awards at 2017 Fiscal YearTransition Period End Table on page 5777 and related notes. |
| (3) | The “All Other Stock Awards: Number of Shares of Stock or Units” column shows restricted stock units granted under our Equity Incentive Plan in our fiscal transition period. For these grants, cash dividend equivalents are not payable during the restriction period on restricted stock units, and instead, each restricted stock unit paid out receives accrued dividend equivalents in an amount per share equal to the cash dividends or other distributions, if any, paid with respect to an issued and outstanding share of our common stock during the restriction period, with payment of such dividend equivalents to be made in cash at the time of the actual payout of restricted stock units after completion of the restriction period. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 72 for the treatment of these restricted stock units upon a termination of employment or change in control. For additional information related to the terms and conditions of these restricted stock units, see the Outstanding Equity Awards at Fiscal Transition Period End Table on page 77 and related notes. |
| (4) | The “Exercise or Base Price of Option Awards” column shows the exercise price per share for the performance stock options at the time of grant, which was the closing market price per share of our common stock on the grant date or, if the grant is made on a weekend or holiday, the closing market price per share of our common stock on the preceding business day.date.
|
| | | (5) | The “Grant Date Fair Value of Stock and Option Awards” column shows the aggregate grant date fair value computed in accordance with ASC 718 of performance share units (at target) and, performance stock options (at target) and restricted stock units granted in our fiscal 2017.transition period. In accordance with SEC rules, the amounts in this column reflect the grant date fair value without reduction for estimates of forfeitures related to service-basedservice- based vesting conditions. |
The grant date fair values of performance share units were computed based on the probable outcome of the performance conditions as of the grant date of such awards, which was at target. The grant date fair values of performance share units granted in fiscal 2017 were calculated based on a multifactor Monte Carlo valuation model that simulates our stock price and TSR relative to other companies in the Standard & Poor’s 500, and the resulting grant date fair value per share was $102.47 less a discount of $6.68 per share, because dividends are not paid on performance share units during the performance period, for a grant date fair value of $95.79 per share.
The grant date fair values of stock option grants were calculated at the grant date using the Black-Scholes-Merton option-pricing model. The grant date fair value per share of our common stock underlying stock options granted to our named executive officers in fiscal 2017 was $13.82 per share.
| The grant date fair values of these performance share units were computed based on the probable outcome of the performance conditions as of the grant date of such awards (which was at target) and were determined as of the grant date using the $204.85 closing market price of our common stock on the grant date. |
The assumptions used for the valuations are set forth in Note 15 to our audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.
| The grant date fair values of these performance stock options were calculated at the grant date using the Black-Scholes-Merton option-pricing model and were computed based on the probable outcome of the performance vesting condition as of the grant date of the performance stock options (which was at target). The grant date fair value per share of our common stock underlying these performance stock options was $38.61. |
| The grant date fair values of restricted stock units were determined as of the grant date using the $204.85 closing market price of our common stock on the grant date. |
| The assumptions used for the valuations are set forth in Note 16 to our audited consolidated financial statements in our Transition Report on Form 10-KT for the fiscal transition period ended January 3, 2020. These amounts reflect our accounting for these grants and do not necessarily correspond to the actual values that may be realized by our named executive officers. |
| L3HARRIS 2020 PROXY STATEMENT 66
|
OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEARTRANSITION PERIOD END TABLE The following table provides information regarding outstanding unexercised stock options and unvested stock awards held by each of our named executive officers as of June 30, 2017.January 3, 2020. Each grant of outstanding unexercised stock options or unvested stock awards is shown separately for each named executive officer. The vesting schedule for each grant of outstanding unexercised stock options is shown in the footnotes following this table.
| | Option Awards | | Stock Awards | | | | |
Unexercised Options (#) Exercisable | | |
Unexercised Options (#) Unexercisable | | | Equity Incentive Underlying Unexercised Unearned Options (#)(2) | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(3) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | | | Equity Incentive Plan Awards: | | | | | | | | | | | | | | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5) | | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(6) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name/Option Grant Date(1) | | | | | | | | | | | | | | | | |
| | | |
| | | William M. Brown 8/25/2012 | | | 181,600 | | | | 0 | | | —
| | | $ | 46.53 | | 8/25/2022 | | | 25,019 | | | $ | 5,265,749 | | | | 48,820 | | | $ | 10,275,145 | | | 8/23/2013 | | | 177,900 | | | | 0 | | | —
| | | $ | 56.97 | | 8/23/2023 | | | | | | | | | | | | | | | | | | 8/23/2014 | | | 138,000 | | | | 0 | | | —
| | | $
| 71.02 | | 8/23/2024 | | | | | | | | | | | | | | | | | | 8/28/2015 | | | 390,290 | | | | 0 | | | —
| | | $
| 77.54 | | 8/28/2025 | | | | | | | | | | | | | | | | | | 8/27/2016 | | | 303,820 | | | | 0 | | | —
| | | $ | 90.84 | | 8/27/2026 | | | | | | | | | | | | | | | | | | 8/25/2017 | | | 118,429 | | | | 0 | | | —
| | | $ | 119.66 | | 8/25/2027 | | | | | | | | | | | | | | | | | | 8/25/2018 | | | 75,524 | | | | 0 | | | —
| | | $ | 163.23 | | 8/25/2028 | | | | | | | | | | | | | | | | | 8/1/2019 | | | 1,385,563 — | | | | 0 — | | | 129,501
| | | $ | 204.85 | | 8/1/2029 | | | | | | | | | | | | | | | | | Christopher E. Kubasik 10/30/2015 | | | 66,258 | | | | 0 | | | —
| | | $
| 97.24 | | 10/30/2025 | | | 11,830 | | | $ | 2,489,860 | | | | 48,820 | | | $ | 10,275,145 | | | 2/16/2016 | | | 76,190 | | | | 0 | | | —
| | | $
| 89.39 | | 2/16/2026 | | | 31,792 | | | $ | 6,691,262 | | | | | | | | | | | 2/21/2017 | | | 56,624 | | | | 0 | | | —
| | | $
| 129.85 | | 2/21/2027 | | | 43,622 | | | $ | 9,181,122 | | | | | | | | | | | 12/20/2017 | | | 112,138 | | | | 0 | | | —
| | | $
| 149.31 | | 12/20/2027 | | | | | | | | | | | | | | | | | | 2/20/2018 | | | 97,171 | | | | 0 | | | | — | | | $ | 162.30 | | 2/20/2028 | | | | | | | | | | | | | | | | | 8/1/2019 | | | 408,381 — | | | | 0 — | | | | 129,501 | | | $ | 204.85 | | 8/1/2029 | | | | | | | | | | | | | | | | | Jesus Malave, Jr. 8/1/2019 | | | — | | | | — | | | | 34,707 | | | $ | 204.85 | | 8/1/2029 | | | 4,638 | | | $ | 976,160 | | | | 12,888 | | | $ | 2,712,537 | | Todd W. Gautier 2/21/2017 | | | 15,571 | | | | 0 | | | | — | | | $ | 129.85 | | 2/21/2027 | | | 8,181 | | | $ | 1,721,855 | | | | 12,888 | | | $ | 2,712,537 | | | 2/20/2018 | | | 13,158 | | | | 0 | | | | — | | | $ | 162.30 | | 2/20/2028 | | | 1,602 | | | $ | 337,173 | | | | | | | | | | | 8/1/2019 | | | 28,729 — | | | | 0 — | | | | 34,707 | | | $ | 204.85 | | 8/1/2029 | | | 9,783 | | | $ | 2,059,028 | | | |
| | | |
| | Edward J. Zoiss 8/22/2014 | | | 5,300 | | | | 0 | | | | — | | | $ | 71.02 | | 8/22/2024 | | | 3,906 | | | $ | 822,096 | | | | 12,888 | | | $ | 2,712,537 | | | 8/28/2015 | | | 18,410 | | | | 0 | | | | — | | | $ | 77.54 | | 8/28/2025 | | | | | | | | | | | | | | | | | | 8/26/2016 | | | 27,800 | | | | 0 | | | | — | | | $ | 90.84 | | 8/26/2026 | | | | | | | | | | | | | | | | | | 8/25/2017 | | | 12,277 | | | | 0 | | | | — | | | $ | 119.66 | | 8/25/2027 | | | | | | | | | | | | | | | | | | 8/24/2018 | | | 9,012 | | | | 0 | | | | — | | | $ | 163.23 | | 8/24/2028 | | | | | | | | | | | | | | | | | 8/1/2019 | | | 72,799 — | | | | 0 — | | | | 34,707 | | | $ | 204.85 | | 8/1/2029 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Option Awards | | Stock Awards | Option
Grant
Date
(1) | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(2) | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)(2)(3) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)(4) | | | Market
Value of
Shares
or Units
of Stock
That Have
Not Vested
($)(5) | | | Equity Incentive Plan Awards: | | | Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(6) | | | Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(7) | | William M. Brown | 11/1/2011 | | 366,552 |
| | | 0 |
| | — |
| | $ | 36.66 |
| | 11/1/2021 | |
|
| | |
|
| | | 133,680 |
| | | $ | 14,581,814 |
| | | 8/25/2012 | | 181,600 |
| | | 0 |
| | — |
| | $ | 46.53 |
| | 8/25/2022 | | | | | | | | 93,800 |
| | | $ | 10,231,704 |
| | | 8/23/2013 | 177,900 |
| 0 |
| — |
| $ | 56.97 |
| 8/23/2023 | | | | | | | | 227,480 |
| | | $ | 24,813,518 |
| | | 8/23/2014 | 92,000 |
| 46,000 |
| — |
| $ | 71.02 |
| 8/23/2024 | | | | | | | | | | | | | | 8/28/2015 | | 85,914 |
| | | 304,376 |
| | — |
| | $ | 77.54 |
| | 8/28/2025 | | | | | | | | | | | | | | 8/27/2016 | | 0 |
| | | 303,820 |
| | — |
| | $ | 90.84 |
| | 8/27/2026 | | | | | | | | | | | | | | | | 903,966 |
| | | 654,196 |
| | | | | | | | | | | | | | | | | | | Rahul Ghai | 8/28/2015 | | 4,297 |
| | | 8,593 |
| | — |
| | $ | 77.54 |
| | 8/28/2025 | | 4,866 |
| | | $ | 530,783 |
| | | 4,420 |
| | | $ | 482,134 |
| | | 8/26/2016 | | 0 |
| | | 45,680 |
| | — |
| | $ | 90.84 |
| | 8/26/2026 | | 2,510 |
| | | $ | 273,791 |
| | | 14,110 |
| | | $ | 1,539,119 |
| | | | | 4,297 |
| | | 54,273 |
| | | | | | | | 7,376 |
| | | $ | 804,574 |
| | | 18,530 |
| | | $ | 2,021,253 |
| | | 6/1/2015 | | — |
| | | — |
| | 11,550 |
| | $ | 79.70 |
| | 6/1/2025 | | | | | | | | | | | | | Sheldon J. Fox | 8/27/2010 | | 19,400 |
| | | 0 |
| | — |
| | $ | 42.87 |
| | 8/27/2020 | | 4,879 |
| | | $ | 532,201 |
| | | 14,510 |
| | | $ | 1,582,751 |
| | | 8/26/2011 | | 30,900 |
| | | 0 |
| | — |
| | $ | 37.69 |
| | 8/26/2021 | | | | | | | | 14,110 |
| | | $ | 1,539,119 |
| | | 8/24/2012 | 45,800 |
| 0 |
| — |
| | $ | 46.53 |
| 8/24/2022 | | | | | | | | 28,620 |
| | | $ | 3,121,870 |
| | | 8/23/2013 | 51,200 |
| 0 |
| — |
| | $ | 56.97 |
| 8/23/2023 | | | | | | | | | | | | | | 8/22/2014 | 23,600 |
| 11,800 |
| — |
| | $ | 71.02 |
| 8/22/2024 | | | | | | | | | | | | | | 8/28/2015 | 14,117 |
| 28,233 |
| — |
| | $ | 77.54 |
| 8/28/2025 | | | | | | | | | | | | | | 8/26/2016 | 0 |
| 45,680 |
| — |
| | $ | 90.84 |
| 8/26/2026 | | | | | | | | | | | | | | | 185,017 |
| 85,713 |
| | | | | | | | | | | | | | | | | | 6/1/2015 | — |
| — |
| 28,860 |
| | $ | 79.70 |
| 6/1/2025 | | | | | | | | | | | | | Dana A. Mehnert | 8/23/2013 | | 51,200 |
| | | 0 |
| | — |
| | $ | 56.97 |
| | 8/23/2023 | | | | | | | | 14,510 |
| | | $ | 1,582,751 |
| | | 8/22/2014 | | 20,534 |
| | | 10,266 |
| | — |
| | $ | 71.02 |
| | 8/22/2024 | | | | | | | | 14,110 |
| | | $ | 1,539,119 |
| | | 8/28/2015 | 14,117 |
| 28,233 |
| — |
| $ | 77.54 |
| 8/28/2025 | | | | | | | | 28,620 |
| | | $ | 3,121,870 |
| | | 8/26/2016 | 0 |
| 45,680 |
| — |
| $ | 90.84 |
| 8/26/2026 | | | | | | | | | | | | | | | 85,851 |
| 84,179 |
| | | | | | | | | | | | | | | | Scott T. Mikuen | 8/24/2012 | | 33,600 |
| | | 0 |
| | — |
| | $ | 46.53 |
| | 8/24/2022 | | 2,441 |
| | | $ | 266,264 |
| | | 12,620 |
| | | $ | 1,376,590 |
| | | 3/1/2013 | | 700 |
| | | 0 |
| | — |
| | $ | 47.71 |
| | 3/1/2023 | | | | | | | | 12,270 |
| | | $ | 1,338,412 |
| | | 8/23/2013 | | 40,000 |
| | | 0 |
| | — |
| | $ | 56.97 |
| | 8/23/2023 | |
|
| | |
|
| | | 24,890 |
| | | $ | 2,715,002 |
| | | 8/22/2014 | | 20,534 |
| | | 10,266 |
| | — |
| | $ | 71.02 |
| | 8/22/2024 | | | | | | | | | | | | | | 8/28/2015 | | 12,274 |
| | | 24,546 |
| | — |
| | $ | 77.54 |
| | 8/28/2025 | | | | | | | | | | | | | | 8/26/2016 | | 0 |
| | | 39,720 |
| | — |
| | $ | 90.84 |
| | 8/26/2026 | | | | | | | | | | | | | | | | 107,108 |
| | | 74,532 |
| | | | | | | | | | | | | | | | | | | | 6/1/2015 | | — |
| | | — |
| | 14,430 |
| | $ | 79.70 |
| | 6/1/2025 | | | | | | | | | | | |
67 L3HARRIS 2020 PROXY STATEMENT |
|
| (1) | All options granted are nonqualified stock options. The exercise price for all stock option grantsoptions, other than stock options granted to Messrs. Kubasik and Gautier prior to August 1, 2019, is the closing market price of a share of our common stock on the grant date, except that the grants made to Mr. Brown by theHarris’ independent directors of our Board on August 25, 2012, August 23, 2014, and August 27, 2016 and August 25, 2018 were annual grants made on a Saturday using the closing market price on the prior business day in accordance with the terms of our equity incentive plan. The stock options granted to Messrs. Kubasik and Gautier prior to August 1, 2019 are stock options originally granted by L3 to purchase shares of L3 common stock at an exercise price equal to the closing market price of a share of L3’s common stock on the grant date, each of which was converted on June 29, 2019 upon completion of the Merger pursuant to the Merger Agreement into an option to purchase a number of shares of our common stock equal to the original number of shares of L3 common stock subject to the L3 stock option multiplied by 1.30 (the exchange ratio in the Merger), at an exercise price equal to the original exercise price of the L3 stock option divided by 1.30. The exercise price for all stock options may be paid in cash and/or shares of our common stock, or an option holder may use “broker assisted cashless exercise” procedures. If an option holder’s employment is terminatedAll then-outstanding unvested options immediately vested on June 29, 2019 as a result of death, then subjectthe Merger, which constituted a change in control pursuant to their terms and conditions. See the “Potential Payments Upon Termination or a minimum one-year vesting period, such option holder’s unvestedChange in Control” section of this proxy statement beginning on page 72 for the treatment of these options immediately fully vest (at target,upon a termination of employment or change in the case of performance stock options) and all options will be exercisable by such option holder’s beneficiaries for up to 12 months following the date of death but not later than the regularly scheduled expiration date. If an option holder’s employment is terminated as acontrol.
|
result of disability, then subject to a minimum one-year vesting period, such option holder’s unvested options immediately fully vest (at target, in the case of performance stock options) and all options will be exercisable until the regularly scheduled expiration date. If an option holder’s employment is terminated as a result of retirement after age 62 with 10 or more years of full-time service, then subject to a minimum one-year vesting period, such option holder’s options shall continue to vest in accordance with their vesting schedule and continue to be exercisable until the regularly scheduled expiration date, except unvested performance stock options, which are forfeited. If an option holder’s employment is terminated as a result of retirement before age 62, but after age 55 with 10 or more years of full-time service, then subject to a minimum one-year vesting period, such option holder’s options shall cease vesting and options exercisable at the time of such retirement continue to be exercisable until the regularly scheduled expiration date, but unvested options (including unvested performance stock options) are forfeited. If an option holder’s employment is terminated by us other than for misconduct, then such option holder’s unvested options are forfeited and, subject to a minimum one-year vesting period, vested options may be exercised until the sooner of 90 days following such involuntary termination or the regularly scheduled expiration date. If an option holder’s employment is terminated by us for misconduct, then such option holder’s vested and unvested options are automatically forfeited. If an option holder voluntarily terminates or resigns employment (other than due to retirement or for good reason), then such option holder’s unvested options are automatically forfeited and, subject to a minimum one-year vesting period, vested options may be exercised until the sooner of 30 days following such voluntary termination or resignation or the regularly scheduled expiration date. Upon a change in control, outstanding unvested options immediately vest (in the case of performance stock options, at target or at such greater level of performance as our Board or Compensation Committee may authorize) and become exercisable until the regularly scheduled expiration date.
| | | (2) | The following table details the regular vesting schedule for all unvested stock options as of January 3, 2020 for each named executive officer. In general, options expire 10 years from the grant date. (As noted in note (1) above, all then-outstanding unvested options immediately vested on June 29, 2019 as a result of the Merger, which constituted a change in control pursuant to their terms and conditions.) |
| | | | | | | Name | Grant Date | Option Vesting Date | | Number of
Shares Underlying Options | | | William M. Brown | 8/23/20141/2019 | 8/23/20176/29/2022 | 46,000 |
| | 8/28/2015 | 8/28/2017 | 85,913 |
| | | | 8/28/2018129,501 | 85,913 |
| | Christopher E. Kubasik | 8/28/20151/2019 | 8/28/20186/29/2022 | 132,550 |
| | 8/27/2016 | 8/27/2017 | 101,274 |
| | | | 8/27/2018129,501 | 101,273 |
| | Jesus Malave, Jr. | 8/1/2019 | 6/29/2022 | | | 8/27/201934,707 | 101,273 |
| Rahul GhaiTodd W. Gautier | 8/28/20151/2019 | 8/28/20176/29/2022 | 4,297 |
| | | | 8/28/201834,707 | 4,296 |
| | Edward J. Zoiss | 8/26/20161/2019 | 8/26/20176/29/2022 | 15,227 |
| | | | 8/26/2018 | 15,227 |
| | 34,707 | | 8/26/2019 | 15,226 |
| | 6/1/2015 | 6/1/2018 | 11,550 |
| Sheldon J. Fox | 8/22/2014 | 8/22/2017 | 11,800 |
| | 8/28/2015 | 8/28/2017 | 14,117 |
| | | 8/28/2018 | 14,116 |
| | 8/26/2016 | 8/26/2017 | 15,227 |
| | | 8/26/2018 | 15,227 |
| | | 8/26/2019 | 15,226 |
| | 6/1/2015 | 6/1/2018 | 28,860 |
| Dana A. Mehnert | 8/22/2014 | 8/22/2017 | 10,266 |
| | 8/28/2015 | 8/28/2017 | 14,117 |
| | | 8/28/2018 | 14,116 |
| | 8/26/2016 | 8/26/2017 | 15,227 |
| | | 8/26/2018 | 15,227 |
| | | 8/26/2019 | 15,226 |
| Scott T. Mikuen | 8/22/2014 | 8/22/2017 | 10,266 |
| | 8/28/2015 | 8/28/2017 | 12,273 |
| | | 8/28/2018 | 12,273 |
| | 8/26/2016 | 8/26/2017 | 13,240 |
| | | 8/26/2018 | 13,240 |
| | | 8/26/2019 | 13,240 |
| | 6/1/2015 | 6/1/2018 | 14,430 |
|
| | (3)
| These are performance stock options granted on June 1, 2015, shown at target. Performance stock options vest on June 1, 2018, as to a number of shares of common stock to be issued upon exercise that is contingent upon our achievement of full-year run rate net synergies from the Exelis acquisition, as measured at the end of the three-year performance period against target, full-year run rate net synergies establishedwhich were granted as part of the special, one-time integration-related awards in our acquisition business case, subjectfiscal transition period and for which the number of options that were possible to a threshold achievementearn and vest at the time of 80% of target full-year run rate synergies and a maximum of 200%grant were either 0% or 100% of the target number of sharesperformance stock options based on the performance vesting condition of common stockL3Harris achievement by December 31, 2021 of a threshold level for our achievement at or above 133% of target full-year run rate synergies.gross synergies from the Merger. For additional information related to the performance measure and associated target, see the “Compensation Discussion and Analysis” section of this proxy statement. For these performance stock options, an executive officer must remain employed with us through June 29, 2022 for these options to be earned and to vest. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 72 for the treatment of these performance stock options in these situations and upon a termination of employment or change in control. These performance stock options expire no later than 10 years from grant date. |
| (3) | | (4) | These are grants under restricted stock unit awards and restricted stock unit awards, as follows: (a) in the case of Mr. Ghai, 14,600 shares ofMessrs. Brown and Zoiss, restricted stock units granted on May 6, 2015,August 1, 2019 as part of which one-third (4,867) vested on May 6, 2016, one-third (4,867) vested on May 6, 2017 and the remaining one-third (4,866) willannual compensation cycle awards in our fiscal transition period that are scheduled to vest on May 6, 2018August 1, 2022 if Mr. Ghai is employed by us on such date, and 2,510 shares of restricted stock granted on June 1, 2015 that will vest on June 1, 2018 if Mr. Ghaithe holder is employed by us on such date; (b) in the case of Mr. Fox, 6,275 shares ofMalave, restricted stock units granted on JuneAugust 1, 2015 that will2019 in connection with his hiring as our Senior Vice President and Chief Financial Officer to offset foregone equity compensation from his prior employer, of which one-third (1,546) are scheduled to vest on JuneAugust 1, 20182020 if Mr. FoxMalave is employed by us on such date, one-third (1,546) are scheduled to vest on August 1, 2021 if Mr. Malave is employed by us on such date, and the remaining one-third (1,546) are scheduled to vest on August 1, 2022 if Mr. Malave is employed by us on such date; (c) in the case of Mr. Kubasik, 11,830 restricted stock units converted from which 1,396 were surrenderedL3 performance stock units based on the greater of the target and actual level of performance through the effective time of the Merger (as reasonably determined by the compensation committee of the Board of Directors of L3 after consultation with Harris that are scheduled to satisfy income tax withholding requirementsvest on December 31, 2020 (the last day of the original performance period applicable to the L3 performance stock units) if Mr. Kubasik is employed by us on such date and 31,792 shares of restricted stock converted from L3 shares of restricted stock that are scheduled to vest on December 14, 2021 if Mr. Kubasik is employed by us on such date; and (d) in the case of Mr. Gautier, 8,181 restricted stock units converted from L3 restricted stock units that are scheduled to vest on February 11, 2022 if Mr. Gautier is employed by us on such date and 1,602 restricted stock units converted from L3 performance stock units based on the greater of the target and actual level of performance through the effective time of the Merger (as reasonably determined by the compensation committee of the Board of Directors of L3 after consultation with Harris) that are scheduled to vest on December 31, 2020 (the last day of the original performance period applicable to the L3 performance stock units) if Mr. Gautier is employed by us on such date. In the case of Messrs. Kubasik and Gautier, the conversions of their restricted stock units from L3 performance stock units or restricted stock units and of their shares of restricted stock from L3 shares of restricted stock occurred as of June 29, 2019 upon completion of the Merger pursuant to retirementthe Merger Agreement based on the 1.30:1 exchange ratio in the Merger.
For these restricted stock unit awards, cash dividend equivalents are not payable during the restriction period on restricted stock units, and instead, each restricted stock unit paid out receives accrued dividend equivalents in an amount per share equal to the cash dividends or other distributions, if any, paid with respect to an issued and outstanding share of our common stock during the restriction period, with payment of such dividend equivalents to be made in cash at the time of the actual payout of restricted stock units after completion of the restriction period. For these shares of restricted stock, dividend equivalents are paid in an amount equal to the dividends paid on our common stock. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 72 for the treatment of these restricted stock unit awards and restricted stock awards upon a termination of employment or change in control. |
eligibility criteria; and (c) in the case of Mr. Mikuen, 3,140 shares of restricted stock granted on June 1, 2015 that will vest on June 1, 2018 if Mr. Mikuen is employed by us on such date, from which 699 were surrendered to satisfy income tax withholding requirements pursuant to retirement eligibility criteria. During the restriction period of restricted stock units and shares of restricted stock, the holder may not vote, sell, exchange, assign, transfer, pledge or otherwise dispose of such units or shares. Dividend equivalents are paid on restricted stock units and shares of restricted stock in an amount equal to the dividends paid on our common stock. In the event of involuntary termination other than for misconduct or retirement after age 55 with 10 or more years of full-time service prior to full vesting, subject to a minimum one-year holding period, restricted stock units and shares of restricted stock will be pro-rated based on the period worked during the restriction period and paid out promptly (but subject to any delay required by U.S. Federal tax law). In the event of death or disability prior to full vesting, subject to a minimum one-year holding period, restricted stock units and shares of restricted stock immediately fully vest. Upon a change in control, restricted stock units and shares of restricted stock immediately vest and will be paid as soon as reasonably practicable, but not later than 60 days following the change in control, or in certain events, promptly following the expiration of the initial restriction period.
| | (5)(4) | The market value shown was determined by multiplying the number of restricted stock units andor shares of restricted stock that havehad not vested by the $109.08$210.47 closing market price per share of our common stock on June 30, 2017,January 3, 2020, the last trading day of our fiscal 2017.transition period. |
| | (6)(5) | These are grants under performance share unitunits granted as part of the special, one-time integration-related awards in: (a)in our fiscal 2016 for the three-year performance period of fiscal 2016-2018 and (b) fiscal 2017 for the three-year performance period of fiscal 2017-2019. For all of our named executive officers, thetransition period. The numbers of performance share units and related values as of June 30, 2017January 3, 2020 represent the maximum possible payouts of the performance share units (200%(400% of target), rather than payouts of the performance share units at target, in accordance with SEC rules requiring reporting of these amounts in this manner because our performance exceeded target during the last completed fiscal year or years over which performance is measured. Actual performance maywill cause our named executive officersthe number of shares that are earned to earnrange from 0% to 200%a maximum of 400% of the target award for suchnumber of performance share units. Eachunits based on an award payout formula of 0% to 200% for L3Harris achievement, as of December 31, 2021, relative to a target level of $500 million for full-year run rate gross synergies from the Merger (with a minimum threshold set at 80% of target performance), with a 50% to 200% modifier (i.e., downward or upward) for L3Harris achievement, as of December 31, 2021, relative to a target for cumulative earnings per share. Cash dividend equivalents are not payable during the performance period on performance share units, and instead, each performance share unit earned and paid out will receivereceives accrued dividend equivalents in an amount per share equal to the cash dividends or other distributions, if any, paid with respect to an issued and outstanding share of our common stock during the performance period, and thatwith payment of such dividend equivalents willto be made in cash at the time of the actual payout of performance share units ultimately earned as determined after completion of the performance period. In the event of death or disability, in each case, prior to full vesting, subject to a minimum holding period ending on the last day of the first fiscal year of the three-year performance period,For these performance share units, are paid pro-rata basedan executive officer must remain employed with us through June 29, 2022 to earn an award. See the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on target andpage 72 for the period worked during the performance period, and paid out promptly. Upon a change in control,treatment of these performance share units are deemed fully earned and fully vested immediately and will be paid at the endupon a termination of the performance period at not less than the target level, subject to accelerated payoutemployment or forfeiturechange in certain circumstances. control.
|
| L3HARRIS 2020 PROXY STATEMENT 68
|
| For more information regarding performance share units, see the Grants of Plan-Based Awards in Fiscal 2017Transition Period Table on page 5565 and related notes and the “Compensation Discussion and Analysis” section of this proxy statement. This Outstanding Equity Awards at 2017 Fiscal Year End Table does not include the performance share units granted to Messrs. Brown, Fox, Mehnert and Mikuen in fiscal 2015 for the three-year performance period of fiscal 2015-2017, because these performance share units became fully vested at the end of the performance period on June 30, 2017 and consequently are included in the Option Exercises and Stock Vested in Fiscal 2017 Table on page 59 under the “Stock Awards” column. |
| | (7)(6) | The market value shown was determined by multiplying the number of unearned and unvested performance share units (at maximum) by the $109.08$210.47 closing market price per share of our common stock on June 30, 2017,January 3, 2020, the last trading day of our fiscal 2017.transition period. |
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2017TRANSITION PERIOD TABLE The following table provides information for each of our named executive officers regarding (1) stock option exercises during our fiscal 2017,transition period, including the number of shares acquired and value realized on exercise, and (2) vesting of stock awards during or in respect of our fiscal 2017,transition period, including the number of shares acquired and value realized on vesting.
| | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#)(1) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#)(2) | | | Value Realized on Vesting ($)(2) | | | William M. Brown | | | 366,552 | | | $ | 64,032,589 | | | | 145,552(3) |
| | $ | 27,528,250 | | | Christopher E. Kubasik | | | — | | | | — | | | | 59,177(4) |
| | $ | 11,210,098 | | | Jesus Malave, Jr. | | | — | | | | — | | | | — | | | | — | | | Todd W. Gautier | | | 12,727 | | | $ | 2,548,841 | | | | 9,936(5) |
| | $ | 1,884,134 | | | Edward J. Zoiss | | | — | | | | — | | | | 16,094(6) |
| | $ | 3,043,858 | |
| | | | | | | | | | | | Option Awards | Stock Awards | | Name | Number of Shares
Acquired on
Exercise
(#)(1) | Value Realized on
Exercise
($)(1) | Number of Shares
Acquired on
Vesting
(#)(2) | Value Realized on
Vesting
($)(2) | | William M. Brown | 0 |
| $ | 0 |
| 37,453(3) | $ | 4,023,283 |
| | Rahul Ghai | 0 |
| $ | 0 |
| 4,867(4) | $ | 538,874 |
| | Sheldon J. Fox | 17,700 |
| $ | 955,446 |
| 10,082(5) | $ | 1,094,049 |
| | Dana Mehnert | 126,400 |
| $ | 7,400,056 |
| 7,558(6) | $ | 824,427 |
| | Scott T. Mikuen | 30,000 |
| $ | 1,849,818 |
| 9,757(7) | $ | 1,034,832 |
|
| | | (1) | Value realized on exercise of stock options was determined by multiplying the number of options exercised by the difference between the weighted-average selling price of the shares of our common stock sold on the date of exercise and the exercise price, irrespective of any taxes owed upon exercise. |
| | | (2) | ConsistsUnless otherwise specified in the notes below, consists of shares earned and acquired on vesting upon completion of the Merger on June 29, 2019 (the beginning of our fiscal transition period) of performance share unit awards (including L3 performance share unit awards) and shares acquired on vesting upon completion of restricted stock orthe Merger on June 29, 2019 of restricted stock unit awards as described further in the notes below,(including L3 restricted stock unit awards), with value realized on vesting of those performance share unit awards determined by multiplying the number of shares earned and vested by the $109.08 closing market price of our common stock on June 30, 2017, the last trading day of our fiscal 2017, and with value realized on vesting of restricted stock or restricted stock unit awards determined by multiplying the number of shares acquired on vesting by the $189.13 closing market price of our common stock on June 28, 2019, the datelast trading day prior to the day of vesting, as described further in the notes below. Upon the vesting and release of performance share unit restricted stock and restricted stock unit awards, shares are surrendered to satisfy income tax withholding requirements. Amounts shown for number of shares acquired and value realized on vesting, however, dohave not give effectbeen reduced to the surrender ofreflect shares surrendered to cover such tax withholding obligations. TheWith respect to performance share unit awards granted by Harris prior to the Merger, as noted elsewhere, the Merger closing on June 29, 2019 triggered accelerated vesting and payouts of performance share unit awards for the fiscal 2018-2020 and fiscal 2019-2021 performance period award cycles. In anticipation of the closing, payouts in respect of those awards were therefore determined and approved on June 28, 2019, and the number of shares earned and acquired on vesting in fiscal 2017 in respect of performance share unitthose awards granted infor the: (a) fiscal 2015 for the three-year2018-2020 performance period of fiscal 2015-2017,award cycle, as a percentage of the target number of units under suchthose awards as granted in fiscal 2015,2018, was 112.8%171.2%; and (b) fiscal 2019-2021 performance period award cycle, as a percentage of the target number of units under those awards as granted in fiscal 2019, was 169.6%. For additional information with respect to payouts to Messrs. Brown, Fox, Mehnert and Mikuen in respect of performance share unit awards granted in fiscal 2015 for the three-yearfiscal 2018-2020 and fiscal 2019-2021 performance period of fiscal 2015-2017,award cycles, see the “Compensation Discussion and Analysis” section of this proxy statement.statement and the “Compensation Discussion and Analysis—Executive Compensation Decisions For Fiscal 2019—Long-Term Incentives” discussion in our proxy statement for our 2019 Annual Meeting of Shareholders filed with the SEC on September 10, 2019. With respect to performance share unit awards granted by L3 prior to the Merger, (x) the number of shares earned and acquired on vesting in respect of those awards and (y) the number of shares acquired on vesting of restricted stock units that were converted from those awards in connection with the Merger, in each case, was based on the greater of the target and actual level of performance through the effective time of the Merger (as reasonably determined by the compensation committee of the Board of Directors of L3 after consultation with Harris). |
| | | (3) | Consists of (a) 33,95363,050 shares earned and vested in fiscal 2017 in respect of a performance share unit award granted in fiscal 20152018 for the three-year performance period of fiscal 2015-2017, as described further in note (2) above; and2018-2020; (b) 3,500 shares acquired on vesting of a restricted stock unit award granted on August 23, 2013, with value realized on vesting of $319,690 (3,500 shares multiplied by the $91.34 closing market price of our common stock on August 23, 2016). |
| | (4) | Shares acquired on ratable vesting on May 6, 2017 of a restricted stock award of 14,600 shares granted on May 6, 2015, with value realized on vesting determined using the $110.72 closing market price of our common stock on the date of vesting. |
| | (5) | Consists of (a) 8,68649,496 shares earned and vested in fiscal 2017 in respect of a performance share unit award granted in fiscal 20152019 for the three-year performance period of fiscal 2015-2017,2019-2021; (c) 18,414 shares acquired on vesting of restricted stock units granted on August 25, 2017; and (d) 14,592 shares acquired on vesting of restricted stock units granted on August 25, 2018, in each case, as described further in note (2) above. |
| (4) | Consists of (a) 22,098 shares earned and vested in respect of L3 performance share unit awards granted in February 2017 and February 2018, as described further in note (2) above; (b) 35,025 shares acquired on vesting of L3 restricted stock units granted prior to October 12, 2018, as described further in note (2) above; and (b) 1,396(c) 2,054 shares surrenderedacquired on vesting on December 15, 2016 to satisfy income tax withholding requirements pursuant to retirement eligibility criteria in respect31, 2019 of a restricted stock awardunits that were converted from L3 performance stock units in connection with the Merger, with vesting on the last day of 6,275 shares granted on June 1, 2015,the original performance period applicable to such L3 performance stock units, as described further in note (2) above, with value realized on vesting of $146,580 (1,396$406,425 (2,054 shares multiplied by the $105.00$197.87 closing market price of our common stock on December 15, 2016)31, 2019). (These share amounts reflect the 1.30:1 exchange ratio in the Merger.) |
| (5) | | (6) | SharesConsists of (a) 4,425 shares earned and vested in fiscalrespect of L3 performance share unit awards granted in February 2017 and February 2018, as described further in note (2) above; (b) 4,946 shares acquired on vesting of L3 restricted stock units granted prior to October 12, 2018, as described further in note (2) above; and (c) 565 shares acquired on vesting on December 31, 2019 of restricted stock units that were converted from L3 performance stock units in connection with the Merger, with vesting on the last day of the original performance period applicable to such L3 performance stock units, as described further in note (2) above, with value realized on vesting of $111,797 (565 shares multiplied by the $197.87 closing market price of our common stock on December 31, 2019). (These share amounts reflect the 1.30:1 exchange ratio in the Merger.) |
| (6) | Consists of (a) 6,536 shares earned and vested in respect of a performance share unit award granted in fiscal 20152018 for the three-year performance period of fiscal 2015-2017, as described further in note (2) above. |
| | (7) | Consists of (a) 7,5582018-2020; (b) 5,907 shares earned and vested in fiscal 2017 in respect of a performance share unit award granted in fiscal 20152019 for the three-year performance period of fiscal 2015-2017,2019-2021; (c) 1,909 shares acquired on vesting of restricted stock units granted on August 25, 2017; and (d) 1,742 shares acquired on vesting of restricted stock units granted on August 24, 2018, in each case, as described further in note (2) above; (b) 1,500 shares acquired on vesting of a restricted stock unit award granted on August 23, 2013, with value realized on vesting of $137,010 (1,500 shares multiplied by the $91.34 closing market price of our common stock on August 23, 2016); and (c) 699 shares surrendered on December 15, 2016 to satisfy income tax withholding requirements pursuant to retirement eligibility criteria in respect of a restricted stock award of 3,140 shares granted on June 1, 2015, with value realized on vesting of $73,395 (699 shares multiplied by the $105.00 closing market price of our common stock on December 15, 2016).above. |
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NONQUALIFIED DEFERRED COMPENSATION Retirement Savings Plan Our Retirement PlanRSP is a tax-qualified, 401(k) defined contribution retirement plan available to manymost of our U.S.-based employees.employees, including our named executive officers. Under our Retirement Plan,RSP, subject to applicable limits under the Internal Revenue Code, participants generally may contribute from 1%up to 70% of eligible compensation, the most significant components of which are base salary and annual incentive payments, with contributions by named executive officers and certain other highly compensated employees limited to 12% of eligible compensation.payments. In general, following one year of service, we match up to the first 6% of eligible compensation that is contributed by a participant. In addition, at our discretion, we may make a profit sharing contribution to our Retirement Plan, but in recent years we have not done so. Instead, participants were eligible to receive incentive payments under our Performance Reward Plan (if any), which were in cash unless participants elected to defer either half or all of such payments to our Retirement Plan, subject to Internal Revenue Code limitations. The Internal Revenue Code capslimits certain contributions to a participant’s Retirement PlanRSP account and also capslimits the amount of compensation that may be considered when determining benefits under our Retirement Plan.RSP. Participants in our Retirement PlanRSP are immediately vested in contributions they make and are fully vested in the remainder of their account (including contributions we make) upon termination of employment on or after the attainment of age 55 or due to their disability or death. In general, participants also become fully vested in the remainder of their account when they have provided fourafter three years of service toemployment with us (contributions we make generally are subject to four-yearthree-year graduated vesting).
During our fiscal transition period, we also maintained the L3 401(k) Plan, an analogous legacy L3 tax-qualified, 401(k) defined contribution retirement plan available to most U.S.-based employees who were employees of L3 at the time of the Merger. The assets of the L3 401(k) Plan were combined into the trust for our RSP effective December 31, 2019, and the participants in the plan became eligible to participate in our RSP effective January 1, 2020.
Supplemental Executive Retirement PlanPlans To the extent contributions by participants to our Retirement PlanRSP are limited by the Internal Revenue Code, certain of our salaried employees, including our named executive officers, are eligible to participate in our SERP, provided the employee timely elects to participate.ERSP. The SERPERSP is an unfunded, nonqualified defined contribution retirement plan intended to make up the difference between the amount actually credited to a participant’s account under our Retirement PlanRSP and the amount that, in the absence of certain Internal Revenue Code limits, would have been credited to the participant’s account. In addition, our Compensation Committee may, at its discretion, provide for the deferral of other compensation to executive officers under our SERP,ERSP, including equity awards. During our fiscal transition period, we also maintained the SSP-II, an analogous legacy L3 unfunded, non-qualified defined contribution plan available to certain salaried employees who were employees of L3 at the time of the Merger. The participants in the SSP-II became eligible to participate in our ERSP effective January 1, 2020, at which time no further contributions were permitted in the SSP-II.The value of our contributions credited to our named executive officers’ accounts under our RSP and ERSP (or under the L3 401(k) Plan or the SSP-II) is shown in the Fiscal Transition Period Summary Compensation Table on page 62 under the “All Other Compensation” column and related notes. In addition, Mr. Gautier was a participant under the L3 Supplemental Executive Retirement Plan, a non-qualified, unfunded, defined benefit pension plan, which we maintained following the Merger and from which he received during our fiscal transition period an accelerated payout triggered by the change in control under the plan as a result of the Merger. Effective January 1, 2020, Mr. Gautier (and other plan participants) became ineligible to receive continued service credits under the plan and became eligible to participate only in our RSP and ERSP. Deferred compensation under our SERPERSP or the SSP-II generally will be paid or commence being paid to a participant in January of the calendar year following the later of the year in which such participant reaches age 55 andor the year in which such participant’s employment terminates.terminates, whichever is later. Participants select the form in which payment will be made, typically a lump sum or annual payments over a three-, five-, seven-, ten-period of 3, 5, 7, 10 or fifteen-year period.15 years. Deferred amounts generally may not be withdrawn prior to their payment date, except to meet an “unforeseeable financial emergency,” as defined under U.S. Federal tax law, or in the event of a change in control of Harristhe Company that satisfies certain requirements of U.S. Federal tax law. Payments to “specified employees,” as defined under U.S. Federal tax law, are delayed at least six months after termination of employment (this six-month delay generally does not apply to amounts deferred prior to 2005).
The vesting provisions of our SERPERSP are generally the same as the vesting provisions of our Retirement Plan.RSP. Participants in our SERPERSP are immediately vested in contributions they make and are fully vested in the remainder of their account upon termination of employment on or after the attainment of age 55 or due to their disability or death. Participants also generally become fully
| L3HARRIS 2020 PROXY STATEMENT 70
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vested in the remainder of their account when they have provided fourafter three years of serviceemployment with us (contributions we make generally are subject to us.three-year graduated vesting). Earnings on amounts credited to a participant’s account in our SERPERSP or the SSP-II are based on participant selections among investment choices, which substantially mirror the investment choices available to participants inunder our Retirement Plan.RSP. Participants may elect that a portion of their account be deemed invested in the HarrisCompany stock fund. Amounts deemed invested in the Harris stock fund, and such amounts are credited with dividend equivalents equal to the dividends paid on our common stock, which are then deemed reinvested in the HarrisCompany stock fund. No above-market or preferential earnings are paid or guaranteed on investment choices.
Amounts credited to a participant’s account in our SERPERSP or the SSP-II may be partially or fully funded by a grantor trust, also known as a “rabbi trust,” and are required to be fully funded upon a change in control of Harris.the Company. The assets in such trust are subject to the claims of our creditors, and participants are treated as our unsecured general creditors. Amounts credited to our named executive officers’ accounts in our ERSP or the SSP-II as of the end of fiscal 2019 were paid out to such named executive officers following the Merger, which constituted a change in control pursuant to the terms and conditions of our ERSP and the SSP-II (with the rabbi trust funding requirement waived by participants).
Fiscal 2017Transition Period Nonqualified Deferred Compensation Table The following table summarizes the amounts credited, earnings or losses and account balances for our named executive officers under our SERP.ERSP or the SSP-II. For additional information related to our SERP,ERSP or the SSP-II, see the “Nonqualified Deferred Compensation” section of this proxy statement beginning on page 60.59. | Name | | Executive Contributions in Last Fiscal Year ($)(1) | | | Registrant Contributions
in Last Fiscal Year ($)(2) | | | Aggregate Earnings in Last Fiscal Year ($)(3) | | | Aggregate Withdrawals/ Distributions ($)(4) | | | Aggregate Balance at Last Fiscal Year End ($)(4) | | | William M. Brown | | $ | 163,115 | | | $ | 267,485 | | | $ | (145,226 | )
| | $ | 4,398,938 | | | $ | 607,025 | | | Christopher E. Kubasik | | $ | 29,786 | | | $ | 87,731 | | | $ | (7,433 | )
| | $ | 632,693 | | | $ | 29,568 | | | Jesus Malave, Jr. | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | Todd W. Gautier | | $ | 15,505 | | | $ | 46,353 | | | $ | (7,818 | )
| | $ | 191,005 | | | $ | 15,532 | | | Edward J. Zoiss | | $ | 227,154 | | | $ | 50,885 | | | $ | 16,992 | | | $ | 723,660 | | | $ | 477,346 | |
| | | | | | | | | | | | | | | | | | Name | Executive
Contributions
in Last
Fiscal Year
($)(1) | Registrant
Contributions
in Last
Fiscal Year
($)(2) | Aggregate
Earnings
in Last
Fiscal Year
($)(3) | Aggregate
Withdrawals/
Distributions
($) | Aggregate
Balance
at Last
Fiscal Year End
($)(4) | | William M. Brown | $ | 370,385 |
| $ | 184,846 |
| $ | 420,813 |
| $ | 0 |
| $ | 2,574,890 |
| | Rahul Ghai | $ | 28,735 |
| $ | 27,966 |
| $ | 9,194 |
| $ | 0 |
| $ | 65,895 |
| | Sheldon J. Fox | $ | 91,315 |
| $ | 45,381 |
| $ | 267,555 |
| $ | 0 |
| $ | 1,510,392 |
| | Dana A. Mehnert | $ | 93,739 |
| $ | 45,381 |
| $ | 362,028 |
| $ | 0 |
| $ | 2,664,481 |
| | Scott T. Mikuen | $ | 84,992 |
| $ | 41,977 |
| $ | 377,303 |
| $ | 0 |
| $ | 2,318,035 |
|
| | | (1) | Represents contributions to our SERPERSP or the SSP-II of salary, annual cash incentives or other eligible compensation that have been deferred and credited during our fiscal 2017.transition period. The portion representing deferral of base salary is included in the Fiscal 2017Transition Period Summary Compensation Table on page 5262 in the “Salary” column for our fiscal 2017.transition period. The portion representing deferral of annual cash incentives relates to deferred Annual Incentive Plan payments forin our fiscal 2016transition period in respect of fiscal 2019 performance, the amount of which is included in the Fiscal 2017Transition Period Summary Compensation Table on page 5262 in the “Non-Equity Incentive Plan Compensation” column for fiscal 2016.2019. Any contributions by our named executive officers to our SERPERSP of deferred Annual Incentive Plan payments forin respect of our fiscal 2017transition period performance will be contributions in fiscal 2018.2020. |
| | | (2) | Represents contributions by us to our SERPERSP or the SSP-II credited during our fiscal 2017,transition period, which are included in the Fiscal 2017Transition Period Summary Compensation Table on page 5262 in the “All Other Compensation” column. |
| | | (3) | None of the earnings in this column are included in the Fiscal 2017Transition Period Summary Compensation Table on page 5262 because no preferential or above-market amounts are paid on balances in our SERP.ERSP or the SSP-II. |
| | | (4) | Includes amounts reported as compensation in the Fiscal 2017Transition Period Summary Compensation Table for fiscal 20162019, 2018 and 20152017 as follows: Mr. Brown — $976,241; Mr. Fox — $283,056; Mr. Mehnert — $119,373; and Mr. Mikuen — $272,202.$1,881,354. |
71 L3HARRIS 2020 PROXY STATEMENT |
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POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL This section of the proxy statement sets forth information regarding compensation and benefits that each of our named executive officers would receive in the event of termination of employment of such named executive officer under several different circumstances, including: (1) termination by us for cause; (2) a voluntary termination (resignation) by such named executive officer; (3) termination by such named executive officer for good reason (constructive involuntary termination); (4) involuntary termination by us without cause; (5) death; (6) disability; (7) retirement or (8) termination by us without cause or by such named executive officer for good reason following a future change in control of Harris,the Company, as well as in the event of a future change in control of Harristhe Company without termination of employment of such named executive officer. Potential Termination Payments Under Brown Employment Agreement — William M. BrownAgreements In October 2011, our Board approved, and Harris and Mr. Brown entered into, an employment agreementthe Brown Original Agreement providing for Mr. Brown’s employment as our Chief Executive Officer and President. In connection with entering into the Merger Agreement, we and Mr. Brown, on October 12, 2018, entered into the Brown Letter Agreement addressing Mr. Brown’s employment agreement providesfollowing completion of the Merger. The Brown Original Agreement provided for an initial employment term that commenced on November 1, 2011 and ended on October 31, 2016. As2016, and as of November 1, 2016, the employment term automatically extendsextended for successive one-year periods unless we or Mr. Brown provide prior written notice that the employment term willwould not be so extended. We haveUnder the Brown Original Agreement, we agreed to provide Mr. Brown with certain benefits in the event of termination of Mr. Brown’s employment by us without “cause” or by Mr. Brown for a “constructive termination” (as such terms are defined in the agreement).
Under Mr. Brown’s employment agreement,the Brown Original Agreement, “cause” generally means: A substantial and continual failure or refusal by him to perform his material duties under his employment agreement (other than any failure resulting from illness or disability);
A willful breach by him of any material provision of his employment agreement;
Any reckless or willful misconduct (including action or failures to act) by him that causes material harm to our business or reputation;| > | A substantial and continual failure or refusal by him to perform his material duties under his employment agreement (other than any failure resulting from illness or disability); |
Any unexcused, repeated or prolonged absence from work by him (other than as a result of, or in connection with, sickness, injury or disability) during a period of 90 consecutive days;
A conviction of him for the commission of a felony (including entry of a nolo contendere plea) or an indictment of him for the commission of a felony under the U.S. Federal securities laws;
Embezzlement or willful misappropriation by him of our property;
A willful and substantial violation by him of a material Harris policy that is generally applicable to all employees or all of our officers (including our Code of Conduct); or
A failure by him to cooperate in an internal investigation after being instructed by our Board to cooperate.
| > | A willful breach by him of any material provision of his employment agreement; |
| > | Any reckless or willful misconduct (including action or failures to act) by him that causes material harm to our business or reputation; |
| > | Any unexcused, repeated or prolonged absence from work by him (other than as a result of, or in connection with, sickness, injury or disability) during a period of 90 consecutive days; |
| > | A conviction of him for the commission of a felony (including entry of a nolo contendere plea) or an indictment of him for the commission of a felony under the U.S. Federal securities laws; |
| > | Embezzlement or willful misappropriation by him of our property; |
| > | A willful and substantial violation by him of a material Company policy that is generally applicable to all employees or all of our officers (including our Code of Conduct); or |
| > | A failure by him to cooperate in an internal investigation after being instructed by our Board to cooperate. |
“Constructive termination” generally means, without Mr. Brown’s consent: A reduction in his annual base salary or current annual cash incentive target award, other than a reduction also applicable in a substantially similar manner and proportion to our other senior executive officers;
Our removal of him from his position as Chief Executive Officer or President;Our assignment to him of duties or responsibilities that are materially inconsistent with his positions with us;| > | A reduction in his annual base salary or current annual cash incentive target award, other than a reduction also applicable in a substantially similar manner and proportion to our other senior executive officers; |
Any requirement by us that he relocate his principal place of employment to a location other than our principal headquarters;
| > | Our removal of him from his position as Chief Executive Officer or President (The Brown Letter Agreement providing for Mr. Brown’s role as Chairman and CEO following the Merger constituted Mr. Brown’s consent to removal of him as President.); |
| > | Our assignment to him of duties or responsibilities that are materially inconsistent with his positions with us; |
| > | Any requirement by us that he relocate his principal place of employment to a location other than our principal headquarters; |
| > | Our failure to nominate him for reelection to our Board upon expiration of his term at any annual meeting of our shareholders during the term of his employment; |
| > | Our failure to obtain an assumption of his employment agreement by a successor of the Company; |
| > | Our delivery of a notice not to renew his employment term pursuant to his employment agreement; or |
| > | Our termination of the indemnification agreement we have entered into with him without entering into a replacement or successor agreement, or making other appropriate indemnification arrangements in favor of him, on terms reasonably acceptable to him and no less favorable to him than to our other senior executives. |
Under the term of his employment; Our failure to obtain an assumption of his employment agreement by a successor of Harris;
Our delivery of a notice not to renew his employment term pursuant to his employment agreement; or
Our termination of the indemnification agreement we have entered into with him without entering into a replacement or successor agreement, or making other appropriate indemnification arrangements in favor of him, on terms reasonably acceptable to him and no less favorable to him than to our other senior executives.
IfBrown Original Agreement, if Mr. Brown’s employment is terminated by us without cause (other than by reason of death or disability) or by Mr. Brown as a result of a constructive termination, then Mr. Brown will be entitled to receive from us compensation that has accrued but not yet been paid and, subject to his execution and delivery of a release of claims against us:
Pro-rated annual cash incentive compensation for the fiscal year of termination based on the achievement of performance objectives;
Severance payments, paid in substantially equal monthly installments over a 24-month period, in an aggregate amount equal to two times the sum of his then-current base salary and target annual
| L3HARRIS 2020 PROXY STATEMENT 72
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| > | Pro-rated annual cash incentive compensation for the fiscal year of termination based on the achievement of performance objectives; |
| > | Severance payments, paid in substantially equal monthly installments over a 24-month period, in an aggregate amount equal to two times the sum of his then-current base salary and target annual cash incentive compensation for the year of termination; |
| > | COBRA continuation medical benefits for a period of 18 months following the termination date; |
| > | Each unvested time-based vesting stock option will continue to vest in accordance with its ordinary vesting schedule for the two-year period following the date of termination, at which time any remaining unvested portion of the stock options will be forfeited, and to the extent vested, will remain outstanding for the 27-month period following the termination date, but in no event beyond the normal expiration period; |
| > | Each performance share unit will remain outstanding and eligible to vest for the remainder of the applicable performance period if the termination date is prior to the end of the applicable performance period, with vesting subject to attainment of the applicable performance goals and to pro-ration based on the portion of the applicable performance period which has elapsed as of the termination date (with the remainder of the award forfeited); and |
| > | Each other equity award will be treated in the manner set forth in the applicable plan and award agreement. |
Under the year of termination; COBRA continuation medical benefits for a period of 18 months following the termination date;
The stock options forming part of his “transition-related” equity awards will remain outstanding for the one-year period following termination, but in no event beyond the normal expiration period;
Each other time-based vesting stock option will continue to vest in accordance with its ordinary vesting schedule for the two-year period following the date of termination, at which time any remaining unvested portion of the stock options will be forfeited, and to the extent vested, will remain outstanding for the 27-month period following the termination date, but in no event beyond the normal expiration period;
Each performance share unit will remain outstanding and eligible to vest for the remainder of the applicable performance periodBrown Original Agreement, if the termination date is prior to the end of the applicable performance period, with vesting subject to attainment of the applicable performance goals and to pro-ration based on the portion of the applicable performance period which has elapsed as of the termination date (with the remainder of the award forfeited); and
Each other equity award will be treated in the manner set forth in the applicable plan and award agreement.
If Mr. Brown’s employment is terminated by us for cause or due to Mr. Brown’s death or disability, or upon Mr. Brown’s retirement or resignation, then Mr. Brown (or his estate or legal representative, as appropriate) will be entitled to receive from us:
| > | Accrued but unpaid base salary and unpaid vacation time through the date of termination; |
| > | Earned but unpaid annual cash incentive compensation under our Annual Incentive Plan (or any successor plan) for the prior fiscal year; |
| > | Reimbursement of reasonable business expenses incurred prior to the date of termination; and |
| > | Other or additional compensation benefits, if any, in accordance with the terms of our applicable plans or employee benefit programs for terminated employees. |
Under the date of termination; Earned but unpaid annual cash incentive compensation under our Annual Incentive Plan (or any successor plan) for the prior fiscal year;
Reimbursement of reasonable business expenses incurred prior to the date of termination; and
Other or additional compensation benefits,Brown Original Agreement, if any, in accordance with the terms of our applicable plans or employee benefit programs for terminated employees.
If Mr. Brown’s employment is terminated due to death or disability, then Mr. Brown (or his estate or legal representative, as appropriate) also will be entitled to receive from us the vesting of any equity-based awards then held by him, if and to the extent provided in the applicable plan and award agreements. We may, at our option, terminate Mr. Brown’s employment in the event of his disability.
Mr. Brown’s employment agreementThe Brown Original Agreement also provides that he may not for a two-year period following termination of his employment for any reason, without our prior written consent, directly or indirectly:
Hold a 5% or greater equity, voting or profit participation interest in, or associate with, an enterprise that competes with us; or
Solicit any customer or any employee to leave us.| > | Hold a 5% or greater equity, voting or profit participation interest in, or associate with, an enterprise that competes with us; or |
Mr. Brown’s employment agreement| > | Solicit any customer or any employee to leave us. |
The Brown Original Agreement also contains a non-disparagement clause applicable during the term of his employment and for a period of two years thereafter. If there is a change in control of Harristhe Company (including the Merger) and Mr. Brown’s employment terminates under circumstances provided under his change in control severance agreement discussed below under “Executive Change in Control Severance Agreements,” then Mr. Brown will be entitled to the compensation and benefits provided under his change in control severance agreement, as modified by the Brown Letter Agreement, in lieu of any compensation or benefits receivable under the Brown Original Agreement. The Brown Letter Agreement addressing Mr. Brown’s employment following completion of the Merger provides that: | > | Mr. Brown will serve as Chairman and Chief Executive Officer of L3Harris through the two-year Initial Period following the Merger. For the one-year Subsequent Period, he will serve as Chairman of L3Harris. On the third anniversary of the closing of the Merger, he will retire as an officer and employee of L3Harris and will resign as a member of L3Harris’ Board of Directors. |
| > | During the Initial Period, Mr. Brown’s annual base salary is $1,450,000, his target annual cash bonus award is $2,500,000, the target value of his annual long-term incentive awards is $10,250,000 and in no case will any such compensation element be less than that paid or granted to Mr. Kubasik. (Our Board maintains discretion to increase these amounts.)
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| > | After the closing of the Merger, L3Harris would grant Mr. Brown a one-time integration award composed of performance stock units with a target value of $2,500,000 (subject to certain performance-based multipliers) and performance-based non-qualified stock options with a grant date value of $5,000,000 and a ten-year term. Both components of the integration award will be subject to three-year cliff vesting and will vest (if at all) subject to continued employment and achievement of performance conditions established by the L3Harris Compensation Committee. (This award was granted in August 2019.) |
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 | > | If during the Subsequent Period there is a qualifying termination of Mr. Brown (as defined in his Executive Change in Control Severance Agreement entered into with Harris), Mr. Brown would be eligible for the compensation, benefits and other rights provided under that Executive Change in Control Severance Agreement, with such amounts determined using a “3X” multiple. In addition, his outstanding stock options (other than those granted as part of the integration award) and restricted stock units would become fully vested, exercisable and payable (as applicable), and options would remain exercisable for their full remaining term. Outstanding performance stock units (other than those granted as part of the integration award) would remain outstanding and eligible to vest based on the attainment of performance goals. Mr. Brown would also receive benefit continuation payments in lieu of providing in-kind medical and prescription drug coverage until he reaches the age of 65 (or, if earlier, the date he becomes eligible to receive comparable benefits from another employer). Additionally, if such qualifying termination occurs in the Initial Period, the integration award would remain outstanding and eligible to vest as to a portion of the award based on the date of termination and attainment of applicable performance goals. If such qualifying termination occurs during the Subsequent Period, the integration award would remain outstanding and eligible to vest based on the greater of target performance and the actual attainment of applicable performance goals. The integration award options that vest would remain exercisable for their full term. |
| > | Upon his retirement at the end of the Subsequent Period, Mr. Brown will not receive any cash severance, but his equity awards (other than those comprising the integration award) will be treated as described above regarding a qualifying termination, and his integration award will pay or vest, as applicable, based on actual performance. In addition, Mr. Brown will receive the benefit continuation payments described above regarding a qualifying termination, and for 12 months following his retirement, have access to office space and administrative support provided by L3Harris. |
| > | Except as expressly modified by the Brown Letter Agreement, the terms of Mr. Brown’s pre-Merger Executive Change in Control Severance Agreement with Harris and his 2011 employment agreement with Harris remain in full force and effect, including the restrictive covenants and confidentiality provisions of those agreements. |
Potential Payments Under Kubasik Letter Agreement In connection with entering into the Merger Agreement, L3 and Mr. Kubasik, L3’s then-serving Chairman, Chief Executive Officer and President, entered into the Kubasik Letter Agreement, which addresses Mr. Kubasik’s employment following completion of the Merger. Pursuant to approval from our Board, we assumed the Kubasik Letter Agreement following completion of the Merger and Mr. Kubasik’s appointment as our Vice Chairman, President and Chief Operating Officer. The Kubasik Letter Agreement provides that:
| > | Mr. Kubasik will serve as Vice Chairman, President and Chief Operating Officer of L3Harris through the Initial Period. Upon the commencement of the Subsequent Period (or, if earlier, the date that Mr. Brown ceases to serve as the Chief Executive Officer of L3Harris), Mr. Kubasik will become the Chief Executive Officer of L3Harris. On the third anniversary of the closing of the Merger, Mr. Kubasik will also become Chairman of L3Harris. |
| > | During the Initial Period, Mr. Kubasik’s annual base salary is $1,450,000, his target annual cash bonus award is $2,500,000, the target value of his annual long-term incentive awards is $10,250,000 and in no case will any such compensation element be less than that paid or granted to Mr. Brown. (Our Board maintains discretion to increase these amounts.)
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| > | After the closing of the Merger, L3Harris would grant Mr. Kubasik a one-time integration award composed of performance stock units with a target value of $2,500,000 (subject to certain performance-based multipliers) and performance-based non-qualified stock options with a grant date value of $5,000,000 and a ten-year term. Both components of the integration award will be subject to three-year cliff vesting and will vest (if at all) subject to continued employment and achievement of performance conditions established by the L3Harris Compensation Committee. (This award was granted in August 2019.) |
| > | In the event that L3Harris terminates him without “cause” or he terminates his employment for “good reason,” Mr. Kubasik’s outstanding stock options (other than those granted as part of the integration award) and restricted stock units would become fully vested, exercisable and payable (as applicable), and options would remain exercisable for their full remaining term. Outstanding performance stock units (other than those granted as part of the integration award) would remain outstanding and eligible to vest based on the attainment of performance goals. Additionally, if such qualifying termination occurs in the Initial Period, the integration award would remain outstanding and eligible to vest as to a portion of the award based on the date of termination and attainment of applicable performance goals. If such qualifying termination occurs during the Subsequent Period, the integration award would remain outstanding and eligible to vest based on the greater of target performance and the actual attainment of applicable performance goals. The integration award options that vest would remain exercisable for their full term. |
| > | The protection period under which Mr. Kubasik will be covered by L3’s Amended and Restated Change in Control Severance Plan (the “L3 CIC Plan”) was extended until the fourth anniversary of the closing of the Merger, in the event of his termination without “cause” or for “good reason” (each as defined in the L3 CIC Plan and modified in the Kubasik Letter Agreement). |
| > | The definition of “cause” under the L3 CIC Plan as applicable to Mr. Kubasik was modified to include an act of misconduct in violation of certain L3Harris policies or federal or applicable state law regarding discrimination or sexual harassment of subordinate employees that creates a material risk of meaningful harm to L3Harris. |
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 | > | The definition of “good reason” under the L3 CIC Plan as applicable to Mr. Kubasik was modified to include the following events: failure to promote him to the contemplated new roles upon and after the closing of the Merger; failure of Mr. Brown to cease providing services to L3Harris on or before the third anniversary of the closing of the Merger; or L3Harris’ material breach of the Kubasik Letter Agreement. Mr. Kubasik also agreed to a limited waiver of his “good reason” rights related to his contemplated relocation to Florida, certain across-the-board changes in employee benefits and his transition to the role of Vice Chairman, President and Chief Operating Officer at the closing of the Merger. |
| > | Mr. Kubasik is eligible to receive an additional payment of up to $1,250,000 for relocation-related expenses, with gross up of amounts taxed as ordinary income. |
| > | Certain restrictive covenants and confidentiality provisions of the L3 CIC Plan apply as a condition to severance benefits under the L3 CIC Plan and are extended to 24 months following termination of employment. |
Potential Payments Under Malave Letter Agreement We are party to the Malave Letter Agreement with Mr. Malave pursuant to which he was appointed Senior Vice President and Chief Financial Officer of L3Harris effective June 29, 2019 (the “Start Date”). The Malave Letter Agreement includes the following compensation and benefits: | > | base salary at the annual rate of $625,000; |
| > | eligibility to receive an annual cash incentive under our Annual Incentive Plan with a target value of 100% of his base salary; |
| > | commencing with calendar year 2020, eligibility to receive annual equity awards granted under our Equity Incentive Plan with a target value of $2,000,000; |
| > | one-time restricted stock unit award granted in August 2019 under our Equity Incentive Plan with a grant date value of $950,000 (“One-Time RSU Award”), subject to vesting ratably over three years; |
| > | a one-time momentum equity award granted in August 2019 under our Equity Incentive Plan comprised of (a) performance share units with a target value of $660,000; and (b) performance-based stock options with a grant date value of $1,340,000 and a term of ten years. Both components of the momentum equity award will be subject to three-year cliff vesting and will vest (if at all) subject to achievement of applicable cost synergy goals for the Merger established by the Compensation Committee; |
| > | a one-time cash sign-on bonus of $200,000; |
| > | eligibility to participate in our retirement and employee health and welfare plans; and |
| > | certain relocation benefits. |
Under the Malave Letter Agreement, in the event that L3Harris terminates Mr. Malave without “cause” (as defined in the Malave Letter Agreement) or he terminates his employment agreement.for “good reason” (as defined in the Malave Letter Agreement) within 36 months after the Start Date:
| > | the One-Time RSU Award will become fully vested; |
| > | if such termination is not in connection with a “change in control” (as defined in the Malave Letter Agreement), then subject to certain conditions, Mr. Malave will receive a severance benefit equal to (i) his then current annual base salary (provided that, in the event of a termination by him for Good Reason due to material reduction in his base salary, the severance will be in an amount equal to his annual base salary before such material reduction), and (ii) a pro rata annual cash bonus for the performance period in which his termination occurs, subject to actual achievement of applicable performance goals through the end of such performance period; and |
| > | if (in either case) such termination is on or following a “change in control” and within 36 months after the Start Date, then, in lieu of any severance benefits payable as described above, and subject to certain conditions, Mr. Malave will receive a severance benefit equal to (i) a “2X” multiple of his then current annual base salary (provided that, in the event of a termination by him for Good Reason due to material reduction in his base salary, the severance will be in an amount equal to his annual base salary before such material reduction) plus his then current target annual cash bonus, and (ii) a pro rata annual cash bonus for the performance period in which his termination occurs, subject to actual achievement of applicable performance goals through the end of such performance period, pro-rated based on the number of days he was employed during such performance period. |
Mr. Malave’s entitlement to severance benefits under the Malave Letter Agreement is in lieu of severance benefits under any L3Harris severance plan or other severance benefits to which he may be entitled. However, if L3Harris implements a new executive severance plan or plans in which he is eligible to participate with terms and benefits equal to or in excess of those in the Malave Letter Agreement, then his right to severance benefits will be determined solely in accordance with the terms of such new plan(s), which will replace and supersede the terms of Malave Letter Agreement.
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Potential Payments Under Executive Change in Control Severance Arrangements
Change in Control Severance Agreements Our
Prior to the Merger, the Harris Board hashad approved change in control severance agreements for our pre-Merger Board-elected or appointed officers, including those named executive officers of L3Harris who were employed by Harris at the time of the Merger (Messrs. Brown and Zoiss), to provide continuity of management and ensure dedication of our executives in the event of a threatened or actual change in control. Under these agreements, we would provide severance benefits to our Board-elected or appointed officers, including our named executivethose officers if, within two years following a “change in control:” The executive terminates employment for “good reason;” or
| > | The executive terminates employment for “good reason;” or |
| > | We terminate the executive’s employment for any reason other than for “cause” (all terms as defined in the change in control severance agreement and summarized below). |
Benefits are paid only on a “double trigger” basis: in other words, there must be both a change in control severance agreement and summarized below).a qualifying termination of employment. Meaning of “change in control.” Under these agreements, a “change in control” generally means the occurrence of any one of the following events: Any person becomes the beneficial owner of 20% or more of the combined voting power of our outstanding common stock;
| > | Any person becomes the beneficial owner of 20% or more of the combined voting power of our outstanding common stock; |
| > | A change in the majority of our Board not approved by two-thirds of our incumbent directors; |
| > | The consummation of a merger, consolidation or reorganization, unless immediately following such transaction: (1) more than 60% of the total voting power resulting from the transaction is represented by shares that were our voting securities immediately prior to the transaction; (2) no person becomes the beneficial owner of 20% or more of the total voting power of our outstanding voting securities as a result of the transaction; and (3) at least a majority of the members of the board of directors of the company resulting from the transaction were our incumbent directors at the time of our Board’s approval of the execution of the initial agreement providing for the transaction; |
| > | Our shareholders approve a plan of complete liquidation or dissolution of L3Harris; or |
| > | We consummate a sale or disposition of all or substantially all of our assets. |
The Merger constituted a change in the majoritycontrol under these agreements. Meaning of our Board not approved by two-thirds of our incumbent directors; The consummation of a merger, consolidation or reorganization, unless immediately following such transaction: (1) more than 60% of the total voting power resulting from the transaction is represented by shares that were our voting securities immediately prior to the transaction; (2) no person becomes the beneficial owner of 20% or more of the total voting power of our outstanding voting securities as a result of the transaction; and (3) at least a majority of the
members of the board of directors of the company resulting from the transaction were our incumbent directors at the time of our Board’s approval of the execution of the initial agreement providing for the transaction;
Our shareholders approve a plan of complete liquidation or dissolution of Harris; or
We consummate a sale or disposition of all or substantially all of our assets.
“good reason.” Under these agreements, “good reason” generally means: A reduction in the executive’s annual base salary or current annual incentive target award;
| > | A reduction in the executive’s annual base salary or current annual incentive target award; |
| > | The assignment of duties or responsibilities that are inconsistent in any material adverse respect with the executive’s position, duties, responsibility or status with us immediately prior to the change in control; |
| > | A material adverse change in the executive’s reporting responsibilities, titles or offices with us as in effect immediately prior to the change in control; |
| > | Any requirement that the executive: (1) be based more than 50 miles from the facility where the executive was located at the time of the change in control or (2) travel on L3Harris business to an extent substantially greater than the travel obligations of the executive immediately prior to the change in control; or |
| > | Failure by us to continue in effect any employee benefit or compensation plans or provide the executive with employee benefits as in effect for the executive immediately prior to the change in control. |
Meaning of duties or responsibilities that are inconsistent in any material adverse respect with the executive’s position, duties, responsibility or status with us immediately prior to the change in control; A material adverse change in the executive’s reporting responsibilities, titles or offices with us as in effect immediately prior to the change in control;
Any requirement that the executive: (1) be based more than 50 miles from the facility where the executive was located at the time of the change in control or (2) travel on Harris business to an extent substantially greater than the travel obligations of the executive immediately prior to the change in control; or
Failure by us to continue in effect any employee benefit or compensation plans or provide the executive with employee benefits as in effect for the executive immediately prior to the change in control.
“cause.” Under these agreements, the term “cause” generally means: A material breach by the executive of the duties and responsibilities of the executive’s position; or
| > | A material breach by the executive of the duties and responsibilities of the executive’s position; or |
| > | The conviction of the executive of, or plea of nolo contendere by the executive to, a felony involving willful misconduct that is materially injurious to us. |
Potential cash severance payment. nolo contendere by the executive to, a felony involving willful misconduct that is materially injurious to us. If triggered, the lump-sum cash severance benefit payable to an executive under the executive’s change in control severance agreement consistswould consist of:
| > | Unpaid base salary through the date of termination; |
| > | A pro-rated annual bonus (as determined under the change in control severance agreement); |
| > | Any unpaid accrued vacation pay; |
| > | To the extent permitted under Section 409A of the Internal Revenue Code, any other benefits or awards that have been earned or became payable pursuant to the terms of any compensation plan but that have not yet been paid to the executive; |
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A pro-rated annual bonus (as determined under the change in control severance agreement);
Any unpaid accrued vacation pay;
To the extent permitted under Section 409A of the Internal Revenue Code, any other benefits or awards that have been earned or became payable
 pursuant to the terms of any compensation plan but that have not yet been paid to the executive;
Two times the executive’s highest annual rate of base salary during the 12-month period prior to the date of termination;| > | Two times the executive’s highest annual rate of base salary during the 12-month period prior to the date of termination (following the Merger, “three times” in the case of Mr. Brown pursuant to the Brown Letter Agreement); and |
Two times the greatest of the executive’s (1) highest annual bonus in the three years prior to the change in control, (2) target bonus for the year in which the change in control occurred or (3) target bonus for the year in which the executive’s employment is terminated.| > | Two times the greatest of the executive’s (1) highest annual bonus in the three years prior to the change in control, (2) target bonus for the year in which the change in control occurred or (3) target bonus for the year in which the executive’s employment is terminated (following the Merger, “three times” in the case of Mr. Brown pursuant to the Brown Letter Agreement). |
Other potential severance benefits. In addition, if triggered, severance benefits to an executive under the executive’s change in control severance agreement include: | > | Receipt of the same level of medical, dental, accident, disability and life insurance and any similar benefits as are in effect on the date of termination (or the highest level of coverage provided to active executives immediately prior to the change in control, if more favorable), for the two years following the date of termination, but in no event later than age 65 (benefit continuation payments in lieu of providing in-kind medical and prescription drug coverage, in the case of Mr. Brown pursuant to the Brown Letter Agreement); |
| > | Reimbursement for any relocation expense related to the pursuit of other business opportunities incurred within two years following the date of termination; |
| > | Reimbursement for recruitment or placement services of up to $4,000; and |
| > | Reimbursement for professional financial or tax planning services of up to $5,000 per year for the calendar year in which the termination occurs and the next calendar year. |
The change in control severance arrangements with Mr. Malave are pursuant to the Malave Letter Agreement, and those arrangements are described in the “Agreement with Mr. Malave” discussion beginning on page 75. L3 Change in Control Severance Plan Prior to the Merger, L3 had adopted the L3 CIC Plan covering its executive officers and other corporate employees, including Messrs. Kubasik and Gautier, to maintain alignment of the interests of individuals covered by the plan and shareholders during the period of an actual or rumored change in control and facilitate objective assessment of potential transactions that may be in the best interests of L3 shareholders but could negatively impact the covered individual’s future employment. Under the L3 CIC Plan, severance benefits would be provided to L3 executive officers, including Messrs. Kubasik and Gautier, and other individuals covered by the plan if, within two years following a “change in control”: | > | The executive terminates employment for “good reason”; or |
| > | The executive’s employment is terminated without “cause” (all terms as defined in the L3 CIC Plan and summarized below). |
Benefits are paid only on a “double trigger” basis: in other words, there must be both a change in control and a qualifying termination of employment. In addition, the L3 CIC Plan covers terminations that become effective prior to the occurrence of a change in control if more favorable), for the two years following the date of termination, but in no event later than age 65; Reimbursement for any relocation expense related to the pursuit of other business opportunities incurred within two years following the date of termination;
Reimbursement for recruitment or placement services of up to $4,000; and
Reimbursement for professional financial or tax planning services of up to $5,000 per year for the calendar year in which thesuch termination occurs and(a) upon the next calendar year.request of the acquiror or (b) otherwise in anticipation of the change in control.
Further, these agreements:
Meaning of “change in control.” Under the L3 CIC Plan, a “change in control” generally means the occurrence of any one of the following events: Do not provide for a tax gross-up of excise taxes;| > | the acquisition by any person or group (including a group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than L3 or any of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a majority of the combined voting power of L3’s then outstanding voting securities, other than by any employee benefit plan maintained by L3; |
Do provide for a “best net after-tax” payment approach that reduces payments and benefits to an executive if the reduction would result in the executive receiving higher payments and benefits on a net after-tax basis;| > | the sale of all or substantially all of the assets of L3 and its subsidiaries taken as a whole; or |
Do provide that we will reimburse the executive for any legal fees and costs with respect to any dispute arising under the agreement; and| > | the election, including the filling of vacancies, during any period of 24 months or less, of 50% or more of the members of the board of directors of L3, without the approval of L3’s incumbent directors at the beginning of such period. |
Do provide that, not later than the date on whichThe Merger constituted a change in control occurs,under the L3 CIC Plan, and we are requiredobligated to contribute to an irrevocable “rabbi trust” in cash or other liquid assets, an amount equal toprovide the total payments expected to be paidseverance benefits under the agreements, assuming that the employment of the executives is terminated, plus the amount of trust administration and trustee fees reasonably expected to be incurred (in recognition that in certain situations payments under the agreements will be required to be deferred for up to six months following the triggering event to comply with Section 409A of the Internal Revenue Code). L3 CIC Plan, if triggered.
64Meaning of “good reason.” Under the L3 CIC Plan, “good reason” generally means, other than due to employee’s disability or death:
| > | A reduction in the executive’s base salary or annual or long-term incentive opportunity (including target bonus, if applicable); |
| > | An adverse change to the calculation methodology for determining bonuses or long-term incentives which is reasonably likely to have an adverse impact on the amounts the executive has the potential to earn under such programs; |
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| > | Any failure by the acquiror to continue to provide employee benefits that are substantially similar in the aggregate to those afforded to the executive immediately prior to the change in control; |
| > | A material adverse change in executive’s duties or responsibilities; |
| > | A relocation of executive’s principal place of business of 50 miles or more, provided that such relocation also increases the executive’s commute by at least 25 miles; |
| > | A failure to pay the executive’s base salary and other amounts earned by the executive within 10 days after the date such compensation is due; or |
| > | Failure of any successor or assignee to all or substantially all of the business and/or assets of L3 in connection with any change in control, by agreement in writing in form and substance reasonably satisfactory to the executive, expressly, absolutely and unconditionally to assume and agree to perform all obligations under the L3 CIC Plan. |
Meaning of “cause.” Under the L3 CIC Plan, the term “cause” generally means: | > | Intentional failure to perform reasonably assigned duties; |
| > | Dishonesty or willful misconduct in the performance of duties; |
| > | Engaging in a transaction in connection with the performance of duties to L3 or its affiliates which transaction is adverse to the interests of L3 and is engaged in for personal profit; or |
| > | Willful violation of any law, rule or regulation in connection with the performance of duties (other than traffic violations or similar offenses). |
Potential cash severance payment. If triggered, the lump-sum cash severance benefit payable to an executive under the L3 CIC Plan would consist of: | > | A multiple of current annual salary and average annual incentive plan awards for the prior three years: (a) chief executive officer, chief operating officer, chief financial officer and chief legal officer – three times (including for Mr. Kubasik), and (b) segment presidents – two and a half times (including for Mr. Gautier). The annual incentive plan award for the year of termination is a pro rata award based on (a) the number of months worked in the year of termination and (b) the average annual incentive plan awards for the prior three years (or the actual annual incentive plan award payable for the full year of termination, if performance is determinable at the time of termination). |
Other potential severance benefits. In addition, if triggered, severance benefits to an executive under the L3 CIC Plan include: | > | Receipt of continued medical and life insurance benefits at the same cost to the executive, or cash equal to any increased premiums, for the same period as the severance multiple described above; |
| > | Reasonable outplacement services paid for by L3; and |
| > | If eligible, L3-paid financial planning services for the one-year period after a change in control under an L3 policy that is separate from the L3 CIC Plan. |
For a summary of the modifications to the L3 CIC Plan applicable to Mr. Kubasik relating to the definitions of “cause” and “good reason”, see the “Potential Payments Under Kubasik Letter Agreement” section beginning on page 74.
L3Harris Executive Change in Control Severance Plan The Merger constituted a change in control transaction under the change in control severance arrangements described above, which are still operative for applicable covered individuals, including our named executive officers who were employed with L3 or Harris at the time of the Merger. In February 2020, we adopted the new L3Harris Executive Change in Control Severance Plan, which provides severance benefits to executive officers and certain other executives (excluding our CEO and COO) if the executive is terminated without “cause” or resigns for “good reason” (such as a material adverse change in compensation or job responsibilities or location) within two years following a change in control. The plan includes a “double trigger” so that we would provide benefits only if there is both a change in control and a termination of employment. The terms of the new plan do not apply for our CEO and COO and also do not apply for individuals covered by the change in control severance arrangements described above until after the expiration of the applicable change in control severance arrangements described above.
Our executive change in control severance arrangements reflect sound practices because they | > | Do not provide for a tax gross-up of excise taxes; |
| > | Do provide for a “best net after-tax” payment approach that reduces payments and benefits to an executive if the reduction would result in the executive receiving higher payments and benefits on a net after-tax basis; |
| > | Do provide that we will reimburse the executive for any legal fees and costs with respect to any dispute arising under the agreement; and |
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| > | Do provide that, not later than the date on which a change in control occurs, we are required to contribute to an irrevocable “rabbi trust” in cash or other liquid assets, an amount equal to the total payments expected to be paid under the agreements, assuming that the employment of the executives is terminated, plus the amount of trust administration and trustee fees reasonably expected to be incurred (in recognition that in certain situations payments under the agreements will be required to be deferred for up to six months following the triggering event to comply with Section 409A of the Internal Revenue Code). (This funding requirement was waived in respect of the Merger.) |
Termination Payments and Benefits Upon Any TerminationGenerally Available to Salaried Employees Many of our salaried employees, including our named executive officers, are entitled to receive certain elements of compensation on a non-discretionary basis upon termination of employment for any reason. Subject to the exceptions noted below, these include: Accrued salary and pay for unused vacation;
Distributions of vested plan balances under our Retirement Plan or SERP;| > | Accrued salary and pay for unused vacation; |
| > | Distributions of vested plan balances under our RSP and ERSP (and the SSP-II and L3 Supplemental Executive Retirement Plan, where applicable); and |
| > | Earned but unpaid bonuses. |
The amounts shown in the “Tables of Potential Payments Upon Termination or Change in Control” section of this proxy statement beginning on page 6781 do not include these elements of compensation or benefits. For a description Termination of Named Executive Officers Under Various Circumstances Note to readers: The impacts to equity awards described in the following paragraphs regarding termination under various circumstances apply only to outstanding equity awards as of the end of our SERP and the account balances credited to our named executive officers under our SERP as of June 30, 2017, see the Fiscal 2017 Nonqualified Deferred Compensation Table on page 61.fiscal transition period (not equity awards granted afterward during fiscal 2020). Termination for Cause cause. A named executive officer whose employment is terminated by us for cause is not entitled to any compensation or benefits other than those generally paid to all of our salaried employees upon any termination of employment as described above. In addition, as noted under “Recovery of Executive Compensationexecutive compensation (“Clawback”)” in the “Compensation Discussion and Analysis” section of this proxy statement, depending on the circumstances giving rise to such termination, we may be entitled to recover all or a portion of any performance-based compensation if our financial statements are restated as a result of errors, omissions or fraud. Annual incentive awards, vested and unvested options, including performance stock options, performance share units, and restricted stock units and shares of restricted stock are automatically forfeited following a termination for cause or misconduct. Involuntary Termination Without Cause termination without cause. In the case of termination of employment by us without cause, Mr.each of Messrs. Brown, Kubasik and Malave is entitled to the compensation and benefits under his respective employment agreement described above, under the description of his employment agreement, and our other named executive officers are not contractually entitled to any compensation or benefits under the change in control severance arrangements described above because the Merger constituted a change in control under the arrangements between the other than those that are generally paid to all salaried employees upon any termination of employment as described above. However, as discussed innamed executive officer and us (including L3) at the “Compensation Discussion and Analysis” section of this proxy statement, we have a long-standing practice of providing reasonable severance compensation for involuntary termination of an executive’s employment without cause. The specific amount would be based on the relevant circumstances, including considerationtime of the reason for termination, length of employment and other factors.Merger. Under our Annual Incentive Plan, following an involuntary termination by us without cause, subject to beingif the executive was employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment continuing to be made followingafter the fiscal year end based on our performance.
Under
Except as set forth above for Messrs. Brown and Kubasik under their respective employment agreements, under our equity incentive plans, following an involuntary termination by us other than for misconduct, subject to a minimum one-year vestingcause or holding period:misconduct: Unvested options are forfeited and vested
| > | Vested options may be exercised until the sooner of 90 days following such termination or the regularly scheduled expiration date; |
| > | Unvested options are forfeited;
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| > | Vested performance stock options may be exercised until the regularly scheduled expiration date; |
| | > | Unvested performance stock options are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned and to vest based on satisfaction of the performance vesting condition and become exercisable upon expiration of the service period;
| | > | Unvested performance share units are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets; provided that if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; |
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Performance share units are forfeited; andRestricted stock units and shares of restricted stock will be pro-rated based on the period worked during the restriction period and paid out promptly following involuntary termination (but subject to any delay required by U.S. Federal tax laws).| > | Shares of restricted stock are paid pro-rata based on the period worked during the restriction period, promptly following involuntary termination without cause (but subject to any delay required by U.S. Federal tax law); and |
| > | Restricted stock units immediately fully vest and are paid as soon as practicable.
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Voluntary Termination/Resignation termination/resignation/good reason. A named executive officer who voluntarily terminates or resigns employment (other than due to retirement or for good reason) is not entitled to any compensation or benefits other than those generally paid to all of our salaried employees upon any termination of employment as described above. Annual incentive awards and unvested stock options, including performance stock options, performance share units, restricted stock units and shares of restricted stock are automatically forfeited following a voluntary termination or resignation. Subject to a minimum one-year vesting period, vestedVested options may be exercised until the sooner of 30 days (90 days, in the case of performance stock options) following a voluntary termination or resignation or the regularly scheduled expiration date. DeathUpon voluntary termination for good reason by an executive officer, except as otherwise provided in the Brown Letter Agreement, the Kubasik Letter Agreement or the Malave Letter Agreement, in the case of Messrs. Brown, Kubasik and Malave, respectively:
| > | Vested performance stock options may be exercised until the regularly scheduled expiration date; |
| > | Unvested performance stock options are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned and to vest based on satisfaction of the performance vesting condition and become exercisable upon termination of the service period; |
| > | Unvested performance share units are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets; provided that if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; and |
| > | Restricted stock units immediately vest and are paid as soon as practicable. |
Death or disability. If a named executive officer’s employment is terminated as a result of death, thehis or her beneficiaries of such named executive officer are eligible for benefits under the death benefit programs generally available to many of our U.S.-based employees, including basic group life insurance paid by us and supplemental group life insurance if elected and paid for by the employee. In addition, for such named executive officer: Account balances in our Retirement Plan and SERP become fully vested;
Subject to being employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during the fiscal year, with payment continuing to be made following the fiscal year end based on our performance;
Subject to a minimum one-year vesting period, options immediately fully vest (at target, in the case of performance stock options) and will be exercisable by the beneficiaries for up to
12 months following the date of death but not later than the regularly scheduled expiration date;
Subject to a minimum holding period ending on the last day of the first fiscal year of the three-year performance period, performance share units are paid pro-rata based on target and on the period worked during the performance period and paid out promptly; and
Subject to a minimum one-year holding period, restricted stock units and shares of restricted stock immediately fully vest.
Disability
executive. If a named executive officer’s employment is terminated as a result of disability, such namedthe executive officer is eligible for benefits under the disability programs generally available to many of our U.S.-based employees. Theseemployees, which include a long-term disability income benefit and, in most cases, continuation of health and survivor and accident life insurance coverage applicable to active employees for specified periods, while disabled. In addition, for such named executive officer: Account balances in our Retirement Plan and SERP become fully vested;
Subject to being employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during the fiscal year, with payment continuing to be made following the fiscal year end based on our performance;
Subject to a minimum one-year vesting period, options immediately fully vest (at target, in the case of performance stock options) and will be exercisable until the regularly scheduled expiration date;death or disability:
Subject to a minimum holding period ending on the last day of the first fiscal year of the three-year performance period, performance share units are paid pro-rata based on target and on the period worked during the performance period and paid out promptly; and
Subject to a minimum one-year holding period, restricted stock units and shares of restricted stock immediately fully vest.| > | Account balances in our RSP and ERSP become fully vested; |
| > | If the executive was employed for a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance; |
| > | Performance stock options immediately vest at target and will be exercisable by the beneficiaries (or by the executive officer in the case of disability) for up to 12 months following the date of death (or disability) but not later than the regularly scheduled expiration date; |
| > | Subject to a minimum one-year vesting period, stock options (other than performance stock options) immediately vest at target and will be exercisable by the beneficiaries (or by the executive officer in the case of disability) for up to 12 months following the date of death (or disability) but not later than the regularly scheduled expiration date; |
| > | Performance share units immediately vest at target and are paid out as soon as administratively practicable following death and, in the case of disability, following the earlier of expiration of the service period or the occurrence of a change in control that qualifies as a “change in control event” within the meaning of Treasury Regulations section 1.409-3(i)(5);
|
| > | Subject to a minimum one-year holding period, shares of restricted stock immediately fully vest; and |
| > | Restricted stock units immediately fully vest and are paid out as soon as administratively practicable. |
Retirement. Among our named executive officers, as of June 30, 2017,January 3, 2020, Messrs. Fox, MehnertGautier and MikuenZoiss were retirement-eligible for purposes of our Retirement Plan, SERP,RSP, ERSP, Annual Incentive Plan Performance Reward Plan and our equity incentive plans. If a named executive officer’s employment is terminated as a result of retirement, such named executive officer would receive retirement benefits generally available to our retirement-eligible salaried employees. In addition, for such named executive officer: addition: Account balances in our Retirement Plan and SERP| > | Account balances in our RSP and ERSP become fully vested; |
Subject to being| > | If the executive was employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance;
|
| L3HARRIS 2020 PROXY STATEMENT 80
|
After age 55 with 10 or more years of full-time service, but before age 62, subject to a minimum one-year vesting period, options cease vesting and options exercisable at the time of retirement continue to be exercisable until the regularly scheduled expiration date, but unvested options (including unvested performance stock options) are forfeited; After age 62 with 10 or more years of full-time service, subject to a minimum one-year vesting period, options continue to vest in accordance with their vesting schedule and continue to be exercisable until the regularly scheduled expiration date, except unvested performance stock options, which are forfeited;After age 55 with 10 or more years of full-time service, subject to a minimum holding period ending on the last day of the first fiscal year of the three-year performance period, performance share units are paid pro-rata based on the period worked during the performance period, with payment continuing to be made at the end of the performance period based on our performance; andAfter age 55 with 10 or more years of full-time service, subject to a minimum one-year holding period, restricted stock units and shares of restricted stock are paid pro-rata based on the period worked during the restriction period, promptly following retirement (but subject to any delay required by U.S. Federal tax law).| > | If after age 55 with 10 or more years of full-time service, but before age 62 options exercisable at the time of retirement remain exercisable until the regularly scheduled expiration date; |
| > | If after age 62 with 10 or more years of full-time service, options remain exercisable until the regularly scheduled expiration date; |
| > | If after age 55 with 10 or more years of full-time service on or after June 29, 2020, performance stock options cease vesting, and performance stock options exercisable at the time of retirement remain exercisable until the regularly scheduled expiration date, but unvested performance stock options are forfeited;
|
| > | Performance share units are forfeited; and
|
| > | If after age 55 with 10 or more years of full-time service on or after June 29, 2020 restricted stock units are paid pro-rata based on the period worked during the restriction period, promptly following retirement (but subject to any delay required by U.S. Federal tax law). |
ControlEach ofcontrol. Cash severance payments and other severance benefits under our named executive officers has entered into a “double trigger” change in control severance agreement with us providing for benefits only upon both a change in control and a subsequent qualifying termination of employment in accordance withagreements or the terms of the agreement. For additional information regarding the terms of such agreements, see “Executive Change in Control Severance Agreements” beginningL3 CIC Plan are discussed on page 63.76 and page 77, respectively. In addition, upon a change in control, and irrespective of employment status:whether or not a termination occurs:
| > | Annual cash incentive compensation awards under our Annual Incentive Plan are fully earned and paid out promptly following the change in control or, in certain instances, following the end of the fiscal year, in each case at not less than the target level; |
| > | Options (other than performance stock options) immediately vest and become exercisable until the regularly scheduled expiration date; |
| > | All Performance stock options vest at target and become exercisable upon expiration of the service period, subject to accelerated payout or forfeiture in certain circumstances;
|
| > | All Performance share units are deemed fully earned and fully vested immediately and will be paid as soon as administratively practicable following expiration of the service period at not less than the target level, subject to accelerated payout or forfeiture in certain circumstances; and
|
All options immediately vest (in the case of performance stock options, at target or at such greater level of performance as our Board or Compensation Committee may authorize) and become exercisable until the regularly scheduled expiration date;
All performance share units are deemed fully earned and fully vested immediately and will be paid at the end of the performance period at not less than the target level, subject to accelerated payout or forfeiture in certain circumstances;| > | Shares of restricted stock immediately fully vest and will be paid out as soon as administratively practicable following the change in control. |
All restricted stock units and shares of restricted stock immediately vest and will be paid as soon as practicable, but not later than 60 days following the change in control, or in certain events, promptly following the expiration of the initial restriction period.
Tables of Potential Payments Upon Termination or Change in Control The following tables set forthshow, on an executive-by-executive basis, the amounts of the estimated incremental compensation and benefits that would be provided to each of our named executive officers if such executive’s employment with us is terminated for any reason,in a hypothetical termination as of January 3, 2020 (as described in more detail below) under various circumstances, including termination by us for cause, voluntary termination (resignation), termination by the executive for good reason or for constructive termination, involuntary termination by us without cause, death, disability, retirement (to the extent the named executive officer is retirement-eligible), or termination by us without cause or by the executive for good reason following a future change in control of Harris. The tables also set forth the amounts of the estimated incremental compensation and benefits that would be provided to each of our named executive officersL3Harris, as well as in the event of a future change in control of HarrisL3Harris without termination of employment of such executive. These amounts are estimates of the amounts that would be paid to the named executive officer upon such termination of employment or change in control. The actual amounts to be paid are determinable only at the time of a named executive officer’s termination of employment or a future change in control. As noted above, the Merger constituted a change in control under the agreements and other arrangements between the named executive officers and us (including L3) at the time of the Merger, and therefore the amounts for many of the circumstances shown in the tables are the same as for termination by us without cause or by the executive for good reason following a future change in control of L3Harris.The estimated amounts included in the tables also are based on the following: The applicable provisions in the agreements and other arrangements between the named executive officer and us, which are summarized in the “Potential Payments Upon Termination or a Change in Control” section of this proxy statement beginning on page 62;
We have assumed that the termination event occurred as of June 30, 2017, the last day of our fiscal 2017,
| > | We have assumed that the hypothetical termination event occurred as of January 3, 2020, the last day of our fiscal transition period, and that the value of our common stock was $210.47 per share based on the closing market price on such date; |
| > | The applicable provisions as of January 3, 2020 in the agreements and other arrangements between the named executive officer and us, which are summarized on pages 72-81; |
| > | Cash severance includes multiples of salary and annual incentive compensation, but does not include paid or unpaid salary or annual incentive compensation or cash incentives earned for our fiscal transition period because a named executive officer is entitled to annual incentive compensation if employed on January 3, 2020; |
| > | We have not included the value of any options that were vested prior to January 3, 2020; |
81 L3HARRIS 2020 PROXY STATEMENT |
|
 stock was $109.08 per share based on the closing market price on such date;
Cash severance includes multiples of salary and annual incentive compensation, but does not include paid or unpaid salary or annual incentive compensation or cash incentives earned for fiscal 2017 because a named executive officer is entitled to annual incentive compensation if employed on June 30, 2017;| > | We have assumed that all unvested, in-the-money options that were not automatically forfeited on January 3, 2020 vested and were exercised on such day; |
We have not included the value of any options that were vested prior to June 30, 2017;
We have assumed that all unvested, in-the-money options that were not automatically forfeited on June 30, 2017 vested (at target, in the case of performance stock options) and were exercised on such day;The value of accelerated performance share units is based on the target number of performance share units previously granted and does not include performance share units for the performance period ended June 30, 2017 because a named executive officer is entitled to such performance share units if employed on June 30, 2017 (see the Option Exercises and Stock Vested in Fiscal 2017 Table on page 59 of this proxy statement for the value associated with such performance share units);| > | The value of accelerated performance share units is based on the target number of performance share units previously granted and includes the dollar value of dividend equivalents paid in cash with respect to such accelerated performance share units; |
We have not included any payment of the aggregate balance shown in the Fiscal 2017 Nonqualified Deferred Compensation Table on page 61 of this proxy statement;
We have included the estimated value of continuation of health and welfare benefits and perquisites, where applicable; andFor a termination by us without cause or by the named executive officer for good reason following a change in control, the “Other Benefits” line includes $4,000 for placement services, $10,000 ($5,000 per year for two years) for financial or tax planning services, $300,000 for estimated relocation assistance and an estimate of reimbursement for taxes associated with relocation assistance, in each case pursuant to the change in control severance agreement.| > | The value of accelerated restricted stock units includes the dollar value of dividend equivalents paid in cash with respect to such accelerated restricted stock units; |
| > | We have not included any payment of the aggregate balance shown in the Fiscal Transition Period Nonqualified Deferred Compensation Table on page 71 of this proxy statement; |
| > | We have included the estimated value of continuation of health and welfare benefits and perquisites, where applicable; and |
| > | For a termination by us without cause or by the named executive officer for good reason following a change in control, the “Other Benefits” line includes $4,000 for placement services, $10,000 ($5,000 per year for two years) for financial or tax planning services, $300,000 for estimated relocation assistance and an estimate of reimbursement for taxes associated with relocation assistance, in each case pursuant to our executive change in control severance agreements. |
With respect to a named executive officer over the age of 55 and who has completed at least 10 years of full-time service (Messrs. Fox, MehnertGautier and MikuenZoiss as of June 30, 2017)January 3, 2020), a termination of such executive’s employment with us that is within such executive’s control would be expected to be designated as retirement, as opposed to voluntary termination (resignation) or termination by such executive for good reason.
William M. Brown
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 15,555,000 |
| | $ | 15,555,000 |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 15,555,000 |
| Value of Accelerated Unvested Options | | $ | 0 | | | $ | 0 | | | $ | 242,599 |
| | $ | 242,599 |
| | $ | |
| | $ | 727,796 |
| | $ | 0 |
| | $ | 727,796 |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 5,303,277 |
| | $ | 5,303,277 |
| | $ | |
| | $ | 5,303,277 |
| | $ | 0 |
| | $ | 5,303,277 |
| Value of Accelerated Vesting of Unvested Performance | | $ | 0 | | | $ | 0 | | | $ | 862,294 |
| | $ | 862,294 |
| | $ | 2,587,094 |
| | $ | 2,587,094 |
| | $ | 0 |
| | $ | 2,587,094 |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 193,960 |
| | $ | 193,960 |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 193,960 |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 511,236 | | | $ | 511,236 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 511,236 |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 22,668,336 |
| | $ | 22,668,336 |
| | $ | 8,618,167 |
| | $ | 8,618,167 |
| | $ | 0 |
| | $ | 24,878,363 |
|
67
| L3HARRIS 2020 PROXY STATEMENT 82
|
William M. BrownChristopher E. Kubasik
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payment | | Termination
by Harris
for Cause | | Voluntary
Termination/
Resignation | | Termination by
Executive for
Constructive
Termination | | Involuntary
Termination by
Harris without
Cause | | Death | | Disability | | Change in
Control
without
Termination | | Termination by
Harris without
Cause/by Executive
for Good Reason
Following a
Change in Control | | Cash Severance | | $ | 0 |
| | $ | 0 |
| | $ | 6,700,000 |
| | $ | 6,700,000 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 6,700,000 |
| | Value of Accelerated or Continued Vesting of Unvested Options | | $ | 0 |
| | $ | 0 |
| | $ | 15,045,230 | * | | $ | 15,045,230 | * | | $ | 11,350,779 |
| | $ | 11,350,779 |
| | $ | 16,892,456 |
| | $ | 16,892,456 |
| | Value of Accelerated or Continued Vesting of Unvested Performance Share Units | | $ | 0 |
| | $ | 0 |
| | $ | 6,777,204 | * | | $ | 6,777,204 | * | | $ | 6,777,204 |
| | $ | 6,777,204 |
| | $ | 12,781,568 |
| | $ | 12,781,568 |
| | Health and Welfare Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 30,494 |
| | $ | 30,494 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 56,404 |
| | Other Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 533,686 |
| | TOTAL | | $ | 0 |
| | $ | 0 |
| | $ | 28,552,928 |
| | $ | 28,552,928 |
| | $ | 18,127,983 |
| | $ | 18,127,983 |
| | $ | 29,674,024 |
| | $ | 36,964,114 |
|
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 11,850,000 |
| | $ | 11,850,000 |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 11,850,000 |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | 242,599 |
| | $ | 242,599 |
| | $ | |
| | $ | 727,726 |
| | $ | 0 |
| | $ | 727,726 |
| Value of Accelerated Vesting of Unvested Restricted Stock and
Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 6,738,950 |
| | $ | 6,738,950 |
| | $ | |
| | $ | 6,738,950 |
| | $ | 0 |
| | $ | 6,738,950 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | 862,294 |
| | $ | 862,294 |
| | $ | 2,587,094 |
| | $ | 2,587,094 |
| | $ | 0 |
| | $ | 2,587,094 |
| Value of Unvested Legacy L3 Performance
Cash
| | $ | 0 | | | $
| 0 | | | $
| 1,920,000 | | | $
| 1,920,000 | | | $
| 599,601 | | | $
| 599,601
| | | $
| 0 | | | $
| 1,920,000 | | Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 61,076 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 61,076 |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 18,000 | | | $ | 18,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 18,000 |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 21,692,919 |
| | $ | 21,692,919 |
| | $ | 10,653,442 |
| | $ | 10,653,442 |
| | $ | 0 |
| | $ | 23,902,916 |
|
________________
Jesus Malave, Jr.
| | | * | Under the terms of Mr. Brown’s employment agreement, if his employment is terminated by us without cause or by Mr. Brown for constructive termination, (a) each time-based vesting stock option held by Mr. Brown will continue to vest in accordance with its ordinary vesting schedule for the two-year period following the date of termination, and (b) the performance share units are subject to vesting based on achievement of performance goals and pro-ration. The amounts shown represent the value of such unvested options and unvested performance share units that would vest during such 24-month period or be pro-rated based on the $109.08 closing market price of our common stock on June 30, 2017, the last trading day of our fiscal 2017. |
Rahul Ghai
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payment | | Termination
by Harris
for Cause | | Voluntary
Termination/
Resignation | | Termination
by Executive
for Good Reason | | Involuntary
Termination
by Harris without
Cause | | Death | | Disability | | Change in
Control
without
Termination | | Termination
by Harris without Cause/by Executive
for Good Reason
Following a
Change in Control | | Cash Severance | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 827,585 | * | | Value of Accelerated Vesting of Unvested Options | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 610,362 |
| | $ | 610,362 |
| | $ | 1,443,565 |
| | $ | 1,443,565 |
| | Value of Accelerated Vesting of Unvested Restricted Stock | | $ | 0 |
| | $ | 0 |
| | $ | 270,082 |
| | $ | 270,082 |
| | $ | 804,574 |
| | $ | 804,574 |
| | $ | 804,574 |
| | $ | 804,574 |
| | Value of Accelerated Vesting of Unvested Performance Share Units | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 427,841 |
| | $ | 427,841 |
| | $ | 1,034,688 |
| | $ | 1,034,688 |
| | Health and Welfare Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 7,839 |
| | Other Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 533,686 |
| | TOTAL | | $ | 0 |
| | $ | 0 |
| | $ | 270,082 |
| | $ | 270,082 |
| | $ | 1,842,777 |
| | $ | 1,842,777 |
| | $ | 3,282,827 |
| | $ | 4,651,937 |
|
| | | * | Reduced by $922,415 due to the impact of the “best net after-tax” provision included in Mr. Ghai’s change in control severance agreement. |
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 625,000 |
| | $ | 625,000 |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,500,000 |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | 65,018 |
| | $ | 65,018 |
| | $ | |
| | $ | 195,053 |
| | $ | 0 |
| | $ | 195,053 |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 139,052 |
| | $ | 139,052 |
| | $ | |
| | $ | 983,117 |
| | $ | 0 |
| | $ | 983,117 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | 227,656 |
| | $ | 227,656 |
| | $ | 682,967 |
| | $ | 682,967 |
| | $ | 0 |
| | $ | 682,967 |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 0 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 1,056,726 |
| | $ | 1,056,726 |
| | $ | 1,861,137 |
| | $ | 1,861,137 |
| | $ | 0 |
| | $ | 4,926,165 |
|
83 L3HARRIS 2020 PROXY STATEMENT |
|
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Retirement | | Change in Control without Termination | | | Termination by L3Harris without Cause/ by Executive for Good Reason Following a Change in Control | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 3,447,417 |
| | $ | 3,447,417 |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 3,447,417 |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | 65,018 |
| | $ | 65,018 |
| | $ | |
| | $ | 195,053 |
| $ | 0 | | $ | 0 |
| | $ | 195,053 |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 2,059,028 |
| | $ | 2,059,028 |
| | $ | |
| | $ | 443,039 |
| $ | 0 | | $ | 0 |
| | $ | 1,721,855 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | 227,656 |
| | $ | 227,656 |
| | $ | 682,967 |
| | $ | 682,967 |
| $ | 0 | | $ | 0 |
| | $ | 682,967 |
| Value of Unvested Legacy L3 Performance
Cash
| | $ | 0 | | | $ | 0 | | | $
| 260,000 | | | $ | 260,000 | | | $ | 81,196 | | | $ | 81,196 | | $ | 0 | | $ | 0 | | | $
| 260,000
| | Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 80,581 |
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 18,000 | | | $ | 18,000 | | | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 6,157,700 |
| | $ | 6,157,700 |
| | $ | 1,402,255 |
| | $ | 1,402,255 |
| $ | 0 | | $ | 0 |
| | $ | 6,405,873 |
|
Sheldon
J. FoxZoiss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payment | | Termination
by Harris
for Cause | | Voluntary
Termination/
Resignation | | Termination
by Executive
for Good
Reason | | Involuntary
Termination
by Harris
without Cause | | Death | | Disability | | Retirement | | Change in
Control
without
Termination | | Termination
by Harris without
Cause/by Executive
for Good Reason
Following a
Change in Control | | Cash Severance | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 2,040,000 | * | | Value of Accelerated Vesting of Unvested Options | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 2,187,484 |
| | $ | 2,187,484 |
| | $ | 0 |
| | $ | 3,020,687 |
| | $ | 3,020,687 |
| | Value of Accelerated Vesting of Unvested Restricted Stock | | $ | 0 |
| | $ | 0 |
| | $ | 322,331 |
| | $ | 322,331 |
| | $ | 532,201 |
| | $ | 532,201 |
| | $ | 322,331 |
| | $ | 532,201 |
| | $ | 532,201 |
| | Value of Accelerated Vesting of Unvested Performance Share Units | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 808,420 |
| | $ | 808,420 |
| | $ | 808,420 |
| | $ | 1,605,782 |
| | $ | 1,605,782 |
| | Health and Welfare Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 49,865 |
| | Other Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 533,686 |
| | TOTAL | | $ | 0 |
| | $ | 0 |
| | $ | 322,331 |
| | $ | 322,331 |
| | $ | 3,528,105 |
| | $ | 3,528,105 |
| | $ | 1,130,751 |
| | $ | 5,158,670 |
| | $ | 7,782,221 |
|
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Retirement | | Change in Control without Termination | | | Termination by L3Harris without Cause/ by Executive for Good Reason Following a Change in Control | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 2,400,000 |
| | $ | 2,400,000 |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 2,400,000 |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | 65,018 |
| | $ | 65,018 |
| | $ | |
| | $ | 195,053 |
| $ | 0 | | $ | 0 |
| | $ | 195,053 |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 827,955 |
| | $ | 827,955 |
| | $ | |
| | $ | 827,955 |
| $ | 0 | | $ | 0 |
| | $ | 827,955 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | 227,656 |
| | $ | 227,656 |
| | $ | 682,967 |
| | $ | 682,967 |
| $ | 0 | | $ | 0 |
| | $ | 682,967 |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 67,530 |
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 511,236 | | | $ | 511,236 | | | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 4,099,395 |
| | $ | 4,099,395 |
| | $ | 1,705,975 |
| | $ | 1,705,975 |
| $ | 0 | | $ | 0 |
| | $ | 4,684,741 |
|
| | | * | Includes $40,000 in respect of the difference in Mr. Fox’s fiscal 2017 Annual Incentive Plan target and his actual fiscal 2017 Annual Incentive Plan payout. |
Dana A. Mehnert
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payment | | Termination
by Harris
for Cause | | Voluntary
Termination/
Resignation | | Termination
by Executive
for Good
Reason | | Involuntary
Termination
by Harris
without
Cause | | Death | | Disability | | Retirement | | Change in
Control
without
Termination | | Termination
by Harris
without Cause/by Executive for Good Reason
Following a Change in Control | | Cash Severance | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 1,930,000 | * | | Value of Accelerated Vesting of Unvested Options | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 1,281,193 |
| | $ | 1,281,193 |
| | $ | 0 |
| | $ | 2,114,396 |
| | $ | 2,114,396 |
| | Value of Accelerated Vesting of Unvested Performance Share Units | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 808,420 |
| | $ | 808,420 |
| | $ | 808,420 |
| | $ | 1,605,782 |
| | $ | 1,605,782 |
| | Health and Welfare Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 65,506 |
| | Other Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 533,686 |
| | TOTAL | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 2,089,613 |
| | $ | 2,089,613 |
| | $ | 808,420 |
| | $ | 3,720,178 |
| | $ | 6,249,370 |
|
| | | * | Includes $40,000 in respect of the difference in Mr. Mehnert’s fiscal 2017 Annual Incentive Plan target and his actual fiscal 2017 Annual Incentive Plan payout.L3HARRIS 2020 PROXY STATEMENT 84
|
Scott T. Mikuen
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payment | | Termination
by Harris
for Cause | | Voluntary
Termination/
Resignation | | Termination
by Executive
for Good
Reason | | Involuntary
Termination
by Harris
without Cause | | Death | | Disability | | Retirement | | Change in
Control
without
Termination | Termination
by Harris
without Cause/by
Executive
for Good Reason
Following a Change in Control | | Cash Severance | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| $ | 1,900,000 |
| | Value of Accelerated Vesting of Unvested Options | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 1,588,858 |
| | $ | 1,588,858 |
| | $ | 0 |
| | $ | 2,313,351 |
| $ | 2,313,351 |
| | Value of Accelerated Vesting of Unvested Restricted Stock | | $ | 0 |
| | $ | 0 |
| | $ | 161,220 |
| | $ | 161,220 |
| | $ | 266,264 |
| | $ | 266,264 |
| | $ | 161,220 |
| | $ | 266,264 |
| $ | 266,264 |
| | Value of Accelerated Vesting of Unvested Performance Share Units | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 702,965 |
| | $ | 702,965 |
| | $ | 702,965 |
| | $ | 1,396,504 |
| $ | 1,396,504 |
| | Health and Welfare Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| $ | 64,583 |
| | Other Benefits | | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| | $ | 0 |
| $ | 533,686 |
| | TOTAL | | $ | 0 |
| | $ | 0 |
| | $ | 161,220 |
| | $ | 161,220 |
| | $ | 2,558,087 |
| | $ | 2,558,087 |
| | $ | 864,185 |
| | $ | 3,976,119 |
| $ | 6,474,388 |
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)We are required under Item 402(u) of Regulation S-K to calculate and disclose our “CEO pay ratio.” As permitted under SEC rules for such calculation and disclosure, from our total employee population of 17,494 full-time, part-time, seasonal and temporary workers as of May 1, 2018 (other than our CEO), we excluded all 781 non-U.S. employees1 (less than 5% of total employees) and then identified the median employee based on W-2 taxable Medicare wages (Box 5) for the 12 months leading up to May 1, 2018, as reported to the Internal Revenue Service. We used the same median employee for our fiscal transition period ended January 3, 2020 as for fiscal 2018 in our pay ratio calculation, because there were no changes in our employee population (excluding L3 employees, as permitted under SEC rules) or employee compensation arrangements during our fiscal transition period ended January 3, 2020, that we believe would result in a significant change to our pay ratio disclosure. As noted, as a result of the Securities Exchange ActMerger occurring during our fiscal transition period ended January 3, 2020, we excluded from our employee population data described above approximately 31,000 employees who were employees of 1934, as amended, requires our directors and executive officers, as well as persons who own more than 10% of our outstanding shares of common stock, to file reports of ownership and changes in ownership of our securities withL3 at the SEC. We have procedures in place to assist our directors and executive officers in preparing and filing these reports on a timely basis.
Based solely on a reviewtime of the forms furnished to us, or written representations from certain persons that no Forms 5 were required,Merger. We calculated such median employee’s total compensation of $58,426 for our fiscal transition period ended January 3, 2020, in the same manner we believe that all required forms have been timely filedcalculated our CEO’s total compensation of $15,745,630 for our fiscal 2017.
PROPOSAL 2: ADVISORY VOTE TO APPROVE THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
In accordance withtransition period ended January 3, 2020, as reported in the requirements of Section 14A“Total” column of the Securities Exchange Act of 1934, as amended, andFiscal Transition Period Summary Compensation Table on page 62. Based on this information, for our fiscal transition period ended January 3, 2020, the related rulesratio of the SEC, we are providingmedian of the total compensation of all employees (other than our shareholders withCEO and former L3 employees) to the opportunity to vote, on a non-binding, advisory basis, to approve thetotal compensation of our named executive officers asCEO was 1:269, which pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Because applicable SEC rules permit various methodologies, assumptions and exclusions, such pay ratio may not be comparable to pay ratios calculated and disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC (including the “Compensation Discussion and Analysis” section, the Fiscal 2017 Summary Compensation Table andby other related tables and accompanying footnotes and narratives).
As described in the “Compensation Discussion and Analysis” section of this proxy statement beginning on page 30, the overall objective of our executive compensation program is to encourage and reward the creation of sustainable, long-term shareholder value.
As set forth more fully under “Overall Objective and Guiding Principles of Our Executive Compensation Program” on page 30 of this proxy statement, the guiding principles of our executive compensation program include the following:
companies. Compensation programs must directly align the interests of our executives with those of our shareholders.
Compensation and benefits must be competitive within the market to attract, motivate and retain executives that drive our desired business results.
To motivate achievement of our financial goals and strategic objectives, a significant portion of compensation will be at-risk and based on our financial performance and the executive’s personal performance.
An executive’s realized pay will be aligned with the executive’s performance through above-target compensation for above-target performance and below-target compensation for below-target performance.
In furtherance of this objective and guiding principles, our executive compensation program includes a number of features intended to reflect sound practices and ensure that our program reinforces pay-for-performance and the creation of sustainable, long-term shareholder value. These
| 1 | Approximate number of non-U.S. employees excluded, by jurisdiction: Australia (175), Canada (116), Germany (78), Pakistan (25), United Arab Emirates (16), United Kingdom (310) and 10 or fewer in each of Algeria, Brazil, Estonia, France, Hong Kong, India, Japan, Italy, Malaysia, Poland, Qatar, Romania, Saudi Arabia, Singapore and Taiwan. |
7085 L3HARRIS 2020 PROXY STATEMENT
|
features are described in more detail in the “Compensation Discussion and Analysis” section of this proxy statement and include the following:
Our executive compensation decisions are made by the independent members of our Board or by our Management Development and Compensation Committee, which is made up exclusively of independent members.
Our Management Development and Compensation Committee has retained an independent executive compensation consulting firm to provide objective analysis, advice and information.
Our Management Development and Compensation Committee periodically reviews the composition of our compensation comparison peer group and makes changes it determines are appropriate.
We address each element of our executive compensation program in the context of competitive practices. We generally set an executive officer’s target direct annual compensation (the total of base salary rate, target annual cash incentives and target long-term equity-based incentive compensation granted as part of our annual cycle for grants to executive officers) within 20% below to 20% above the median for comparable positions, where available, at companies in our compensation comparison peer group, using discretion after also considering the executive officer’s experience, position, responsibilities, tenure and contributions. An executive officer’s realized compensation is substantially dependent on our performance.
We make a significant portion of each executive’s overall compensation dependent on our performance as measured against pre-determined targets for short- and long-term financial performance measures, such as operating income, free cash flow, revenue, earnings per share compound annual growth rate, ROIC, run rate net synergies from the Exelis acquisition and other financial metrics. In fiscal 2017, 89% of total target direct compensation of our CEO was tied to Company and individual performance. We believe our financial performance measure targets are challenging yet achievable.
We have established a strong relationship between an executive’s compensation and our stock price performance because a significant portion of an executive’s overall compensation opportunity is in the form of equity.
We have meaningful stock ownership guidelines that are designed to maintain alignment of executives’ interests with those of our shareholders.
Our equity plans prohibit option repricing and back-dating.
We provide few perquisites, after eliminating virtually all executive perquisites.
We have a “clawback” policy that entitles us to recover cash and equity incentive payments from executives in the event of a restatement of our financial statements as a result of errors, omissions or fraud.
We will pay cash severance payments under executive change in control severance agreements only on a “double trigger” basis (i.e., only on both a change in control and a qualifying termination of employment).
We do not provide excise tax gross-ups under executive change in control severance agreements.
We do not pay dividend equivalents on performance share unit awards unless, and only to the extent, the performance share unit awards ultimately are earned at the end of the performance period.
We do not permit executives (or directors or other employees) to engage in short sales with respect to our stock or enter into hedging, puts, calls or other “derivative” transactions with respect to our securities.
We do not permit executives (or directors) to hold or purchase our stock on margin or in a margin account or otherwise pledge our stock as collateral for margin accounts, loans or any other purpose.
We believe that the features of our executive compensation program align with our pay-for-performance philosophy and further align the interests of our executive officers with the long-term interests of our shareholders, while appropriately balancing risk and reward.
Our Board recommends that our shareholders approve the compensation of our named executive officers as disclosed in this proxy statement by voting in favor of the following resolution:
“RESOLVED, that the shareholders of Harris Corporation hereby approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Harris Corporation proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Fiscal 2017 Summary Compensation Table and other related tables and accompanying footnotes and narratives.”
The vote on this proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which means that the vote is not binding
on us, our Board and our Management Development and Compensation Committee. However, our Board and our Management Development and Compensation Committee, which is responsible for designing and administering our executive officer compensation program, value the opinions expressed by our shareholders and will consider the voting results when making future decisions regarding compensation for our named executive officers.
We currently hold our advisory vote to approve the compensation of our named executive officers (“Say-on-Pay vote”) annually. Shareholders have an opportunity to cast an advisory vote on the frequency of Say-on-Pay votes at least every six years, and the next advisory vote on the frequency of the Say-On-Pay vote will be at our 2017 Annual Meeting of Shareholders pursuant to Proposal 3 below.
Vote Required and Related Matters
The affirmative vote of a majority of the shares present or represented at the 2017 Annual Meeting of
Shareholders and entitled to vote on this proposal will be required to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Abstaining from voting on this proposal will have the effect of a vote against approval of the compensation of our named executive officers as disclosed in this proxy statement. Any broker non-votes will have no effect on the approval of the compensation of our named executive officers as disclosed in this proxy statement.
Recommendation Regarding Proposal 2
Our Board of Directors unanimously recommends that you vote “FOR” approval of the compensation of our named executive officers as disclosed in this proxy statement. If not otherwise specified, proxies will be voted “FOR” approval of this proposal.
 PROPOSAL 3: ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended, and the related rules of the SEC, we also are providing our shareholders with the opportunity to vote, on a non-binding, advisory basis, on the frequency of future advisory votes to approve the compensation of our named executive officers (similar to the non-binding, advisory vote in Proposal 2 of this proxy statement). Shareholders may vote for every year, every 2 years or every 3 years as the frequency of future Say-on-Pay votes or may abstain from voting on this proposal.
At our 2011 Annual Meeting of Shareholders, our shareholders strongly supported a frequency of “every year” for holding future Say-on-Pay votes, consistent with the recommendation of our Board. As a result, our Board decided to hold annual Say-on-Pay votes. Our Board continues to believe that holding an advisory Say-on-Pay vote every year is the most appropriate alternative for us at this time. Our Board believes that an annual advisory Say-on-Pay vote enables our shareholders to provide regular input on our executive compensation philosophy, policies and practices and the continuing focus of our executive compensation program on driving sustainable, long-term shareholder value. Our Board recommends that shareholders vote for approval, on a non-binding, advisory basis, of “every year” as the frequency of future advisory votes to approve the compensation of our named executive officers.
The vote on this proposal is advisory, and the result of the vote on this proposal is not binding on us, our Board or
its committees. However, our Board and its applicable determining the frequency of future advisory votes to approve the compensation of our named executive officers.
Vote Required and Related Matters
The affirmative vote of a majority of the shares present or represented at the 2017 Annual Meeting of Shareholders and entitled to vote on this proposal will be required to approve, on a non-binding, advisory basis, any particular frequency of future advisory votes to approve the compensation of our named executive officers. Because the vote on this proposal is non-binding, advisory and intended to indicate the preference of our shareholders, if no particular frequency receives a majority vote, then the particular frequency receiving the greatest number of votes will be deemed the preference of our shareholders. Abstaining from voting on this proposal will have the effect of a vote against each particular frequency of future advisory votes to approve the compensation of our named executive officers. Any broker non-votes will have no effect on the approval of a particular frequency of future advisory votes to approve the compensation of our named executive officers.
Recommendation Regarding Proposal 3
Our Board of Directors unanimously recommends that you vote “EVERY YEAR” as the frequency of future advisory votes to approve the compensation of our named executive officers. If not otherwise specified, proxies will be voted for the “EVERY YEAR” voting option with respect to this proposal.
REPORT OF THE AUDIT COMMITTEE OF L3HARRIS
The following Report of our Audit Committee does not constitute soliciting material and the Report should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Report by reference therein. The role of the Audit Committee is, among other things, to assist the Board of Directors (the “Board”) of L3Harris Technologies, Inc. (“L3Harris”) in its oversight of: The integrity of Harris’ financial statements;
Harris’ compliance with relevant legal and regulatory requirements;Harris’ internal control over financial reporting;| > | the integrity of L3Harris’ financial statements; |
The qualifications and independence of Harris’ independent registered public accounting firm; andThe performance of Harris’| > | L3Harris’ compliance with relevant legal and regulatory requirements; |
| > | L3Harris’ internal control over financial reporting; |
| > | the qualifications and independence of L3Harris’ independent registered public accounting firm; and |
| > | the performance of L3Harris’ internal audit function and independent registered public accounting firm. |
The Board has determined that, in its business judgment, all members of theL3Harris’ Audit Committee are independent within the meaning of the listing standards of the NYSE,New York Stock Exchange, the Sarbanes-Oxley Act of 2002 and related rules of the SECSecurities and Harris’Exchange Commission (“SEC”) and L3Harris’ Director Independence Standards. Harris’
L3Harris’ management is responsible for the preparation, presentation and integrity of Harris’L3Harris’ financial statements and the effectiveness of Harris’L3Harris’ system of internal control over financial reporting and disclosure controls and procedures. Management and theL3Harris’ Internal Audit department are responsible for maintaining and evaluating appropriate accounting and financial reporting practices and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. Harris’L3Harris’ independent registered public accounting firm for its fiscal 2017,transition period, Ernst & Young LLP (“EY”), iswas responsible for auditing Harris’L3Harris’ consolidated financial statements and expressing an opinion as to whether such financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States. EY also iswas responsible for auditing the effectiveness of Harris’L3Harris’ internal control over financial reporting. Representatives of EY attended all regularly scheduled meetings of the Audit Committee during the fiscal 2017.transition period. The Audit Committee has met and held discussions with management, the head of Internal Audit and EY. The Audit CommitteeEY, and discussed with the internal auditors and EY the overall scope of, and plans for, their respective audits and the identification of audit risks. The Audit Committee also met with EY and the head of Internal Audit, the Principal Accounting Officer and the Chief Financial Officer, with and without management present, to discuss the results of their respective examinations, the reasonableness of significant judgments, the evaluations of Harris’L3Harris’ internal control over financial reporting and the overall quality of Harris’L3Harris’ financial reporting. Management has represented to the Audit Committee that Harris’L3Harris’ consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. In the performance of its oversight function,functions, the Audit Committee has: Reviewed and discussed with management and EY Harris’ internal control over financial reporting, including a review of management’s report on its assessment and EY’s audit of the effectiveness of Harris’ internal control over financial reporting and any significant deficiencies or material weaknesses;
Considered, reviewed and discussed the audited financial statements with management and EY, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices;
Discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties;
Received, reviewed and discussed the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with the Audit Committee concerning independence, and has discussed with EY its independence;| > | reviewed and discussed with management and EY L3Harris’ internal control over financial reporting, including a review of management’s report on its assessment and EY’s audit of the effectiveness of L3Harris’ internal control over financial reporting and any significant deficiencies or material weaknesses; |
Reviewed the services provided by EY other than its audit services and considered whether the provision of such other services by EY is compatible with maintaining its independence, discussed with EY its independence, and concluded that EY is independent from Harris and its management; and
Reviewed the contents of SEC-required certification statements from the CEO and Chief Financial Officer and also discussed and reviewed the process and internal controls for providing reasonable assurances that the financial statements included in the Harris Annual Report on Form 10-K for the fiscal year ended June 30, 2017 are true in all important respects, and that the report contains all appropriate material information of which they are aware.| > | considered, reviewed and discussed the audited financial statements with management and EY, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices; |
| > | discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties; |
L3HARRIS 2020 PROXY STATEMENT 86 |
| > | received, reviewed and discussed the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with an audit committee concerning independence, and discussed with EY its independence; |
| > | reviewed the services provided by EY other than its audit services and considered whether the provision of such other services by EY is compatible with maintaining its independence, discussed with EY its independence, and concluded that EY is independent from L3Harris and its management; and |
| > | reviewed the contents of SEC-required certification statements from the Chief Executive Officer and Chief Financial Officer and also discussed and reviewed the process and internal controls for providing reasonable assurances that the financial statements included in L3Harris’ Transition Report on Form 10-KT for the fiscal transition period ended January 3, 2020 are true in all important respects, and that the report contains all appropriate material information of which they are aware. |
In reliance on the reports, reviews and discussions described in this Report, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in Harris’ AnnualL3Harris’ Transition Report on Form 10-K10-KT for the fiscal yeartransition period ended June 30, 2017,January 3, 2020, for filing with the SEC. The Audit Committee also has appointed, and has requested shareholder ratification of theits appointment of, EY as Harris’L3Harris’ independent registered public accounting firm for the fiscal year ending June 29, 2018. January 1, 2021. Submitted on August 24, 2017February 27, 2020 by the Audit Committee of the Board of Directors.Directors of L3Harris Technologies, Inc. Gregory T. Swienton,
Lewis Kramer, Chairperson Sallie
B. Bailey
Peter W. Chiarelli
Thomas A. Dattilo Terry D. GrowcockCorcoran
87 L3HARRIS 2020 PROXY STATEMENT |
PROPOSAL 4: RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED REGISTERED PUBLIC ACCOUNTING FIRM
| Our Board unanimously recommends voting FOR ratification of appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 1, 2021. |
| > Independent accounting firm with breadth of knowledge, support and expertise of accessible national office. > Significant industry and government contracting expertise. > Periodic mandated rotation of audit firm’s lead engagement partner. |
Our Audit Committee has appointed Ernst & Young LLP (“EY”) to audit our books and accounts and internal control over financial reporting for the fiscal year ending January 1, 2021. Although not required by applicable law, our Board believes that obtaining shareholder ratification of the appointment is a sound corporate governance practice. If our shareholders do not ratify the appointment of EY, our Audit Committee will reconsider whether to retain EY, and may either do so or hire another firm without resubmitting the matter to shareholders for approval. We expect that a representative of EY will be present at the 2020 Annual Meeting to respond to appropriate questions from shareholders and to make a statement if he or she desires to do so. As provided in our Audit Committee’s charter and as discussed above, our Audit Committee is responsible for directly appointing, compensating, retaining, terminating and overseeing our independent registered public accounting firm. Although we have a very long-standing relationship with EY, our Audit Committee frequently evaluates the independence and effectiveness of our independent registered public accounting firm and its personnel, as well as the cost and quality of its audit and audit-related services. Our Audit Committee retains the discretion at any time to appoint a different independent registered public accounting firm. In accordance with sound corporate governance practices and in order to ensure that our Audit Committee and our shareholders are receiving the best and most cost-effective audit services available, our Audit Committee periodically considers issuing a “request for proposal” to EY and other large nationally recognized accounting firms with regard to our audit engagement, which could result in a firm other than EY providing audit engagement services to us in later years. Our Audit Committee used this process in connection with its selection and appointment of EY as our independent registered public accounting firm for the fiscal year ending January 1, 2021.
L3HARRIS 2020 PROXY STATEMENT 88 |
Fees Paid to Independent Registered Public Accounting Firm EY served as our independent registered public accounting firm for theour fiscal yeartransition period ended June 30, 2017.January 3, 2020. In addition to the engagement to audit our fiscal transition period financial statements and internal control over financial reporting and to review the financial statements included in our quarterly reports on Form 10-Q, EY also was engaged by us during our fiscal 2017transition period to perform certain audit-related and tax services. The following table presents fees for professional audit services and other services rendered by EY for the audit of our annual financial statements forfiscal transition period ended January 3, 2020 and the fiscal years ended June 30, 201728, 2019 and July 1, 2016 and fees for other services rendered by EY during those periods.June 29, 2018:
| | | Fiscal Transition Period | | | Fiscal 2019 | | | Fiscal 2018 | | Audit Fees(1) | | $ | 14,922,674 | | | $ | 9,679,000 | | | $ | 12,243,000 | | Audit-Related Fees(2) | | $ | 6,431 | | | $ | 0 | | | $ | 0 | | Tax Fees(3) | | $ | 460,529 | | | $ | 455,000 | | | $ | 1,425,000 | | All Other Fees(4) | | $ | 10,615 | | | $ | 0 | | | $ | 0 | | | Total | | $ | 15,400,249 | | | $ | 10,134,000 | | | $ | 13,668,000 | |
| (1) | Audit fees included fees associated with the annual audit and the audit of internal control over financial reporting, as well as reviews of our quarterly reports on Form 10-Q, SEC registration statements and other filings, comfort letter procedures, accounting and reporting consultations and statutory audits required internationally for certain of our subsidiaries. |
| (2) | No audit-related services were rendered or fees billed for fiscal 2019 or 2018. |
| (3) | Tax fees for our fiscal transition period consisted of $204,142 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $256,387 related to tax planning and tax advisory services. Tax fees for fiscal 2019 consisted of $125,000 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $330,000 related to tax planning and tax advisory services. Tax fees for fiscal 2018 consisted of $782,000 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $643,000 related to tax planning and tax advisory services. |
| | | | | | | | | | | Fiscal 2017 | | Fiscal 2016 | | Audit Fees | $ | 12,595,427 |
| | $ | 13,647,000 |
| | Audit-Related Fees | 2,500,000 |
| | 0 |
| | Tax Fees | 3,606,000 |
| | 3,698,000 |
| | All Other Fees | 0 |
| | 0 |
| | Total | $ | 18,701,427 |
| | $ | 17,345,000 |
|
| (4) | For fiscal 2019 and 2018, no professional services were rendered or fees billed for services not included within Audit Fees, Audit-Related Fees or Tax Fees. |
Audit Fees. Audit fees included fees associated with the annual audit and the audit of internal control over financial reporting, including purchase accounting and audit procedures relating to our acquisition of Exelis, as well as reviews of our quarterly reports on Form 10-Q, SEC registration statements and other filings, comfort letter procedures, accounting and reporting consultations and statutory audits required internationally for certain of our subsidiaries.
Audit-Related Fees. Audit-related fees for fiscal 2017 primarily related to audit services for a “carve-out” audit required in connection with a divestiture in fiscal 2017. No audit-related services were rendered or fees billed for fiscal 2016.
Tax Fees. Tax fees for fiscal 2017 consisted of $1,226,000 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $2,380,000 related to tax planning and tax
advisory services. Tax fees for fiscal 2016 consisted of $2,865,000 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $833,000 related to tax planning and tax advisory services.
All Other Fees. For fiscal 2017 and fiscal 2016, no professional services were rendered or fees billed for services not included within Audit Fees, Audit-Related Fees or Tax Fees.
EY did not perform any professional services related to financial information systems design and implementation for us in our fiscal 2017transition period or in fiscal 2019 or fiscal 2016.2018.
Our Audit Committee has determined in its business judgment that the provision of the services described above is compatible with maintaining EY’s independence.
Pre-Approval of Audit and Non-Audit Services Under our Audit Committee Pre-Approval Policy and Procedures, as adopted by our Audit Committee, our Audit Committee must pre-approve all audit and non-audit services provided by our independent registered public accounting firm to ensure that the provision of such services does not impair the firm’s independence. The policy utilizes a framework of both general pre-approval for certain specified services and specific pre-approval for all other services. Early in each fiscal year, our Audit Committee reviews and, as it deems appropriate, pre-approves the audit services and any audit-related services, tax services and other services to be performed by our independent registered public accounting firm, together with specific details regarding such services anticipated to be required for such fiscal year including, when available, estimated fees. Our Audit Committee periodically reviews the services provided to date and the actual fees against the estimates, and such fee amounts may be updated to the extent appropriate at regularly scheduled meetings of our Audit Committee. Additional pre-approval is required before actual fees for any service can exceed the originally pre-approved amount. Our Audit Committee also may revise the list of pre-approved services and related fees from time to time. AllOur Audit Committee followed this same process for the fiscal transition period, and all of the services described in the table above under the captions “Audit Fees,” “Audit-Related Fees” and
“Tax Fees” related notes were pre-approved in accordance with this policy.
If we seek to engage our independent registered public accounting firm for other services that are not considered subject to general pre-approval as described above, then our Audit Committee must approve such specific engagement as well as the estimated fees. Such engagement will be presented to our Audit Committee for pre-approval at its next regularly scheduled meeting. If the timing of the project requires an expedited decision, then we may ask the Chairperson of our Audit Committee to pre-approve such engagement. Any such pre-approval by the Chairperson is then presented to our full Audit Committee for ratification at the next Audit Committee meeting. In any event, pre-approval of any engagement by our Audit Committee or the Chairperson of our Audit Committee is required before our independent registered public accounting firm may commence any engagement. Additional pre-approval is required before any fees can exceed approved fees for any such specifically approved services. Appointment
89 L3HARRIS 2020 PROXY STATEMENT |
Public Accounting Firm for Fiscal 2018Our Audit Committee has appointed EY
PROPOSALS 4, 5 AND 6 Proposals 4, 5, and 6 each request that shareholders approve an amendment to auditmodernize our books and accounts and internal control over financial reporting for the fiscal year ending June 29, 2018. Although applicable law does not require shareholder ratificationRestated Certificate of the appointment, our Board believes that obtaining shareholder ratification of the appointment is a sound corporate governance practice. If our shareholders do not ratify the appointment of EY, our Audit Committee will reconsider whether to retain EY and may retain EY or hire another firm without resubmitting the matter to shareholders for approval. We expect that a representative of EY will be present at the 2017 Annual Meeting to respond to appropriate questions from shareholders and to make a statement if he or she desires to do so.
As provided in our Audit Committee’s charter andIncorporation as discussed above, our Audit Committee is responsible for directly appointing, compensating, retaining, terminating and overseeing our independent registered public
follows: accounting firm. Although we have a very long-standing relationship with EY,| > | Remove supermajority voting and “fair price” requirements for business combinations involving interested shareholders (Proposal 4) |
| > | Remove the “anti-greenmail” provision (Proposal 5) |
| > | Remove the requirement that we have cumulative voting for directors if there is a 40% shareholder (Proposal 6) |
Each of these proposed amendments to our Audit Committee frequently evaluatesRestated Certificate of Incorporation will be voted on separately, and they are not conditioned on one another or on the independenceapproval of any other proposal to be presented at the Annual Meeting. We describe these proposals and effectivenessthe related amendments in more detail below. TO AMEND OUR RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING AND “FAIR PRICE” REQUIREMENTS FOR BUSINESS COMBINATIONS INVOLVING INTERESTED SHAREHOLDERS
| Our Board unanimously recommends voting FOR the amendment to our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders. |
| > The supermajority voting and “fair price” requirements for business combinations involving interested shareholders were designed to protect our shareholders against hostile takeovers by activist investors. > Our Board believes the concerns that prompted adopting such supermajority voting and “fair price” requirements in 1984 are now adequately addressed by the corporate law of Delaware, the state in which we are incorporated. > Eliminating these requirements would modernize our Restated Certificate of Incorporation and be more consistent with current corporate governance best practices and governance practices of other S&P 500 companies. |
BACKGROUND ON OUR SUPERMAJORITY VOTING AND “FAIR PRICE” REQUIREMENTS Article Ninth of our independent registered public accounting firmRestated Certificate of Incorporation (“Article Ninth”) contains two requirements, approved by our shareholders in 1984, which were originally intended to protect our shareholders against hostile takeovers by activist investors: | > | Supermajority voting requirement. Article Ninth requires the affirmative vote of holders of at least 80% of our common stock to approve certain business combinations involving an interested shareholder (generally defined for this purpose as a holder of more than 10% of our common stock). Article Ninth includes exceptions to this supermajority voting requirement |
L3HARRIS 2020 PROXY STATEMENT 90 |
| if the business combination with the interested shareholder either has been approved by a majority of our “continuing directors” (as defined in Article Ninth) or satisfies the “fair price” requirement described below. If either of these exceptions applies, the business combination with the interested shareholder instead would be subject to the usual voting requirements of the Delaware General Corporation Law (the “DGCL”). |
| > | “Fair price” requirement. The “fair price” exception (to the supermajority voting requirement) in Article Ninth requires that the consideration to be received by shareholders in the business combination with the interested shareholder meet or exceed the highest of certain prices previously paid by the interested shareholder and be in cash or generally the same form as previously paid by the interested shareholder. These criteria as to amount and form of consideration, in addition to certain notice and information criteria, were common elements of a “fair price” requirement, an anti-takeover measure intended to defend against two-tiered tender offers in which a potential acquirer offers one price for shares needed to gain control of a target company and a lower price (or other less attractive consideration) for the remaining shares, which can pressure shareholders to tender their shares for the tender offer price regardless of their value. A standard “fair price” provision encourages a potential acquirer to negotiate with a company’s board of directors by requiring the potential acquirer to pay a “fair price” for all shares based on a formula or other criteria unless the acquirer’s offer satisfies specified approval requirements of the company’s board of directors or shareholders. |
WHY WE PROPOSE TO ELIMINATE THESE REQUIREMENTS In the years since our shareholders approved these supermajority and its personnel,“fair price” requirements, Delaware corporate law has been amended to provide similar protections. Specifically, Section 203 of the DGCL disallows a business combination involving an interested shareholder (defined for this purpose as a shareholder owning more than 15% of a company’s voting stock) for a period of three years after the shareholder became an interested shareholder, unless: | > | the company’s board approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder prior to such business combination or transaction; |
| > | the shareholder owned at least 85% of the company’s outstanding voting stock (excluding shares owned by persons who are directors and also officers of the company and shares owned by certain employee benefit plans) upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder; or |
| > | the business combination was approved by the company’s board of directors and by the affirmative vote of at least 66 and 2/3% of the company’s outstanding voting stock not owned by the interested shareholder. |
Our Nominating and the cost and quality of its audit and audit-related services. In accordance with sound corporate governance practices and in order to ensure that our AuditGovernance Committee and our Board believe that Section 203 of the DGCL sufficiently protects our shareholders are receivingagainst the concerns that Article Ninth of our Restated Certificate of Incorporation sought to address, making Article Ninth no longer necessary. Our Nominating and Governance Committee and our Board therefore believe that eliminating Article Ninth is in the best interests of L3Harris and most cost-effective audit services available, our Auditshareholders and also would be consistent with current corporate governance best practices and the governance practices of other S&P 500 companies. On the recommendation of our Nominating and Governance Committee, periodically considers issuing a request for proposal from EYour Board unanimously approved, and other large nationally recognized accounting firms with regardrecommends that our shareholders approve an amendment to our audit engagement. ARestated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders by eliminating Article Ninth based on the determination to use a requestof our Nominating and Governance Committee and our Board that such an amendment is in the best interests of L3Harris and our shareholders because Article Ninth is not necessary considering the similar protections afforded by Section 203 of the DGCL and eliminating Article Ninth would be consistent with current corporate governance best practices and governance practices of other S&P 500 companies. WHAT HAPPENS IF SHAREHOLDERS APPROVE THIS PROPOSAL If this proposal is approved, Article Ninth’s supermajority voting and “fair price” requirements for proposal process could result in a firm other than EY providing audit engagement services to us in later years. Our Audit Committee retains the discretion at any time to appoint a different independent registered public accounting firm. Vote Requiredbusiness combinations involving interested shareholders would no longer apply, and Related MattersArticle Ninth would be eliminated entirely from our Restated Certificate of Incorporation.
The primary effects of eliminating Article Ninth would be that, for business combinations previously covered by Article Ninth, the business combination would be subject to Board approval, and if the DGCL requires a shareholder vote, to the affirmative vote of shareholders required by the DGCL (including Section 203, if applicable) and our governing documents. If this proposal is approved, it will become effective upon our filing of an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the 2020 Annual Meeting. Such amendment will amend and restate Article Ninth to read in its entirety as follows: “NINTH: Reserved.” If this proposal is not approved, Article Ninth will remain unchanged and as currently in effect.
91 L3HARRIS 2020 PROXY STATEMENT |
TO AMEND OUR RESTATED CERTIFICATE
OF INCORPORATION TO ELIMINATE THE “ANTI-GREENMAIL” PROVISION
| Our Board unanimously recommends voting FOR the amendment to our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision. |
| > “Anti-greenmail” provisions were commonly implemented in the 1980s to prohibit companies from making “greenmail” payments – premium payments to activist investors. > Our Board believes that our anti-greenmail provision is no longer necessary to combat the threats that it was originally intended to address when adopted in 1985, due to subsequent laws that sufficiently deter “greenmail” payments and the behavior of activist investors that originally prompted those payments. > Anti-greenmail provisions now are less common among S&P 500 companies, and our Board believes eliminating our anti-greenmail provision is consistent with current corporate governance best practices. |
BACKGROUND ON OUR “ANTI-GREENMAIL” PROVISION Article Tenth, Section 1 of our Restated Certificate of Incorporation contains an “anti-greenmail” provision. This provision requires that, if we wish to repurchase shares of our common stock from an interested shareholder (generally defined as one beneficially owning, directly or indirectly, 5% or more of our common stock) and we do not offer the same repurchase terms to our other shareholders, then we cannot repurchase the interested shareholder’s shares without the approval of the shares beneficially owned by the interested shareholder plus a majority of the remaining outstanding shares present or represented atof our common stock.
WHY WE PROPOSE TO ELIMINATE THIS PROVISION Our “anti-greenmail” provision, adopted in 1985, was designed to prohibit us from making premium payments to activist investors. It is now uncommon for S&P 500 companies to have “anti-greenmail” provisions in their certificates of incorporation, and such provisions are no longer necessary because federal and state laws exist that deter “greenmail” payments as well as the 2017 Annual Meetingbehavior of Shareholdersactivist investors that originally prompted “greenmail” payments. Our Nominating and entitledGovernance Committee and our Board believe that eliminating our “anti-greenmail” provision is in the best interests of L3Harris and our shareholders because it is no longer necessary to deter the threats it was intended to address when adopted. Also, our Nominating and Governance Committee and our Board believe that eliminating it would be consistent with current corporate governance best practices and governance practices of other S&P 500 companies and would modernize our Restated Certificate of Incorporation.
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WHAT HAPPENS IF SHAREHOLDERS APPROVE THIS PROPOSAL The primary effect of eliminating our “anti-greenmail” provision would be that our Board would be able to authorize such a payment without shareholder approval if it determines the payment to be in the best interests of L3Harris and our shareholders. As noted, our “anti-greenmail” provision is contained in Article Tenth, Section 1 of our Restated Certificate of Incorporation. Our Board also is separately proposing to eliminate Article Tenth, Section 2 of our Restated Certificate of Incorporation, as discussed in Proposal 6. For this reason, there are several different ways that the vote on this proposal could impact Article Tenth: | > | If this proposal and Proposal 6 are both approved: we will file an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety: “TENTH: Reserved.” |
| > | If neither this proposal nor Proposal 6 is approved: Article Tenth will not be amended and will remain unchanged and as currently in effect. |
| > | If this proposal is approved, but Proposal 6 is not approved: we will file an amendment to our Restated Certificate of Incorporation with the Delaware Secretary of State promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety as set forth in Appendix B-1 to this proxy statement. |
| > | If this proposal is not approved, but Proposal 6 is approved: we will file an amendment to our Restated Certificate of Incorporation with the Delaware Secretary of State promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety as set forth in Appendix B-2 to this proxy statement. |
93 L3HARRIS 2020 PROXY STATEMENT |
TO AMEND OUR RESTATED CERTIFICATE
OF INCORPORATION TO ELIMINATE THE CUMULATIVE VOTING PROVISION THAT APPLIES WHEN WE HAVE A 40% SHAREHOLDER
| Our Board unanimously recommends voting FOR the amendment to our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder. |
| > The only cumulative voting requirement in our Restated Certificate of Incorporation is in Article Tenth, Section 2; it applies when we have a 40% shareholder and was originally adopted in 1985 as an anti-takeover measure. > Cumulative voting generally is rare among S&P 500 companies, and our Board believes that this limited cumulative voting right is not necessary to protect our shareholders against activist investors. > Our Board also believes that eliminating this limited cumulative voting right is consistent with current corporate governance best practices, the governance practices of other S&P 500 companies, and the majority voting standard that otherwise applies to the election of our directors. |
BACKGROUND ON OUR CUMULATIVE VOTING PROVISION Article Tenth, Section 2 of our Restated Certificate of Incorporation currently provides that when any shareholder holds 40% or more of our common stock, we must use cumulative voting for the election of directors. Cumulative voting entitles each shareholder to one vote per share times the number of directors to be requiredelected and allows a shareholder to ratifyallocate those votes among the director nominees in whatever manner the shareholder chooses. For example, a shareholder may concentrate voting power by allocating all of the shareholder’ votes to one director nominee or may distribute those votes among two or more director nominees. As a result, when cumulative voting is in effect, one shareholder (or group of shareholders) holding a relatively small number of shares may, by cumulating votes and applying them to certain director nominees, be able to elect one or more directors even if a majority of shareholders oppose their election. WHY WE PROPOSE TO ELIMINATE THIS PROVISION Our limited cumulative voting requirement (which applies when we have a 40% shareholder), adopted in 1985, was designed as an anti-takeover measure. Moreover, cumulative voting generally is rare among S&P 500 companies, and it is not consistent with the majority voting standard that normally applies to the election of our Audit Committee’s appointmentdirectors. Our Nominating and Governance Committee and our Board believe that eliminating this limited cumulative voting right is in the best interests of EYL3Harris and our shareholders because it is not necessary to protect our shareholders against activist investors (as was the intention when it was adopted). In addition, our Nominating and Governance Committee and our Board believe that eliminating this limited cumulative voting right would be consistent with current corporate governance best practices and governance practices of other S&P 500 companies and with the majority voting standard that otherwise applies to the election of our directors, and would modernize our Restated Certificate of Incorporation.
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WHAT HAPPENS IF SHAREHOLDERS APPROVE THIS PROPOSAL In general, Delaware corporate law provides that shareholders do not have the right to cumulatively vote their shares in any election of directors unless a company’s certificate of incorporation provides otherwise. Therefore, the primary effect of eliminating our cumulative voting provision would be that all director elections would be conducted using a standard voting method in which shareholders cast one vote per share per nominee, without regard for whether any shareholder owns 40% or more of our common stock, and the voting standard for director elections would continue to be a majority voting standard in uncontested elections and a plurality voting standard in contested elections. The cumulative voting provision is contained in Article Tenth, Section 2 of our Restated Certificate of Incorporation. Our Board is also separately proposing to eliminate Article Tenth, Section 1 of our Restated Certificate of Incorporation, as our independent registered public accounting firm for fiscal year 2018. Abstaining from votingdiscussed in Proposal 5. For this reason, there are several different ways that the vote on this proposal could impact Article Tenth: | > | If Proposal 5 and this proposal are both approved: we will file an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety: “TENTH: Reserved.” |
| > | If neither Proposal 5 nor this proposal is approved: Article Tenth will not be amended and will remain unchanged and as currently in effect. |
| > | If Proposal 5 is approved, but this proposal is not approved: we will file an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety as set forth in Appendix B-1 to this proxy statement. |
| > | If Proposal 5 is not approved, but this proposal is approved: we will file an amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the 2020 Annual Meeting to amend and restate Article Tenth to read in its entirety as set forth in Appendix B-2 to this proxy statement. |
95 L3HARRIS 2020 PROXY STATEMENT |
SHAREHOLDER PROPOSAL TO PERMIT THE ABILITY OF SHAREHOLDERS TO ACT BY WRITTEN CONSENT
| Our Board unanimously recommends voting AGAINST the shareholder proposal to permit the ability of shareholders to act by written consent. |
| > We received the shareholder proposal and supporting statement set forth below from John Chevedden. According to the information provided to us, John Chevedden, whose address is 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, owns more than $2,000 in market value of our common stock as of the date the proposal was submitted to us. The shareholder proposal is required to be voted on at our Annual Meeting only if properly presented at our Annual Meeting. In accordance with the applicable proxy statement regulations, the shareholder proposal and supporting statement, for which the Board of Directors of L3Harris accepts no responsibility, are as follows: |
SHAREHOLDER PROPOSAL AND SUPPORTING STATEMENT Proposal 7 - Adopt a Mainstream Shareholder Right - Written Consent
Shareholders request that our board of directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 large companies in a single year. This included 67%-support at both Allstate and Sprint. This proposal topic also won 63%-support at Cigna Corp. (CI) in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.
Our high 25% threshold for shareholders to call a special meeting has bureaucratic pitfalls that trigger minor shareholder errors that could mean that 50% of shares would need to ask for a special meeting in order to be sure of obtaining the threshold of 25% of requests without errors. One can be sure that management will have an eagle eye to spot any errors.
The right for shareholders to act by written consent is gaining acceptance as a more important right than the effect ofright to call a vote against ratificationspecial meeting. This also seems to be the conclusion of the appointment Intel Corporation (INTC) shareholder vote at the 2019 Intel annual meeting.
The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compared to 2018.
After a 45%-vote (less than a majority vote) for a written consent shareholder proposal The Bank of ourNew York Mellon Corporation (BK) said it adopted written consent in 2019.
Perhaps BK is starting a new trend in recognizing that a 45%-vote represents a majority vote from the shares that have access to independent registered public accounting firm. Any broker non-votes will have no effect on the ratificationproxy voting advice.
Written consent won 44%-support at Capital One Financial Corporation (COF) in 2018 and this increased to 56% support in 2019. Written consent won 47%-support at United Rentals, Inc. (URI) in 2018 and this increased to 51%-support in 2019. Written consent won 43%-support at Flowserve Corporation (FLS) in 2018 and this increased to 51%-support in 2019.
Please vote yes: Adopt a Mainstream Shareholder Right - Written Consent - Proposal 7
L3HARRIS 2020 PROXY STATEMENT 96 |
Recommendation Regarding Proposal 4
L3HARRIS’ RESPONSE TO THE SHAREHOLDER PROPOSAL Our Board has considered the shareholder proposal carefully, believes it is unnecessary and not in the best interest of DirectorsL3Harris and our shareholders and unanimously recommends that you vote “FOR” ratification of our Audit Committee’s appointment of EY as our independent registered public accounting firmvoting AGAINST the shareholder proposal for the fiscal year ending June 29, 2018.reasons set forth below. If not otherwise specified, proxies will be voted “FOR” approvalAGAINST the shareholder proposal.
Our Board believes that the ability of this proposal.shareholders to act by written consent is not necessary because our shareholders currently have the right to call a special meeting. In 2012, our Board amended our By-Laws to allow shareholders holding 25% of our outstanding common stock to call a special meeting. The provisions in our By-Laws governing the ability to call a special meeting offer all shareholders a formal and well-informed, fair and equitable opportunity, including advance notice and thorough disclosure to all shareholders, to act rather than enabling a limited group of shareholders to act by written consent. Shareholder meetings provide an opportunity for discussion and interaction among shareholders so that all points of view may be considered prior to a vote.
By contrast, enabling a small group of shareholders to act by written consent could deprive the remaining shareholders of these important rights, while presenting an opportunity for special interest investors (including those who accumulate a short-term voting position through the borrowing of shares) with no fiduciary duties to other shareholders to initiate action with no prior notice either to the other shareholders or to L3Harris, thus precluding the opportunity for all shareholders to deliberate in an open and transparent manner and to consider arguments for and against any action, including our Board’s views and potential alternatives our Board might propose.
The ability of shareholders to act by written consent as reflected in the shareholder proposal also could cause confusion and disruption. For example, multiple shareholder groups could solicit written consents simultaneously, which could result in duplicative or contradictory written consents.
Our Board believes that matters of sufficient importance to warrant action between annual meetings of shareholders should not be decided without notification to all shareholders, the benefit of consideration and input by our Board and an opportunity for all shareholders to be heard and to vote at a meeting.
We are committed to engaging with our shareholders and listening to their perspectives. We regularly engage in discussions with investors, investor advocates and key opinion leaders on a broad variety of governance issues.
In addition to the right to call a special meeting and extensive shareholder outreach, we maintain other strong corporate governance practices that protect the rights of all shareholders, including:
75| > | Annual election of directors, with majority voting and a resignation policy for directors in uncontested elections. |
| > | Proxy access provisions (proactively adopted), which enable shareholders to nominate directors to be included in our proxy materials subject to satisfying procedural and eligibility requirements. |
| > | Shareholders’ ability to submit proposals to be considered at our annual meetings. |
| > | Lead Independent Director with expansive duties. |
| > | Engaged, experienced and diverse Board, which held 17 Board and committee meetings during our fiscal transition period and 36 Board and committee meetings during our fiscal 2019. |
| > | Shareholder access to our Board, as described in the “Communicating with our Board of Directors” section of this proxy statement beginning on page 22. |
In summary, our Board opposes this shareholder proposal because our Board believes it is not necessary given the existing right of our shareholders to call special meetings, it could provide an opportunity for advancement of special interests and short-termism and it could potentially cause confusion and disruption. For these reasons, and in light of our strong commitment to corporate governance practices that protect the rights of all shareholders, our Board unanimously recommends voting AGAINST the shareholder proposal.
97 L3HARRIS 2020 PROXY STATEMENT |
OWNERSHIP
SHARES OWNED BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table shows beneficial ownership of shares of our common stock, as of February 3, 2020, by: (a) each member of our Board, including the nominees for election at the 2020 Annual Meeting; (b) our CEO and each other named executive officer; and (c) all of our then-serving directors and executive officers as a group. Except as otherwise noted, the named individual had sole voting and investment power with respect to the securities.
| Name | Shares Beneficially Owned | Shares Owned(1) | Shares Under Exercisable Options(2) | Total Shares Beneficially Owned(3) | Percentage of Shares | | DIRECTORS AND NOMINEES | | | | | | Sallie B. Bailey | 1,604 | — | 1,604 | * | | Peter W. Chiarelli | 1,412 | — | 1,412 | * | | Thomas A. Corcoran | 22,078 | — | 22,078 | * | | Thomas A. Dattilo | 3,412 | — | 3,412 | * | | Roger B. Fradin | 1,137 | — | 1,137 | * | | Lewis Hay III | 15,440 | — | 15,440 | * | | Lewis Kramer | 19,690 | — | 19,690 | * | | Rita S. Lane | 2,226 | — | 2,226 | * | | Robert B. Millard | 224,784 | — | 224,784 | * | | Lloyd W. Newton | 11,424 | — | 11,424 | * | | NAMED EXECUTIVE OFFICERS | | | | | William M. Brown† | 367,474 | 1,385,563 | 1,753,037 | * | Christopher E. Kubasik† | 73,160 | 408,381 | 481,541 | * | | Jesus Malave, Jr. | - | - | - | | | Todd W. Gautier | 17,608 | 28,729 | 46,337 | * | | Edward J. Zoiss | 21,292 | 72.799 | 94,091 | * | All Directors and Executive Officers, as a group (20 persons)(4) | 967,046 | 2,151,405 | 3,118,451 | 1.4% |
| † | Mr. Brown, our Chief Executive Officer, also is a director and Chairman of our Board. Mr. Kubasik, our President and Chief Operating Officer, also is a director and Vice Chairman of our Board. |
| (1) | Includes shares over which the individual or his or her immediate family members hold or share voting and/or investment power and excludes shares listed under the “Shares Under Exercisable Options” column.For each non-employee director, also includes 412 unvested director share units in respect of an award granted on October 25, 2019 under the Harris Corporation 2015 Equity Incentive Plan. The director share units generally will fully vest on the one-year anniversary of the grant date, subject to the non-employee director’s continued service and the terms and conditions of the non-employee director’s director share unit agreement.For our named executive officers and other executive officers, includes shares owned through our retirement plan. |
| (2) | Includes shares underlying options granted by us that are exercisable as of February 3, 2020 and shares underlying options that become exercisable within 60 days thereafter. |
| (3) | Represents the total of shares listed under the “Shares Owned” and “Shares Under Exercisable Options” columns. |
| (4) | No directors or executive officers have pledged any shares of our common stock, nor are any such persons permitted to make any such pledge under our policies. |
L3HARRIS 2020 PROXY STATEMENT 98 |
SHAREHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OFPRINCIPAL SHAREHOLDERS
Pursuant to applicable requirementsSEC rules requiring disclosure regarding any persons known to us to be a beneficial owner of more than 5% of our common stock, the following table shows beneficial ownership of our common stock, as of February 28, 2020, by each person who has reported to the SEC beneficial ownership of more than 5% of our common stock, based on the reports filed by these persons:
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | | The Vanguard Group | 18,808,425(1) | 8.5%(1) | | 100 Vanguard Boulevard | | | | Malvern, PA 19355 | | | | | | | BlackRock, Inc. | 17,211,998(2) | 7.8%(2) | | 55 East 52nd Street | | | | New York, NY 10055 | | | | | |
| (1) | Based on information contained in Amendment No. 9 to Schedule 13G filed with the SEC on February 10, 2020 by The Vanguard Group indicating that, as of December 31, 2019, The Vanguard Group had sole voting power over 331,335 shares, shared voting power over 64,464 shares, sole dispositive power over 18,428,583 shares and shared dispositive power over 379,842 shares. |
| (2) | Based on information contained in Schedule 13G filed with the SEC on February 5, 2020 by BlackRock, Inc. indicating that, as of December 31, 2019, BlackRock, Inc. had sole voting power over 15,637,261 shares, shared voting power over 0 shares, sole dispositive power over 17,211,998 shares and shared dispositive power over 0 shares. |
DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, as well as persons who own more than 10% of our outstanding shares of common stock, to file reports of ownership and changes in orderownership of our securities with the SEC. We have procedures in place to be consideredassist our directors and executive officers in preparing and filing these reports on a timely basis. Based solely on a review of the forms furnished to us, or written representations from certain persons that no Form 5 was required, we believe that all required forms were timely filed for inclusion in our proxy statement and formfiscal transition period.
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NOMINATIONS AND PROPOSALS
To nominate a person for election to our Board or to present a proposal for consideration at the 20182021 Annual Meeting of Shareholders, wea shareholder must receive any proposalssend the nomination or proposal to our Secretary within the applicable timeframe and with the information required by our By-Laws and, if applicable, SEC regulations at the following address: L3Harris Technologies, Inc., 1025 West NASA Boulevard, Melbourne, Florida 32919. The timeframes and requirements are described in more detail below.
A nomination or proposal submitted by a shareholder that shareholders wish to present no later than May 14, 2018. Such proposals will need to be in writingdoes not supply the required information about a nominee or proposal and the shareholder submitting the nomination or proposal, or that does not comply with SEC regulations regarding the inclusion of shareholder proposals in Harris-sponsored proxy materials. In addition, our By-Laws, provide that, for any shareholder proposal or directorwill be disregarded.
DIRECTOR NOMINATIONS BY PROXY ACCESS
To submit a nomination to be properly presented at the 2018 Annual Meeting of Shareholders, but not for inclusion in ourL3Harris-sponsored proxy statement and formmaterials pursuant to the proxy access provision of proxy/voting instruction, the shareholder proposal or director nomination must comply with the requirements set forth in our By-Laws, and we must receivewritten notice of the matter not less than 90 nor more than 120 days prior to October 27, 2018. Thus, to be timely, notice of a shareholder proposal or director nomination for the 2018 Annual Meeting of Shareholders must be received by our Secretary no earlier than June 29, 2018October 14, 2020, and no later than July 30, 2018. However, ifNovember 13, 2020. The notice must include the 2018 Annual Meetinginformation and documents specified in Article II, Section 11 of Shareholders isour By-Laws.
OTHER DIRECTOR NOMINATIONS
To submit a nomination pursuant to our By-Laws, but not scheduledpursuant to be held within a period that commences on September 27, 2018 and ends on November 26, 2018, and instead, such meeting is scheduled to be held on a date outside that period,the proxy access provision of our By-Laws, written notice of a shareholder proposal or director nomination, to be timely, must be received by our Secretary byno earlier than December 25, 2020, and no later than January 24, 2021. The notice must include the closeinformation and documents specified in Article II, Section 8 of business onour By-Laws. We will not be required to include the laternomination in our proxy materials.
You must include the following information about the proposed nominee (and other information and documents specified in Article II, Section 8 of 90 days priorour By-Laws): name, age, principal occupation or employment, information as to such other meeting date or 10 days followingwhether the date such other meeting datenominee is first publicly announced or disclosed.eligible for consideration as an independent director and the written consent of the nominee to serve as a director if elected and, if applicable, to be named in the proxy statement as a nominee. Notwithstanding
Shareholders should note that the foregoing notice deadlines under our By-Laws,applicable timeframes described above for director nominations will change if the number of directors to be elected to our Board of Directors at the 20182021 Annual Meeting of Shareholders is increased and either all of the nomineesincreased.
OTHER PROPOSALS BY SHAREHOLDERS
To submit a proposal for director at the 2018 Annual Meeting of Shareholders or the size of the increased Board of Directors is not publicly announced or disclosedinclusion in L3Harris-sponsored proxy materials pursuant to SEC Rule 14a-8, written notice must be received by us by July 19, 2018, notice will be considered timely, but only with respect to nominees for any new positions created by such increase, if the notice is delivered to our Secretary no later than November 13, 2020. The notice must include the closeinformation and documents specified in Article II, Section 8 of business 10 days following the first date all of such nominees or the size of the increased Board of Directors is publicly announced or disclosed.our By-Laws. Further, any proxy granted with respect
To submit a proposal pursuant to the 2018 Annual Meeting of Shareholders will confer discretionary authorityour By-Laws and not pursuant to vote with respect to a shareholder proposal or director nomination ifSEC Rule 14a-8, written notice of such proposal or nomination is notmust be received by our Secretary within the applicable timeframe provided above. Eachno earlier than December 25, 2020, and no later than January 24, 2021. The notice of a shareholder proposal or director nomination must contain all ofinclude the information required by our By-Laws, including, as applicable:
Whether the shareholder is providing the notice at the request of a beneficial holderand documents specified in Article II, Section 8 of our stock;
WhetherBy-Laws. We will not be required to include the shareholder, any beneficial holder on whose behalf the notice is being delivered or any nominee has any agreement, arrangement or understanding with, or has received any financial assistance, funding or other consideration from, any other person with respect to the investment by the shareholder or such beneficial holderproposal in us or the matter the notice relates to, and the details thereof;
The name and address of the shareholder, any beneficial holder on whose behalf the notice is being delivered, any nominees listed in the notice and any persons with whom such agreement, arrangement or understanding exists or from whom such assistance has been obtained (each, an “Interested Person” or collectively, “Interested Persons”);
A description of all equity securities and debt instruments of us or any of our subsidiaries beneficially owned by all Interested Persons;
Whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into by or for the benefit of any Interested Person with respect to us or our subsidiaries, the effect or intent of which is to increase or decrease the economic risk or voting power of such Interested Person;
A representation that the shareholder is a holder of record of our stock that would be entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the matter set forth in the notice;
The information regarding each nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the SEC;
Each nominee’s signed consent to serve as a director of Harris if elected; and
Information as to whether each nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K.
The above is a summary of the material requirements for shareholder proposals and director nominations set forth in our By-Laws, and we refer you to our By-Laws for more detailed information.
A copy of our By-Laws is available on the Corporate Governance section of our website at harris.com/about/corporate-governance. You alsowww.l3harris.com/corporate-governanceor may obtain a copy of our By-Laws uponbe obtained by written request to our Secretary at the address below.
Aabove. Further, any proxy granted with respect to the 2021 Annual Meeting of Shareholders will confer discretionary authority to vote with respect to a nomination or proposal that does not supply adequate information about the nominee or proposal and thesubmitted by a shareholder making theif notice of such nomination or proposal or that doesis not comply withreceived by our By-Laws, will be disregarded. You should address all nominations or proposals to:Secretary within the applicable timeframe described above.
Secretary
Harris Corporation L3HARRIS 2020 PROXY STATEMENT 100 |
1025 West NASA Boulevard
DISCRETIONARY VOTING ON OTHER MATTERSABOUT THE
ANNUAL MEETING
BACKGROUND ON THE L3HARRIS MERGER
I know that L3Harris Technologies, Inc. resulted from the merger of Harris Corporation and L3 Technologies, Inc. What organizational changes occurred in connection with the merger?
In connection with the completion of the Merger, notable organizational changes included:
| > | Our name changed from “Harris Corporation” to “L3Harris Technologies, Inc.”; |
| > | Shares of our common stock, which previously traded under ticker symbol “HRS” on the NYSE prior to completion of the Merger, now are traded under ticker symbol “LHX”; |
| > | Our Board now is comprised of 12 directors: William M. Brown, Chairman and CEO (formerly Harris’ Chairman, President and CEO); Christopher E. Kubasik, Vice Chairman, President and COO (formerly L3’s Chairman, CEO and President); 5 independent directors from the Harris Board; and 5 independent directors from the L3 Board; and |
| > | We transitioned to a calendar year oriented financial reporting cycle, and our fiscal year now ends on the Friday nearest December 31. |
ExceptFor a more detailed summary, see our recent SEC filings on our website at www.l3harris.comor through the EDGAR filings system at www.sec.gov. The information contained on our website is not incorporated by reference into this proxy statement.
What is the fiscal transition period?
As noted above, we changed our fiscal year end from the Friday nearest June 30 to the Friday nearest December 31. Following our full fiscal year 2019 (which ended June 28, 2019), this change resulted in an abbreviated fiscal transition period of approximately six months, that started on June 29, 2019 and ended on January 3, 2020. Our fiscal year that started January 4, 2020 will end on January 1, 2021. ATTENDING THE MEETING
Do I need an admission ticket to attend the Annual Meeting?
All shareholders are welcome to attend the Annual Meeting. Because seating is limited, admission will be on a first-come, first-served basis. No ticket is required for admission, but for security purposes, you may be required to present evidence of your share ownership and a valid, government-issued photo identification, such as a driver’s license or passport. Additionally, packages, boxes, handbags, briefcases and other items are subject to inspection.
RECEIVING PROXY MATERIALS
What is a proxy and what is a proxy statement?
A proxy is your legal designation of another person to vote the shares you own. That other person is called a proxy. If you designate someone as your proxy, the document in which you make that designation also is called a proxy. A proxy statement is a document that we are required by law to provide to you when we ask you to name a proxy to vote your shares. This document you are reading is a proxy statement, and we encourage you to read it carefully.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials?
The rules of the SEC permit us to furnish proxy materials over the Internet. As a result, our practice is to mail to most of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. All shareholders receiving the Notice of Internet Availability of Proxy Materials will have the ability to access our proxy materials over the Internet and also may request to receive a paper copy of our proxy materials by mail. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials over the Internet or to request a paper copy, as well as instructions on how you may elect to receive future proxy materials electronically on an ongoing basis.
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 Why didn’t I receive a Notice of Internet Availability of Proxy Materials?
If you previously requested to receive paper copies of our proxy materials, we do not send you a Notice of Internet Availability of Proxy Materials. If you previously elected to receive proxy materials electronically, we send you only an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website.
What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card?
If you receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card, you own shares of L3Harris common stock in multiple accounts with your brokers(s) and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker(s) and/or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare Shareowner Services, which may be reached by telephone at 1-888-261-6777 or over the Internet at www.computershare.com/investor.
How can I access the proxy materials over the Internet?
Your Notice of Internet Availability of Proxy Materials or proxy/voting instruction card contains instructions for viewing our proxy materials for the 2020 Annual Meeting of Shareholders over the Internet and how to elect to receive future proxy materials electronically by e-mail. Our proxy materials also are available on our website at www.l3harris.com/corporate-governance.
Electing to receive future proxy materials electronically will help us conserve natural resources and reduce costs. If you elect to receive future proxy materials electronically, you will receive an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website. Your election to receive proxy materials electronically by e-mail will remain in effect until you terminate it.
How may I obtain a paper copy of the proxy materials?
Instructions for obtaining a paper copy of our proxy materials are contained in the Notice of Internet Availability of Proxy Materials and the e-mail regarding the availability of our proxy materials. Shareholders who do not receive a Notice of Internet Availability of Proxy Materials or an e-mail regarding the availability of our proxy materials will receive a paper copy of our proxy materials by mail.
VOTING YOUR SHARES
What is a record date and who is entitled to vote at the meeting?
A record date is the date, as of the close of business on which, shareholders of record are entitled to notice of and to vote at a meeting of shareholders. The record date for the 2020 Annual Meeting is February 28, 2020 and was established by our Board as required under the laws of Delaware, our state of incorporation. Thus, owners of record of shares of L3Harris common stock as of the close of business on February 28, 2020 are entitled to receive notice of and to vote at the 2020 Annual Meeting and at any adjournments or postponements thereof.
How many shares can be voted and what is a quorum?
You are entitled to one vote for each share of L3Harris common stock that you owned as of the close of business on February 28, 2020, and you may vote all of those shares. Only our common stock has voting rights. On the record date, there were 216,896,195 shares of our common stock outstanding and entitled to vote at the 2020 Annual Meeting and approximately 12,500 holders of record and approximately 576,000 beneficial owners holding shares in “street name.”
A quorum is the minimum number of shares that must be represented in person or by proxy for us to conduct the 2020 Annual Meeting. The attendance in person or by proxy of holders of a majority of the shares of common stock entitled to vote at the 2020 Annual Meeting, or 108,448,098 shares of our common stock based on the record date of February 28, 2020, will constitute a quorum to hold the 2020 Annual Meeting. If you grant your proxy over the Internet, by telephone or by your proxy/voting instruction card, your shares will be considered present at the 2020 Annual Meeting and counted toward the quorum.
What methods can I use to vote my shares?
You have a choice of voting your shares:
| > | In person at the Annual Meeting. |
Even if you plan to attend the Annual Meeting, we encourage you to vote your shares over the Internet, by telephone or by mail. Please carefully read the instructions below on how to vote your shares. Because the instructions vary depending on how you own your shares and the method you use to vote your shares, it is important to follow the instructions for your particular situation.
If you vote your shares over the Internet or by telephone, you should not return a proxy/voting instruction card.
What is the difference between a “record holder” and a “beneficial owner” holding shares in “street name”?
You are a “record holder” if your shares are registered in your name, in which case you either hold a stock certificate or have an account directly with our transfer agent, Computershare Shareowner Services. Your shares are held in “street name” if your shares are registered or held in the name of your broker, bank or other nominee, in which case you are considered the “beneficial owner” of such shares.
L3HARRIS 2020 PROXY STATEMENT 102 |
How do I vote my shares if I am a “record holder” (shares registered in my name)?
Voting over the Internet Voting over the Internet is easy, fast and available 24 hours a day. You may submit your proxy/voting instruction over the Internet by following the instructions sent to you in the mailed Notice of Internet Availability of Proxy Materials, the mailed proxy/voting instruction card or the email notifying you that the proxy materials were available (as applicable). You will be able to confirm that the Internet voting system has properly recorded your vote, which will be counted immediately, and there is no need to return a proxy/voting instruction card.
Voting by telephone Voting by telephone also is easy, fast and available 24 hours a day. If you live in the United States or Canada, you may vote by calling 1-800-690-6903 (toll-free). You will need the control number sent to you in the mailed Notice of Internet Availability of Proxy Materials, the mailed proxy/ voting instruction card or the email notifying you that the proxy materials were available (as applicable). You will be able to confirm that the telephone voting system has properly recorded your vote, which will be counted immediately, and there is no need to return a proxy/voting instruction card.
Voting by mail If you received a proxy/voting instruction card by mail, you can vote by completing, signing, dating and promptly mailing your proxy/voting instruction card in the accompanying postage-paid return envelope.
Voting in person at the meeting If you plan to attend the Annual Meeting, you can vote in person. To do so, you will need to bring with you evidence of your share ownership and a valid, government-issued photo identification, such as a driver’s license or passport.
How do I vote my shares if I am a “beneficial owner” (shares held in “street name”)?
Voting over the Internet, by telephone or by mail If your shares are registered or held in the name of your broker, bank or other nominee (“street name”), you have the right to direct your broker, bank or other nominee how to vote your shares using the method(s) specified by your broker, bank or other nominee. If your broker, bank or other nominee participates in an Internet or telephone voting program, then you may be able to use that method, in addition to voting by mail. These programs provide eligible “street name” shareholders the opportunity to vote over the Internet or by telephone. Voting forms will provide instructions for shareholders whose brokerage firms or banks are participating in these programs.
Voting in person at the meeting If your shares are registered or held in the name of your broker, bank or other nominee and you plan to attend the Annual Meeting to vote in person, you should contact your broker, bank or other nominee to obtain a “broker’s proxy” and bring it with you to the Annual Meeting, together with a valid, government-issued photo identification, such as a driver’s license or passport, and your account statement or other evidence of your share ownership.
Can I revoke my proxy or change my vote?
If your shares are registered in your name (“record holder”), you may revoke your proxy or change your vote at any time before your shares are voted at the Annual Meeting. There are several ways to do this:
| > | By sending a written notice of revocation to our Secretary at L3Harris Technologies, Inc., Attention: Secretary, 1025 West NASA Boulevard, Melbourne, Florida 32919; |
| > | By duly signing and delivering a proxy/voting instruction card that bears a later date; |
| > | By subsequently voting over the Internet or by telephone as described above; or |
| > | By attending the Annual Meeting and voting in person by ballot. |
If your shares are held in “street name,” you may revoke your proxy or change your vote by submitting new voting instructions to your broker, bank or other nominee.
How do I vote my shares held in the L3Harris Stock Fund through the L3Harris Retirement Savings Plan or the Aviation Communications & Surveillance Systems 401(k) Plan?
If you are a participant in the L3Harris Stock Fund through the L3Harris Retirement Savings Plan or the Aviation Communications & Surveillance Systems 401(k) Plan (the “ACSS Plan”), you may provide voting instructions for the shares of L3Harris common stock credited to your account in the L3Harris Stock Fund to the trustee of the applicable plan over the Internet, by telephone or by mail as described above. If you do not timely provide voting instructions for those shares, then as directed by the terms of those plans, those shares will be voted by the trustee in the same proportion as the shares for which other participants in the applicable plan have timely provided voting instructions, except as otherwise required by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
How do I vote my shares held in the Company’s Dividend Reinvestment Plan?
If you are a participant in the Company’s Dividend Reinvestment Plan (“DRIP”) administered by Computershare Trust Company, N.A., your voting instruction covers the shares of L3Harris common stock held in your DRIP account. Computershare Trust Company, N.A., as the DRIP administrator, is the shareholder of record of L3Harris common stock owned through the DRIP and will not vote those shares unless you provide it with voting instructions, which you may do over the Internet, by telephone or by mail as described above.
What happens if I return an unmarked proxy/voting instruction card? If you properly execute and return a proxy/voting instruction card with no votes marked, your shares will be voted as
103 L3HARRIS 2020 PROXY STATEMENT |
recommended by our Board. Our Board’s recommendations, together with the description of each proposal, are included earlier in this proxy statement. In summary, our Board unanimously recommends you vote: | > | FOR election of all 12 of the nominees for director named in this proxy statement for a one-year term expiring at the 2021 Annual Meeting of Shareholders (see Proposal 1); |
| > | FOR approval, in an advisory vote, of the compensation of our named executive officers as disclosed in this proxy statement (see Proposal 2); and |
| > | FOR ratification of our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 2020 (see Proposal 3); |
| > | FOR an amendment to our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders (see Proposal 4); |
| > | FOR an amendment to our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision (see Proposal 5); |
| > | FOR an amendment to our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder (see Proposal 6); and |
| > | AGAINST the shareholder proposal to permit the ability of shareholders to act by written consent (see Proposal 7). |
Could other matters described inbe decided at the meeting?
At the date of this proxy statement, our Board of Directors isdid not awareknow of any matter that will or maymatters to be properly presentedraised at the 2017 Annual Meeting of Shareholders.other than those referred to in this proxy statement and did not intend to bring before the Annual Meeting any matter other than the proposals described in this proxy statement. The deadline under our By-Laws for any shareholder proposal not discussed in this proxy statement to be properly presented at the 2017 Annual Meeting of Shareholders has passed. If any other matter ismatters are properly brought before the 2017 Annual Meeting or any adjournments or postponements thereof, your shares will be voted at the discretion of Shareholders, the persons named as proxies in our proxy materials intendholders.
How will my shares be voted if I do not provide instructions to my broker?
It is possible for a proxy to indicate that some of the shares represented are not being voted with respect to certain proposals. This occurs, for example, when a broker, bank or other nominee does not have discretion under NYSE rules to vote on a matter without instructions from the beneficial owner of the shares and has not received such instructions. In these cases, the unvoted shares will not be considered present and entitled to vote with respect to that matter, although they may be considered present and entitled to vote for which we have received proxiesother purposes and will be counted in accordance with their best judgment. MISCELLANEOUS MATTERS
Annual Report on Form 10-K
Our Annual Report on Form 10-KUnder NYSE rules, no proposal in this proxy statement (other than Proposal 3 to ratify our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 2020) is “routine” and, as such, your broker, bank or other nominee will not have the discretion to vote your shares on any proposal in this proxy statement (other than Proposal 3).
L3HARRIS 2020 PROXY STATEMENT 104 |
What is the required vote for each proposal?
| Proposals | Vote Required for Approval | Effect of Abstentions | Effect of Broker Non-Votes | Proposal 1: Elect our Board’s 12 nominees for director for a one-year term expiring at the 2021 Annual Meeting of Shareholders | A nominee must receive more FOR votes than AGAINST votes | None | None | Proposal 2: Approve, in an advisory vote, the compensation of our named executive officers as disclosed in this proxy statement | A majority of the shares present or represented at the Annual Meeting and entitled to vote on this proposal must vote FOR this proposal | Counted as a vote AGAINST | None | Proposal 3: Ratify appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2020 | A majority of the shares present or represented at the Annual Meeting and entitled to vote on this proposal must vote FOR this proposal | Counted as a vote AGAINST | None | Proposal 4: Amend our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders | 80% of the outstanding shares entitled to vote generally in the election of directors (or 173,516,956 shares) must vote FOR this proposal | Counted as a vote AGAINST | Counted as a vote AGAINST | Proposal 5: Amend our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision | 80% of the outstanding shares entitled to vote generally in the election of directors (or 173,516,956 shares) must vote FOR this proposal | Counted as a vote AGAINST | Counted as a vote AGAINST | Proposal 6: Amend our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder | 80% of the outstanding shares entitled to vote generally in the election of directors (or 173,516,956 shares) must vote FOR this proposal | Counted as a vote AGAINST | Counted as a vote AGAINST | Proposal 7: Shareholder proposal to permit the ability of shareholders to act by written consent, if such proposal is properly presented at the Annual Meeting | A majority of the shares present or represented at the Annual Meeting and entitled to vote on this proposal must vote FOR this proposal | Counted as a vote AGAINST | None |
Who pays for the solicitation of proxies?
We actively solicit proxy participation by Internet, by telephone, by e-mail, by letter or in person. We will bear the cost of soliciting proxies, including the cost of preparation, assembly, printing and mailing of proxy and solicitation materials. In addition, we request and encourage brokers and other custodians, nominees and fiduciaries to make available, forward or supply proxy and solicitation materials to our shareholders, and, upon request, we will reimburse them for their expenses in accordance with the fee schedule approved by the NYSE, as applicable. Our officers, directors and employees may, by telephone, e-mail or letter, or in person, make additional requests for the return of proxies, although we do not reimburse our own officers, directors or employees for soliciting proxies. We also have engaged Georgeson LLC to assist in the solicitation of proxies for a fee not to exceed $12,500 plus reimbursement of out-of-pocket expenses. Who will tabulate and oversee the vote?
Representatives of Broadridge Investor Communication Solutions, Inc. will tabulate and oversee the vote.
Where can I find the voting results of the Annual Meeting?
We intend to announce the preliminary voting results at the Annual Meeting and to disclose final results in a Current Report on Form 8-K, which we will file with the SEC and make available through the Investors section of our website at www.l3harris.com/investorswithin four business days of the Annual Meeting (or, if final results are not available at that time, within four business days of the date on which final results become available).
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Transition Report on Form 10-KT
Our Transition Report on Form 10-KT for our fiscal transition period ended June 30, 2017January 3, 2020 has been filed with the SEC.SEC and is available on the Investors section of our website at www.l3harris.com/investors.Upon request, we will furnish to shareholders without charge a copy of the AnnualTransition Report on Form 10-K.10-KT. Shareholders may obtain a copy by:by calling Writing (321) 727-9100 or writing to our Secretary at:
Harris Corporation
L3Harris Technologies, Inc. 1025 West NASA Boulevard Melbourne, Florida 32919; or Calling (321) 727-9100.
A copy also is available on the Investors section of our website at harris.com/investors/financial-reports.32919
Shareholder List
A list of our shareholders of record as of the record date of September 1, 2017February 28, 2020 will be available for examination for any purpose germane to the 20172020 Annual Meeting of Shareholders during normal business hours at 1025 West NASA Boulevard, Melbourne, Florida, at least 10 calendar days prior to, and also at, the 20172020 Annual Meeting of Shareholders.
By Order of the Board of Directors Scott T. Mikuen Senior Vice President, General Counsel and Secretary Melbourne, Florida September 7, 2017March [•], 2020
L3HARRIS 2020 PROXY STATEMENT 106 |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
To supplement our income from continuing operations per diluted common share, net income and net cash provided by operating activities financial measures presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide the non-GAAP financial measures shown in the reconciliation table below, which have been adjusted to include, exclude or deduct certain costs, charges, expenses, losses or other amounts, because we believe that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. We also believe that these non-GAAP financial measures enhance the ability of investors to analyze our business trends and to understand our performance. In addition, we may utilize non-GAAP financial measures as guides in our forecasting, budgeting and long-term planning processes, and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:
NON-GAAP INCOME FROM CONTINUING OPERATIONS PER DILUTED COMMON SHARE
| | | Transition Period Ended January 3, 2020 | | | | | | GAAP income from continuing operations per diluted common share | | $ | 3.68 | | | | | | Adjustments: | | | | | | | | | (Gain) loss on sale of businesses | | | (1.02 | ) | | | | | Gain on sale of asset group | | | (0.05 | ) | | | | | L3Harris Merger transaction and integration costs, including change-in-control (CIC) charges | | | 0.68 | | | | | | L3Harris Merger integration costs | | | 0.84 | | | | | | Charges related to consolidation of facilities | | | 0.22 | | | | | | Gain on pension curtailment | | | (0.10 | ) | | | | | Additional cost of sales related to the fair value step-up in inventory sold | | | 0.64 | | | | | | Amortization of acquisition-related intangibles | | | 1.30 | | | | | | Non-cash cumulative adjustment to lease expense | | | 0.04 | | | | | | Losses and other costs related to debt refinancing | | | 0.01 | | | | | | Total pre-tax adjustments | | | 2.56 | | | | | | Income taxes on above adjustments | | | (0.81 | ) | | | | | Total adjustments after-tax | | | 1.75 | | | | | | Non-GAAP income from continuing operations per diluted common share | | $ | 5.43 | | | | | ADJUSTED FREE CASH FLOW | | | | | | | | | Dollars in Millions | | Transition Period Ended January 3, 2020 | | | Fiscal Year Ended June 28, 2019 | | | Net cash provided by operating activities | | $ | 939 | | | $ | 1,185 | | | Net additions of property, plant and equipment | | | (173 | ) | | | (161 | ) | | Free cash flow | | | 766 | | | | 1,024 | | | Cash used for L3Harris Merger transaction and integration costs, including CIC payments | | | 381 | | | | 31 | | | Voluntary contribution to defined pension plans | | | 302 | | | | - | | | Adjusted free cash flow | | $ | 1,449 | | | $ | 1,055 | |
A-1 L3HARRIS 2020 PROXY STATEMENT |
 Adjusted EBIT | | | | | | | | | | Dollars in Millions | | Fiscal Transition Period January 3, 2020 | | | Fiscal Year Ended June 28, 2019 | | | Net income | | $ | 834 | | | $ | 949 | | | Adjustments: | | | | | | | | | | Discontinued operations, net of income taxes | | | 1 | | | | 4 | | | Net interest expense | | | 123 | | | | 167 | | | Income taxes | | | 73 | | | | 160 | | | (Gain) loss on sale of businesses | | | (229 | ) | | | - | | | Gain on sale of asset group | | | (12 | ) | | | - | | | L3Harris Merger transaction and integration costs, including CIC charges | | | 342 | | | | 65 | | | Charges related to consolidation of facilities | | | 48 | | | | - | | | Gain on pension curtailment | | | (23 | ) | | | - | | | Additional cost of sales related to the fair value step-up in inventory sold | | | 142 | | | | - | | | Amortization of acquisition-related intangibles | | | 289 | | | | - | | | Non-cash cumulative adjustment to lease expense | | | 10 | | | | - | | | Losses and other costs related to debt refinancing | | | 3 | | | | - | | | Total adjustments | | $ | 767 | | | $ | 396 | | | Adjusted EBIT | | $ | 1,601 | | | $ | 1,345 | |
L3HARRIS 2020 PROXY STATEMENT
| A-1.1 |
APPENDIX B-1: PROPOSED CHANGES TO L3HARRIS TECHNOLOGIES, INC. RESTATED CERTIFICATE OF INCORPORATION RELATING TO PROPOSAL 5
TENTH: SECTION 1. RESERVED. SECTION 2. In any election of directors of this corporation on or after the date on which any 40 percent Shareholder (as hereinafter defined) becomes a 40 percent Shareholder, and until such time as no 40 percent Shareholder any longer exists, there shall be cumulative voting for election of directors so that any holder of shares of Voting Stock entitled to vote in such election shall be entitled to as many votes as shall equal the number of directors to be elected multiplied by the number of votes to which such shareholder’s shares would be entitled except for the provision of this Section 2, and such shareholder may cast all of such votes for a single director, or distribute such votes among as many candidates as such shareholder sees fit. In any such election of directors, one or more candidates for the Board of Directors of the corporation may be nominated by a majority of the Disinterested Directors. With respect to any candidates nominated by a majority of the Disinterested Directors or by any person who is the beneficial owner of shares of Voting Stock having a Market Price of $100,000 or more, there shall be included in any proxy statement or other communication with respect to such election to be sent to holders of shares of Voting Stock by the corporation during the period in which there is a 40 percent Shareholder, at the expense of the corporation, descriptions and other statements of or with respect to such candidates submitted by them or on their behalf, which shall receive equal space, coverage and treatment as is received by candidates nominated by the Board of Directors or management of the corporation.
SECTION 3. RESERVED.
SECTION 4. FOR THE PURPOSES OF THIS ARTICLE:
| A. | A “person” shall mean any individual, firm, corporation, or other entity. |
| B. | “Voting Stock” shall mean the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors. |
| C. | “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on April 27, 1984, and shall include in any case any person that directly or indirectly controls or is controlled by or is under common control with the person specified. |
| D. | “40 percent Shareholder” shall mean any person (other than the corporation or any Subsidiary) who or which: |
| (i) | is the beneficial owner, directly or indirectly, of 40 percent or more of the voting power of the outstanding Voting Stock; or |
| (ii) | is an Affiliate of the corporation and at any time within the 2-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 40 percent or more of the voting power of the then outstanding Voting Stock; or |
| (iii) | is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the 2-year period immediately prior to the date in question beneficially owned by any 40 percent Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. |
| E. | A person shall be a “beneficial owner” of any Voting Stock: |
| (i) | which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or |
| (ii) | which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement, or understanding; or |
B-1 L3HARRIS 2020 PROXY STATEMENT |
| (iii) | which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of any shares of Voting Stock. |
| F. | For the purpose of determining whether a person is a 40 percent Shareholder pursuant to this Section 4, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of Paragraph E of this Section 4, but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement, or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. |
| G. | “Market Price” means the last closing sale price immediately preceding the time in question of a share of the stock in question on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the last closing bid quotation with respect to a share of such stock immediately preceding the time in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use (or any other system of reporting or ascertaining quotations then available), or if such stock is not so quoted, the fair market value at the time in question of a share of such stock as determined by the Board in good faith. |
| I. | “Disinterested Director” means any member of the Board of Directors of the corporation (the “Board”) who is unaffiliated with any 40 percent Shareholder and was a member of the Board prior to the time that any 40 percent Shareholder became a 40 percent Shareholder, and any successor of a Disinterested Director who is unaffiliated with any 40 percent Shareholder and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the Board. |
SECTION 5. A majority of the Disinterested Directors of the corporation shall have the power and duty to determine for the purposes of this Article, on the basis of information known to them after reasonable inquiry, (A) whether a person is a 40 percent Shareholder, (B) the number of shares of Voting Stock beneficially owned by any person, and (C) whether a person is an Affiliate or an Associate of another person. The good faith determination of a majority of the Disinterested Directors shall be conclusive and binding for all purposes of this Article.
SECTION 6. Notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation, or the bylaws of the corporation), the affirmative vote of the holders of at least 80 percent of the voting power of the outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article.
| B-1.1 |
APPENDIX B-2: PROPOSED CHANGES TO L3HARRIS TECHNOLOGIES, INC. RESTATED CERTIFICATE OF INCORPORATION RELATING TO PROPOSAL 6
TENTH: SECTION 1. Any purchase by this corporation of shares of Voting Stock from an Interested Shareholder, other than pursuant to an offer to the holders of all of the outstanding shares of the same class of Voting Stock as those so purchased, at a per share price in excess of the Market Price at the time of such purchase of the shares so purchased, shall require the affirmative vote of the holders of that amount of the voting power of the Voting Stock equal to the sum of:
| (i) | the voting power of the shares of Voting Stock of which the Interested Shareholder is the beneficial owner, and |
HARRIS CORPORATION
| (ii) | a majority of the voting power of the remaining outstanding shares of Voting Stock, voting together as a single class. |
SECTION 2. RESERVED.
SECTION 3. It shall be the duty of any Interested Shareholder:
| (i) | to give or cause to be given written notice to the corporation, immediately upon becoming an Interested Shareholder, of such person’s status as an Interested Shareholder and of such other information as the corporation may reasonably require with respect to identifying all owners and amount of ownership of the outstanding Voting Stock of which such Interested Shareholder is a beneficial owner as defined herein, and |
| (ii) | to notify the corporation promptly in writing of any change in the information provided in subparagraph (i) of this Section 3, provided, however, that the failure of an Interested Shareholder to comply with the provisions of this Section 3 shall not in any way be construed to prevent the corporation from enforcing the provisions of this Article. |
SECTION 4. For the purposes of this Article:
| A. | A “person” shall mean any individual, firm, corporation, or other entity. |
| B. | “Voting Stock” shall mean the outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors. |
| C. | “Interested Shareholder” shall mean any person (other than the corporation or any Subsidiary) who or which: |
| (i) | is the beneficial owner, directly, or indirectly, of 5 percent or more of the voting power of the outstanding Voting Stock; or |
| (ii) | is an Affiliate of the corporation and at any time within the 2-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 5 percent or more of the voting power of the then outstanding Voting Stock; or |
| (iii) | is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the 2-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. |
| D. | “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on April 27, 1984, and shall include in any case any person that directly or indirectly controls or is controlled by or is under common control with the person specified. |
| E. | A person shall be a “beneficial owner” of any Voting Stock: |
| (i) | which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or |
| (ii) | which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement, or understanding; or |
B-2 L3HARRIS 2020 PROXY STATEMENT |
| (iii) | which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of any shares of Voting Stock. |
| F. | For the purpose of determining whether a person is an Interested Shareholder pursuant to this Section 4, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of Paragraph E of this Section 4 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement, or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. |
| G. | “Market Price” means the last closing sale price immediately preceding the time in question of a share of the stock in question on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the last closing bid quotation with respect to a share of such stock immediately preceding the time in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use (or any other system of reporting or ascertaining quotations then available), or if such stock is not so quoted, the fair market value at the time in question of a share of such stock as determined by the Board in good faith. |
| I. | “Disinterested Director” means any member of the Board of Directors of the corporation (the “Board”) who is unaffiliated with any Interested Shareholder and was a member of the Board prior to the time that any Interested Shareholder became an Interested Shareholder, and any successor of a Disinterested Director who is unaffiliated with any Interested Shareholder and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the Board. |
SECTION 5. A majority of the Disinterested Directors of the corporation shall have the power and duty to determine for the purposes of this Article, on the basis of information known to them after reasonable inquiry, (A) whether a person is an Interested Shareholder, (B) the number of shares of Voting Stock beneficially owned by any person, and (C) whether a person is an Affiliate or an Associate of another person. The good faith determination of a majority of the Disinterested Directors shall be conclusive and binding for all purposes of this Article. SECTION 6. Notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation, or the bylaws of the corporation), the affirmative vote of the holders of at least 80 percent of the voting power of the outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article.
L3HARRIS 2020 PROXY STATEMENT
| B-2.1 |
L3HARRIS TECHNOLOGIES, INC. 1025 WEST NASA BOULEVARD MELBOURNE, FL 3291932919 | | YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
VOTE BY INTERNET - www.proxyvote.com Use the Internet to submit your proxy/voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on October 26, 2017.April 23, 2020. Have your proxy/voting instruction card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic proxy/voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by HarrisL3Harris in printing and mailing proxy materials, you can elect to receive all future proxy statements, proxy/voting instruction cards and annual reports electronically via e-mail or the Internet. To elect electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to submit your proxy/voting instructions up until 11:59 P.M. Eastern Time on October 26, 2017.April 23, 2020. Have your proxy/voting instruction card in hand when you call and then follow the instructions.
NOTE:Your Internet or phone voting instructions authorize the named proxies and/or provide the Plan Trustee with instructions to vote these shares in the same manner as if you marked, signed, dated and returned your proxy/voting instruction card.
VOTE BY MAIL (ONLY IF NOT VOTING BY INTERNET OR PHONE) Mark, sign and date your proxy/voting instruction card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | E31649-P96818 KEEP THIS PORTION FOR YOUR RECORDS
| | DETACH AND RETURN THIS PORTION ONLY | THIS PROXY/VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THIS PROXY/VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | HARRIS CORPORATIONL3HARRIS TECHNOLOGIES, INC. PROXY/VOTING INSTRUCTION CARD
| | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends a vote “FOR” each nominee listed in Proposal 1; “FOR” “FOR” Proposals 2 through 6; and “AGAINST” Proposal 2; for “EVERY YEAR” on Proposal 3; and “FOR” Proposal 4.7. | | | | | | | | | | | | 1. Election of Directors for a One-Year Term Expiring at 2018 Annual Meeting of Shareholders | | | | | | | | | | | | | | | | | | | | | | Nominees:
| | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | 1a. James F. Albaugh
| | ¨
| | ¨ | | ¨ | | | | 1k. Gregory T. Swienton
| | ¨ | | ¨ | | ¨ | | | | | | 1b. William M. Brown
| | ¨ | | ¨ | | ¨ | | | | 1l. Hansel E. Tookes II | | ¨ | | ¨ | | ¨ | | | | | | 1c. Peter W. Chiarelli
| | ¨ | | ¨ | | ¨ | | 2. Advisory Vote to Approve the Compensation of Named Executive Officers as Disclosed in Proxy Statement
| | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | Every Year | | Every 2 Years | | Every 3 Years | Abstain | | | | | 1d. Thomas A. Dattilo
| | ¨ | | ¨ | | ¨ | | 3. Advisory Vote on Frequency of Future Advisory Votes to Approve the Compensation of Named Executive Officers
| | ¨ | | ¨ | | ¨ | ¨ | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | 1e. Roger B. Fradin
| | ¨ | | ¨ | | ¨ | | 4. Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm for Fiscal Year 2018 | | ¨ | | ¨ | | ¨ | | | | | | 1f. Terry D. Growcock
| | ¨ | | ¨ | | ¨ | | | | NOTE: If this proxy/voting instruction card is properly executed, then the undersigned’s shares will be voted in the manner instructed herein, or if no instruction is provided, then either as the Board of Directors recommends or, if the undersigned is a participant in the Harris Corporation Retirement Plan, as may otherwise be provided in the plan. The named proxies also are authorized, in their discretion,to consider and act upon such other business as may properly come before the 2017 Annual Meeting or any adjournments or postponements thereof.
| | | | | | 1g. Lewis Hay III
| | ¨ | | ¨ | | ¨ | | | | | | | | | 1h. Vyomesh I. Joshi
| | ¨ | | ¨ | | ¨ | | | | | | | | | 1i. Leslie F. Kenne
| | ¨ | | ¨ | | ¨ | | | | | | | | | 1j. Dr. James C. Stoffel
| | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | | For address changes and/or comments, please check this box and write them on1.
| Election of Directors for a Term Expiring at the back where indicated.2021 Annual Meeting of Shareholders | |
¨
| | | | | | | | | | | | | | | | | | | | | | Nominees: | For | Against
| Abstain | | | | | | | | | | | | | | | | | | | | | | | | 1a. | Sallie B. Bailey | ☐ | ☐ | ☐ |
| | For | Against
| Abstain | | |
| | | | | | | | | | | | | |
| | 1b. | | ☐ | ☐ | ☐ | 2. | Approval, in an Advisory Vote, of the Compensation of Named Executive Officers as Disclosed in the Proxy Statement | ☐ | ☐ | ☐ | | | | | | | | | | | |
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| | | | | 1c. | Peter W. Chiarelli | ☐ | ☐ | ☐ | 3. | Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm for Fiscal Year 2020 | ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | 1d. | | ☐ | ☐ | ☐ | 4.
| Approval of an Amendment to Our Restated Certificate of Incorporation to Eliminate the Supermajority Voting and “Fair Price” Requirements for Business Combinations Involving Interested Shareholders | ☐ | ☐ | ☐ | | | | | | | | | | | |
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| | | | | 1e. | Thomas A. Dattilo | ☐ | ☐ | ☐ | 5.
| Approval of an Amendment to Our Restated Certificate of Incorporation to Eliminate the “Anti-Greenmail” Provision | ☐ | ☐ | ☐ | | | | | | | | | | | | | |
| | | | | 1f. | Roger B. Fradin | ☐ | ☐ | ☐ | 6.
| Approval of an Amendment to Our Restated Certificate of Incorporation to Eliminate the Cumulative Voting Provision that Applies When We Have a 40% Shareholder | ☐ | ☐ | ☐ | | | | | | | | | | | | | |
| | | | | 1g. | Lewis Hay III | ☐ | ☐ | ☐ | 7.
| Shareholder Proposal to Permit the Ability of Shareholders to Act by Written Consent | ☐ | ☐ | ☐ | | | | | | | | | | | | |
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| | | | | 1h. | Lewis Kramer | ☐ | ☐ | ☐ | NOTE: If this proxy/voting instruction card is properly executed, then the undersigned’s shares will be voted in the manner instructed therein, or if no instruction is provided, then either as the Board of Directors recommends or, if the undersigned is a participant in the L3Harris Stock Fund through any retirement plan sponsored by L3Harris, as may otherwise be provided in the plan. The named proxies also are authorized, in their discretion, to consider and act upon such other business as may properly come before the 2020 Annual Meeting or any adjournments or postponements thereof.
| | | | | | | | | | | | | | 1i. | Christopher E. Kubasik | ☐ | ☐ | ☐ | | | | | | | | | | | | | | 1j. | Rita S. Lane | ☐ | ☐ | ☐ | | | | | | | | | | | | | | 1k. | Robert B. Millard | ☐ | ☐ | ☐ | | | | | | | | | | | | | | 1i. | Lloyd W. Newton | ☐ | ☐ | ☐ | For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | Signature (Joint Owners) | | Date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. (See reverse side for information on how to submit your proxy/voting instructions by Internet, by phone or by mail.)
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on October 27, 2017:April 24, 2020: The Notice of 20172020 Annual Meeting and Proxy Statement and AnnualTransition Report for Fiscal YearTransition Period Ended June 30, 2017January 3, 2020 are available at www.proxyvote.com.
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E31650-P96818
| | HARRIS CORPORATIONL3HARRIS TECHNOLOGIES, INC.
Annual Meeting of Shareholders
October 27, 2017, 1:00 PM Local April 24, 2020, 7:30 AM Mountain Time
This proxy is solicited on behalf of the Board of Directors of Harris Corporation
L3Harris Technologies, Inc. (“L3Harris”) and the Harris Corporation Retirement Plan Trustee.
Trustees of various retirement plans sponsored by L3Harris. | | | | | | | You are receiving this proxy/voting instruction card because you are a registered shareholder and/or a participant in the Harris Corporation Retirement Plan.L3Harris Stock Fund through a retirement Plan sponsored by L3Harris. This proxy/voting instruction card revokes all prior proxies/voting instructions given by you. If you are voting by mail with this proxy/voting instruction card, please mark your choices and sign and date on the reverse side exactly as your name or names appearappear(s) there. If shares are held in the name of joint holders, each should sign. If you are signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give your full title as such.
| | | | | | | | | | | If the undersigned is a registered shareholder, the undersigned hereby appoints WILLIAM M. BROWN, RAHUL GHAIJESUS MALAVE, JR. and SCOTT T. MIKUEN, and each of them, with power to act without the others and with full power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as instructed on the reverse side of this proxy/voting instruction card, all the shares of Harris CorporationL3Harris common stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Harris CorporationL3Harris to be held on October 27, 2017April 24, 2020 or at any adjournments or postponements thereof, with all powers which the undersigned would possess if present at the Annual Meeting. If this proxy/voting instruction card has been properly executed but the undersigned has provided no voting instructions, then the undersigned’s shares will be voted “FOR” the election of the Board of Directors’ nominees;nominees listed in Proposal 1; “FOR” Proposals 2 through 6; and “AGAINST” Proposal 2; for “EVERY YEAR” on Proposal 3; and “FOR” Proposal 4.
7. | | | | | | | | | | | If the undersigned is a participant in the Harris Corporation Retirement Plan,L3Harris Stock Fund through any retirement plan sponsored by L3Harris, the undersigned hereby instructs the Planapplicable plan Trustee to vote, as instructed on the reverse side of this proxy/voting instruction card, the shares allocable to the undersigned’s Harris CorporationL3Harris Stock Fund Accountaccount at the Annual Meeting of Shareholders of Harris CorporationL3Harris Technologies, Inc. to be held on October 27, 2017April 24, 2020 or at any adjournments or postponements thereof. If the undersigned does not provide voting instructions, the Planapplicable plan Trustee will vote such shares in the same proportion as the shares for which other participants in the PlanL3Harris Stock Fund through such plan have timely provided voting instructions, except as otherwise provided in accordance with ERISA. | | | | | | | | Address Changes/Comments:
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| | | | | | | | | | | | | | | | | | | | | | | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | | | | | | | | Continued and to be marked, signed and dated on reverse side | | | | | | | | | |
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