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(Item No. 2 on the Proxy Card)

The Board is proposing an advisory vote for our shareholders to approve the compensation program for our Named Executive Officers (NEOs) as described on pages 33 to 72 in this proxy statement under the heading “Executive Compensation.” While this vote is non-binding, the Board and the MDCC will review and consider the results. Raytheon will also continue to regularly engage with shareholders to solicit their views on executive compensation and other matters. As in the past, the MDCC will consider this feedback for incorporation into aspects of our executive compensation program. The Board recommends you vote “yes” on the following resolution:

“Resolved, that the shareholders approve the compensation of the named executive officers described in this proxy statement under ‘Executive Compensation,’ which section includes the Compensation Discussion and Analysis, the compensation tables, and accompanying narrative disclosure.”

Raytheon’s compensation program rests on the key principles summarized below.

Pay-for-performance: Executive compensation is tied to Raytheon and individual performance over both the near and long term. Pages 4–6 and 34–54
Shareholder alignment: We ensure that the interests of executives are closely aligned with those of shareholders by heavily weighting long-term, stock-based incentives and enforcing meaningful stock ownership and retention requirements. Pages 4–6, 38–39, 52–54 and 57
Substantial variable component: A substantial portion of each executive’s pay opportunity is variable, at-risk compensation based upon Raytheon’s financial performance and stock price. Pages 4–6, 46–54
Short-term versus long-term: The compensation program carefully balances short- and long-term incentives, with a heavier weighting toward long-term incentives. Pages 5 and 46–54
Use of key financial metrics: Short- and long-term incentive awards are based on pre-established goals for key financial metrics selected for their ability to drive operational and financial performance. Pages 35–36 and 47–54
Balanced incentives: Our awards have both significant upside opportunity for exceptional performance and downside risk for underperformance. Pages 4–6 and 34–54
Market focus: The MDCC considers both the practices of peer companies and broader market survey data in setting executive compensation. Pages 43–45
Competitiveness: Our executive compensation program addresses the need to attract and retain highly-qualified executives essential to Raytheon’s success in a highly competitive environment. Pages 5, 34, 39 and 42–45
Managing risk: The compensation program is designed to avoid encouraging excessive risk-taking. Page 55
Consultant independence: The MDCC adheres to a stringent Compensation Consultant Independence Policy when retaining outside advisers. Page 55
Clawback rights: Our clawback policy provides for recovery of compensation in certain circumstances where restatement of financial results is required. Page 58

Our shareholders have approved our executive compensation program through advisory say-on-pay votes and, overall, speak favorably about our program in our communications with them. The MDCC has incorporated shareholder feedback from our outreach into our executive compensation program. Following our 2018 shareholder outreach communications, and after careful consideration of relevant information and the feedback received from some shareholders, the MDCC adjusted our long-term incentive compensation mix. This change was made with input from the MDCC’s independent compensation consultant and was consistent with our executive compensation planning and benchmarking efforts, and is discussed in more detail under “Shareholder Outreach and Compensation Program Changes” on page 39. The Board believes the MDCC has established a compensation program for the NEOs that is appropriate and soundly grounded in the above principles, and that warrants shareholder support.

The Board unanimously recommends an advisory vote FOR this proposal. Proxies solicited by the Board will be so voted unless shareholders specify otherwise in their proxies.
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