PROPOSAL 2:
ADVISORY VOTE TO APPROVE NAMED
EXECUTIVE OFFICER COMPENSATION
(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.
| PRINCIPLE |
|
MORE INFORMATION |
|---|
| 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.
