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THE BOARD OF DIRECTORS AND
BOARD COMMITTEES

The Board has six standing committees: Audit, Governance and Nominating, Management Development and Compensation, Public Affairs, Special Activities, and Executive. The charter of each committee (other than the Executive Committee) is published on our website. See “Corporate Governance — Governance Documents” on page 22 for information on obtaining a copy.

During 2016, the Board met formally six times, and engaged in other discussions and actions apart from these meetings. The non-management directors, all of whom are independent, meet in executive session chaired by the Lead Director at the conclusion of each regularly scheduled Board meeting. In addition, committee members generally meet in executive session, without management present, at the conclusion of regularly scheduled committee meetings.

Average attendance for directors at Board and committee meetings
96.9%

No director attended less than 75% of the total of all Board and applicable committee meetings, except for Mr. Paliwal. Mr. Paliwal, who was elected at the September 2016 meeting, was unable to attend the November 2016 Board and committee meetings (the only meetings held in 2016 after his election) due to unforeseen schedule conflicts. All directors standing for election are expected to attend the 2017 Annual Meeting of Shareholders. In 2016, all of the directors who were members of the Board at that time (other than one who had an illness in the family) attended the Annual Meeting.

The Board’s six standing committees are described below. Each committee, other than the Executive Committee, is composed entirely of independent directors.

AUDIT COMMITTEE
NUMBER OF 2016 MEETINGS: 9
COMMITTEE MEMBERS:
Tracy A. Atkinson, Chair | Robert E. Beauchamp | Letitia A. Long | George R. Oliver | James A. Winnefeld, Jr.
KEY RESPONSIBILITIES:

  • Appoint and evaluate the performance and independence of Raytheon’s independent auditors;
  • Oversee the integrity of our financial statements;
  • Oversee our internal audit function;
  • Consider the adequacy of our internal controls and the objectivity of financial reporting;
  • Review the independent auditors’ audit of the effectiveness of Raytheon’s internal controls;
  • Pre-approve all audit fees and terms for, as well as all non-audit engagements with, the independent auditors;
  • Review annual and periodic reports and earnings press releases and recommend to the Board whether the annual audited financial statements should be included in Raytheon’s Form 10-K;

  • Review and discuss with management Raytheon’s risk-assessment and risk management policies, including enterprise risk management and major financial risk exposures, and steps to monitor and control such exposures;
  • Review the performance of Raytheon’s pension plans and risks related to those plans;
  • Establish and review procedures for employees and others to report concerns or complaints confidentially and anonymously regarding accounting, internal control or auditing matters; and
  • Review compliance with our Code of Conduct with respect to certain financial reporting, controls and allegations of financial misconduct.

The Board has determined that each member is independent in accordance with NYSE and SEC rules applicable to audit committee members. The Board also has determined that each of Ms. Atkinson and Messrs. Beauchamp and Oliver is an “audit committee financial expert,” as defined by SEC rules, and that all members are “financially literate” under the NYSE standards.

The Audit Committee Report is included on page 64.



GOVERNANCE AND NOMINATING COMMITTEE
NUMBER OF 2016 MEETINGS: 9
COMMITTEE MEMBERS:
Stephen J. Hadley, Chair | Dinesh C. Paliwal | Michael C. Ruettgers* | William R. Spivey
KEY RESPONSIBILITIES:

  • Review and report to the Board with regard to matters of corporate governance;
  • Make recommendations to the Board regarding the size and composition of the Board;
  • Establish procedures for nominating directors and recommend candidates for election to the Board;
  • Consider director nominees proposed by shareholders;
  • Review our Governance Principles and recommend revisions to the Board;

  • Review and approve or ratify transactions and relationships under our Related Party Transactions Policy;
  • Review shareholder proposals in connection with our Annual Meetings and recommend actions to the Board regarding such proposals;
  • Oversee the orientation program for new directors and the continuing education program for existing directors; and
  • Review and recommend to the Board the compensation of non-employee directors.

The Board has determined that each member is independent in accordance with NYSE rules.

*Mr. Ruettgers will be retiring from the Board effective May 25, 2017.



MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE (MDCC)
NUMBER OF 2016 MEETINGS: 6
COMMITTEE MEMBERS:
William R. Spivey, Chair | Robert E. Beauchamp | Stephen J. Hadley | George R. Oliver
KEY RESPONSIBILITIES:

  • Review and oversee compensation and benefits, as well as personnel plans, policies and programs;
  • Review and recommend to the Board the compensation of the CEO and the other four most highly compensated executive officers (the “NEOs”);
  • Review and approve the compensation of other officers and key employees;
  • Periodically review succession plans for the CEO and other executive officers and elected officers as well as career development plans for elected officers and other key employees;
  • Administer and make awards, other than to directors, under our equity compensation plans;

  • Review and discuss with management the “Compensation Discussion and Analysis” section of this proxy statement;
  • Review Raytheon’s incentive compensation arrangements to ensure they are not reasonably likely to encourage inappropriate risk-taking;
  • Appoint, compensate and oversee any outside compensation consultant, outside legal counsel or other committee adviser; and
  • Annually assess the independence of its outside compensation consultants or advisers, and pre-approve any services proposed to be provided by such consultants or advisers to Raytheon.

The Board has determined that each member is independent in accordance with NYSE rules.

The MDCC Report is included on page 46.



PUBLIC AFFAIRS COMMITTEE
NUMBER OF 2016 MEETINGS: 6
COMMITTEE MEMBERS:
Letitia A. Long, Chair | Tracy A. Atkinson | George R. Oliver | Dinesh C. Paliwal
KEY RESPONSIBILITIES:

  • Review political, social and legal trends and issues that may affect Raytheon’s business, operations, financial performance or public image;
  • Review our policies and practices in the areas of legal, regulatory and social responsibility, including those involving:
  • environmental protection;
  • health and safety of employees;
  • ethics;
  • export control;

  • regulatory compliance (except financial matters);
  • charitable contributions and community relations;
  • government relations and legislative policy;
  • political contributions and lobbying;
  • anticorruption and use of foreign and domestic consultants and representatives; and
  • government contracting and defense procurement policies; and
  • Review and monitor corporate policies and practices that relate to public policy.

The Board has determined that each member is independent in accordance with NYSE rules.



SPECIAL ACTIVITIES COMMITTEE
NUMBER OF 2016 MEETINGS: 7
COMMITTEE MEMBERS:
Vernon E. Clark, Chair | Stephen J. Hadley | Letitia A. Long | Michael C. Ruettgers* | James A. Winnefeld, Jr.
KEY RESPONSIBILITIES:

  • Review Raytheon’s programs, activities and potential acquisitions involving classified business activities;
  • Review policies, processes, practices, procedures, risk management and internal controls applicable to Raytheon’s classified business;
  • Review Raytheon cybersecurity, including with respect to our internal IT systems, products, programs and factories;

  • Review any critical technology gaps and how Raytheon is addressing such gaps; and
  • Support the MDCC, as required, in the review of talent development/succession planning for key technology positions.

The Board has determined that each member is independent in accordance with NYSE rules.

*Mr. Ruettgers will be retiring from the Board effective May 25, 2017.



EXECUTIVE COMMITTEE

The Executive Committee is empowered to act for the full Board during intervals between Board meetings, with the exception of certain matters that by law may not be delegated. The Executive Committee did not meet in 2016.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Directors who served as members of our MDCC during fiscal year 2016 were Robert E. Beauchamp, Stephen J. Hadley, George R. Oliver, and William R. Spivey. None of these members is or has ever been an officer or employee of Raytheon. To our knowledge, there were no relationships involving members of the MDCC or our other directors that would constitute a compensation committee interlock.

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