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PROXY SUMMARY

This summary highlights selected information contained in this proxy statement, but it does not contain all the information you should consider. We urge you to read the whole proxy statement before you vote. This proxy statement was first mailed to shareholders on or about April 21, 2017.

WE WILL BE VOTING ON THE FOLLOWING MATTERS:
AGENDA ITEM VOTING RECOMMENDATION MORE INFORMATION
1. Election of ten directors nominated by Raytheon’s Board FOR EACH NOMINEE Page 7
2. Advisory vote to approve named executive officer compensation YES Page 26
3. Advisory vote on the frequency of future say-on-pay votes AN ANNUAL VOTE Page 59
4. Management proposal to approve incentive plan for Section 162(m) purposes YES Page 60
5. Ratification of the independent auditors YES Page 63

CURRENT COMMITTEE MEMBERSHIPS
Independent Directors Age Director Since Audit Committee Governance and Nominating Committee Management Development and Compensation Committee Public Affairs Committee Special Activities Committee
Tracy A. Atkinson 52 2014 CHAIR o
Robert E. Beauchamp 57 2015 o o
Vernon E. Clark (Lead Director) 72 2005 CHAIR
Stephen J. Hadley 70 2009 CHAIR o o
Letitia A. Long 58 2015 o CHAIR o
George R. Oliver 56 2013 o o o
Dinesh C. Paliwal 59 2016 o o
Michael C. Ruettgers* 74 2000 o o
William R. Spivey 70 1999 o CHAIR
James A. Winnefeld, Jr. 61 2017 o o
Inside Director
Thomas A. Kennedy 61 2014
Number of Meetings in 2016 9 9 6 6 7
Independent Directors Age Director Since
Tracy A. Atkinson 52 2014
Current Committee Memberships:
Audit Committee (Chair)
Public Affairs Committee
Robert E. Beauchamp 57 2015
Current Committee Memberships:
Audit Committee
Management Development and Compensation Committee
Vernon E. Clark (Lead Director) 72 2005
Current Committee Memberships:
Special Activities Committee (Chair)
Stephen J. Hadley 70 2009
Current Committee Memberships:
Governance and Nominating Committee (Chair)
Management Development and Compensation Committee
Special Activities Committee
Letitia A. Long 58 2015
Current Committee Memberships:
Audit Committee
Public Affairs Committee (Chair)
George R. Oliver 56 2013
Current Committee Memberships:
Audit Committee
Management Development and Compensation Committee
Public Affairs Committee
Dinesh C. Paliwal 59 2016
Current Committee Memberships:
Governance and Nominating Committee
Public Affairs Committee
Michael C. Ruettgers* 74 2000
Current Committee Memberships:
Governance and Nominating Committee
Special Activities Committee
William R. Spivey 70 1999
Current Committee Memberships:
Governance and Nominating Committee
Management Development and Compensation Committee (Chair)
James A. Winnefeld, Jr. 61 2017
Current Committee Memberships:
Audit Committee
Special Activities Committee
Inside Director
Thomas A. Kennedy 61 2014
Number of Meetings in 2016
Audit Committee: 9
Governance and Nominating Committee: 9
Management Development and Compensation Committee: 6
Public Affairs Committee: 6
Special Activities Committee: 7

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


COMPOSITION OF THE BOARD
COMPOSITION OF THE BOARD
COMPOSITION OF THE BOARD
COMPOSITION OF THE BOARD

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


BOARD TENURE AND REFRESHMENT

Our Board represents a balance of long-term members with in-depth knowledge of our business and new members who bring valuable attributes, skills, and experience. The Board has undergone significant refreshment over the last five years.

Director Nominees

DIVERSITY OF SKILLS AND EXPERIENCE

Our Board embodies a broad and diverse set of experiences, qualifications, attributes and skills.

Below are the attributes, skills and experience of our director nominees.


OUR 2016 PERFORMANCE

In 2016, Raytheon continued to execute our growth strategy and deliver strong program performance while also maintaining strong operating margins. Our global team built upon Raytheon’s return to growth in 2015, driven by increases in both domestic and international sales. Highlights of our 2016 performance include:

RECORD BOOKINGS OF
$27.8 BILLION
FOR THE YEAR

FULL-YEAR NET SALES OF
$24.1 BILLION,
UP 3.5% FOR THE YEAR

FULL-YEAR EPS FROM CONTINUING OPERATIONS OF
$7.44

STRONG OPERATING CASH FLOW FROM CONTINUING OPERATIONS OF
$2.9 BILLION
FOR THE YEAR

13TH
CONSECUTIVE YEAR OF INTERNATIONAL SALES GROWTH

2016 TOTAL SHAREHOLDER RETURN OF
16.9%


OUR EXECUTIVE COMPENSATION PROGRAM

Our Management Development and Compensation Committee (MDCC) designed our executive compensation program to attract and retain highly-qualified executives, motivate our executives to achieve our overall business objectives, reward individual performance, and align our executives’ interests with those of our shareholders. Our program’s primary direct compensation elements are base salary, annual cash incentives, and long-term equity incentives. The MDCC focuses on the appropriate mix between fixed and at-risk variable compensation, and short-term cash and long-term equity compensation to provide total direct compensation opportunities that meet our objectives. Our base salaries are competitive and reflect an executive’s experience and scope of responsibilities. Our annual cash incentives and long-term equity incentives motivate and reward Raytheon and individual performance. Our long-term equity incentives also align executives’ interests with those of our shareholders, and help retain highly-qualified executives.


CEO Compensation


Other NEOs (Named Executive Officers) Compensation

Most of our executives’ compensation is at risk and varies based on performance. Due to Raytheon’s strong 2016 financial performance, our annual cash incentive (RBI) was funded and our long-term equity performance plan (LTPP) paid out above pre-determined targets. Our Named Executive Officers also achieved strong results against their individual performance goals in 2016.

Consistent with our compensation objectives, our Named Executive Officers, or NEOs, received the following compensation in 2016:

Annual Cash Incentive Long-Term Equity Incentives(1)
NEO Salary RBI LTPP Restricted Stock Total
Thomas A. Kennedy
Chairman and Chief Executive Officer
$1,299,979 $2,938,400 $5,000,028 $3,899,980 $13,138,387
Anthony F. O’Brien
Vice President and Chief Financial Officer
$608,510 $734,400 $1,199,945 $1,100,001 $3,642,856
David C. Wajsgras
Vice President, and President of Intelligence, Information and Services (IIS)
$971,943 $1,052,500 $1,250,007 $1,300,035 $4,574,485
Richard R. Yuse
Vice President, and President of Space and Airborne Systems (SAS)
$792,506 $997,900 $1,250,007 $1,300,035 $4,340,448
Taylor W. Lawrence
Vice President, and President of Missile Systems (MS)
$728,151 $817,900 $1,250,007 $1,300,035 $4,096,093

(1) Reflects the NEO’s restricted stock/unit award and 2016-2018 LTPP award (at target) granted in 2016 based on the number of shares/units multiplied by the closing price of our common stock on the award determination date.

For a complete discussion of our executive compensation program, see the “Compensation Discussion and Analysis” section of this proxy statement.


SHAREHOLDER ENGAGEMENT AND ADVISORY SAY-ON-PAY VOTE

We communicate annually with a significant percentage of our shareholders (typically representing over 40% of our shares) on governance and compensation matters. Since 2011, the first year we offered a shareholder advisory say-on-pay vote, Raytheon’s shareholders have consistently voted overwhelmingly for our executive compensation program, with an average of 95.0% voting in favor.

We view this support as an indication of broad shareholder agreement with the philosophy and policies underpinning our executive compensation program.

Votes Cast “FOR” Say-on-Pay Vote

Votes Cast

GOVERNANCE HIGHLIGHTS

Major elements of our governance profile are summarized below. We discuss most of these matters in greater detail in this proxy statement.

RECENT DEVELOPMENTS

  • Significant Board Refreshment.
    Two new directors added in the last twelve months; a total of seven added and six departed in the last five years
  • Proactive Adoption of Proxy Access By-Law in March 2016.
    3% ownership/3-year holding period/cap of 20% of Board (but not less than two directors)
  • Redesigned Proxy Statement in 2017.
    Proxy statement revamped to be more readable and useful for shareholders
INDEPENDENCE

  • All non-employee directors are independent
  • Independent directors regularly meet in executive session
  • Rigorous compensation consultant independence policy
ALIGNMENT WITH SHAREHOLDER INTERESTS

  • Pay-for-performance executive compensation program
  • Contemporary stock ownership and retention guidelines for directors and officers
  • Prohibition against director and officer hedging of Raytheon stock
SHAREHOLDER ACCESS

  • Active company outreach and engagement with shareholders throughout the year
  • Shareholders may include nominees in Raytheon proxy materials (Proxy Access)
  • Shareholders may call special shareholder meetings
  • Shareholders may act by written consent
TRANSPARENCY

  • Clear, understandable and detailed financial reporting and proxy statement disclosure
  • Extensive voluntary website disclosure regarding Raytheon’s political expenditures and lobbying activities
  • Annual Corporate Responsibility Report addressing sustainability, ethics and business conduct, safety and wellness, and community support
ACCOUNTABILITY

  • Annual election of all directors and majority voting in uncontested elections
  • Annual shareholder advisory vote to approve named executive officer compensation
  • Annual Board evaluation of CEO performance
  • Restatement Clawback Policy
  • No ‘poison pill’
BOARD PRACTICES

  • Robust annual Board and committee self-evaluation process, including a mid-year review and independent director discussions in executive session
  • Mandatory director retirement at age 74
  • Periodic Board review of management succession planning
  • Balanced and diverse Board composition
  • Limits on outside public company board service
INDEPENDENT LEAD DIRECTOR

  • Fully independent and empowered Lead Director with broadly defined authority and responsibilities
  • Position currently held by Vernon E. Clark, Retired Chief of Naval Operations for the U.S. Navy
RISK OVERSIGHT

  • Regular Board review of enterprise risk management and related policies, processes and controls
  • Board committees exercise oversight of risk matters under their purview

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