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 29 to 60 in this proxy statement under the heading “Executive Compensation.” While
this vote is non-binding, the Board and the MDCC will review the results and consider shareholder opinions. Raytheon also will
continue to engage with shareholders to address any concerns relating to executive compensation or other matters. The Board
is asking you to 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 4–5 and
30–43 |
| Shareholder alignment: We ensure that the interests of executives are closely aligned with those of shareholders
by making stock-based incentives a central component of compensation and enforcing meaningful stock
ownership and retention requirements. |
|
Pages 4–5, 32, 37,
42–43 and 47 |
| Balanced incentives: Our awards have both significant upside opportunity for exceptional performance and
downside risk for underperformance. |
|
Pages 4–5 and
30–43 |
| Substantial variable component: A substantial portion of each executive’s compensation opportunity is variable,
based upon Raytheon’s financial performance and stock price. |
|
Pages 5 and
37–43 |
| Short-term versus long-term: The compensation program carefully balances short- and long-term incentives. |
|
Pages 5 and
37–43 |
| Use of key financial metrics: Short- and long-term incentive awards are based on pre-established financial
measures that drive optimum performance. |
|
Pages 31–32 and
38–43 |
| Market focus: The MDCC considers both the practices of peer companies and broader market survey data in
setting executive compensation. |
|
Pages 34–36 |
| 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 4, 30, and 33–36 |
| Managing risk: The compensation program is designed to avoid encouraging excessive risk-taking. |
|
Page 45 |
| Consultant independence: The MDCC adheres to a stringent Compensation Consultant Independence Policy
when retaining outside advisers. |
|
Pages 44–45 |
| Clawback rights: Our clawback policy provides for recovery of compensation in certain circumstances where
restatement of financial results is required. |
|
Page 48 |
In addition, our shareholders have indicated their support of our executive compensation program through advisory say-on-pay
votes and in our communications with shareholders. As reflected in the Executive Compensation disclosure, 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.
