SHAREHOLDER PROPOSALS

As described below, we have been notified that one shareholder intends to present a proposal for consideration at the 2018 Annual Meeting.

We continue to make corporate governance, particularly shareholder concerns, a priority. Management remains open to engaging in dialogue with respect to shareholder concerns and to sharing our views regarding our governance generally.
We encourage any shareholder wishing to meet with management to contact the Office of the Corporate Secretary.

Any shareholder who intends to present a proposal at the 2019 Annual Meeting, including nominee(s) for director under our Proxy Access by-law, must deliver the proposal in the manner specified below:

• Between November 18, 2018, and December 18, 2018, if the proposal is a nominee or nominees submitted for inclusion in our proxy materials for the 2019 Annual Meeting pursuant to our Proxy Access by-law;
• No later than December 18, 2018, if the proposal is submitted for inclusion in our proxy materials for the 2019 Annual Meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934; or
• Between January 31, 2019, and March 2, 2019, if the proposal is submitted in accordance with Section 2.7 of our by-laws, in which case we are not required to include the proposal in our proxy materials.

All shareholder proposals must be sent to the Corporate Secretary at Raytheon Company, 870 Winter Street, Waltham, Massachusetts 02451, either by U.S. mail or a delivery service, or by facsimile to 781-522-3332.

SHAREHOLDER PROPOSAL
(Item No. 4 on the proxy card)

John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, beneficial owner of no fewer than 100 shares, has proposed the adoption of the following resolution and has furnished the following statement in support of his proposal:

Proposal 4 – Enhance Shareholder Proxy Access

RESOLVED: Stockholders ask the board of directors to amend its proxy access bylaw provisions and any associated documents, to include the following changes for the purpose of decreasing the average amount of Company common stock the average member of a nominating group would be required to hold for 3-years to satisfy the aggregate ownership requirements to form a nominating group and to increase the possible number of proxy access director candidates:

• No limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% of common stock required to nominate directors under our Company’s proxy access provisions.
• The number of shareholder-nominated candidates eligible to appear in proxy materials will be 25% of Directors (rounded down) but not less than 2.

Even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the current 3% criteria for a continuous 3-years at most companies according to the Council of Institutional Investors. This proposal addresses the contradiction that our company now has with proxy access for only the largest shareholders who are probably the least likely shareholders to use it.

For 20 shareholders to make use of our current proxy access -the average holding for such a group of 20 Raytheon shareholders would be $81 million each. Yet it might take an average current holding of $162 million or $243 million each when any stock held for less than 3 continuous years is subtracted.

Raytheon management spent a 5-digit dollar amount to prevent us from voting on the topic of this proposal in 2017. Meanwhile this proposal topic won substantial support at 6 major companies in 2017- including Apple.

Please vote to improve management accountability to shareholders:
Enhance Shareholder Proxy Access – Proposal 4
The Board recommends that shareholders vote AGAINST this proposal.

Raytheon’s current corporate governance framework reflects our responsiveness and accountability to shareholders and our Board’s commitment to robust, balanced governance practices. Our current proxy access by-law, which we proactively adopted in 2016 (the “Proxy Access By-Law”), provides shareholders with meaningful proxy access. It represents the culmination of our Board’s careful consideration of proxy access over time and the detailed input we elicited from institutional shareholders owning approximately 40% of our stock.

We have continued to receive feedback through our ongoing shareholder outreach indicating shareholder support of the Proxy Access By-Law. The Proxy Access By-Law allows a shareholder or group of up to 20 shareholders owning 3% or more of our outstanding stock (including recallable loaned stock) continuously for at least three years to nominate and include up to two individuals or 20% of the Board, whichever is greater, in our proxy materials. In contrast, the proposal would allow an unlimited number of shareholders to aggregate their holdings to reach the 3% minimum ownership requirement, and would increase the number of proxy access nominees to 25% of the Board. It is noteworthy that similar 2017 proposals at Apple and other major companies failed to pass by a significant margin.

The current 20-shareholder limit in the Proxy Access By-Law ensures that the proxy access mechanism is not driven by a large number of shareholders, no one of which has a meaningful economic stake in Raytheon. The lack of any limit on the number of shareholders that may aggregate their holdings to reach the 3% minimum ownership requirement would allow hundreds of shareholders to act together, imposing on us a very significant burden and expense in reviewing and verifying the information and representations of each member of an uncapped shareholder group in order to verify the group’s eligibility. We question whether allowing an unlimited number of shareholders to aggregate their shares is even workable for the nominating shareholder group, given the broad solicitation that would be required, and the practical difficulties of coordinating such a large number of shareholders.

The Proxy Access By-Law permits eligible shareholders to nominate the greater of two nominees or 20% of the Board. This fully accomplishes the main objective of proxy access. We believe that raising the potential level of Board representation to 25% of the Board would have unintended effects that would be harmful to shareholder value, including promoting the use of proxy access to lay the groundwork for effecting a change of control, encouraging the pursuit of special interests at the expense of a long-term strategic view, or otherwise disrupting the effective functioning of our Board.

We are committed to ensuring effective, balanced corporate governance and to continually engaging with our shareholders. Through our eight consecutive years of proactive shareholder engagement, we have solicited input that has contributed greatly to shaping a number of our corporate governance initiatives. In addition to the Proxy Access By-Law, we also have solicited shareholder input regarding, and proactively have implemented, shareholders’ right to act by written consent and shareholders’ right to call a special meeting of shareholders.

Our Board has demonstrated its commitment to Board refreshment and to the election of highly qualified directors who bring diverse perspectives to our Board’s decision-making process. Over the last five years, our Board has undergone significant refreshment, resulting in lower average tenure and younger average age, and broadened diversity of background. Shareholders have demonstrated strong support for our Board, with all directors nominated at the 2017 Annual Meeting having received a ‘for’ vote of at least 95.37% of the shares voted.

We believe that the Proxy Access By-Law fully accomplishes the essential goals of proxy access and that the proponent is advocating for a change in the Proxy Access By-Law that has no benefit to our shareholders. In light of the objectives already being achieved through our robust shareholder engagement and our commitment to effective, responsive corporate governance and ongoing Board refreshment, we believe that changing the proxy access framework as outlined by the proponent is unwarranted, does not provide any improvement to shareholders’ ability to use proxy access, and could disrupt the meaningful proxy access rights that our shareholders currently enjoy.