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 is being made available
to shareholders on or about April 17, 2018.
WE WILL BE VOTING ON THE FOLLOWING MATTERS:
Agenda Item
Voting Recommendation
More Information
1. Election of twelve directors nominated by Raytheon’s Board
Our Board represents a balance of long-term members
with in-depth knowledge of our business and newer
members who bring valuable additional attributes, skills
and experience. The Board has undergone significant
refreshment over the last five years.
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 2017 PERFORMANCE
In 2017, our growth strategy continued to deliver results for our shareholders and customers, and we also maintained strong
program performance and operating margins. Our global team built upon Raytheon’s return to growth in 2015, driven by
increases in both domestic and international sales. In fact, 2017 was the 14th consecutive year of international sales growth,
which reflects the continued success of our differentiated international strategy. Highlights of our 2017 performance include:
RECORD FULL-YEAR
NET SALES OF
$25.3 BILLION
UP 5.1% FOR THE YEAR
STRONG
BOOKINGS OF
$27.7 BILLION
FOR THE YEAR
FULL-YEAR EPS FROM
CONTINUING OPERATIONS OF
$6.94
(reflecting an unfavorable $0.59 impact
from the Tax Cuts and Jobs Act of 2017
and an unfavorable $0.09 impact from
a discretionary pension plan contribution)
STRONG OPERATING CASH FLOW
FROM CONTINUING OPERATIONS OF
$2.7 BILLION
FOR THE YEAR
(after a 4th quarter $1.0 billion pretax
discretionary pension plan contribution)
14TH
CONSECUTIVE YEAR OF
INTERNATIONAL SALES GROWTH
2017 TOTAL SHAREHOLDER
RETURN OF
34.0%
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 between 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 both Raytheon and individual performance. Our long-term equity incentives also align executives’ interests
with those of our shareholders, and help retain highly-qualified executives.
(1) Base salary includes a lump-sum payment to Mr. Wajsgras in 2017 in lieu of a base salary merit increase. This amount appears in the “Bonus” column of the
Summary Compensation Table on page 49. Restricted Stock excludes a retention award of restricted stock granted to Mr. Yuse in 2017. For more information,
see the Summary Compensation Table on page 49.
Most of our executives’ compensation is at risk and varies based on performance. Due to Raytheon’s strong 2017 financial
performance, our annual cash incentive (RBI) was funded, and our long-term equity performance plan (LTPP) paid out, above predetermined
targets. Our Named Executive Officers also achieved strong results against their individual performance goals in 2017.
Consistent with our compensation objectives, our Named Executive Officers, or NEOs, received the following compensation in 2017:
Thomas A. Kennedy
Chairman and Chief Executive Officer
$1,403,211
–
$3,434,000
$5,499,988
$4,400,045
$14,737,244
Anthony F. O’Brien
Vice President and Chief Financial Officer
$721,159
–
$912,400
$1,299,946
$1,249,928
$4,183,433
David C. Wajsgras
Vice President, and President of Intelligence, Information and Services (IIS)
$977,101
$19,542(3)
$1,171,500
$1,250,011
$1,300,065
$4,718,219
Richard R. Yuse(2)
Vice President, and President of Space and Airborne Systems (SAS)
$821,290
–
$984,700
$1,250,011
$1,300,065
$4,356,066
Taylor W. Lawrence
Vice President, and President of Missile Systems (MS)
$756,473
–
$932,000
$1,250,011
$1,300,065
$4,238,549
(1) Reflects the NEO’s restricted stock/unit award and 2017–2019 LTPP award (at target) granted in 2017 based on the number of shares/units multiplied by the
closing price of our common stock on the award determination date.
(2) This table excludes the value of a retention award of restricted stock granted to Mr. Yuse in 2017.
(3) This amount represents a lump sum payment to Mr. Wajsgras in 2017 in lieu of a base salary merit increase.
SHAREHOLDER ENGAGEMENT AND ADVISORY SAY-ON-PAY VOTE
For each of the last eight years, we have communicated
with a significant percentage of our shareholders (typically
representing between 30% and 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” Our Executive Compensation
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
Four new directors added in the last two years; a total of nine directors added and six departed in the last five years.
Redesigned Proxy Statement in 2017
Proxy statement revamped to be more readable and useful for shareholders.
Introduction in 2017 of Individual Director Self-Assessments
Tied to director development and Board/committee leadership planning, overseen by the Board’s Governance and
Nominating Committee.
INDEPENDENCE
All non-employee directors are independent
Independent directors regularly meet in executive session