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 as described on pages 27 to 58 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 views. 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.”
As discussed in greater detail in the Executive Compensation section of this proxy statement, Raytheon's compensation
program rests on certain key principles, including:
| 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
28-42 |
| 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,
40-41
and 45 |
| Balanced incentives: Our awards have both significant upside opportunity for exceptional performance and
downside risk for underperformance |
|
Pages 4-5 and
28-41 |
| Substantial variable component: A substantial portion of each executive's compensation opportunity is variable,
based upon Raytheon's financial performance and stock price
ownership and retention requirements |
|
Pages 5 and
35
|
| Short-term versus long-term: The compensation program carefully balances short-term and long-term incentives |
|
Pages 5 and
35 |
| Use of key financial metrics: Short- and long-term incentive awards are based on pre-established financial
measures that drive optimum performance |
|
Pages 29-30 and
36-41 |
| Market focus: The MDCC considers both the practices of peer companies and broader market survey data in
setting executive compensation |
|
Pages 32-34 |
| Competitiveness: Our executive compensation program addresses the need to retain and attract highly-qualified
executives essential to Raytheon's success in a highly competitive environment |
|
Pages 4,
28
and 31-34 |
| Managing risk: The compensation program is designed to avoid encouraging excessive risk-taking |
|
Page 43 |
| Consultant independence: The MDCC adheres to a stringent Compensation Consultant Independence Policy
when retaining outside advisors |
|
Page 42 |
| Clawback rights: Our clawback policy provides for recovery of compensation in certain circumstances where
restatement of financial results is required |
|
Page 45 |
As reflected in the Executive Compensation disclosure, the Board believes that the MDCC has established a compensation
program for the NEOs soundly grounded in the above principles that is appropriate and warrants shareholder support.
