> | Unpaid base salary through the date of termination; >
A pro-rated annual bonus (as determined under the change in control severance agreement); 80 L3HARRIS2022 PROXY STATEMENT
| | COMPENSATION TABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL | |
> | A pro-rated annual bonus (as determined under the change in control severance agreement);
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> | Any unpaid accrued vacation pay;
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>
> | To the extent permitted under Section 409A of the Internal Revenue Code, any other benefits or awards that have been earned or became payable pursuant to the terms of any compensation plan but that have not yet been paid to the executive; |
Any unpaid accrued vacation pay; > | Two times the executive’s highest annual rate of base salary during the 12-month period prior to the date of termination (following the Merger, “three times” in the case of Mr. Brown pursuant to the Brown Letter Agreement); and |
>To the extent permitted under Section 409A of the Internal Revenue Code, any other benefits or awards that have been earned or became payable pursuant to the terms of any compensation plan but that have not yet been paid to Mr. Brown; > | Two times the greatest of the executive’s (1) highest annual bonus in the three years prior to the change in control, (2) target bonus for the year in which the change in control occurred or (3) target bonus for the year in which the executive’s employment is terminated (following the Merger, “three times” in the case of Mr. Brown pursuant to the Brown Letter Agreement). |
>
Three times Mr. Brown’s highest annual rate of base salary during the 12-month period prior to the date of termination; and >
Three times the greatest of Mr. Brown’s (1) highest annual bonus in the three years prior to the change in control, (2) target bonus for the year in which the change in control occurred or (3) target bonus for the year in which Mr. Brown’s employment is terminated. Other potential severance benefits.In addition, if triggered, severance benefits to an executiveMr. Brown under the executive’shis change in control severance agreement include: >
Receipt of the same level of medical, dental, accident, disability and life insurance and any similar benefits as are in effect on the date of termination (or the highest level of coverage provided to active executives immediately prior to the change in control, if more favorable), for the two years following the date of termination, but in no event later than age 65 (with benefit continuation payments in lieu of providing in-kind medical and prescription drug coverage, pursuant to the Brown Letter Agreement); > | Receipt of the same level of medical, dental, accident, disability and life insurance and any similar benefits as are in effect on the date of termination (or the highest level of coverage provided to active executives immediately prior to the change in control, if more favorable), for the two years following the date of termination, but in no event later than age 65 (benefit continuation payments in lieu of providing in-kind medical and prescription drug coverage, in the case of Mr. Brown pursuant to the Brown Letter Agreement); |
> | Reimbursement for any relocation expense related to the pursuit of other business opportunities incurred within two years following the date of termination; |
> | Reimbursement for recruitment or placement services of up to $4,000; and |
> | Reimbursement for professional financial or tax planning services of up to $5,000 per year for the calendar year in which the termination occurs and the next calendar year. |
>
Reimbursement for any relocation expense related to the pursuit of other business opportunities incurred within two years following the date of termination; >
Reimbursement for recruitment or placement services of up to $4,000; and >
Reimbursement for professional financial or tax planning services of up to $5,000 per year for the calendar year in which the termination occurs and the next calendar year. Kubasik Legacy CIC Severance Arrangement – — L3 Change in Control Severance Plan As noted above, the Merger constituted a change in control transaction under the legacy “double trigger” L3 CIC Plan, which is still operative for applicable covered individuals – for Mr. Kubasik, until June 29, 2023 pursuant to the Kubasik Letter Agreement; and for Mr. Gautier, until June 29, 2021.Agreement. Under the L3 CIC Plan, we would provide severance benefits to those officersMr. Kubasik if, within twofour years (four years in the case of Mr. Kubasik pursuant(pursuant to the Kubasik Letter Agreement) following a “change in control”: >
Mr. Kubasik terminates employment for “good reason”; or >
> | The executive terminates employment for “good reason”; or |
Mr. Kubasik’s employment is terminated without “cause” (all terms as defined in the L3 CIC Plan and summarized below).> | The executive’s employment is terminated without “cause” (all terms as defined in the L3 CIC Plan and summarized below). |
Meaning of “change in control.”Under the L3 CIC Plan, a “change in control” generally means the occurrence of any one of the following events: >
> | the acquisition by any person or group (including a group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than L3 or any of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a majority of the combined voting power of L3’s then outstanding voting securities, other than by any employee benefit plan maintained by L3; |
the acquisition by any person or group (including a group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than L3 or any of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a majority of the combined voting power of L3’s then outstanding voting securities, other than by any employee benefit plan maintained by L3; >
the sale of all or substantially all of the assets of L3 and its subsidiaries taken as a whole; or > | the sale of all or substantially all of the assets of L3 and its subsidiaries taken as a whole; or |
>
the election, including the filling of vacancies, during any period of 24 months or less, of 50% or more of the members of the board of directors of L3, without the approval of L3’s incumbent directors at the beginning of such period. > | the election, including the filling of vacancies, during any period of 24 months or less, of 50% or more of the members of the board of directors of L3, without the approval of L3’s incumbent directors at the beginning of such period. |
Meaning of “good reason.”Under the L3 CIC Plan, “good reason” generally means, other than due to employee’s disability or death: >
A reduction in Mr. Kubasik’s base salary or annual or long-term incentive opportunity (including target bonus, if applicable); >
An adverse change to the calculation methodology for determining bonuses or long-term incentives which is reasonably likely to have an adverse impact on the amounts Mr. Kubasik has the potential to earn under such programs; >
Any failure by the acquiror to continue to provide employee benefits that are substantially similar in the aggregate to those afforded to Mr. Kubasik immediately prior to the change in control; >
A material adverse change in Mr. Kubasik’s duties or responsibilities; >
A relocation of Mr. Kubasik’s principal place of business of 50 miles or more, provided that such relocation also increases his commute by at least 25 miles; >
A failure to pay Mr. Kubasik’s base salary and other amounts earned by him within 10 days after the date such compensation is due; or L3HARRIS 2022 PROXY STATEMENT 81
> | A reduction in the executive’s base salary or annual or long-term incentive opportunity (including target bonus, if applicable); |
> | An adverse change to the calculation methodology for determining bonuses or long-term incentives which is reasonably likely to have an adverse impact on the amounts the executive has the potential to earn under such programs; |
L3HARRIS2021 PROXY STATEMENT 79
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| | | | | | | | | COMPENSATION TABLESTABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL | | |
>
> | Any failure by the acquiror to continue to provide employee benefits that are substantially similar in the aggregate to those afforded to the executive immediately prior to the change in control; |
Failure of any successor or assignee to all or substantially all of the business and/or assets of L3 in connection with any change in control, by agreement in writing in form and substance reasonably satisfactory to Mr. Kubasik, expressly, absolutely and unconditionally to assume and agree to perform all obligations under the L3 CIC Plan.> | A material adverse change in executive’s duties or responsibilities; |
> | A relocation of executive’s principal place of business of 50 miles or more, provided that such relocation also increases the executive’s commute by at least 25 miles; |
> | A failure to pay the executive’s base salary and other amounts earned by the executive within 10 days after the date such compensation is due; or |
> | Failure of any successor or assignee to all or substantially all of the business and/or assets of L3 in connection with any change in control, by agreement in writing in form and substance reasonably satisfactory to the executive, expressly, absolutely and unconditionally to assume and agree to perform all obligations under the L3 CIC Plan. |
Meaning of “cause.”Under the L3 CIC Plan, the term “cause” generally means: >
> | Intentional failure to perform reasonably assigned duties; |
Intentional failure to perform reasonably assigned duties; > | >
Dishonesty or willful misconduct in the performance of duties; |
> | Engaging in a transaction in connection with the performance of duties to L3 or its affiliates which transaction is adverse to the interests of L3 and is engaged in for personal profit; or |
> | Willful violation of any law, rule or regulation in connection with the performance of duties (other than traffic violations or similar offenses). |
In addition, in the caseperformance of Mr. Kubasik,duties;
>
Engaging in a transaction in connection with the performance of duties to L3 or its affiliates which transaction is adverse to the interests of L3 and is engaged in for personal profit; or >
Willful violation of any law, rule or regulation in connection with the performance of duties (other than traffic violations or similar offenses). In addition, the definition of “cause” was modified pursuant to the Kubasik Letter Agreement to include an act of misconduct in violation of certain L3Harris policies or federal or applicable state law regarding discrimination or sexual harassment of subordinate employees that creates a material risk of meaningful harm to L3Harris, pursuant to the Kubasik Letter Agreement.L3Harris. Potential cash severance payment.If triggered, the lump-sum cash severance benefit payable to an executive under the L3 CIC Plan would consist of: > | A multiple of current annual salary and average annual incentive plan awards for the prior three years: (a) chief executive officer, chief operating officer, chief financial officer and chief legal officer – three times (including for Mr. Kubasik), and (b) segment presidents – two and a half times (including for Mr. Gautier). The annual incentive plan award for the year of termination is a pro rata award based on (a) the number of months worked in the year of termination and (b) the average annual incentive plan awards for the prior three years (or the actual annual incentive plan award payable for the full year of termination, if performance is determinable at the time of termination). |
of three times his current annual salary and average annual incentive plan awards for the prior three years for Mr. Kubasik.
Other potential severance benefits.In addition, if triggered, severance benefits to an executiveMr. Kubasik under the L3 CIC Plan include: >
> | Receipt of continued medical and life insurance benefits at the same cost to the executive, or cash equal to any increased premiums, for the same period as the severance multiple described above; |
Receipt of continued medical and life insurance benefits at the same cost to Mr. Kubasik, or cash equal to any increased premiums, for the same period as the severance multiple described above; > | Reasonable outplacement services paid for by L3; and |
> | If eligible, L3-paid financial planning services for the one-year period after a change in control under an L3>
Reasonable outplacement services paid for by L3; and >
If eligible, L3Harris paid financial planning services for the year in which the termination occurs plus one-additional year thereafter under an L3Harris policy that is separate from the L3 CIC Plan. |
For a summary of the modifications to the L3 CIC Plan applicable to Mr. Kubasik relating to the definitions of “cause” and “good reason”, see the “Potential Payments Under Kubasik Letter Agreement” section beginning on page 75.
Change in Control Severance Arrangements Reflect Sound Pay Practices Our executive change in control severance arrangements reflect sound practices because they: >
Do not provide for a tax gross-up of excise taxes; >
Do provide for a “best net after-tax” payment approach that reduces payments and benefits to an executive if the reduction would result in the executive receiving higher payments and benefits on a net after-tax basis; and >
Do provide that we will reimburse the executive for any legal fees and costs with respect to any dispute arising under the arrangement. > | Do not provide for a tax gross-up of excise taxes;
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82 L3HARRIS2022 PROXY STATEMENT
> | Do provide for a “best net after-tax” payment approach that reduces payments and benefits to an executive if the reduction would result in the executive receiving higher payments and benefits on a net after-tax basis;
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> | Do provide that we will reimburse the executive for any legal fees and costs with respect to any dispute arising under the arrangement; and |
> | With respect to our change in control severance agreements approved by the Harris Board prior to the Merger, do provide that, not later than the date on which a change in control occurs, we are required to contribute to an irrevocable “rabbi trust” in cash or other liquid assets, an amount equal to the total payments expected to be paid under the agreements, assuming that the employment of the executives is terminated, plus the amount of trust administration and trustee fees reasonably expected to be incurred (in recognition that in certain situations payments under the agreements will be required to be deferred for up to six months following the triggering event to comply with Section 409A of the Internal Revenue Code). (This funding requirement was waived in respect of the Merger.) |
80 L3HARRIS 2021 PROXY STATEMENT
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| | COMPENSATION TABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
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Termination Payments Generally Available to Salaried Employees Many of our salaried employees, including our named executive officers, are entitled to receive certain elements of compensation on a non-discretionary basis upon termination of employment for any reason. Subject to the exceptions noted below, these include: >
>Accrued salary and pay for unused vacation;
| Accrued salary and pay for unused vacation; |
>
Earned but unpaid bonuses; > | Earned but unpaid bonuses; |
>
Distributions of vested plan balances under our RSP and ERSP (and the SSP-II, where applicable); and > | Distributions of vested plan balances under our RSP and ERSP (and the SSP-II, where applicable); and |
>
Payments under the Legacy L3 Link Pension Plan and the Legacy L3 SERP Pension Plan that do not change as a result of termination of employment for any reason, as applicable. >
| Payments under the Legacy L3 Link Pension Plan and the Legacy L3 SERP Pension Plan that do not change as a result of termination of employment for any reason, as applicable. |
The amounts shown in the “Tables of Potential Payments Upon Termination or Change in Control” section of this proxy statement beginning on page 8486 do not include these elements of compensation or benefits.
Termination of Named Executive Officers Under Various Circumstances Termination for cause.A named executive officer whose employment is terminated by us for cause is not entitled to any compensation or benefits other than those generally paid to all of our salaried employees upon any termination of employment as described above. In addition, as noted under “Recovery of Executive Compensation (“Clawback”)” in the “Compensation Discussion and Analysis” section of this proxy statement, depending on the circumstances giving rise to such termination, we may be entitled to recover all or a portion of any performance-based compensation if our financial statements are restated as a result of errors, omissions or fraud. Annual incentive awards, vested and unvested options, including performance stock options, performance share units and restricted stock units and shares of restricted stock are automatically forfeited following a termination for cause or misconduct. Involuntary termination without cause.In the case of termination of employment by us without cause, each of Messrs. BrownKubasik and KubasikBrown is entitled to compensation and benefits under his respective employment agreement described above; Mr. Malave is(until his separation on January 21, 2022) was entitled to compensation and benefits under our new ServiceSeverance Pay Plan described above and full vesting of his One-Time RSU Award, as described above, under the Malave Letter Agreement; and our other named executive officers are entitled to compensation or benefits under the Legacy CIC Severance Arrangements described above until their expiration because the Merger constituted a change in control under those arrangements, and after their expiration, under our new Severance Pay Plan. Under our Annual Incentive Plan, following an involuntary termination by us without cause, if the executive was employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance. Except as otherwise provided for Messrs. Kubasik, Brown Kubasik and Malave in their respective employment agreements described above, under our equity incentive plans, upon an involuntary termination by us other than for cause or misconduct (and assuming not within 2 years following a future change in control): >
Unvested options, as well as unvested performance stock options, are forfeited, although a pro-rata portion of unvested performance stock options (based on the period worked during the performance period) will remain outstanding and eligible to be earned and to vest based on satisfaction of the performance vesting condition and become exercisable upon expiration of the service period; >
Vested options may be exercised for up to 90 days following such termination but not later than the regularly scheduled expiration date; >
Vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date; >
Unvested performance share units are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets, subject to a minimum one-year vesting period in the case of performance share units granted after our fiscal transition period; and provided that, in the case of performance share units granted in our fiscal transition period, if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; >
Unvested restricted stock units granted in our fiscal transition period immediately fully vest and are paid as soon as practicable; and >
Unvested restricted stock units granted after our fiscal transition period vest pro-rata based on the period worked during the restriction period, subject to a minimum one-year vesting period, with the vested portion generally paid out as soon as practicable and the unvested portion forfeited. L3HARRIS 2022 PROXY STATEMENT 83
> | Unvested options, as well as unvested performance stock options, are forfeited, although a pro-rata portion of unvested performance stock options (based on the period worked during the performance period) will remain outstanding and eligible to be earned and to vest based on satisfaction of the performance vesting condition and become exercisable upon expiration of the service period; |
> | Vested options, as well as vested performance stock options granted in fiscal 2015, may be exercised for up to 90 days following such termination but not later than the regularly scheduled expiration date; |
> | Vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date; |
> | Unvested performance share units are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets, subject to a minimum one-year vesting period in the case of performance share units granted after our fiscal transition period; and provided that, in the case of performance share units granted in our fiscal transition period, if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; |
> | Unvested restricted stock units granted in our fiscal transition period immediately fully vest and are paid as soon as practicable; and |
> | Unvested restricted stock units granted after our fiscal transition period vest pro-rata based on the period worked during the restriction period, subject to a minimum one-year vesting period, with the vested portion generally paid out as soon as practicable and the unvested portion forfeited. |
L3HARRIS 2021 PROXY STATEMENT 81
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| | | | | | | | | COMPENSATION TABLESTABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL | | |
Voluntary termination/resignation/good reason.In the case of voluntary termination or resignation of employment by a named executive officer (other than for good reason or due to retirement):
>
>The named executive officer is not entitled to any compensation or benefits other than those generally paid to all of our salaried employees upon any termination of employment as described above;
| The named executive officer is not entitled to any compensation or benefits other than those generally paid to all of our salaried employees upon any termination of employment as described above; |
>
Annual incentive awards, unvested stock options, unvested performance stock options, unvested performance share units, unvested restricted stock units and unvested shares of restricted stock are automatically forfeited; > | Annual incentive awards, unvested stock options, unvested performance stock options, unvested performance share units, unvested restricted stock units and unvested shares of restricted stock are automatically forfeited; |
>
Vested options, as well as vested performance stock options, in each case granted prior to the Merger may be exercised for up to 30 days following such termination or resignation but not later than the regularly scheduled expiration date; and > | Vested options, as well as vested performance stock options, in each case granted prior to the Merger may be exercised for up to 30 days following such termination or resignation but not later than the regularly scheduled expiration date; and |
>
Vested options, as well as vested performance stock options, in each case granted after the Merger may be exercised for up to 90 days following such termination or resignation but not later than the regularly scheduled expiration date. >
| Vested options, as well as vested performance stock options, in each case granted after the Merger may be exercised for up to 90 days following such termination or resignation but not later than the regularly scheduled expiration date. |
Except as otherwise provided for Messrs. Kubasik, Brown Kubasik and Malave in their respective employment agreements described above (until his January 21, 2022 separation, in the case of Mr. Malave), under our equity incentive plans, upon a voluntary termination for good reason by an executive officer (and assuming not within 2 years following a future change in control), the same equity treatment as described above in the case of voluntary termination or resignation applies, except as follows: >
> | Unvested performance stock options are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned and to vest based on satisfaction of the performance vesting condition and become exercisable upon termination of the service period; |
> | Vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date; |
> | Unvested performance share units granted in our fiscal transition period are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets; provided that if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; and |
> | Unvested restricted stock units granted in our fiscal transition period immediately fully vest in the case of employees not covered by the L3 CIC Plan and are paid as soon as practicable. |
>
Vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date; >
Unvested performance share units granted in our fiscal transition period are forfeited, although a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets; provided that if termination occurs on or after June 29, 2021 and through June 29, 2022, vesting shall be at not less than the target level; and >
Unvested restricted stock units granted in our fiscal transition period immediately fully vest and are paid as soon as practicable. Death or disability.If a named executive officer’s employment is terminated as a result of death, his or herthe individual’s beneficiaries are eligible for benefits under the death benefit programs generally available to many of our U.S.-based employees, including basic group life insurance paid by us and supplemental group life insurance if elected and paid for by the executive. If a named executive officer’s employment is terminated as a result of disability, the executive is eligible for benefits under the disability programs generally available to many of our U.S.-based employees, which include a long-term disability income benefit and, in most cases, continuation of health and survivor and accident life insurance coverage applicable to active employees for specified periods, while disabled. In addition, upon death or disability: >
Account balances in our RSP and ERSP become fully vested; > | Account balances in our RSP and ERSP become fully vested; |
>If the executive was employed for a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance; >
Unvested options granted after our fiscal transition period immediately fully vest, and unvested performance stock options granted in our fiscal transition period immediately vest at target; >
Vested options, as well as vested performance stock options, granted prior to the Merger may be exercised, in the case of death, for up to 12 months following the date of death but not later than the regularly scheduled expiration date (by the beneficiaries), and in the case of disability, until the regularly scheduled expiration date; >
Vested options, as well as vested performance stock options, granted after the Merger may be exercised for up to 12 months following the date of death (by the beneficiaries) or disability but not later than the regularly scheduled expiration date; >
Unvested performance share units immediately vest at target and are paid out as soon as administratively practicable following death and, in the case of disability, generally following expiration of the service period but may be paid out earlier in certain circumstances; and >
Unvested restricted stock units immediately fully vest and are paid out as soon as administratively practicable, and subject to a minimum one-year holding period, unvested shares of restricted stock immediately fully vest. 84 L3HARRIS2022 PROXY STATEMENT
>
| If the executive was employed for a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance; |
> | Unvested options granted after our fiscal transition period immediately fully vest, and unvested performance stock options granted in our fiscal transition period immediately vest at target; |
> | Vested options, as well as vested performance stock options, granted prior to the Merger may be exercised, in the case of death, for up to 12 months following the date of death but not later than the regularly scheduled expiration date (by the beneficiaries), and in the case of disability, until the regularly scheduled expiration date; |
> | Vested options, as well as vested performance stock options, granted after the Merger may be exercised for up to 12 months following the date of death (by the beneficiaries) or disability but not later than the regularly scheduled expiration date; |
> | Unvested performance share units immediately vest at target and are paid out as soon as administratively practicable following death and, in the case of disability, generally following expiration of the service period but may be paid out earlier in certain circumstances; and |
> | Unvested restricted stock units immediately fully vest and are paid out as soon as administratively practicable, and subject to a minimum one-year holding period, unvested shares of restricted stock immediately fully vest. |
82 L3HARRIS 2021 PROXY STATEMENT
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| | COMPENSATION TABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
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Retirement.Among our named executive officers, as of January 1,December 31, 2021, all were eligible to participate and remain fully vested in RSP and ESRP (with exception of Mr. Malave’s company match). Additionally, Messrs. GauiterKubasik, Brown, Gautier and Zoiss were retirement-eligible for purposes of our RSP and ERSP and certain awards under our equity incentive plans. If a named executive officer’s employment is terminated as a result of retirement, such named executive officer would receive retirement benefits generally available to our retirement-eligible salaried employees. In addition, upon retirement: > Account balances in our RSP and ERSP become fully vested; > | Account balances in our RSP and ERSP become fully vested;
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>
If the executive was employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance; > | If the executive was employed a minimum of 180 days during the fiscal year, annual incentive compensation awards are paid pro-rata based on the period worked during such fiscal year, with payment made after the fiscal year end based on our performance;
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>
Unvested options, as well as unvested performance stock options, are forfeited; > | Unvested options, as well as unvested performance stock options, are forfeited;
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>
If after age 55 with 10 or more years of full-time service, vested options, as well as vested performance stock options, in each case granted prior to the Merger may be exercised until the regularly scheduled expiration date; > | If after age 55 with 10 or more years of full-time service, vested options, as well as vested performance stock options, in each case granted prior to the Merger may be exercised until the regularly scheduled expiration date;
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>
If after age 55 with 10 or more years of full-time service on or after June 29, 2020, vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date; > | If after age 55 with 10 or more years of full-time service on or after June 29, 2020, vested performance stock options granted in our fiscal transition period may be exercised until the regularly scheduled expiration date;
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>
If after age 60 with 5 or more years of full-time service and satisfaction of certain advance notice and other criteria, vested options granted after our fiscal transition period may be exercised until the regularly scheduled expiration date; > | If after age 60 with 5 or more years of full-time service and satisfaction of certain advance notice and other criteria, vested options granted after our fiscal transition period may be exercised until the regularly scheduled expiration date;
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>
Unvested performance share units are forfeited; although in the case of performance share units granted after our fiscal transition period, if after age 60 with 5 or more years of full-time service and satisfaction of certain advance notice and other criteria, and subject to a minimum one-year vesting period, a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets; > | Unvested performance share units are forfeited; although in the case of performance share units granted after our fiscal transition period, if after age 60 with 5 or more years of full-time service and satisfaction of certain advance notice and other criteria, and subject to a minimum one-year vesting period, a pro-rata portion (based on the period worked during the performance period) will remain outstanding and eligible to be earned based on attainment of applicable performance targets;
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>
If after age 55 with 10 or more years of full-time service on or after June 29, 2020, unvested restricted stock units granted in our fiscal transition period vest pro-rata based on the period worked during the restriction period, with the vested portion generally paid out as soon as practicable and the unvested portion forfeited; and > | If after age 55 with 10 or more years of full-time service on or after June 29, 2020, unvested restricted stock units granted in our fiscal transition period vest pro-rata based on the period worked during the restriction period, with the vested portion generally paid out as soon as practicable and the unvested portion forfeited; and
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>
> | If after age 60 with 5 or more years of full-time service and satisfaction of certain advance notice and other criteria, and subject to a minimum one-year holding period, unvested restricted stock units granted after our fiscal transition period vest pro-rata based on the period worked during the restriction period, with the vested portion generally paid out as soon as practicable and the unvested portion forfeited. |
Change in control.Cash severance payments and other severance benefits under our Legacy CIC Severance Arrangements are discussed on pages 78-80.79-82. In addition, upon a future change in control, the impact under our Annual Incentive Plan is described below and there is no impact under to unvested equity awards under our equity incentive plans except as described below: >
Whether or not a termination occurs, annual cash incentive compensation awards under our Annual Incentive Plan are fully earned and paid out promptly following the change in control or, in certain instances, following the end of the fiscal year, in each case at not less than the target level; > | Whether or not a termination occurs, annual cash incentive compensation awards under our Annual Incentive Plan are fully earned and paid out promptly following the change in control or, in certain instances, following the end of the fiscal year, in each case at not less than the target level;
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>
If the “double trigger” qualifying termination of employment also occurs, unvested options granted after our fiscal transition period immediately vest and may be exercised until the regularly scheduled expiration date; >
Unvested performance stock options granted in our fiscal transition period vest at not less than the target level and become exercisable upon expiration of the service period, subject to accelerated exercisability if the “double trigger” qualifying termination of employment or death or disability also occurs and to forfeiture in certain other employment termination circumstances; >
Unvested performance share units granted after the Merger are deemed fully earned at not less than the target level and will vest and be paid out as soon as administratively practicable following expiration of the service period, subject to accelerated vesting and payout if the “double trigger” qualifying termination of employment or certain other employment terminations also occur and to forfeiture in certain other employment termination circumstances; >
Unvested shares of restricted stock immediately fully vest and will be paid out as soon as administratively practicable following the change in control; and >
If the “double trigger” qualifying termination of employment also occurs, unvested restricted stock units granted after our fiscal transition period immediately fully vest and are paid out as soon as administratively practicable. L3HARRIS 2022 PROXY STATEMENT 85
> | If the “double trigger” qualifying termination of employment also occurs, unvested options granted after our fiscal transition period immediately vest and may be exercised until the regularly scheduled expiration date;
|
> | Unvested performance stock options granted in our fiscal transition period vest at not less than the target level and become exercisable upon expiration of the service period, subject to accelerated exercisability if the “double trigger” qualifying termination of employment or death or disability also occurs and to forfeiture in certain other employment termination circumstances;
|
> | Unvested performance share units granted after the Merger are deemed fully earned at not less than the target level and will vest and be paid out as soon as administratively practicable following expiration of the service period, subject to accelerated vesting and payout if the “double trigger” qualifying termination of employment or certain other employment terminations also occur and to forfeiture in certain other employment termination circumstances;
|
> | Unvested shares of restricted stock immediately fully vest and will be paid out as soon as administratively practicable following the change in control; and
|
> | If the “double trigger” qualifying termination of employment also occurs, unvested restricted stock units granted after our fiscal transition period immediately fully vest and are paid out as soon as administratively practicable.
|
L3HARRIS 2021 PROXY STATEMENT 83
|
�� | | | | | | | | | COMPENSATION TABLESTABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL | | |
Tables of Potential Payments Upon Termination or Change in Control The following tables show, on an executive-by-executive basis, the amounts of the estimated incremental compensation and benefits that would be provided to each of our named executive officers in a hypothetical termination as of January 1,December 31, 2021 (as described in more detail below) under various circumstances, including termination by us for cause, voluntary termination (resignation), termination by the executive for good reason or for constructive termination, involuntary termination by us without cause, death, disability, retirement (to the extent the executive is retirement-eligible), or termination by us without cause or by the executive for good reason following a future change in control of L3Harris, as well as in the event of a future change in control of L3Harris without termination of employment of such executive. The actual amounts to be paid are determinable only at the time of a named executive officer’s termination of employment or a future change in control. As noted above, the Merger constituted a change in control under the agreements and other arrangements between thecertain of our named executive officers and us (including L3) at the time of the Merger, and therefore, for Messrs. Kubasik and Brown, the amounts for many of thecertain circumstances shown in the tables are the same as for termination by us without cause or by the executive for good reason following a future change in control of L3Harris. Notwithstanding the required disclosure of a hypothetical termination as of December 31, 2021, Mr. Malave left L3Harris on January 21, 2022 pursuant to the terms of the Malave Separation Agreement, under which all of his outstanding vested options and unvested equity awards were immediately cancelled, terminated and forfeited. The estimated amounts in the tables also are based on the following: >
The assumption that the hypothetical termination event occurred as of December 31, 2021, the last day of fiscal 2021, and that the value of our common stock was $213.24 per share based on the closing market price on December 31, 2021, the last trading day of fiscal 2021; >
The applicable provisions as of December 31, 2021 in the agreements and other arrangements between the named executive officer and us, which are summarized on pages 75-82; >
Cash severance includes multiples of salary and annual incentive compensation, but does not include paid or unpaid salary or annual incentive compensation or cash incentives earned for service through the end of fiscal 2021; >
The value of any options that were vested prior to December 31, 2021 is not included; >
The assumption that all unvested, in-the-money options that were not automatically forfeited on December 31, 2021 and that were entitled to vesting on such day vested and were exercised on such day; >
The value of accelerated restricted stock units includes the dollar value of (a) dividend equivalents paid in cash with respect to such accelerated restricted stock units and (b) performance share units granted as part of the special, one-time integration-related awards in our fiscal transition period, which have been earned at 400% of target based on an award payout formula as of December 31, 2021 and an executive officer must remain employed with us through June 29, 2022 to earn the award (for further information, see the Outstanding Equity Awards at 2021 Fiscal Year End Table on page 69 and related notes); >
The value of accelerated performance share units is based on the target number of performance share units previously granted and includes the dollar value of dividend equivalents paid in cash with respect to such accelerated performance share units; >
Any payment of the aggregate balance shown in the Fiscal 2021 Nonqualified Deferred Compensation Table on page 74 of this proxy statement is not included; >
Any payments under the Legacy L3 Link Pension Plan and the Legacy L3 SERP Pension Plan that do not change as a result of termination of employment for any reason or a change in control are not included; >
The estimated value of continuation of health and welfare benefits and perquisites is included, where applicable; >
For a termination by us without cause or by the named executive officer for good reason, including following a change in control, the “Other Benefits” line includes, in the case of Mr. Kubasik, $20,800 for financial planning services from a designated third-party provider for one year following separation (pursuant to current practice) and $18,000 for outplacement services (pursuant to the L3 CIC Plan); in the case of Mr. Brown, $6,595 for outplacement services, $10,000 ($5,000 per year for two years) for financial or tax planning services, $300,000 for estimated relocation assistance and an estimate of reimbursement for taxes associated with relocation assistance, pursuant to their executive change in control severance agreements; and in the case of Mr. Malave, following termination by us without cause, $20,800 for financial planning services from a designated third-party provider for one year and $18,000 for outplacement services (pursuant to current practice and the Severance Pay Plan), and following termination by us without cause or by Mr. Malave for good reason following a change in control, $20,800 for financial planning services from a designated third-party provider for two years (pursuant to the CIC Severance Plan); and >
With respect to a named executive officer (a) over the age of 60 and who has completed at least 5 years of full-time service (Mr. Kubasik as of December 31, 2021) and who provides a written 6 month notice for equity awards made in fiscal 2020 or fiscal 2021, or (b) over the age of 55 and who has completed at least 10 years of full-time service (Messrs. Brown and Zoiss as of December 31, 2021) for retention restricted stock unit awards granted during our fiscal transition period, a termination of such executive’s employment with us that is within such executive’s control would be expected to be designated as retirement, as opposed to voluntary termination (resignation) or termination by such executive for good reason. There are no retirement provisions for the special performance equity grants during the fiscal transition period for unvested awards. 86 L3HARRIS2022 PROXY STATEMENT
> | The assumption that the hypothetical termination event occurred as of January 1, 2021, the last day of fiscal 2020, and that the value of our common stock was $189.02 per share based on the closing market price on December 31, 2020, the last trading day of fiscal 2020;
|
> | The applicable provisions as of January 1, 2021 in the agreements and other arrangements between the named executive officer and us, which are summarized on pages 73-80;
|
> | Cash severance includes multiples of salary and annual incentive compensation, but does not include paid or unpaid salary or annual incentive compensation or cash incentives earned for service through the end of fiscal 2020;
|
> | The value of any options that were vested prior to January 1, 2021 is not included;
|
> | The assumption that all unvested, in-the-money options that were not automatically forfeited on January 1, 2021 and that were entitled to vesting on such day vested and were exercised on such day (there were no such in-the-money options on January 1, 2021);
|
> | The value of accelerated restricted stock units includes the dollar value of dividend equivalents paid in cash with respect to such accelerated restricted stock units;
|
> | The value of accelerated performance share units is based on the target number of performance share units previously granted and includes the dollar value of dividend equivalents paid in cash with respect to such accelerated performance share units;
|
> | Any payment of the aggregate balance shown in the Fiscal 2020 Nonqualified Deferred Compensation Table on page 72 of this proxy statement is not included;
|
> | Any payments under the Legacy L3 Link Pension Plan and the Legacy L3 SERP Pension Plan that do not change as a result of termination of employment for any reason or a change in control are not included;
|
> | The estimated value of continuation of health and welfare benefits and perquisites is included, where applicable;
|
> | For a termination by us without cause or by the named executive officer for good reason, including following a change in control (which includes the Merger), the “Other Benefits” line includes, in the case of Messrs. Brown and Zoiss, $6,595 for outplacement services, $10,000 ($5,000 per year for two years) for financial or tax planning services, $300,000 for estimated relocation assistance and an estimate of reimbursement for taxes associated with relocation assistance, pursuant to their executive change in control severance agreements; in the case of Messrs. Kubasik and Gautier, $20,000 for financial planning services from a designated third-party provider for one year following separation (pursuant to current practice) and $18,000 for outplacement services (pursuant to the L3 CIC Plan); and in the case of Mr. Malave, following termination by us without cause, $20,000 for financial planning services from a designated third-party provider for one year and $18,000 for outplacement services (pursuant to current practice and the Severance Pay Plan), and following termination by us without cause or by Mr. Malave for good reason following a change in control, $20,000 for financial planning services from a designated third-party provider for two years (pursuant to the CIC Severance Plan); and
|
> | With respect to a named executive officer over the age of 60 and who has completed at least 5 years of full-time service (none of our named executive officers as of January 1, 2021), a termination of such executive’s employment with us that is within such executive’s control would be expected to be designated as retirement, as opposed to voluntary termination (resignation) or termination by such executive for good reason.
|
84 L3HARRIS 2021 PROXY STATEMENT
|
| | | | | | | | |
| | COMPENSATION TABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| |
Christopher E. Kubasik | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Retirement | | | Change in
Control without
Termination | | | Termination by
L3Harris without
Cause/by Executive
for Good Reason
Following a
Change in Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 12,673,500 | | | | | | $ | 12,673,500 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 12,673,500 | | | | | | Value of Accelerated
Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,086,513 | | | | | | $ | 1,086,513 | | | | | | $ | 3,898,348 | | | | | | $ | 3,898,348 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,898,348 | | | | | | Value of Accelerated
Vesting of Unvested
Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 10,848,780 | | | | | | $ | 12,602,683 | | | | | | $ | 16,994,755 | | | | | | $ | 16,994,755 | | | | | | $ | 1,753,902 | | | | | | $ | 0 | | | | | | $ | 16,994,755 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,814,042 | | | | | | $ | 6,000,261 | | | | | | $ | 6,000,261 | | | | | | $ | 3,814,042 | | | | | | $ | 0 | | | | | | $ | 12,291,733 | | | | | | Health and Welfare
Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 150,878 | | | | | | $ | 150,878 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 150,878 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | $ | 20,800 | | | | | | $ | 20,800 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 24,759,672 | | | | | | $ | 30,366,416 | | | | | | $ | 26,914,164 | | | | | | $ | 26,914,164 | | | | | | $ | 5,567,944 | | | | | | $ | 0 | | | | | | $ | 46,048,014 | | | |
William M. Brown | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Retirement | | | Change in
Control without
Termination | | | Termination by
L3Harris without
Cause/by Executive
for Good Reason
Following a
Change in Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 15,705,000 | | | | | | $ | 15,705,000 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 15,705,000 | | | | | | Value of Accelerated or
Continued Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,086,513 | | | | | | $ | 1,086,513 | | | | | | $ | 3,898,348 | | | | | | $ | 3,898,348 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,898,348 | | | | | | Value of Accelerated
Vesting of Unvested
Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 16,408,503 | | | | | | $ | 18,162,405 | | | | | | $ | 22,554,478 | | | | | | $ | 22,554,478 | | | | | | $ | 4,479,229 | | | | | | $ | 0 | | | | | | $ | 22,554,478 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,814,042 | | | | | | $ | 6,000,261 | | | | | | $ | 6,000,261 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 12,291,733 | | | | | | Health and Welfare
Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 149,925 | | | | | | $ | 149,925 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 149,925 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 511,236 | | | | | | $ | 511,236 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 511,236 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 33,861,177 | | | | | | $ | 39,429,121 | | | | | | $ | 32,453,086 | | | | | | $ | 32,453,086 | | | | | | $ | 4,479,229 | | | | | | $ | 0 | | | | | | $ | 55,110,719 | | | |
L3HARRIS 2022 PROXY STATEMENT 87
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 15,705,000 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| Value of Accelerated Unvested Options | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | | | | $ | 4,851,684 |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | 7,345,448 |
| Value of Accelerated Vesting of Unvested Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | 1,577,862 |
| | $ | 3,244,926
|
| | $ | |
| | $ | 4,033,857 |
| | $ | 0 |
| | $ | 7,345,320 |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 172,614 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | | | | $ | 511,237 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 511,237 |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 22,818,397 |
| | $ | 24,485,461 |
| | $ | 9,586,344 |
| | $ | |
| | $ | 0 |
| | $ | 31,088,618 |
|
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 12,240,000 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| Value of Accelerated Vesting of Unvested Restricted Stock and
Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 6,235,365 |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | 8,729,128 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 38,000 | | | $ | 38,000 | | | $ | 20,000 | | | $ | 20,000 | | | $ | 0 | | | $ | 38,000 |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 20,261,071 |
| | $ | 21,928,135 |
| | $ | 10,990,024 |
| | $ | |
| | $ | 0 |
| | $ | 28,531,292 |
|
L3HARRIS 2021 PROXY STATEMENT 85
|
| | | | | | | | | | COMPENSATION TABLESTABLES POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL | | |
Jesus Malave, Jr.* | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Change in
Control without
Termination | | | Termination by
L3Harris without
Cause/by Executive
for Good Reason
Following a
Change in Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 760,000 | | | | | | $ | 1,520,000 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,040,000 | | | | | | Value of Accelerated Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 291,192 | | | | | | $ | 291,192 | | | | | | $ | 894,476 | | | | | | $ | 894,476 | | | | | | $ | 0 | | | | | | $ | 894,476 | | | | | | Value of Accelerated Vesting of Unvested Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,207,523 | | | | | | $ | 3,566,965 | | | | | | $ | 4,510,694 | | | | | | $ | 4,510,694 | | | | | | $ | 0 | | | | | | $ | 4,510,694 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 781,496 | | | | | | $ | 1,258,509 | | | | | | $ | 1,258,509 | | | | | | $ | 0 | | | | | | $ | 2,605,904 | | | | | | Health and Welfare Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 17,117 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 34,234 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | $ | 20,800 | | | | | | $ | 20,800 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 4,258,715 | | | | | | $ | 6,215,570 | | | | | | $ | 6,684,479 | | | | | | $ | 6,684,479 | | | | | | $ | 0 | | | | | | $ | 11,124,108 | | | |
*
Mr. Malave left L3Harris on January 21, 2022. Pursuant to the Malave Separation Agreement, all of his outstanding vested options and unvested equity grants were immediately cancelled, terminated and forfeited, and he did not receive a payment under our Annual Incentive Plan for fiscal 2021. Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Change in Control without Termination | | | Termination by L3Harris without Cause/by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 700,000 |
| | $ | 1,400,000 |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,800,000 |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 599,601 |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | 1,110,668 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | 0 |
| | $ | |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 0 |
| | $ | |
| | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 34,234 |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 38,000
| | | $ | 20,000 | | | $ | 20,000 | | | $ | 0 | | | $ | 40,000 |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 1,716,141 |
| | $ | 2,812,838 |
| | $ | 1,729,613 |
| | $ | |
| | $ | 0 |
| | $ | 5,631,655 |
|
Todd W. Gautier | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Retirement | | | Change
in Control
without
Termination | | | Termination
by L3Harris
without Cause/
by Executive for
Good Reason
Following a
Change in
Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,300,000 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,600,000 | | | | | | Value of Accelerated Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 291,192 | | | | | | $ | 291,192 | | | | | | $ | 736,258 | | | | | | $ | 736,258 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 736,258 | | | | | | Value of Accelerated Vesting of Unvested Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,863,971 | | | | | | $ | 3,137,748 | | | | | | $ | 5,669,422 | | | | | | $ | 5,669,422 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 5,669,422 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 595,355 | | | | | | $ | 943,227 | | | | | | $ | 943,227 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,938,560 | | | | | | Health and Welfare Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 15,928 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 31,855 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | $ | 20,800 | | | | | | $ | 20,800 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,155,163 | | | | | | $ | 5,379,023 | | | | | | $ | 7,369,707 | | | | | | $ | 7,369,707 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 11,014,894 | | | |
88 L3HARRIS2022 PROXY STATEMENT
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Retirement | | Change in Control without Termination | | | Termination by L3Harris without Cause/ by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 3,276,667 |
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | 1,604,540 |
| | $ | |
| | $ | |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | 1,933,805 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | 151,140
|
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 38,000 | | | $ | 38,000 | | | $ | 20,000 | | | $ | 20,000 | | $ | 0 | | $ | 0 | | | $ | |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 5,486,886 |
| | $ | 5,747,108 |
| | $ | 2,618,963 |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | 6,862,953 |
|
| 86COMPENSATION TABLES L3HARRIS 2021 PROXY STATEMENTPOTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| |
Sean J. Stackley | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Change
in Control
without
Termination | | | Termination
by L3Harris
without Cause/
by Executive for
Good Reason
Following a
Change in
Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,300,000 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,600,000 | | | | | | Value of Accelerated Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 291,192 | | | | | | $ | 291,192 | | | | | | $ | 736,258 | | | | | | $ | 736,258 | | | | | | $ | 0 | | | | | | $ | 736,258 | | | | | | Value of Accelerated Vesting of Unvested Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,863,971 | | | | | | $ | 3,137,748 | | | | | | $ | 5,245,698 | | | | | | $ | 5,245,698 | | | | | | $ | 0 | | | | | | $ | 5,245,698 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 595,355 | | | | | | $ | 943,227 | | | | | | $ | 943,227 | | | | | | $ | 0 | | | | | | $ | 1,938,560 | | | | | | Health and Welfare Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 185 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 370 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | $ | 20,800 | | | | | | $ | 20,800 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,155,163 | | | | | | $ | 5,363,280 | | | | | | $ | 6,945,983 | | | | | | $ | 6,945,983 | | | | | | $ | 0 | | | | | | $ | 10,559,685 | | | |
Edward J. Zoiss | | Executive Benefits
and Payment | | | Termination
by L3Harris
for Cause | | | Voluntary
Termination/
Resignation | | | Termination by
Executive for
Constructive
Termination | | | Involuntary
Termination
by L3Harris
without Cause | | | Death | | | Disability | | | Retirement | | | Change
in Control
without
Termination | | | Termination
by L3Harris
without Cause/
by Executive for
Good Reason
Following a
Change in
Control | | | | Cash Severance | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,300,000 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,600,000 | | | | | | Value of Accelerated Vesting of Unvested Options | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 291,192 | | | | | | $ | 291,192 | | | | | | $ | 736,258 | | | | | | $ | 736,258 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 736,258 | | | | | | Value of Accelerated Vesting of Unvested Restricted Stock Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,731,963 | | | | | | $ | 4,005,739 | | | | | | $ | 4,701,351 | | | | | | $ | 4,701,351 | | | | | | $ | 699,303 | | | | | | $ | 0 | | | | | | $ | 4,701,351 | | | | | | Value of Accelerated
Vesting of Unvested
Performance Share Units | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 595,355 | | | | | | $ | 943,227 | | | | | | $ | 943,227 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,938,560 | | | | | | Health and Welfare Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 15,928 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 31,855 | | | | | | Other Benefits | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | $ | 20,800 | | | | | | $ | 20,800 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 38,800 | | | | | | TOTAL | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 4,023,154 | | | | | | $ | 6,247,014 | | | | | | $ | 6,401,636 | | | | | | $ | 6,401,636 | | | | | | $ | 699,303 | | | | | | $ | 0 | | | | | | $ | 10,046,824 | | | |
L3HARRIS 2022 PROXY STATEMENT 89
| | | | | | | | |
| | COMPENSATION TABLES CEO PAY RATIO | |
Edward J. Zoiss
Executive Benefits and Payment | | Termination by L3Harris for Cause | | | Voluntary Termination/ Resignation | | | Termination by Executive for Constructive Termination | | | Involuntary Termination by L3Harris without Cause | | | Death | | | Disability | | | Retirement | | Change in Control without Termination | | | Termination by L3Harris without Cause/ by Executive for Good Reason Following a Change in Control | | | Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 2,792,000 |
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| Value of Accelerated | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | |
| Value of Accelerated Restricted Stock Units | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | 358,684 | | $ | 0 |
| | $ | 1,146,717 |
| Value of Accelerated Performance Share Units | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | 0 | | $ | 0 |
| | $ | |
| Health and Welfare | | $ | 0 | | | $ | 0 | | | $ | |
| | $ | |
| | $ | 0 | | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | |
| | Other Benefits | | $ | 0 | | | $ | 0 | | | $ | 511,237 | | | $ | 511,237 | | | $ | 20,000 | | | $ | | | $ | 0 | | $ | 0 | | | $ | |
| | TOTAL | | $ | 0 | | | $ | 0 | | | $ | 4,511,911 |
| | $ | 4,772,132 |
| | $ | 1,771,875 |
| | $ | |
| $ | 358,684 | | $ | 0 |
| | $ | 5,887,978 |
|
We are required under Item 402(u) of Regulation S-K to calculate and disclose our “CEO pay ratio.” As permitted under SEC rules for such calculation and disclosure, from our total employee population of 49,396 full-time, part-time, seasonal and temporary workers as of January 1, 2021 (other than our CEO), we excluded all employees not located in the United States, Canada or Australia, for a total of 2,281 excluded employees (less than 5% of total employees)1 and then identified the median employee based on W-2 taxable Medicare wages (Box 5) for the 12 months leading up to January 1, 2021, as reported to the Internal Revenue Service, for employees located in the United States and the closest equivalent for employees located in Canada or Australia. We used the same median employee for our fiscal 2021 as for fiscal 2020 in our pay ratio calculation because there were no changes to our employee population or our compensation arrangements during fiscal 2021 that we believe would result in a significant change to our pay ratio disclosure. We calculated such median employee’s total compensation of $99,189$110,846 for fiscal 20202021 in the same manner we calculated our CEO’s total compensation of $15,452,653$15,697,749 for fiscal 2020,2021, as reported in the “Total” column of the Fiscal 20202021 Summary Compensation Table on page 62.64. Based on this information, for fiscal 2020,2021, the ratio of the median of the total compensation of all employees (other than our CEO) to the total compensation of our CEO was 1:156,142, which pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Because applicable SEC rules permit various methodologies, assumptions and exclusions, such pay ratio may not be comparable to pay ratios calculated and disclosed by other companies. 1
Of our total employee population of 49,396 employees, 44,050 were located, and 5,346 were not located, in the United States as of January 1, 2021. These same numbers were used in calculating the de minimis exemption to determine the SEC-permitted number of excluded employees. The approximate number of employees excluded, by jurisdiction, were as follows: Great Britain (1,331), Italy (255), Germany (225), Portugal (103), India (82), Thailand (60), New Zealand (49), United Arab Emirates (46), Pakistan (23), France (14), Hong Kong (14), Saudi Arabia (11) and 10 or fewer in each of Algeria, Brazil, Chile, China, Egypt, Estonia, Hungary, Ireland, Japan, Jordan, Republic of Korea, Lithuania, Mexico, Malaysia, Netherlands, Oman, Philippines, Poland, Romania, Singapore, Spain, Sweden, Switzerland, Taiwan and Turkey. 1 | Of our total employee population of 49,396 employees, 44,050 were located, and 5,346 were not located, in the United States as of January 1, 2021. These same numbers were used in calculating the de minimis exemption to determine the SEC-permitted number of excluded employees. The approximate number of employees excluded, by jurisdiction, were as follows: Great Britain (1,331), Italy (255), Germany (225), Portugal (103), India (82), Thailand (60), New Zealand (49), United Arab Emirates (46), Pakistan (23), France (14), Hong Kong (14), Saudi Arabia (11) and 10 or fewer in each of Algeria, Brazil, Chile, China, Egypt, Estonia, Hungary, Ireland, Japan, Jordan, Republic of Korea, Lithuania, Mexico, Malaysia, Netherlands, Oman, Philippines, Poland, Romania, Singapore, Spain, Sweden, Switzerland, Taiwan and Turkey.
|
L3HARRIS 2021 PROXY STATEMENT 87
|
90 L3HARRIS2022 PROXY STATEMENT
REPORT OF THE
AUDIT COMMITTEE OF
L3HARRIS
L3HARRIS
The following Report of our Audit Committee does not constitute soliciting material and the Report should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Report by reference therein. The role of the Audit Committee is, among other things, to assist the Board of Directors (the “Board”) of L3Harris Technologies, Inc. (“L3Harris”) in its oversight of: >
the integrity of L3Harris’ financial statements; > | the integrity of L3Harris’ financial statements;
|
>
L3Harris’ compliance with relevant legal and regulatory requirements; > | L3Harris’ compliance with relevant legal and regulatory requirements;
|
>
L3Harris’ internal control over financial reporting; > | L3Harris’ internal control over financial reporting;
|
>
the qualifications and independence of L3Harris’ independent registered public accounting firm; and > | the qualifications and independence of L3Harris’ independent registered public accounting firm; and
|
>
> | the performance of L3Harris’ internal audit function and independent registered public accounting firm. |
The Board has determined that, in its business judgment, all members of L3Harris’ Audit Committee are independent within the meaning of the listing standards of the New York Stock Exchange, the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission (“SEC”) and L3Harris’ Director Independence Standards. L3Harris’ management is responsible for the preparation, presentation and integrity of L3Harris’ financial statements and the effectiveness of L3Harris’ system of internal control over financial reporting and disclosure controls and procedures. Management and L3Harris’ Internal Audit department are responsible for maintaining and evaluating appropriate accounting and financial reporting practices and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. L3Harris’ independent registered public accounting firm for its fiscal year ended January 1,December 31, 2021, Ernst & Young LLP (“EY”), was responsible for auditing L3Harris’ consolidated financial statements and expressing an opinion as to whether such financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States. EY also was responsible for auditing the effectiveness of L3Harris’ internal control over financial reporting.reporting as of December 31, 2021. Representatives of EY attended all regularly scheduled meetings of the Audit Committee during the fiscal year ended January 1,December 31, 2021. The Audit Committee met and held discussions with management, the head of Internal Audit and EY, and discussed with the internal auditors and EY the overall scope of, and plans for, their respective audits and the identification of audit risks. The Audit Committee also met with EY and the head of Internal Audit, Principal Accounting Officer and Chief Financial Officer, with and without management present, to discuss the results of their respective examinations, the reasonableness of significant judgments, the evaluations of L3Harris’ internal control over financial reporting and the overall quality of L3Harris’ financial reporting. Management has represented to the Audit Committee that L3Harris’ consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. In the performance of its oversight functions, the Audit Committee has: >
reviewed and discussed with management and EY L3Harris’ internal control over financial reporting, including a review of management’s report on its assessment and EY’s audit of the effectiveness of L3Harris’ internal control over financial reporting and any significant deficiencies or material weaknesses; > | reviewed and discussed with management and EY L3Harris’ internal control over financial reporting, including a review of management’s report on its assessment and EY’s audit of the effectiveness of L3Harris’ internal control over financial reporting and any significant deficiencies or material weaknesses;
|
>
considered, reviewed and discussed the audited financial statements with management and EY, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices; >
discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties; L3HARRIS 2022 PROXY STATEMENT 91
> | considered, reviewed and discussed the audited financial statements with management and EY, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices;
|
> | discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties;
|
88 L3HARRIS 2021 PROXY STATEMENT
|
| | | | | | | | |
| | REPORT OF THE AUDIT COMMITTEE OF L3HARRIS |
> | received, reviewed and discussed the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with an audit committee concerning independence, and discussed with EY its independence;
|
> | reviewed the services provided by EY other than its audit services and considered whether the provision of such other services by EY is compatible with maintaining its independence, discussed with EY its independence, and concluded that EY is independent from L3Harris and its management; and
|
>
received, reviewed and discussed the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with an audit committee concerning independence, and discussed with EY its independence; > | reviewed the contents of SEC-required certification statements from the Chief Executive Officer and Chief Financial Officer and also discussed and reviewed the process and internal controls for providing reasonable assurances that the financial statements included in L3Harris’ Annual Report on Form 10-K for the fiscal year ended January 1, 2021 are true in all important respects, and that the report contains all appropriate material information of which they are aware.
|
>
reviewed the services provided by EY other than its audit services and considered whether the provision of such other services by EY is compatible with maintaining its independence, discussed with EY its independence and concluded that EY is independent from L3Harris and its management; and >
reviewed the contents of SEC-required certification statements from the Chief Executive Officer and Chief Financial Officer and also discussed and reviewed the process and internal controls for providing reasonable assurances that the financial statements included in L3Harris’ Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are true in all important respects, and that the report contains all appropriate material information of which they are aware. In reliance on the reports, reviews and discussions described in this Report, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in L3Harris’ Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2021, for filing with the SEC. The Audit Committee also has appointed, and has requested shareholder ratification of its appointment of, EY as L3Harris’ independent registered public accounting firm for the fiscal year ending December 31, 2021. Submitted on February 25, 202123, 2022 by the Audit Committee of the Board of Directors of L3Harris Technologies, Inc.
Sallie B. Bailey
Peter W. Chiarelli
Thomas A. Corcoran
L3HARRIS 2021 PROXY STATEMENT 89
|
92 L3HARRIS2022 PROXY STATEMENT
4:
RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
| | Our Board unanimously recommends voting FOR ratification of appointment of Ernst & Young LLP as our independent registered public accounting firmfor the fiscal year ending December 31, 2021.30, 2022. |
| | Independent accounting firm with breadth of knowledge, support and expertise of accessible national office.
>
Significant industry and government contracting expertise. >
Periodic mandated rotation of audit firm’s lead engagement partner. | |
Our Audit Committee has appointed Ernst & Young LLP ("EY"(“EY”) to audit our books and accounts and internal control over financial reporting for the fiscal year ending December 31, 2021.30, 2022. Although not required by applicable law, our Board believes that obtaining shareholder ratification of the appointment is a sound corporate governance practice. If our shareholders do not ratify the appointment of EY, our Audit Committee will reconsider whether to retain EY, and may either do so or hire another firm without resubmitting the matter to shareholders for approval. We expect that a representative of EY will be present at the 20212022 Annual Meeting of Shareholders to respond to appropriate questions from shareholders and to make a statement if he or shethe individual desires to do so. As provided in our Audit Committee’s charter and as discussed above, our Audit Committee is responsible for directly appointing, compensating, retaining, terminating and overseeing our independent registered public accounting firm. Although we have a very long-standing relationship with EY, our Audit Committee frequently evaluates the independence and effectiveness of our independent registered public accounting firm and its personnel, as well as the cost and quality of its audit and audit-related services. Our Audit Committee retains the discretion at any time to appoint a different independent registered public accounting firm. In accordance with sound corporate governance practices and in order to ensure that our Audit Committee and our shareholders are receiving the best and most cost-effective audit services available, our Audit Committee periodically considers issuing a “request for proposal” to EY and other large nationally recognized accounting firms with regard to our audit engagement, which could result in a firm other than EY providing audit engagement services to us in later years. Our Audit Committee used this process in connection with its selection and appointment of EY as our independent registered public accounting firm for the fiscal year ending December 31, 2021.30, 2022. L3HARRIS 2022 PROXY STATEMENT 93
90 L3HARRIS 2021 PROXY STATEMENT
|
| | | | | | | | |
| | PROPOSAL 3:4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
FEES PAID TO INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM EY served as our independent registered public accounting firm for fiscal 2020,2021, which ended January 1,December 31, 2021. In addition to the engagement to audit our fiscal 20202021 financial statements and internal control over financial reporting and to review the financial statements included in our quarterly reports on Form 10-Q, EY also was engaged by us during fiscal 20202021 to perform certain tax services. The following table presents fees for professional audit services and other services rendered by EY for fiscal 2020, our fiscal transition period2021 and fiscal 2019, which ended June 28, 2019:2020: | | | | | | | | | Fiscal 2019 | | Audit Fees(1) | | $ | 13,437,957 | | | $ | 14,922,674 | | | $ | 9,679,000 | | Audit-Related Fees(2) | | $ | 302,049 | | | $ | 6,431 | | | $ | 0 | | Tax Fees(3) | | $ | 1,997,183 | | | $ | 460,529 | | | $ | 455,000 | | All Other Fees(4) | | $ | 6,705 | | | $ | 10,615
| | | $ | 0 | | | Total | | $ | 15,743,894 | | | $ | 15,400,249 | | | $ | 10,134,000 | |
| | | | | Fiscal 2021 | | | Fiscal 2020 | | | | Audit Fees(1) | | | | $ | 11,595,205 | | | | | | $ | 13,437,957 | | | | | | Audit-Related Fees(2) | | | | $ | 2,012,174 | | | | | | $ | 302,049 | | | | | | Tax Fees(3) | | | | $ | 1,858,896 | | | | | | $ | 1,997,183 | | | | | | All Other Fees | | | | $ | 8,225 | | | | | | $ | 6,705 | | | | | | Total | | | | $ | 15,474,500 | | | | | | $ | 15,743,894 | | | |
(1)
(1)Audit fees included fees associated with the annual audit and the audit of internal control over financial reporting, as well as reviews of our quarterly reports on Form 10-Q, SEC registration statements and other filings, comfort letter procedures, accounting and reporting consultations and statutory audits required internationally for certain of our subsidiaries.
| Audit fees included fees associated with the annual audit and the audit of internal control over financial reporting, as well as reviews of our quarterly reports on Form 10-Q, SEC registration statements and other filings, comfort letter procedures, accounting and reporting consultations and statutory audits required internationally for certain of our subsidiaries. |
(2)
Audit-related services in fiscal 2021 and fiscal 2020 primarily related to audits of stand-alone financial statements of business within the consolidated group. (2)
| Audit-related services in fiscal 2020 primarily related to audits of stand-alone financial statements of business within the consolidated group. No audit- related services were rendered or fees billed for fiscal 2019. |
(3)
Tax fees for fiscal 2021 consisted of $1,541,123 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $317,773 related to tax planning and advisory services. Tax fees for fiscal 2020 consisted of $1,474,612 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $522,571 related to tax planning and tax advisory services. (3)
| Tax fees for fiscal 2020 consisted of $1,474,612 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $522,571 related to tax planning and tax advisory services. Tax fees for our fiscal transition period consisted of $204,142 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $256,387 related to tax planning and tax advisory services. Tax fees for fiscal 2019 consisted of $125,000 related to tax compliance, including foreign and domestic return preparation and transfer pricing studies, and $330,000 related to tax planning and tax advisory services. |
(4)
| For fiscal 2019, no professional services were rendered or fees billed for services not included within Audit Fees, Audit-Related Fees or Tax Fees. |
EY did not perform any professional services related to financial information systems design and implementation for us in fiscal 2020, our fiscal transition period2021 or fiscal 2019. 2020. Our Audit Committee has determined that the provision of the services described above is compatible with maintaining EY’s independence.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES Under our Audit Committee Pre-Approval Policy and Procedures, our Audit Committee must pre-approve all audit and non-audit services provided by our independent registered public accounting firm to ensure that the provision of such services does not impair the firm’s independence. The policy utilizes a framework of both general pre-approval for certain specified services and specific pre-approval for all other services. Early in each fiscal year, our Audit Committee reviews and, as it deems appropriate, pre-approves the audit services and any audit-related services, tax services and other services to be performed by our independent registered public accounting firm, together with specific details regarding such services anticipated to be required for such fiscal year including, when available, estimated fees. Our Audit Committee periodically reviews the services provided to date and the actual fees against the estimates, and such fee amounts may be updated to the extent appropriate at regularly scheduled meetings of our Audit Committee. Additional pre-approval is required before actual fees for any service can exceed the originally pre-approved amount. Our Audit Committee also may revise the list of pre-approved services and related fees from time to time. Our Audit Committee followed this same process for fiscal 2020,2021, and all of the services described in the table above and related notes were pre-approved in accordance with this policy. If we seek to engage our independent registered public accounting firm for other services that are not considered subject to general pre-approval as described above, then our Audit Committee must approve such specific engagement as well as the estimated fees. Such engagement will be presented to our Audit Committee for pre-approval at its next regularly scheduled meeting. If the timing of the project requires an expedited decision, then we may ask the Chair of our Audit Committee to pre-approve such engagement. Any such pre-approval by the Chair is then presented to our full Audit Committee for ratification at the next Audit Committee meeting. In any event, pre-approval of any engagement by our Audit Committee or the Chair of our Audit Committee is required before our independent registered public accounting firm may commence any engagement. Additional pre-approval is required before any fees can exceed approved fees for any such specifically approved services.
L3HARRIS 2021 PROXY STATEMENT 91
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94 L3HARRIS2022 PROXY STATEMENT
SHARES OWNED BY DIRECTORS, NOMINEES AND The following table shows beneficial ownership of shares of our common stock, as of February 5, 2021,23, 2022, by: (a) each member of our Board, including the nominees for election at the 20212022 Annual Meeting of Shareholders; (b) our CEO and each other named executive officer; and (c) all of our then-serving directors and executive officers as a group. Except as otherwise noted, the named individual had sole voting and investment power with respect to the securities. | | | | | Shares Beneficially Owned | | | | Name | | | Shares
Owned(1) | | | Shares Under
Exercisable Options(2) | | | Total Shares
Beneficially Owned(3) | | | Percentage
of Shares | | | | DIRECTORS AND NOMINEES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sallie B. Bailey | | | | | 3,287 | | | | | | | — | | | | | | | 3,287 | | | | | | | * | | | | | | Peter W. Chiarelli | | | | | 3,095 | | | | | | | — | | | | | | | 3,095 | | | | | | | * | | | | | | Thomas A. Corcoran | | | | | 17,812 | | | | | | | — | | | | | | | 17,812 | | | | | | | * | | | | | | Thomas A. Dattilo | | | | | 5,095 | | | | | | | — | | | | | | | 5,095 | | | | | | | * | | | | | | Roger B. Fradin | | | | | 3,005 | | | | | | | — | | | | | | | 3,005 | | | | | | | * | | | | | | Harry B. Harris, Jr. | | | | | 0 | | | | | | | — | | | | | | | 0 | | | | | | | * | | | | | | Lewis Hay III | | | | | 16,237 | | | | | | | — | | | | | | | 16,237 | | | | | | | * | | | | | | Lewis Kramer | | | | | 15,373 | | | | | | | — | | | | | | | 15,373 | | | | | | | * | | | | | | Rita S. Lane | | | | | 3,023 | | | | | | | — | | | | | | | 3,023 | | | | | | | * | | | | | | Robert B. Millard | | | | | 225,581 | | | | | | | — | | | | | | | 225,581 | | | | | | | * | | | | | | Lloyd W. Newton | | | | | 12,221 | | | | | | | — | | | | | | | 12,221 | | | | | | | * | | | | | | NAMED EXECUTIVE OFFICERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher E. Kubasik† | | | | | 80,492 | | | | | | | 479,654 | | | | | | | 560,146 | | | | | | | * | | | | | | William M. Brown† | | | | | 208,616 | | | | | | | 569,046 | | | | | | | 777,662 | | | | | | | * | | | | | | Jesus Malave, Jr. | | | | | 2,359 | | | | | | | — | | | | | | | 2,359 | | | | | | | * | | | | | | Todd W. Gautier | | | | | 536 | | | | | | | 24,349 | | | | | | | 24,885 | | | | | | | * | | | | | | Sean J. Stackley | | | | | 5,478 | | | | | | | 13,401 | | | | | | | 18,879 | | | | | | | * | | | | | | Edward J. Zoiss | | | | | 16,663 | | | | | | | 60,280 | | | | | | | 76,943 | | | | | | | * | | | | | | All Directors and Executive Officers,
as a group (20 persons)(4) | | | | | 713,363 | | | | | | | 1,261,417 | | | | | | | 1,974,780 | | | | | | | 1.0 | % | | |
*
| Name | Shares Beneficially Owned | Shares Owned(1) | Shares Under Exercisable Options(2) | Total Shares Beneficially Owned(3) | Percentage of Shares | | DIRECTORS AND NOMINEES | | | | | | Sallie B. Bailey | 2,490 | — | 2,490 | * | | Peter W. Chiarelli | 2,298 | — | | * | | Thomas A. Corcoran | 21,465 | — | | * | | Thomas A. Dattilo | 4,298 | — | | * | | Roger B. Fradin | 2,208 | — | | * | | Lewis Hay III | 16,326 | — | | * | | Lewis Kramer | 14,576 | — | | * | | Rita S. Lane | 3,112 | — | | * | | Robert B. Millard | 225,670 | — | | * | | Lloyd W. Newton | 12,310 | — | | * | | NAMED EXECUTIVE OFFICERS | | | | | William M. Brown† | 367,476 | 1,228,728 | 1,596,204 | * | Christopher E. Kubasik† | 80,397 | 433,146 | 513,543 | * | | Jesus Malave, Jr. | 1,169
| 5,074
| 6,243
| * | | Todd W. Gautier | 16,739 | 32,595 | 49,334 | * | | Edward J. Zoiss | 21,327 | | 74,282 | * | All Directors and Executive Officers, as a group (20 persons)(4) | 974,439 | 1,968,971 | 2,943,410 | 1.4% |
*Less than 1%.
†
Mr. Brown,Kubasik, our Chief Executive Officer, also is a director and Chair of our Board. Mr. Kubasik, our President and Chief Operating Officer, also is a director and Vice Chair of our Board. Mr. Brown, our former Chief Executive Officer, also is a director and Executive Chair of our Board. (1)
Includes shares over which the individual or the individual’s immediate family members hold or share voting and/or investment power and excludes shares listed under the “Shares Under Exercisable Options” column. For each non-employee director, other than Mr. Harris, also includes approximately 792 unvested director share units in respect of an award granted on April 22, 2021, under our Equity Incentive Plan (including accrued reinvested divided equivalents thereon), which generally will fully vest on the one-year anniversary of the grant date, subject to the non-employee director’s continued service and the terms and conditions of the non-employee director’s director share unit agreement. For our named executive officers and other executive officers, includes shares owned through our retirement plan. (2)
Includes shares underlying options granted by us that are exercisable as of February 23, 2022 and shares underlying options that become exercisable within 60 days thereafter. (3)
Represents the total of shares listed under the “Shares Owned” and “Shares Under Exercisable Options” columns. (4)
No directors or executive officers have pledged any shares of our common stock, nor are any such persons permitted to make any such pledge under our policies. L3HARRIS2022 PROXY STATEMENT 95(1) | Includes shares over which the individual or his or her immediate family members hold or share voting and/or investment power and excludes shares listed under the “Shares Under Exercisable Options” column. For each non-employee director, also includes approximately 881 unvested director share units in respect of an award granted on April 24, 2020 under our Equity Incentive Plan (including accrued reinvested divided equivalents thereon), which generally will fully vest on the one-year anniversary of the grant date, subject to the non-employee director’s continued service and the terms and conditions of the non-employee director’s director share unit agreement. For our named executive officers and other executive officers, includes shares owned through our retirement plan. For Mr. Kubasik, also includes 31,792 shares of restricted stock converted from L3 shares of restricted stock that have been reported as beneficially owned on Form 4 and as to which the restriction period has not expired and he has sole voting power but no investment power. For Mr. Gautier, also includes 8,181 shares in respect of restricted stock units converted from L3 restricted stock units that have been reported as beneficially owned on Form 4 and as to which the restriction period has not expired and he has no voting power or investment power. |
(2)
| Includes shares underlying options granted by us that are exercisable as of February 5, 2021 and shares underlying options that become exercisable within 60 days thereafter. |
(3)
| Represents the total of shares listed under the “Shares Owned” and “Shares Under Exercisable Options” columns. |
(4)
| For all directors and executive officers, as a group, also includes 6,239 shares in respect of restricted stock units converted from L3 restricted stock units that have been reported as beneficially owned on Form 4 and as to which the restriction period has not expired and the executive officer has no voting power or investment power. No directors or executive officers have pledged any shares of our common stock, nor are any such persons permitted to make any such pledge under our policies. |
92 L3HARRIS 2021 PROXY STATEMENT
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| | SHARE OWNERSHIP PRINCIPAL SHAREHOLDERS | |
Pursuant to SEC rules requiring disclosure regarding any persons known to us to be a beneficial owner of more than 5% of our common stock, the following table shows beneficial ownership of our common stock, as of February 15, 2021,2022, by each person who has reported to the SEC beneficial ownership of more than 5% of our common stock, based on the reports filed by these persons: | | Name and Address of Beneficial Owner | | | Amount and Nature of
Beneficial Ownership | | | Percent of Class | | | | The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355 | | | | | 16,782,733(1) | | | | | | | 8.55 | %(1) | | | | | Capital World Investors
333 South Hope Street, 55th Floor
Los Angeles, CA 90071 | | | | | 14,871,240(2) | | | | | | | 7.6 | %(2) | | | | | BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 | | | | | 12,280,012(3) | | | | | | | 6.3 | %(3) | | |
(1)
Name and Address of Beneficial Owner | Amount and Nature of
Beneficial Ownership
| Percent of Class
| The Vanguard Group | 17,310,496(1)
| | 100 Vanguard Boulevard | | | Malvern, PA 19355 | | | | | | BlackRock, Inc. | | | 55 East 52nd Street | | | New York, NY 10055 | | | | | |
Based on information contained in Amendment No. 11 to Schedule 13G filed with the SEC on February 10, 2022 by The Vanguard Group indicating that, as of December 31, 2021, The Vanguard Group had sole voting power over 0 shares, shared voting power over 303,953 shares, sole dispositive power over 16,009,977 shares and shared dispositive power over 772,756 shares. (2)
(1) | Based on information contained in Amendment No. 10 to Schedule 13G filed with the SEC on February 10, 2021 by The Vanguard Group indicating that, as of December 31, 2020, The Vanguard GroupBased on information contained in a Schedule 13G filed with the SEC on February 11, 2022 by Capital World Investors indicating that, as of December 31, 2021, Capital World Investors had sole voting power over 14,871,240 shares, shared voting power over 0 shares, sole dispositive power over 14,871,240 shares and shared dispositive power over 0 shares, shared voting power over 337,817 shares, sole dispositive power over 16,406,881 shares and shared dispositive power over 903,615 shares. |
(2) | Based on information contained in Amendment No. 1 to Schedule 13G filed with the SEC on January 29, 2021 by BlackRock, Inc. indicating that, as of December 31, 2020, BlackRock, Inc. had sole voting power over 15,216,994 shares, shared voting power over 0 shares, sole dispositive power over 16,868,838 shares and shared dispositive power over 0 shares. |
(3)
Based on information contained in Amendment No. 2 to Schedule 13G filed with the SEC on February 1, 2022 by BlackRock, Inc. indicating that, as of December 31, 2021, BlackRock, Inc. had sole voting power over 11,039,389 shares, shared voting power over 0 shares, sole dispositive power over 12,280,012 shares and shared dispositive power over 0 shares. DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, as well as persons who own more than 10% of our outstanding shares of common stock, to file reports of ownership and changes in ownership of our securities with the SEC. We have procedures in place to assist our directors and executive officers in preparing and filing these reports on a timely basis. Based solely on a review of the forms furnished to us, or written representations from certain persons that no Form 5 was required, we believe that all required forms were timely filed for fiscal 2020,2021, with the exception of formsa form in respect of certain transactionsa transaction involving the acquisition of 218 shares, which was reported in one late-filed Form 4, filed in fiscal 20202021 on behalf of one of our director Roger B. Fradin. As reported in the Form 4, the transactions were effected due to administrative error by the third party manager of managed accounts on behalf of a community property trust and consisted of seven 2019 transactions and three 2020 transactions, involving the acquisition of 453 shares, and the disposition of 268 shares, in aggregate.
L3HARRIS 2021 PROXY STATEMENT 93
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96 L3HARRIS2022 PROXY STATEMENT
NOMINATIONS
SHAREHOLDER
NOMINATIONS
AND PROPOSALS To nominate a person for election to our Board or to present a proposal for consideration at the 20222023 Annual Meeting of Shareholders, a shareholder must send the nomination or proposal to our Secretary within the applicable timeframe and with the information required by our By-Laws and, if applicable, SEC regulations at the following address: L3Harris Technologies, Inc., 1025 West NASA Boulevard, Melbourne, Florida 32919. The timeframes and requirements are described in more detail below. A nomination or proposal submitted by a shareholder that does not supply the required information about a nominee or proposal and the shareholder submitting the nomination or proposal, or that does not comply with our By-Laws, will be disregarded.
DIRECTOR NOMINATIONS BY PROXY ACCESS To submit a nomination for inclusion in L3Harris-sponsored proxy materials pursuant to the proxy access provision of our By-Laws, written notice must be received by our Secretary no earlier than October 13, 2021,12, 2022, and no later than November 12, 2021.11, 2022. The notice must include the information and documents specified in Article II, Section 11 of our By-Laws.
OTHER DIRECTOR NOMINATIONS To submit a nomination pursuant to our By-Laws, but not pursuant to the proxy access provision of our By-Laws, written notice must be received by our Secretary no earlier than December 24, 2021,23, 2022, and no later than January 24, 2022.22, 2023. The notice must include the information and documents specified in Article II, Section 8 of our By-Laws. We will not be required to include the nomination in our proxy materials. YouA shareholder must include the following information about the proposed nominee (and other information and documents specified in Article II, Section 8 of our By-Laws): name, age, principal occupation or employment, information as to whether the nominee is eligible for consideration as an independent director and the written consent of the nominee to serve as a director if elected and, if applicable, to be named in the proxy statement as a nominee.
Shareholders should note that the applicable timeframes described above for director nominations will change if the number of directors to be elected to our Board of Directors at the 20222023 Annual Meeting of Shareholders is increased.
In addition to satisfying the foregoing requirements under our By-Laws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than L3Harris’ nominees must provide notice that sets forth the information required by SEC Rule 14a-19 no later than February 21, 2023.
OTHER PROPOSALS BY SHAREHOLDERS To submit a proposal for inclusion in L3Harris-sponsored proxy materials pursuant to SEC Rule 14a-8, written notice must be received by our Secretary no later than November 12, 2021.11, 2022. The notice must include the information and documents specified in Article II, Section 8 of our By-Laws. To submit a proposal pursuant to our By-Laws and not pursuant to SEC Rule 14a-8, written notice must be received by our Secretary no earlier than December 24, 2021,23, 2022, and no later than January 24, 2022.22, 2023. The notice must include the information and documents specified in Article II, Section 8 of our By-Laws. We will not be required to include the proposal in our proxy materials. A copy of our By-Laws is available on the Corporate Governance section of our website at www.l3harris.com/company/environmental-social-and-governance or may be obtained by written request to our Secretary at the address above. Further, any proxy granted with respect to the 20222023 Annual Meeting of Shareholders will confer discretionary authority to vote with respect to a nomination or proposal submitted by a shareholder if notice of such nomination or proposal is not received by our Secretary within the applicable timeframe described above. L3HARRIS 2022 PROXY STATEMENT 97
94 L3HARRIS 2021 PROXY STATEMENT
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INFORMATION
ABOUT THE
ANNUAL MEETING
BACKGROUND ON THE L3HARRIS MERGER
I know that L3Harris Technologies, Inc. resulted from the merger of Harris Corporation and L3 Technologies, Inc. What organizational changes occurred in connection with the merger?
In connection with the completion of the Merger, notable organizational changes included:
> | Our name changed from “Harris Corporation” to “L3Harris Technologies, Inc.”;
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> | Shares of our common stock, which previously traded under ticker symbol “HRS” on the NYSE prior to completion of the Merger, now are traded under ticker symbol “LHX”;
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> | Our Board now is comprised of 12 directors: William M. Brown, Chair and CEO (formerly Harris’ Chairman, President and CEO); Christopher E. Kubasik, Vice Chair, President and COO (formerly L3’s Chairman, CEO and President); 5 independent directors from the Harris Board; and 5 independent directors from the L3 Board; and
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> | We transitioned to a calendar year oriented financial reporting cycle, and our fiscal year now ends on the Friday nearest December 31.
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For a more detailed summary, see our filings on our website at www.l3harris.com/investorsor through the EDGAR filings system at www.sec.gov. The information contained on our website is not incorporated by reference into this proxy statement.
What is the fiscal transition period?
As noted above, we changed our fiscal year end from the Friday nearest June 30 to the Friday nearest December 31. Following our full fiscal year 2019 (which ended June 28, 2019), this change resulted in an abbreviated fiscal transition period of approximately six months, that started on June 29, 2019 and ended on January 3, 2020. Our full fiscal year 2020 started on January 4, 2020 and ended on January 1, 2021.
ATTENDING THE VIRTUAL ANNUAL MEETING What are the procedures for attending and participating in the virtual Annual Meeting? All shareholders are welcome to attend the Annual Meeting. The 20212022 Annual Meeting will be virtual-only, held exclusively online, due to the public health impact of COVID and to supportmaintain the health and well-beingsafety of our shareholders, employees and boardBoard of directors.Directors. The platform for the virtual Annual Meeting includes functionality that affords authenticated shareholders the same meeting participation rights and opportunities they would have at an in-person meeting. Instructions to access and log-in to the virtual Annual Meeting are provided below, and once admitted, shareholders may view reference materials such as our list of shareholders as of the record date, submit questions and vote their shares by following the instructions that will be available on the virtual meeting website. To be admitted to the 20212022 Annual Meeting, go to www.virtualshareholdermeeting.com/LHX2021LHX2022 and enter the 16-digit control number on your Notice of Internet Availability of Proxy Materials or proxy/voting instruction card. Online access to the Annual Meeting will open at 8:7:45 a.m. AM Eastern Time on April 23, 202122, 2022 to allow time for you to log-in prior to the start of the live audio webcast of the Annual Meeting at 9:8:00 a.m.AM Eastern Time. If you are unable to locate your Notice of Internet Availability of Proxy Materials or proxy/���voting instruction card containing your 16-digit control number or otherwise to log-in as an authenticated shareholder, you may opt to participate in the Annual Meeting as a “guest,” in which case you will be able to hear the audio webcast but will not be able to utilize the question, voting or other functionality noted above. If you experience technical difficulties accessing or during the meeting, please call the technical support telephone number posted on the virtual meeting website. We will have technicians ready to assist you with any technical difficulties you may have beginning 15 minutes prior to the start of the Annual Meeting, at 8:7:45 a.m.AM Eastern Time. The Annual Meeting shareholder question and answer session will include questions submitted live during the meeting through www.virtualshareholdermeeting.com/www.virtualshareholdermeeting.com/LHX2021LHX2022. L3HARRIS 2021 PROXY STATEMENT 95website at www.l3harris.com/company/environmental-social-and-governance soon after the meeting.
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RECEIVING PROXY MATERIALS What is a proxy and what is a proxy statement? A proxy is your legal designation of another person to vote the shares you own. That other person is called a proxy. If you designate someone as your proxy, the document in which you make that designation also is called a proxy. A proxy statement is a document that we are required by law to provide to you when we ask you to name a proxy to vote your shares. This document you are reading is a proxy statement, and we encourage you to read it carefully. Why did I receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials? SEC rules permit us to furnish proxy materials over the Internet. As a result, our practice is to mail to most of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. All shareholders receiving the Notice of Internet Availability of Proxy Materials will have the ability to access our proxy materials over the Internet and also may request to receive a paper copy of our proxy materials by mail. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials over the Internet or to request a paper copy, as well as instructions on how you may elect to receive future proxy materials electronically on an ongoing basis. Why didn’t I receive a Notice of Internet Availability of Proxy Materials? If you previously requested to receive paper copies of our proxy materials, we do not send you a Notice of Internet Availability of Proxy Materials. If you previously elected to receive proxy materials electronically, we send you only an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website. 98 L3HARRIS2022 PROXY STATEMENT
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What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card? If you receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card, you own shares of L3Harris common stock in multiple accounts with your brokers(s) and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker(s) and/or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare Shareowner Services,Services, which may be reached by telephone at 1-888-261-6777 or over the Internet at www.computershare.com/investor. What if I share the same address with another L3Harris shareholder? How can I access the proxy materials over the Internet?
YourIf you share an address with one or more other L3Harris shareholders, you may have received only a single Notice of Internet Availability of Proxy Materials or proxy/voting instruction card for your entire household. This practice, known as “householding,” is intended to conserve natural resources and reduce printing and mailing costs. If you are a record holder (shares are registered in your name) and you prefer to receive a separate Notice of Internet Availability of Proxy Materials or proxy/voting instruction card this year or in the future, or if you are receiving multiple copies at your address and would like to enroll in “householding” and receive a single copy, please contact our transfer agent Computershare by telephone at 1-888-261-6777 or over the Internet at www.computershare.com/investor. If you are a “beneficial owner” (your shares are registered or held in the name of your broker, bank or other nominee), please contact your broker, bank or other nominee to make your request. There is no charge for separate copies.
How can I receive electronic access to the proxy materials instead of receiving a paper copy by mail? Your Notice of Internet Availability of Proxy Materials or proxy/voting instruction card contains instructions for viewing our proxy materials for the 20212022 Annual Meeting of
Shareholders over the Internet and how to elect to receive future proxy materials electronically by e-mail. Our proxy materials also are available on our website at www.l3harris.com/company/environmental-social-and-governance.
Electing to receive future proxy materials electronically will help us conserve natural resources and reduce printing and mailing costs. If you elect to receive future proxy materials electronically, you will receive an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website. Your election to receive proxy materials electronically by e-mail will remain in effect until you terminate it. How may I obtain a paper copy of the proxy materials? Instructions for obtaining a paper copy of our proxy materials are contained in the Notice of Internet Availability of Proxy Materials and the e-mail regarding the availability of our proxy materials. Shareholders who do not receive a Notice of Internet Availability of Proxy Materials or an e-mail regarding the availability of our proxy materials will receive a paper copy of our proxy materials by mail.
VOTING YOUR SHARES What is a record date and who is entitled to vote at the meeting? A record date is the date, as of the close of business on which, shareholders of record are entitled to notice of and to vote at a meeting of shareholders. The record date for the 20212022 Annual Meeting is February 26, 202125, 2022 and was established by our Board as required under the laws of Delaware, our state of incorporation. Thus, owners of record of shares of L3Harris common stock as of the close of business on February 26, 202125, 2022 are entitled to receive notice of and to vote at the 20212022 Annual Meeting and at any adjournments or postponements thereof. How many shares can be voted and what is a quorum? You are entitled to one vote for each share of L3Harris common stock that you owned as of the close of business on February 26, 2021,25, 2022, and you may vote all of those shares. Only our common stock has voting rights. On the record date, there were 205,565,782193,059,798 shares of our common stock outstanding and entitled to vote at the 20212022 Annual Meeting and approximately 10,93510,453 holders of record and approximately 735,000905,365 beneficial owners holding shares in “street name.” A quorum is the minimum number of shares that must be represented in person or by proxy for us to conduct the 20212022 Annual Meeting. The attendance in person or by proxy of holders of a majority of the shares of common stock entitled to vote at the 20212022 Annual Meeting, or 102,782,89296,529,900 shares of our common stock based on the record date of February 26, 2021,25, 2022, will constitute a quorum to hold the 20212022 Annual Meeting. Shareholders who attend the 20212022 Annual Meeting that are admitted pursuant to the instructions to join the virtual meeting as an authenticated shareholder will be considered to be attending the meeting in person. If you grant your proxy over the Internet, by telephone or by your proxy/voting instruction card, your shares will be considered present at the 20212022 Annual Meeting and counted toward the quorum. 96 L3HARRIS 2021 PROXY STATEMENT
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What methods can I use to vote my shares? You have a choice of voting your shares: > | Before the Annual Meeting: |
>
| Before the Annual Meeting: ■ | Over the Internet at www.proxyvote.com, following the voting instructions on that website;
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Over the Internet at www.proxyvote.com, following the voting instructions on that website;
By telephone; or ■
> | During the virtual Annual Meeting: |
By mail; or >
During the virtual Annual Meeting: | ■ | Over the Internet at www.virtualshareholdermeeting.com/LHX2021, following the voting instructions on that website.
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Over the Internet at
www.virtualshareholdermeeting.com/LHX2022, following the voting instructions on that website. Even if you plan to attend the virtual Annual Meeting over the Internet, we encourage you to vote your shares before the Annual Meeting over the Internet, by telephone or by mail. Please carefully read the instructions below on how to vote L3HARRIS 2022 PROXY STATEMENT 99
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your shares. Because the instructions vary depending on how you own your shares and the method you use to vote your shares, it is important to follow the instructions for your particular situation. If you vote your shares before the Annual Meeting over the Internet or by telephone, you should not return a proxy/voting instruction card. What is the difference between a “record holder” and a “beneficial owner” holding shares in “street name”? You are a “record holder” if your shares are registered in your name, in which case you either hold a stock certificate or have an account directly with our transfer agent, Computershare Shareowner Services. Your shares are held in “street name” if your shares are registered or held in the name of your broker, bank or other nominee, in which case you are considered the “beneficial owner” of such shares. How do I vote my shares if I am a “record holder” (shares(shares registered in my name)? Voting before the Annual Meeting over the Internet Voting over the Internet before the Annual Meeting is easy, fast and available 24 hours a day. You may submit your proxy/voting instruction over the Internet by following the instructions sent to you in the mailed Notice of Internet Availability of Proxy Materials, the mailed proxy/voting instruction card or the email notifying you that the proxy materials were available (as applicable). You will be able to confirm that the Internet voting system has properly recorded your vote, which will be counted immediately, and there is no need to return a proxy/voting instruction card.
Voting before the Annual Meeting by telephone Voting by telephone also is easy, fast and available 24 hours a day. If you live in the United States or Canada, you may vote by calling 1-800-690-6903 (toll-free). You will need the control number sent to you in the mailed Notice of Internet Availability of Proxy Materials, the mailed proxy/voting instruction card or the email notifying you that the proxy materials were available (as applicable). You will be able to confirm that the telephone voting system has properly recorded your vote, which will be counted immediately, and there is no need to return a proxy/voting instruction card.
Voting before the Annual Meeting by mail If you received a proxy/voting instruction card by mail, you can vote by completing, signing, dating and promptly mailing your proxy/voting instruction card in the accompanying postage-paid return envelope.
envelope.
Voting during the Annual Meeting over the Internet If you plan to attend the virtual Annual Meeting, you can vote over the Internet by following the voting instructions on the virtual meeting website. How do I vote my shares if I am a “beneficial owner” (shares held in “street name”)? Voting before the Annual Meeting over the Internet, by telephone or by mail If your shares are registered or held in the name of your broker, bank or other nominee (“street name”), you have the right to direct your broker, bank or other nominee how to vote your shares using the method(s) specified by your broker, bank or other nominee. If your broker, bank or other nominee participates in an Internet or telephone voting program, then you may be able to use that method, in addition to voting by mail. These programs provide eligible “street name” shareholders the opportunity to vote over the Internet or by telephone. Voting forms will provide instructions for shareholders whose brokerage firms or banks are participating in these programs. Voting during the Annual Meeting over the Internet If your shares are registered or held in the name of your broker, bank or other nominee and you plan to attend the virtual Annual Meeting to vote, you should contact your broker, bank or other nominee to obtain a “broker’s proxy” and voting instructions. Can I revoke my proxy or change my vote? If your shares are registered in your name (“record holder”), you may revoke your proxy or change your vote at any time before your shares are voted at the Annual Meeting. There are several ways to do this: > | By sending a written notice of revocation to our Secretary at L3Harris Technologies, Inc., Attention: Secretary, 1025 West NASA Boulevard, Melbourne, Florida 32919; |
>
> | By duly signing and delivering a proxy/voting instruction card that bears a later date; |
By sending a written notice of revocation to our Secretary at L3Harris Technologies, Inc., Attention: Secretary, 1025 West NASA Boulevard, Melbourne, Florida 32919; >
> | By subsequently voting over the Internet or by telephone as described above; or |
By duly signing and delivering a proxy/voting instruction card that bears a later date; >
> | By attending the virtual Annual Meeting and following the voting instructions on the virtual meeting website. |
By subsequently voting over the Internet or by telephone as described above; or >
By attending the virtual Annual Meeting and following the voting instructions on the virtual meeting website. If your shares are held in “street name,” you may revoke your proxy or change your vote by submitting new voting instructions to your broker, bank or other nominee. L3HARRIS 2021 PROXY STATEMENT 97
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| | | | | | | | | INFORMATION ABOUT THE ANNUAL MEETING | | |
How do I vote my shares held in the L3Harris Stock Fund through the L3Harris Retirement Savings Plan or the Aviation Communications & Surveillance Systems 401(k) Plan? If you are a participant in the L3Harris Stock Fund through the L3Harris Retirement Savings Plan or the Aviation Communications & Surveillance Systems 401(k) Plan (the “ACSS Plan”), you may provide voting instructions for the shares of L3Harris common stock credited to your account in the L3Harris Stock Fund to the trustee of the applicable plan over the Internet, by telephone or by mail as described above. If you do not timely provide voting instructions for those shares, then as directed by the terms of those plans, those shares will be voted by the trustee in the same proportion as the shares for which other participants in the applicable plan have timely provided voting instructions, except as otherwise required by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). How do I vote my shares held in the Company’s Dividend Reinvestment Plan? If you are a participant in the Company’s Dividend Reinvestment Plan (“DRIP”) administered by Computershare Trust Company, N.A., your voting instruction covers the shares 100 L3HARRIS2022 PROXY STATEMENT
| | INFORMATION ABOUT THE ANNUAL MEETING | |
of L3Harris common stock held in your DRIP account. Computershare Trust Company, N.A., as the DRIP administrator, is the shareholder of record of L3Harris common stock owned through the DRIP and will not vote those shares unless you provide it with voting instructions, which you may do over the Internet, by telephone or by mail as described above. What happens if I return an unmarked proxy/voting instruction card? If you properly execute and return a proxy/voting instruction card with no votes marked, your shares will be voted as recommended by our Board. Our Board’s recommendations, together with the description of each proposal, are included earlier in this proxy statement. In summary, our Board unanimously recommends you vote: > | FOR election of all 12 of the nominees for director named in this proxy statement for a one-year term expiring at the 2022 Annual Meeting of Shareholders (see Proposal 1);
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> | FOR approval, in an advisory vote, of the compensation of our named executive officers as disclosed in this proxy statement (see Proposal 2); and
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> | FOR ratification of our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 2021 (see Proposal 3).
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FOR election of all 13 of the nominees for director named in this proxy statement for a one-year term expiring at the 2023 Annual Meeting of Shareholders (see Proposal 1); >
FOR the amendments to our Restated Certificate of Incorporation to increase the maximum number of Board seats (see Proposal 2); >
FOR approval, in an advisory vote, of the compensation of our named executive officers as disclosed in this proxy statement (see Proposal 3); and >
FOR ratification of our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 2022 (see Proposal 4). Could other matters be decided at the meeting? At the date of this proxy statement, our Board did not know of any matters to be raised at the Annual Meeting other than those referred to in this proxy statement and did not intend to bring before the Annual Meeting any matter other than the proposals described in this proxy statement. The deadline under our By-Laws for any shareholder proposal not discussed in this proxy statement to be properly presented at the Annual Meeting has passed. If any other matters are properly brought before the Annual Meeting or any adjournments or postponements thereof, your shares will be voted at the discretion of the proxy holders. How will my shares be voted if I do not provide instructions to my broker? It is possible for a proxy to indicate that some of the shares represented are not being voted with respect to certain proposals. This occurs, for example, when a broker, bank or other nominee does not have discretion under NYSE rules to vote on a matter without instructions from the beneficial owner of the shares and has not received such instructions. In these cases, the unvoted shares will not be considered present and entitled to vote with respect to that matter, although they may be considered present and entitled to vote for other purposes and will be counted in determining the presence of a quorum. Under NYSE rules, only Proposal 34 to ratify our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 20212022 is “routine” and, as such, your broker, bank or other nominee will not have the discretion to vote your shares on any proposal in this proxy statement other than Proposal 3.4. 98 L3HARRIS 2021 PROXY STATEMENT
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| | INFORMATION ABOUT THE ANNUAL MEETING |
What is the required vote for each proposal? | | Proposals | | | Vote Required for Approval | | | Effect of Abstentions | | | Effect of Broker Non-Votes | | | Proposal 1:Elect our Board's 12Board’s 13 nominees for director for a one-year term expiring at the 20222023 Annual Meeting of Shareholders | | | A nominee must receive more FOR votes than AGAINST votes | | | None | | | None | | | Proposal 2: Amend our Restated Certificate of Incorporation to increase the maximum number of Board seats | | | A majority of the outstanding stock entitled to vote on this proposal must vote FOR this proposal | | | Counted as a vote AGAINST | | | Counted as a vote AGAINST | | | | Proposal 3:Approve, in an advisory vote, the compensation of our named executive officers as disclosed in this proxy statement | | | A majority of the shares present or represented at the Annual Meeting and entitled to vote on this proposal must vote FOR this proposal | | | Counted as a vote AGAINST | | | None | | | Proposal 3: 4:Ratify appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 20212022 | | | A majority of the shares present or represented at the Annual Meeting and entitled to vote on this proposal must vote FOR this proposal | | | Counted as a vote AGAINST | | | None | |
Who pays for the solicitation of proxies? We actively solicit proxy participation by Internet, by telephone, by e-mail, by letter or in person. We will bear the cost of soliciting proxies, including the cost of preparation, assembly, printing and mailing of proxy and solicitation materials. In addition, we request and encourage brokers and other custodians, nominees and fiduciaries to make available, L3HARRIS 2022 PROXY STATEMENT 101
| | INFORMATION ABOUT THE ANNUAL MEETING | |
forward or supply proxy and solicitation materials to our shareholders, and, upon request, we will reimburse them for their expenses in accordance with the fee schedule approved by the NYSE, as applicable. Our officers, directors and employees may, by telephone, e-mail or letter, or in person, make additional requests for the return of proxies, although we do not reimburse our own officers, directors or employees for soliciting proxies. We also have engaged Georgeson LLC to assist in the solicitation of proxies for a fee not to exceed $12,500$14,500 plus reimbursement of out-of-pocket expenses. Who will tabulate and oversee the vote? Representatives of Broadridge Financial Solutions, Inc. will tabulate and oversee the vote. Where can I find the voting results of the Annual Meeting? We intend to announce the preliminary voting results at the Annual Meeting and to disclose final results in a Current Report on Form 8-K, which we will file with the SEC and make available through the Investors section of our website at www.l3harris.com/investors within four business days of the Annual Meeting (or, if final results are not available at that time, within four business days of the date on which final results become available).
Annual Report on Form 10-K Our Annual Report on Form 10-K for our fiscal year ended January 1,December 31, 2021 has been filed with the SEC and is available on the InvestorsInvestors section of our website at www.l3harris.com/investorswww.l3harris.com/investors.. Upon request, we will furnish to shareholders without charge a copy of the Annual Report on Form 10-K.Shareholders may obtain a copy by calling (321) 727-9100 or writing to our Secretary at: L3Harris Technologies, Inc.
1025 West NASA Boulevard
Melbourne, Florida 32919
Shareholder List A list of our shareholders of record as of the record date of February 26, 202125, 2022 will be available for examination for any purpose germane to the 20212022 Annual Meeting of Shareholders, by shareholders during normal business hours at 1025 West NASA Boulevard, Melbourne, Florida, at least 10 calendar days prior to, and by authenticated shareholders on the virtual meeting website during, the 20212022 Annual Meeting of Shareholders.
By Order of the Board of Directors Scott T. Mikuen
Senior Vice President, General Counsel and Secretary
Melbourne, Florida
March 11, 2021
L3HARRIS 2021 PROXY STATEMENT 99
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102 L3HARRIS2022 PROXY STATEMENT
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
To supplement our net income, net cash provided by operating activities and income from continuing operations per diluted common share net income and net cash provided by operating activities financial measures presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide the non-GAAP financial measures shown in the reconciliation table below, which have been adjusted to include, exclude or deduct certain costs, charges, expenses, losses or other amounts, because we believe that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. We also believe that these non-GAAP financial measures enhance the ability of investors to analyze our business trends and to understand our performance. In addition, we may utilize non-GAAP financial measures as guides in our forecasting, budgeting and long-term planning processes, and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:
ADJUSTED EBIT(a) | | Dollars in Millions | | | Fiscal 2021 | | | Fiscal 2020 | | | | Net income | | | | $ | 1,842 | | | | | | $ | 1,086 | | | | | | Adjustments: | | | | | | | | | | | | | | | | | | Discontinued operations, net of income taxes | | | | | 1 | | | | | | | 2 | | | | | | Income taxes | | | | | 440 | | | | | | | 234 | | | | | | Net interest expense | | | | | 265 | | | | | | | 254 | | | | | | L3Harris Merger integration costs | | | | | 128 | | | | | | | 140 | | | | | | Amortization of acquisition-related intangibles | | | | | 627 | | | | | | | 709 | | | | | | Additional cost of sales related to the fair value step-up in inventory sold | | | | | — | | | | | | | 31 | | | | | | Business divestiture-related (gains) losses | | | | | (220) | | | | | | | 51 | | | | | | Impairment of goodwill and other assets and other COVID-related charges | | | | | 207 | | | | | | | 785 | | | | | | CAS pension settlement (gains) losses | | | | | 41 | | | | | | | — | | | | | | Impairment of equity method investment | | | | | 35 | | | | | | | — | | | | | | Other items | | | | | 31 | | | | | | | (12) | | | | | | Total adjustments | | | | | 1,555 | | | | | | | 2,194 | | | | | | Adjusted EBIT | | | | $ | 3,397 | | | | | | $ | 3,280 | | | |
Dollars in Millions | | Fiscal 2020 | | | Pro Forma 2019 | | | Fiscal Transition Period
| | | Net income | | $ | 1,086 | | | $ | 1,650 | | | $ | 834 | | | Adjustments: | | | | | | | | | | | | | | Discontinued operations, net of income taxes | | | 2 | | | | 2 | | | | 1 | | | Net interest expense | | | 254 | | | | 253 | | | | 123 | | | Income taxes | | | 234 | | | | 189 | | | | 73 | | | Pre-merger integration costs, including change in control charges | | | — | | | | 100 | | | | 70 | | | L3Harris Merger-related transaction costs | | | — | | | | 83 | | | | 83 | | | L3Harris Merger integration costs | | | 130 | | | | 102 | | | | 72 | | | Restructuring charges and other items | | | 29 | | | | 117 | | | | 117 | | Charges related to consolidation of facilities, including right-of-use asset impairment | | | — | | | | 48 | | | | 48 | | | Gain on pension plan curtailment | | | — | | | | (23 | ) | | | (23 | ) | | Amortization of acquisition-related intangibles | | | 709 | | | | 601 | | | | 289 | | | Additional cost of sales related to the fair value step-up in inventory sold | | | 31 | | | | 142 | | | | 142 | | | Business divestiture-related losses (gains) | | | 51 | | | | (229 | ) | | | (229 | ) | | Other divestiture-related expenses | | | 13 | | | | — | | | | — | | Impairment of goodwill and other assets related to divestitures and COVID impacts | | | 767 | | | | — | | | | — | | | Gain on sale of property, plant and equipment | | | (22 | ) | | | — | | | | — | | | Gain on sale of asset group | | | — | | | | (12 | ) | | | (12 | ) | | Non-cash cumulative adjustment to lease expense | | | (2 | ) | | | 10 | | | | 10 | | | (Gains) losses and other costs related to debt refinancing | | | (2 | ) | | | 6 | | | | 3 | | | Total adjustments | | | 2,194 | | | | 1,389 | | | | 767 | | | Adjusted EBIT | | $ | 3,280 | | | $ | 3,039 | | | $ | 1,601 | |
L3HARRIS2022 PROXY STATEMENT A-1
L3HARRIS 2021 PROXY STATEMENT A-1
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| | | | | | | | | APPENDIX A: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
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ADJUSTED FREE CASH FLOW(a)
Dollars in Millions | | Fiscal 2020 | | | Pro Forma 2019 | | | Fiscal Transition Period
| | | Net cash provided by operating activities | | $ | 2,790 | | | $ | 1,655 | | | $ | 939 | | | Additions of property, plant and equipment | | | (368 | ) | | | (267 | ) | | | (173 | ) | | Proceeds from sale of property, plant and equipment, net | | | 91 | | | | — | | | | — | | | Free cash flow | | | 2,513 | | | | 1,388 | | | | 766 | | Cash used for L3Harris Merger transaction and integration costs, including change in control payments | | | — | | | | 278 | | | | 254 | | | Cash used for L3Harris Merger integration costs | | | 173 | | | | 127 | | | | 127 | | | Voluntary contribution to defined pension plans | | | — | | | | 302 | | | | 302 | | | Adjusted free cash flow | | $ | 2,686 | | | $ | 2,095 | | | $ | 1,449 | |
| | Dollars in Millions | | | Fiscal 2021 | | | Fiscal 2020 | | | | Net cash provided by operating activities | | | | $ | 2,687 | | | | | | $ | 2,790 | | | | | | Additions of property, plant and equipment | | | | | (342) | | | | | | | (368) | | | | | | Proceeds from sale of property, plant and equipment, net | | | | | 7 | | | | | | | 91 | | | | | | Cash used for L3Harris Merger integration costs | | | | | 118 | | | | | | | 173 | | | | | | Net cash paid for income taxes associated with business divestitures | | | | | 276 | | | | | | | — | | | | | | Adjusted Free Cash Flow | | | | $ | 2,746 | | | | | | $ | 2,686 | | | |
NON-GAAP INCOME FROM CONTINUING OPERATIONS PER DILUTED COMMON SHARE(a)
| | Fiscal 2020 | | | Pro Forma 2019 | | GAAP income from continuing operations per diluted common share attributable to L3Harris Technologies, Inc. common shareholders
| | $ | 5.19 | | | $ | 7.25 | | | Adjustments: | | | | | | | | | | Pre-merger integration costs, including change in control charges | | | — | | | | 0.45 | | | L3Harris Merger-related transaction costs | | | — | | | | 0.37 | | | L3Harris Merger integration costs | | | 0.60 | | | | 0.45 | | | Restructuring charges and other items | | | 0.13 | | | | 0.52 | | | Charges related to consolidation of facilities, including right-of-use asset impairment | | | — | | | | 0.22 | | | Gain on pension plan curtailment | | | — | | | | (0.10 | ) | | Amortization of acquisition-related intangibles | | | 3.29 | | | | 2.68 | | | Additional cost of sales related to the fair value step-up in inventory sold | | | 0.14 | | | | 0.64 | | | Business divestiture-related (gains) losses | | | 0.24 | | | | (1.02 | ) | | Other divestiture-related expenses | | | 0.06 | | | | — | | | Impairment of goodwill and other assets related to divestitures and COVID impacts | | | 3.56 | | | | — | | | Gain on sale of property, plant and equipment | | | (0.10 | ) | | | — | | | Gain on sale of asset group | | | — | | | | (0.05 | ) | | Non-cash cumulative adjustment to lease expense | | | (0.01 | ) | | | 0.04 | | | (Gains) losses and other costs related to debt refinancing | | | (0.01 | ) | | | 0.02 | | | Noncontrolling interests portion of adjustments | | | (0.19 | ) | | | — | | | Total pre-tax adjustments | | | 7.71 | | | | 4.22 | | | Income taxes on above adjustments | | | (1.30 | ) | | | (1.21 | ) | | Total adjustments after-tax | | | 6.41 | | | | 3.01 | | | Non-GAAP income from continuing operations per diluted common share | | $ | 11.60 | | | $ | 10.26 | |
| | Dollars in Millions | | | Fiscal 2021 | | | Fiscal 2020 | | | | Income from continuing operations per diluted common share attributable to L3Harris Technologies, Inc. common shareholders | | | | $ | 9.09 | | | | | | $ | 5.19 | | | | | | Adjustments: | | | | | | | | | | | | | | | | | | L3Harris Merger integration costs | | | | | 0.63 | | | | | | | 0.60 | | | | | | Amortization of acquisition-related intangibles | | | | | 3.09 | | | | | | | 3.29 | | | | | | Additional cost of sales related to the fair value step-up in inventory sold | | | | | — | | | | | | | 0.14 | | | | | | Business divestiture-related (gains) losses | | | | | (1.08) | | | | | | | 0.24 | | | | | | Impairment of goodwill and other assets and other COVID-related charges | | | | | 1.02 | | | | | | | 3.56 | | | | | | CAS pension settlement (gains) losses | | | | | 0.20 | | | | | | | — | | | | | | Impairment of an equity method investment | | | | | 0.17 | | | | | | | — | | | | | | Other items | | | | | 0.14 | | | | | | | 0.07 | | | | | | Noncontrolling interests portion of adjustments | | | | | (0.02) | | | | | | | (0.19) | | | | | | Total pre-tax adjustments | | | | | 4.16 | | | | | | | 7.71 | | | | | | Income taxes on above adjustments | | | | | (0.30) | | | | | | | (1.30) | | | | | | Total adjustments after tax | | | | | 3.86 | | | | | | | 6.41 | | | | | | Non-GAAP income from continuing operations per diluted common share | | | | $ | 12.95 | | | | | | $ | 11.60 | | | |
(a) “Fiscal 2021” refers to our fiscal year ended December 31, 2021. “Fiscal 2020” refers to our fiscal year ended January 1, 2021; “Pro Forma 2019” refers2021. A-2 L3HARRIS2022 PROXY STATEMENT
![[MISSING IMAGE: tm224033d4-px_page1bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-032801/tm224033d4-px_page1bw.jpg) SCAN TOVIEW MATERIALS & VOTEL3HARRIS TECHNOLOGIES, INC. 1025 WEST NASA BOULEVARD MELBOURNE, FL 32919YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode aboveUse the Internet to submit your proxy/voting instructions and for electronic delivery of information forup until 11:59 P.M. Eastern Time on April 21, 2022. Have your proxy/voting instruction card in hand when you access the four quarters ended January 3, 2020 presented on a “pro forma” basis, combiningweb site and follow the actual GAAP results forinstructions to obtain your records and to create an electronic proxy/voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/LHX2022You may attend the thirdmeeting via the Internet and fourth quarters of 2019 (which occurred followingvote during the L3Harris Merger) withmeeting. Have the corresponding results for the first two quarters of 2019 (preceding the L3Harris Merger), as reflectedinformation that is printed in the pro forma condensed combined income statement information (preparedbox marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to submit your proxy/voting instructions up until 11:59 P.M. Eastern Time on April 21, 2022. Have your proxy/voting instruction card in ahand when you call and then follow the instructions.NOTE: Your Internet or phone voting instructions authorize the named proxies and/or provide the Plan Trustee with instructions to vote these shares in the same manner consistent with Article 11 of Regulation S-X) includedas if you marked, signed, dated and returned your proxy/voting instruction card.VOTE BY MAIL (ONLY IF NOT VOTING BY INTERNET OR PHONE)Mark, sign and date your proxy/voting instruction card and return it in L3Harris’ Annual Report on Form 10-K for the fiscal year ended January 1, 2021; and “Fiscal Transition Period” referspostage paid envelope we have provided or return it to our abbreviated six-month fiscal transition period of June 29, 2019 through January 3, 2020.
A-2 L3HARRIS 2021 PROXY STATEMENT
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 Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TOVote Processing,c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEPD68491-Z81767-P66091KEEP THIS PORTION FOR YOUR RECORDS THISRECORDSTHIS PROXY/VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION ONLY D35502-P52184-Z79401 L3HARRIS TECHNOLOGIES, INC. 1025 WEST NASA BOULEVARD MELBOURNE, FL 32919 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! For Against Abstain ! ! ! 1b. William M. Brown 1a. Sallie B. Bailey 1e. Thomas A. Dattilo 1c. Peter W. Chiarelli 1d. Thomas A. Corcoran 1h. Lewis Kramer 1f. Roger B. Fradin 1g. Lewis Hay III 1i. Christopher E. Kubasik 1l. Lloyd W. Newton 1j. Rita S. Lane 1k. Robert B. Millard L3HARRISONLYL3HARRIS TECHNOLOGIES, INC. PROXY/VOTING INSTRUCTION CARD TheCARDThe Board of Directors recommends a vote "FOR" each nominee listed in Proposal 1; "FOR" Proposal 2; "FOR" Proposal 3; and "FOR" Proposal 3. 1.4.1. Election of Directors for a Term Expiring at the 20222023 Annual MeetingMeetingof ShareholdersNominees:For Against Abstain1a. Sallie B. Bailey! ! !For Against Abstain1b. William M. Brown! ! !2. To amend Our Restated Certificate of Shareholders Nominees: 2.Incorporation to increase the maximum number of Board seats1c. Peter W. Chiarelli! ! !3. Approval, in an Advisory Vote, of the Compensation of Named Executive Officers as Disclosed in the Proxy Statement 3.Statement! ! !1d. Thomas A. Corcoran 1e. Thomas A. Dattilo 1f. Roger B. Fradin1g. Harry B. Harris Jr.1h. Lewis Hay III 1i. Lewis Kramer1j. Christopher E. Kubasik 1k. Rita S. Lane1l. Robert B. Millard! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !4. Ratification of Appointment of Ernst & Young LLP as Independent Registered! ! !Registered Public Accounting Firm for Fiscal Year 2021 NOTE:2022NOTE: If this proxy/voting instruction card is properly executed, then the undersigned’s shares will be voted in the manner instructed therein, or if no instruction is provided, then either as the Board of Directors recommends or, if the undersigned is a participant in the L3Harris Stock Fund through any retirement plan sponsored by L3Harris Technologies, Inc., as may otherwise be provided in the plan. The named proxies also are authorized, in their discretion, to consider and act upon such other business as may properly come before the 20212022 Annual Meeting or any adjournments or postponements thereof. Pleasethereof.1m. Lloyd W. Newton! ! !Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. For Against Abstain YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. VOTE BY INTERNET - www.proxyvote.com Use the Internet to submit your proxy/voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 22, 2021. Have your proxy/voting instruction card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic proxy/voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/LHX2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to submit your proxy/voting instructions up until 11:59 P.M. Eastern Time on April 22, 2021. Have your proxy/voting instruction card in hand when you call and then follow the instructions. NOTE: Your Internet or phone voting instructions authorize the named proxies and/or provide the Plan Trustee with instructions to vote these shares in the same manner as if you marked, signed, dated and returned your proxy/voting instruction card. VOTE BY MAIL (ONLY IF NOT VOTING BY INTERNET OR PHONE) Mark, sign and date your proxy/voting instruction card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.officer.Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
![[MISSING IMAGE: tm224033d4-px_page2bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-032801/tm224033d4-px_page2bw.jpg) YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. (See(See reverse side for information on how to submit your proxy/voting instructions by Internet, by phone or by mail.)Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on April 23, 2021:22, 2022:The Notice of 20212022 Annual Meeting and Proxy Statement and Annual Report for Fiscal Year EndedJanuary 1,Ended December 31, 2021 are available at www.proxyvote.com. D35503-P52184-Z79401 L3HARRISwww.proxyvote.com.D68492-Z81767-P66091L3HARRIS TECHNOLOGIES, INC. AnnualINC.Annual Meeting of Shareholders April 23, 2021, 9:22, 2022, 8:00 AM Eastern Time ThisTimeThis proxy is solicited on behalf of the Board of Directors of L3Harris Technologies, Inc. ("L3Harris") and the Trustees of various retirement plans sponsored by L3Harris. YouL3Harris.You are receiving this proxy/voting instruction card because you are a registered shareholder and/or a participant in the L3Harris Stock Fund through a retirement Plan sponsored by L3Harris. This proxy/voting instruction card revokes all prior proxies/voting instructions given by you. If you are voting by mail with this proxy/voting instruction card, please mark your choices and sign and date on the reverse side exactly as your name or namesname(s) appear(s) there. If shares are held in the name of joint holders, each should sign. If you are signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give your full title as such. Ifsuch.If the undersigned is a registered shareholder, the undersigned hereby appoints CHRISTOPHER E. KUBASIK, WILLIAM M. BROWN JESUS MALAVE, JR. and SCOTT T. MIKUEN, and each of them, with power to act without the others and with full power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as instructed on the reverse side of this proxy/voting instruction card, all the shares of L3Harris common stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of L3HarristoL3Harris to be held on April 23, 202122, 2022 or at any adjournments or postponements thereof, with all powers which the undersigned would possess if present at the Annual Meeting. If this proxy/voting instruction card has been properly executed but the undersigned has provided no voting instructions, then the undersigned’s shares will be voted "FOR" the election of the Board of Directors’ nominees listed in Proposal 1; "FOR" Proposal 2; "FOR" Proposal 3; and "FOR" Proposal 3. If4.If the undersigned is a participant in the L3Harris Stock Fund through any retirement plan sponsored by L3Harris, the undersigned hereby instructs the applicable plan Trustee to vote, as instructed on the reverse side of this proxy/voting instruction card, the shares allocable to the undersigned's L3Harris Stock Fund account at the Annual Meeting of Shareholders of L3Harris Technologies, Inc. to be held on April 23, 202122, 2022 or at any adjournments or postponements thereof. If the undersigned does not provide voting instructions, the applicable plan Trustee will vote such shares in the same proportion as the shares for which other participants in the L3Harris Stock Fund through such plan have timely provided voting instructions, except as otherwise provided in accordance with ERISA. ContinuedERISA.Continued and to be marked, signed and dated on reverse side
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