DEF 14A 1 nc10006721x5_def14a.htm DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, DC 20549
 
SCHEDULE 14A INFORMATION
 
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Filed by the Registrant ☒
 
Filed by a Party other than the Registrant ☐
 
Check the appropriate box:

Preliminary Proxy Statement
 
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material Pursuant to §240.14a-12
 
L3HARRIS TECHNOLOGIES, INC.
 
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):

 

No fee required


 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.


1)
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Aggregate number of securities to which transaction applies:____________________________________________________


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(set forth the amount on which the filing fee is calculated and state how it was determined): ___________________________


4)
Proposed maximum aggregate value of transaction: ___________________________________________________________


5)
Total fee paid: ________________________________________________________________________________________

 
Fee paid previously with preliminary materials:

 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.


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OUR
VALUES


Integrity, Excellence and Respect – always. At L3Harris, innovation is powered by our foundational commitment to living our values.



       
       
       
       

NOTICE OF 2020 ANNUAL
MEETING OF SHAREHOLDERS

When:*
Friday, April 24, 2020
7:30 AM Mountain Time
 
Meeting Agenda
 
Proposal 1: To elect as directors the 12 nominees named in the accompanying proxy statement for a one-year term expiring at the 2021 Annual Meeting of Shareholders.

Proposal 2: To approve, in an advisory vote, the compensation of our named executive officers as disclosed in the accompanying proxy statement.

Proposal 3: To ratify our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year 2020.
 
Proposal 4: To amend our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders.
 
Proposal 5: To amend our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision.
 
Proposal 6: To amend our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder.
 
Proposal 7: Consideration of a shareholder proposal as described in the accompanying proxy statement, if such proposal is properly presented at the Annual Meeting.
 
The accompanying proxy statement more fully describes these matters.
 
Shareholders also will act on any other business matters that may properly come before the meeting, but we have not received notice of any such matters.
 
All holders of common stock of record at the close of business on February 28, 2020 are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof. No ticket is required to attend the Annual Meeting, but for security reasons, you may be asked to show evidence of share ownership and a valid government issued photo ID. Packages, bags, boxes and other items are subject to inspection.
 
By Order of the Board of Directors,

Scott T. Mikuen
Senior Vice President, General Counsel and Secretary
Melbourne, Florida
March 12, 2020

Important notice regarding the availability of proxy materials for the annual meeting of shareholders to be held on Friday, April 24, 2020: The Proxy Statement and 2019 Transition Report to Shareholders are available at: www.l3harris.com/corporate-governance.

Where:*
The Grand America Hotel
555 South Main Street
Salt Lake City, Utah 84111
 
   
YOUR VOTE IS IMPORTANT
 
Even if you plan to attend the Annual
Meeting, we encourage you to vote
your shares in advance to ensure they
are counted.
 
   
   
   
 

* If it becomes necessary due to coronavirus/COVID-19 precautions or impacts to change the date, time, location (including to Melbourne, Florida) and/or means of holding the Annual Meeting (including solely by means of remote communication), we will announce the change(s) in advance, and details on how to participate will be issued by press release, posted on our website and filed as additional proxy materials.

** Until 11:59 p.m. Eastern time on April 23, 2020. You must have the control number that appears on your Notice of Internet Availability of Proxy Materials or proxy/voting instruction card.
L3HARRIS 2020 PROXY STATEMENT  i

       
       
       
       

DEAR FELLOW
SHAREHOLDERS

L3HARRIS TECHNOLOGIES, INC.
1025 West NASA Boulevard
Melbourne, Florida 32919

 
 
March 12, 2020
     
William M. Brown
Chairman & CEO
 
On behalf of your Board of Directors, I am pleased to invite you to attend the 2020 Annual Meeting of Shareholders of L3Harris Technologies, Inc. to be held on Friday, April 24, 2020. The holding of the 2020 Annual Meeting approximately six months after the 2019 Annual Meeting reflects our transition to a calendar year oriented financial reporting cycle in connection with the transformational merger that created L3Harris — we changed our fiscal year end from the Friday nearest June 30 to the Friday nearest December 31. As a result, much of the information in the accompanying Proxy Statement, particularly relating to executive compensation matters, relates to the abbreviated six-month transition period of June 29, 2019 through January 3, 2020 (to which we sometimes refer to as our “fiscal transition period”).
 

The accompanying Notice of 2020 Annual Meeting of Shareholders and Proxy Statement describe the matters to be acted on at the meeting, which include:

>  election of the 12 nominees for director named in the accompanying Proxy Statement for a one-year term expiring at the 2021 Annual Meeting of Shareholders;
>  approval, in an advisory vote, of the compensation of our named executive officers;
>  ratification of the appointment of our independent registered public accounting firm for our fiscal year 2020;
>  an amendment to our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders;
>  an amendment to our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision;
>  an amendment to our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder;
>  consideration of a shareholder proposal as described in the accompanying Proxy Statement, if such proposal is properly presented at the meeting; and
>  such other business as may properly come before the meeting or any adjournments or postponements thereof.
     
   
Your Board of Directors unanimously recommends that shareholders vote AGAINST the shareholder proposal and FOR all of the other proposals set forth above.
     
   
It is important that your shares be represented and voted at the meeting, even if you are unable to attend. You can ensure that your shares are represented and voted at the meeting by submitting your proxy/voting instruction over the Internet or by telephone, or by mail by using the traditional proxy/voting instruction if you received your proxy materials by mail. You can find instructions for these convenient ways to vote on both the Notice of Internet Availability of Proxy Materials and the proxy/voting instruction card, as well as in the accompanying Notice of 2020 Annual Meeting of Shareholders and Proxy Statement.
     
   
Sincerely,
     
   
William M. Brown
   
Chairman and Chief Executive Officer

ii  L3HARRIS 2020 PROXY STATEMENT

       
       
       
       

CONTENTS





 
The Board of Directors of L3Harris Technologies, Inc. is soliciting proxies to be voted at our 2020 Annual Meeting of Shareholders on April 24, 2020, and at any adjournments or postponements thereof. We expect that this proxy statement and form of proxy will be mailed and made available to shareholders beginning on or about March 13, 2020.

L3HARRIS 2020 PROXY STATEMENT  iii

       
       
       
       

PROXY
SUMMARY
2020 Annual Meeting
of Shareholders
 
Friday, April 24, 2020
7:30 AM Mountain Time
 
The Grand America Hotel
555 South Main Street
Salt Lake City, Utah 84111
 
Record Date: February 28, 2020

This summary does not contain all information shareholders should consider, and we encourage shareholders to read the entire proxy statement carefully.
 
VOTING MATTERS
For more
information
Board’s
recommendation
Proposal 1
Elect our Board’s 12 nominees for director for a one-year term expiring at the 2021 Annual Meeting of Shareholders
Page 7
FOR each nominee
Proposal 2
Approve, in an advisory vote, the compensation of our named executive officers as disclosed in this proxy statement
Page 33
FOR the proposal
Proposal 3
Ratify appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2020
Page 88
FOR the proposal
Proposal 4
Amend our Restated Certificate of Incorporation to eliminate the supermajority voting and “fair price” requirements for business combinations involving interested shareholders
Page 90
FOR the proposal
Proposal 5
Amend our Restated Certificate of Incorporation to eliminate the “anti-greenmail” provision
Page 92
FOR the proposal
Proposal 6
Amend our Restated Certificate of Incorporation to eliminate the cumulative voting provision that applies when we have a 40% shareholder
Page 94
FOR the proposal
Proposal 7
Shareholder proposal to permit the ability of shareholders to act by written consent, if such proposal is properly presented at the Annual Meeting
Page 96
AGAINST the proposal
 
Shareholders also will act on any other business that may properly come before the meeting.
 
HIGHLIGHTS OF THE MERGER

All-stock merger completed on June 29, 2019 (“Merger”) involving Harris Corporation (“Harris”) and L3 Technologies, Inc. (“L3”), with Harris changing its name to “L3Harris Technologies, Inc.” (“L3Harris” or “Company”)

Transformational merger – one of largest combinations ever in defense industry – creating an agile global aerospace and defense technology innovator that end-to-end solutions to meet customers’ critical needs.

> Top-tier leadership structure was set under merger agreement, with full transition of Chairman and CEO 
positions from William M. Brown (formerly Harris’ Chairman, President and CEO) to Christopher E. Kubasik (currently Vice Chairman, President and COO and formerly L3’s Chairman, CEO and President) within three years.

> Reconstituted 12-member Board drew members in equal numbers from L3 and Harris boards.





 

In this proxy statement, references to the “Harris Board,” the “L3 Board” and the “Harris Compensation Committee” are references to the Harris Board of Directors, the L3 Board of Directors and the Harris Management Development and Compensation Committee, respectively, prior to the completion of the Merger.

 
L3HARRIS 2020 PROXY STATEMENT  1

     
     
     
PROXY SUMMARY  BOARD AND GOVERNANCE HIGHLIGHTS
   

BOARD AND GOVERNANCE HIGHLIGHTS
 
We have long been focused on and committed to responsible and effective corporate governance in order to enhance the creation of sustainable, long-term shareholder value and to be accountable and responsive to our shareholders. The following are highlights regarding our governance framework and the composition of our Board of Directors (our “Board”).

Director Nominees
 
Our Board’s nominees for election as director are the twelve directors currently comprising our Board:
 
>
William M. Brown, Chairman and CEO;
>
Christopher E. Kubasik, Vice Chairman, President and COO; and
>
Ten independent directors (Sallie B. Bailey, Peter W. Chiarelli, Thomas A. Corcoran, Thomas A. Dattilo, Roger B. Fradin, Lewis Hay III, Lewis Kramer, Rita S. Lane, Robert B. Millard and Lloyd W. Newton).
 
All nominees are independent except for Mr. Brown and Mr. Kubasik. The nominees are standing for election for a one-year term expiring at the 2021 Annual Meeting of Shareholders.
 
       
Other
Current
Public
Company
Boards
L3Harris Committee Memberships
Director nominee
Age
 
Director
Since*
 
Principal Occupation/Experience
Audit
Compensation
Finance
Nominating
and
 Governance
Ad Hoc
Technology
Sallie B. Bailey
60
2018
Former EVP and CFO of Louisiana Pacific Corporation
1
 

 
William M. Brown
57
2011
Chairman and CEO of L3Harris
1
         
Peter W. Chiarelli
69
2012
General, U.S. Army (Retired)
     
Thomas A. Corcoran
75
1997
President of Corcoran Enterprises, LLC; former Senior Advisor for The Carlyle Group
1
 
   
Thomas A. Dattilo
68
2001
Advisor for private investment
firms; former Chairman and CEO of Cooper Tire & Rubber Company
 
 
 
Roger B. Fradin
66
2016
Operating Executive with The Carlyle Group; former Vice Chairman of Honeywell International Inc.
3
   
 
Lewis Hay III
64
2002
Operating Advisor for Clayton Dubilier & Rice, LLC; former Chairman and CEO of NextEra Energy, Inc.
1
 
 
 
Lewis Kramer
72
2009
Former Global Client Service Partner and National Director of Audit Services of Ernst & Young LLP
1
     
Christopher E. Kubasik
58
2018
Vice Chairman, President and COO of L3Harris
         
Rita S. Lane
57
2018
Principal at Hajime, LLC; former VP, Operations of Apple Inc.
2
 
   
Robert B. Millard
Lead Independent Director
69
1997
Chairman of Massachusetts
Institute of Technology Corporation
1
     
Lloyd W. Newton
77
2012
General, U.S. Air Force (Retired); former EVP of Pratt & Whitney Military Engines
     

* Reflects tenure with L3 or Harris board of directors, as applicable.
Member
■  Chairperson

L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROXY SUMMARY  BOARD AND GOVERNANCE HIGHLIGHTS

Nominee Skills and Attributes
 
Our Board believes that these twelve nominees are well positioned to discharge our Board’s responsibilities.
 
Not only do they represent a diverse mix of backgrounds, skills and experience and a track record of driving long-term shareholder value, but, together, they also possess a deep and unique understanding of our business and the challenges and opportunities L3Harris faces.
 
Tenure of Director Nominees (including tenure with L3 or Harris board of directors, as applicable)
As shown below, our nominees represent a favorable balance of shorter and longer tenures. At the same time, our Board’s reconstitution in connection with the Merger benefited all nominees through new interactions and refreshed perspectives.

4
UNDER 4 YEARS
4
4 – 10 YEARS
4
MORE THAN 10 YEARS

Nominee Skills and Background of 12 nominees

Senior P&L Experience
                                 
  9  
           
                                                 
Public Company Board
                                         
 11 
   
                                                 
M&A/Post Merger Integration
                                 
  9  
           
                                                 
Aerospace & Defense
                         
  7  
                   
                                                 
Military Service
         
  3  
                                   
                                                 
Diverse
         
  3  
                                   
                                                 
Technology
                         
  7  
                   
                                                 
Finance Expertise
                             
  8  
               
                                                 
Global Operations
                                     
  10 
       

Key Governance Practices
 
Below are some key practices and policies that demonstrate our Board’s commitment to responsible and effective corporate governance to enhance the creation of sustainable, long-term shareholder value and to be accountable and responsive to our shareholders:
 
BOARD STRUCTURE AND POLICIES

>
Independent directors make up approximately 83% of the Board and 100% of each committee.

>
All directors elected annually; majority voting standard in uncontested elections.

>
Lead Independent Director broadly empowered with defined responsibilities and authority.

>
Independent directors regularly hold executive sessions led by Lead Independent Director.

>
Our Board and all standing committees conduct annual self-evaluations for continuous improvement in performance and effectiveness.

>
Our Board membership criteria take into account diversity of viewpoints, background, experience, gender, race, ethnicity and similar demographics, as well as avoiding potential overboarding (more than 4 other public company boards, under our guidelines).
>
Policy requiring directors to retire at age 75 (exception for three years for directors designated pursuant to Merger-related provisions of our governing documents).
 
>
Board reviews and evaluates management development and succession plans.
 
>
Strong ethics and business conduct program, reflecting our commitment to our Code of Conduct and broader compliance principles, to responsible corporate citizenship and sustainability and to our belief that we should conduct all business dealings with honesty, integrity and responsibility.



 

 
L3HARRIS 2020 PROXY STATEMENT  3

     
     
     
PROXY SUMMARY  PERFORMANCE HIGHLIGHTS
   
SHAREHOLDER INPUT AND ALIGNMENT

>
Meaningful stock ownership guidelines for non-employee directors.
 
>
Prohibition on short sales, hedging, other derivative transactions and pledging of our common stock by directors and executive officers.
 
>
Robust proxy access By-Law provision allowing eligible shareholders to nominate and include in our proxy materials candidates for election to our Board.
>
Shareholders holding at least 25% of our common stock can call a special meeting.
 
>
Annual “say-on-pay” advisory vote.

>
Engagement with large share holders on key aspects of our executive compensation program.



 
 
PERFORMANCE HIGHLIGHTS
 
Key 6-Month Fiscal
Transition Period
Financial Results

Revenue, adjusted EBIT and adjusted
free cash flow results are important
because they are components of
performance measures used in
incentive compensation.
 

* See Appendix A for reconciliations of GAAP to non-GAAP financial measures. “EPS” refers to income from continuing operations per diluted common share.

 

The holding of the 2020 Annual Meeting approximately six months after the 2019 Annual Meeting reflects our transition to a calendar year oriented financial reporting cycle in connection with the transformational merger that created L3Harris — we changed our fiscal year end from the Friday nearest June 30 to the Friday nearest December 31. As a result, much of the information in this proxy statement, particularly relating to executive compensation matters, relates to the abbreviated six-month transition period of June 29, 2019 through January 3, 2020 (which we sometimes refer to as our “fiscal transition period”).

 

L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROXY SUMMARY  EXECUTIVE COMPENSATION HIGHLIGHTS

Strategic Achievements
 
Our strong fiscal transition period financial results reflected our successful execution of the key strategic priorities L3Harris set for our fiscal transition period, which were:

>
Executing seamless integration of L3 and Harris, including achieving at least $500 million in gross cost synergies from the Merger by the end of 2021;
 
>
Driving flawless execution and margin expansion through our e3 (excellence everywhere every day) operational excellence program;
 
>
Building a new performance culture with a strong bias for action and accountability;
>
Growing revenue through investments in differentiated technology and innovation;
 
>
Reshaping our portfolio to focus on high margin, high growth businesses; and
 
>
Maximizing cash flow with shareholder friendly capital deployment.


 
EXECUTIVE COMPENSATION HIGHLIGHTS
 
Our basic executive compensation philosophy is as follows:
 

OVERALL OBJECTIVE
 
Encourage and reward creation
of sustainable, long-term
shareholder value

 

GUIDING PRINCIPLES

>  Align with shareholders’ interests

>  Be competitive at target performance level




>  Motivate achievement of financial goals and strategic objectives

>  Align realized pay with performance
 

Target Pay Mix for 6-Month Fiscal Transition Period
 
Consistent with our goals of aligning pay with performance and with the interests of our shareholders, a high percentage of fiscal transition period total target direct compensation is at risk (either performance-based or time-based). Under our incentive plans, compensation may be at risk either because it is performance-based (payouts depend on achievement relative to pre-established performance goals) or time-based (equity awards subject to delayed vesting and thus the risk of a potential decrease in the price of our common stock).
 
For the calculations below, total target direct compensation for our 6-month fiscal transition period includes 50% of annual base salary level, the target value of annual cash incentive awards (which were granted at 50% of full-year values) and the target value of annual cycle awards of long-term equity-based incentive compensation (also granted at 50% of full-year values); but does not include the target value of the special, one-time integration-related long-term equity-based incentive compensation awards (which are entirely performance-based and at risk) or other compensation elements such as retirement, severance, health, welfare or other personal benefits; transition or relocation benefits; or payouts that occurred in our fiscal transition period as a result of the Merger.

 
L3HARRIS 2020 PROXY STATEMENT  5

     
     
     
PROXY SUMMARY  EXECUTIVE COMPENSATION HIGHLIGHTS
   



Overview of Compensation Decisions for 6-Month Fiscal Transition Period

   
Base Salary
Level
 
Annual Cash
Incentive Payout
 
Target Value of
Annual Cycle Awards
(Equity-Based)
   
Target Value of
Special, One-Time
Integration-Related
Awards (Equity-Based)
 
Mr. Brown
 
$
1,450,000
 
$1,467,500
117.4% of target
 
$
5,125,000
   
$
7,500,000
 
Mr. Kubasik
 
$
1,450,000
 
$1,467,500
117.4% of target
   
N/A
   
$
7,500,000
 
Mr. Malave
 
$
625,000
 
$367,000
117.4% of target
   
N/A
   
$
2,000,000
 
Mr. Gautier
 
$
600,000
 
$283,000
94.3% of target
   
N/A
   
$
2,000,000
 
Mr. Zoiss
 
$
600,000
 
$388,000
129.3% of target
 
$
800,000
   
$
2,000,000
 

L3HARRIS 2020 PROXY STATEMENT


       
       
       
       
PROPOSAL 1:
ELECTION OF DIRECTORS
     
Our Board unanimously
recommends voting FOR
election of its 12 nominees
for director for a one-
year term expiring at the
2021 Annual Meeting of
Shareholders.

 
>  With a diverse mix of backgrounds, skills and experience and a track record of driving long-term shareholder value, as well as a deep and unique understanding of our business and the challenges and opportunities L3Harris faces, our Board is well positioned to discharge its responsibilities.
 
>  Nominees collectively have broad and diverse leadership experience and many other qualifications, skills and attributes that our Board views as valuable to L3Harris.
 
>  Favorable balance of shorter and longer tenures among nominees, all of whom are independent, except Mr. Brown, our Chairman and CEO, and Mr. Kubasik, our Vice Chairman, President and COO.

Our entire Board is elected annually by our shareholders. Our Restated Certificate of Incorporation provides that our Board shall consist of not less than 8 or more than 13 directors, the exact number of directors to be determined from time to time by our Board. Each director holds office until the Annual Meeting of Shareholders for the year in which that director’s term expires, and until that director’s successor is elected and qualified, except in the case of death, resignation, retirement or removal from office. Vacancies may be filled by a majority of the remaining directors.
 
OUR NOMINEES AS A GROUP
 
Our Board currently consists of the following twelve directors:

>
William M. Brown, Chairman and Chief Executive Officer;
 
>
Christopher E. Kubasik, Vice Chairman, President and Chief Operating Officer; and
>
Ten independent directors (Sallie B. Bailey, Peter W. Chiarelli, Thomas A. Corcoran, Thomas A. Dattilo, Roger B. Fradin, Lewis Hay III, Lewis Kramer, Rita S. Lane, Robert B. Millard and Lloyd W. Newton).


 
Based on the recommendation of our Nominating and Governance Committee, our Board has nominated the 12 directors comprising our Board – all of whom are standing for election as incumbents – for a new one-year term that will expire at the 2021 Annual Meeting of Shareholders.
 
No nominee is related to any other nominee or to any executive officer of L3Harris or its subsidiaries, by blood, marriage or adoption.
 
Below we provide information on each nominee’s experience, qualifications, attributes and skills that our Board has determined support the nominee’s nomination and service as a L3Harris director. Data with respect to the number of shares of our common stock beneficially owned by each of our directors as of February 3, 2020 can be found in the table on page 98. Beginning on page 16, we describe our director nomination process and the criteria we apply in selecting nominees.

 
L3HARRIS 2020 PROXY STATEMENT  7

     
     
     
PROPOSAL 1: ELECTION OF DIRECTORS  VOTING STANDARD FOR DIRECTORS
   
VOTING STANDARD FOR DIRECTORS
 
Under our By-Laws and Corporate Governance Guidelines, the voting standard for the election of our directors is a majority voting standard in uncontested elections and a plurality voting standard in contested elections. The election of directors at the 2020 Annual Meeting of Shareholders is an uncontested election and thus the majority voting standard applies.
 
To be elected under a majority voting standard, a director nominee must receive more “For” votes than “Against” votes. Abstentions and any broker non-votes will have no effect on the election of directors because only votes cast “For” or “Against” a nominee will be counted. Any incumbent director nominee who does not receive more “For” votes than “Against” votes must promptly offer to tender his or her resignation following certification of the vote, and our Nominating and Governance Committee will then recommend to our Board whether or not to accept it. Our Board shall take action within 90 days following certification of the vote, unless such action would cause us to fail to comply with the New York Stock Exchange (“NYSE”) independence or other legal requirements, in which event our Board shall take action as promptly as practicable while continuing to meet such requirements. Our Board will also promptly publicly disclose its decision and the reasons therefor. If our Board does not accept the resignation, the nominee will continue to serve as a director until the next Annual Meeting of Shareholders and until his or her successor shall be duly elected and qualified, or until his or her prior death, resignation, retirement or removal from office. If our Board accepts the resignation, then a majority of our Board, in its sole discretion, may fill any resulting vacancy or may choose not to fill the vacancy and to decrease the size of our Board.
 
Proxies will be voted for the election of each of Ms. Bailey, Ms. Lane and Messrs. Brown, Chiarelli, Corcoran, Dattilo, Fradin, Hay, Kramer, Kubasik, Millard and Newton to serve for a one-year term expiring at the 2021 Annual Meeting of Shareholders, unless otherwise specified in the proxy/voting instructions. Proxies cannot be voted for more than the 12 nominees for director named in this proxy statement.

CRITERIA FOR BOARD MEMBERSHIP
 
General Criteria
 
Under our Corporate Governance Guidelines, our Board selects director nominees based on the recommendation of our Nominating and Governance Committee and the following criteria:

>
Demonstrated ability and sound judgment;

>
Personal qualities and characteristics, accomplishments and reputation in the business community, professional integrity, educational background, business experience and related experience;
 
>
Willingness to objectively appraise management performance;
 
>
Current knowledge and contacts in the markets in which we do business and in our industry or other relevant industries, giving due consideration to potential conflicts of interest;
 
>
Ability and willingness to commit adequate time to Board and committee matters, including attendance at Board, committee and annual shareholder meetings;
>
Diversity of viewpoints, background, experience, gender, race, ethnicity and similar demographics;
 
>
The number of other boards of which the individual is a member; and
 
>
Compatibility of the individual’s experience, qualifications, skills, attributes and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of L3Harris and the interests of our shareholders.




 

L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEE BIOGRAPHIES

Incumbent Nominees
 
Our Nominating and Governance Committee’s process for considering, reviewing and evaluating incumbent directors as potential nominees for re-election typically is as follows:

>
Prior to each annual meeting of shareholders, each current director discusses his or her participation on our Board and its committees and other relevant matters with our Chairman.
 
>
Each current director also is requested to discuss any concerns or issues regarding continued membership on our Board with the Chairperson of our Nominating and Governance Committee.
>
In addition, our Nominating and Governance Committee reviews each current director’s experience, qualifications, attributes, skills, tenure, contributions, other directorships, meeting attendance record, any changes in employment status and other information it deems helpful in considering and evaluating the director for nomination.




 
Our Nominating and Governance Committee followed this process with respect to nominees for election at the 2020 Annual Meeting.
 
Consideration of Diversity
 
Our Board values diversity as a factor in selecting nominees to serve on our Board. Although we have adopted no specific policy on diversity, our Nominating and Governance Committee considers our Board membership criteria in selecting nominees for directors, including diversity of viewpoints, background, experience, gender, race, ethnicity and similar demographics. Such considerations also may include personal characteristics, functional background, executive or professional experience, and international experience. As a general matter, our Board considers diversity in the context of our Board as a whole and takes into account the personal characteristics and experience of current and prospective directors to facilitate Board deliberations and decisions that reflect a broad range of perspectives.
 
NOMINEE BIOGRAPHIES
 
Each of the nominees has consented to stand for election. If any nominee becomes unavailable for election, which we do not currently anticipate, proxies instructing a vote for that nominee may be voted for a substitute nominee selected by our Board or, alternatively, our Board may determine to leave the vacancy temporarily unfilled or reduce the number of directors in accordance with our By-Laws.

 
L3HARRIS 2020 PROXY STATEMENT  9

     
     
     
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION
   

NOMINEES FOR ELECTION


L3Harris
Committees

> Audit
> Finance
  Sallie B. Bailey  
Age: 60

Director since Apr. 2018

Independent Director

Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge of corporate finance, capital raising, strategic planning, banking relationships, operations, complex information technology and other systems, enterprise risk management and investor relations
 
>  Knowledge and experience with complex financial and accounting functions and internal controls
 
>  Knowledge of complex financial, operational, management and strategic issues faced by a large global company
 
>  Public company board and corporate governance experience
 

Position, Principal Occupation and Professional Experience
 
>
Executive Vice President and Chief Financial Officer of Louisiana-Pacific Corporation (Dec. 2011 - July 2018)
 
>
Vice President and Chief Financial Officer of Ferro Corporation (Jan. 2007 - July 2010)
 
>
11-year career at The Timken Company in various senior management positions of increasing responsibility (1995 - 2006), lastly as Senior Vice President, Finance and Controller
 
>
Previously with Tenneco Inc. in various finance organization roles (1988 - 1995), lastly as Assistant Treasurer
 
>
Previously with Deloitte and Touche LLP as an audit supervisor
 
Other Current/Recent Public Company Directorships
 
>
NVR, Inc. (since 2020)
 
>
General Cable Corporation (2013 - 2018)



L3Harris
Committees

>   None
 
William M. Brown
 
Age: 57
Director since Dec. 2011
Employee Director
(not independent)
Qualifications, Skills and Attributes Valuable to L3Harris
>  Current role as our Chief Executive Officer and the terms of employment agreement, as well as his leadership and management skills
 
>  Knowledge of complex strategic, operational, management and financial issues faced by a large company with international operations
 
>  Knowledge and expertise related to strategic planning, global supply chain and procurement, productivity and lean manufacturing initiatives, international sales, marketing and operations, domestic and international mergers and acquisitions, regulatory challenges, and enterprise risk management
 
>  Public company board and governance experience
 

Position, Principal Occupation and Professional Experience
 
>
Chairman of the Board and Chief Executive Officer of L3Harris Technologies, Inc. (since June 29, 2019)
 
>
Chairman of the Board, President and Chief Executive Officer of Harris Corporation (April 2014 - June 28, 2019)
 
>
President and Chief Executive Officer of Harris Corporation (Nov. 2011 - April 2014)
 
>
14-year career in U.S. and international roles at United Technologies Corporation (“UTC”), a diversified global building and aerospace company (1997 - 2011), including Senior Vice President, Corporate Strategy and Development; 5 years as President of UTC’s Fire & Security Division; and President of Asia Pacific Operations of UTC’s Carrier Corporation
 
>
Previously with McKinsey & Company as senior engagement manager and with Air Products and Chemicals, Inc. as project engineer
 
Other Current/Recent Public Company Directorships
 
>
Celanese Corporation (since 2016)

10  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION


L3Harris
Committees

>  Ad Hoc Technology
 (Chairperson)
>  Audit
 
Peter W. Chiarelli
 
Age: 69
Director since Aug. 2012
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge and expertise in complexities of both U.S. and international militaries, defense communities and defense industries
 
>  Extensive background in military operations and national security
 
>  Experience addressing complex operational and strategic issues, managing significant operating budgets, and handling legislative and public affairs


 
Position, Principal Occupation and Professional Experience
 
>
Chief Executive Officer, 1560 LLC, a company engaged in public policy and electoral research and analysis (2018 - 2019)
 
>
Chief Executive Officer of One Mind, a non-profit organization bringing together healthcare providers, researchers and academics to cure brain disorders (April 2012 - Jan. 2018)
 
>
General, U.S. Army (Retired), retired in March 2012 after nearly 40 years of service with U.S. Army, commanding troops at all levels from platoon to Multi-National Corps and holding various senior officer positions, including:

 
Vice Chief of Staff (Army’s second-highest-ranking officer), with responsibility for oversight of day-to-day operations and for leading budget planning and execution and efforts to modernize equipment, procedures and formations
 
Senior Military Assistant, Secretary of Defense
 
Commander of Multi-National Corps - Iraq
Division Commander, Fort Hood, Texas and Baghdad, Iraq
U.S. Army Chief of Operations, Training and Mobilization
Executive Officer, Supreme Allied Commander, Europe
 
 

L3Harris
Committees

>  Audit
>  Finance
 
Thomas A. Corcoran
 
Age: 75
Director since June 29, 2019
(1997 including L3 service)
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge of complex operational, management, financial, strategic and governance issues faced by large public companies
 
>  Knowledge and expertise related to global supply chain, manufacturing, human resources, accounting and internal controls, finance and economic analysis and mergers and acquisitions
 
>  Knowledge of, and management experience with, aerospace and defense and technology industries and with the government procurement process, including with major U.S. Department of Defense programs
 
>  Public company board and governance experience
 

Position, Principal Occupation and Professional Experience
 
>
President, Corcoran Enterprises, LLC, a private management consulting firm (since 2001)
 
>
Senior Advisor, The Carlyle Group, a global alternative asset manager (2001 - 2017)
 
>
President and Chief Executive Officer, Gemini Air Cargo, an aircraft, crew, maintenance and insurance cargo airline (March 2001 - April 2004)
 
>
President and Chief Executive Officer, Allegheny Teledyne Incorporated, a global manufacturer of technically advanced specialty materials and complex components (Oct. 1999 - Dec. 2000)
 
>
President and Chief Operating Officer, Electronic Systems Sector and Space & Strategic Missiles Sector, Lockheed Martin Corporation, a global aerospace, defense, security and advanced technologies company (April 1993 - Sept. 1999)
 
>
26-year career at General Electric in various management positions
 
Other Current/Recent Public Company Directorships
 
>
Aerojet Rocketdyne Holdings, Inc. (since 2008)
 
>
L3 Technologies, Inc. (1997 - June 28, 2019)

 
L3HARRIS 2020 PROXY STATEMENT  11

     
     
     
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION
   



L3Harris
Committees

>   Compensation
>   Nominating and
Governance
 
Thomas A. Dattilo
 
Age: 68
Director since Aug. 2001
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge of complex operational, management, financial, strategic and governance issues faced by a large global public company
 
>  Knowledge and expertise related to global supply chain and distribution, mergers and acquisitions, lean manufacturing and related initiatives, international operations, human resources and talent management, accounting and internal controls, and investor relations
 
>  Experience and knowledge related to strategic planning, capital raising, mergers and acquisitions, and economic analysis
 
>  Public company board, governance and executive compensation experience
 
 

Position, Principal Occupation and Professional Experience
 
>
Advisor to various private investment firms (currently)
 
>
Chairman and Senior Advisor to Portfolio Group, a privately-held provider of outsourced financial services to automobile dealerships specializing in aftermarket extended warranty and vehicle service contract programs (Jan. 2013 - June 2016)
 
>
Senior Advisor for Cerberus Operations and Advisory Company, LLC, a unit of Cerberus Capital Management, a private investment firm (2007 - 2009)
 
>
Chairman, President and Chief Executive Officer of Cooper Tire & Rubber Company (“Cooper”), which specializes in design, manufacture and sale of passenger car and truck tires (2000 - 2006)
 
>
President and Chief Operating Officer of Cooper (1999 - 2000)
 
>
Previously held senior positions with Dana Corporation, including President of its sealing products group

Other Current/Recent Public Company Directorships
 
>
Solera Holdings, Inc. (2013 - 2016)


L3Harris
Committees

>  Ad Hoc
Technology
>  Finance
(Chairperson)
 
Roger B. Fradin
 
Age: 66
Director since Oct. 2016
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge of complex strategic, operational, financial, management and governance issues faced by a large public company
 
>  Knowledge of domestic and international operations, business development, strategic planning, product development and marketing, technology innovation, corporate finance, mergers and acquisitions, human resources and talent management, accounting and internal controls
 
>  Entrepreneurial background, with experience in driving growth for business and entering new markets, both organically and through acquisitions
 
>  Knowledge and experience in capital markets and finance matters
 
>  Public company board and governance experience
 

Position, Principal Occupation and Professional Experience
 
>
Chairman of Resideo Technologies, Inc., a residential comfort, thermal and security solutions provider (since 2018)

>
Chief Executive Officer of Juniper Industrial Holdings, Inc., a special purpose acquisition company focused on industrial and aerospace acquisitions (Oct. 2019 - Jan. 2020)

>
Consultant (since 2020) and Operating Executive (Feb. 2017-2020) for The Carlyle Group, a global alternative asset manager

>
17-year career in senior positions with Honeywell International Inc, a diversified technology and manufacturing company (2000 - 2017), including:


Vice Chairman (2014 - 2017)
 

President and Chief Executive Officer, Automation and Controls business unit (2004 - 2014)
President and Chief Executive Officer, Security and Fire Solutions business unit

 
Other Current/Recent Public Company Directorships
 
>
Juniper Industrial Holdings, Inc. (since 2019)
 
>
Resideo Technologies, Inc. (since 2018)
 
>
Vertiv Holdings Co (since 2018)
>
Pitney Bowes Inc. (2012 - 2019)
 
>
MSC Industrial Direct Co., Inc. (1998 - 2019)



 
12  L3HARRIS 2020 PROXY STATEMENT


     
     
     

 
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION


L3Harris
Committees

>   Compensation
 (Chairperson)
>   Nominating and
 Governance
 
Lewis Hay III
 
Age: 64
Director since Feb. 2002
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge of complex strategic, operational, management, regulatory, financial and governance issues faced by a large public company
 
>  Knowledge and expertise related to strategic planning, capital raising, financial planning, enterprise risk management, accounting and internal controls, mergers and acquisitions, and investor relations
 
>  Public company board, governance and executive compensation experience
 

Position, Principal Occupation and Professional Experience
 
>
Operating Advisor for Clayton, Dubilier & Rice, LLC, a private equity investment firm (since Jan. 2014)
 
>
14-year career in senior positions with NextEra Energy, Inc. (formerly FPL Group, Inc.) (“NextEra”), one of the nation’s leading electricity-related services companies and the largest renewable energy generator in North America (1999 - 2013), including:


Chief Executive Officer of NextEra (June 2001 - July 2012)


Chairman of NextEra (Jan. 2002 - Dec. 2013)

Other Current/Recent Public Company Directorships
 
>
Anthem, Inc. (since 2013)
 
>
Capital One Financial Corporation (2003 - 2019)


L3Harris
Committees

>  Audit
(Chairperson)
>  Compensation
 
Lewis Kramer
 
Age: 72
Director since June 29, 2019
(2009 including L3 service)
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge and experience with complex financial, audit and accounting matters and complex information technology and other systems
 
>  Knowledge of capital structure and related credit and finance matters, enterprise risk management and mergers and acquisitions
 
>  Extensive financial and business knowledge gained while serving as an independent auditor for numerous organizations across many industries
 
>  Public company board, governance and executive compensation experience
 
>  Expertise on functioning of audit committees and internal-control related matters
 

Position, Principal Occupation and Professional Experience
 
>
Retired from Ernst & Young LLP, a multinational professional services firm, in June 2009 after a nearly 40-year career during which he served on the firm’s U.S. Executive Board and held various senior positions including:


Global Client Service Partner for worldwide external audit and all other services for major clients
National Director of Audit Services

 
Other Current/Recent Public Company Directorships
 
>
Las Vegas Sands Corp. (since 2017)
 
>
L3 Technologies, Inc. (2009 - June 28, 2019)
 
 
L3HARRIS 2020 PROXY STATEMENT  13

     
     
     
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION
   


L3Harris
Committees

> None
 
Christopher E. Kubasik
 
Age: 58
Director since June 29, 2019
(2018 including L3 service)
Employee Director
(not independent)
Qualifications, Skills and Attributes Valuable to L3Harris
>  Current role as our President and Chief Operating Officer and the terms of his employment agreement, as well as his leadership and management skills
 
>  Knowledge and experience with complex strategic, operational, management and financial issues faced by a large aerospace and defense company with international operations
 
>  Knowledge and experience with complex financial and accounting functions and internal controls, mergers and acquisitions, human resources and talent development
 
>  Broad experience in aerospace, defense, and technology industries and with business development and the government procurement process, as well as deep knowledge of Department of Defense customers
 
>  Public company board and governance experience
 

Position, Principal Occupation and Professional Experience
 
>
Vice Chairman, President and Chief Operating Officer of L3Harris Technologies, Inc. (since June 29, 2019)
 
>
Chairman, Chief Executive Officer and President of L3 Technologies, Inc. (May 2018 - June 28, 2019)
 
>
Chief Executive Officer and President of L3 Technologies, Inc. (Jan. 2018 - April 2018)
 
>
President and Chief Operating Officer of L3 Technologies, Inc. (Oct. 2015 - Dec. 2017)
 
>
President and Chief Executive Officer of Seabury Advisory Group LLC (now part of Accenture plc), a leading aviation and development professional services firm (March 2014 - Oct. 2015)
 
>
President and Chief Executive Officer of Ackuity Advisors, Inc., an aerospace and defense consulting firm (Jan. 2013 - March 2014)
 
>
Various senior executive positions with Lockheed Martin Corporation (1999 - 2012), a global aerospace, defense, security and advanced technologies company, including Vice Chairman, President and Chief Operating Officer from 2010 to 2012
 
>
17-year career with Ernst & Young LLP, where he was named partner in 1996
 
Other Current/Recent Public Company Directorships
 
>
L3 Technologies, Inc. (2018 - June 28, 2019)
 
>
Spirit AeroSystems Holdings, Inc. (2013 - 2016)

14  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROPOSAL 1: ELECTION OF DIRECTORS  NOMINEES FOR ELECTION


L3Harris
Committees

>   Compensation
>   Finance
 
Rita S. Lane
 
Age: 57
Director since June 29, 2019
(2018 including L3 service)
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge and expertise related to global supply chain and distribution, manufacturing, sales and marketing and complex information technology and related systems
 
>  Knowledge and expertise related to strategic planning, technology innovation and research and development
 
>  Knowledge of complex operational, management, financial and operational issues faced by large global companies
 
>  Public company board and governance experience
 
 

Position, Principal Occupation and Professional Experience
 
>
Serves as the Principal at Hajime, LLC, a supply chain advisor for start-up companies (since Jan. 2014)
 
>
Vice President, Operations of Apple Inc., where she oversaw the launch of the iPad® and manufacturing of the Mac® Desktop & Accessories product lines (July 2008 - Jan. 2014)
 
>
Senior Vice President, Integrated Supply Chain and Chief Procurement Officer of Motorola Solutions, Inc. (June 2006 - July 2008)
 
>
14-year career with International Business Machines Corporation serving within the Systems & Personal Computer division and as Vice President, Integrated Supply Chain
 
>
Served for 5 years in the U.S. Air Force as a Captain
 
Other Current/Recent Public Company Directorships

>
Sanmina Corporation (since 2016)
 
>
Signify N.V. (since 2016)
>
L3 Technologies, Inc. (2018 - June 28, 2019)



 

L3Harris
Committees

>  Ad Hoc Technology
>  Nominating and
Governance
 
Robert B. Millard
 
Age: 69
Director since June 29, 2019
(1997 including L3 service)
Lead Independent
Director
(since June 29, 2019)
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge and expertise related to corporate finance, capital raising, financial planning, accounting, mergers and acquisitions, and economic analysis
 
>  Experience and knowledge related to strategic planning, product development, technology innovation, and talent management
 
>  Public company board, governance and executive compensation experience
 

Position, Principal Occupation and Professional Experience
 
>
Chairman of the Massachusetts Institute of Technology Corporation since 2014
 
>
Held various positions in business, including:


Managing Director at Lehman Brothers and its predecessors (1976 - 2008)
Chairman of Realm Partners L.L.C. (2009 - 2014)

 
Other Current/Recent Public Company Directorships
 
>
Evercore Inc. (since 2012)
 
>
L3 Technologies, Inc. (1997 - June 28, 2019)
 
 
L3HARRIS 2020 PROXY STATEMENT  15

     
     
     
PROPOSAL 1: ELECTION OF DIRECTORS  DIRECTOR NOMINATION PROCESS
   


L3Harris
Committees

>  Ad Hoc Technology
>  Nominating and Governance
(Chairperson)
 
Lloyd W. Newton
 
Age: 77
Director since June 29, 2019
(2012 including L3 service)
Independent Director
Qualifications, Skills and Attributes Valuable to L3Harris
>  Knowledge and expertise in complexities of U.S. military and defense industry and extensive background in U.S. Department of Defense operations and human resources
 
>  Experience addressing complex organizational and strategic issues, managing significant operating budgets and handling legislative and public affairs
 
>  Knowledge of, and experience with, large aerospace and defense government projects and with the procurement process, including with major U.S. Department of Defense programs, and with complex operations, business development and technology-driven business environments
 
>  Public company board and governance experience

Position, Principal Occupation and Professional Experience
 
>
Executive Vice President, Pratt & Whitney Military Engines, an aerospace manufacturer (Sept. 2000 - March 2006)
 
>
Four-Star General and Commander, U.S. Air Force (Retired), retired in March 2000, after 34 years of service. Responsible for the recruiting, training and education of all Air Force personnel from 1997 until his retirement. Also served as an Air Force congressional liaison officer with the U.S. House of Representatives and was a member of the Air Force’s Air Demonstration Squadron, the Thunderbirds
 
Other Current/Recent Public Company Directorships
 
>
L3 Technologies, Inc. (2012 - June 28, 2019)
 
>
Torchmark Corporation (2006 - 2018)
 
DIRECTOR NOMINATION PROCESS
 
Our Board is responsible for approving nominees to stand for election as directors. Our Nominating and Governance Committee assists in this process, identifying individuals it determines are qualified to become Board members and recommending nominees.
 
Our Board has a long-standing policy to consider director nominees recommended by shareholders. A shareholder who wishes to recommend a nominee may do so by following the process discussed on page 100. Our Secretary will forward properly submitted shareholder-recommended nominations to the Chairperson of our Nominating and Governance Committee, and such nominations will be evaluated and considered by that committee in the same manner in which it evaluates other proposed nominees.
 
In addition, the “proxy access” provision of our By-Laws allows an individual eligible shareholder, or a group of no more than 20 eligible shareholders, to nominate and include in our proxy materials candidates for election to our Board under terms that include the following:
 
>
The shareholder or shareholder group must have owned 3% or more of the outstanding shares of our common stock continuously for at least three years.
 
>
The maximum number of proxy access nominees permitted is the greater of two or 20% of our Board (rounded down to the nearest whole number).
 
>
The shareholder(s) and the nominee(s) must satisfy additional eligibility and procedural requirements set forth in Article II, Section 11 of our By-Laws, including that a proxy access nomination notice must be delivered to us within a prescribed time period in advance of our Annual Meeting of Shareholders (see page 100 for the specific timeframe that applies to nominations for our 2021 Annual Meeting of Shareholders) and that all nominees and nominating shareholder(s) provide certain information, representations and agreements to us.
 
Our Board believes that the proxy access provision of our By-Laws strikes an appropriate balance between providing our shareholders with broad and meaningful access to our proxy materials, on one hand, and requiring sufficient transparency, protecting the interests of all shareholders and ensuring effective governance, on the other hand, and reflects best practices by being broadly consistent with other Standard & Poor’s 500 (“S&P 500”) companies’ proxy access by-laws.
 
Our Nominating and Governance and Committee expects to retain a third-party search firm to assist in identifying and/or evaluating potential nominees, and all of our current independent directors who were previously directors of Harris were identified and/or evaluated using that process.

16  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
PROPOSAL 1: ELECTION OF DIRECTORS  BOARD REFRESHMENT POLICY

BOARD REFRESHMENT POLICY
 
As noted above, upon completion of the Merger on June 29, 2019, our Board was reconstituted to consist of twelve directors:
 
>
William M. Brown, Chairman and Chief Executive Officer (formerly Harris’ Chairman, President and Chief Executive Officer);

>
Christopher E. Kubasik, Vice Chairman, President and Chief Operating Officer (formerly L3’s Chairman, Chief Executive Officer and President);
 
>
Five independent directors from the Harris Board (Sallie B. Bailey, Peter W. Chiarelli, Thomas A. Dattilo, Roger B. Fradin and Lewis Hay III); and
 
>
Five independent directors from the L3 Board (Thomas A. Corcoran, Lewis Kramer, Rita S. Lane, Robert B. Millard and Lloyd W. Newton).
 
Our Board believes that these twelve directors not only have a diverse mix of backgrounds, skills and experience and a track record of driving long-term shareholder value, but, together, also possess a deep and unique understanding of our business and thus the challenges and opportunities L3Harris faces, and therefore, our Board is well positioned to discharge its responsibilities. Our Board has a favorable balance of shorter and longer tenures and has benefited through new interactions and the accompanying refreshed perspectives.
 
We do not impose term limits for directors. Under our retirement policy, a director who reaches age 75 may not be appointed, re-appointed, nominated or stand for election or re-election, but may serve out the remainder of his or her then-current term. This policy does not apply to any director designated pursuant to the Merger-related provisions of our Restated Certificate of Incorporation and our By-Laws, until after the third anniversary of the Merger. A director also is expected to offer to tender his or her resignation from the Board in the event of retirement from his or her principal position or another significant change in employment position or employer. Our Board then would determine whether such director’s continued Board membership under the new circumstances is in the best interests of L3Harris and our shareholders, free from conflicts of interest and otherwise appropriate.

 
L3HARRIS 2020 PROXY STATEMENT  17

       
       
       
       

CORPORATE
GOVERNANCE

We have long been focused on and committed to responsible and effective corporate governance in order to enhance the creation of sustainable, long-term shareholder value and to be accountable and responsive to our shareholders. In support of those goals, we have Corporate Governance Guidelines that trace their history to 1960. Our Board regularly reviews our Corporate Governance Guidelines and updates them from time to time as regulatory requirements change and governance practices evolve. Our Nominating and Governance Committee is responsible for overseeing our Corporate Governance Guidelines and reporting and making recommendations to our Board concerning corporate governance matters.
 
Our Corporate Governance Guidelines address a broad set of issues that our Board believes are integral to sound governance practices:

>
Board composition
 
>
Director independence

>
Selection of Chairman

>
Designation and responsibilities of Lead Independent Director
 
>
Selection of Board nominees

>
Board membership criteria

>
Majority voting for directors

>
Director retirement policy

>
Other directorships
>
Director compensation

>
Stock ownership guidelines

>
Prohibitions on hedging

>
Prohibition on margin accounts and pledging transactions
 
>
Meeting schedules and agenda

>
Executive sessions of independent directors
 
>
Access to management

>
Board committees and membership
>
Board and director responsibilities

>
Director orientation and continuing education
 
>
CEO performance evaluation and compensation
 
>
Succession planning

>
Board and committee self-evaluations



 
A copy of our Corporate Governance Guidelines is available on the Corporate Governance section of our website at www.l3harris.com/corporate-governance.

OUR BOARD’S ROLE AND RESPONSIBILITIES
 
Overview
 
Our Board is responsible for overseeing the management of our business, property and affairs and is focused on the creation of sustainable, long-term shareholder value. In addition to participating in Board and committee meetings held at our corporate headquarters or other offices or locations and reviewing relevant materials, Board members inform themselves about our business through discussions with our Chief Executive Officer (“CEO”), our President and Chief Operating Officer (“COO”) and our other executives, and by visiting our facilities.
 
Our Board’s major responsibilities include:
 
>
overseeing the conduct of our business and reviewing and approving our long-term strategy, key strategic and financial objectives and operating plans and other significant actions;
 
>
overseeing the management of our business and other enterprise risks;

>
establishing and maintaining an effective governance structure, including appropriate board composition;

>
planning for board succession and appointing directors to fill Board vacancies between annual meetings of shareholders;

>
selecting our CEO and COO, electing our corporate officers, evaluating the performance of our CEO, COO and other executive officers, planning for CEO succession and monitoring management’s succession planning for other executive officers;
 
>
determining CEO and COO compensation and overseeing the determination of other executive officer compensation;

>
overseeing our ethics and compliance programs; and

>
overseeing our systems of control which promote accurate and timely reporting of financial information to shareholders and our processes for maintaining the integrity of our financial statements and other public disclosures.

18  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  OUR BOARD'S ROLE AND RESPONSIBILITIES

Strategy Oversight
 
Our Board plays an active role in overseeing the formulation and implementation of our overall business strategy. As part of our annual strategic planning process, toward the end of each fiscal year, our senior leadership team and other executives present to our Board Company-wide and business unit annual operating plans and three-year strategic plans for the upcoming fiscal year(s). Our Board thoroughly reviews and provides substantive insight and guidance on these plans and, after further review sessions, approves them. Our Board then receives regular updates throughout the year on the progress, challenges and risks with respect to execution of the plans.
 
Our Board also routinely receives updates on and discusses topics of strategic importance to us, such as technology, cybersecurity, enterprise risk management and merger, acquisition and portfolio shaping opportunities. Our Board holds executive sessions solely for independent directors, and separately with our CEO and COO present, at each regularly-scheduled Board meeting to discuss strategic matters and other significant business developments.
 
Risk Oversight
 
In fulfilling its responsibility of overseeing the management of our business and other enterprise risks, our Board has approved our use of an enterprise risk management (“ERM”) process administered by management, as described below, and considers risks and related mitigation identified through the ERM process or raised in the context of a range of matters on which management reports to our Board or one of its committees.
 
ENTERPRISE RISK MANAGEMENT PROCESS
 
Our ERM process, among other things, is designed to identify material risks across L3Harris with input from each business segment and function. This process has been reviewed by our Board and is the subject of oversight and regular review by our Audit Committee. However, the responsibility for the day-to-day management of risk lies with our management, which continually monitors the material risks facing L3Harris, including strategic risk, financial risk, operational risk, and legal and compliance risk. Under our ERM process, which is coordinated through a cross-functional management committee, various material business risks are regularly identified, assessed and prioritized. The top risks to L3Harris, which are reflected in an enterprise risk “heat map,” and any mitigation plans associated with those risks, are reported to our Board. In addition, our management ERM committee regularly provides reports to our senior executives to ensure dissemination of information about identified risks to management and throughout L3Harris. We also manage risk through numerous controls and processes embedded in our operations, which are reviewed from time to time with our Board and/or its relevant committees.
 
ALLOCATION OF RISK OVERSIGHT RESPONSIBILITIES
 
As noted above, our Board also considers risks that are raised in the context of various matters that management may bring to the attention of our Board or one of its committees. When a committee considers risks, it provides reports regarding such risks to our full Board. Examples of risks considered by our Board and its committees are shown below:
 
>
Full Board – elements of risk related to Company-wide and business unit annual operating plans, three-year strategic plans, cybersecurity, merger, acquisition and portfolio shaping opportunities, market environment updates, regular financial and operations updates and other strategic discussions.
 
>
Audit Committee – elements of risk related to financial reporting, internal audit, internal control over financial reporting, auditor independence and related areas of accounting, taxation, law and regulation.
 
>
Compensation Committee – elements of risk related to compensation policies and practices and talent management and succession planning.
 
>
Finance Committee – elements of risk related to liquidity, financial arrangements, capital structure, ability to access capital markets and the financial and investment aspects of our defined contribution and defined benefit plans.
 
>
Nominating and Governance Committee – elements of risk related to corporate governance issues and various aspects of U.S. and international regulatory compliance, ethics, business conduct, social responsibility, environmental, health and safety matters and export/import controls.

 
L3HARRIS 2020 PROXY STATEMENT  19

     
     
     
CORPORATE GOVERNANCE  OUR BOARD'S ROLE AND RESPONSIBILITIES
   

Management Succession Planning
 
As part of its oversight responsibility for management succession planning, our Board dedicates at least one meeting each year to a comprehensive review of our management succession strategy and our leadership pipeline for key roles, including the CEO, based on our long-term strategy. Our Board’s Compensation Committee facilitates the review session, which includes:
 
>
consideration and assessment of key leadership talent throughout our Company;

>
our talent strategy for critical positions, including roles for which it may be necessary to consider external candidates; and

>
contingency plans in the event the CEO or another executive officer unexpectedly is unable to serve for any reason, including death or disability.
 
In addition, management conducts periodic talent reviews of all of our business segments and corporate functional areas, including discussion of the succession plans for key positions and identification of top talent for development in future leadership roles. These reviews inform and support our Board’s review session. Our Board also receives regular updates on key talent indicators for our overall workforce, including employee engagement, attrition, diversity and inclusion, recruiting and development programs and our broader human capital strategy, and has regular opportunities to observe key leaders and high-potential talent through presentations, meetings and other events. On occasion, individual Board members may serve in a mentoring capacity for one or more of our executives.
 
Ethics, Compliance and Sustainability Oversight
 
Our Board has responsibility for overseeing our ethics and compliance programs and our activities related to corporate citizenship and responsibility and sustainability. This oversight is carried out largely through our Board’s Nominating and Governance Committee, which assists our Board in overseeing our ethics and business conduct program, our environmental, health and safety programs and our charitable, civic, educational and philanthropic activities, and also monitors and takes appropriate action regarding strategic issues and trends relating to environmental, social and governance efforts and corporate citizenship and responsibility that could affect our operations, financial performance or public image. For additional details on the role of our Nominating and Governance Committee, see page 28.
 
CODE OF CONDUCT
 
All L3Harris employees, officers and directors are required to abide by our Code of Conduct to help ensure that we consistently conduct our business in an ethical and legal manner. Our Code of Conduct is an important component of a comprehensive ethics and compliance program that includes compliance with all laws and corporate policies and procedures, an open relationship among employees that contributes to good business conduct, and an abiding belief that we should conduct all business dealings with integrity, honesty and responsibility.
 
Our Nominating and Governance Committee assists our Board in fulfilling its oversight responsibility as to our compliance with the goals and objectives in our Code of Conduct by reviewing and taking action regarding compliance processes, standards and controls and reviewing results of relevant audits and investigations. Our Code of Conduct covers a broad range of topics, including:

>
Respect in the workplace

>
Health and safety

>
Privacy of personally identifiable information

>
Avoiding conflicts of interest

>
Working with governments

>
Commitment to quality

>
Preventing bribery and corruption

>
Business courtesies

>
Fair competition

>
Exports, imports and trade compliance
>
Confidential information and intellectual property

>
Material non-public information and insider trading

>
Communicating L3Harris information

>
Social media

>
Business records and record management

>
Protecting L3Harris and customer assets

>
Political activities and lobbying

>
Human rights

>
Corporate responsibility



 
Employees are required to report any conduct they believe in good faith to be a violation of our Code of Conduct or policies. Our Code of Conduct is posted on our website at www.l3harris.com/corporate-governance and also is available by written request to our Corporate Ethics Office, L3Harris Technologies, Inc., 1025 West NASA Boulevard, Melbourne, Florida 32919. Any amendment to, or waiver from, our Code of Conduct that is required to be disclosed to shareholders will be posted on our website within four business days following such amendment or waiver.

20  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  OUR BOARD'S ROLE AND RESPONSIBILITIES

SUSTAINABILITY – ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
 
As an aerospace and defense company, L3Harris leads, manages and monitors a broad range of ESG impacts, and the following summary focuses on key impacts relevant to our business and to our stakeholders.
 
Sound Governance, Board Leadership. L3Harris is committed to responsible and effective corporate governance to enhance the creation of sustainable, long-term shareholder value and be accountable and responsive to all stakeholders.
 
In support of those goals, we have Corporate Governance Guidelines that our Board regularly reviews and updates as regulatory requirements change and governance practices evolve.
 
Our Board is well positioned to discharge its responsibilities. The members have a diverse mix of backgrounds, skills and experience and a track record of driving long-term shareholder value. They also have a deep and unique understanding of the business and the challenges and opportunities L3Harris faces.
 
Living Our Values. Our unwavering commitment to the highest ethical standards is a cornerstone of our values and our continued success. We instill the highest standards of performance and behavior in our employees, who sign an annual pledge to never compromise our values in order to achieve business objectives. Our customers, shareholders, suppliers and communities expect nothing less.
 
Advancing Environmental Sustainability & Compliance. The Company’s robust environmental, health and safety (“EH&S”) management system provides the framework for establishing policies and standards, as well as enterprise initiatives to reduce solid waste, water usage and greenhouse gas emissions. The EHS management system follows the guidelines and principles outlined in ISO 14001, OHSAS 18001 and ANSI Z10.
 
Following the Merger, L3Harris is working to re-baseline Company metrics and re-announce our long-term goals with the Company’s first ESG Report that will be in accordance with industry standards. We are focused on continuous improvement in order to further reduce greenhouse gas emissions and water usage and increase our solid waste diversion rate from landfill.
 
Strategies to drive continuous improvement include leveraging our EHS management system, IDENTIFYING AND QUANTIFYING ENERGY-SAVING OPPORTUNIES, INSTALLING MORE ENERGY EFFICIENT INFRASTRUCTURE, CONDUCTING solid waste characterization assessments, and establishing employee-led GreenTeams across the organization.
 
Ensuring a Safe Workplace. L3Harris is committed to protecting the health and safety of our workers and customers and the environments in the global communities where we operate. By leveraging our EHS management system centered around industry best practices and continuous improvement, we minimize and seek to eliminate exposure to hazards every day to promote an ‘Accept Only Zero’ mindset.
 
Building a High-Performance Culture: Diversity and Inclusion. Our commitment to speed, innovation and flawless execution is matched only by our dedication to providing every employee with rewarding career opportunities and an inclusive environment.
 
L3Harris is proud to have eight Employee Resource Groups. These voluntary, employee-led groups connect those with shared values and interests, and host activities focused on professional development, community outreach and employee engagement.
 
We recognize the importance of gender parity and take our commitment to strengthen the pipeline and create pathways for women to reach leadership positions very seriously.
 
Our CEO has signed the CEO Action for Diversity and Inclusion and the Catalyst CEO Actions for change, where we commit to advance diversity, build inclusion, empower employees, mitigate bias, advance understanding and drive accountability.
 
Our efforts to create a welcoming, engaging and inclusive workplace have been externally recognized. L3Harris received 100% on the Human Rights Campaign Corporate Equality Index. In addition, L3Harris was the only aerospace and defense company included on the 2020 Bloomberg Gender Equality Index. Last year, L3Harris was also certified as a Great Place to Work.
 
Supporting Our Communities. Community investment and outreach is more than a business strategy – it’s about driving positive change in the areas that matter most. L3Harris provides philanthropic support to our communities through strategic investments in STEM (Science, Technology, Engineering and Mathematics) programs that strengthen education and skills of our industry’s next generation, projects aligned with our customers’ missions and opportunities in the community.

This past Veterans’ Day, L3Harris launched a company-wide volunteer initiative, LIFT (L3Harris Investing for Tomorrow), that facilitates employee volunteer service. The launch on Veterans’ Day was celebrated with more than 60 events across the U.S.

 
L3HARRIS 2020 PROXY STATEMENT  21

     
     
     
CORPORATE GOVERNANCE  STOCK OWNERSHIP GUIDELINES FOR NON-EMPLOYEE DIRECTORS
   
Communicating With Our Board of Directors
 
GENERAL COMMUNICATIONS
 
Shareholders and other persons who wish to communicate with a member or members of our Board, including our Chairman, our Vice Chairman, our Lead Independent Director, the chairperson of any standing committee of our Board or the independent directors as a group, may send an e-mail to the intended recipient(s) c/o our Secretary at corporate.secretary@l3harris.com or may write to the intended recipient(s) c/o our Secretary, L3Harris Technologies, Inc., 1025 West NASA Boulevard, Melbourne, Florida 32919. Our Secretary will review each such communication and, if it is related to the duties and responsibilities of our Board and its committees, will forward it to the appropriate recipient(s). A director who receives a communication for which he or she was the intended recipient will determine whether it will be sent to our full Board or a committee thereof.
 
Our Board has instructed our Secretary not to forward communications that our Secretary deems unduly hostile, threatening, illegal or otherwise inappropriate (such as surveys, spam, junk mail, resumes, service or product inquiries or complaints, solicitations or advertisements). Our Secretary will periodically provide our Board a summary of all communications (other than surveys, spam, etc.) that were not forwarded to the intended recipient(s) and will make those communications available to any director upon request.
 

ACCOUNTING, INTERNAL CONTROL, AUDITING AND OTHER MATTERS
 
Our Audit Committee has established procedures for the receipt, retention and treatment of complaints and concerns regarding accounting, internal accounting controls or auditing matters, financial reporting or disclosure matters, and other matters relating to actual, alleged or potential violations of any law, rule or regulation relating to securities or to fraud against shareholders. Upon receipt of a complaint or concern, a determination will be made whether it pertains to any of these matters, and if it does, it will be handled in accordance with these procedures. A copy of the procedures is available on the Corporate Governance section of our website at www.l3harris.com/corporate-governance.
 
Employees may communicate concerns about such matters to their supervisor, manager or ethics advisor, or to the Vice President, Internal Audit or the Director, Ethics and Compliance or certain other individuals. Alternatively, they may communicate their concerns on a confidential, anonymous basis by way of e-mail or toll-free hotline numbers listed on our website and in our Code of Conduct.
 
Other persons with such complaints or concerns may contact our Vice President, Internal Audit or Director, Ethics and Compliance at 1025 West NASA Boulevard, Melbourne, Florida 32919.

 
STOCK OWNERSHIP GUIDELINES FOR NON-EMPLOYEE DIRECTORS
 
To further align the interests of our non-employee directors and shareholders, our Board has adopted stock ownership guidelines for our non-employee directors, as follows:
 
>
Our non-employee directors are expected to own L3Harris stock or stock equivalent units having a minimum value equal to five times the annual cash retainer for service as a member of our Board.
 
>
Directors are expected to meet these levels within five years after election or appointment to our Board (or five years from the closing of the Merger, in the case of non-employee directors designated by Harris or L3 in connection with the Merger).
 
Shares owned outright or jointly by the non-employee director and deferred equity awards (on an after-tax basis) credited for the non-employee director under any deferred compensation plan maintained by L3Harris count toward the guidelines. Directors who are retiring and will not be standing for re-election at the next Annual Meeting of Shareholders are no longer subject to the guidelines. As of February 28, 2020, all of our non-employee directors met the stock ownership guidelines or were on track to achieve such ownership within the applicable compliance timeframe.

BOARD LEADERSHIP STRUCTURE
 
Our Board’s leadership is currently structured as follows:
 
>
a combined position of Chairman of the Board (“Chairman”) and CEO;

22  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  BOARD LEADERSHIP STRUCTURE
 
>
a Vice Chairman of the Board (“Vice Chairman”);
>
a Lead Independent Director with well-defined duties that support our Board’s oversight responsibilities;
>
a robust committee structure comprised solely of independent directors; and
>
engaged Board members who are independent (other than our current Chairman and CEO and our current Vice Chairman, President and COO) and who conduct candid and constructive discussions and deliberations.
 
Board Policy on Chairman and CEO Roles
 
Our Board elects a Chairman from among the directors and also may appoint a Vice Chairman, as it has done in connection with the Merger. Our Board combines or separates the positions of Chairman and CEO based on what our Board believes best serves the needs of L3Harris and our shareholders at any particular time based on then-existing facts and circumstances. For example, in connection with the transition to Mr. Brown as Harris’ CEO in November 2011, the Harris Board appointed Mr. Dattilo as non-executive Chairman to provide independent leadership during the transition and enable Mr. Brown to concentrate on our business operation. A few years later, the Harris Board re-combined the CEO and Chairman positions and designated Mr. Dattilo as Lead Independent Director.
 
This history evidences our Board’s proactive commitment to strong corporate governance and appropriate independent oversight of management. Our Board believes it would be fundamentally wrong, however, to permanently and inflexibly separate or combine the positions of Chairman and CEO and remove our Board’s ability to choose the leadership structure that best serves the needs of L3Harris and our shareholders at a given time based on its unique knowledge of the challenges and opportunities L3Harris faces.
 
Current Board Leadership
 
Our Board believes the following factors are key to providing it with appropriate opportunities for oversight, discussion and evaluation of L3Harris’ decisions and direction:
 
>
the Lead Independent Director structure;
>
the independence of each director, other than Messrs. Brown and Kubasik;
>
the ability of independent directors to participate in the agenda-setting process for our Board and committee meetings;
>
regularly scheduled executive sessions of independent directors; and
>
our directors’ access to management.

Our Lead Independent Director currently is Mr. Millard, whom our Board designated on June 29, 2019 and who succeeds Mr. Hay.
As noted elsewhere, under the terms of the Merger Agreement and the related employment agreements with Mr. Brown and Mr. Kubasik:
>
Mr. Brown will serve as our Chairman and CEO through the second anniversary of the Merger, then step down as CEO and continue to serve for one additional year as Chairman. On the third anniversary of the Merger, he will retire as an officer and employee of L3Harris and resign as a member of our Board.
>
Mr. Kubasik will serve as Vice Chairman, President and COO through the second anniversary of the Merger (or, if earlier, the date that Mr. Brown ceases to serve as our CEO), at which point he will become our CEO. On the third anniversary of the Merger, Mr. Kubasik will become our Chairman.
The employment agreements with Mr. Brown and Mr. Kubasik are described in “Compensation Discussion and Analysis – Employment Agreements” beginning on page 52.
 
Our Board believes that its current leadership structure provides independent board leadership and oversight while also benefiting from having Mr. Brown serve as Chairman as well as CEO, and that Mr. Brown has demonstrated the strong leadership and vision necessary to drive our strategies and achieve our objectives while so serving. Our Board believes that Mr. Brown’s in-depth knowledge of our business and its challenges and opportunities, as well as his extensive understanding of our day-to-day operations and his ability to provide insight and direction on important strategic initiatives, make him well-positioned to chair regular Board meetings and to bring key business and stakeholder issues to our Board’s attention.


 
L3HARRIS 2020 PROXY STATEMENT  23

     
     
     
CORPORATE GOVERNANCE  BOARD LEADERSHIP STRUCTURE
   
 
 
Role of Lead Independent Director
When our Chairman is not an independent director, our independent directors (by affirmative majority vote) designate one independent Board member to serve as Lead Independent Director. Service as Lead Independent Director generally is for a one-year term commencing on the date of our Annual Meeting of Shareholders. Until the third anniversary of the completion of the Merger, our Lead Independent Director must be a director designated by L3 prior to the Merger, who may be removed as Lead Independent Director prior to that anniversary only with the approval of at least 75% of the other then-serving independent directors.
The responsibilities and authority of our Lead Independent Director include:
 
 
>  Presiding at all meetings of our Board at which our Chairman is not present, including executive sessions of our independent directors;
>  Serving as liaison between our Chairman and our independent directors;
>  Approving the information sent to our Board and the meeting agendas for our Board;
>  Approving our Board meeting schedules to assure sufficient time for discussion of all agenda items;
>  Calling meetings of our independent directors;
>  Being available for consultation and direct communication with major shareholders, if they request and consistent with our policies regarding shareholder communications;
>  Providing timely feedback from executive sessions of our independent directors to our CEO or other members of senior management;
 
Playing a key role in the annual CEO and COO evaluation process, together with the Chairperson of our Compensation Committee (or the Chairperson of our Nominating and Governance Committee if the same individual is serving as Lead Independent Director and Chairperson of our Compensation Committee);
>  Playing a key role in our Board’s annual self-evaluation process and related matters, together with the Chairperson of our Nominating and Governance Committee (or the Chairperson of our Compensation Committee if the same individual is serving as Lead Independent Director and Chairperson of our Nominating and Governance Committee);
>  Guiding and playing a key role in the CEO succession planning process; and
>  Other responsibilities and authority as our Board may determine from time to time.
 
 
The designation of a Lead Independent Director is not intended to inhibit communications among our directors or between any of them and our Chairman.
 

Executive Sessions of Independent Directors

Our Corporate Governance Guidelines require that at least two-thirds of the directors on our Board be independent directors. The agenda for each regularly scheduled Board meeting includes an executive session of independent directors, which is chaired by our Lead Independent Director. The agenda for each regularly scheduled standing committee meeting (other than quarterly earnings review meetings of our Audit Committee) likewise includes an executive session of independent directors.
An important part of the executive sessions of independent directors of our Board and its standing committees is the discussion of results from the annual self-evaluations undertaken by our Board and its standing committees, which are described below.

Self-Evaluations by our Board and Committees

Our Board and its standing committees undertake annual self-evaluations designed to foster continuous improvement in performance and effectiveness. Our Nominating and Governance Committee facilitates our Board’s annual self-evaluation. Directors are asked to consider areas such as our Board’s role, relations with management, composition and meetings, and committee members are asked to consider areas such as the committee’s role and the responsibilities articulated in its charter, its composition and its operation. Self-evaluations may be undertaken utilizing written questionnaires, facilitated discussions or other means, as determined by our Board or the applicable committee. As noted above, review and discussion of the self-evaluation process and results occurs in executive session of our Board or the applicable committee.

24  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE BOARD LEADERSHIP STRUCTURE

Director Independence Standards
Our Board assesses the independence of our directors and examines the nature and extent of any relationships between us and our directors, their families and their affiliates. Our Board is guided in this assessment by our Director Independence Standards, available on the Corporate Governance section of our website at www.l3harris.com/corporate-governance.

For a director to be considered independent, our Board must affirmatively determine that the director does not have any direct or indirect material relationship with us, other than as a director. When assessing the materiality of a director’s relationship with us, our Board will consider the issue not merely from the standpoint of the director, but also from the standpoint of persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others.
Pursuant to our Corporate Governance Guidelines, our Board undertook a review of director independence in February 2020, which included a review of the responses of each director to questions regarding his or her commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, and discussions with the director. Based on the NYSE listing standards and our Director Independence Standards, our Board has affirmatively determined in its business judgment that each director, with the exception of Mr. Brown, our Chairman and CEO, and Mr. Kubasik, our Vice Chairman, President and COO, is independent and has no direct or indirect material relationship with L3Harris, other than as a director, that impairs the director’s independence.
In connection with its independence determination, our Board considered that we conduct business with the Massachusetts Institute of Technology, where Mr. Millard is chair of the Massachusetts Institute of Technology Corporation. In no instances did the amount received by us or such other organization in our fiscal transition period exceed the greater of $1 million or 1% of either our or such other organization’s consolidated gross revenues. Mr. Millard did not have any interest in these transactions and was not involved in decisions regarding us with respect to these transactions.

 
L3HARRIS 2020 PROXY STATEMENT  25

     
     
     
CORPORATE GOVERNANCE  BOARD COMMITTEES
   
BOARD COMMITTEES
Our Board currently has four standing committees to assist in discharging its responsibilities: Audit, Compensation, Finance, and Nominating and Governance. Our Board also has an Ad Hoc Technology Committee that provides oversight of technology and innovation processes, initiatives and talent.
Each committee regularly reports its activities and actions to our full Board, generally at the next Board meeting following the committee meeting. Our Board has adopted a written charter for each committee. The charters of our Audit Committee, Compensation Committee and Nominating and Governance Committee comply with the NYSE corporate governance requirements. There are no NYSE requirements with respect to our Finance Committee charter.
Copies of all standing committee charters and our Corporate Governance Guidelines are available on the Corporate Governance section of our website at www.l3harris.com/corporate-governance and also are available to shareholders upon written request to our Secretary at L3Harris Technologies, Inc., 1025 West NASA Boulevard, Melbourne, Florida 32919.
Each standing committee’s principal functions are summarized below, with a more detailed description of purposes and responsibilities contained in its charter (and in our Corporate Governance Guidelines, in the case of our Nominating and Governance Committee).
 
Audit Committee
 
Chair
Lewis Kramer
 
Members
Sallie B. Bailey
Peter W. Chiarelli
Thomas A. Corcoran
Key responsibilities
>
Assisting our Board in overseeing, among other things: the quality and integrity of our financial statements; our compliance with relevant legal and regulatory requirements; our internal control over financial reporting; our independent registered public accounting firm’s qualifications and independence; and the performance of our internal audit function and our independent registered public accounting firm.
>
Directly appointing, compensating, retaining, terminating and overseeing the work of our independent registered public accounting firm.
>
Pre-approving all audit services, internal control-related services and non-audit services to be provided by our independent registered public accounting firm.
>
Reviewing and discussing with our independent registered public accounting firm, our internal audit department and our management any major issues regarding accounting principles and financial statement presentations, the effect of regulatory

and accounting initiatives or actions, as well as off-balance sheet structures, on our financial statements, and any major issues concerning the adequacy of our internal controls or special steps adopted in light of any material control deficiencies.
>
Discussing guidelines and policies governing management’s risk assessment process.
>
Reviewing and discussing our earnings press releases, the types of financial information and earnings guidance we provide, and the types of presentations made by us to analysts and rating agencies.
>
Reviewing and discussing quarterly and year-end operating results with our independent registered public accounting firm, our internal audit department and our management; reviewing our interim financial statements prior to their inclusion in our Form 10-Q filings; and recommending to our Board the inclusion of our annual financial statements in our Annual Reports on Form 10-K.
 
Our Board has determined that each member of our Audit Committee:
>
is independent within the meaning of NYSE listing standards, applicable laws and rules and our Director Independence Standards; and
>
satisfies the “financial literacy” requirements of NYSE listing standards and has “accounting or related financial management expertise.”
Our Board also has determined that Mr. Kramer and Ms. Bailey each satisfy the “audit committee financial expert” criteria, as that term is defined by Securities and Exchange Commission (“SEC”) rules.

26  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  BOARD COMMITTEES

 
Compensation
Committee
 

Chair
Lewis Hay III
 
Members
Thomas A. Dattilo
Lewis Kramer
Rita S. Lane
 

Key responsibilities

>
Reviewing management training, development, organizational structure and succession plans, and recommending to our Board individuals for election as officers, including executive officers.
 
>
Overseeing and reviewing our overall compensation philosophy, establishing the compensation and benefits of our executive officers and administering our equity-based compensation plans.
 
>
Reviewing and approving corporate goals and objectives relevant to the compensation of our CEO and COO, evaluating our CEO’s and COO’s respective performance against those goals and objectives, and together with all independent directors of our Board, determining and approving annual salary, cash and equity incentives and other executive benefits for our CEO and COO based on this evaluation.
 
>
Reviewing and approving the annual salary, cash and equity incentives and other benefits for our other executive officers.
 
>
Reviewing and approving employment, separation, severance and change in control agreements and terms and any special arrangements in the event of termination of employment, death or retirement of executive officers.
>
Determining stock ownership guidelines for our CEO, COO, executive officers and other corporate officers and overseeing compliance with such guidelines.
 
>
Overseeing regulatory compliance with applicable executive compensation laws, rules and regulations and with NYSE rules regarding shareholder approval of equity compensation plans.
 
>
Reviewing, in consultation with our Nominating and Governance Committee, responses to shareholder proposals regarding matters falling within the responsibilities and duties of our Compensation Committee.
 
>
Reviewing management’s assessment of the effect on our business of risks from our compensation policies and practices and periodically discussing such matters with management.
 
>
Periodically reviewing our diversity and inclusion efforts.

>
Reviewing and discussing the “Compensation Discussion and Analysis” section of our proxy statement with management and making a recommendation to our Board on the inclusion of such section in our proxy statement.
 
>
Retaining and terminating independent executive compensation consultants, including approving such consultants’ fees and other retention terms.

 
Our Board has determined that each member of our Compensation Committee is independent within the meaning of the NYSE listing standards, applicable laws and rules and our Director Independence Standards.
 
Our Compensation Committee has delegated to our CEO the authority to grant equity awards to employees who are not executive officers, subject to an annual maximum number of shares underlying the awards that may be granted, and annually reviews these awards.
 
For additional information regarding the role of our Compensation Committee and our executive compensation process and procedures, including the role of executive officers and compensation consultants in recommending the amount or form of executive compensation, see the “Compensation Discussion and Analysis” section of this proxy statement beginning on page 35.

 
Finance Committee
 
Chair
Roger B. Fradin
 
Members
Sallie B. Bailey
Thomas A. Corcoran
Rita S. Lane
 

Key responsibilities
 
>
Periodically reviewing our financial position, capital structure, working capital, capital transactions, equity investments, debt ratings and other matters relating to our financial condition.
 
>
Reviewing our dividend policy, capital asset plan and share repurchase policy and making recommendations to our Board relating to such policies.
>
Overseeing the financial and investment policies and objectives applicable to our material benefit plans.


 
Our Board has determined that each member of our Finance Committee is independent within the meaning of the NYSE listing standards and our Director Independence Standards.

 
L3HARRIS 2020 PROXY STATEMENT  27

     
     
     
CORPORATE GOVERNANCE  BOARD COMMITTEES
   

 
Nominating and
Governance
Committee
 
Chair
Lloyd W. Newton
 
Members
Thomas A. Dattilo
Lewis Hay III
Robert B. Millard
 

Key responsibilities

>
Identifying and recommending qualified individuals for election or re-election to our Board and filling vacancies on our Board.
 
>
Adopting a policy and procedures for considering director candidates recommended by our shareholders.
 
>
Developing, reviewing and recommending to our Board our Corporate Governance Guidelines and monitoring trends and evolving practices in corporate governance.
 
>
Periodically assessing the adequacy of our corporate governance framework, including our Restated Certificate of Incorporation and By-Laws, and recommending changes to our Board for approval, as appropriate.
 
>
Developing, reviewing and recommending to our Board director compensation and benefit plans.
 
>
Reviewing, and making recommendations to our Board concerning, the structure, size, composition and operation of our Board and its committees, including recommending committee assignments.
 
>
Developing, reviewing and recommending to our Board the meeting schedule for our Board and its committees, in consultation with our Lead Independent Director and each committee chairperson.
           
          
>
Reviewing, and approving or ratifying, related person transactions in accordance with relevant policies.
 
>
Reviewing and making recommendations to our Board regarding shareholder proposals and a process for shareholder communications with our Board.
 
>
Facilitating our Board’s annual self-evaluation of its performance and effectiveness.
 
>
Retaining and terminating independent director compensation consultants, including approving such consultants’ fees and other retention terms.
 
>
Assisting our Board in overseeing our ethics and business conduct program consistent with sound, ethical business practices and legal requirements.
 
>
Assisting our Board in overseeing our environmental, health and safety programs and charitable, civic, educational and philanthropic activities.
 
>
Reviewing and taking appropriate action concerning strategic issues and trends relating to corporate citizenship and responsibility, including social and political trends and public policy issues that may have an impact on our operations, financial performance or public image.
 
Our Board has determined that each member of our Nominating and Governance Committee is independent within the meaning of the NYSE listing standards and our Director Independence Standards.
 
For additional information regarding the role of our Nominating and Governance Committee and our director compensation process and procedures, including the role of compensation consultants relating to director compensation, see the “Director Compensation and Benefits” section of this proxy statement beginning on page 30.

 
Ad Hoc Technology
Committee
 
Chair
Peter W. Chiarelli
Members
Roger B. Fradin
Robert B. Millard
Lloyd W. Newton

In addition to the four standing committees shown above, our Board also has an Ad Hoc Technology Committee that provides oversight of technology and innovation processes, initiatives and talent.

28  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  OTHER GOVERNANCE MATTERS
OTHER GOVERNANCE MATTERS
 
Meeting Attendance
 
In our fiscal transition period, our Board of Directors held 4 meetings, and its committees held a total of 13 meetings, and the average attendance of directors at those meetings is shown in the table below.
 
Fiscal Transition Period Board and Committee Meetings and Attendance
 
Board / Committee
Number of Meetings Held
Average Meeting Attendance
Board of Directors
4
100%
Audit Committee
5
100%
Compensation Committee
4
100%
Finance Committee
1
100%
Nominating and Governance Committee
2
100%
Ad Hoc Technology Committee
1
100%
 
Each director attended 100% of the fiscal transition period meetings of our Board and its committees on which he or she served. All of the directors taken together attended 100% of such meetings of our Board and its committees on which they served. In addition to meetings at our corporate headquarters, our Board periodically holds meetings at other facilities and locations.
 
We typically schedule a Board meeting in conjunction with our Annual Meeting of Shareholders. In the absence of unavoidable conflict, all Board members are expected to attend each Annual Meeting of Shareholders. All of our Board members attended our 2019 Annual Meeting of Shareholders.
 
Related Person Transaction Policy
 
Our Board has adopted a written policy and procedures for the review, approval and ratification of transactions among L3Harris and our directors and executive officers and their related interests. The policy supplements the conflicts of interest policies set forth in our Code of Conduct and our other internal policies and procedures. Under the related person transaction policy, all related person transactions are to be reviewed by our Nominating and Governance Committee. Our Nominating and Governance Committee may approve or ratify a related person transaction if, in its business judgment, it determines that the transaction is in, or is not inconsistent with, the best interests of L3Harris and our shareholders. This may include situations where we provide to or receive from related persons products or services on an arm’s-length basis on terms comparable to those provided to or received from unrelated third parties. Any director who participates in or is the subject of an existing or potential related person transaction may not participate in the review, approval or ratification of the related person transaction.
 
Under the policy and consistent with SEC rules, a related person transaction is any transaction, arrangement or relationship in which L3Harris was, is or will be a participant, where the amount involved exceeds $120,000 and in which a related person had, has or will have a direct or indirect material interest. A related person includes any of our directors, nominees for director or executive officers, any person who is known to be the beneficial owner of more than 5% of any class of our common stock, an immediate family member of any person described above and any firm, corporation or other entity controlled by any person described above. The policy requires that each director and executive officer annually complete a questionnaire to identify his or her related interests and persons and notify us of changes to that information. Before entering into a proposed related person transaction, the related person or involved business area of L3Harris is requested to notify our Secretary of the facts and circumstances of the proposed transaction. If the Secretary determines that the proposed transaction is a related person transaction, it shall be submitted to our Nominating and Governance Committee for review and consideration. A related person transaction entered into without our Nominating and Governance Committee’s prior approval will not violate this policy or be unenforceable, so long as the transaction is brought to our Nominating and Governance Committee promptly after it is entered into or after it becomes apparent that the transaction is covered by this policy and is ratified by our Nominating and Governance Committee.
 
Based on its holdings as reported on a Schedule 13G/A filed with the SEC, each of The Vanguard Group and BlackRock, Inc. beneficially owned more than 5% of our common stock as of February 28, 2020. The Vanguard Group and certain of its affiliates provided asset management services in our fiscal transition period for our defined contribution and defined benefit plans, for which participants paid or will pay approximately $57,289. BlackRock, Inc. and certain of its affiliates provided asset management services in our fiscal transition period for certain of our defined contribution and defined benefit plans, for which participants paid or will pay approximately $799,891. 

 
L3HARRIS 2020 PROXY STATEMENT  29

     
     
     
CORPORATE GOVERNANCE  DIRECTOR COMPENSATION AND BENEFITS
   

The agreements with each of The Vanguard Group and BlackRock, Inc. were negotiated on an arm’s-length basis, and the ownership of our common stock plays no role in the business relations between us and The Vanguard Group and BlackRock, Inc. In addition, we believe that the agreements represent standard terms and conditions for asset management services. In accordance with our then-existing related person transaction policy, the Harris Governance and Corporate Responsibility Committee reviewed, ratified and approved the agreements entered into by Harris with The Vanguard Group and BlackRock, Inc.
 
DIRECTOR COMPENSATION AND BENEFITS
 
Our Board compensation program is intended to attract and retain directors with demonstrated ability, integrity, judgment and experience to fulfill their responsibility to oversee management and to develop and oversee the implementation of strategies aimed at creating sustainable, long-term value for our shareholders. The program also is intended to recognize the time commitments and potential liability associated with serving on the board of a public company.
 
Our independent directors are not permitted to receive, directly or indirectly, any consulting, advisory or other compensatory fees from us, and we do not compensate our employee directors separately for service as a director.
 
The form and amount of director compensation is annually reviewed and assessed by our Nominating and Governance Committee. The committee reviews compensation comparison peer group data and broad survey data concerning director compensation practices, levels and trends for companies comparable to us in revenue, businesses and complexity, as supplied by independent compensation consultants. If the committee believes any changes to director compensation are warranted, it makes recommendations for the Board to consider.
 
Our Board compensation program, which reflects Board-approved changes in connection with the Merger that take into account the increased complexity of our business and operations resulting from the completion of the Merger, is described below.
 
Cash and Equity-Based Retainers for Non-Employee Directors
 
Effective following the completion of the Merger, our non-employee directors receive the following cash and equity-based retainers:
 
>
Board member: $130,000 annual cash retainer and $165,000 annual equity-based retainer in the form of director share units (described in more detail below)
 
>
Lead Independent Director: $35,000 annual cash retainer

>
Chairperson of Audit Committee: $30,000 annual cash retainer

>
Chairperson of any other standing committee: $20,000 annual cash retainer
 
Each cash retainer is payable on a quarterly basis in arrears and pro-rated based on period of service if a director does not serve for the entire quarter.
 
For the equity-based retainer, each year at our Annual Meeting of Shareholders, non-employee directors will be granted a number of director share units under the Harris Corporation 2015 Equity Incentive Plan (or any successor equity compensation plan adopted by L3Harris) calculated by dividing $165,000 by the fair market value of one share of L3Harris common stock on the grant date (rounded down to the nearest whole share). The director share units 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. If a non-employee director becomes a director after an Annual Meeting of Shareholders, he or she will be granted a pro-rated director share unit award based on the period of the non-employee director’s service on our Board during the year. During our fiscal transition period from June 29, 2019 to January 3, 2020, the director share unit award for each non-employee director made at our 2019 Annual Meeting of Shareholders was calculated based on a grant date value of $82,500 instead of $165,000, reflective of the six-month fiscal transition period.
 
Deferred Compensation Plan for Non-Employee Directors
 
On June 29, 2019, our Board adopted the L3Harris Technologies, Inc. 2019 Non-Employee Director Deferred Compensation Plan (the “L3Harris Director Deferred Compensation Plan”), an unfunded, non-qualified deferred compensation plan for the benefit of our non-employee directors, which became effective December 31, 2019.

Under the L3Harris Director Deferred Compensation Plan, prior to the commencement of a calendar year beginning on or after January 1, 2020, each non-employee director of L3Harris may elect to defer all or a portion of cash retainer fees to be earned and director share units to be granted in the subsequent year or years. (Special rules govern the timing of deferral elections by new non-employee directors who join our Board after a calendar year has commenced.)

30  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
CORPORATE GOVERNANCE  DIRECTOR COMPENSATION AND BENEFITS

Any cash retainer deferred will be credited as deferred units (each deferred unit is equivalent in value to one share of L3Harris common stock) to the non-employee director’s account as of the date the retainer would have otherwise been paid. The number of deferred units credited will be equal to the cash retainer amount deferred as of such date divided by the fair market value of L3Harris common stock on such date. Any director share unit award deferred will be credited as deferred units to the non-employee director’s account as of the date on which the director share units vest.
 
Each deferred unit is credited with dividend equivalents equal to dividends paid on L3Harris common stock, which are deemed reinvested in additional deferred units on the dividend payment date. Deferred units will be appropriately adjusted in the event of any change in L3Harris common stock through a merger, consolidation, or otherwise; a stock dividend; or a stock split, combination or other change in L3Harris common stock.
 
Payment will be made in shares of L3Harris common stock equal to the number of deferred units credited to the director’s account (with any fractional deferred units paid in cash based on the fair market value of one share of L3Harris common stock on the payment date). A director may elect to receive deferred amounts either in a lump sum on a date certain within 90 days after his or her resignation or retirement or in up to 10 annual installments over a designated number of years beginning on a date certain within 90 days after his or her resignation or retirement. Within 90 days following a non-employee director’s death, a lump sum equal to the then-remaining balance in his or her account will be made to his or her beneficiary. Within 10 business days after a change in control (as defined in the Harris Corporation 2015 Equity Incentive Plan) and to the extent permitted by Federal tax laws, each non-employee director (or former non-employee director) will receive a cash lump sum equal to the number of deferred units credited to his or her account on the date of the change in control, multiplied by the fair market value of one share of L3Harris common stock on such date. If payment within 10 business days following a change in control is not permitted by Federal tax laws, then payment will be made at the time and in the form that payment would have been made if a change in control had not occurred.

Reimbursement, Insurance and Charitable Gift Matching
 
We pay or reimburse each non-employee director for travel and out-of-pocket costs and expenses incurred in connection with attending Board and committee meetings and other meetings on our behalf and attending director education programs. On occasion, spouses or guests are invited to accompany directors to Board-related events, and we cover their travel and related expenses.
 
We also provide each non-employee director with accidental death and dismemberment insurance of up to $200,000 and business travel insurance of up to an additional $200,000 in the event that he or she is involved in an accident while traveling on business relating to our affairs, and we pay the premiums for such insurance. The premiums for coverage during our fiscal transition period for all non-employee directors collectively amounted to less than $500. We also provide liability insurance coverage for all of our directors and officers.
 
Non-employee directors may participate in the same charitable gift matching program available to our employees, under which our foundation matches contributions to eligible educational institutions and tax-exempt organizations up to an annual maximum of $10,000 per director and per employee.
 
Indemnification Agreements
 
We have entered into indemnification agreements with each of our directors and Board-elected officers, including the executive officers named in the Fiscal Transition Period Summary Compensation Table on page 62. Under these agreements, we indemnify directors and officers with respect to their activities as a director, officer, employee or agent of L3Harris, or when serving at our request as a director, officer, employee or agent or in any other capacity for another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by them in connection with any threatened, pending or completed action, suit or other proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, including appeals, to which they were, are or are threatened to be made, parties as a result of their service to us. Under the indemnification agreements, each director or officer will continue to be so indemnified with respect to his or her service to or for us even after ceasing to occupy a position as an officer, director, employee or agent of L3Harris.

 
L3HARRIS 2020 PROXY STATEMENT  31

     
     
     
CORPORATE GOVERNANCE  DIRECTOR COMPENSATION AND BENEFITS
   

FISCAL TRANSITION PERIOD COMPENSATION OF NON-EMPLOYEE DIRECTORS TABLE
 
The following table sets forth information regarding compensation paid to each of our non-employee directors for our fiscal transition period. We currently do not have a non-equity incentive plan or pension plan for directors.
 
Non-Employee Director    
Fees Earned
or Paid in
Cash
$(1)
   
Stock
Awards
$(2)
   
Option
Awards
$(3)
   
Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings
$(4)
   
All Other
Compensation
$(5)
   
Total
$
 
Sallie B. Bailey
 
$
65,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
147,394
 
Peter W. Chiarelli
 
$
75,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
157,394
 
Thomas A. Corcoran
 
$
65,000
   
$
82,394
   
$
0
   
$
0
   
$
1,000
   
$
148,394
 
Thomas A. Dattilo
 
$
65,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
147,394
 
Roger B. Fradin
 
$
75,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
157,394
 
Lewis Hay III
 
$
75,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
157,394
 
Lewis Kramer
 
$
80,000
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
162,394
 
Rita S. Lane
 
$
65,000
   
$
82,394
   
$
0
   
$
0
   
$
10,000    
$
157,394
 
Robert B. Millard
 
$
82,500
   
$
82,394
   
$
0
   
$
0
   
$
0
   
$
164,894
 
Lloyd W. Newton
 
$
75,000
   
$
82,394
   
$
0
   
$
0
   
$
10,000
   
$
167,394
 

(1)
Reflects total cash compensation earned in our fiscal transition period for Board, committee, committee chairperson and Lead Independent Director retainers.
 
(2)
Reflects the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“ASC 718”) with respect to director share units awarded in our fiscal transition period.
 

Under ASC 718, the fair value of the director share unit awards was determined as of the grant date using the closing market price of L3Harris common stock on the grant date. These amounts reflect our accounting for these awards and do not necessarily correspond to the actual values that may be realized by directors.
 

As of January 3, 2020, our non-employee directors had the following aggregate number of director share units outstanding: Ms. Bailey — 412 units; Gen. Chiarelli — 412 units; Mr. Corcoran — 412 units; Mr. Dattilo — 412 units; Mr. Fradin — 412 units; Mr. Hay — 412 units; Mr. Kramer — 412 units; Ms. Lane — 412 units; Mr. Millard — 412 units; and Mr. Newton — 412 units.
 
(3)
Stock options were not an element of compensation for our non-employee directors, and consequently, non-employee directors held no stock options as of January 3, 2020.
 
(4)
There were no above-market or preferential earnings in the L3Harris Director Deferred Compensation Plan, which became effective December 31, 2019.
 
(5)
As noted above, our non-employee directors were eligible to participate in our foundation’s charitable gift matching program up to an annual maximum of $10,000 per director. Although directors participated on the same basis as our employees, SEC rules require disclosure of the amount of a director’s participation in a gift matching program. The amounts shown for Mr. Corcoran, Ms. Lane and Mr. Newton reflect charitable gift matching payments made during our fiscal transition period.

32  L3HARRIS 2020 PROXY STATEMENT

       
       
       
       

PROPOSAL 2:
TO APPROVE, IN AN ADVISORY VOTE,
THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS
 
           
 
Our Board unanimously recommends voting
FOR approval of the
compensation of our
named executive officers
as disclosed in this proxy
statement.
 
 
>  Executive compensation decisions were made by independent members of our Board and Compensation Committee.

>  Executive compensation for our fiscal transition period reflected pay-for-performance alignment, with strong fiscal transition period financial results and strong 1-year, 3-year and 5-year total shareholder return (“TSR”) results.
 
           

As at past Annual Meetings and as required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, and related SEC rules, we are asking our shareholders to vote, on a non-binding, advisory basis, to approve the compensation of our named executive officers as disclosed in this proxy statement. We encourage you, before voting, to review this entire proxy statement, and particularly the Compensation Discussion and Analysis section on pages 35-59, the Compensation Tables section on pages 62-71 and the Potential Payments Upon Termination or a Change in Control section on pages 72-84.
 
The overall objective of our executive compensation program is to encourage and reward the creation of sustainable, long-term shareholder value. Our guiding principles, shown on page 39 and summarized below, provide a framework for our executive compensation program to meet this objective. Specifically, our program is designed to:

>
Directly align the interests of our executives with those of our shareholders.
 
>
Provide competitive compensation and benefits to attract, motivate and retain executives that drive our desired business results.
 
>
Ensure that a significant portion of compensation is at-risk and based on company and personal performance so as to motivate achievement of our financial goals and strategic objectives.

>
Align an executive’s realized pay with his or her performance through above-target compensation for above-target performance and below-target compensation for below-target performance.
 
 
L3HARRIS 2020 PROXY STATEMENT  33

     
     
     
PROPOSAL 2:  TO APPROVE, IN AN ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
   

We believe that our executive compensation program helped to incentivize our executives, was integral to achieving our strong fiscal transition period financial results and strong 1-year, 3-year and 5-year TSR results, and appropriately rewarded executives for that performance.
 
Please note that your vote on this proposal is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our named executive officers as disclosed in this proxy statement under SEC rules. Also, the vote is advisory, which means that the results are not binding on us. However, our Board and our Compensation Committee, which are responsible for designing and administering our executive officer compensation program, value the opinions expressed by our shareholders and will consider the voting results when making future decisions regarding compensation for our named executive officers.
 
Shareholders will be voting on the following resolution:
 
“RESOLVED, that the shareholders of L3Harris Technologies, Inc. hereby approve, on an advisory basis, the compensation of the named executive officers as disclosed in the L3Harris Technologies, Inc. proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Fiscal Transition Period Summary Compensation Table and other related tables and accompanying footnotes and narratives.”
 
We currently hold our advisory vote to approve the compensation of our named executive officers (“Say-on-Pay vote”) annually. Shareholders have an opportunity to cast an advisory vote on the frequency of the Say-on-Pay vote at least every six years, and the next advisory vote on the frequency of the Say-on-Pay vote will be at our 2023 Annual Meeting of Shareholders.

34  L3HARRIS 2020 PROXY STATEMENT

       
       
       
       

COMPENSATION
DISCUSSION
AND ANALYSIS

Executive Summary 35
Our Executive Compensation Philosophy and Practices
39
Overview of Our Main Executive Compensation Elements
44
Executive Compensation Decisions for Our Six-Month Fiscal Transition Period
47
Employment Agreements
52
Other Compensation Elements
55
Other Compensation Policies
57
 
EXECUTIVE SUMMARY
 
This Compensation Discussion and Analysis (“CD&A”) is intended to help shareholders understand our overall executive compensation program, objectives, framework and elements. It also discusses and analyzes the basis for the compensation paid with respect to our fiscal transition period to our named executive officers shown in the Fiscal Transition Period Summary Compensation Table on page 62 and the related tables and narrative discussion thereafter.
 
How Recent Corporate Events Affect This CD&A
 
This CD&A contains information about our named executive officers’ compensation relating to our most recent fiscal period ended January 3, 2020. When reviewing the information presented here and considering your vote for Proposal 2, it is important to take note of the following circumstances:
 
Compensation reported for abbreviated 6-month fiscal transition period vs. full fiscal years. In connection with the Merger, we changed our fiscal year end from the Friday nearest June 30 to the Friday nearest December 31. This transition to a calendar year oriented financial reporting cycle resulted in an abbreviated six-month “fiscal transition period” of June 29, 2019 through January 3, 2020, so the compensation of our executives for the fiscal transition period reflects that shorter time frame. Prior fiscal periods referred to in this proxy statement, by contrast, were our full fiscal years ended June 28, 2019 (fiscal 2019), June 29, 2018 (fiscal 2018) and June 30, 2017 (fiscal 2017).
 
Post-merger vs. pre-merger information. As noted above, the Merger was completed on June 29, 2019, after the end of our fiscal 2019. Our abbreviated fiscal transition period reflects the results for the combined company, L3Harris, whereas our fiscal 2019, 2018 and 2017 results reflect standalone results for Harris (not for L3 or L3Harris). The description in this proxy statement of our executive compensation program, and of the philosophy, principles and key practices that shape it, apply for L3Harris and also generally applied for Harris prior to the Merger. (In this proxy statement, references to the “Harris Board,” the “L3 Board” and the “Harris Compensation Committee” are references to the Harris Board of Directors, the L3 Board of Directors and the Harris Management Development and Compensation Committee, respectively, prior to the completion of the Merger.)

 
L3HARRIS 2020 PROXY STATEMENT  35

     
     
     
COMPENSATION DISCUSSION AND ANALYSIS  EXECUTIVE SUMMARY
   

Our named executive officers for our fiscal transition period were:

William M. Brown
Christopher E. Kubasik
Jesus Malave, Jr.
Todd W. Gautier
Edward J. Zoiss
Chairman and
Chief Executive Officer
Vice Chairman,
President and Chief
Operating Officer
Senior Vice President
and Chief Financial
Officer
President, Aviation
Systems
President, Space and
Airborne Systems
 
On June 29, 2019 following completion of the Merger, Mr. Brown (formerly Harris’ Chairman, President and Chief Executive Officer) became our Chairman and Chief Executive Officer and Mr. Kubasik (formerly L3’s Chairman, Chief Executive Officer and President) became our Vice Chairman, President and Chief Operating Officer.
 
Fiscal Transition Period Performance
 
BUSINESS ENVIRONMENT
 
We are an agile global aerospace and defense technology innovator, delivering end-to-end solutions that meet customers’ mission-critical needs. We provide advanced defense and commercial technologies across air, land, sea, space and cyber domains. As of the end of our 6-month fiscal transition period, we had approximately $9 billion in revenue (or approximately $18 billion on an annualized basis) and about 48,000 employees, with customers in over 130 countries. In our fiscal transition period, we derived approximately 73% of our revenue from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, both directly and through prime contractors. Our common stock is listed under ticker symbol “LHX” on the NYSE.
 
KEY FINANCIAL RESULTS

Our strong fiscal transition period financial results reflected our successful execution against the key strategic priorities we set for our fiscal transition period. Those key strategic priorities were:

>
Executing seamless integration of L3 and Harris, including achieving at least $500 million in gross cost synergies from the Merger by the end of 2021;
 
>
Driving flawless execution and margin expansion through our e3 (excellence everywhere every day) operational excellence program;
 
>
Building a new performance culture with a strong bias for action and accountability;
>
Growing revenue through investments in differentiated technology and innovation;
 
>
Reshaping our portfolio to focus on high margin, high growth businesses; and
 
>
Maximizing cash flow with shareholder friendly capital deployment.
 
Key 6-Month Fiscal Transition Period Results vs. Full Year Fiscal Year 2019 Results
 
(in millions, except per share amounts)
  
Fiscal
Transition
Period ($)
     
Fiscal 2019
($)
  
Orders (funded)
 
$
9,428
   
$
7,451
 
Revenue
 
$
9,263
   
$
6,801
 
Net income
 
$
834
   
$
949
 
Adjusted EBIT*
 
$
1,601
   
$
1,345
 
Operating cash flow
 
$
939
   
$
1,185
 
Adjusted free cash flow*
 
$
1,449
   
$
1,055
 
Cash used to repurchase shares of our common stock
 
$
1,500
   
$
200
 
Annualized cash dividend rate per share**
 
$
3.00
   
$
2.74
 

*
See Appendix A for reconciliations of GAAP to non-GAAP financial measures.
 
**
On February 28, 2020, our Board increased our quarterly cash dividend rate from $.75 per share to $.85 per share, for an annualized cash dividend rate of $3.40 per share.

36  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
COMPENSATION DISCUSSION AND ANALYSIS  EXECUTIVE SUMMARY

In addition, our financial results for performance measures used in our cash incentive compensation determinations for our fiscal transition period exceeded applicable targets. In particular, our revenue of $9.263 billion exceeded target of $9.229 billion, our adjusted EBIT of $1.601 billion exceeded target of $1.537 billion, and our adjusted free cash flow of $1.449 billion exceeded target of $1.328 billion.
 
Based on these and prior-period results, we delivered strong 1-year, 3-year and 5-year cumulative TSR results relative to companies in the S&P 500 and to the median of our compensation comparison peer group for our fiscal transition period, as shown below:
 
TSR Results(1) at End of Fiscal Transition Period
 

 
L3Harris Technologies, Inc.

S&P 500

Compensation Comparison Peer Group, Median
 
(1)
TSR results reflect reinvestment of dividends. As noted above, the closing of the Merger occurred on June 29, 2019, and thus TSR results reflect L3Harris results for the fiscal transition period and Harris standalone results for prior periods.
 
Target Pay Mix for Fiscal Transition Period
 
In accordance with our principle of aligning pay with performance, the percentage of total target direct compensation for our fiscal transition period that was at risk was 90% for our CEO, 63% for our COO and 75% for our other named executive officers, on average. Under our incentive plans, compensation may be at risk either because it is performance based (payouts depend on achievement relative to pre-established performance goals) or time-based (equity awards subject to delayed vesting and thus the risk of a potential decrease in the price of our common stock price).
 
For the calculations below, total target direct compensation for our 6-month fiscal transition period includes 50% of annual base salary level, the target value of annual cash incentive awards (which were granted at 50% of full-year values) and the target value of annual cycle awards of long-term equity-based incentive compensation (also granted at 50% of full-year values); but does not include the target value of the special, one-time integration-related long-term equity-based incentive compensation awards (which are entirely performance based and at risk) or other compensation elements such as retirement, severance, health, welfare or other personal benefits; transition or relocation benefits; or payouts that occurred in our fiscal transition period as a result of the Merger.

 
L3HARRIS 2020 PROXY STATEMENT  37

     
     
     
COMPENSATION DISCUSSION AND ANALYSIS  EXECUTIVE SUMMARY
   

CEO, COO and Other Named Executive Officer Fiscal Transition Period Target Direct Compensation Mix


Target Pay Mix for 2020
 
In connection with returning to a more typical annual compensation cycle for fiscal 2020 (which commenced January 4, 2020) and in accordance with our principle of aligning pay with performance, the percentage of total target direct compensation for 2020 that is at risk is 90% for our CEO, 90% for our COO and 79% for our other named executive officers, on average.
 
For the calculations below, total target direct compensation for fiscal 2020 includes annual base salary level, the target value of annual cash incentive awards and the target value of annual cycle awards of long-term equity-based incentive compensation (which consists of our more typical historic mix of performance share units, stock options and restricted stock units); but does not include other compensation elements such as retirement, severance, health, welfare or other personal benefits; or transition or relocation benefits.
 
CEO, COO and Other Named Executive Officer 2020 Target Direct Compensation Mix



38  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
COMPENSATION DISCUSSION AND ANALYSIS  OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES

Shareholder Engagement on Executive Compensation and
“Say-on-Pay” Results
 
As part of our shareholder outreach, we seek shareholder views and input on our executive compensation program. In fact, past input received from our large shareholders influenced our determinations to adjust the weighting of certain financial performance measures under our annual cash incentive compensation plan and to alter the financial performance measures for our performance share units. In addition, as part of our investor relations engagement processes following transformative merger and acquisition activity (including the Merger), we have engaged with several among our larger shareholders to understand those metrics important to them to ensure the Merger is successful and delivers long-term shareholder value. As a result of that engagement, we altered our existing short- and long-term incentive plan designs to reflect their feedback. We expect to continue to seek the views and input of our large shareholders regarding our executive compensation program on a regular basis.
 
At our 2019 Annual Meeting of Shareholders, approximately 94% of the shares voted on the “say-on-pay” proposal were cast in support of L3Harris’ fiscal 2019 executive compensation and related disclosures. At that time, our Compensation Committee viewed those results as broad shareholder support for L3Harris’ executive compensation program and consequently made no material changes to the program or to L3Harris’ compensation policies. Our Board and Compensation Committee will continue to consider input from shareholders, including through advisory votes on executive compensation, in making compensation decisions and reviewing executive compensation programs and policies.
 
OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES
 
Overall Objective and Guiding Principles
 
The overall objective of our executive compensation program is to encourage and reward the creation of sustainable, long-term shareholder value. Our guiding principles provide a framework for our executive compensation program to meet this objective.

GUIDING PRINCIPLES FOR EXECUTIVE COMPENSATION

             
 
Align with Shareholders’ Interests
We believe an executive’s interests are directly aligned with our shareholders’ interests when our compensation programs appropriately balance short-and long-term financial performance, create a “pay for profitable growth” environment, are impacted by our stock price performance and require meaningful ownership of our stock.
 
 
 
Be Competitive at Target Performance Level
We believe an executive’s total compensation should be competitive at the target performance level to motivate performance and to attract, retain, develop and reward executives who possess the abilities and skills to build long-term shareholder value.
 
             
 
 
 
 
 
 
 
             
 
Motivate Achievement of Financial Goals and Strategic Objectives
We believe an effective way to incentivize an executive to create long-term shareholder value is to make a significant portion of overall compensation dependent on the achievement of our short- and long-term financial goals and strategic objectives and on the value of our stock.
 
 
 
Align Realized Pay with Performance
We believe that although an executive’s total compensation should be tied to achievement of financial goals and strategic objectives and should be competitive at the target performance level, above-target performance should be appropriately rewarded and there should be downside risk of below-target compensation if we do not achieve our financial goals and strategic objectives.
 
             

Although compensation levels differ among our named executive officers based on competitive factors and their varying roles, responsibilities and performance, there are no material differences in the manner in which total target direct compensation is determined for any of our named executive officers or the compensation policies that apply to them. The material elements of our executive compensation program applicable to our named executive officers also apply to our other executive officers, except that not all executive officers were granted a special, one-time integration-related long-term equity-based incentive compensation award.

 
L3HARRIS 2020 PROXY STATEMENT  39

     
     
     
COMPENSATION DISCUSSION AND ANALYSIS  OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES
   

Key Practices
 
In accordance with our overall objective and our guiding principles, we follow sound executive compensation practices that are designed to encourage and reward the creation of sustainable, long-term shareholder value.

 
 
 
 
 
 
 
WHAT WE DO
 
 
 
 WHAT WE DON’T DO
 
             
 
Place executive compensation decisions in the hands of independent directors

>   Retain an independent executive compensation consulting firm

  Periodically review and change composition of compensation comparison peer group, as appropriate

  Make a significant portion of each executive’s overall compensation dependent on our performance against pre-determined targets for short- and long-term financial measures

  Make a significant portion of each executive’s overall compensation opportunity equity-based to establish a strong link between compensation and our stock price performance and to provide rewards in alignment with shareholder returns

  Align performance share unit award payouts with our stock price performance through a relative TSR adjustment metric

  Have meaningful stock ownership guidelines to maintain alignment of executives’ interests with those of our shareholders

  Hold annual “say-on-pay” advisory vote and seek input of large shareholders on key aspects of our executive compensation program

  Regularly review and evaluate plans for management development, succession and diversity

  Pay cash severance under executive change in control severance agreements only on a “double trigger” basis

>   Have a “clawback” policy to recover cash and equity incentive payments from executives if our financial statements are restated due to errors, omissions or fraud

  Provide for accelerated vesting of equity-based compensation granted after fiscal 2019 only on a “double trigger” basis

  Maintain a 12-month minimum vesting period for annual cycle awards of equity-based compensation, except in the case of death, disability or a qualifying termination after a change in control

 
 
 
>   Provide excessive perquisites

  Permit repricing or back-dating of options

Provide excise tax gross-ups under executive change in control severance agreements

Pay dividend equivalents to executive officers on performance share unit and restricted stock unit awards (except to extent earned at end of the applicable period)

  Permit directors, executives or other employees to engage in short sales or enter into hedging, puts, calls or other “derivative” transactions with respect to our securities

  Permit directors or executives to hold or purchase our stock on margin or in a margin account or otherwise pledge our stock as collateral for margin accounts, loans or any other purpose

Provide guaranteed incentive payouts over multi-year periods


 

40  L3HARRIS 2020 PROXY STATEMENT

     
     
     

 
COMPENSATION DISCUSSION AND ANALYSIS  OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES

Who Does What
 
ROLE OF COMPENSATION COMMITTEE
 
Our Compensation Committee sets the philosophy, objectives, elements, policies and practices of compensation for our executive officers. In approving compensation levels and targets, individual objectives and financial performance measure targets for our named executive officers, our Compensation Committee reviews the relationship between our executive compensation program and the achievement of our financial goals and strategic objectives, with an emphasis on creating a “pay for profitable growth” environment.
 
ROLE OF INDEPENDENT COMPENSATION CONSULTANT
 
Our Compensation Committee has the authority to retain compensation consultants and other advisors to assist it in fulfilling its duties and responsibilities and has directly retained FW Cook—a nationally recognized, independent executive compensation consulting firm—to provide it with objective analysis, recommendations on plan design, competitive market data and other advice and information related to CEO and COO compensation and the compensation of other executive officers. (FW Cook also served in a comparable capacity for the L3 Compensation Committee prior the Merger.) FW Cook performs these services solely at the direction and under the supervision of our Compensation Committee and does not provide any other services for, or receive other remuneration from, L3Harris.
 
Prior to the Merger, the Harris Compensation Committee had comparable authority and directly retained Pearl Meyer & Partners (“PM”), a nationally recognized, independent executive compensation consulting firm, for similar purposes, and the Harris Governance and Corporate Responsibility Committee separately retained PM to provide it with similar types of analysis, recommendations, advice and information related to the compensation of non-employee directors. PM performed these services solely at the direction and under the supervision of the applicable committee and did not provide any other services for, or receive other remuneration from, Harris. PM’s services in fiscal 2019 included providing recommendations to the Harris Compensation Committee prior to the Merger on the compensation arrangements for our CEO and COO following the Merger.
 
With regard to FW Cook’s services related to CEO and other executive officer compensation, our Compensation Committee has sole authority to modify or approve FW Cook’s remuneration, determine the nature and scope of its services, evaluate its performance, terminate the engagement and engage a replacement or additional consultant at any time. Our Compensation Committee also regularly meets with FW Cook in executive session, without our CEO or other members of management present. Taking into consideration the independence factors in the NYSE listing standards and SEC rules, our Compensation Committee has made the determination that, in its business judgment, FW Cook was independent and that its work did not raise any conflicts of interest.

ROLE OF CEO
 
Our Compensation Committee considers recommendations from our CEO, with input from our COO, in making decisions regarding our executive compensation program and the compensation of our other executive officers. During the annual compensation planning process, our CEO recommends targets for all incentive compensation programs. The targets are based on our Board-approved annual operating plan and long-term strategic plan. As part of the annual performance review process, which includes an assessment of each executive officer’s performance against individual objectives, our CEO, with input from our COO, presents an evaluation of each executive officer’s contributions (including both strengths and development needs), reviews succession plans for each executive position, and recommends specific compensation for the other executive officers, including base salary level adjustments and annual cash incentive and equity awards.
 
Annual Compensation Cycle
 
Our Board and Compensation Committee generally follow an annual compensation cycle with respect to each new fiscal year as described below, and they generally followed that cycle for our abbreviated six-month fiscal transition period, making adjustments as they deemed necessary to accommodate the shorter time frame (for example, approving target compensation values and granting equity awards earlier in the process; and approving annual cash incentive award target values and annual cycle equity award target values at 50% of full-year values). We returned to our typical annual compensation cycle starting with our fiscal year 2020 (which commenced January 4, 2020).
 
With respect to the compensation decisions described below, the independent directors of our Board make all final compensation decisions for our CEO and COO (typically based on the recommendation of our Compensation Committee in both cases), and our Compensation Committee makes them for other executive officers. These decisions include: determining the types and levels of benefits; establishing performance measures, weightings and targets; setting target compensation values; granting equity awards and determining payouts. As noted below in the “Employment Agreements” section of this CD&A, the base salary level, annual cash incentive and annual cycle awards of long-term equity-based incentive compensation for our CEO and COO, as well as the special, one-time integration-related long-term equity-based incentive compensation awards for our CEO and COO, are required to be the same pursuant to our employment agreements with them.

 
L3HARRIS 2020 PROXY STATEMENT  41

     
     
     
COMPENSATION DISCUSSION AND ANALYSIS  OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES
   

 
WHAT WE DO PRIOR TO OR EARLY IN A NEW FISCAL YEAR
 
 

Consider program design changes

Determine what changes, if any, should be made to the executive compensation program for the new fiscal year (after receiving input from our CEO, COO and independent compensation consultant, and an assessment of compensation trends and competitive market data).
 
Set target compensation values
 
The process for setting target compensation values includes a review of:

>  the executive’s three-year compensation history, including base salary level and annual cash incentive and equity awards;

>  the types and levels of other benefits available to the executive, such as change in control severance arrangements; and

>  compensation comparison peer group data or broad compensation market data, including surveys.

Establish performance measures and targets and individual performance objectives

Establish:

>   short- and long-term financial performance measures and their relative weighting and associated targets for


 
 
 
performance-based, at-risk elements of compensation for the new fiscal year; and
 
>  individual performance objectives for each executive and for his or her business unit or organization.
 
These measures, weightings and targets and performance objectives are intended to align with our Board-approved annual operating plan and long-term strategic plan and create a “pay for profitable growth environment” and thereby encourage and reward the creation of sustainable, long-term value for our shareholders.
 
Make equity grants
 
Annual equity award grants to executive officers are made at meetings, the dates for which usually are set one year or more in advance, and annual equity award grants to our other eligible employees typically are made on the same date. We do not time equity grants to take advantage of information, either positive or negative, about us that has not been publicly disclosed.
 
In special circumstances, such as new hires or promotions or for retention or recognition, grants may occur outside of the typical cycle. Under a policy adopted by our Compensation Committee, such grants are made on the first trading day of the month following the hiring, promotion or other event (if this day falls during a “quiet period” under our insider trading policy, then on the first trading day after such period ends).

 
 
WHAT WE DO AFTER THAT FISCAL YEAR ENDS
 
 
 
 
 
 
Conduct performance reviews
 
For our CEO and COO, the independent directors of our Board conduct a performance review, evaluating such executive officer’s achievement of objectives established early in the fiscal year, other accomplishments, overall company performance and such executive officer’s self-evaluation of performance for the fiscal year. This review occurs in executive session, under the leadership of our Compensation Committee Chairperson and without our CEO, COO or other members of management present.
 
>  For our other executive officers, our CEO, with input from our COO, provides our Compensation Committee with specific compensation recommendations based
       
on a review and assessment of each executive officer’s performance, including achievement of objectives established early in the fiscal year for the executive and his or her business unit or organization, contribution to company performance and other accomplishments.
 
Determine payouts
 
Payouts of performance-based, at-risk elements of compensation to executives are determined based on performance reviews relative to pre-determined objectives and formulaic calculations of our financial results for the fiscal year against pre-determined targets, typically after audited financial statements become available approximately two months after the fiscal year end.

 
 
For fiscal 2019, due to the then-impending closing of the Merger, performance reviews were conducted and payouts of performance-based elements of compensation to Harris executive officers were approved on June 28, 2019, immediately before fiscal 2019 ended, instead of after the fiscal year ended as in a typical compensation cycle. For our abbreviated fiscal transition period, which began June 29, 2019 and ended January 3, 2020, in connection with selecting executives for roles in the combined Company after the Merger, target compensation values and equity-based compensation awards for executives were approved within the first month following the completion of the Merger, with equity-based compensation awards granted on August 1, 2019 (the first trading day after our “quiet period” ended, in accordance with our insider trading policy).

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COMPENSATION DISCUSSION AND ANALYSIS  OUR EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES

Competitive Considerations
 
BENCHMARKING
 
Our Board and Compensation Committee set total target direct compensation for our CEO, COO and other executives in their discretion (including based on factors such as experience, position, responsibilities, tenure and contributions), but generally within the range of 20% below to 20% above the median of total target direct compensation for comparable positions in our compensation comparison peer group (to the extent such data is available) and after considering other broad compensation market data, including surveys. For our fiscal transition period, our Human Resources Department performed a comprehensive assessment and benchmarking of the competitive compensation positioning of our CEO, COO and other executive officers and the mix and elements of their compensation, primarily focusing on our compensation comparison peer group, but also using broad general industry and aerospace and defense compensation market data. For our fiscal transition period, our Compensation Committee also engaged FW Cook to review, assess and validate our Human Resources Department’s assessment and benchmarking process.
 
COMPENSATION COMPARISON PEER GROUP
 
Our compensation comparison peer group is used to assess the competitiveness of the compensation of our CEO, COO and other executive officers. We seek to include companies that compete with us for executive talent and are similar to us in industry, business model, revenue and/or market capitalization. Our Compensation Committee periodically reviews the composition of this peer group and makes changes it determines are appropriate based on changes to our businesses or to the attributes of companies in the group or the availability of their compensation data. Our independent compensation consultant, our CEO, our COO and management provide input to our Compensation Committee regarding changes to the attributes of peer companies.
 
Compensation Comparison Peer Group for Fiscal Transition Period and 2020
 
(Companies added shown in red)
 
Eaton Corporation plc
Lockheed Martin Corporation
Rockwell Automation, Inc.
Emerson Electric Co.
Motorola Solutions, Inc.
Spirit AeroSystems Holdings, Inc.
General Dynamics Corporation
Northrop Grumman Corporation
Textron Inc.
Honeywell International Inc.
Parker Hannifin Corporation
United Technologies Corporation
Leidos Holdings, Inc.
Raytheon Company
 
 
Our compensation comparison peer group for our fiscal transition period initially was proposed by Aon, subsequently was reviewed and endorsed by FW Cook and PM in support of their respective work for the L3 and Harris Compensation Committees prior to the Merger, and was approved by the L3 and Harris Compensation Committees, in connection with L3 and Harris entering into the Merger Agreement and the employment arrangements with Messrs. Brown and Kubasik. The changes to our compensation comparison peer group for our fiscal transition period (compared with the previous compensation comparison peer group for Harris) were based on the larger size of our combined Company and refreshed business model following the Merger, with companies added shown in red in the table above and the following companies removed:
 
>
Companies removed: Curtiss-Wright Corporation, Huntington Ingalls Industries, Inc., L3 Technologies, Inc., Orbital ATK, Inc., Rockwell Collins, Inc., Teledyne Technologies Incorporated and TransDigm Group Incorporated.
 
Companies added to the group compete with L3Harris for executive talent and are similar to L3Harris following the Merger in industry, business model, revenue and/or market capitalization. Companies removed from the group generally were removed due to acquisitions by other companies, evolving business disparity or evolving revenue or market capitalization disparity.
 
In August 2019, our Compensation Committee approved the same compensation comparison peer group for fiscal 2020 as was approved for our fiscal transition period.

 
L3HARRIS 2020 PROXY STATEMENT  43

     
     
     
COMPENSATION DISCUSSION AND ANALYSIS  OVERVIEW OF OUR MAIN EXECUTIVE COMPENSATION ELEMENTS
   

OVERVIEW OF OUR MAIN EXECUTIVE
COMPENSATION ELEMENTS

The compensation program for our executive officers primarily consists of the following elements:
 
>
base salary;

>
annual cash incentive award compensation; and

>
equity-based long-term incentive compensation.
 
As noted above, the overall objective of our compensation program is to encourage and reward the creation of sustainable, long-term shareholder value. Our Compensation Committee believes that the current elements of our executive compensation program further this objective. They directly align the interests of our executives and shareholders, are competitive, motivate achievement of our short- and long-term financial goals and strategic objectives and align realized pay with performance.
 
We do not have a formal policy relating to the mix among the various elements of our compensation program. However, we believe that the greater an executive’s responsibility level and ability to influence results, the greater the portion of his or her overall compensation that should be performance-based, at-risk compensation.
 
The equity-based long-term incentive compensation we granted in our fiscal transition period included restricted stock unit awards as part of our annual compensation cycle, as well as special, one-time integration-related awards consisting of performance share units and performance stock options. These awards are discussed in more detail below in this CD&A. For 2020, we returned to our more typical mix of types of equity-based awards for our annual long-term incentive compensation element—performance share units, stock options and restricted stock units.
 
Base Salary
 
Base salary reflects a fixed, stable portion of the overall compensation package and also generally serves as the base amount from which other compensation elements are determined. It represents a relatively small percentage of total target direct compensation, particularly for executive officers with greater responsibility and ability to influence results.
 
Our Compensation Committee reviews executive base salary levels prior to or early in each fiscal year and whenever there is a substantial change in an executive’s responsibilities or in market conditions. It generally targets an executive officer’s base salary level to fall between 20% below and 20% above the market median for comparable positions at companies in our compensation comparison peer group, and considers other relevant market data, including surveys. However, an executive’s base salary level also is influenced by his or her experience, position, responsibilities, tenure, contributions and individual performance, as well as current business conditions and our business outlook.
 
Annual Cash Incentive
 
We provide our executive officers the opportunity to earn annual cash incentive compensation under our Annual Incentive Plan. Awards under this plan are structured to provide payouts ranging from 0% to 200% of pre-established award target values, depending on:
 
>
our performance against specific pre-determined financial performance measures; and

>
named executive officer performance against pre-determined individual objectives and contribution to our overall results.

For executives, this structure creates:

>
the upside potential of above-target payouts if our financial performance is above target; and

>
the downside risk of below-target payouts if our financial performance is below target.
 
Through this structure, the annual cash incentive motivates our executives to focus on achieving or exceeding pre-determined financial performance measure targets and individual objectives strategically chosen to align with the interests of our shareholders.
 
SETTING AWARD TARGET VALUES
 
As described above in “Annual Compensation Cycle,” early in the fiscal year, an annual cash incentive compensation award target value is set for each executive officer. For the named executive officers, these target values generally are set as a percentage of base salary level, using as a reference point either compensation comparison peer group data (if such data is available for a comparable position) or broad compensation market data, including surveys. The independent directors of our Board (based on the recommendation of our Compensation Committee) set target values for our CEO and COO, and our

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COMPENSATION DISCUSSION AND ANALYSIS  OVERVIEW OF OUR MAIN EXECUTIVE COMPENSATION ELEMENTS

Compensation Committee sets them for other executive officers. (As noted above, target values for our fiscal transition period were 50% of full-year values, reflecting the 6-month duration of our fiscal transition period.)
 
ESTABLISHING METRICS AND INDIVIDUAL PERFORMANCE OBJECTIVES
 
Also early in the fiscal year, specific financial performance measures and their relative weighting and associated targets and thresholds are established, as well as individual performance objectives for each executive officer. Again, the independent directors of our Board (in the case of our CEO and COO) and our Compensation Committee (in the case of other executive officers) establish these metrics and objectives.
 
As a general principle, we seek to establish targets for financial performance measures that are aligned with our annual operating plan and are challenging yet achievable. Targets are set at levels we believe require significant effort on the part of executives, yet also represent a reasonable expectation of financial results based on prior-year performance, existing business conditions, the markets in which we participate and our outlook.
 
DETERMINING PAYOUTS
 
The independent directors of our Board (in the case of our CEO and COO) and our Compensation Committee (in the case of other executive officers) determine and approve payouts of performance-based, cash incentive compensation under our Annual Incentive Plan, based on formulaic calculations of our financial results against pre-determined financial performance measure targets, as well as performance reviews relative to pre-determined objectives for the fiscal year. Pre-determined objectives generally emphasize ethics; compliance and safety; operational excellence; talent; engagement; diversity and inclusion; and environmental, social and governance focus areas. Payout determinations typically occur after audited financial statements become available (approximately two months after the end of each fiscal year). In certain instances, as permitted under our Annual Incentive Plan, financial performance measure targets and our actual results may be adjusted in recognition of unusual or nonrecurring events affecting us or our financial statements, such as items that are determined not to be reflective of normal, ongoing business operations. At the request of the Chairperson of our Audit Committee, our Internal Audit Department independently verifies calculations for Annual Incentive Plan payouts.
 
For corporate executives, payouts are based 100% on consolidated L3Harris results; for segme