| 2022-2024 PERFORMANCE SHARE UNIT TARGETS AND RESULTS ARE PUBLISHED
TRANSPARENTLY AND RETROSPECTIVELY WHILE PROTECTING COMPETITIVELY
SENSITIVE INFORMATION
In our long-term incentive plans, balancing transparency with protecting competitive interests is crucial. This reflects the realities in
an industry that is characterized by short-term funding mechanisms enacted by Congress. On March 15, 2025, the President signed
into law a full-year Continuing Resolution (CR), comprising the third and final CR for GFY 2025. The CR provides funding at the account
level, not the program level, creating uncertainty as to program funding. The bill also provides authority for “new starts” but only if
the program was funded in either the House or Senate GFY 2025 appropriations bill. While we value providing our shareholders with
meaningful information, we have strategically decided not to disclose forward-looking targets on our long-term financial performance
measures in our Proxy Statements, in part because of the current nature of the funding process. We also provided relevant rationale in
our 2025 Proxy Statement (p. 34), including competitive advantage, market sensitivity, confidential business information, and a focus on
performance outcomes. This approach is largely consistent with what we observe in our peer group disclosures.
We disclose the forward-looking performance measures, performance ranges, and resulting payout ranges, all of which were reiterated
for the 2022-2024 cycle awards in our most recently issued Proxy Statements (both 2025 and 2024 Proxy Statements, p. 34 and
p. 46, respectively). Following the end of the performance period, we retrospectively disclose numerical financial performance targets to
provide full transparency and ensure our shareholders can assess the rigor of our performance goals. The vesting details of the 2022-
2024 performance share units cycle, as explained in our 2025 Proxy Statement (p. 34), are as follows:
i TSR refers to Total Shareholder Return.
ii “Merger” refers to the all-stock merger completed on June 29, 2019 involving Harris Corporation (“Harris”) and L3 Technologies, Inc., with Harris changing its name to L3Harris
Technologies, Inc.
iii The $8.1M value is calculated by adding the total number of shares underlying restricted stock units from the 2022 long-term incentive award, plus the number of shares awarded at the end of
the performance period from vested 2022-2024 performance share units, and multiplying such total number of shares by the 2024 fiscal year-end stock price of $209.75. Outstanding options
from the 2022 long-term incentive award have an exercise price of $233.51 per share and at 2024 fiscal year-end were underwater, and therefore had no value.
iv “EPS” refers to non-GAAP net income per diluted common share attributable to L3Harris common shareholders. EPS is a non-GAAP financial measure. See Appendix A in the Proxy Statement for
reconciliations of GAAP to non-GAAP financial measures.
v “Adjusted EBIT” refers to earnings before interest and taxes, adjusted as set forth in Appendix A in the Proxy Statement. Adjusted EBIT is a non-GAAP financial measure. See Appendix A in the
Proxy Statement for reconciliations of GAAP to non-GAAP financial measures.
vi “Average ROIC” refers to 3-year average return on invested capital, calculated as set forth in Appendix A in the Proxy Statement. Average ROIC is a non-GAAP financial measure. See Appendix A
in the Proxy Statement for reconciliations of GAAP to non-GAAP financial measures.
Financial Performance
Measures Weighting Threshold
(50%)
Target
(100%)
Maximum
(200%)
Result Relative
to Target
Resulting
Payout %
Weighted
Payout %
3-year Average ROIC 50 % 12.8 % 16.0 % 19.2 % 113.0 % 164.8 %
108.6 %
3-year Cumulative EPS 50 % $38.17 $42.41 $46.65 90.5 % 52.3 %
TSR vs. S&P 500 Modifier 20th Percentile 50th Percentile 80th Percentile 96.0 % -1.3 % -1.3 %
2022-2024 Performance Share Units Awarded to Executives (% of Target) 107.1 %
In light of the above, the Board of Directors and Compensation Committee believe
that our target total compensation levels align with peers in our industry, and 2024
payouts show that our compensation program is working as intended to promote
pay-for-performance and align our executive compensation with shareholder
interests. This is why the Board of Directors recommends voting “FOR” approval
of the Compensation of our Named Executive Officers.
FORWARD LOOKING STATEMENTS
This Executive Compensation Supplement contains forward-looking statements within the meaning of federal securities laws made in
reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include, but are not limited to,
statements about realizable pay; future financial performance; future payouts and future results of our executive compensation program;
government funding; financial projection of other financial items; and assumptions underlying any of the foregoing. Persons reading
this Executive Compensation Supplement are cautioned not to place undue reliance on forward-looking statements. The Company’s
consolidated results, future trends and forward-looking statements could be affected by many factors, risks and uncertainties, including
but not limited to those in “Risk Factors” in our Form 10-K for fiscal 2024, available on our investor relations webpage at www.l3harris.
com/investors. Forward-looking statements are made as of the date of this presentation, and the Company disclaims any intention or
obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future
events, or otherwise. |
