What is the main reason for these changes to Mr. Lance's compensation and benefits?

The primary reason for the changes is to ensure compliance with Section 409A of the Internal Revenue Code, which imposes strict rules on nonqualified deferred compensation plans. The company is also updating other terms not directly related to Section 409A.

What severance benefits would Mr. Lance receive if terminated without cause?

If terminated by Harris without Cause, or if Mr. Lance resigns for Good Reason (and has executed a release of claims), he is entitled to a lump sum payment equal to two times his annual base salary plus his target incentive compensation for the prior fiscal year. He would also receive prorated bonus for the year of termination, continued health benefits for 24 months, extended vesting and exercisability of equity awards, and prorated performance share awards.

How do the new agreements address the company's pension plan for Mr. Lance?

The Supplemental Pension Plan has been amended and restated to comply with Section 409A. It outlines specific benefits for retirement at age 60, retirement after age 60, early retirement (at age 55 with 10 years of service), termination without cause or for good reason, disability, and death. The benefits are calculated based on Mr. Lance's "Final Pay" (salary and target incentive) and years of credited service, with potential reductions based on age or offset by disability payments.

Are there any non-compete or non-solicitation clauses in these new agreements?

Yes, both the new Letter Agreement and the Restated Supplemental Pension Plan include non-compete and non-solicitation provisions. These restrict Mr. Lance from associating with competitive enterprises and soliciting customers or employees for specified periods following termination of employment.

LHX 8-K: Leadership Changes

Summary

This 8-K filing from L3Harris Technologies (formerly Harris Corporation) details significant changes to the executive compensation and benefits arrangements for its Chairman, President, and CEO, Howard L. Lance. The primary driver for these changes is to ensure compliance with Section 409A of the Internal Revenue Code, which governs nonqualified deferred compensation. These adjustments, effective January 1, 2009, are formalized through a new Letter Agreement and an Amended and Restated Supplemental Pension Plan. The revised arrangements outline specific terms for termination, including severance packages for termination without cause or for good reason, which are generally more favorable than previous agreements. The supplemental pension plan has also been updated to define retirement benefits, early retirement provisions, and benefits in the event of disability or death, while also incorporating Section 409A compliance and new non-compete/non-solicitation clauses. Investors should note the specific terms regarding severance multiples, benefit calculations, and the potential six-month delay in payments for "specified employees" under Section 409A.

Key Highlights

1Harris Corporation is updating executive compensation and benefits for CEO Howard L. Lance to comply with Section 409A of the Internal Revenue Code.
2A new Letter Agreement, effective January 1, 2009, replaces the previous 2004 agreement and governs Mr. Lance's employment terms.
3In case of termination without Cause or resignation for Good Reason, Mr. Lance is entitled to severance equivalent to two times his base salary plus target incentive compensation.
4The revised agreement also includes provisions for continued health benefits for 24 months post-termination and extended vesting/exercisability of stock options and restricted stock.
5Performance share awards will have prorated vesting calculated based on a deemed termination date two years after actual termination in qualifying events.
6An Amended and Restated Supplemental Pension Plan details retirement, early retirement, disability, and death benefits, with specific calculations based on "Final Pay" (salary plus target incentive).
7Both agreements incorporate non-compete and non-solicitation clauses, with specific durations tied to employment status and severance received.
8All deferred compensation payments are subject to a potential six-month delay if Mr. Lance is considered a 'specified employee' under Section 409A.

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Executive Changes (Dec 24, 2008)

Summary

Key Highlights

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