01—Abstract
Summary
Summary of the 8-K filed August 2, 2016. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies (formerly Harris Corporation) announced a Cooperation Agreement with activist investor JANA Partners LLC, dated July 29, 2016.
This agreement outlines a collaborative process to appoint two new, mutually acceptable independent directors to the company's Board of Directors. The appointment is expected to occur before September 8, 2016, and these new directors will be nominated for election at the upcoming 2016 Annual Meeting of Shareholders. This development suggests a resolution to potential governance concerns raised by JANA Partners, aiming to enhance board oversight and potentially influence strategic direction.
The agreement details specific qualifications for the new directors, ensuring they are independent of JANA and meet NYSE listing standards. It also outlines provisions for replacements should a new director be unable to serve, contingent on JANA maintaining a minimum ownership threshold.
In exchange for this cooperation, JANA has agreed to a standstill period, restricting its ability to engage in certain shareholder activism activities, such as proxy solicitations or making unsolicited proposals for extraordinary transactions. The company's board size will temporarily increase to accommodate the new directors.
02—Key points
Key Highlights
- Harris Corporation entered into a Cooperation Agreement with JANA Partners LLC on July 29, 2016.
- The agreement mandates the appointment of two new independent directors to the Board of Directors, mutually acceptable to both parties.
- The identification and appointment of these new directors are expected to be completed before September 8, 2016.
- The new directors will be nominated by the Board for election at the 2016 Annual Meeting of Shareholders.
- The Board size will temporarily increase from 12 to 13 directors to accommodate the new appointments.
- JANA Partners LLC has agreed to a standstill period, limiting its activism activities during this time.
- The agreement aims to resolve potential governance disputes and foster collaboration between the company and JANA Partners.
03—Questions
Frequently Asked Questions
What is the main purpose of the Cooperation Agreement between Harris Corporation and JANA Partners LLC?
The main purpose of the Cooperation Agreement is to collaboratively appoint two new independent directors to Harris Corporation's Board of Directors. This aims to address JANA Partners' concerns and ensure a smooth transition and enhanced governance through mutual agreement on board composition.
What are the key obligations of JANA Partners LLC under this agreement?
Under the agreement, JANA Partners LLC must agree on two mutually acceptable independent director candidates with Harris Corporation. They have also agreed to a 'standstill period' during which they will not engage in certain shareholder activism actions, such as soliciting proxies, forming new groups, proposing extraordinary transactions, or making public statements that disparage the company.
What are the implications for Harris Corporation's Board of Directors?
The Board of Directors will increase in size from 12 to 13 members immediately prior to the appointment of the first new director. Both new directors will be nominated for election at the 2016 Annual Meeting, and the company will ensure they are appointed to at least two board committees if requested by JANA.
What is the 'Standstill Period' and when does it end?
The Standstill Period begins on July 29, 2016, and ends on the earlier of (1) a material breach of the agreement by Harris Corporation that is not cured within 15 days, or (2) 30 days prior to the expiration of the company's advance notice period for director nominations for its 2017 Annual Meeting. During this period, JANA's activist actions are restricted.
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