Summary
This 8-K filing from L3Harris Technologies (formerly Harris Corporation) details compensation actions approved for its named executive officers for fiscal year 2017. The primary focus is on payouts under the Annual Incentive Plan and the Equity Incentive Plan. These payouts are based on the achievement of pre-established financial performance measures, including operating income, free cash flow, and revenue for the annual plan, and cumulative operating income and return on invested capital for the three-year equity plan. Adjustments were made to performance targets to account for significant corporate actions such as the acquisition of Exelis Inc. and divestitures of the government IT services and Harris CapRock Communications businesses.
Key Highlights
- 1Compensation for key executive officers for fiscal year 2017 has been finalized and approved.
- 2Payouts are tied to specific financial performance metrics set at the beginning of the fiscal year and performance period.
- 3William M. Brown, CEO, received the largest cash payout of $2,100,000 under the Annual Incentive Plan.
- 4Equity Incentive Plan payouts, in the form of performance share units, were approved for a three-year performance period (FY2015-FY2017).
- 5William M. Brown is set to receive 33,953 performance share units, with other named officers receiving smaller amounts.
- 6Performance targets were adjusted to reflect significant corporate events, including acquisitions (Exelis Inc.) and divestitures (government IT services, Harris CapRock).
- 7The compensation actions were approved by the independent directors of the Board and the Management Development and Compensation Committee.
Frequently Asked Questions
For the Annual Incentive Plan, payouts were based on Company consolidated operating income (40% weight), free cash flow (40% weight), and revenue (20% weight). For the Equity Incentive Plan covering the 2015-2017 performance period, payouts were based on the Company’s three-year cumulative operating income and average annual return on invested capital, each weighted equally. Total shareholder return was also a factor for potential upward or downward adjustment of equity payouts.
The performance targets were adjusted to account for significant corporate actions. Specifically, the acquisition of Exelis Inc. in fiscal 2015 and the divestitures of the government IT services business and Harris CapRock Communications commercial business in fiscal 2017 were factored into the achievement calculations for both the annual and equity incentive plans.
The named executive officers mentioned in this filing who received payouts are William M. Brown (Chairman, President and Chief Executive Officer), Rahul Ghai, Christopher D. Young, Sheldon J. Fox, and Dana A. Mehnert.
The performance share unit payouts represent the culmination of a three-year performance period (FY2015-FY2017). These payouts are based on the company's achievement of long-term financial goals and relative shareholder return, providing a long-term incentive for the named executive officers.