8-KLeadership ChangesOther EventsExhibits & Filings

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Executive Changes (Feb 23, 2024)

Filed February 23, 2024For Securities:LHX

Summary

L3Harris Technologies (LHX) filed an 8-K on February 23, 2024, detailing a severance protection letter agreement with its CEO, Christopher E. Kubasik. This agreement, approved by the Board, provides severance benefits similar to the Company's Executive Change in Control Severance Plan, but with a reduced 'severance multiple' of 2 (instead of 3) and pro-rata bonus based on actual performance for terminations without cause or for good reason outside of a change-in-control period but before March 31, 2028. Additionally, the filing disclosed that Mr. Kubasik has established a Rule 10b5-1 trading plan to exercise vested stock options granted in 2016 and sell the underlying shares. This plan aims to comply with regulatory requirements and the Company's insider trading policies, with sales to occur between May and June 2024, subject to specific price thresholds. These actions provide clarity on executive compensation arrangements and potential future stock transactions.

Key Highlights

  • 1CEO Christopher E. Kubasik has a new severance protection letter agreement outlining benefits for termination without cause or for good reason outside of a change-in-control period.
  • 2The agreement provides severance benefits substantially similar to the Executive Change in Control Severance Plan, but with a reduced 'severance multiple' (2x base salary and target bonus, down from 3x).
  • 3Pro-rata bonus payments under the new agreement will be based on actual company performance, not target performance.
  • 4The agreement includes provisions for pro-rata vesting of equity awards granted after February 23, 2024, if terminated without cause or for good reason during the specified non-change-in-control protection period (until March 31, 2028).
  • 5CEO Kubasik established a Rule 10b5-1 trading plan to exercise and sell 76,190 vested stock options granted in 2016, which expire in 2026.
  • 6These option exercises and sales under the 10b5-1 plan are scheduled to occur between May and June 2024, subject to minimum price thresholds.
  • 7Mr. Kubasik has agreed to non-competition and non-solicitation covenants for two years post-employment.

Frequently Asked Questions

The agreement is designed to provide customary severance benefit protection to CEO Christopher E. Kubasik, particularly after his previous termination protection period expired. It outlines the terms and benefits he would receive in case of termination without cause or for good reason under specific circumstances, ensuring a level of financial security.

While generally similar to the Company's Executive CIC Severance Plan, the new agreement has two key differences for terminations occurring outside of a CIC period but before March 31, 2028. The 'severance multiple' for base salary and target bonus is reduced to 2 (from 3), and any pro-rata bonus payment will be based on actual financial performance instead of target performance.

The Rule 10b5-1 plan allows Mr. Kubasik to pre-arrange the sale of company shares acquired through the exercise of vested stock options. This is done to comply with SEC regulations (Rule 10b5-1) and the company's insider trading policies, ensuring that such transactions are not based on material non-public information and are executed during the company's open trading window.

The plan covers vested options granted in 2016 that expire in 2026. The sales of shares underlying these options are scheduled to begin in May 2024 and conclude no later than June 13, 2024, subject to minimum price thresholds set within the plan.