By L3Harris Technologies, a leading defense contractor, has announced that its board will conduct an extensive review of its business operations and make necessary adjustments to its incentive-compensation plans. This decision follows the company’s agreement with D.E. Shaw, one of its largest shareholders.
As part of this strategic move, L3Harris has appointed two new board members: Kirk Hachigian, the former CEO of JELD-WEN Holding, and Bill Swanson, former CEO of Raytheon. Additionally, the company plans to appoint another director next year, in consultation with D.E. Shaw.
To facilitate the review process, L3Harris will establish an ad hoc committee comprising Swanson, Roger Fradin (another director), and special advisor Bill Brown (former CEO). This committee will thoroughly examine the company’s operational performance, cost structure, portfolio composition, and explore all possible avenues for value creation. The comprehensive review is projected to conclude by 2024.
As part of its commitment to enhancing shareholder value, L3Harris will also modify its long-term incentive compensation plan. It will prioritize relative total shareholder return as a core metric for performance share units, rather than merely a modifier.
This announcement follows L3Harris’ recent agreement to sell its Commercial Aviation Solutions business to private-equity firm TJC for a potential sum of $800 million. The company has also recently appointed a new chief financial officer.
D.E. Shaw’s managing director, Michael O’Mary, expressed the firm’s support for L3Harris’ proactive measures.
Despite facing challenges this year, with shares down approximately 6%, L3Harris remains confident in its ability to thrive in the ever-evolving defense industry.
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