L3Harris Technologies announced that its Board of Directors has appointed Kirk S. Hachigian, former Chair and CEO of JELD-WEN Holding, Inc. and Cooper Industries plc., and William H. (“Bill”) Swanson, retired Chair and CEO of Raytheon Company, to its Board effective immediately. In addition, the Board intends to appoint an additional independent director in 2024.
Consistent with the company’s commitment to shareholder value creation and supporting the work already well underway, the Board will establish an ad hoc Business Review Committee, which will undertake a review of L3Harris’ operational performance, cost structure, portfolio composition and all available value creation levers. The committee’s review is expected to be completed in 2024. Current director Roger Fradin and Bill Swanson will Co-Chair the committee, and the additional members of the committee will include Kirk Hachigian and current director Rita Lane. L3Harris’ Former Executive Chair and CEO William M. (“Bill”) Brown will serve as a Special Advisor to the committee. The company will also adjust its long-term incentive compensation plan, which currently uses relative total shareholder return as a modifier, to incorporate relative total shareholder return as a core metric for performance share units.
In connection with these announcements, the company has entered into a cooperation agreement with funds affiliated with the D. E. Shaw group, which is currently one of the company’s largest investors. Pursuant to the agreement, the D. E. Shaw group and the L3Harris Board will agree on the additional independent director to be added to the Board in 2024. The D. E. Shaw group has also agreed to customary voting and standstill provisions.
“I welcome Kirk Hachigian and Bill Swanson to our Board as we advance our transformation into a stronger, more focused company poised to drive sustainable shareholder value,” said Christopher E. Kubasik, Chair and Chief Executive Officer of L3Harris. “The full Board appreciates the constructive engagement of the D. E. Shaw group and looks forward to benefitting from the perspectives of our newest independent directors at this time.”
Kubasik added, “We continue to take purposeful action as we implement our strategy to become a national security and technology-focused company. To that end, we recently appointed industry-veteran Ken Bedingfield as our CFO and announced the divestiture of our non-core Commercial Aviation Solutions business. Our team is excited to discuss the actions underway to further streamline and optimize our portfolio, deliver on our cost-savings goals, maintain disciplined capital allocation, accelerate operating income and grow free cash flow per share. We are confident these initiatives will put us on a path to create value for our shareholders, which we look forward to discussing in more detail tomorrow at Investor Day.”
“We appreciate the positive and constructive dialogue we have had with the L3Harris Board, and are supportive of the actions being taken by Chris, the Board and the management team to strengthen L3Harris,” said Michael O’Mary, Managing Director of D. E. Shaw & Co., L.P. “L3Harris is a leader in its core business, and we believe that today’s Board enhancements – along with the Board’s commitment to thoroughly review the Company’s business and optimize its portfolio, performance, and operations – positions L3Harris to deliver significant and sustainable value for its shareholders. We look forward to the company providing further information on its core initiatives, margin targets and capital allocation framework at its Investor Day tomorrow.”
With the addition of Kirk Hachigian and Bill Swanson to the Board, the L3Harris Board will comprise 14 directors, 13 of whom will be independent, and six of whom will have been appointed since 2021.
