PAGE 1
--------------------------------------------------------------------------
RAYTHEON
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 24, 1995
The Annual Meeting of Stockholders of Raytheon Company will be held at
Raytheon's Executive Offices, 141 Spring Street, Lexington, Massachusetts
02173, at 2:00 p.m. on Wednesday, May 24, 1995 for the following purposes:
1. To elect four directors for a term of three years.
2. To approve the Raytheon Company 1995 Stock Option Plan.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 4, 1995 are
entitled to notice of and to vote at the meeting.
Please sign your proxy and return it in the enclosed, postage-paid
envelope so that you may be represented at the meeting. If you attend the
meeting and wish to vote by ballot, your proxy will be cancelled.
By order of the Board of Directors,
CHRISTOPH L. HOFFMANN
Secretary
Lexington, Massachusetts 02173
April 18, 1995<PAGE>
PAGE 2
RAYTHEON COMPANY
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 24, 1995
This Proxy Statement and the enclosed proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors of
Raytheon Company (the "Company") from holders of the Company's common
stock, par value $1.00 per share ("Common Stock"), for use at the Annual
Meeting of Stockholders to be held May 24, 1995, and at any adjournment
thereof, for the purposes set forth in the accompanying notice. The Company
will bear all costs relating to the solicitation of proxies from its
stockholders. In addition to soliciting proxies by mail, the Company's
officers and employees, without receiving additional compensation, may
solicit proxies by telephone, by telegram or in person. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable out-of-pocket expenses incurred by them in sending the proxy
materials to beneficial owners of Common Stock.
This Proxy Statement is first being sent to stockholders on or about
April 18, 1995.
All shares of Common Stock represented by properly signed and dated
proxies received by the Company prior to the meeting will, unless such
proxies have been revoked, be voted in accordance with the instructions on
such proxies. If no instruction is indicated, the shares will be voted FOR
the election of the four nominees for director listed in this Proxy
Statement, FOR the proposal to adopt the Raytheon Company 1995 Stock Option
Plan and, in the discretion of the persons named in the proxy, on such
other matters as may properly come before the meeting. Any stockholder who
has given a proxy may revoke such proxy at any time before it is voted at
the Annual Meeting by delivering to the Secretary written notice of
revocation or a duly executed proxy bearing a later date or by attending
the meeting and voting in person.
If a stockholder is a participant in the Company's Stock Ownership Plan
or Savings and Investment Plan, the proxy will represent the number of
shares allocated to the participant's account under the plan(s). For those
shares held in the plans, the proxy will serve as a direction to the plan
trustee as to how the shares are to be voted.
All votes, whether by proxy or ballot, will be tabulated by an
independent business entity, which will not disclose the vote of any
stockholder except as is (i) required by law, (ii) necessary in connection
with a judicial or regulatory action or proceeding, (iii) necessary in
connection with a contested proxy or consent solicitation, or (iv)
requested by the stockholder casting such vote. Any comment written on a
proxy card will be provided to the Secretary without disclosing the
stockholder's vote unless necessary to an understanding of the comment.
Abstentions and broker non-votes will be tabulated in determining the
presence of a quorum, but will be treated as votes withheld with respect
to matters submitted to a vote.<PAGE>
PAGE 3
VOTING SECURITIES
The record date for the determination of stockholders entitled to vote
at the meeting is the close of business on April 4, 1995, at which time the
Company had issued and outstanding 123,096,455 shares of Common Stock.
Each share is entitled to one vote with respect to all matters which may be
properly submitted to a vote of stockholders at the Annual Meeting.
ELECTION OF DIRECTORS
(Item 1)
The Company's Restated Certificate of Incorporation provides that its
Board of Directors shall be divided into three classes, each class being as
nearly equal in number as possible, and that at each Annual Meeting of
Stockholders the successors to the Directors whose terms expire that year
shall be elected for a term of three years.
To be elected as a director, each nominee must receive the favorable
vote of a plurality of the shares represented and entitled to be voted at
the meeting. Unless otherwise directed, proxies received pursuant to this
solicitation will be voted for the election of the four nominees listed
below who have been designated by the Board of Directors. If, on account of
death or unforeseen contingencies, any of these persons is unavailable for
election, the proxies will be voted for a substitute nominee designated by
the Board of Directors.
Nominees for the Class of Directors Whose Terms Expire in 1998
CHARLES F. ADAMS
Director, 1938 to 1942 and since 1946. Retired Chairman of the Board,
Raytheon Company. Age 84.
THEODORE L. ELIOT, JR.
Director since 1983. Dean Emeritus of the Fletcher School of Law and
Diplomacy, Tufts University; former U.S. Ambassador. Principal Business:
International Relations. Age 67. Director: Neurobiological Technologies,
Inc. and Fiberstars, Inc.
JAMES N. LAND, JR.
Director since 1978. Principal Business: Corporate Financial Advisor. Age
65. Director: E.W. Blanch Holdings, Inc.
DENNIS J. PICARD
Director since 1989. Chairman of the Board and Chief Executive Officer
since March 1, 1991. Prior thereto, Mr. Picard served as President from
1989 and as Senior Vice President, General Manager of the Missile Systems
Division from 1983. Age 62. Director: State Street Boston Corporation.<PAGE>
PAGE 4
Directors Whose Terms of Office Continue
FRANCIS H. BURR
Director since 1977. Term expires 1997. Of Counsel, law firm of Ropes &
Gray. Principal Business: Law. Age 80.
FERDINAND COLLOREDO-MANSFELD
Director since 1987. Term expires 1996. Chairman and Chief Executive
Officer, Cabot Partners since October, 1990. Prior thereto, Mr.
Colloredo-Mansfeld was Chairman and Chief Executive Officer, Cabot, Cabot &
Forbes Realty Advisers, Inc. (predecessor of Cabot Partners) and Chairman,
Chief Executive Officer and President of Cabot, Cabot and Forbes from 1986.
Principal Business: Real Estate Investment and Management. Age 55.
Director: Shawmut National Corporation; Data General Corporation.<PAGE>
PAGE 5
BARBARA B. HAUPTFUHRER
Director since 1987. Term expires 1996. Principal Business: Corporate
Director. Age 66. Director: The Vanguard Group of Investment Companies and
each of the mutual funds in the Group; The Great Atlantic and Pacific Tea
Co., Inc.; Knight-Ridder, Inc.; Massachusetts Mutual Life Insurance
Company; Alco Standard Corporation.
RICHARD D. HILL
Director since 1974. Term expires 1996. Retired Chairman, Bank of Boston
Corporation and The First National Bank of Boston. Principal Business:
Corporate Director. Age 75.
THOMAS L. PHILLIPS
Director since 1962. Term expires 1997. Retired Chairman of the Board and
Chief Executive Officer, Raytheon Company. Age 70. Director: John Hancock
Mutual Life Insurance Company; Knight-Ridder, Inc.; Digital Equipment
Corporation; Systems Research and Applications. Trustee: State Street
Research Funds; MetLife-State Street Funds.
WARREN B. RUDMAN
Director since September 1993. Term expires 1997. Partner, law firm of
Paul, Weiss, Rifkind, Wharton and Garrison since January 1992. Principal
Business: Law. Prior thereto, Mr. Rudman served as a United States Senator
from 1980 through January 1992. Age 64. Director: Chubb Corporation;
several mutual funds managed by Dreyfus Corporation.
JOSEPH J. SISCO
Director since 1977. Term expires 1997. Partner, Sisco Associates.
Principal Business: Management Consultant. Age 75. Former President of
American University and Undersecretary of State for Political Affairs.
Director: Tenneco Inc.; Braun AG; The Interpublic Group of Companies, Inc.
ALFRED M. ZEIEN
Director since 1992. Term expires 1996. Chairman of the Board and Chief
Executive Officer of The Gillette Company since 1991. Prior thereto, Mr.
Zeien served as President of Gillette from 1991 and as Vice Chairman,
Gillette International/Diversified Operations from 1988. Principal
Business: Consumer Goods and Services. Age 65. Director: Bank of Boston;
The Gillette Company; Polaroid Corporation; Massachusetts Mutual Life
Insurance Company; Repligen Corporation.
Other Arrangement
On April 2, 1995 the Company entered into an Agreement and Plan of
Merger providing for the merger of E-Systems, Inc. into a wholly owned
subsidiary of the Company following the Company's successful cash tender<PAGE>
PAGE 6
offer for E-Systems's shares. In the Merger Agreement the Company has
agreed that following the merger, A. Lowell Lawson, Chairman and Chief
Executive Officer of E-Systems, will be elected to the Company's Board of
Directors to serve for a term expiring at the 1998 Annual Meeting of
Stockholders.
Mr. Lawson, age 57, has been Chairman of the Board and Chief Executive
Officer of E-Systems since 1994. Mr. Lawson also is President of E-
Systems, a position he has held since 1989.
Mr.Lawson is not a nominee for election at this Annual Meeting of
Stockholders as his election is contingent upon the consummation of the
merger.
SECURITY OWNERSHIP
Directors and Executive Officers
As of February 28, 1995, the following directors and named executive
officers and the directors and all executive officers as a group were the
beneficial owners (as defined by the Securities and Exchange Commission) of
the number of shares of Common Stock indicated below:
Number of Shares
Beneficial Owner and Nature of Percent
or Group Beneficial Ownership of Class
--------------- -------------------- --------
Charles F. Adams 635,456(1) *
Max E. Bleck 75,106(2) *
Francis H. Burr 2,000 *
Ferdinand Colloredo-Mansfeld 3,000 *
Theodore L. Eliot, Jr. 1,000(1) *
Barbara B. Hauptfuhrer 1,000(3) *
Richard D. Hill 3,307 *
Christoph L. Hoffmann 38,569(4) *
James N. Land, Jr. 3,000 *
Thomas L. Phillips 117,424 *
Dennis J. Picard 278,471(5) *
Warren B. Rudman 200(6) *
Sheldon Rutstein 30,469(7) *
Joseph J. Sisco 1,226 *
William H. Swanson 66,498(8) *
Alfred M. Zeien 1,000 *
All directors and executive
officers as a group, (29 in
number, including those
listed above). 1,675,657(9,10) 1.4%
-----------
* Less than one percent of the class<PAGE>
PAGE 7
(1) All shares held in trust and voting and investment power is
shared.
(2) Includes 36,151 shares held in trust, 30,000 shares as to which
Mr. Bleck has the right to acquire beneficial ownership within
sixty days of said date, 245 shares held in the Raytheon Stock
Ownership Plan and 8,000 restricted shares over which he has
voting power but no investment power.
(3) Excludes shares held by various mutual funds of the Vanguard Group
of Investment Companies. As a director of Vanguard, Mrs.
Hauptfuhrer shares voting and investment power in these shares
with other Vanguard directors. Mrs. Hauptfuhrer disclaims
beneficial ownership of all such shares.
(4) Includes 4,500 shares as to which voting and investment power are
shared, 15,000 shares as to which Mr. Hoffmann has the right to
acquire beneficial ownership within sixty days of said date, 69
shares held in the Raytheon Stock Ownership Plan and 19,000
restricted shares over which he has voting power but no investment
power.
(5) Includes 93,210 shares as to which Mr. Picard has the right to
acquire beneficial ownership within sixty days of said date, 412
shares held in the Raytheon Stock Ownership Plan and 100,002
restricted shares over which he has voting power but no investment
power.
(6) Excludes shares held by any of the mutual funds of Dreyfus
Corporation. As a director of several funds managed by Dreyfus
Corporation, Mr. Rudman shares voting and investment power in the
shares held by such funds with the other directors of those funds
and with the directors of Dreyfus Corporation. Mr. Rudman
disclaims beneficial ownership of all such shares.
(7) Includes 18,000 shares as to which Mr. Rutstein has the right to
acquire beneficial ownership within sixty days of said date and
349 shares held in the Raytheon Stock Ownership Plan.
(8) Includes 42,191 shares as to which Mr. Swanson has the right to
acquire beneficial ownership within sixty days of said date, 290
shares held in the Raytheon Stock Ownership Plan and 19,200
restricted shares over which he has voting power but no investment
power.
(9) Share ownership includes, in the case of certain officers, a minor
number of shares held by trusts or family members as to which
beneficial ownership is disclaimed.
(10) Includes 450,910 shares as to which individual members of the
group have the right to acquire beneficial ownership within sixty
days of said date, 3,561 shares held in the Raytheon Stock<PAGE>
PAGE 8
Ownership Plan and 275,402 restricted shares over which
individuals have voting power but no investment power.
THE BOARD OF DIRECTORS AND CERTAIN OF ITS COMMITTEES
Board of Directors' Meetings
The Board of Directors met thirteen times during 1994. All directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and the Committees on which they served. Overall attendance at
such meetings was 97%.
Audit Committee
Directors Francis H. Burr, Richard D. Hill and James N. Land, Jr. serve
as members of the Audit Committee of the Board of Directors. The Audit
Committee met three times during 1994. The Committee's duties are to
consult with and make inquiry of the Company's outside auditors from time
to time; to review procedures followed and reports submitted by such
outside auditors; to make such further investigations of the Company's
financial affairs as it deems appropriate; to report to the Board of
Directors on the results of such consultation and investigation; and to
recommend to the Board of Directors the engagement of the Company's outside
auditors.
Compensation Committee
Directors Charles F. Adams, Barbara B. Hauptfuhrer, Richard D. Hill,
Joseph J. Sisco and Alfred M. Zeien serve as members of the Compensation
Committee of the Board of Directors. The Compensation Committee met eleven
times during 1994. The Committee's duties are to develop, review and
recommend to the Board of Directors compensation programs for the executive
officers of the Company as more fully described in its Report below.
Planning and Nominating Committee
Directors Charles F. Adams, Francis H. Burr, Theodore L. Eliot, Jr.,
James N. Land, Jr., Thomas L. Phillips, Warren B. Rudman and Joseph J.
Sisco serve as members of the Planning and Nominating Committee of the
Board of Directors. The Planning and Nominating Committee met twice during
1994. The Committee's duties are to study strategies for achieving
corporate goals, to propose to the Board of Directors candidates for
election to the Board and to make other recommendations relating to Board
membership. The Planning and Nominating Committee will consider nominees
recommended by stockholders. No formal procedures are required to be
followed by stockholders in submitting such recommendations.
Policy Committee
Directors Francis H. Burr, Ferdinand Colloredo-Mansfeld, Theodore L.
Eliot, Jr., Barbara B. Hauptfuhrer, Richard D. Hill, James N. Land, Jr.,
Warren B. Rudman, Joseph J. Sisco and Alfred M. Zeien serve as members of<PAGE>
PAGE 9
the Policy Committee of the Board of Directors. The Policy Committee met
five times during 1994. The Committee's duties are to consider such matters
of corporate policy as are referred to it from time to time and to
supervise and administer the Company's 1976 Stock Option Plan (the "1976
Option Plan") and to consider and make recommendations with respect to any
amendments to said plan. As of February 22, 1995, there were no shares
available for further option grants under the 1976 Option Plan. Although
shares subject to options that expire or are terminated, surrendered,
cancelled or forfeited may again be available for issuance under the 1976
Option Plan, it is the Company's intention not to grant further options
under the 1976 Option Plan in the event that stockholders approve the
Raytheon Company 1995 Stock Option Plan. See Item 2 - Approval of the 1995
Stock Option Plan.
Compensation of Directors
During 1994, each Board member, other than Messrs. Picard and Bleck, was
paid a quarterly retainer of $6,500 and, in addition, was paid a fee of
$1,000 for attendance at each meeting of the Board and each committee
meeting other than telephonic meetings and committee meetings of less than
two hours' duration held on the day of full Board meetings for which the
fee was $500.
In addition, Mr. Adams was paid $50,004 during 1994 for continuing
regular services as a consultant to the Company.
Directors not eligible for benefits under any Company-sponsored pension
plan, who have served on the Board for at least five years, and who comply
with a prescribed non-competition agreement, will be entitled to a monthly
payment equal to one-twelfth the amount of the director's annual retainer
in effect at the time of the director's retirement from the Board under the
Raytheon Company Retirement Plan for Directors. Payments under the plan
terminate upon the earlier of the death of the retiree and his/her spouse
or the expiration of fifteen consecutive years from the initial payment
under the plan.
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company of the only
individual to serve as the Company's chief executive officer during the
last completed fiscal year and the other four most highly compensated
executive officers of the Company (the "Named Executive Officers") for the
fiscal years ended December 31, 1994, 1993 and 1992. No other executive
officer who departed during the last completed fiscal year had reportable
salary and bonus that would have placed such officer in the group of four
highest paid executive officers.<PAGE>
PAGE 10
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards
(a) (b) (c) (d) (f) (g) (i)
All
Restricted Other
Stock Compen-
Name and Principal Salary (1) Bonus Award(s)(2) Options sation
Position Year ($) ($) ($) (#) (3)($)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dennis J. Picard 1994 $965,754 $870,000 0 65,000 $12,507
Chairman of the 1993 $870,762 $870,000 0 40,000 $ 9,642
Board and Chief 1992 $780,012 $600,000 0 20,000 $ 8,607
Executive Officer
Max E. Bleck 1994 $624,180 $385,000 0 0 $12,755
President 1993 $573,000 $385,000 0 30,000 $10,546
1992 $520,002 $325,000 0 15,000 $ 9,985
Sheldon Rutstein 1994 $563,863 $275,000 0 7,300 $ 10,614
Senior Vice 1993 $430,506 $275,000 0 10,000 $ 8,784
President- 1992 $390,006 $235,000 0 8,000 $ 8,151
Chief Financial
Officer
William H. Swanson 1994 $411,450 $290,000 0 10,000 $ 7,068
Executive Vice 1993 $377,070 $290,000 0 12,000 $ 6,555
President and 1992 $327,888 $230,000 0 8,000 $ 6,255
General Manager -
Electronic
Systems Division
Christoph L. 1994 $362,250 $225,000 $324,375 14,000 $ 7,392
Hoffmann 1993 $322,500 $225,000 0 15,000 $ 7,450
Executive Vice 1992 $275,004 $180,000 $433,750 0 $ 7,156
President and
Secretary<PAGE>
PAGE 11
(1) The figures reported in column (c) reflect salary adjustments in the
course of the normal compensation review cycle effective July 1, 1994.
Pursuant to the Company's announced wage freeze, at the next compensa-
tion review date (July 1, 1995), the salaries for the Named Executive
Officers will remain frozen at the levels approved on July 1, 1994.
(2) The executive is not entitled to the cash amount shown in column (f) in
the year the restricted stock award is made. The award vests over
several years and is subject to the executive remaining employed by the
Company. In the event of a change of control in the Company (as
defined in the plan pursuant to which awards are made), all restrictions
lapse and the award becomes fully vested. Dividends are paid on the
restricted stock reported in column (f).
The number and value at closing price on December 30, 1994 of the aggre-
gate restricted, non-vested stock holdings (over which the executive has
voting but no investment power) of each of the named executives is as
follows: Mr. Picard, 100,002 shares, $6,387,628; Mr. Bleck, 8,000
shares, $511,000; Mr. Rutstein, 16,000 shares, $1,022,000; Mr. Swanson,
19,200 shares, $1,226,400; Mr. Hoffmann, 19,000 shares, $1,213,625.
Mr. Rutstein retired effective as of the close of business on December
31, 1994 and forfeited 16,000 restricted shares and the 7,300 options
granted in 1994 reported in column (g).
Mr. Bleck has announced his retirement effective May 1, 1995 at which time
all restrictions on the 8,000 shares noted above will lapse pursuant to
the terms of the Company's standard restricted stock agreement.
Mr. Hoffmann's 1994 restricted stock award shown in column (f) vests pro
rata over a five year period as follows:
Vesting Date Shares
------------ ------
22 June 1995 1,000
22 June 1996 1,000
22 June 1997 1,000
22 June 1998 1,000
22 June 1999 1,000
-----
Total 5,000
(3) For 1994, the amounts in column (i) include: (a) the value of life
insurance premiums paid by the Company (Mr. Picard, $6,766; Mr. Bleck,
$7,014; Mr. Rutstein, $4,873; Mr. Swanson, $1,327; and Mr. Hoffmann,
$1,651); (b) Company contributions of $1,241 for each Named Executive
Officer under the Stock Ownership Plan; and (c) Company contributions
of $4,500 for each Named Executive Officer under the Savings and
Investment Plan.
/TABLE
<PAGE>
PAGE 12
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Individual Grants Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term(4)
(a) (b) (c) (d) (e) (f) (g)
No. of % of Total
Securi- Options
ties Un- Granted to
derlying Employees Exercise or
Options in Fiscal Base Price Expiration 5% ($) 10% ($)
Granted Year (2) ($/Share)(3) Date
Name (#) (1)
<S> <C> <C> <C> <C> <C> <C>
Dennis J. Picard 1,536 0.08% $65.0625 6/21/04 $ 62,849 $ 159,272
63,464 3.44% $65.0625 6/21/05 $2,933,081 $7,651,753
Max E. Bleck -- -- -- -- -- --
-- -- -- -- -- --
Sheldon Rutstein 1,536 0.08% $65.0625 6/21/04 $ 62,849 $ 159,272
5,764 0.31% $65.0625 6/21/05 $ 266,392 $ 694,956
William H. Swanson 1,536 0.08% $65.0625 6/21/04 $ 62,849 $ 159,272
8,464 0.46% $65.0625 6/21/05 $ 391,176 $1,020,491
Christoph L. 1,536 0.08% $65.0625 6/21/04 $ 62,849 $ 159,272
Hoffmann 12,464 0.68% $65.0625 6/21/05 $ 576,042 $1,502,765
(1) Options become exercisable one year after the grant date.
(2) Total options granted to employees in 1994 = 1,843,550.
(3) Fair market value of underlying shares on the date of grant.
(4) The potential realizable values set forth in columns (f) and (g) are purely hypothetical and would result
only if the following conditions were met: (a) the holder of the option does not exercise the option until
the day before it expires, ten years in the case of incentive stock options and eleven years in the case of
non-qualified stock options, and (b) each year during the respective ten or eleven year periods the Company's Common
Stock goes up 5% in value in the case of column (f) and 10% in value in the case of column (g). The assumed rates
are not intended to forecast future stock price appreciation but are prescribed by the Securities and Exchange
Commission for illustrative purposes only. Actual gains, if any, are dependent on the performance of the Company's
Common Stock, overall stock market conditions, and the timing of any future option exercise. In fact, as of
December 31, 1994, the options set forth in the above table had no value because at that date the market value of
the underlying shares was below the option price. There can be no assurance that the potential values shown in this
table will be realized.
/TABLE
<PAGE>
PAGE 13
<TABLE> AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
(a) (b) (c) (d) (e)
Shares Value of Unexercised
Acquired on Value Number of Unexercised In-the-Money
Exercise Realized Options at FY End Options at FY End(1)
(#) $
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Dennis J. Picard 25,809 $ 822,232 93,210 65,000 $1,499,698 $0
Max E. Bleck 4,441 $ 95,759 30,000 -- $ 142,500 $0
Sheldon Rutstein -- -- 28,000 7,300(2) $ 450,437 $0
William H. Swanson 4,809 $ 147,976 42,191 10,000 $ 785,132 $0
Christoph L. -- -- 19,500 14,000 $ 176,859 $0
Hoffmann
(1) Fair market value on December 30, 1994 = $64.00.
(2) Mr. Rutstein retired effective as of the close of business on December 31, 1994 and forfeited all 7,300
unexercisable options.
/TABLE
<PAGE>
PAGE 14
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Charles F. Adams, a member of the Compensation Committee, was Chairman
of the Board of Directors until May 28, 1975. Ferdinand Colloredo-Mansfeld,
a member of the Policy Committee, is a principal owner of C-M Holdings L.P.
C-M Holdings L.P., through a subsidiary, leases an office, service
area/warehouse to a subsidiary of the Company at a rent of approximately
$671,386 per year.
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation programs are developed and reviewed
by the Compensation and Policy Committees of the Board of Directors. These
programs align executive compensation with the Company's business strategy
and management initiatives and are intended to attract, retain, motivate
and reward executive managers of a caliber and level of experience
necessary to achieve the performance objectives of the Company. The Board
of Directors supports an integrated performance-oriented compensation
program that balances short- and long-term objectives to maximize the value
of the Company to its stockholders and that puts Company executives in a
responsible competitive range of total compensation considering both the
magnitude of business operations and Company performance.
The Compensation Committee makes recommendations to the Board of
Directors with respect to base salary and makes bonus and long-term
incentive awards other than stock option awards under the 1976 Option Plan.
The Policy Committee makes recommendations on stock option awards under the
1976 Option Plan. As of February 22, 1995, there were no shares available
for further option grants under the 1976 Option Plan. Although shares
subject to options that expire or are terminated, surrendered, cancelled or
forfeited may again be available for issuance under the 1976 Option Plan,
it is the Company's intention not to grant further options under the 1976
Option Plan in the event that stockholders approve the Raytheon Company
1995 Stock Option Plan. See Item 2 - Approval of the 1995 Stock Option
Plan. Both committees work with the Company's independent compensation
consultant, Coopers & Lybrand, which provides information regarding current
industry and marketplace compensation data and practices.
Individual compensation awards are established based upon the
contribution the executive has made in attaining the Company's short-term
and strategic performance objectives as well as the executive's anticipated
future contribution. While earnings performance of the Company and its
constituent business units is of paramount significance in compensation
awards, the Committees are mindful of rewarding and encouraging executives
who are able to protect and further the Company's interests in the
drastically contracting defense industry environment and to promote and
further the Company's goals to diversify defense technologies and
strengthen its established non-defense businesses. Further, the Committees
take into consideration the attainment of global and long-term objectives
of the Company that may not be reflected in the current period's earnings<PAGE>
PAGE 15
performance. The Company's executive compensation programs consist
primarily of the following integrated components:
Base Salary -- which is designed to compensate executives competitively
within the industry and marketplace.
Bonus Awards -- which provide a direct link between executive
compensation and the Company's performance.
Long-Term Incentives -- which consist of stock options and restricted
stock awards that link management decision making with long-term Company
performance and stockholder interests.
Base Salary. Base salary levels for the Chief Executive Officer ("CEO")
and other executive officers of the Company are reviewed annually by the
Compensation Committee. The Committee's policy has been and continues to
be to maintain base salary levels based upon competitive analyses, compiled
by an independent compensation consultant, of peer group and other major
U.S. industrial companies. The Company's compensation peer group includes
the twenty-five Fortune 500 companies that rank immediately above and the
twenty-five that rank immediately below the Company on the basis of annual
revenues as well as companies represented in the peer group index in the
Comparison of Five Year Cumulative Total Return graph included in this
Proxy Statement. Specifically, the latter group consists of Allied Signal
Inc., E-Systems, Inc., General Dynamics Corporation, Litton Industries,
Inc., Lockheed Corporation, Loral Corporation, Martin Marietta Corporation,
McDonnell Douglas Corporation, Northrop Corporation, Rockwell International
Corporation, Texas Instruments Incorporated, and United Technologies
Corporation. The Committee also reviews compensation trends among a group
of comparable multi-industry companies as reported by Coopers & Lybrand and
other national compensation and benefits consulting firms.
Bonuses. All executive officers, including the CEO, participate in a
Management Incentive Plan, which compensates officers in the form of annual
cash bonuses. The Compensation Committee recommends the appropriation of
funds from operating revenues of the current year for purposes of
establishing an executive bonus pool. The size of the pool is based on the
Company's overall performance, as reflected by growth in earnings per share
and net income. In 1994, while these measures increased 12.3% and 9.6%,
respectively, in view of a salary freeze imposed for 1995 on all salaried
employees within the defense electronics business and the corporate staff,
the Compensation Committee and the Board of Directors, at the request of
the CEO, agreed to hold total bonus expenditures for 1994 to the 1993
level. Individual awards reflect an executive officer's contribution to
the Company's performance. In the case of operating executives, the
primary performance criterion is the earnings performance of the
executive's business unit compared to the prior period and the unit's
business plan. In the case of senior staff executives, the primary
criteria are the effective performance of the staff function and the
executive's contribution to the overall management of the Company.
Consideration is also given to the executive officer's contribution towards
improvement in return on assets and long-term profitability and on<PAGE>
PAGE 16
improving performance in such areas as technical achievement, on-time
deliveries, timely proposal submissions, improved billing and collection
practices, subcontractor control, and efficient personnel management.
Concurrent with the determination not to increase the total bonus
expenditure for 1994 over 1993, the Compensation Committee further resolved
that bonus awards for the Named Executive Officers, while remaining fully
subject to stated performance standards, would not in any event be greater
than awards for 1993.
Long-Term Incentives
Stock option grants, the Company's principal vehicle for payment of
long-term compensation, are made by the Policy Committee under the 1976
Option Plan or the Compensation Committee under the Company's 1991 Stock
Plan (the "1991 Stock Plan"). As noted above, however, there are no shares
available for additional option grants under the 1976 Option Plan. Similar
to the process used in making annual base salary and bonus recommendations,
option awards are based upon surveys of current industry and marketplace
compensation data. Award recommendations are made on the basis of an
executive's level of responsibility, value to the organization and, in the
case of operating executives, the organization's earnings and sales
performance, or, in the case of staff executives, effective performance of
the staff function and contribution to the overall management of the
Company. The size of each executive's award is determined by considering
norms for comparable positions in the industry and marketplace. Equitable
distribution within the Company is also considered. Options are granted at
the then prevailing market value.
The Board of Directors believes that the grant of stock options
encourages executive officers to manage the Company from the perspective of
an owner with an equity stake in the business. As the value of the Company
increases over time, the value of the shares of stock underlying the
options granted to each of the executive officers increases, providing a
strong incentive for executive officers to maximize stockholder value over
time. Participation in the 1976 Option Plan and 1991 Stock Plan is not
limited to executive officers but extends to a broad range of key managers
of the Company. In 1994, following a survey of option grant practices
within Fortune 500 companies conducted by the Company's independent
compensation consultant, the Compensation Committee determined to broaden
stock option participation among middle management and key individual
contributors. The 1976 Option Plan and 1991 Stock Plan have been approved
by the Company's stockholders.
Restricted stock awards are made by the Compensation Committee under the
1991 Stock Plan. The Board of Directors believes that the award of
restricted stock encourages executive officers to manage the Company from
the perspective of an owner with an equity stake in the business.
Restricted stock awards also balance the short-term emphasis of annual
bonuses by providing a long-term incentive as the executive officer cannot
freely sell the restricted stock until the expiration of a period of time
(usually five to seven years) after the award is made. In addition,
restricted stock awards serve as a strong device for retaining managers,
as a manager who leaves the Company forfeits the unvested portion of the
award.<PAGE>
PAGE 17
CEO Compensation. Consistent with the determination of compensation
levels for other executive officers, the CEO's compensation is based upon
an assessment of industry and marketplace norms prepared by independent
compensation consultants, Coopers & Lybrand. The Compensation and Policy
Committees also considered additional criteria in determining the CEO's
1994 bonus and stock option awards: improvement in the Company's earnings,
stock price and price-earnings ratio; the Company's solid performance
despite continuing significant defense industry spending cuts; the CEO's
strong leadership in transitioning the Company to a broader and more
profitable commercial base, and taking in a timely fashion the cost
reduction and downsizing actions necessary to stay competitive in the
defense industry; the Company's successful consolidation of Beech Aircraft
Corporation and Raytheon Corporate Jets into Raytheon Aircraft Company; and
the major restructuring of the Company's defense-related business into the
Electronic Systems Division, as well as the CEO's leadership qualities and
high work ethic.
Despite overall improvement in Company performance, the CEO asked the
Compensation Committee to freeze his base salary and bonus as well as the
base salary and bonus of the other Named Executive Officers. The CEO's
total compensation (base salary, bonus and long-term incentive
compensation), after taking into account the freeze, falls significantly
below the average of the industry and Fortune 500 peer groups.
Furthermore, the number of options granted to the CEO in 1994 falls at the
low end of the range when compared to options granted to peer group CEOs.
Other Compensation. The Company's compensation programs also include
certain other minor items, which may include: (i) life insurance coverage,
(ii) an allocation of Company stock under the Raytheon Stock Ownership
Plan, (iii) matching contributions under the Raytheon Savings and
Investment Plan, and (iv) other miscellaneous compensation.
The Committee has carefully studied the provisions of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), which limit the
deductibility of executive compensation in excess of $1 million. The
proposed regulations issued by the Internal Revenue Service in 1994 still
leave many unresolved questions. The Committee has concluded that it would
be unwise to adopt a plan that might limit its effectiveness and
discretionary powers, and may be subject to amendment based on additional
guidance from the IRS. In any event, the Company will not suffer any loss
of tax deductions under the new law for the 1994 or 1995 tax years, as the
only executive officer whose non-qualifying income may exceed $1 million
has elected to defer until retirement any bonuses earned for services
during both 1994 and 1995. It is the intent of the Company, once the
proposed regulations under Section 162(m) are finalized, to structure its
executive compensation programs in such a fashion that no deductions are
lost by the Company due to the limitations imposed by Section 162(m).<PAGE>
PAGE 18
Members of the Compensation Committee
Joseph J. Sisco, Chairman
Charles F. Adams
Barbara B. Hauptfuhrer
Richard D. Hill
Alfred M. Zeien
Members of the Policy Committee
Richard D. Hill, Chairman
Francis H. Burr
Ferdinand Colloredo-Mansfeld
Theodore L. Eliot, Jr.
Barbara B. Hauptfuhrer
James N. Land, Jr.
Warren B. Rudman
Joseph J. Sisco
Alfred M. Zeien
COMPARATIVE STOCK PERFORMANCE
Set forth below is a line graph comparing the cumulative total return of
the Company's Common Stock against the cumulative total return of the
Standard and Poor's 500 Stock Index and a Company-selected peer group for
the period commencing January 1, 1990 and ending December 31, 1994.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
RAYTHEON VS. S&P 500 INDEX AND PEER GROUP INDEX
1994 1993 1992 1991 1990 1989
Raytheon 211.21 213.39 161.95 127.65 104.54 100.00
E Systems 152.56 154.50 142.74 128.05 113.95 100.00
Gen Motors Cl 'H' 159.53 174.40 112.63 62.55 71.67 100.00
Litton 219.43 166.99 116.19 113.75 100.32 100.00
Lockheed 229.78 208.96 167.49 127.74 91.20 100.00
Loral 285.27 279.96 167.74 139.79 116.18 100.00
Martin Marietta 226.85 222.77 170.33 142.40 102.50 100.00
McDonnell Douglas 272.94 202.91 89.87 132.23 67.73 100.00
Northrop 306.58 262.42 229.65 168.92 106.75 100.00
Rockwell 176.13 177.81 135.03 122.90 120.68 100.00
Texas Instruments 226.94 190.25 138.18 89.45 108.13 100.00
United Tech. 137.62 131.69 98.89 107.57 91.44 100.00
S&P 500 151.53 149.52 135.88 126.28 96.89 100.00
Peer Average 197.31 185.47 130.51 107.36 93.03 100.00
ASSUMES $100 INVESTED ON JAN. 1, 1990; ASSUMES REINVESTMENT OF DIVIDENDS
GRAPH FILED UNDER FORM SE DATED APRIL 13, 1995.<PAGE>
PAGE 19
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
STOCKHOLDER RETURN
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
chart above.
The peer group is composed of E-Systems, Inc., General Motors
Corporation (Class "H"), Litton Industries, Inc., Lockheed Corporation,
Loral Corporation, Martin Marietta Corporation, McDonnell Douglas
Corporation, Northrop Corporation, Rockwell International Corporation,
Texas Instruments Incorporated and United Technologies Corporation.
PENSION PLAN
The Company's salaried pension plan covers all salaried employees,
excluding those at certain subsidiaries, who have completed one year of
service and attained age 21. The plan is Company funded and does not
require or permit employee contributions. Benefits are computed by a
formula which takes into account an employee's years of service and plan
membership, final average compensation and an estimated primary Social
Security benefit. From time to time, an enhanced pension benefit is
provided to an individual as an inducement to join the Company. Such
benefit is covered by the non-funded plan described below.
The following table shows the estimated annual retirement benefits
payable to salaried employees on normal retirement at age 65:
ANNUAL ESTIMATED BENEFITS UNDER THE PENSION FORMULA
OF THE RAYTHEON COMPANY PENSION PLAN FOR SALARIED EMPLOYEES
Years of Pension Credit at Age 65
Final Average
Annual Compensation 15 Years 20 Years 30 Years 40 Years
$ 50,000 $ 13,500 $ 18,000 $ 24,000 $ 30,000
100,000 27,000 36,000 48,000 60,000
150,000 40,500 54,000 72,000 90,000
300,000 81,000 108,000 144,000 180,000
500,000 135,000 180,000 240,000 300,000
700,000 189,000 252,000 336,000 420,000
900,000 243,000 324,000 432,000 540,000
1,100,000 297,000 396,000 528,000 660,000
1,300,000 351,000 468,000 624,000 780,000
1,500,000 405,000 540,000 720,000 900,000
---------------
(1) Under the plan formula, the amounts in the table will be reduced
by a percentage of the employee's estimated primary Social
Security benefit.
(2) Messrs. Hoffmann, Picard and Swanson would, at the normal
retirement age of 65, have benefits based upon 18, 41 and 41 years<PAGE>
PAGE 20
of credit, respectively. Their expected pension benefits at age 65
are determinable under the formula illustrated by the table. As an
inducement to join the Company, Mr. Bleck was granted an enhanced
pension benefit. At normal retirement age, Mr. Bleck would have
received benefits based upon approximately 15 years of plan
credit.
(3) The remuneration covered by the plan includes base pay and bonuses
for Messrs. Bleck, Hoffmann, Picard, Rutstein and Swanson as
reported in the Summary Compensation Table.
(4) Pensions shown in the above table are straight-life annuity
amounts.
(5) Mr. Rutstein retired as of the close of business on December 31,
1994 and began receiving benefits under the Raytheon Company
Pension Plan for Salaried Employees and the Raytheon Company
Excess Benefit Plan based upon 35 years of service. Mr. Rutstein
was 60 years old at retirement.
(6) Mr. Bleck has announced his retirement effective May 1, 1995 at
which time he will begin to receive benefits under the Raytheon
Company Pension Plan for Salaried Employees and the Raytheon
Company Excess Benefit Plan based upon 18 years of service. As of
his stated retirement date, Mr.Bleck will be 68 years old.
Amounts in excess of $118,800 annually and amounts based on annual
salary in excess of $150,000 may be subject to reduction because of the
annual pension benefit limitations imposed under the Code; however, the
extent of any reduction will vary in individual cases according to
circumstances existing at time of retirement. Amounts that otherwise would
have been payable under the Company's salaried pension plan in excess of
such limitations will be provided under an excess benefit plan, a separate
non-funded plan adopted by the Board of Directors in 1980.
OTHER INFORMATION
During 1994 the Company retained the law firm of Ropes & Gray for
various legal services. Francis H. Burr, a Director and member of the
Audit, Planning and Nominating, and Policy Committees, is of counsel to
such firm.
During 1994 the Company retained the law firm of Paul, Weiss, Rifkind,
Wharton and Garrison for various legal services. Warren B. Rudman, a
Director and member of the Planning and Nominating and Policy Committees,
is a member of such firm.
C-M Holdings L.P., of which Mr. Colloredo-Mansfeld is a principal owner,
through a subsidiary, leases an office, service area/warehouse to a
subsidiary of the Company at a rent of approximately $671,386 per year.
Mr. Colloredo-Mansfeld is a Director and member of the Executive, Finance
and Policy Committees.<PAGE>
PAGE 21
During 1991, the Company provided to Max E. Bleck, Director and
President, an interest-free loan of $800,000 to assist him in his
relocation from Kansas to Massachusetts. As of March 15, 1995, the
outstanding balance was $800,000. The loan is secured by a mortgage on Mr.
Bleck's home. Under the terms of the loan agreement, Mr. Bleck must repay
the loan in full within two months after the date of his retirement.
During 1992, the Company provided to Robert L. Swam, Executive Vice
President, Group Executive-Appliance Group, an interest-free loan of
$250,000 to assist him in his relocation from Maryland to Massachusetts.
As of March 15, 1995, the outstanding balance was $130,000. The loan is
secured by a mortgage on Mr. Swam's home.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The accounting firm of Coopers & Lybrand, which has served continuously
since 1961 as the Company's principal independent accountant, was selected
to continue in that capacity for the current year.
Representatives of that firm are expected to be present at the meeting
and will be given the opportunity to make a statement if they desire to do
so. Such representatives are expected to be available to respond to
appropriate questions.
STOCK TRANSACTION REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who
own more than ten percent of the Company's Common Stock, to file with the
Securities and Exchange Commission and the Stock Exchanges on which the
Company's Common Stock is listed, reports of any changes in ownership of
Common Stock. Directors, officers and ten-percent shareholders are also
required to furnish the Company with copies of all Section 16(a) forms they
file.
During 1994, Messrs. Bleck and Colloredo-Mansfeld each filed one late
report covering one transaction.
PROPOSAL TO APPROVE THE 1995 STOCK OPTION PLAN
(Item 2)
On March 22, 1995, the Board of Directors adopted the Raytheon Company
1995 Stock Option Plan (the "1995 Plan") subject to stockholder approval.
20,000,000 shares of Common Stock have been allocated to the 1995 Plan.
The allocated shares constitute 16.2% of the outstanding shares of the
Company at February 28, 1995 and 17.9% if combined with the 2,016,433
shares currently available for grant under the 1991 Stock Plan. Both
percentages are well within the range of shares authorized for stock based
grants as reported in national surveys of major U.S. corporations.
The 1995 Plan is proposed to supersede and replace the 1976 Option Plan.
As noted above, there are no shares available for further option grants<PAGE>
PAGE 22
under the 1976 Option Plan. Although shares subject to options that expire
or are terminated, surrendered, cancelled or forfeited may again be
available for issuance under the 1976 Option Plan, it is the Company's
intention not to grant further options under the 1976 Option Plan in the
event that stockholders approve the 1995 Plan.
The following summary description is qualified in its entirety by
reference to the full text of the 1995 Plan, which is attached to this
Proxy Statement as Appendix A.
Purpose. The Board of Directors believes that the 1995 Plan will be of
substantial value in attracting and retaining key employees and in
stimulating their efforts toward the continued success of the Company and
its subsidiaries. In that regard, the 1995 Plan will (i) align the
long-term interests of key employees and stockholders by creating a direct
link between key employee compensation and stockholder return, (ii) enable
key employees to develop and maintain a substantial stock ownership in the
Company and (iii) provide incentives to such key employees to continue
contributing to the success of the Company.
Administration. The 1995 Plan will be administered by the Compensation
Committee, which is a disinterested committee comprised solely of
non-employee directors who are not eligible to participate in the 1995
Plan. The Compensation Committee selects participants and, in a manner
consistent with the terms of the 1995 Plan, determines the number and
duration of the options to be granted and the terms and conditions of the
option agreements.
Eligibility. Participants under the 1995 Plan shall consist of key
individuals employed by the Company who are selected from time to time by
the Compensation Committee to receive awards. Non-employee directors are
not eligible to participate.
Stock Options. Options granted under the 1995 Plan may be incentive
stock options as that term is used in Section 422 of the Code or
non-statutory stock options. The option price for both incentive stock
options and non-statutory stock options may not be less than the fair
market value of the Company's Common Stock on the date the option is
granted. The option price is payable in cash or in Common Stock of the
Company having a fair market value equal to the option exercise price. The
proceeds received by the Company from the sale of stock under the 1995 Plan
are added to the general funds of the Company.
All unexercised options terminate after a certain number of years which
may not be longer than ten years in the case of incentive stock options or
ten years plus one day in the case of non-statutory stock options.
Unexercised options may terminate earlier depending upon the optionee's
termination of employment, retirement, death or breach of any provisions of
the option agreement. Shares under options that have terminated or lapsed,
including options that have been surrendered unexercised, shall again be
available for issuance under the 1995 Plan.<PAGE>
PAGE 23
In the event of a change in the number or kind of outstanding shares of
the Company's Common Stock, an appropriate adjustment may be made with
respect to existing and future options.
The 1995 Plan provides that each outstanding option shall immediately
become fully exercisable upon a Change in Control of the Company, as
defined in the 1995 Plan. A "Change in Control" includes the acquisition
by a third party of twenty-five percent or more of the Company's Common
Stock or a merger, sale of substantially all the assets or liquidation of
the Company.
Options may be granted under the 1995 Plan until March 21, 2005.
Options outstanding at that date will continue in effect in accordance with
the terms of the 1995 Plan.
Federal Income Tax Consequences. The following is a brief description of
the Company's understanding of the federal income tax consequences
applicable to incentive stock options and non-statutory stock options
granted under the 1995 Plan. This summary is not intended to constitute
tax advice and specifically does not address any state, local or foreign
tax consequences.
Incentive Stock Options. The optionee pays no federal income tax upon
the grant or exercise of incentive stock options. If the shares are
disposed of within two years from the date of the grant or one year from
the date of exercise, the excess of the stock's fair market value on the
date of exercise (or, if less, the amount realized on its sale) over the
option price paid at exercise is taxable ordinary income to the optionee.
If the stock is held beyond such period, any gain or loss realized upon the
sale of such stock is treated at long-term capital gain or loss. The
Company does not receive a tax deduction in connection with the exercise of
an incentive stock option unless the shares are disposed of during such
period. In such a case, the deduction would be equal to the amount of
taxable ordinary income to the optionee. In addition, subject to certain
exceptions for death or disability, if an incentive stock option is
exercised more than three months after termination of employment, the
exercise of the option will generally be treated as the exercise of a
non-statutory stock option.
The exercise of an incentive stock option will give rise to an item of
tax preference that may result in alternative minimum tax liability for the
optionee unless the optionee disposes of the stock received upon exercise
of the option within the same calendar year of exercise.
Non-statutory Stock Options. A non-statutory stock option results in no
taxable income to the optionee or deduction to the Company at the time it
is granted. An optionee exercising such an option will, at that time,
realize taxable compensation in the amount of the difference between the
option price and the then market value of the shares. Subject to
applicable information reporting requirements, a deduction for federal
income tax purposes will be allowable to the Company in the year of
exercise in an amount equal to the taxable compensation realized by the<PAGE>
PAGE 24
optionee. The optionee's tax basis in the option shares is equal to the
option price paid for such shares plus the amount includable in income upon
exercise. At sale, appreciation (or depreciation) after the date of
exercise is treated as either short-term or long-term capital gain (or
loss) depending upon how long the shares have been held.
Accounting Treatment. No expense is incurred for accounting purposes
upon the grant of incentive stock options or upon the grant of
non-statutory stock options at full market value. Upon the exercise of
non-statutory stock options, the employee receives taxable income equal to
the difference between the exercise price and the fair market value of the
shares. The Company is entitled to a tax deduction in the same amount.
Amendment. Within certain limits, the Board of Directors has the right
to alter, amend or revoke the 1995 Plan. However, the Board of Directors
may not, without the approval of the stockholders, alter or amend the 1995
Plan to increase the maximum number of shares of Common Stock that may be
issued under the 1995 Plan, extend the term of the 1995 Plan or of options
granted thereunder, or change the classes of persons eligible to receive
options.
Market Value. On April 4, 1995, the closing price of the Company's
Common Stock on the New York Stock Exchange Composite Transactions was
$70.50 per share as reported in The Wall Street Journal.
Adoption of this proposal will require the affirmative vote of a
majority of shares of Common Stock represented at the meeting, in person or
by proxy, and entitled to vote.
The Board of Directors believes that the 1995 Plan is in the best
interests of the Company and its stockholders and recommends a vote FOR the
proposal to approve the 1995 Stock Option Plan.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Stockholder nominations and proposals for inclusion in the proxy
materials relating to the 1996 Annual Meeting of Stockholders must be
received by the Secretary at the Company's Executive Offices, 141 Spring
Street, Lexington, Massachusetts 02173 no later than December 20, 1995.
BUSINESS TO BE TRANSACTED
At the date of this statement, the Board of Directors does not know of
any business to be brought before the Annual Meeting other than the matters
described in this Proxy Statement. In the event that any other matter
properly shall come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote in accordance with their judgment
on such matters.
The Annual Report for the fiscal year ended December 31, 1994, mailed to
stockholders at an earlier date, is not a part of this Proxy Statement and
is not proxy-soliciting material.<PAGE>
PAGE 25
By Order of the Board of Directors,
Christoph L. Hoffmann
Secretary
Lexington, Massachusetts
April 18, 1995
APPENDIX A
RAYTHEON COMPANY
1995 STOCK OPTION PLAN
1. Definitions. As used in this 1995 Stock Option Plan of Raytheon
Company, the following terms shall have the following meanings:
1.1 Change in Corporate Control means (1) the time of approval by the
shareholders of the Company of (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of Stock would be converted into cash,
securities or other property, other than a merger in which the holders of
Stock immediately prior to the merger will have the same proportionate
ownership of common stock of the surviving corporation immediately after
the merger, (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially
all the assets of the Company, or (C) adoption of any plan or proposal for
the liquidation or dissolution of the Company, or (2) the date on which any
"person" (as defined in Section 13(d) of the Securities Exchange Act of
1934), other than the Company or a subsidiary or employee benefit plan or
trust maintained by the Company or any of its subsidiaries, shall become
(together with its "affiliates" and "associates," as defined in Rule 12b-2
under the Securities Exchange Act of 1934) the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of more than 25% of the Stock outstanding at the time,
without the prior approval of the Board of Directors of the Company.
1.2 Code means the Internal Revenue Code of 1986, as amended.
1.3 Committee means the Compensation Committee of the Company's Board
of Directors, consisting exclusively of directors who at the relevant time
are "outside directors" within the meaning of Section 162(m) of the Code.
1.4 Company means Raytheon Company, a Delaware corporation.
1.5 Fair Market Value means the value of a share of Stock of the
Company on any date as determined by the Board.
1.6 Grant Date means the date on which an Option is granted, as
specified in Section 7.<PAGE>
PAGE 26
1.7 Incentive Stock Option means an Option grant that is intended to
meet the requirements of Section 422 of the Code.
1.8 Non-Statutory Stock Option means an Option grant that is not
intended to be an Incentive Stock Option.
1.9 Option means an option to purchase shares of the Stock granted
under the Plan.
1.10 Option Agreement means an agreement between the Company and an
Optionee, setting forth the terms and conditions of an Option.
1.11 Option Period means the period from the date of the grant of an
Option to the date when the Option expires as stated in the terms of the
Option Agreement.
1.12 Option Price means the price paid by an Optionee for an Option
under this Plan.
1.13 Option Share means any share of Stock of the Company transferred
to an Optionee upon exercise of an Option pursuant to this Plan.
1.14 Optionee means a person eligible to receive an Option, as provided
in Section 6, to whom an Option shall have been granted under the Plan.
1.15 Plan means this 1995 Stock Option Plan of the Company.
1.16 Related Corporation means a Parent Corporation or a Subsidiary
Corporation, each as defined in Section 424 of the Code.
1.17 Stock means common stock, $1.00 par value, of the Company.
2. Purpose. This 1995 Stock Option Plan is intended to encourage
ownership of the Stock by key employees of the Company and its Related
Corporations and to provide additional incentive for them to promote the
success of the Company's business. With respect to any Incentive Stock
Options that may be granted hereunder, the Plan is intended to be an
incentive stock option plan within the meaning of Section 422 of the Code.
3. Term of the Plan. Options under the Plan may be granted not later
than March 21, 2005.
4. Stock Subject to the Plan. At no time shall the number of shares
of the Stock then outstanding which are attributable to the exercise of
Options granted under the Plan, plus the number of shares then issuable
upon exercise of outstanding options granted under the Plan, exceed
20,000,000 shares, subject, however, to the provisions of Section 15 of the
Plan. No Optionee may be granted in any year Options to purchase more than
200,000 shares of Stock, subject to adjustment pursuant to Section 15.
Shares to be issued upon the exercise of Options granted under the Plan may<PAGE>
PAGE 27
be either authorized but unissued shares or shares held by the Company in
its treasury. If any Option expires or terminates for any reason without
having been exercised in full, the shares not purchased thereunder shall
again be available for Options thereafter to be granted.
5. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan (including, without limitation, the
provisions of Section 19), the Committee shall have complete authority, in
its discretion, to make the following determinations with respect to each
Option to be granted by the Company: (a) the key employee to receive the
Option; (b) the time of granting the Option; (c) the number of shares
subject thereto; (d) the Option Price (subject to Section 8 below); (e) the
Option Period; and (f) whether the Option is an Incentive Stock Option or a
Non-Statutory Stock Option. Incentive Stock Options granted under this
Plan shall be designated specifically as such. In making such
determinations, the Committee may take into account the nature of the
services rendered by the respective employees, their present and potential
contributions to the success of the Company and its subsidiaries, and such
other factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of the Plan, the Committee shall also have
complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions
of the respective Option Agreements (which need not be identical), and to
make all other determinations necessary or advisable for the administration
of the Plan. The Committee's determinations on the matters referred to in
this Section 5 shall be conclusive.
6. Eligibility. An Option may be granted only to a key employee of
one or more of the Company and its subsidiaries. A director of one or more
of the Company and its subsidiaries who is not also an employee of one or
more of the Company and its subsidiaries shall not be eligible to receive
Options.
7. Time of Granting Options. The granting of an Option shall take
place at the time specified by the Committee. Only if expressly so
provided by the Committee shall the Grant Date be the date on which an
Option Agreement shall have been duly executed and delivered by the Company
and the Optionee.
8. Option Price. The Option Price under each Option shall be as
determined by the Committee, but shall not be less than 100% of the Fair
Market Value of the Stock on the Grant Date.
9. Option Period. No Incentive Stock Option may be exercised later
than the tenth anniversary of the Grant Date. No Non-Statutory Stock
Option may be exercised later than one day after the tenth anniversary of
the Grant Date. An Option may become exercisable in such installments,
cumulative or non-cumulative, or may be immediately exercisable, as the
Committee may determine.
10. Maximum Size of Incentive Stock Option as Such. To the extent
that the aggregate Fair Market Value of Stock for which an Incentive Stock<PAGE>
PAGE 28
Option becomes exercisable by an Optionee for the first time in any
calendar year exceeds $100,000, the portion of such Incentive Stock Option
which exceeds such $100,000 limitation shall be treated as a Non-Statutory
Stock Option, and not an incentive option under Section 422 of the Code.
For purposes of this Section 10, all Incentive Stock Options granted to an
Optionee by the Company, as well as any options that have been granted to
the Optionee under any other stock incentive plans of the Company or any
related corporation which are intended to comply with the provisions of
Section 422 of the Code, shall be considered in the order in which they
were granted, and the Fair Market Value shall be determined as of the Grant
Dates.
11. Exercise of Option.
(a) An Option may be exercised only by giving written notice, in
the manner provided in Section 21 hereof, specifying the number of
shares as to which the Option is being exercised, accompanied (except as
otherwise provided in paragraph (b) of this Section 11) by full payment
for such shares in the form of check or bank draft payable to the order
of the Company or other shares of the Stock with a current Fair Market
Value equal to the Option Price of the shares to be purchased. Receipt
by the Company of such notice and payment shall constitute the exercise
of the Option or a part thereof. Within 20 days thereafter, the Company
shall deliver or cause to be delivered to the Optionee a certificate or
certificates for the number of shares then being purchased by him. Such
shares shall be fully paid and nonassessable. If such shares are not at
that time effectively registered under the Securities Act of 1933, as
amended, the Optionee shall include with such notice a letter, in form
and substance satisfactory to the Company, confirming that such shares
are being purchased for the Optionee's own account for investment and
not with a view to distribution.
(b) In lieu of payment by check, bank draft or other shares of
Stock accompanying the written notice of exercise as described in
paragraph (a) of this Section 11, an Optionee may, unless prohibited by
applicable law, elect to effect payment by including with the written
notice referred to in paragraph (a) of this Section 11 irrevocable
instructions to deliver for sale to a registered securities broker
acceptable to the Company a number of the shares subject to the Option
being exercised sufficient, after brokerage commissions, to cover the
aggregate exercise price of such Option and, if the Optionee further
elects, the Optionee's withholding obligations with respect to such
exercise referred to in Sections 12 or 20, together with irrevocable
instructions to such broker to sell such shares and to remit directly to
the Company such aggregate exercise price and, if the Optionee has so
elected, the amount of such withholding obligation. The Company shall
not be required to deliver to such securities broker any stock
certificate for such shares until it has received from the broker such
exercise price and, if the Optionee has so elected, such withholding
obligation amount.
12. Notice of Disposition of Stock Prior to Expiration of Specified<PAGE>
PAGE 29
Incentive Stock Option Holding Period. The Company may require that the
person exercising an Incentive Stock Option give a written representation
to the Company, satisfactory in form and substance to its counsel and upon
which the Company may reasonably rely, that he or she will report to the
Company any disposition of shares purchased upon exercise prior to the
expiration of the holding periods specified by Section 422(a)(1) of the
Code. If and to the extent that the disposition imposes upon the Company
federal, state, local or other withholding tax requirements, or any such
withholding is required to secure for the Company an otherwise available
tax deduction, the Company shall have the right to require that the person
making the disposition remit to the Company an amount sufficient to satisfy
those requirements.
13. Transferability of Options. Options shall not be transferable,
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee.
14. Termination of Employment or Service. Each Option shall terminate
and may no longer be exercised if the Optionee ceases to perform services
for the Company or a Related Corporation in accordance with the following:
(a) If an Optionee ceases to be an active employee of the Company
or any Related Corporation other than by reason of death or retirement,
absent in any case a determination by the Committee to the contrary, any
Options which were exercisable by the Optionee on the date of cessation
of active employment may be exercised any time (i) before their
expiration date or (ii) within the respective periods listed below in
this Section 14(a), depending upon the reason for cessation of active
employment, whichever is earlier, but only to the extent that the
Options were exercisable when active employment ceased. Notwithstanding
the foregoing, in the event an Optionee fails to exercise an Incentive
Stock Option within three months after the date of termination, such
Option will be treated as a Non-Statutory Stock Option pursuant to
Section 422 of the Code. The respective periods following cessation of
active employment referred to in clause (i) of the first sentence of
this Section 14(a) are as follows:
Reason for Cessation Period Following Last Day
of Active Employment of Active Employment Within
Which Option May Be Exercised
Medical leave of absence During such leave
Personal leave of absence Three months
Discharge for cause or other None
severance of employment
determined by Committee to
warrant termination of option
Layoff or similar involuntary One Year
termination without cause<PAGE>
PAGE 30
Voluntary termination Three Months
(non-retirement)
(b) If an Optionee's employment terminates because of death,
Options may be exercised at any time before the expiration date or
within one year after the date of termination, whichever is earlier, but
only (i) if and to the extent that the Optionee was entitled to exercise
the Option at the date of the Optionee's death, and (ii) by the
Optionee's estate or by the person(s) who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death of the
Optionee.
(c) If an Optionee's employment terminates because of retirement,
any Options which were exercisable by the Optionee on the date of
termination of employment may be exercised any time before their
expiration date or within three years after the date of termination,
whichever is earlier, but only to the extent that the Options were
exercisable when employment ceased (absent a determination by the
Committee to the contrary at the time any such Options were granted or
prior to their expiration date), as provided hereunder. Notwithstanding
the foregoing, in the event an Optionee fails to exercise an Incentive
Stock Option within three months after the date of his or her
retirement, such Option will be treated as a Non-Statutory Stock Option.
15. Anti-Dilution Adjustments. Pro rata adjustment shall be made in
the maximum number of shares of Stock subject to the Plan or that may be
awarded to any individual in any year to give effect to any stock
dividends, stock splits, stock combinations, recapitalizations and other
similar changes in the capital structure of the Company. Pro rata
adjustments shall be made in the number, kind and price of shares of Stock
covered by any outstanding Option hereunder to give effect to any stock
dividends, stock splits, stock combinations, recapitalizations and similar
changes in the capital structure of the Company, or a merger, dissolution
or reorganization of the Company, after the date the Option is granted, so
that the Optionee is treated in a manner equivalent to that of holders of
the underlying Stock.
16. Change in Corporate Control. Upon a Change in Corporate Control,
each outstanding Option shall immediately become fully exercisable, and a
registration statement under the Securities Act of 1933, as amended, with
respect to shares covered by all outstanding Options, whether to be issued
by the Company or by any successor corporation, shall be effective at all
times during which the Options may be exercised and, to facilitate resale
of the shares, during the twelve months after the last exercise of the
Options.
17. Reservation of Stock. The Company shall at all times during the
term of the Options reserve and keep available such number of shares of the
Stock as will be sufficient to satisfy the requirements of this Plan and
shall pay all fees and expenses necessarily incurred by the Company in
connection therewith.<PAGE>
PAGE 31
18. Limitation of Rights in the Option Shares. The Optionee shall not
be deemed for any purpose to be a stockholder of the Company with respect
to any of the Option Shares except to the extent that the Option shall have
been exercised with respect thereto and, in addition, a certificate shall
have been issued therefor and delivered to the Optionee.
19. Termination and Amendment of the Plan. The Committee may at any
time terminate the Plan or make such amendment to the Plan as it shall deem
advisable, provided that, except as provided in Section 14, the Committee
may not, without the approval by the holders of a majority of the Stock,
change the classes of persons eligible to receive Options, increase the
maximum number of shares available for option under the Plan or extend the
period during which Options may be granted or exercised. No termination or
amendment of the Plan may, without the consent of the Optionee to whom any
Option shall theretofore have been granted, adversely affect the rights of
such Optionee under such Option.
20. Withholding. The Company's obligations to deliver shares of Stock
upon exercise of an Option shall be subject to the Optionee's satisfaction
of all applicable federal, state and local income and employment tax
withholding obligations. The Committee may, at or after grant, permit an
Optionee to satisfy such tax withholding requirements by delivery to the
Company of shares retained from the Option grant creating the tax
obligation having a value equal to the amount to be withheld. The value of
shares of Stock to be withheld or delivered shall be based on the
Committee's determination of the Fair Market Value of a share of Stock on
the date the amount of tax to be withheld is to be determined.
21. Notices. Any communication or notice required or permitted to be
given under the Plan shall be in writing, and mailed by registered or
certified mail or delivered in hand, if to the Company, to 141 Spring
Street, Lexington, Massachusetts 02173, Attention: Vice President - Human
Resources and, if to the Optionee, to the address as the Optionee shall
last have furnished to the communicating party.<PAGE>
PAGE 32
FRONT SIDE OF PROXY CARD
RAYTHEON COMPANY
Lexington MA 02l73
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Dennis J. Picard, Christoph L. Hoffmann and
Peter R. D'Angelo, or any one or more of them with full power of
substitution, as proxy or proxies for the undersigned, to vote all shares
of stock of the undersigned in Raytheon Company, with all the powers the
undersigned would have if personally present, at the Annual Meeting of
Stockholders of Raytheon Company to be held at the Executive Offices of the
Company, Lexington, Massachusetts, at 2:00 P.M., Wednesday, May 24, 1995,
and at any and all adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR Item 1 and FOR Item 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD USING THE ENCLOSED ENVELOPE.
Please sign this card exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President,
or other authorized officer. If a partnership, please sign in partnership
name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
-------------------------------- ------------------------------
-------------------------------- ------------------------------
-------------------------------- ------------------------------
==================================================================
REVERSE SIDE OF PROXY CARD
1. To elect four directors of the class whose term of office expires in
1995 to serve for a term of three years.
NOMINEES: Charles F. Adams, Theodore L. Eliot, Jr., James N. Land, Jr. and
Dennis J. Picard.
For / / Withhold / / For All Except / /
If you do not wish your shares voted "FOR" a particluar nominee, mark the
"For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee(s).
2. To approve the Raytheon Company 1995 Stock Option Plan.
For / / Against / / Abstain / /<PAGE>
PAGE 33
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Date
-----------------------------
---------------------------------- ----------------------------
Shareholder sign here Co-owner sign here<PAGE>
PAGE 34
FRONT PAGE OF PROXY CARD
RAYTHEON COMPANY
STOCK OWNERSHIP PLANS
SAVINGS AND INVESTMENT PLANS
Lexington MA 02l73
This Direction is Solicited on Behalf of the Board of Directors.
The undersigned hereby directs Fidelity Management Trust Company, Trustee
of the Raytheon Stock Ownership Plan ("SOP") and the Savings and Investment
Plan ("SIP"), to vote all shares of Raytheon Common Stock of the
undersigned in the SOP and/or in the Common Stock Fund of the SIP at the
Annual Meeting of Stockholders of Raytheon Company to be held at the
Executive Offices of the Company, Lexington, Massachusetts, at 2:00 P.M.,
Wednesday, May 24, 1995, and at any and all adjournments thereof.
This voting direction when properly executed will be voted in the manner
directed herein by the undersigned SOP/SIP Participant. If no direction is
made, this direction will be voted FOR Item 1 and FOR Item 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD USING THE ENCLOSED ENVELOPE.
Please sign this card exactly as your name appears hereon. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
-------------------------------- ------------------------------
-------------------------------- ------------------------------
-------------------------------- ------------------------------
---------------------------------------------------------------
REVERSE SIDE OF PROXY CARD
1. To elect four directors of the class whose term of office expires in
1995 to serve for a term of three years.
NOMINEES: Charles F. Adams, Theodore L. Eliot, Jr., James N. Land, Jr. and
Dennis J. Picard.
For / / Withhold / / For All Except / /
If you do not wish your shares voted "FOR" a particluar nominee, mark the
"For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee(s).
2. To approve the Raytheon Company 1995 Stock Option Plan.
For / / Against / / Abstain / /<PAGE>
PAGE 35
3. In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting.
Date
------------------------------
----------------------------------
Shareholder sign here<PAGE>
