L3Harris Technologies [LHX] on Monday said its has formed a new committee within its board of directors charged with quickly reviewing operational performance, cost structure, its portfolio, and ways to enhance shareholder value, complementing efforts already underway in the company.
The Business Review Committee will be co-chaired by Bill Swanson, a former chairman and CEO of then Raytheon Technologies before retiring in 2014, and Roger Fradin, a member of the company’s board or a predecessor board since 2026. Fradin, 69, chairs the Finance Committee. Swanson, 74, is newly appointed to the L3Harris board.
L3Harris said in a government filing that the Business Review Committee will aim to report its findings and recommendations to the board by the company’s 2024 annual shareholders’ meeting. The 2023 annual meeting was held on April 21.
The review begins just as the company hired a new chief financial officer (CFO), Ken Bedingfield, who most recently led defense technology startup Epirus and before that was CFO of Northrop Grumman
[NOC].
“We continue to take purposeful action as we implement our strategy to become a national security and technology-focused company,” Chris Kubasik, chairman and CEO of L3Harris, said in a statement. “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.”
In addition to the Commercial Aviation Solutions business, L3Harris has divested other units the past few years, including its security detection business, a geospatial data services business, electron devices and microwave divisions, businesses for military training and combat propulsion systems, and others. In 2023, the company has also spent billions of dollars on two key acquisitions, the tactical data link product line of ViaSat [VSAT] and Aerojet Rocketdyne.
Capital Alpha Partners defense analyst Byron Callan in a client note on Monday said the L3Harris announcement suggests further divestitures and portfolio shaping may be ahead between 2024 and 2026. He also said more defense companies may look to divest businesses that may not do well in what his firm sees “as a challenging defense market in the 2020s.”
The Business Review Committee also includes Kirk Hachigian, 64, who like Swanson is newly appointed to the board, and Rita Lane, 60, who has been a director since 2018. Hachigian is a former chairman and CEO of windows and doors manufacturer JELD-WEN Holding [JELD]. Bill Brown, former chairman and CEO of L3Harris, will serve as a special adviser to the committee.
“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,” Kubasik said.
L3Harris’s board now stands at 14 members, 13 of whom are independent. The company will add another independent director in 2024.
L3Harris is also changing its long-term incentive compensation plan to make relative shareholder return a core metric for performance share units. Relative shareholder return is currently a modifier for incentive performance.