Exhibit 10.2
December 14, 2005
Mr. Gregory S.
Shelton
P.O. Box 35070
Tucson, AZ 95740
Re: Transition
Agreement
Dear Greg:
Please accept this letter confirming
the understandings we have reached with respect to your transition
to retirement and resignation as Vice President – Engineering
and Technology of Raytheon Company.
1. Separation Date . The
effective date of your separation from active employment with
Raytheon and your resignation as Vice President – Engineering
and Technology (“Separation Date”) will be
January 1, 2006.
2. Salary Continuance/Bonus :
As part of the transition to your separation, you will receive
bi-weekly salary continuance payments for one (1) year at your
current base salary, subject to normal statutory withholding. In
establishing the start date of this one-year period, the Company
will add to the Separation Date any time remaining in your Extended
Personal Time Off (“EPTO”) account and legacy PTO
account as of the Separation Date. Our records indicate that, as of
the date of this Agreement, the balance in your EPTO and legacy PTO
accounts totals 148.3 days. This EPTO and legacy PTO balance will
provide payments to you through August 1, 2006. Your salary
continuance payments will begin as of August 2, 2006. At the
end of this period, it is our mutual understanding that you will
retire from Raytheon.
You will also receive a lump-sum
payment equal to your 2005 Results Based Incentive
(“RBI”) Bonus target of 60% ($196,573.00), payable in
2007 at the time this bonus is normally paid to active employees
for the 2006 RBI bonus performance period.
3. Results Based Incentive
Bonus : You will receive an RBI Bonus based on the 2005
corporate funding level as of the date in 2006 when such bonuses
are scheduled to be paid to similarly situated
employees.
4. Long-Term Performance Plan
(LTPP) : You will continue to participate in the LTPP for the
performance cycle 2004-2006. Upon completion of the performance
period, you will receive a payout in accordance with the terms of
the plan at 100% of the award based on performance for the entire
three-year program.
5. Restricted Stock
Acceleration : Effective as of your Separation Date, the
restrictions on the restricted shares awards dated June 23,
2004 and May 9, 2005 shall lapse.
6. Stock Options : Treatment
of your stock options will be according to the retirement
provisions of the Plans under which they were granted and in
accordance with your Grant Agreements. For purposes of the exercise
of your vested stock options, your last day actually worked is
January 1, 2006.
7. Fringe Benefits : During
the period of salary continuance, you may continue to participate,
on an active employee basis, in the Raytheon Savings and Investment
Plan and in Company-sponsored medical, vision, dental, health care
reimbursement and employer-paid life insurance plans. At the end of
this period, COBRA benefits will be made available for a period not
to exceed eighteen (18) months. At the end of the 18-month
COBRA period, if you have chosen to retire, you are eligible to
participate in Raytheon’s retiree medical program under the
provisions applicable to participants in the Raytheon
Non-Bargaining (General Dynamics) Retirement Plan. Your
participation in other Company-sponsored plans, including optional
life insurance, accidental death and dismemberment, short-term
disability, long-term disability, and dependent care reimbursement,
shall cease as of the end of your EPTO/legacy PTO period, unless
you choose to end your participation earlier.
For the period January 1, 2006,
through June 30, 2006, you will reimburse the Company for the
value of the benefits provided to you during that period of
executive financial planning services provided by AYCO ($833.33 per
month), your car allowance ($1,166.67 per month), and excess
liability coverage ($56.25 per month). The total of these monthly
amounts is $2,056.25, and the total for the six-month period is
$12,337.50. By July 15, 2006, the Company will make a cash
payment to you equal to the reimbursements that you paid to the
Company for January 1, 2006, though June 30, 2006. This
arrangement is necessary in order to comply with recent tax laws,
since you are among the 50 highest-paid officers of the Company.
Alternatively, you may choose to suspend one or more of these
benefits from January 1, 2006, through June 30, 2006, and
have the Company pay you the value of the suspended benefits by
July 15, 2006. Executive financial planning services provided
by AYCO, your car allowance, and excess liability coverage will be
available to you for the balance of the salary continuation
period.
8. Personal Time Off
(“PTO”) : You will be paid any unused accrued PTO,
which as of today is 35 hours.
9. Mutual Release : You and
the Company will execute the Mutual Release attached
hereto.
10. Consulting Services :
During the salary continuation period contained in paragraph 2
above, you agree to provide consulting services to the Company for
a fee of $160.00 per hour. Requests for your services will be
coordinated through John Malanowski. You will be entitled to
reimbursement for travel and incidental expenses incurred in the
performance of these services in accordance with the normal Company
Travel and Expense Reimbursement policies for Corporate
Officers.
11. Litigation Cooperation :
You agree that, in the event that Raytheon Company becomes a party
in any legal or administrative proceeding or asserted claim
relating to events which occurred during your employment and about
which you have knowledge, you will
cooperate to the fullest extent reasonably
possible in the preparation and presentation by Raytheon Company in
the prosecution or defense, including without limitation the
execution of affidavits or other documents providing information
requested by Raytheon Company. The Company will reimburse you for
any out-of-pocket costs, including but not limited to legal fees,
which you incur in connection with providing such litigation
cooperation. In the event that such litigation cooperation would be
expected to require an appreciable period of time, the Company
agrees to discuss at that time an appropriate fee for your
services.
12. Ethics Compliance : You
hereby represent and warrant that, to the best of your knowledge,
you have complied in full with all Raytheon Company policies
related to ethics, and have disclosed to Raytheon Company all
matters which were required to be disclosed by said policies. In
particular, you represent and warrant that, to the best of your
knowledge except as so disclosed by you, you have no information
which you believe could be the basis for any charge of a violation
of law by Raytheon Company or persons associated with Raytheon
Compan
