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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

RTX Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


Table of Contents





RTX
Notice of 2024 Annual
Meeting of Shareowners
and Proxy Statement

 


Table of Contents

Our Values
 

At RTX, we hold ourselves to the highest standard and live by our values:

Trust  
We act with integrity and do the right thing.

Respect  
We embrace diverse perspectives and treat others the way they want to be treated.

Accountability  
We honor our commitments, expect excellence and take pride in our work.

Collaboration  
We share insights, learn together and perform as a team.

Innovation  
We experiment, design, build and transform with speed and agility.

These values drive our actions, behaviors and performance with a vision for a safer, more connected world.



Table of Contents

March 11, 2024

Notice of 2024 Annual
Meeting of Shareowners
 

PLACE

Our 2024 Annual Meeting will be held in a virtual-only format at: www.virtualshareholdermeeting.com/RTX2024

DATE AND TIME

May 2, 2024
8:00 a.m. Eastern time

Your vote is very important. Please submit your proxy card or voting instruction form as soon as possible.

Who may vote

If you owned shares of RTX Common Stock at the close of business on March 5, 2024, you are entitled to receive this Notice of the 2024 Annual Meeting and to vote at the meeting, either during the virtual meeting or by proxy.

How to attend

To be admitted to the 2024 Annual Meeting via the website, enter the 16-digit voting control number found on your proxy card, voting instruction form, notice of internet availability of proxy materials or email notification. You can find detailed instructions on pages 110-112 of this Proxy Statement.

Please review this Proxy Statement and vote in one of the four ways shown to the right under “Voting Methods Available to You.”

By Order of the Board of Directors.

Edward G. Perrault
Corporate Vice President & Secretary

AGENDA

1 Election of the Thirteen Director Nominees Listed in this Proxy Statement
2 Advisory Vote to Approve Executive Compensation
3 Appointment of PricewaterhouseCoopers LLP to Serve as Independent Auditor for 2024
4 Approve an Amendment to the RTX Corporation 2018 Long-Term Incentive Plan
5 Shareowner Proposal Requesting a Lobbying Transparency Report
6 Shareowner Proposal Requesting a Report on Full Value Chain Emissions Reduction Plan
7 Shareowner Proposal Requesting a Human Rights Impact Assessment


VOTING METHODS AVAILABLE TO YOU

      Internet
Visit the website shown in your proxy card, voting instruction form or electronic communications.
Telephone
Call the number shown in your proxy card, voting instruction form or electronic communications.
Mail
Sign, date and return your proxy card or voting instruction form in the enclosed envelope.
During the Meeting
Attend the 2024 Annual Meeting online. See pages 110-112 for instructions.

RTX 2024 PROXY STATEMENT   i


Table of Contents

Table of Contents
 

Notice of 2024 Annual Meeting of Shareowners i
Proxy Summary 1
       
CORPORATE GOVERNANCE
Proposal 1
Election of Directors 11
Nominees 14
Corporate Governance 21
Compensation of Directors 36
Share Ownership 38
     
EXECUTIVE COMPENSATION
Proposal 2
Advisory Vote to Approve Executive Compensation 40
Compensation Discussion and Analysis 42
Executive Summary 43
How We Make Pay Decisions and Assess Our Programs 47
2023 Principal Elements of Compensation 49
2023 CEO Pay Decisions 56
2023 Pay Decisions for Other NEOs 58
Other Compensation Elements 62
Other Executive Compensation Policies and Practices 65
Report of the Human Capital & Compensation Committee 67
Compensation Tables 68
CEO Pay Ratio 81
Pay versus Performance 83
     
AUDIT
Audit Committee Report 89
Proposal 3
Appointment of PricewaterhouseCoopers LLP to Serve as Independent Auditor for 2024 90
 
OTHER COMPANY PROPOSALS
Proposal 4
Approve an Amendment to the RTX Corporation 2018 Long-Term Incentive Plan 92
 
SHAREOWNER PROPOSALS
Proposal 5
Shareowner Proposal Requesting a Lobbying Transparency Report 100
Proposal 6
Shareowner Proposal Requesting a Report on Full Value Chain Emissions Reduction Plan 103
Proposal 7
Shareowner Proposal Requesting a Human Rights Impact Assessment 106
 
OTHER SHAREOWNER INFORMATION
Frequently Asked Questions About the Annual Meeting 110
Other Important Information 116
 
APPENDICES
Appendix A:
Reconciliation of GAAP Measures to Corresponding Non-GAAP Measures 120
Appendix B:
Financial Performance Metrics Used in Incentive Compensation Plans 122
Appendix C:
RTX Corporation Long-Term Incentive Plan 123

 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareowners to be held on May 2, 2024. This Notice of the 2024 Annual Meeting of Shareowners and Proxy Statement, as well as RTX’s 2023 Annual Report, are available free of charge at www.proxyvote.com or at www.rtx.com/proxy. References in either document to our website are for the convenience of readers, and information available at or through our website is not a part of, nor is it incorporated by reference in, the Proxy Statement or Annual Report.

The Board of Directors of RTX Corporation (“RTX,” the “Company” or the “Corporation”) is soliciting proxies to be voted at our 2024 Annual Meeting of Shareowners on May 2, 2024, and at any postponed or reconvened meeting. We expect that the proxy materials or a notice of internet availability will be mailed and made available to shareowners beginning on or about March 11, 2024. At the meeting, votes will be taken on the matters listed in the Notice of 2024 Annual Meeting of Shareowners.

ii   RTX 2024 PROXY STATEMENT


Table of Contents

Proxy Summary
This section highlights selected information in this Proxy Statement. Please review the entire Proxy Statement and our 2023 Annual Report before voting your shares.

Annual Meeting Agenda

      Board recommendation       Page numbers
Proposal 1:
Election of Directors FOR each director nominee 11–20
Proposal 2:
Advisory Vote to Approve Executive Compensation FOR 40–41
Proposal 3:
Appointment of PricewaterhouseCoopers LLP to Serve as Independent Auditor for 2024 FOR 90–91
Proposal 4:
Approve an Amendment to the RTX Corporation 2018 Long-Term Incentive Plan FOR 92–99
Proposal 5:
Shareowner Proposal Requesting a Lobbying Transparency Report AGAINST 100–102
Proposal 6:
Shareowner Proposal Requesting a Report on Full Value Chain Emissions Reduction Plan AGAINST 103–105
Proposal 7:
Shareowner Proposal Requesting a Human Rights Impact Assessment AGAINST 106–109

2023 Performance Highlights

In 2023, we demonstrated business resilience, shaped our Company to capitalize on evolving customer demands, advanced our key strategic priorities, and took decisive action to ensure the safety and quality of our products, all while delivering solid results.

With commercial air travel returning to pre-pandemic levels, along with an elevated global threat environment, the demand for our commercial aerospace and defense products is strong, as demonstrated by our record backlog of $196 billion at year-end.

We completed the realignment of our business units to form three market-leading segments—Collins Aerospace, Pratt & Whitney and Raytheon. This has positioned us to better meet our customers’ needs, leverage our scale and drive both technology advancements and cost efficiencies.

In July, we determined that a rare condition in powder metal manufactured between the fourth quarter of 2015 and the third quarter of 2021 that was used to make certain Pratt & Whitney engine parts would require accelerated inspection and retirement of potentially affected parts. We promptly developed and began to execute a robust fleet management and recovery plan to address this issue. In meeting the challenges posed by this matter, as well as supply chain pressures and continued inflation, we demonstrated our business resilience, exceeding the adjusted net sales, free cash flow (“FCF”) and adjusted earnings per share (“EPS”) goals we communicated to investors in early 2023.(1) We also returned $16.1 billion to investors through dividends and share repurchases and increased our dividend per share by 7.3%.(2)

We continued to execute on our structural cost reduction plans and operational modernization initiatives, capturing $1.7 billion in cost synergies since the Merger,(3) exceeding both our original and revised 2025 goals ($1 billion and $1.5 billion, respectively), and putting us on track to achieve our newly announced 2025 goal of $2 billion. At the same time, with new bookings of $95 billion and a book-to-bill ratio of 1.28, we remained committed to achieving sustained, profitable growth.

With our industry-leading commercial aerospace and defense franchises and our sharp focus on strategic priorities, we are confident in our ability to deliver significant long-term value for our shareowners.

(1) Adjusted net sales, FCF and adjusted EPS are non-GAAP financial measures. See Appendix A on pages 120-121 for more information.
(2) In the second quarter of 2023, we increased our quarterly dividend from $0.55 per share to $0.59 per share.
(3) United Technologies Corporation (“UTC”) and Raytheon Company (“RTN”) merged on April 3, 2020 (the “Merger”).

RTX 2024 PROXY STATEMENT    1


Table of Contents

PROXY SUMMARY | 2023 PERFORMANCE HIGHLIGHTS

FINANCIAL PERFORMANCE

We overcame challenges to deliver solid financial results in 2023.

DILUTED EARNINGS PER SHARE
($ per share)
      CASH FLOW(2)
(in billions)
NET INCOME
(in billions)
SALES
(in billions)

2023 AT A GLANCE

1.28 7.3% increase $78 billion $118 billion
book-to-bill ratio
in dividend per share
defense backlog at year-end
commercial aerospace backlog at year-end
     
22%
$16.1 billion
87th consecutive year
commercial original equipment and aftermarket sales growth at Pratt & Whitney and Collins Aerospace
returned to investors through dividends and share repurchases
paying a dividend to our shareowners

LEADERSHIP TRANSITION

Following several years of a deliberate, disciplined succession planning process, the RTX Board of Directors announced a leadership transition, where Christopher T. Calio will succeed Gregory J. Hayes as Chief Executive Officer at our 2024 Annual Meeting of Shareowners on May 2, 2024. Mr. Hayes will continue to serve as Executive Chairman of RTX. Mr. Calio was also appointed to the Board of Directors, effective December 14, 2023. Fredric G. Reynolds will continue to serve as the Board’s independent Lead Director.

Christopher T.
Calio
President & Chief
Executive Officer
   
Gregory J.
Hayes
Executive
Chairman
   
Fredric G.
Reynolds
Independent
Lead Director

(1) See Appendix A on pages 120-121 for more information regarding non-GAAP financial measures.
(2) GAAP cash flow is cash flow from operating activities of continuing operations, while non-GAAP cash flow is free cash flow from continuing operations.

2     RTX 2024 PROXY STATEMENT


Table of Contents

PROXY SUMMARY | 2023 PERFORMANCE HIGHLIGHTS

PROGRESS ON OUR KEY STRATEGIC PRIORITIES

In 2023, we continued to execute on our key strategic priorities, including:

Transforming our Company

In January of 2023, we announced a plan to strengthen our market position and generate additional revenue and technology synergies by realigning our business units.

In July, we announced the completion of our realignment from four to three market-leading businesses—Collins Aerospace, Pratt & Whitney and Raytheon.

These transformative steps empower us to work as one to tackle tomorrow's challenges and to propel the aerospace and defense industry forward.

Enhancing productivity and managing costs

In 2023, we continued to deliver on our commitments to enhance productivity and manage costs. Examples include:

To diagnose and address supply chain challenges, we deployed specialists to work directly onsite with over 400 suppliers, focusing on our most impacted locations and on areas critical to our business.
We continued to transform RTX through the rollout of our CORE operating system and implementation of Industry 4.0 initiatives in modernization, smart factories and automation. We also connected numerous systems and priority factories to a common analytics platform to improve our operational performance.
Our digital transformation efforts have allowed us to achieve 100% network modernization and over 50% cloud adoption of our business operations.
We have taken action to offset inflationary headwinds through aggressive cost-reduction initiatives, including reducing our U.S. data center and global office space footprints by 60% and 15%, respectively. We have also decreased our use of digital applications by 30%.

Prioritizing product safety and quality and supporting our customers

At RTX, our accountable, responsible culture is an essential aspect of our work and our values. Ensuring that our products are safe and secure is our highest priority, and one we will never compromise.

To support this commitment, we have robust systems and processes for monitoring product safety and quality, which enable us to detect potential issues and promptly investigate and address them.

In 2023, these systems and processes led us to detect the Pratt & Whitney powder metal manufacturing matter (as discussed on page 30), We identified and disclosed the issue and worked diligently to develop fleet management plans to address it. We continue to take proactive steps to mitigate the operational impact to our customers and to ensure the safe operation of our fleet as we execute on our fleet management plan.

Strategically investing in technology and innovation and managing our business portfolio

We are investing in strategic capabilities and divesting noncore businesses to ensure our portfolio is balanced with strong businesses and market-leading franchises. During 2023, we:

Invested nearly $9.7 billion in capital expenditures and Company- and customer-funded research and development to drive sales growth over the long term.
Signed agreements to divest Collins Aerospace’s actuation and flight control business and Raytheon's Cybersecurity, Intelligence & Services business.
Continued to accelerate our partnerships with innovative companies and technologies, including investments by RTX Ventures in seven emerging companies in 2023 that align with our technology priorities.

Expanding and executing on capital deployment priorities

We remain committed to returning value to our shareowners. As a result, we took the opportunity to accelerate into 2023 share repurchases that we had planned for 2024 and 2025 with a $10 billion accelerated share repurchase (“ASR”) program. Since the Merger, we have returned $29.4 billion in capital to our shareowners through dividends and share repurchases, surpassing our 2025 commitment of $20 billion two years ahead of schedule. We further announced an expansion of our 2025 capital return commitment to $36–$37 billion.

RTX 2024 PROXY STATEMENT    3


Table of Contents

PROXY SUMMARY | EXECUTIVE COMPENSATION OVERVIEW

Executive Compensation Overview

HOW WE ALIGN PAY WITH PERFORMANCE

Our executive compensation program is structured to advance our fundamental objective: aligning our executives’ compensation with the long-term interests of our shareowners.

The primary goal of the Human Capital & Compensation Committee (the “Committee”) has been to design a program that rewards both financial and operating performance and effective strategic leadership, and advances our commitment to our corporate responsibility initiatives—all key elements in building sustainable shareowner value. This pay-for-performance philosophy is embedded into our Guiding Principles (see page 45), which underpin the Committee’s approach to program design.

How does our executive compensation program align pay with performance?

Performance Metrics. We use performance metrics that recognize and reward performance contributions that drive strategy, maximize performance and deliver results for our shareowners and customers.
“At-Risk” Compensation. The largest portion of compensation for our Named Executive Officers (“NEOs”) is “at-risk” compensation—annual and long-term incentive awards that are contingent upon Company performance in our key financial and Corporate Responsibility Scorecard metrics (see page 5), and our stock price performance.

2023 Pay Decisions

In making annual pay decisions, the Committee focuses primarily on “total direct compensation,” which includes our three principal elements of executive compensation: base salary, annual incentives and long-term incentives (“LTI”). Total direct compensation is set each year to reflect the Committee’s assessment of Company, business unit and individual performance. 2023 total direct compensation includes 2023 base salary, 2023 annual incentives paid in the first quarter of 2024 and the LTI grant values approved by the Committee in February 2024, which were based on its assessment of 2023 performance and the competitive market pay for each NEO’s role. The February 2023 LTI award grant date fair values (accounting values at the time of grant) shown in the Summary Compensation Table on page 68 reflect the Committee’s assessment of 2022 performance and the competitive market pay for each NEO’s role at that time, and therefore are excluded from 2023 total direct compensation. Total direct compensation, as presented below, also uses year-end salary levels and does not reflect any salary changes that may have occurred during the year, as the Summary Compensation Table does. For more details on our principal elements of compensation, see pages 49-55, and on total direct compensation, see page 57.

The table below shows 2023 total direct compensation for our NEOs, as described above.

2023 PAY DECISIONS AND PAY MIX

      ■ Base Salary      ■ Annual Incentive      ■ LTI      Base Salary
($K)
      Annual Incentive
($K)
      LTI
($K)(1)
     
Total
($K)

Gregory J. Hayes

$1,675 $2,780 $10,000 $14,455

Neil G. Mitchill, Jr.

$975 $1,100 $5,500 $7,575

Christopher T. Calio

$1,010 $1,410 $13,500 $15,920

Stephen J. Timm

$850 $840 $4,500 $6,190

Wesley D. Kremer(2)

$905 $820 $0 $1,725
“At-Risk”

(1) Reflects values approved by the Committee for the LTI award granted on February 8, 2024. These values differ from those that will be reported in the Summary Compensation Table in 2025, which will be calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation—Stock Compensation.
(2) Mr. Kremer served in the role of President, Raytheon during 2023. On January 4, 2024, we announced that effective January 7, 2024, he would step down from this role and would continue to operate in a transitional capacity as Special Advisor to the President & Chief Operating Officer until his retirement in March 2024. As a result, Mr. Kremer was not granted an LTI award on February 8, 2024.

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PROXY SUMMARY | EXECUTIVE COMPENSATION OVERVIEW

2023 Performance Metrics

The Committee believes that the metrics used for our annual and long-term incentive plans are essential indicators of the long-term health of our Company and measure particularly salient aspects of Company performance, therefore serving the fundamental objective of our executive compensation program.

Metrics for the Annual Incentive Plan (“AIP”)(1)

FINANCIAL METRICS

Earnings measure the immediate impact of operating decisions on the Company’s annual performance. For our Corporate executives, we use net income as our RTX-wide earnings metric, and for our business units, we use operating income.

Free Cash Flow (“FCF”) measures our ability to generate cash to fund our operations and key business investments—whether that means funding critical research and development, strategic acquisitions, paying down debt or distributing earnings to our shareowners.

CORPORATE RESPONSIBILITY SCORECARD (“CRS”)

People & Culture drives progress toward our long-term diversity, equity and inclusion (“DE&I”) and talent objectives through two annual metrics: total representation percentage and employee retention rate.

Sustainability drives progress toward our long-term environmental sustainability objectives through two annual metrics: greenhouse gas emissions and water usage.

Metrics for Performance Share Units (“PSUs”)(1)

Adjusted Earnings Per Share (“EPS”) measures the Company’s ability to create long-term, sustainable earnings that will ultimately drive total shareowner return.

Return on Invested Capital (“ROIC”) measures the efficiency with which we allocate capital resources, considering not just the quantity of earnings but also the quality of earnings and investments that drive sustainable growth.

Relative Total Shareowner Return (“TSR”) measures our ability to return value to our shareowners compared to competing investment opportunities like the S&P 500 Index and our Core Aerospace & Defense (“A&D”) Peers and reinforces our program’s pay-for-performance objectives.

(1) See Appendix B on page 122 for definitions of financial metrics and page 51 for definitions of Corporate Responsibility Scorecard metrics.

How 2023 Performance Affected Incentive Payouts

2023 Annual Incentives. The following chart shows the RTX-wide goals established by the Committee for AIP purposes, our 2023 performance relative to these goals, how these results translated into the 2023 RTX performance factor and the discretionary adjustments made by the Committee.

Metric(2) Weight     Threshold     Target     Maximum     Actual     Performance
Factor
RTX Earnings—Adjusted Net Income ($M) 40% $6,305 $7,420 $8,680 $7,436 101%
RTX Free Cash Flow ($M) 40% $3,750 $4,750 $6,350 $4,753 100%
RTX Total Representation (%) 5% 42.6% 43.3% 44.6% 42.9% 71%
RTX Employee Retention Rate (%) 5% 92.0% 93.3% 95.5% 95% 177%
RTX Greenhouse Gas Emissions
(metric tons of CO
2)
5% 1,694,499 1,472,665 1,275,242 1,452,220 110%
RTX Water Usage (gallons) 5% 1,743,109,069 1,586,117,140 1,439,015,871 1,613,500,499 91%
2023 RTX Performance Factor (calculated based on formula) 103%
2023 RTX Performance Factor (with Committee discretion) 98%

(2) Financial results for our business units differ from the above table (see page 52 for details). Adjusted net income and free cash flow are financial metrics used solely for AIP purposes and are defined in Appendix B on page 122. These metrics may differ from other non-GAAP metrics used and described in Appendix A. See page 51 for definitions of the Corporate Responsibility Scorecard metrics.

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PROXY SUMMARY | EXECUTIVE COMPENSATION OVERVIEW

As discussed in more detail on page 51, the financial performance definitions used for AIP purposes exclude the impact of changes in tax laws and accounting rules, restructuring costs, acquisitions and divestitures (including acquisition accounting adjustments), and significant and/or nonrecurring items. These adjustments help to align our annual incentive goals and results with the non-GAAP financial expectations and performance we communicate to shareowners and ensures our annual incentive plan drives short-term decision-making made in the best interests of RTX’s long-term business strategies. Consistent with how we reported adjusted net income to our shareowners for the year, the AIP definition excludes the impact of the Pratt & Whitney powder metal manufacturing matter. Nevertheless, the Committee considered the impact of this matter on our shareowners and customers and reduced the RTX performance factor from 103% to 98%, and further reduced the performance factors used for Mr. Hayes and Mr. Calio’s annual incentive awards to 83% and 93% of target, respectively. The Committee believes these actions reinforce our program’s pay-for-performance objectives.

2021–2023 PSUs. As previously disclosed, due to the challenges in setting long-term financial performance goals in early 2021, as a result of the COVID-19 pandemic and its significant impact on the aerospace industry, the Committee used a modified PSU design for 2021, setting one-year EPS and ROIC goals and increasing the three-year TSR weighting from 30% to 50%. As the uncertainty around the pandemic waned, the Committee returned to three-year financial performance goals for all metrics and our prior metric weightings, thus ensuring that PSUs granted in 2022 and thereafter align with our long-term strategic plan.

The table below shows RTX’s performance for each of the four metrics used for the PSUs granted in 2021, resulting in the award vesting at a 143% performance factor. Though the Pratt & Whitney powder metal manufacturing matter (discussed on page 1) did not impact the adjusted EPS and ROIC performance metrics, both relative TSR metrics, which accounted for 50% of the total vesting, were calculated based on RTX's stock price performance after disclosure of the powder metal matter.

Metric* Weight     Threshold     Target     Maximum     Actual     Payout
Factor
Adjusted EPS 25% $3.00 $3.55 $3.90 $4.27 200%
Return on Invested Capital 25% 3.20% 3.70% 4.05% 4.54% 200%
TSR vs. S&P 500 Index Companies 25% 25th percentile 50th percentile 75th percentile 55.4th percentile 122%
TSR vs. Core A&D Peers 25% 25th percentile 50th percentile 75th percentile 33.3rd percentile 50%
Performance Factor 143%
* See Appendix B of our proxy statement filed on March 14, 2022, for a definition of adjusted EPS and return on invested capital used for the purposes of the 2021-2023 PSUs.

The Committee believes that the impact of the Pratt & Whitney powder metal manufacturing matter on 2021–2023 PSU vesting results, and the actions it took to reduce the Corporate performance factor for the 2023 AIP, demonstrate that our program is achieving its fundamental objective of aligning executive pay with the interests of our shareowners.

COMPENSATION IMPACT OF CEO TRANSITION

As previously noted, on December 14, 2023, the Board of Directors appointed Mr. Calio to the role of President & Chief Executive Officer, commencing at our 2024 Annual Meeting of Shareowners on May 2, 2024. Mr. Calio also joined the Board on December 14, 2023. Mr. Hayes will remain a Company employee and continue to serve as Executive Chairman of the Board, while Fredric G. Reynolds will continue to serve as our independent Lead Director.

In connection with this transition, the Committee and the Board approved the following compensation actions:

      Christopher T. Calio       Gregory J. Hayes
Base Salary Increase from $1,010,000 to $1,450,000, effective May 2, 2024 Decrease from $1,675,000 to $1,100,000, effective May 2, 2024
Annual Incentive Target % Increase from 150% to 175% of base salary, effective May 2, 2024 Decrease from 200% to 125% of base salary, effective May 2, 2024
LTI LTI award with an estimated grant value of $13,500,000 awarded on February 8, 2024 LTI award with an estimated grant value of $10,000,000 awarded on February 8, 2024

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PROXY SUMMARY | GOVERNANCE AND BOARD OVERVIEW

Governance and Board Overview

BOARD NOMINEES
Skills and Expertise   Diversity
Tracy A. Atkinson
Retired Executive Vice President & Chief
Administrative Officer, State Street Corporation
2020
3
Christopher T. Calio
President & Chief Operating Officer,
RTX Corporation
2023
0
Leanne G. Caret
Retired Executive Vice President, The Boeing Company
and Former CEO, Boeing Defense, Space and Security
2023
1
Bernard A. Harris, Jr.
Chief Executive Officer and Managing Partner,
Vesalius Ventures, Inc.
2021
1
Gregory J. Hayes
Chairman & Chief Executive Officer,
RTX Corporation
2014
1
George R. Oliver
Chairman & Chief Executive Officer,
Johnson Controls International plc
2020
1
Robert K. (Kelly) Ortberg
Retired Chairman, President & Chief Executive Officer,
Rockwell Collins, Inc.
2020
1
Ellen M. Pawlikowski
General, U.S. Air Force (Retired) and
Former Commander, Air Force Materiel Command
2020
1
Denise L. Ramos
Retired Chief Executive Officer & President,
ITT Inc.
2018
2
Fredric G. Reynolds
Retired Executive Vice President &
Chief Financial Officer, CBS Corporation
2016
1
Brian C. Rogers
Retired Chairman,
T. Rowe Price Group, Inc.
2016
1
James A. Winnefeld, Jr.
Admiral, U.S. Navy (Retired) and
Former Vice Chairman of the Joint Chiefs of Staff
2020
1
Robert O. Work
Retired Deputy Secretary of Defense,
U.S. Department of Defense
2020
0

Women
Men

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PROXY SUMMARY | GOVERNANCE AND BOARD OVERVIEW

NOMINEE HIGHLIGHTS

The nominees for election at the Annual Meeting have a broad range of skills, expertise, attributes and experiences. This enables them to bring a diversity of perspectives to the boardroom, to make substantial contributions to Board deliberations and to provide effective oversight of the Company’s strategy and business plans.

Current or Former CEOs

Women

STEM Degrees

Other Public Company Board Experience

Experience

Senior Leadership
     
Experience in Industry
     
Financial
     
Risk Management/Oversight
     
International
     
Technology/Cybersecurity
     
Government
     
Environmental, Social and Governance (ESG)
     
Manufacturing, Operations and Supply Chain

* Includes Christopher T. Calio's service as CEO of RTX, which commences on May 2, 2024.

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PROXY SUMMARY | GOVERNANCE AND BOARD OVERVIEW

These nominees reflect the significant changes to the Board and refreshment efforts since the Merger, including the addition of three new directors.

TENURE ON RTX BOARD       AGE OF NOMINEES

BOARD ENGAGEMENT IN 2023

Our Board worked closely with management in 2023 to provide strong oversight of execution on key risk management, business realignment, succession planning, strategic investment and capital allocation priorities.

99%       5
overall attendance by directors at the ten Board meetings held during 2023
number of special Board and committee meetings during 2023
99% 100%
overall attendance by directors at Board and committee meetings in 2023
overall attendance by directors at the 2023 Annual Meeting of Shareowners

Board priorities and actions:

Oversight of our execution on key business and financial priorities, including business realignment and return of capital
Extensive engagement on the Pratt & Whitney powder metal manufacturing matter, including review of the effectiveness of our internal systems and processes for monitoring, detecting and addressing product quality and safety issues, as well as oversight of management’s response to the issue
Other areas of risk management, including compliance risks and risks related to cybersecurity and artificial intelligence
CEO and senior management succession planning
Our response to evolving geopolitical and other external conditions, including inflation, interest rates and the ongoing conflict in Ukraine
Proposing and executing the repeal of the only supermajority voting provision in our governing documents, as part of the Board’s commitment to strong governance and accountability to shareowners
Oversight of our execution of ESG-related initiatives in furtherance of our ESG strategy and vision
Evaluating Board committee leadership and composition for potential changes

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PROXY SUMMARY | GOVERNANCE AND BOARD OVERVIEW

STRENGTHENING DIRECTOR OVERSIGHT

Essential to each director’s ability to provide robust and effective oversight is a deep understanding of our businesses, our strategic focus and significant risks we may encounter, as well as an ongoing awareness of new developments and emerging risks that may arise during their Board service.

Below are some of the ways in which our directors are able to gain such understanding and awareness.

Orientation and Continuing Education
New directors participate in individualized orientation sessions to learn the roles and responsibilities of the Board and the committees on which they will serve. They also learn about the Company’s strategy, our businesses, our technologies, our compliance programs, our corporate affairs and community relations, our financial statements and any significant financial, accounting and risk management matters. Outside continuing education programs are made available to directors at the Company’s expense.
     
Site Visits
As part of our directors’ continuing education, the Board strives to visit at least one of our businesses each year. Directors may also conduct site visits for specific purposes. There were visits by various directors to three of our sites in 2023. Site visits give directors a first-hand understanding of the operations of the business and the opportunity to interact with employees and key executives.
     
Strategy and Business Plan Reviews
Annually, the Board holds an offsite meeting with senior management to review the strategy and long-range plans for each of our businesses and to discuss other topics, such as key Company areas of focus and significant and emerging risks.
Direct Interaction with Management
Our CEO and other members of senior management communicate with directors outside of regularly scheduled Board and committee meetings. These communications occur on a regular basis, including through periodic written updates and special meetings. In certain circumstances, such as the Pratt & Whitney powder metal manufacturing matter, these written communications and meetings occur more frequently.
     
Outside Perspectives
The Board is periodically briefed by outside advisors and counsel on strategic, financial, legal, compliance and other matters. This gives them additional perspectives on the Company’s business environment, strategic focus areas, performance and significant and emerging risks. The Lead Director and other directors also directly engage with investors to address their feedback from time to time.
Lead Director Role
Our independent Lead Director plays a crucial role in facilitating the Board’s independent oversight. The Lead Director regularly communicates with other directors, both in executive sessions and outside of Board meetings, to solicit feedback on Board matters, succession planning and management development, among other topics. The Lead Director also regularly collaborates with the CEO on meeting agendas and communicates with the CEO and other directors on developments in the Company’s business, emerging risks and issues, and Board operational and governance matters.

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Proposal 1:
Election of Directors
 

What
am I
voting on?
      We are seeking your support for the election of the thirteen individuals nominated to serve on the Board of Directors until the 2025 Annual Meeting of Shareowners. We believe these nominees have the right experiences and perspectives to guide the Company and provide effective oversight of our strategy and our business plans. Each is well qualified to serve as a director of a large aerospace and defense company that competes in government and commercial markets worldwide.

Criteria for Board Membership

The Board and the Committee on Governance and Public Policy (the “Governance Committee”) believe that there are general attributes all directors must exhibit, in addition to key skills and expertise that should be represented on the Board as a whole, but not necessarily by each director.

THESE GENERAL ATTRIBUTES ARE ESSENTIAL FOR ALL DIRECTORS

Objectivity and independence in making informed business decisions
Extensive knowledge, experience and judgment
Highest integrity
Diversity of perspective
Willingness to devote the extensive time necessary to fulfill a director’s duties
Appreciation for the role of a corporation in society
Loyalty to the interests of RTX and its shareowners

The Governance Committee regularly considers whether the Board has all of the key skills and expertise needed for effective oversight of our businesses and strategy. In 2022, Environmental, Social and Governance (“ESG”) and Manufacturing, Operations and Supply Chain were added as key skills and expertise that should be represented on the Board. See “Key Skills and Expertise” on page 12.

Further, the Governance Committee continues to recognize the value of selecting directors who come from various backgrounds and professions and are diverse in age, gender, race and ethnicity, to ensure that the Board as a whole has a wealth of experiences and perspectives to inform its decisions. We believe diversity makes our business stronger and more innovative and is critical to the Company’s long-term success.

We have added three directors since the Merger, one of whom is a person of color and another of whom is a woman. For more information about diversity on our Board, see “Nominees” on page 7, “Nominee Highlights” on page 8 and “Board Composition and Refreshment” on page 13.

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PROPOSAL 1: ELECTION OF DIRECTORS | CRITERIA FOR BOARD MEMBERSHIP

The charts below show the percentage of directors with skills and expertise in each key area. In the nominee biographies on pages 14-20, we highlight for each individual the three key skills and areas of expertise upon which the Board particularly relies.

KEY SKILLS AND EXPERTISE

     
Senior Leadership
Directors with extensive leadership experience with a complex, large enterprise offer practical perspectives on and oversight of organizational and strategic planning, including in the areas of talent development, succession planning and driving change and long-term growth.
Technology/Cybersecurity
Directors with a background or experience in research and development, engineering, science, information technology/software, cybersecurity or technology offer valuable perspectives on the development of advanced technologies and innovative solutions (including on potential capabilities and implications of artificial intelligence), and also serve a critical role in the Board’s oversight of cybersecurity risks.
Experience in Industry
Directors with experience in the aerospace and defense markets, whether through leadership of a business engaged in those markets or as a government or military customer, provide valuable insights on industry developments and strong oversight of RTX’s strategic priorities and business performance.
Government
Directors who have served in senior government or military roles provide constructive insights about significant government policies and regulations, as well as public policy issues, and their impact on the Company.
Financial
Directors with proficiency in complex financial management, financial reporting processes, capital allocation, capital markets and mergers and acquisitions provide strong oversight of the Company’s financial reporting, financial controls, capital deployment and strategic investments.
Environmental, Social and Governance (ESG)
Directors with experience in environmental (including climate-related) issues, sustainability, social responsibility, product safety, ethics and compliance and public company governance (including service on a public company board) strengthen the Board’s oversight of key ESG initiatives, reporting and risks.
Risk Management/Oversight
Directors with knowledge and experience in managing major risk exposure for complex, large organizations—including significant financial, operational, compliance, reputational, strategic, international, political and cybersecurity risks—are critical to the Board’s important risk oversight role.
Manufacturing, Operations and Supply Chain
Directors who have led organizations with or otherwise managed manufacturing capabilities, operations and supply chains provide valuable insights on these aspects of our business, which are key to our focus on execution, operational efficiencies and structural cost reductions.
International
Directors who have conducted business or operations outside of the United States or worked on international policy and related issues provide perspectives and insights on international business, politics and culture that are invaluable to a global company with operations and sales around the world.

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PROPOSAL 1: ELECTION OF DIRECTORS | BOARD COMPOSITION AND REFRESHMENT

Board Composition and Refreshment

The Board strives to maintain an appropriate balance of tenure, diversity, viewpoints and experiences.

The Board’s composition has changed significantly over the past four years. Since the Merger, five directors have left the Board and three (Bernard A. Harris, Jr., Leanne G. Caret and Christopher T. Calio) have joined. These new directors bring important skills to the Board, including expertise in cybersecurity and supply chain issues, and they also enhance Board diversity.

The Board believes that it benefits from a mix of new directors, who bring fresh perspectives, and longer-serving directors, who bring valuable experience, continuity and a deep understanding of the Company. It also believes that the Board as a whole has the appropriate attributes, experiences and perspectives to guide the Company and provide effective oversight of our strategy and business plans.

TENURE OF RTX BOARD NOMINEES

For more information about the skills, experience and diversity of our directors, see “Nominee Highlights” on page 8.

In 2022, the Board amended its policy to increase the director retirement age to 75 and also adopted a formal 15-year term limit. The Board recognizes that director refreshment is important to shareowners and critical for strong Board oversight. It will continue to promote refreshment by:

Regularly reviewing the key skills and expertise that are most important in selecting candidates to serve as directors, taking into account the evolution of our business, as well as the mix of capabilities and experience already represented on the Board.
Regularly considering individual director tenure and succession.
Using its self-evaluation process, including individual director evaluations, to inform its decisions about nominations and refreshment (see page 24 for more details on the annual self-evaluation process).

How Candidates Are Identified

In furtherance of its focus on director refreshment and Board composition, the Board strives to regularly identify potential director candidates who can bring unique perspectives, add new insights and expertise and enhance the performance and effectiveness of the Board. The Governance Committee is responsible for identifying and evaluating director candidates to recommend to the Board. Potential directors can be brought to the Governance Committee's attention in different ways, as shown below. The Governance Committee screens and evaluates all candidates, regardless of who recommends them, using the criteria described under “Criteria for Board Membership” on page 11.

To ensure there is a large and diverse pool of potential directors, the Governance Committee may engage search firms to assist it in finding qualified and interested candidates and verifying their credentials.       Any shareowner may recommend a director candidate by writing to the RTX Corporate Secretary (see page 115 for contact information).       Current Board members who become aware of suitable candidates may recommend them to the Governance Committee from time to time.

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

Nominees

The Board, upon the recommendation of the Governance Committee, has nominated for election the thirteen individuals listed in this Proxy Statement. All are current directors of RTX.

      The Board of Directors unanimously recommends a vote FOR each of the following nominees:

Tracy A. Atkinson  
INDEPENDENT DIRECTOR
Retired Executive Vice President & Chief
Administrative Officer, State Street Corporation
AGE 59
DIRECTOR SINCE 2020
BOARD COMMITTEES
Human Capital & Compensation (Chair), Finance
Key Skills and Expertise
FINANCIAL
SENIOR LEADERSHIP
RISK MANAGEMENT/OVERSIGHT

Qualifications
Ms. Atkinson provides the Board with significant experience in finance, risk management and compliance matters, as well as executive leadership experience developed through her senior finance and compliance leadership roles at State Street and MFS Investment Management. She also brings valuable accounting expertise derived from her experience as a Certified Public Accountant and a partner at PricewaterhouseCoopers LLP.
Experience
Chief Administrative Officer, State Street Corporation (financial services firm), 2019–2020
Executive Vice President & Chief Compliance Officer, State Street Corporation, 2017–2019
Executive Vice President, Finance, State Street Corporation, 2010–2017
Treasurer, State Street Corporation, 2016–2017
Executive Vice President, Chief Compliance Officer, State Street Corporation, 2009–2010
Executive Vice President, Chief Compliance Officer, State Street Global Advisors, 2008–2009
Senior positions with MFS Investment Management and PricewaterhouseCoopers LLP, 1999–2008
Other Current Directorships
Citizens Financial Group, Inc., since March 2024
United States Steel Corporation, since 2020
Affiliated Managers Group, since 2020
Former Public Company Directorships
Raytheon Company, 2014–2020
Other Leadership Experience and Service
Director and Past President, The Arc of Massachusetts

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

Christopher T. Calio  
President, Chief Operating Officer and Director, RTX Corporation
AGE 50
DIRECTOR SINCE 2023
BOARD COMMITTEES
Finance, Special Activities
Key Skills and Expertise
EXPERIENCE IN INDUSTRY
RISK MANAGEMENT/OVERSIGHT
SENIOR LEADERSHIP

Qualifications
Mr. Calio has substantial experience in the aerospace and defense industry and executive leadership experience gained through his President and COO roles at RTX and other senior leadership roles at RTX and Pratt & Whitney. Through these roles and his legal roles at RTX-affiliated companies, he also brings risk management experience, as well as a significant background in manufacturing, operations and supply chain.
Experience
President, Chief Operating Officer and Director, RTX Corporation, since December 2023
President & Chief Operating Officer, RTX Corporation (formerly Raytheon Technologies Corporation), March 2023–December 2023
Chief Operating Officer, Raytheon Technologies Corporation, March 2022–February 2023
President, Pratt & Whitney, Raytheon Technologies Corporation (formerly United Technologies Corporation ("UTC")), January 2020–February 2022
President, Commercial Engines, Pratt & Whitney, UTC, February 2017–December 2019
Chief of Staff to the Chairman and Chief Executive Officer, UTC, February 2015–January 2017
Various senior positions since joining UTC in 2005, including as Vice President and General Counsel of UTC Aerospace Systems and Vice President and Counsel, Commercial Engines, Pratt & Whitney
Other Leadership Experience and Service
Board of Directors, US-India Strategic Partnership Forum

Leanne G. Caret  
INDEPENDENT DIRECTOR
Retired Executive Vice President, The Boeing Company and Former CEO, Boeing Defense, Space and Security
AGE 57
DIRECTOR SINCE 2023
BOARD COMMITTEES
Audit (Chair), Special Activities
Key Skills and Expertise
FINANCIAL
EXPERIENCE IN INDUSTRY
MANUFACTURING, OPERATIONS & SUPPLY CHAIN

Qualifications
Ms. Caret provides the Board with significant experience in the aerospace and defense industry and finance experience gained through her CEO and CFO roles with Boeing Defense, Space and Security and other senior leadership roles at The Boeing Company. Through these roles she also brings executive leadership experience, as well as a significant background in oversight of risk management and of manufacturing, operations and supply chain.
Experience
Executive Vice President and Senior Advisor, The Boeing Company (aerospace and defense systems & services), April 2022–December 2022
President & CEO, Defense, Space & Security, The Boeing Company, 2016–2022
President, Global Services & Support, The Boeing Company, 2015–2016
Chief Financial Officer, Defense, Space & Security, The Boeing Company, 2014–2015
Vice President & General Manager, Vertical Lift, The Boeing Company, 2013–2014
Vice President, H-47 Programs, The Boeing Company, 2009–2013
General Manager, Global Transport & Executive Systems, The Boeing Company, 1998–2009
Other Current Directorships
Deere & Company, since 2021
Other Leadership Experience and Service
Board of Directors, FIRST® (For Inspiration and Recognition of Science and Technology)
Associate Fellow, American Institute of Aeronautics and Astronautics
Fellow, Royal Aeronautical Society

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

Bernard A. Harris, Jr.  
INDEPENDENT DIRECTOR
Chief Executive Officer and Managing Partner, Vesalius Ventures, Inc.
AGE 67
DIRECTOR SINCE 2021
BOARD COMMITTEES
Audit, Special Activities
Key Skills and Expertise
EXPERIENCE IN INDUSTRY
ESG
TECHNOLOGY/CYBERSECURITY

Qualifications
Dr. Harris has significant aerospace industry knowledge, a deep understanding of science and technology, and executive leadership experience gained through his CEO and other senior leadership roles at Vesalius Ventures and the National Math and Science Initiative, his service as Chief Medical Officer of SPACEHAB and his years as an astronaut and flight surgeon at NASA. He has significant experience in technology innovation and strategic planning. He also brings valuable expertise in guiding organizations to leverage their resources in support of business operations, investment, community development and philanthropic endeavors.
Experience
Chief Executive Officer and Managing Partner, Vesalius Ventures (venture capital), since 1998
Executive Director, National Math and Science Initiative Inc. (education nonprofit), August 2022–March 2023
Chief Executive Officer, National Math and Science Initiative Inc., 2018–2022
Vice President, Business Development, Space Media Inc., 1999–2001
Vice President, Chief Medical Officer and Scientist, SPACEHAB Inc., 1996–2001
Astronaut, NASA, 1991–1996
Clinical Scientist & Flight Surgeon, Johnson Space Center, NASA, 1987–1990
Other Current Directorships
U.S. Physical Therapy, since 2005
MassMutual (non-public)
Former Public Company Directorships
Sterling Bancshares Inc., 2006–2011
Other Leadership Experience and Service
Board of Trustees, Barings Fund & Barings BDC
Board of Directors, Texas Medical Center
The Harris Foundation (founder)
Board of Trustees, Salient & Forward Funds

Gregory J. Hayes  

Chairman & Chief Executive Officer, RTX Corporation
AGE 63
DIRECTOR SINCE 2014
BOARD COMMITTEES
Finance, Special Activities
Key Skills and Expertise
SENIOR LEADERSHIP
FINANCIAL
EXPERIENCE IN INDUSTRY

Qualifications
Mr. Hayes has substantial experience in executive leadership, finance, strategic planning, mergers and acquisitions, business development and global operations and management. He has a deep knowledge of the aerospace and defense industry and the Company’s business, strategy, operations and global markets gained through his CEO and other senior leadership roles at RTX and affiliated companies. He brings a track record of successfully managing complex businesses and developing people. He also provides public company board leadership experience gained as Chairman of the UTC Board.
Experience
Chairman & Chief Executive Officer, RTX Corporation (formerly Raytheon Technologies Corporation), since March 2023
Chairman, President & Chief Executive Officer, Raytheon Technologies Corporation, June 2021–February 2023
President, Chief Executive Officer and Director, Raytheon Technologies Corporation, April 2020–June 2021
Chairman, President & Chief Executive Officer, UTC, 2016–April 2020
President, Chief Executive Officer and Director, UTC, 2014–2016
Senior Vice President & Chief Financial Officer, UTC, 2008–2014
Various senior positions since joining UTC in 1999 through the acquisition of Sundstrand Corporation, including Vice President, Accounting and Finance, and responsibility for UTC’s Corporate Strategy function
Other Current Directorships
Phillips 66 Company, since 2022
Former Public Company Directorships
Nucor Corporation, 2014-2018

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

George R. Oliver  
INDEPENDENT DIRECTOR
Chairman & Chief Executive Officer, Johnson Controls International plc
AGE 63
DIRECTOR SINCE 2020
BOARD COMMITTEES
Human Capital & Compensation, Finance
Key Skills and Expertise
INTERNATIONAL
SENIOR LEADERSHIP
MANUFACTURING, OPERATIONS & SUPPLY CHAIN

Qualifications
Mr. Oliver provides the Board with substantial executive leadership experience and global operational and management expertise, gained through his CEO and other leadership roles at the global industrial and technology companies Johnson Controls, Tyco International and General Electric. He also has significant experience in strategic planning, mergers and acquisitions, finance, risk management and technology.
Experience
Chairman of the Board & Chief Executive Officer, Johnson Controls International plc (diversified technology and multi-industrial company), since 2017
President & Chief Operating Officer, Johnson Controls International plc, 2016–2017
Chief Executive Officer, Tyco International Ltd., 2012–2016
President, Tyco International Ltd., 2011–2012
President, Tyco Electrical and Metal Products, 2007–2010
President, Tyco Safety Products, 2006–2010
Various leadership roles of increasing responsibility at several General Electric divisions, culminating as President of GE Water and Process Technologies, until 2006
Other Current Directorships
Johnson Controls International plc, since 2016
Former Public Company Directorships
Raytheon Company, 2013–2020
Tyco International Ltd., 2012–2016
Other Leadership Experience and Service
Board of Trustees, Worcester Polytechnic Institute
Board of Directors, United Way of Greater Milwaukee & Waukesha Counties
Board of Directors, Greater Milwaukee Committee
Board of Directors, Metropolitan Milwaukee Association of Commerce

Robert K. (Kelly) Ortberg  
INDEPENDENT DIRECTOR
Retired Chairman, President & Chief Executive Officer, Rockwell Collins, Inc.
AGE 63
DIRECTOR SINCE 2020
BOARD COMMITTEES
Finance, Special Activities
Key Skills and Expertise
EXPERIENCE IN INDUSTRY
SENIOR LEADERSHIP
TECHNOLOGY/CYBERSECURITY

Qualifications
Mr. Ortberg has significant aerospace and defense industry expertise and business experience gained through his CEO and other senior leadership roles at Rockwell Collins. Through these roles he also brings executive leadership experience, as well as a significant background in global management and operations, engineering, technology and innovation.
Experience
Special Advisor to the Office of the CEO, Raytheon Technologies Corporation, 2020–February 2021
Chief Executive Officer, Collins Aerospace Systems, UTC, 2018–2020
Chairman, President & CEO, Rockwell Collins, Inc. (aerospace and defense systems & services), 2015–2018
President & CEO, Rockwell Collins, Inc., 2013–2015
President, Rockwell Collins, Inc., 2012–2013
Various senior positions since joining Rockwell Collins in 1987
Other Current Directorships
Aptiv PLC, since 2018
Former Public Company Directorships
Rockwell Collins, Inc., 2013–2018
Other Leadership Experience and Service
Past Chairman, Board of Governors, Aerospace Industries Association
Co-Chairman, Board of Directors, FIRST®

RTX 2024 PROXY STATEMENT    17


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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

Ellen M. Pawlikowski  
INDEPENDENT DIRECTOR
General, U.S. Air Force (Retired) and Former Commander, Air Force Materiel Command
AGE 67
DIRECTOR SINCE 2020
BOARD COMMITTEES
Audit, Special Activities
Key Skills and Expertise
GOVERNMENT
SENIOR LEADERSHIP
EXPERIENCE IN INDUSTRY

Qualifications
General Pawlikowski delivers deep defense industry-specific expertise, senior leadership experience and understanding of leading-edge science and technology through her extensive military service, including as Commander, U.S. Air Force Materiel Command. She provides the Board with important insights regarding military critical mission needs, advanced weapons systems management and acquisition and national security policy.
Experience
Commander, Air Force Materiel Command (military leadership), 2015–2018
Various positions of increasing responsibility during a 36-year career in the U.S. Air Force, including Military Deputy for the Assistant Secretary for Acquisition; Commander/Program Executive Officer, Space and Missile Systems Center; Commander, Air Force Research Laboratory; and Deputy Director and Chief Operating Officer, National Reconnaissance Office
Other Current Directorships
RPM International Inc., since 2022
Applied Research Associates (non-public)
SRI International (non-public)
CEM Defense Materials (non-public)
Former Public Company Directorships
Velo3D, Inc., March 2022–July 2023
Intelsat S.A., 2019–February 2022
Raytheon Company, 2018–2020
Other Leadership Experience and Service
Fellow, American Institute of Aeronautics and Astronautics
Member, National Academy of Engineers
Chairperson, Air Force Studies Board
Co-Chair, Defense Science Board Task Force

Denise L. Ramos  
INDEPENDENT DIRECTOR
Retired Chief Executive Officer & President, ITT Inc.
AGE 67
DIRECTOR SINCE 2018
BOARD COMMITTEES
Audit, Governance and Public Policy
Key Skills and Expertise
MANUFACTURING, OPERATIONS & SUPPLY CHAIN
SENIOR LEADERSHIP
FINANCIAL

Qualifications
Ms. Ramos provides the Board with executive leadership and substantial global operational and management experience gained through her CEO and other leadership roles at ITT Inc. She has extensive financial expertise and experience in strategic planning and mergers and acquisitions, having served as the Chief Financial Officer at ITT and other large global companies. She also brings experience and insights from her current and past service on boards of other public companies in a range of industries.
Experience
Chief Executive Officer & President, ITT Inc. (formerly ITT Corporation—diversified manufacturer), 2011–2019
Senior Vice President & Chief Financial Officer, ITT Corporation, 2007–2011
Chief Financial Officer, Furniture Brands International (home furnishings), 2005–2007
Senior Vice President & Corporate Treasurer, Yum! Brands, Inc., and Chief Financial Officer, KFC Corporation (U.S. Division), 2000–2005
Various finance positions of increasing responsibility during more than 20 years at Atlantic Richfield Company
Other Current Directorships
Bank of America Corp., since 2019
Phillips 66 Company, since 2016
Former Public Company Directorships
ITT Inc., 2011–2019
Praxair, Inc., 2014–2016

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

Fredric G. Reynolds  
INDEPENDENT LEAD DIRECTOR
Retired Executive Vice President & Chief Financial Officer, CBS Corporation
AGE 73
DIRECTOR SINCE 2016
BOARD COMMITTEES
Governance and Public Policy, Human Capital & Compensation
Key Skills and Expertise
FINANCIAL
RISK MANAGEMENT/OVERSIGHT
SENIOR LEADERSHIP

Qualifications
Mr. Reynolds brings to the Board substantial financial and risk management expertise, as well as executive leadership and strategic planning experience gained through his Chief Financial Officer and other leadership roles at large global companies CBS, Viacom and PepsiCo. He also brings his experience and insights from his current and past service on boards of other public companies in a range of industries.
Experience
Executive Vice President & Chief Financial Officer, CBS Corporation (media), 2005–2009
President & Chief Executive Officer, Viacom Television Stations Group (CBS predecessor), 2001–2005
Executive Vice President & Chief Financial Officer, Viacom, Inc., 2000–2001
Executive Vice President & Chief Financial Officer, Westinghouse Electric Corporation, 1994–2000
Various positions at PepsiCo, Inc., 1982–1994
Other Current Directorships
Pinterest, Inc., since 2017
Former Public Company Directorships
Mondelez International, Inc., 2007–May 2022
AOL, Inc., 2009–2015
Hess Corporation, 2013–2019

Brian C. Rogers  
INDEPENDENT DIRECTOR
Retired Chairman, T. Rowe Price Group, Inc.
AGE 68
DIRECTOR SINCE 2016
BOARD COMMITTEES
Finance (Chair), Human Capital & Compensation
Key Skills and Expertise
FINANCIAL
RISK MANAGEMENT/OVERSIGHT
SENIOR LEADERSHIP

Qualifications
Mr. Rogers provides the Board with extensive financial and investment expertise and risk management experience through his Chief Investment Officer and other investment management roles at T. Rowe Price, as well as significant executive leadership and governance experience gained through his service as the Chairman of the Board of T. Rowe Price. Mr. Rogers also provides the Board with important insights into the perspectives of institutional investors.
Experience
Chairman of the Board of Directors, T. Rowe Price Group, Inc. (investment management), 2007–2017
Chief Investment Officer, T. Rowe Price Group, Inc., 2004–2017
Various other senior leadership roles since joining T. Rowe Price Group, Inc., in 1982
Other Current Directorships
Lowe’s Companies, Inc., since 2018
Former Public Company Directorships
Chairman of the Board (non-executive), T. Rowe Price Group, Inc., 2017–2019
Other Leadership Experience and Service
Trustee, Brookings Institution
Board of Directors, Harvard Management Company
Trustee, Johns Hopkins Medicine

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PROPOSAL 1: ELECTION OF DIRECTORS | NOMINEES

James A. Winnefeld, Jr.  
INDEPENDENT DIRECTOR
Admiral, U.S. Navy (Retired) and Former Vice Chairman of the Joint Chiefs of Staff
AGE 67
DIRECTOR SINCE 2020
BOARD COMMITTEES
Special Activities (Chair), Human Capital & Compensation, Governance and Public Policy
Key Skills and Expertise
GOVERNMENT
EXPERIENCE IN INDUSTRY
RISK MANAGEMENT/OVERSIGHT

Qualifications
Admiral Winnefeld brings extensive senior leadership, strategic planning and management experience developed through his various roles of increasing responsibility in the U.S. military, culminating in his service as the Ninth Vice Chairman of the Joint Chiefs of Staff. He provides the Board with deep defense industry-specific domain knowledge and expertise with respect to the global security environment and our core defense customers.
Experience
Vice Chairman of the Joint Chiefs of Staff (military leadership), 2011–2015
Various positions of increasing responsibility during a 37-year career in the U.S. Navy, including Commander, U.S. Northern Command (USNORTHCOM); Commander, North American Aerospace Defense Command (NORAD); Commander, U.S. Sixth Fleet; and Commander, Allied Joint Command Lisbon
Other Current Directorships
Molson Coors Beverage Company, since 2020
Alliance Laundry Systems LLC (non-public)
CEM Defense Materials (non-public)
Enterprise Holdings, Inc. (non-public)
Former Public Company Directorships
Raytheon Company, 2017–2020
Other Leadership Experience and Service
Co-founder and Co-chair, SAFE Project
Trustee, Georgia Tech Foundation
Chairman, President's Intelligence Advisory Board

Robert O. Work  
INDEPENDENT DIRECTOR
Retired Deputy Secretary of Defense, U.S. Department of Defense
AGE 71
DIRECTOR SINCE 2020
BOARD COMMITTEES
Governance and Public Policy (Chair), Audit, Special Activities
Key Skills and Expertise
GOVERNMENT
EXPERIENCE IN INDUSTRY
ESG

Qualifications
Mr. Work provides the Board with significant insight into customer needs acquired through his command, leadership and management positions, including as a U.S. Marine Corps officer, Undersecretary of the Navy and Deputy Secretary of Defense. He has broad expertise in global security matters, including in the areas of defense strategy, advanced technologies, international studies and acquisition reform. He also brings experience with corporate governance and oversight of ESG risks from current and past board service, including his leadership of the Governance Committee.
Experience
U.S. Deputy Secretary of Defense (executive department leadership), 2014–2017
Chief Executive Officer, Center for a New American Security, 2013–2014
Undersecretary of the Navy, U.S. Department of the Navy, 2009–2013
Positions with the Center for Strategic and Budgetary Assessments, serving in positions of increasing responsibility from 2002 to 2009, culminating in service as Vice President for Strategic Studies
Various positions of increasing responsibility during a 27-year career in the U.S. Marine Corps, including artillery battery commander; battalion commander; Base Commander, Camp Fuji, Japan; and Senior Aide to the Secretary of the Navy
Other Current Directorships
System High (non-public)
Govini, Chairman (non-public)
SparkCognition Government Services, Chairman (non-public)
Former Public Company Directorships
Raytheon Company, 2017–2020
Other Leadership Experience and Service
Senior Counselor for Defense, Distinguished Senior Fellow for Defense and National Security, Center for a New American Security
Senior Fellow, Johns Hopkins Applied Physics Laboratory
Member, Council on Foreign Relations
Member, International Institute for Strategic Studies

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Corporate Governance
 

Our Continuing Commitment to Sound Corporate Governance
RTX is committed to strong oversight and governance practices that are grounded in a culture of integrity, accountability, transparency and the highest ethical standards. The Board believes this commitment enhances shareowner value.

GOVERNANCE BEST PRACTICES

Our Board has adopted robust governance practices, as set forth in our Corporate Governance Guidelines, our committee charters and other RTX documents and policies. The Governance Committee regularly monitors and considers current developments in corporate governance, as well as the views of our shareowners, to determine when to recommend governance changes to the Board to enhance Board effectiveness.

Effective Board oversight
 
Highly qualified Board with diverse mix of perspectives, experience and tenures
Regular Board review of strategic plans and priorities, including ESG strategy and execution
Regular Board/committee review of significant risks, including product safety and cybersecurity risks, and corporate culture
Annual Board evaluation of CEO performance
Regular CEO and senior management succession planning
Board independence
 
11 out of 13 director nominees are independent
Robust Lead Director role, an independent position of authority with clearly defined responsibilities
Independent directors meet regularly without management
Fully independent Audit, Human Capital & Compensation and Governance Committees

Commitment to shareowner rights
 
Active and ongoing shareowner engagement
Proxy access with customary terms
Shareowners can act by written consent
Shareowners holding 15% of voting stock can call special meetings
No charter provisions requiring more than a simple majority vote of shareowners
Robust clawback policies
No hedging, short sales or pledging of RTX securities by officers or directors
Rigorous share ownership requirements for directors and senior management
Board accountability
 
Annual Board, committee and individual director evaluations
Annual election of all directors
Majority voting for directors in uncontested elections
Ongoing attention to Board composition and refreshment, along with a 15-year term limit and retirement age of 75
Regular review of committee assignments and leadership, with objective to rotate chairs and members at least every five years
Limits on outside public company board service
Process for consideration and approval of new outside directorships and paid consulting/advisory engagements

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CORPORATE GOVERNANCE | BOARD LEADERSHIP STRUCTURE

CODE OF CONDUCT

Our Code of Conduct reinforces our values and high governance standards by:

explaining how our values of Trust, Respect, Accountability, Collaboration and Innovation must inform our actions;
guiding the conduct of our employees, officers and directors with each other, our business partners and our communities; and
emphasizing the responsibility to conduct our business with integrity, to respect and protect human rights and to report violations of the Code without fear of retaliation.

We encourage you to visit the Corporate Governance section of our website (www.rtx.com) for more information about corporate governance at RTX.

Board Leadership Structure

CHAIRMAN

The Board’s approach. Under our Corporate Governance Guidelines, the Board does not have a fixed policy on whether the roles of Chairman of the Board and CEO should be separate or combined. Instead, the Governance Committee regularly reviews our Board leadership structure, and the Board selects the structure that it believes will provide the most effective leadership and oversight for RTX at the time. In making this decision, the Board considers a range of factors, including:

the Company’s operating and financial performance;
any recent or anticipated changes in the CEO role;
the effectiveness of our processes and structures for Board interaction with and oversight of management; and
whether it is beneficial to maintain a single voice in leadership communications, both internally and with investors and customers.

In the fall of 2023, we engaged with investors on a range of ESG issues, which included soliciting investors’ views on the Board’s leadership structure.

How this approach is currently implemented. The Board considered the factors noted above and the mix of views among our investors, as well as the highly competitive environment in which RTX operates. As announced in December 2023, Christopher T. Calio will succeed Gregory J. Hayes as CEO of RTX at our 2024 Annual Meeting of Shareowners. In light of these considerations, the Board believes that the interests of all shareowners are best served at this time by a Chairman who has long experience and familiarity with the Company, our customers and our operations and strategy, as well as extensive knowledge of the aerospace and defense industry. The Board has, therefore, determined that Mr. Hayes is best qualified to serve in the role of Chairman, given the depth and quality of the insights he brings to Board deliberations, his discernment in ensuring pertinent business information reaches the Board and his unique ability to assist and advise Mr. Calio as he takes on the role of CEO of RTX.

The Board believes that this arrangement of Mr. Calio serving as CEO and Mr. Hayes continuing as Chairman, together with an independent Lead Director, creates and sustains an environment in which the Board works collaboratively with management while ensuring that our independent directors can effectively oversee performance and hold senior leaders accountable. All directors are empowered at both the Board and committee level to contribute to and influence the Board’s exercise of its oversight responsibilities. Directors are encouraged to suggest items for meeting agendas, receive meeting agendas in advance and raise at any meeting items not on the agenda. In addition, all members of the Board have full access to all management.

INDEPENDENT LEAD DIRECTOR

To ensure robust independent leadership on the Board, our corporate governance guidelines provide that when the Chairman of the Board is not independent, our independent directors must designate from among themselves a Lead Director. This structure provides the appropriate balance among a CEO with responsibilities for day-to-day management, an empowered independent Lead Director with well-defined responsibilities and a Chairman with extensive experience in Board leadership who can collaborate with the CEO and Lead Director on setting meeting agendas and RTX’s long-term strategy.

The Board has designated Mr. Reynolds to serve as the Lead Director. Mr. Reynolds was unanimously designated as the Lead Director by RTX’s independent directors because of his deep knowledge of the Company’s business and strategy, his experience with risk management, financial oversight and governance, and his proven leadership skills and judgment. Further, he is highly skilled at

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CORPORATE GOVERNANCE | BOARD LEADERSHIP STRUCTURE

promoting open and transparent communications among directors and management, ensuring that matters are constructively discussed, which supports the effectiveness of the Board’s oversight of management and the business.

Our Corporate Governance Guidelines set forth the roles and responsibilities of the Lead Director, which are designed to promote strong, independent oversight of RTX’s management and affairs. The Lead Director’s responsibilities include facilitating our Board’s review of CEO performance; promoting communication between senior management and our Board about issues such as management development and succession planning, executive compensation, risk management and Company performance; and engaging and communicating with shareowners and other stakeholders as appropriate. In selecting Mr. Reynolds as Lead Director, the independent directors considered the experience and capabilities of each independent director, as well as their willingness and capacity to fulfill the significant responsibilities and time commitment of the role.

ROLES, RESPONSIBILITIES AND AUTHORITY OF CHAIRMAN AND LEAD DIRECTOR

The Lead Director and our Chairman meet and speak with each other regularly about the Company’s strategy and operations and the functioning of the Board. The Lead Director occupies an independent position of authority and facilitates the exchange of directors’ views regarding management.

      CHAIRMAN             LEAD DIRECTOR
Gregory J. Hayes
Chairman since 2021
Fredric G. Reynolds
Lead Director since 2023
Presides at all meetings of the full Board
Presides at meetings of shareowners
Calls special Board meetings
Empowered to call special meetings of Board committees
In conjunction with the Lead Director, plans and approves the schedule and agenda for Board meetings
Subject to input from the Lead Director, approves information sent to the Board
Invites senior executives and other employees to attend Board meetings, as appropriate
Presides over all private sessions of the independent directors, whether regularly scheduled or called at the Lead Director’s discretion
Empowered to call special Board meetings
Collaborates with the Chairman to approve the schedule and set the agenda for Board meetings
Provides input to the Chairman on information sent to the Board
Presides at Board meetings when the Chairman is not present
Engages with significant constituencies, as requested
Oversees the Board’s performance evaluation of the CEO and communicates this evaluation and the CEO's compensation approved by the Human Capital & Compensation Committee
Communicates regularly with the CEO and other directors regarding risk management oversight (see page 30)
Facilitates succession planning and management development
Works with the Chair of the Governance Committee to lead the Board’s annual self-evaluation process and to review any director’s request to accept a new outside directorship or other paid engagement
Authorizes retention of outside advisors and consultants who report to the Board on board-wide issues

As indicated above, RTX’s independent directors meet in private sessions without management present. These sessions are held on a regular schedule, and the Lead Director may call extra sessions as needed.

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CORPORATE GOVERNANCE | BOARD SELF-EVALUATION

Board Self-Evaluation

The Board believes that robust and constructive self-evaluation is an essential element of good corporate governance, Board effectiveness and continuous improvement. To this end, the Board annually evaluates its own performance and the performance of the standing committees and of each individual director.

OVERVIEW OF THE SELF-EVALUATION PROCESS

Oversight and leadership
 

The Governance Committee designs and has oversight responsibility for the annual self-evaluation process.

The Lead Director and the Governance Committee Chair jointly lead the process.

How it works
 
1       Each independent director confers with the Lead Director or the Governance Committee Chair to provide feedback, including a candid assessment of peer contributions and performance.
     
2 The Lead Director and the Governance Committee Chair communicate peer feedback to individual directors, making suggestions for improvement where appropriate, and provide feedback on committee performance to each committee chair.
     
3 The committee chairs discuss this feedback with their committees.
     
4 The Lead Director and the Governance Committee Chair provide to the full Board a summary of the results of the self-evaluation process and facilitate a Board discussion about opportunities for improvement and actions that might be taken.
How it contributes to
Board performance
 

The self-evaluation informs the Board’s consideration of:

Board roles
Board preparedness, effectiveness and priorities
Committee assignments, leadership and performance
Refreshment objectives, including composition, key skills and diversity
Director succession planning
Individual director development

It has generated improvements to our corporate governance practices and the Board’s effectiveness, including:

Allocating more time to private sessions of the independent directors
Restructuring the standing committees and their responsibilities in order to free up additional time at Board meetings for strategy and other discussions
Enhancing breadth of expertise and experience brought to committee deliberations through refreshed committee assignments and leadership
Improving the Board’s self-evaluation process itself

     
In the 2023 self-evaluation process, the Board focused on:
Board and committee composition, knowledge, skills, attributes, diversity and size, including changes to committee assignments and leadership;
The Board’s review and consideration of CEO and senior management succession planning; and
The Board’s effectiveness in performance of its key oversight responsibilities and its communications with management.
     

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CORPORATE GOVERNANCE | BOARD COMMITTEES

Board Committees

Our Board currently has the following standing committees: the Audit Committee, the Committee on Governance and Public Policy, the Finance Committee, the Human Capital & Compensation Committee and the Special Activities Committee. Our Corporate Governance Guidelines require the Governance Committee to periodically review the Board committee structure and assignments. Due to Board refreshment during 2023, as well as the Board's consideration of individual director development and interests and the functioning of the committees, the Board approved amendments to the charter of the Special Activities Committee and approved changes to assignments for each of the committees.

The Audit Committee, the Governance Committee and the Human Capital & Compensation Committee are composed exclusively of independent directors. Mr. Hayes and Mr. Calio (each of whom is an active employee) serve on the Finance Committee and the Special Activities Committee, because the Board believes each brings particular insights on topics within these committees’ responsibilities. Neither of these committees is a required committee under Securities and Exchange Commission ("SEC") rules or New York Stock Exchange ("NYSE") rules.

Each standing committee has the authority to retain independent advisors, to approve the fees paid to those advisors and to terminate their engagements.

Each committee operates under a charter that it reviews annually. These charters are available on the Corporate Governance section of our website (www.rtx.com).


Audit

Leanne G. Caret
Chair
                                               
2023 MEETINGS: 8

COMMITTEE MEMBERS

Bernard A. Harris, Jr.
Ellen M. Pawlikowski
Denise L. Ramos
Robert O. Work
Fredric G. Reynolds served as a member and Chair of the Audit Committee until February 15, 2024. Leanne G. Caret became Chair of the Audit Committee effective February 15, 2024.
Assists the Board in overseeing: the integrity of RTX’s financial statements; the independence, qualifications and performance of RTX’s internal and external auditors; the Company’s compliance with its policies and procedures, internal controls, Code of Conduct and applicable laws and regulations; policies and procedures with respect to risk assessment and management; and other responsibilities as delegated by the Board from time to time
Recommends to the Board a nominee (for shareowner approval) of an accounting firm to serve as RTX’s independent auditor and maintains responsibility for compensation, retention and oversight of the auditor
Pre-approves all auditing services and permitted non-audit services to be performed for RTX by its independent auditor
Reviews and approves the appointment and replacement of the senior Internal Audit executive

The Board has determined that each of Ms. Caret and Ms. Ramos is an “audit committee financial expert,” as defined in the SEC rules.

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CORPORATE GOVERNANCE | BOARD COMMITTEES

Governance and Public Policy

Robert O. Work
Chair
                                               
2023 MEETINGS: 5

COMMITTEE MEMBERS

Denise L. Ramos
Fredric G. Reynolds
James A. Winnefeld, Jr.
Denise L. Ramos joined the Governance Committee effective May 2, 2023.
Reviews and oversees RTX’s positions on significant public policy issues and its policies and objectives with respect to product safety, workplace safety, sustainability, human rights and elements of DE&I that do not fall under human capital management
Develops and recommends modifications to our Corporate Governance Guidelines
Identifies and recommends qualified candidates for election to the Board
Reviews periodically the Company’s policies on retirement age and term limits for non-employee directors
Makes recommendations to the Board for committee assignments
Reviews and monitors the orientation of new Board members and the continuing education of all directors
Oversees the design and conduct of the annual self-evaluation of the Board, its committees and individual directors
Reviews corporate governance developments and trends and, where appropriate, makes recommendations to the Board on the Company’s governance
Recommends to the Board appropriate compensation of non-employee directors

Finance

Brian C. Rogers
Chair
                                               
2023 MEETINGS: 5

COMMITTEE MEMBERS

Tracy A. Atkinson
Christopher T. Calio
Gregory J. Hayes
George R. Oliver
Robert K. Ortberg
Denise L. Ramos served on the Finance Committee until May 2, 2023. Christopher T. Calio joined the Finance Committee effective December 14, 2023.
Reviews and monitors the management of RTX’s financial resources and financial risks
Considers plans for significant acquisitions and divestitures
Monitors progress on pending and completed acquisitions and divestitures
Reviews significant financing programs in support of business objectives
Reviews significant capital appropriations
Reviews policies and programs related to: dividends and share repurchases; financing, working and long-term capital requirements; managing exposure with respect to foreign exchange, interest rates and raw material prices; investment of pension assets; and insurance and risk management

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CORPORATE GOVERNANCE | BOARD COMMITTEES

Human Capital & Compensation

Tracy A. Atkinson
Chair
                                               
2023 MEETINGS: 5

COMMITTEE MEMBERS

George R. Oliver
Fredric G. Reynolds
Brian C. Rogers
James A. Winnefeld, Jr.
Fredric G. Reynolds joined the Human Capital & Compensation Committee effective February 15, 2024.
Reviews RTX’s executive compensation policies and practices to ensure that they adequately and appropriately align executive and shareowner interests
Reviews and approves the design of, and sets performance goals for, our executive annual and long-term incentive programs
Evaluates the performance of RTX, our business units and our NEOs relative to performance goals set by the Committee for the annual and long-term incentive programs
Reviews and approves compensation for the CEO and other executive officers of the Company
Reviews a risk assessment of RTX’s compensation policies, plans and practices
Reviews the Company’s initiatives relating to recruiting, retention, career development, DE&I and other aspects of human capital management

Special Activities

James A. Winnefeld, Jr.
Chair
                                                
2023 MEETINGS: 4

COMMITTEE MEMBERS

Christopher T. Calio
Leanne G. Caret
Bernard A. Harris, Jr.
Gregory J. Hayes
Robert K. Ortberg
Ellen M. Pawlikowski
Robert O. Work
Christopher T. Calio joined the Special Activities Committee effective December 14, 2023.
Reviews and monitors activities involving classified business of RTX, including significant classified programs
Reviews policies, processes, risk management and internal controls applicable to classified business
Supports the Board as required in oversight of classified business cybersecurity
Reviews RTX’s cybersecurity risk exposure with respect to the Company’s products and management’s efforts to manage that exposure
Assists other committees of the Board with their activities and oversight related to product safety risk and development of technical talent
Monitors critical technology gaps and reviews the investments, talent development and other efforts by management to address those gaps

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CORPORATE GOVERNANCE | DIRECTOR INDEPENDENCE

Director Independence

Under RTX’s Director Independence Policy and the NYSE listing standards, a majority of our directors must be independent, meaning that they do not have a direct or indirect material relationship with RTX (other than as a director). The Board’s Director Independence Policy guides the independence determination and defines certain categories of relationships that will not be considered material relationships that would impair a director’s independence. This policy is available on the Corporate Governance section of our website (www.rtx.com).

Before joining the Board and each year thereafter, each director or nominee completes a questionnaire about relationships and transactions that may require disclosure, may affect the independence determination for that individual or may affect our ability to meet the heightened independence standards for members of the Audit Committee and members of the Human Capital & Compensation Committee. The Governance Committee’s assessment of independence considers all known relevant facts and circumstances about the relationships bearing on the independence of a director or nominee. The Board considers potential materiality of a director’s relationship with RTX both from the director’s standpoint and from the standpoint of persons or organizations with which the director has an affiliation. The assessment also considers sales and purchases of products and services, in the ordinary course of business, between RTX (including its subsidiaries) and other companies or charitable organizations where a director or a nominee (or immediate family members) may have relationships pertinent to the independence determination.

In accordance with the Director Independence Policy and the NYSE listing standards, the Board has determined that, other than Mr. Hayes and Mr. Calio (each of whom is a current employee of RTX), none of the nominees for election at the 2024 Annual Meeting has, directly or indirectly, a material relationship with RTX (outside of serving as a director) or any direct or indirect material interest in any transaction involving RTX. Other than Mr. Hayes and Mr. Calio, each nominee satisfies our independence criteria and the independence standards of the NYSE and the SEC.

The Board’s Role

Our Board provides active and independent oversight and guidance to management regarding the Company’s long-term strategy and priorities, risk management, CEO and senior management succession planning, and ESG, as well as other aspects of our business and affairs. In addition, the Board has adopted robust governance practices to enhance its effectiveness and is engaged on behalf of our shareowners.

As part of carrying out its oversight responsibilities, the Board:       In 2023, our Board worked closely with management to provide effective oversight of key priorities, including:
Annually reviews the Company’s long-term plan and objectives and those of its business units
Engages in ongoing discussions of near-, medium- and long-term risks and strategic matters, including the geopolitical environment, economic conditions, industry trends and developments, and their impacts on our business, as well as strategic challenges and opportunities
Is regularly briefed on assessments of the Company’s business portfolio and is engaged in the Company’s mergers, acquisitions, divestitures and other corporate development activities
Receives regular updates on management’s progress and execution of the Company’s strategy and reviews and approves the Company’s annual operating plan
Periodically receives briefings from outside advisors and counsel on strategic, financial, legal and compliance, and other matters
Our risk management efforts, with a particular focus on cybersecurity, compliance and product safety risks, including oversight of the investigation of and remediation plan for the Pratt & Whitney powder metal manufacturing matter
Transforming our enterprise to better meet our customers’ needs by realigning our business segments and divesting noncore businesses
Our response to evolving geopolitical and other external conditions, including inflation, interest rates, supply chain disruptions and the conflict in Ukraine
Our execution of ESG-related initiatives in furtherance of our ESG strategy and vision
Our shareowner engagement efforts
CEO and senior management succession planning
Our focus on operational excellence and financial performance, including through digital infrastructure investments, expanded use of data analytics and engagement with suppliers
Our strategic investments in technology and innovation
Expansion of and meeting our commitment to return capital to investors

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CORPORATE GOVERNANCE | THE BOARD’S ROLE

RISK MANAGEMENT OVERSIGHT

The chart below shows the current allocation of general risk oversight functions between management and the Board.

Management                          Board of Directors                   
Responsible for identifying, assessing, prioritizing and managing the various risks that the Company faces
Responsible for Board/committee risk oversight governance, including allocation of risk oversight responsibilities
Employs a comprehensive enterprise risk management (“ERM”) program
Maintains robust internal processes and an effective internal control environment
 
Audit Committee oversees management’s ERM program
Board has allocated specific responsibilities to itself and its committees for overseeing particular risks, as shown below

      Full Board
Major strategic risks, such as significant litigation and pandemics
Enterprise cybersecurity (e.g., IT systems, factory, supply chain and hosted services) and compliance
Succession planning
Government relations
 
 
 
 
Audit Committee

Financial reporting
Internal controls
Auditing matters
Taxes
Legal, ethical and regulatory compliance programs
Committee on Governance and Public Policy

Corporate governance
Conflicts of interest
Director independence
Product safety
Sustainability
Workplace safety
Human rights
Public policy issues
DE&I (excluding human capital management)

Finance Committee

Capital structure
Financing
Pensions
Capital transactions
Foreign exchange
Interest rates
Corporate transactions
Human Capital & Compensation Committee

Executive compensation and benefits policies, practices and plans
Incentive plan performance metrics and goals
Compensation for senior leaders
Compensation plan design
Executive retention
Human capital management initiatives
Special Activities Committee

Classified business
Technology and innovation
Product cybersecurity

The Board’s risk oversight governance framework is designed to enable it to understand critical near-, medium- and long-term risks in the Company’s business and strategy, allocate responsibilities for risk oversight among the full Board and its committees, evaluate the Company’s risk management processes and whether they are functioning adequately, and engage in regular communications with management regarding risk trends, developments, mitigation, major issues and responsive actions. For the sake of efficiency, the full Board retains primary oversight responsibility over certain risks that cut across the subject area expertise of multiple committees, such as significant litigation.

The Company maintains robust internal processes and an effective internal control environment that facilitate the identification and management of risks and regular communication with the Board. A core element is the Company’s ERM program, which conforms to the Enterprise Risk Management—Integrated Framework established by the Committee of Sponsoring Organizations of the Treadway Commission and is designed to identify and evaluate the full range of significant risks to RTX, including legal, compliance, financial, operational, strategic and reputational risks. Our Finance function, in close collaboration with our Legal, Contracts and

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CORPORATE GOVERNANCE | THE BOARD’S ROLE

Compliance function, leads the ERM program, with an annual cycle for structured reviews, discussions and mitigation planning. Risks are identified and evaluated through both a “bottom-up” and a “top-down” process involving senior management and all of the functions and business units. Through this process, senior management considers trends and developments, as well as the effectiveness of the Company’s mitigation plans. Our risk management processes are informed by the results of our ERM program, including those relating to our Internal Audit plans, our ethics and compliance programs, and our financial reporting and SEC disclosures.

The Chief Financial Officer and General Counsel report to the Board at least annually on the most significant risks under our ERM program and the associated mitigation plans. They also annually brief the Audit Committee on the ERM review process. In connection with these ERM reports and briefings, the Board reviews its allocation of risk oversight responsibilities among itself and its committees.

In addition to these ERM briefings, management regularly reviews significant risks, including trends and developments, with the Board and its committees, providing updates on long-term risks during annual long-range planning, strategic reviews and through regular reviews of annual operating plans, as well as providing a near- and medium-term focus on financial performance, market environment updates and presentations on specific associated risk areas. Between Board and committee meetings, directors receive updates regarding developments in the Company’s business as well as emerging risks. In addition, the Lead Director regularly communicates with the CEO and other directors about emerging risks and issues and the coverage of appropriate risk topics in Board meeting agendas.

Cybersecurity Risk Oversight

Given the nature of our business, we have a robust cybersecurity program for identifying, assessing and managing cybersecurity risks. These risks include those relating to our internal systems, as well as to our products, services and programs for customers, and our supply chain. In 2023, the full Board assumed primary oversight responsibility for “enterprise” cybersecurity risks, such as those relating to our information and operational technology systems and our suppliers and partners for those systems, and it receives regular briefings on these risks in addition to briefings on enterprise cybersecurity incidents and key Company defenses and mitigation strategies. Our Special Activities Committee continues to have primary oversight responsibility for cybersecurity risks that relate to our products and services, is regularly briefed by management on such risks, including updates on product and service cybersecurity incidents, defenses and mitigation strategies, and supports the Board in oversight of classified business cybersecurity, including with respect to company internal information and operational technology systems. The Audit Committee also considers cybersecurity and data privacy risks in connection with its financial and compliance risk oversight role.

Product Safety Risk Oversight

Management fosters a strong safety culture and maintains robust safety programs across our businesses. Product safety is covered by our ERM program, and the Governance Committee has oversight responsibility for product safety risks (with the Special Activities Committee assisting on classified product safety). The Governance Committee annually reviews our corporate product safety program, receives a dashboard at each meeting that reports on product safety matters (including incident metrics and managed safety issues) and regularly receives a briefing from each business unit on its product safety management system, including how the system applies in practice, as well as the business unit’s product safety culture. Our product safety program also provides for immediate reporting to the Governance Committee in the event of certain significant product safety incidents.

Board Oversight of Pratt & Whitney Powder Metal Manufacturing Matter

The safe operation of our products is of paramount importance to the Company. In July of 2023, we determined, through ongoing surveillance by Pratt & Whitney’s (“P&W”) safety management system, that a rare condition in powder metal manufactured between the fourth quarter of 2015 and the third quarter of 2021 that was used to make certain Pratt & Whitney engine parts would require accelerated inspection and retirement of potentially affected parts. Due to the number of affected parts and resultant inspection interval, the impact on the PW1100G-JM Geared Turbo Fan (“GTF”) fleet, which power the A320neo family of aircraft, is outside normal business management activity.

The Board provided, and continues to provide, active and engaged oversight of this matter to ensure that the Company has taken sufficient actions to permit the continued safe operation of the fleet. This Board oversight includes regular reviews of the product safety investigation of this matter, the ‘read-across’ analysis for powder metal impacts to other engine platforms and the development of the associated fleet action plans, including the operational and safety assumptions underpinning those plans. In addition, the Board has reviewed estimated financial impacts attributable to this matter and provided oversight of our performance against the fleet action plan, our public disclosures regarding this matter and our actions to address both customer disruption and negative reputational impact resulting from this matter.

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CORPORATE GOVERNANCE | THE BOARD’S ROLE

Between July and December 2023:

The full Board participated in six formal Board meetings where the powder metal matter was reviewed, four of which were in-person meetings, and three of which were special meetings called to address the matter;
The Governance Committee, which oversees product safety, conducted a detailed review of P&W’s safety management system, as applied to the powder metal matter;
The Board received frequent, written updates from management regarding the powder metal matter, including ten update letters from the Chairman and CEO;
Directors conducted a site visit at P&W’s West Palm Beach facility, one of the sites where GTF overhauls are performed to address the powder metal matter, to obtain insights into how the fleet action will be executed; and
Board members participated in numerous informal calls and discussions with management representatives regarding the matter.

The Board will continue its active oversight of the remediation of the powder metal matter in 2024 and will remain focused on other risks that could impact the safety and quality of our products.

Compensation Risk Oversight

The Human Capital & Compensation Committee believes that executive compensation payouts must:

Align with the Company’s financial performance
Be earned in a manner consistent with RTX’s Code of Conduct
Promote long-term, sustainable value for shareowners
Provide fair and equitable pay regardless of race and gender
Strike a balance between appropriate levels of financial opportunity and risk

The Committee identifies, monitors and mitigates compensation risk in the following ways:

Sound Incentive Plan Design       Our annual and long-term incentive plans use complementary performance metrics that are essential indicators of the financial health of our Company. The Committee establishes financial performance goals that are challenging, yet realistic, and maintains the ability to use its discretion to adjust payouts under our annual incentive plan, to the extent it believes the calculated results do not accurately reflect the overall quality of performance for the year. Further, payouts for both annual incentive awards and PSUs are capped at 200% of target.
Emphasis on Long-Term Performance Long-term incentives (“LTI”) are the cornerstone of RTX’s executive compensation program. Our LTI program incorporates long-term financial performance metrics that are designed to align executive interests with shareowner interests.
Rigorous Share Ownership Requirements RTX maintains significant share ownership requirements for our senior executives and directors. These requirements are intended to reduce risk by aligning the economic interests of executives and directors with those of our shareowners. A significant stake in future performance discourages the pursuit of short-term opportunities that can create excessive risk. See page 38 for more information.
Prohibition on Short Sales, Pledging and Hedging of RTX Securities RTX prohibits directors, officers and employees from entering into transactions involving short sales of our securities. Directors and executive officers are also prohibited from pledging or assigning RTX stock, stock options or other equity interests as collateral for a loan. Transactions in put options, call options or other derivative securities that have the effect of hedging the value of RTX securities also are prohibited, whether or not those securities were granted to or held, directly or indirectly, by a director, officer or employee.

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CORPORATE GOVERNANCE | THE BOARD’S ROLE

Clawback Policy       The RTX Corporation Clawback Policy is our comprehensive policy on recoupment of compensation that covers all RTX employees, including NEOs and executive officers. This policy allows RTX to recoup annual and long-term incentive compensation in a number of circumstances, including financial restatements, compensation earned as a result of financial miscalculations, violations of RTX’s Code of Conduct and violations of post-employment restrictive covenants. Further, in October 2023, we adopted the RTX Corporation Executive Officer Clawback Policy that is intended to comply with SEC regulations and NYSE listing standards. Under this policy, the Company can recoup covered incentive-based compensation from executive officers (as defined by the SEC) upon the occurrence of any restatement made to correct an error in previously issued financial statements due to material noncompliance with any financial reporting requirement under the securities laws. This Policy supplements, but does not replace, the RTX Corporation Clawback Policy. See pages 65-66 for details.
Post-Employment Covenants Members of the Company’s Executive Leadership Group (“ELG”), which includes each of our current NEOs, may not engage in post-employment activities detrimental to RTX, such as disclosing proprietary information, soliciting RTX employees or engaging in competitive activities. See page 65 for more details.

Compensation Risk Assessment. During 2023, the Committee engaged Frederic W. Cook & Co. (“FW Cook”), the Committee’s independent third-party consultant, to perform a compensation risk assessment. As a result of this assessment, both FW Cook and the Committee concluded that the Company’s incentive plans do not contain risky features that are likely to have a material and adverse impact on the Company. Further, FW Cook and the Committee concluded that the Company’s compensation plans, programs and policies contain sufficient risk mitigation factors.

SUCCESSION PLANNING OVERSIGHT

The Board has primary responsibility for CEO and senior management succession planning. The Board considers effective continuity of leadership to be critical to the Company's success and supports senior management in carefully considering and planning for successful leadership transitions. The CEO and the Executive Vice President & Chief Human Resources Officer regularly meet with the Board to discuss the development of potential candidates for succession to senior leadership roles, including the CEO role. The Board's input and feedback are reflected in annual updates to succession plans. Succession plans include readiness assessments, biographical information and career development plans.

On December 14, 2023, as the culmination of several years of a deliberate, disciplined succession planning process, the Board announced a leadership transition, where Mr. Calio will succeed Mr. Hayes as CEO, effective May 2, 2024. Mr. Hayes will continue to serve as Chairman of RTX, becoming Executive Chairman, effective May 2, 2024. Mr. Calio was also elected to the Board, effective December 14, 2023.

ESG OVERSIGHT

Our commitment to innovation and collaboration drives our vision for a safer, more connected world, and underpins our environmental, social and governance (“ESG”) approach. Our ESG pillars—People, Planet and Principles—are essential components of the mission-critical work that we perform. In 2021, with the Board’s engagement, we developed our comprehensive ESG strategy, which sets forward-looking aspirations aligned with our focus areas and business strategy, while supporting the advancement of people, lifting up underserved communities and addressing the global challenges of climate change. In 2022 and 2023, we continued to build on and integrate this strategy throughout our business, holding ourselves accountable for progress on our ESG objectives in our annual incentive plans and increasing transparency to our stakeholders through our annual ESG Reports and website disclosure of our CDP Climate Change Questionnaire responses. Our 2022 ESG Report, published in April 2023, was the Company’s second such report and was prepared in alignment to globally recognized standards and frameworks, including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board’s (SASB) standards for the Aerospace and Defense industry, and the Task Force on Climate-related Financial Disclosures (TCFD). Our 2023 ESG Report, to be published in the second quarter of 2024, will include updates on our accomplishments and progress against the metrics that we have outlined in our prior reports and on our website. Our ESG Reports and our CDP Climate Change Questionnaire responses can be found at: https://www.rtx.com/our-responsibility/resources.

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CORPORATE GOVERNANCE | THE BOARD’S ROLE

Our ESG Strategy: People, Planet and Principles
 

 

ESG Oversight Structure

Our CEO is ultimately responsible for ESG strategy and performance, with oversight by our Board of Directors. As with risk management oversight, the Board has allocated oversight responsibility for ESG matters and risks to its committees, while retaining full Board oversight of certain ESG matters. The chart below shows the current allocation of ESG risk oversight between the full Board and committees of the Board.

      Full Board
ESG matters that cut across the expertise of multiple committees, including:
Sustainable technology and innovation
Climate risk
Business resilience and crisis management
 
 
 
 
Governance Committee

Environmental stewardship & compliance
Energy & greenhouse gas emissions
Health, safety & wellness
Community vitality
Product safety
Human rights
Human Capital & Compensation Committee

Human capital management, including DE&I and talent attraction, development and engagement
Compensation plans
Audit Committee

Ethics & compliance
Data privacy
Product quality
Special Activities Committee

Data security
Classified product safety
Classified business compliance

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CORPORATE GOVERNANCE | SHAREOWNER ENGAGEMENT AND RESPONSIVENESS

The committees are regularly briefed by management on ESG-related matters for which they have responsibility, including briefings on the Company’s programs, initiatives, goals, risks and opportunities relating to these matters. The Board also discusses ESG risks and opportunities in the context of its review of the Company’s top enterprise risks and mitigation plans, strategic priorities, potential investments and operating and long-term planning.

Shareowner Engagement and Responsiveness

The Board and management believe in transparent and open communication with investors. Over the years, these engagements have improved our corporate governance practices, led to increased shareowner rights, enhanced the Board’s composition and improved the design and disclosure of our executive compensation program.

We regularly communicate with our investors throughout the year, through calls, one-on-one and small group meetings, and conferences or other events. We also engage with our investors each spring after our proxy statement is filed. Outside of proxy season, typically in the late summer and fall, we solicit feedback on our ESG initiatives, corporate governance practices and the executive compensation program.

2023 SHAREOWNER ENGAGEMENT OUTSIDE OF PROXY SEASON

When       Who       Topics       Objectives       Outcome
Fall of 2023 Institutional investors representing nearly 38% of our shares
Updates on our ESG accomplishments and progress against the metrics we have outlined
Ongoing integration of our ESG strategy throughout our business, addressing several areas across our three ESG pillars
Highlights of our 2022 ESG Report and preparations for our 2023 report
Enhance investor understanding of our ESG journey, including our areas of focus, our progress to date and our roadmap for increased transparency and accountability
Grow our understanding of which ESG issues are of greatest interest and importance to our stakeholders
Used feedback to inform refinements to our ESG roadmap, as well as the content of our third annual ESG Report and other ESG disclosures
Board leadership
Enhance our understanding of investors’ views on board leadership structures
Communicated to the Governance Committee that our largest investors have a range of views on board leadership structures
Key elements of our 2023 executive compensation program, including the revised Corporate Responsibility Scorecard
Obtain feedback on our executive compensation program, including the implementation of quantitative goals for the Corporate Responsibility Scorecard used for AIP purposes
Provided feedback to the Human Capital & Compensation Committee

  In 2023, we engaged on ESG, Board leadership and
compensation matters with institutional investors
holding RTX Common Stock representing nearly
38% of our outstanding shares.

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CORPORATE GOVERNANCE | POLITICAL ACTIVITIES AND PUBLIC POLICY ENGAGEMENT

Political Activities and Public Policy Engagement

RTX actively participates in the political and public policy process at the federal, state and local levels on matters that are core to our business interests. We operate in highly regulated industries, and our government relations initiatives are intended to educate and inform officials and the public on a broad range of public policy matters that impact our businesses. These initiatives are based on the Company’s interests and needs—not based on the personal agendas of individual directors, officers or employees—and are conducted in accordance with our Code of Conduct and applicable laws and regulations.

All political activities of RTX are managed from the highest levels of the Company. The Board of Directors, directly or through the Governance Committee, is responsible for reviewing and monitoring the Company’s conduct of government relations activities, including its positions on significant public policy issues, advocacy efforts and political spending. The Governance Committee receives regular briefings from management on these matters to ensure that the Company’s political activities are well aligned with its strategy and values.

The Board also oversees the activities of the Employees of RTX Corporation Political Action Committee (“RTX PAC”). RTX PAC is voluntary, funded with employee contributions only, nonpartisan and supports candidates for federal and state office and the national political organizations of both major parties—thus giving employees, regardless of their political affiliations, a way to speak with a unified voice on issues important to RTX. RTX PAC is governed by a Steering Committee composed of members of RTX’s Corporate leadership team and considers several criteria before approving a contribution to a candidate, including a determination that the candidate demonstrates a commitment to RTX’s core values of trust, respect, accountability and collaboration. RTX PAC does not give to candidates who are under Department of Justice investigation or to those who are under investigation for a significant violation of Congressional ethics rules. RTX PAC operates in accordance with all applicable laws and regulations, and its contributions are reflected in public filings with the Federal Election Commission.

The Senior Vice President for Global Government Relations leads RTX’s government relations and political activities initiatives, reports to the Governance Committee on the Company’s political and lobbying activities, including the activities of RTX PAC, and works closely with the Company’s legal department to ensure the Company’s political activities comply with all legal requirements, established company policies and the highest ethical standards.

RTX does not contribute company funds to federal, state or local office candidates, Section 527 organizations, Super PACs, independent expenditures or other “grass roots” communications to the general public related to the support or opposition of federal, state or local candidates, ballot measures or any other election-related matters.

In the ordinary course of business, RTX also participates in, and pays membership dues to, certain nonprofit trade associations that help us stay abreast of technical issues, emerging industry standards and other trends relevant to our business, and provide educational opportunities for employees and support workforce development initiatives. Some trade associations use a portion of their membership dues for nondeductible purposes, such as lobbying. RTX does not make payments to trade associations or other tax-exempt organizations that are designated for election-related purposes.

We are transparent with respect to the Company’s political activities and the activities of RTX PAC, and we fully comply with all applicable public disclosure requirements. In particular,

We provide extensive information about our political activities on our website and ensure that such information is current.
With respect to federal lobbying: We file quarterly lobbying activity reports and semi-annual lobbying contributions reports with the Clerk of the U.S. House of Representatives and the Secretary of the U.S. Senate. These reports contain details of our lobbying efforts, political activity and related expenditures in accordance with the Lobbying Disclosure Act and are publicly accessible via the House and Senate websites and RTX’s website.
With respect to state and local lobbying: Our activities at the state and local level are limited and generally involve issues related to economic development and business regulatory matters in states where we maintain a significant business presence. State and local lobbying activities are disclosed in compliance with applicable laws and regulations, and, for those jurisdictions that provide online availability, we disclose on our website where our filed reports can be obtained.
We disclose, through public filings with the Federal Election Commission, the full list of candidates and committees to which RTX PAC has contributed, and we provide a link to these filings on our website.
We disclose on our website a listing of the trade associations to which the Company paid $25,000 or more in membership dues, including the portion of such dues, if any, that are nondeductible as a lobbying or political expenditure.

Additional information regarding RTX’s public activities can be found on our website at www.rtx.com under the heading “Who We Are/Corporate Governance/Public Activities.”

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Compensation of Directors

Pay Structure

ANNUAL RETAINER

Under the terms of the RTX Corporation Board of Directors Deferred Stock Unit Plan (“RTX Director DSU Plan”), annual retainers for non-employee directors are payable 40% in cash and 60% in deferred stock units (“DSUs”). Directors, however, may elect to receive 100% of the annual retainer in DSUs. The annual retainer paid to non-employee directors for the May 2023 to May 2024 Board cycle is dependent upon the role each director holds, as follows:

Role       Cash ($)       Deferred
Stock Units ($)
            Total Annual
Retainer ($)
All Directors (base retainer) $130,000 $195,000   $325,000
Additional Compensation for Services as:*  
Lead Director $32,000 $48,000   $80,000
Audit Committee Chair $16,000 $24,000   $40,000
Human Capital & Compensation Committee Chair $14,000 $21,000   $35,000
Finance Committee Chair $10,000 $15,000   $25,000
Governance and Public Policy Committee Chair $10,000 $15,000   $25,000
Special Activities Committee Chair $10,000 $15,000   $25,000
* Directors serving in multiple leadership roles receive incremental compensation for each role.

Annual retainers are paid each year following the Annual Meeting. Non-employee directors who join the Board or are appointed to a leadership role between the Annual Meeting and the end of September receive 100% of the annual retainer. However, non-employee directors who join the Board or are appointed to a leadership role between October and the next Annual Meeting receive 50% of the annual retainer.

Non-employee directors do not receive additional compensation for attending regular Board or committee meetings, although they do receive a $3,000 fee for special, in-person meetings. The special meeting fee applies only to formal Board or committee meetings that are not on the Board’s annual calendar and do not take place during a regularly scheduled Board meeting. In 2023, there was one special, in-person meeting of the Board.

DEFERRED RESTRICTED STOCK UNITS

Directors appointed to the Board before October 2019 received a one-time deferred restricted stock unit ("RSU") award. This award vested in equal portions over five years but distribution does not occur until a director retires from the Board. Non-employee directors appointed after October 2019 did not receive a deferred RSU award upon joining the Board. All deferred RSUs are fully vested.

DIVIDEND TREATMENT

When RTX pays a dividend on Common Stock to shareowners, directors are credited with additional DSUs and deferred RSUs equal in value to the dividend paid on the corresponding number of shares of RTX Common Stock.

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COMPENSATION OF DIRECTORS | 2023 DIRECTOR COMPENSATION

PLAN DISTRIBUTIONS

DSUs and deferred RSUs are not distributed to directors until they retire from the Board. Upon retirement, RTX DSUs and deferred RSUs are converted into shares of RTX Common Stock. For our legacy UTC directors, upon the 2020 spinoff by UTC of Carrier and Otis, vested DSUs and deferred RSUs originally based in UTC stock were converted into vested DSUs and deferred RSUs in the stock of RTX, Carrier and Otis. When these directors retire from the RTX Board, the Carrier and Otis DSUs and deferred RSUs (if any) will be distributed in cash. Directors can elect to receive distributions in either a lump sum or in 10- or 15-year installments.

2023 Director Compensation

Name       Fees Earned or
Paid in Cash ($)(1)
     Stock
Awards ($)(2)
      All Other
Compensation ($)(3)
           Total ($)
Tracy A. Atkinson $147,000 $216,000 $25,997   $388,997
Leanne G. Caret(4) $201,000 $297,000 $25,997   $523,997
Bernard A. Harris, Jr. $133,000 $195,000 $18,825   $346,825
George R. Oliver $3,000 $325,000 $328   $328,328
Robert K. (Kelly) Ortberg $133,000 $195,000 $984   $328,984
Margaret L. O’Sullivan(5) $0 $0 $35,997   $35,997
Dinesh C. Paliwal(5) $3,000 $405,000 $30,328   $438,328
Ellen M. Pawlikowski $3,000 $325,000 $10,997   $338,997
Denise L. Ramos $3,000 $325,000 $1,325   $329,325
Fredric G. Reynolds(6) $165,000 $243,000 $1,325   $409,325
Brian C. Rogers $3,000 $350,000 $26,325   $379,325
James A. Winnefeld, Jr. $3,000 $350,000 $20,403   $373,403
Robert O. Work $143,000 $210,000 $8,628   $361,628
(1) Reflects the portion of the directors’ annual retainer paid in cash. Messrs. Oliver, Paliwal, Rogers and Winnefeld, Jr. and Mses. Pawlikowski and Ramos elected to receive their annual cash retainer in DSUs, as detailed in footnote (2).
(2) Reflects the grant date fair value of DSU awards credited to the director’s account, including any portion of the annual cash retainer that the director elected to receive as DSUs. The value of DSU awards is calculated in accordance with FASB ASC Topic 718 using assumptions described in Note 19: Stock Based Compensation, to the Consolidated Financial Statements in RTX’s 2023 Annual Report on Form 10-K. The number of units credited to each director in 2023 was calculated by dividing the value of the award by the NYSE closing price per share of RTX Common Stock on May 2, 2023, which was the date of the 2023 Annual Meeting of Shareowners, or for retainers paid to directors upon joining the Board or being appointed to a leadership role, the RTX closing stock price on the grant date. DSU awards are credited with additional units each time the Company pays a dividend to shareowners and are restricted from distribution while a non-employee director serves on the Board.
(3) Amounts in this column include incidental benefits and matching contributions to eligible nonprofit organizations under the Company’s matching charitable gift program that covers non-employee directors, as well as Company employees. The Company’s matching charitable gifts paid in 2023 were as follows: Ms. Atkinson, $25,000; Ms. Caret, $25,000; Mr. Harris, $17,500; Ms. O’Sullivan, $35,000; Mr. Paliwal, $30,000; Ms. Pawlikowski, $10,000; Mr. Rogers, $25,000; Mr. Winnefeld, Jr., $15,000; and Mr. Work, $8,300.
(4) Ms. Caret joined the Board in January 2023, and as a result was paid: (i) 50% of the base annual retainer for the 2022/2023 Board cycle; and (ii) 100% of the base annual retainer for the 2023/2024 Board cycle. Due to an administrative error, the cash portion of the retainer for the 2022/2023 Board cycle was paid to Ms. Caret in early 2024.
(5) Ms. O’Sullivan and Mr. Paliwal retired from the Board on May 2, 2023 and December 1, 2023, respectively.
(6) Mr. Reynolds was appointed the independent Lead Director of the Board on December 1, 2023, following Mr. Paliwal’s retirement. As a result, during 2023, Mr. Reynolds was paid: (i) 50% of the Lead Director retainer for the 2023/2024 Board cycle; (ii) 100% of the base annual retainer for the 2023/2024 Board cycle; and (iii) 100% of the Audit Committee chair retainer for the 2023/2024 Board cycle.

CHANGES TO DIRECTOR COMPENSATION FOR 2024
In its review of directors’ compensation for the 2024/2025 Board cycle, the Committee on Governance and Public Policy decreased the lead director retainer from $80,000 to $50,000 to better align with the competitive market. This change will become effective on May 2, 2024, the date of the 2024 Annual Meeting of Shareowners.

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Share Ownership  

Share Ownership Requirements

Our rigorous share ownership requirements, shown below, promote and strengthen the alignment of our non-employee directors and senior management with the interests of our shareowners.

6X    5X    4X    3X    2X
base salary for our Chairman and CEO role(s)   annual base cash retainer for non-employee directors   base salary for our CFO, COO and business unit presidents   base salary for other ELG members   base salary for other officers*

For the purposes of determining compliance with the RTX Share Ownership Policy, shares are defined as RTX Common Stock held outright (by the executive/director or their spouse), restricted stock units, restricted stock awards and shares or share equivalents held in a Company savings plan or deferred compensation plan. Stock options, stock appreciation rights and performance share units are excluded from the definition of shares under the RTX Share Ownership Policy.

Non-employee directors must achieve their required ownership level within five years of joining the Board, and ELG members (including the NEOs) must achieve their ownership levels within five years of appointment to the ELG or a role requiring a higher level of ownership. Other officers who are not ELG members must achieve their ownership levels within five years of appointment to an officer role. An individual who has not reached the applicable ownership level after this five-year period is not permitted to sell RTX shares until that ownership level is achieved. All directors, ELG members and other officers currently comply with their respective ownership requirements or are on track to meet them within the five-year period.

* Other officers who are not ELG members.

Beneficial Share Ownership of Directors and Executive Officers

The following table shows the beneficial ownership of RTX Common Stock as of February 9, 2024, for: (i) each director and nominee; (ii) each NEO; and (iii) the directors and executive officers as a group. None of these individuals or the group as a whole beneficially owned more than 1% of RTX Common Stock as of that date. Unless otherwise noted, each person named in the table has sole voting power and sole investment power.

Name of Beneficial Owner       SARs Exercisable
within 60 days(1)
     RSUs Convertible to
Shares within 60 days(2)
     DSUs Convertible to
Shares within 60 days(3)
     Total Shares
Beneficially Owned(4)
Each director and nominee for director, including CEO and President & COO
T. Atkinson 10,866 17,746
C. Calio 28,408 113,953
L. Caret 3,076 3,076
B. Harris, Jr. 6,845 6,845
G. Hayes 260,581 844,807(5)
G. Oliver 10,652 26,918
R. Ortberg 52,092 6,419 204,699
E. Pawlikowski 11,382 14,581
D. Ramos 1,171 20,354 21,525
F. Reynolds 1,195 18,443 41,863
B. Rogers 1,195 28,523 34,718(6)
J. Winnefeld, Jr. 16,790 24,590
R. Work 12,732 17,933

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SHARE OWNERSHIP | CERTAIN BENEFICIAL OWNERS

Name of Beneficial Owner     SARs Exercisable
within 60 days(1)
      RSUs Convertible to
Shares within 60 days(2)
      DSUs Convertible to
Shares within 60 days(3)
      Total Shares
Beneficially Owned(4)
CFO and other NEOs who are not also directors
N. Mitchill, Jr. 19,778 69,796
S. Timm 13,167 49,121
W. Kremer 8,740 54,761
All directors, nominees and executive officers as a group (21 in total)(7) 1,723,343
(1) Net number of shares of RTX Common Stock that would be issued to the current or former executive officers if their vested stock appreciation rights were exercised within 60 days of February 9, 2024. Once vested, each SAR can be exercised for the number of shares of RTX Common Stock having a value equal to the difference between the market price on the exercise date and the exercise price of the SAR. The estimated net number of shares of RTX Common Stock was calculated using $90.51 per share, which was the NYSE closing price of RTX Common Stock on February 9, 2024.
(2) Each non-employee director appointed to the Board prior to October 2019 received deferred RSUs that vest in equal portions over five years and are distributed in shares of RTX Common Stock when the director retires from the Board. The table reflects the vested deferred RSUs, which are the number of shares in which the director has the right to acquire beneficial ownership at any time within 60 days of February 9, 2024, following the director’s retirement from the Board.
(3) Reflects the previously accrued portion of the non-employee director’s annual retainer earned in DSUs, which are restricted from distribution until retirement. The table reflects the number of shares in which the director or nominee has the right to acquire beneficial ownership at any time within 60 days of February 9, 2024, following the director’s retirement from the Board.
(4) Reflects holdings by the director, nominee or officer of all shares beneficially owned (including unvested shares of restricted stock) and awards convertible to shares within 60 days of February 9, 2024.
(5) Includes shares for which a spouse holds sole voting and investment power: G. Hayes (3,720 shares).
(6) Includes shares for which voting and investment power is jointly held by the director: B. Rogers (5,000 shares).
(7) Holdings, as of February 9, 2024, of the directors and executive officers who are listed in the Company’s 2023 Annual Report on Form 10-K.

Certain Beneficial Owners

The following table shows all holders known to RTX to be beneficial owners of more than 5% of the outstanding shares of RTX Common Stock as of December 31, 2023.

Name and Address Shares   Percent of Class
The Vanguard Group(1) 123,901,111       8.6%
100 Vanguard Boulevard
Malvern, PA 19355
 
State Street Corporation(2) 121,420,067   8.4%
State Street Financial Center
1 Congress Street, Suite 1
Boston, MA 02114-2016
 
BlackRock, Inc.(3) 104,985,755   7.3%
50 Hudson Yards
New York, NY 10001
 
Capital Research Global Investors(4) 90,430,489   6.3%
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
 
(1) The Vanguard Group reported in an SEC filing that, as of December 31, 2023, it held shared voting power with respect to 1,646,939 shares of RTX Common Stock, sole dispositive power with respect to 117,889,910 shares of RTX Common Stock and shared dispositive power with respect to 6,011,201 shares of RTX Common Stock, and it did not hold sole voting power with respect to any shares of RTX Common Stock.
(2) State Street Corporation reported in a joint SEC filing that, as of December 31, 2023, it beneficially owned in the aggregate 121,420,067 shares of RTX Common Stock, it held shared voting power with respect to 97,712,727 shares of RTX Common Stock and shared dispositive power with respect to 121,366,724 shares of RTX Common Stock, and it did not hold sole voting power or sole dispositive power with respect to any shares of RTX Common Stock. In the same joint SEC filing, State Street Global Advisors Trust Company, a subsidiary of State Street Corporation, reported that, as of December 31, 2023, it beneficially owned 102,354,310 shares of RTX Common Stock, it held shared voting power with respect to 14,357,299 shares of RTX Common Stock and shared dispositive power with respect to 102,350,230 shares of RTX Common Stock, and it did not hold sole voting power or sole dispositive power with respect to any shares of RTX Common Stock.
(3) BlackRock, Inc. reported in an SEC filing that, as of December 31, 2023, it held sole voting power with respect to 97,482,439 shares of RTX Common Stock and sole dispositive power with respect to 104,985,755 shares of RTX Common Stock, and it did not hold shared voting power or shared dispositive power with respect to any shares of RTX Common Stock.
(4) Capital Research Global Investors, a division of Capital Research and Management Company, reported in an SEC filing that, as of December 31, 2023, it held sole voting power with respect to 90,396,605 shares of RTX Common Stock and sole dispositive power with respect to 90,430,489 shares of RTX Common Stock, and it did not hold shared voting power or shared dispositive power with respect to any shares of RTX Common Stock.

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Proposal 2:
Advisory Vote to Approve
Executive Compensation
 

What
am I
voting on?
      Each year we ask shareowners to approve, on an advisory basis, the compensation of our Named Executive Officers (“NEOs”). Before voting, we encourage you to read and consider the Compensation Discussion and Analysis on pages 42-66, along with the compensation tables on pages 68-80.

How is shareowner feedback considered?

RTX values and considers shareowner views when making executive compensation decisions. Over the years, shareowner input has substantially contributed to the philosophy that underpins the design of our executive compensation program—our Guiding Principles—which are described in detail on page 45 of this Proxy Statement. Each year, we engage with investors to solicit their views on our executive compensation programs (see page 43 for additional details). The Human Capital & Compensation Committee (the “Committee”) uses this feedback in its evaluation and oversight of our program. Shareowner feedback also is reflected in our ongoing effort to make the compensation information in our proxy statements clearer and more transparent.

Why should I vote for this proposal?

The Committee is committed to designing an executive compensation program that is structured to advance our fundamental objective: aligning our executives’ compensation with the long-term interests of our shareowners. The Committee’s primary goal is to ensure our program rewards financial and operating performance, effective strategic leadership and advances our commitment to our corporate responsibility initiatives—all key elements in building sustainable shareowner value.

In addition, compensation opportunities are structured to:

Facilitate the retention of highly talented executives who are critical to our long-term success
Deliver fair and equitable pay to executives of comparable experience and performance who perform similar work, regardless of race or gender
Require ethical and responsible conduct in pursuit of these goals

Further, the performance metrics used in our incentive programs directly align with shareowner interests by correlating the timing and amount of actual payouts to our short-, medium- and long-term performance.

Over the past several years, the Committee has taken several actions to reinforce these objectives, such as replacing RSUs with SARs, incorporating into our Executive Annual Incentive Plan a Corporate Responsibility Scorecard that includes quantitative goals and eliminating certain executive perquisites.

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PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Accordingly, the Board recommends that shareowners vote FOR the following resolution:

“RESOLVED, that the compensation of RTX’s NEOs, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and related information provided in this Proxy Statement, is hereby APPROVED on an advisory basis.”

As a matter of law, the approval or disapproval of this Proposal 2 may not be construed as overruling any decision by RTX or the Board, or as imposing any duty or obligation on RTX, the Board or any individual director.

      The Board of Directors unanimously recommends a vote FOR this proposal.

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Table of Contents

Compensation Discussion
and Analysis
 

What’s
in this
section?
      In this section, we discuss our compensation philosophy and explain how our executive compensation program is structured to advance our fundamental objective of aligning our executives’ compensation with the long-term interests of RTX shareowners. We also explain how the Human Capital & Compensation Committee of the Board (the “Committee”) determined compensation for our NEOs listed below, as well as the Committee’s rationale for specific 2023 pay decisions.

Executive Summary       43
Shareowner Engagement on Compensation 43
2023 Performance Overview 43
How We Align Pay and Performance 45
How We Make Pay Decisions and Assess
Our Programs
47
Roles and Responsibilities 47
2023 Independent Consultant Engagement 48
Our Compensation Peer Group and Use of Market Data 48
2023 Principal Elements of Compensation 49
Base Salary 49
Annual Incentive Awards 49
Long-Term Incentive (“LTI”) Awards 54
2023 CEO Pay Decisions 56
2023 Pay Decisions for Other NEOs 58
Other Compensation Elements 62
Retirement and Deferred Compensation Benefits 62
Perquisites and Other Benefits 63
Severance and Change-in-Control Arrangements 64
Other Executive Compensation Policies
and Practices
65
Post-Employment Restrictive Covenants 65
Clawback Policies 65
Prohibition on Certain Transactions
Involving RTX Stock
66
Employment Agreements 66
Tax Deductibility of Incentive Compensation 66
2023 NAMED EXECUTIVE OFFICERS (NEOs)

Gregory J. Hayes
Chairman &
Chief Executive Officer(1)
Neil G. Mitchill, Jr.
Executive Vice President &
Chief Financial Officer
Christopher T. Calio
President & Chief
Operating Officer(1)
Stephen J. Timm
President,
Collins Aerospace
Wesley D. Kremer
Special Advisor to the
President & Chief Operating Officer(2)

(1) Effective May 2, 2024, Christopher T. Calio will be appointed to the role of President & Chief Executive Officer and Gregory J. Hayes will continue to serve as the Company’s Executive Chairman of the Board.
(2) Mr. Kremer served in the role of President, Raytheon during 2023. On January 4, 2023, we announced that effective January 7, 2024, he would step down from this role and would continue to operate in a transitional capacity as Special Advisor to the President & Chief Operating Officer until his retirement in March 2024.

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COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY

Executive Summary

Shareowner Engagement on Compensation
We actively seek—and highly value—feedback from our shareowners and their advisors. The Committee considers this feedback as part of its ongoing assessment of our program’s effectiveness.

Our 2023 Say-on-Pay Vote
Each year, we consider the results of our advisory vote on executive compensation (“Say-on-Pay”) from the prior year.
At our 2023 Annual Meeting of Shareowners, approximately 95% of the votes cast were in favor of the Committee’s 2022 executive compensation decisions.
We interpreted this as an endorsement of our compensation program’s design and direction.
     

Investor Outreach
 

This past year, our shareowner outreach efforts focused on our ongoing progress toward our corporate responsibility objectives, the Committee’s pay decisions for our NEOs and how we can enhance our proxy disclosure to ensure it is clear and concise. Overall, investors were supportive of our current executive compensation program design, including our shift from qualitative to quantitative Corporate Responsibility Scorecard goals for our Annual Incentive Plan (“AIP”). The feedback we received on our proxy disclosure in response to these outreach efforts has been incorporated into this year’s disclosure. For more information on our shareowner engagement, see page 34.

2023 Performance Overview

In 2023, we demonstrated business resilience, shaped our Company to capitalize on evolving customer demands, advanced our key strategic priorities and took decisive action to ensure the safety and quality of our products, all while delivering solid results.

Throughout the year, we maintained persistent focus on our mission—bringing people together through commercial aerospace and defending democracy across the globe. And in 2023, that mission was as vital as ever.

As the global threat environment drove increased domestic and international defense spending, our technologies and solutions positioned us to support our customers and powered our 2023 defense bookings of $51 billion. We also capitalized on the return of air travel to pre-pandemic levels, realizing original equipment and aftermarket sales growth of 22% for our commercial aerospace business.

In 2023, we transformed our Company by realigning our business units to leverage the full scale and power of the Company for our customers and to capture value for our shareowners.

Managing through the powder metal manufacturing matter (as detailed on page 1), supply chain pressure and inflationary challenges, we demonstrated business resilience and delivered on our commitments to our investors. We exceeded the adjusted net sales, free cash flow (“FCF”) and adjusted earnings per share (“EPS”) goals we communicated to investors in early 2023.(1)

Further, we continued to deliver on our commitment to return capital to our shareowners, with $3.2 billion in dividends and $12.9 billion in share repurchases during the year, including executing a $10 billion Accelerated Share Repurchase (“ASR”) program. This brings the total capital we have returned to our shareowners since the Merger to $29.4 billion, an amount that exceeds our original $20 billion goal, two years ahead of schedule, and keeps us on track to meet our enhanced 2025 commitment of $36 to $37 billion.

With growing and resilient end markets and our transformative technologies, we believe we are well positioned to serve our customers’ evolving needs, to generate value for our shareowners and to deliver on our vision of creating a safer, more connected world.

(1) Adjusted net sales, FCF and adjusted EPS are non-GAAP financial measures. See Appendix A on pages 120-121 for more information.

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COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY

2023 FINANCIAL HIGHLIGHTS

DILUTED EARNINGS PER SHARE
($ per share)
CASH FLOW(2)
(in billions)
 
NET INCOME
(in billions)
SALES
(in billions)

1.28       7.3% increase      87th consecutive year
book-to-bill ratio
in dividends per share
  paying a dividend to our shareowners
         
$78 billion $118 billion   $16.1 billion
defense backlog at year-end
commercial aerospace backlog at year-end
  returned to investors through dividends and share repurchases

(1) See Appendix A on pages 120-121 for more information regarding non-GAAP financial measures.
(2) GAAP cash flow is cash flow from operating activities of continuing operations, while non-GAAP cash flow is free cash flow from continuing operations.

2023 STRATEGIC HIGHLIGHTS

We believe we can solve our customers’ most challenging problems, deliver long-term growth to our shareowners and lead our industry by delivering smarter defense systems, intelligent space technologies and sustainable, more connected flight. In 2023, we made noteworthy progress toward advancing our key strategic priorities in several focus areas.

Business Transformation      Productivity Efficiencies      Product Safety
Realigned our four business units into three industry-leading segments to strengthen our market position and generate additional revenue and technology synergies.
Ensured our portfolio is strong and balanced by signing agreements to divest noncore businesses—Collins Aerospace’s actuation and flight control business and Raytheon’s Cybersecurity, Intelligence & Services business.
Enhanced operational performance through the maturity of our CORE operating system and our Industry 4.0 and digital transformation efforts, as demonstrated by the connection of our priority factories to a common analytics platform, the achievement of 100% network modernization and 50% cloud adoption.
Addressed supply chain challenges by deploying our specialists to work directly onsite at over 400 of our suppliers to diagnose and address problems.
Prioritized the safety of our products—our own robust systems and processes detected the Pratt & Whitney powder metal manufacturing matter (as detailed on page 30), and we developed a fleet management and recovery plan to address it.

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COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY

Cost Management   Innovation
Reduced structural costs to combat inflationary headwinds by decreasing the digital applications we use by 30% and reducing our real estate footprint by 60% for U.S. data centers and 15% for global office space.
Captured $295 million of cost synergies in 2023, bringing our total cost synergies to $1.7 billion since the Merger, which exceeds our original and revised 2025 goal ($1 and $1.5 billion), and puts us on track to achieve our newly announced 2025 goal of $2 billion.
     
Used artificial intelligence and machine learning to accelerate our discovery of novel materials, facilitate the design of hardware and enable us to explore new system architectures.
Boosted our innovative capabilities by investing $9.7 billion in capital expenditures and Company- and customer-funded research and development in 2023.
Funded investments and partnerships (through RTX Ventures) in seven emerging companies with the bold ideas, new concepts and disruptive technologies to transform the aerospace and defense industry.

How We Align Pay and Performance

Our executive compensation program is structured to advance our fundamental objective: aligning our executives’ compensation with the long-term interests of our shareowners.

The Committee’s primary goal is to reward and recognize strong financial and operating performance, effective strategic leadership and advancements in our corporate responsibility initiatives, all of which the Committee believes drive long-term, sustainable shareowner value. This pay-for-performance philosophy is embedded into a set of Guiding Principles that underpin how the Committee approaches the design of our executive compensation program.

OUR GUIDING PRINCIPLES

Competitive

Total compensation should be sufficiently competitive to attract, retain and motivate a leadership team capable of maximizing RTX’s performance. Each element should be benchmarked relative to peers.

Balance

Annual and long-term incentive opportunities should reward the appropriate balance of short-, medium- and long-term financial, strategic and operational business results.

Responsibility

A complete commitment to ethical and corporate responsibility is fundamental to our compensation program. Compensation should take into account each executive’s responsibility to act at all times in accordance with our Code of Conduct, our environmental, health, safety and other corporate social responsibility objectives, and our compliance initiatives. Financial, strategic and operational performance must not compromise these values.

Long-Term Focus

For our most senior executives, long-term, stock-based compensation opportunities should significantly outweigh short-term, cash-based opportunities. Annual objectives should complement sustainable, long-term performance.

Pay-for-Performance

A substantial portion of compensation should be variable, contingent and directly linked to Company, business unit and individual performance. The portion of total compensation contingent on performance should increase with an executive’s level of responsibility.

Shareowner Alignment

The financial interests of executives should be aligned with the long-term interests of our shareowners through stock-based compensation and performance metrics that correlate with long-term shareowner value.

Fair and Equitable

Compensation programs should be designed to deliver fair and equitable pay to executives of comparable experience and performance who perform similar work, regardless of race or gender.

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COMPENSATION DISCUSSION AND ANALYSIS | EXECUTIVE SUMMARY

OVERVIEW OF 2023 PAY DECISIONS

2023 Pay Mix

Consistent with our Guiding Principles, the largest portion of compensation for our NEOs in 2023 was “at-risk” compensation—annual and long-term incentive awards that are contingent on Company performance relative to our key metrics and stock price performance. See pages 5, 50 and 54 for details on the metrics we use in our compensation program and why they were chosen.

     

(1) Percentages calculated based on 2023 total direct compensation, as shown in the table below. NEO average represents the average of all NEOs other than the CEO.

2023 Total Direct Compensation

In making annual pay decisions, the Committee focuses primarily on “total direct compensation,” which includes our three principal elements of executive compensation: base salary, annual incentives and long-term incentives. These elements are discussed in detail on pages 49-55.

Total direct compensation is set each year to reflect the Committee’s assessment of Company, business unit and individual performance for the year. 2023 total direct compensation includes 2023 base salary, 2023 annual incentives paid in the first quarter of 2024 and the LTI grant values approved by the Committee in February 2024, which were based on its assessment of 2023 performance and the competitive market pay for each NEO’s role. This differs from the February 2023 LTI award grant date fair values (accounting values at the time of grant) shown in the Summary Compensation Table on page 68, which were based on the Committee’s assessment of 2022 performance and the competitive market pay for each NEO’s role at that time. For more details on total direct compensation, see page 57.

As previously discussed on pages 5-6, in making 2023 total direct compensation decisions, the Committee took into consideration the impact of the Pratt & Whitney powder metal manufacturing matter (see page 1) on our shareowners and customers and reduced the RTX performance factor from 103% to 98%, and further adjusted the performance factors used for Mr. Hayes and Mr. Calio’s annual incentive awards to 83% and 93% of target, respectively. The Committee believes these actions reflect the pay-for-performance objectives of our executive compensation programs.

The following chart shows the 2023 total direct compensation of our NEOs:

      Base Salary ($K)(1)       Annual Incentive ($K)       LTI ($K)(2)       Total Direct
Compensation ($K)
Gregory J. Hayes $1,675 $2,780 $10,000 $14,455
Neil G. Mitchill, Jr. $975 $1,100 $5,500 $7,575
Christopher T. Calio $1,010 $1,410 $13,500 $15,920
Stephen J. Timm $850 $840 $4,500 $6,190
Wesley D. Kremer(3) $905 $820 $0 $1,725
(1) The base salary values shown in the table above are the base salary in effect for each NEO as of December 31, 2023, and differ from those in the Summary Compensation Table on page 68, which reflect salary adjustments (if any) made during the year.
(2) Reflects values approved by the Committee for the LTI award granted on February 8, 2024. These values differ from the values that will be reported in the Summary Compensation Table in 2025, which will be calculated in accordance with FASB ASC Topic 718, Compensation—Stock Compensation.
(3) On January 4, 2024, we announced that effective January 7, 2024, Mr. Kremer would step down from his role as President of Raytheon and would continue in a transitional capacity as Special Advisor to the President & Chief Operating Officer until his retirement in March 2024. As a result, Mr. Kremer was not granted an LTI award on February 8, 2024.

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COMPENSATION DISCUSSION AND ANALYSIS | HOW WE MAKE PAY DECISIONS AND ASSESS OUR PROGRAMS

How We Make Pay Decisions and Assess Our Programs

Roles and Responsibilities

Human Capital & Compensation Committee

Oversees our programs

Sets financial, strategic and operational goals and objectives for the Company, our business units and the Chairman and CEO, as they relate to the Company’s annual and long-term incentive programs.
Assesses Company, business unit and NEO performance relative to the preestablished goals and objectives set for the year.
Evaluates the competitiveness of officers’ compensation and approves compensation adjustments, as appropriate.
Approves all executive compensation program design changes, including severance, change-in-control, supplemental benefit arrangements and the Company’s Executive Leadership Group (“ELG”) program.
Appoints executives to the ELG.
Reviews risk assessments as they relate to RTX’s compensation plans, policies and practices.
Considers shareowner input regarding executive compensation decisions and policies.
Reviews the Company’s initiatives relating to its human capital management function.
Engages the Committee’s independent consultant, including approving the consultant’s compensation, determining the nature and scope of its services, evaluating its performance, terminating the engagement and replacing or adding consultants as needed.

Management

CEO provides input to the Committee

Presents the Committee with recommendations for each principal element of compensation for officers other than himself.
Considers the performance of each officer, their business unit and/or function, market benchmarks, internal equity and retention risk when making such recommendations.
Has no role in the performance evaluation or compensation decisions for himself (or for the Executive Chairman, if applicable).

Other executives provide insight and assistance

Our Executive Vice President & Chief Human Resources Officer, along with RTX's Human Resources staff, provide insight on program design and gather compensation market data to assist the Committee with its decision-making process.
Management also has the responsibility, delegated to it by the Committee, for the administration of executive compensation plans for RTX employees who are not officers.

Independent Consultant

Provides an independent perspective and assessment

Advises the Committee on a variety of subjects, including compensation plan design and trends, pay-for-performance analytics, benchmarking data, setting performance goals, risk assessment and related matters.
Reports directly to the Committee, participates in meetings as requested and communicates with the Committee Chair between meetings as necessary.

Shareowners

Provide feedback on our programs

In assessing our programs each year, the Committee reviews the feedback we receive from shareowners. Together with other factors, this helps the Committee in its decision-making process and its ongoing assessment of program effectiveness.

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COMPENSATION DISCUSSION AND ANALYSIS | HOW WE MAKE PAY DECISIONS AND ASSESS OUR PROGRAMS

2023 Independent Consultant Engagement

In early 2023, the Committee again engaged Frederic W. Cook & Co. (“FW Cook”) as its independent consultant for the year. Prior to the engagement, the Committee reviewed the firm’s qualifications, independence and any potential conflicts of interest. FW Cook did not perform other services for or receive other fees from the Company. As a result, the Committee determined that FW Cook qualified as an independent consultant. During 2023, FW Cook representatives attended all Committee meetings.

No other consulting firm made recommendations to the Committee on RTX’s peer group composition or on the form, amount or design of executive compensation in 2023. However, the Committee did obtain market data from other compensation consulting firms for various purposes, including benchmarking. Generally, such data is also available to other consulting clients of these firms.

Our Compensation Peer Group and Use of Market Data

How We Use Peer Group Data. The Committee believes that to keep our executive compensation program sufficiently competitive, the target value of each principal element of compensation should approximate the market median of the companies RTX views as competitors for senior executive talent. For this reason, we compare our executive compensation program to the programs of companies within our Compensation Peer Group (“CPG”). In addition, we use market data from the aerospace and defense sector, the Fortune 100 and a broader group of companies to gain insight into general compensation trends and to supplement CPG market data when the Committee finds it necessary or appropriate. The Committee annually evaluates each compensation element relative to the market for each officer’s role and makes adjustments as appropriate. However, individual compensation may vary from market median benchmarks based on the Committee’s assessment of other factors that it considers relevant, including Company, business unit, function and/or individual performance, job scope, retention risk, internal pay equity and sustained performance over time.

How Our Compensation Peer Group is Constructed. The CPG, shown below, is composed of a mix of industry and non-industry peers. The Committee believes these 20 companies provide a relevant comparison based on their similarity to RTX in size, geographic footprint and operational complexity, taking into account factors such as revenue, market capitalization, global scope of operations, manufacturing footprint, research and development activities, and technology and engineering focus. We use the CPG solely for the purpose of benchmarking executive compensation. As a result, we do not use the relative financial performance of the CPG as a performance metric in our incentive compensation programs.

OUR COMPENSATION PEER GROUP (CPG)

                 
Aerospace & Defense Equipment & Machinery Technology/Communications Oil & Gas

Boeing
General Dynamics
L3Harris Technologies
Lockheed Martin
Northrop Grumman

3M
Caterpillar
Deere
AT&T
Cisco
HP Inc.
IBM
Intel
Verizon
Chevron
 
Chemicals Diversified Industrials Automotive Freight & Logistics
Dow General Electric
Honeywell
General Motors UPS

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COMPENSATION DISCUSSION AND ANALYSIS | 2023 PRINCIPAL ELEMENTS OF COMPENSATION

TIMELINE FOR COMPENSATION DECISIONS

The Committee followed the process shown below in making pay decisions for each principal component of compensation included in 2023 total direct compensation, which includes the 2024 LTI awards, as explained on page 57.

February 2023 April 2023 December 2023* February 2024* 1st Quarter of 2024
Approved 2023 base salary merit adjustments.

Approved 2023 annual incentive performance goals.
   2023 base salary merit adjustments took effect.    Reviewed preliminary 2023 Company, business unit and individual NEO performance.   
Reviewed final 2023 Company, business unit and individual NEO performance.

Approved performance factors and individual 2023 annual incentive awards.

Approved and granted 2024 LTI awards reflective of 2023 performance.
  
2023 annual incentive awards paid.
* In connection with the leadership transition announced in December 2023, the Committee made 2024 LTI award decisions for Mr. Hayes and Mr. Calio at its December 2023 meeting.

2023 Principal Elements of Compensation

Base Salary

To attract and retain talented and qualified executives, we provide competitive base salaries that are generally targeted at the peer group market median, but may range above or below it based on tenure, experience, sustained performance over time, job scope and responsibilities, retention risk and internal pay equity. Each year, the Committee reviews the CEO’s recommendations for base salary merit adjustments for our Named Executive Officers, relative to market ranges for similar roles. The Committee has complete discretion to modify or approve the CEO’s recommendations, and the CEO is not involved in the Committee’s determination of his salary (or the salary of the Executive Chairman, if applicable).

Annual Incentive Awards

Annual incentive awards, which are granted under the RTX Corporation Executive Annual Incentive Plan (“AIP”), are an integral component of our executive compensation program. The AIP reinforces Company and business unit goals, promotes the achievement of these goals and enables us to attract, retain and motivate the highest caliber of executive talent.

HOW ANNUAL INCENTIVE AWARDS ARE DETERMINED

The following formula is the basis for determining annual incentive awards for our NEOs:

Though performance relative to preestablished financial and Corporate Responsibility Scorecard goals is the primary basis for determining the performance factors under the AIP, the Committee retains the right to make discretionary adjustments to the overall performance factors if it determines that such performance does not accurately reflect the overall quality of performance for the year. In the past, the Committee has made both positive and negative adjustments (see Appendix B on page 122 for additional details). Examples of situations that could result in discretionary adjustments to performance factors include:

Significant, unforeseen circumstances beyond management’s control that affected performance relative to the established goals, including certain nonrecurring charges and credits unrelated to operating performance

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COMPENSATION DISCUSSION AND ANALYSIS | 2023 PRINCIPAL ELEMENTS OF COMPENSATION

Changes in tax laws and accounting rules that positively or negatively impact performance
Changes to the Company’s capital structure (restructuring, acquisitions and divestitures)

In addition, our NEOs begin the year with individual financial, strategic and/or operational objectives. Based on the CEO’s performance assessment, it may be recommended that the Committee use its discretion to increase or decrease the award an NEO would otherwise receive based on the performance factor approved by the Committee. The Committee considers these recommendations and makes adjustments it deems appropriate, ranging anywhere from -100% to +30% of the approved performance factor. In making its annual incentive decisions, the Committee also considers each executive’s responsibility to act at all times in accordance with our Code of Conduct, Company policies and compliance initiatives.

2023 ANNUAL INCENTIVE TARGETS

Each NEO has an annual incentive target that is expressed as a percentage of the NEO’s base salary as in effect on December 1, 2023. These targets are based on relevant market data for each NEO’s role and generally approximate the median of our CPG. Changes in target percentages that occur during the year (usually due to a change in role) are prorated.

For the 2023 plan year, the Committee increased annual incentive targets for certain NEOs to maintain market competitiveness, as shown below:

NEO 2022 2023
Gregory J. Hayes 200% 200%
Neil G. Mitchill, Jr. 110% 115%
Christopher T. Calio 150% 150%
Stephen J. Timm 100% 105%
Wesley D. Kremer 100% 105%

PERFORMANCE METRICS

2023 Performance Metrics and Weightings
The charts below show the 2023 performance metrics and weightings for our Corporate and business unit executives.

Financial Goals Corporate Responsibility Scorecard (“CRS”)
      Earnings       Free Cash Flow       People & Culture       Sustainability
Corporate Executives
Funding based entirely on Company-wide performance
Business Unit Executives
Funding based equally on business unit performance and Company-wide performance for financial metrics, and entirely on Company-wide performance for CRS metrics
  Company-Wide     Business Unit

As shown above, for our Corporate executives, performance for all metrics are measured on a Company-wide basis. For business unit executives, our financial metrics are based on both business unit results and Company-wide results, while our CRS metrics are measured at the RTX level. The Committee believes that, at the business unit level, financial metrics should motivate executives both to deliver on customer commitments and to leverage Company-wide resources to advance technology and innovation. Payout funding ranges from 0% to 200% of target for all metrics.

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OUR FINANCIAL PERFORMANCE METRICS

Company-Wide Metrics Business Unit Metrics
RTX Earnings RTX FCF Business Unit Earnings Business Unit FCF
How are AIP financial metrics defined?       We start with a GAAP measure: RTX’s net income attributable to common shareowners.*       We start by subtracting one GAAP measure from another: RTX’s consolidated net cash flow from operating activities, less RTX’s capital expenditures.*       We start with a GAAP measure: business unit operating income.*       We start with an internal measure based on business unit net cash flow from operating activities, less capital expenditures.
Then we adjust for the impact of certain items and external events unrelated to our operating performance. These may include, in any given year, changes in tax laws and accounting rules, restructuring costs, the impact of acquisitions and divestitures (including acquisition accounting adjustments), and significant and/or nonrecurring items. See Appendix B on page 122 for additional details.
Why did the Committee choose these metrics? The Committee believes adjusted net income is relevant because it measures the immediate impact of operating decisions on RTX’s overall performance, and includes the impact of items such as tax, interest and foreign exchange fluctuations, which are managed at the Corporate level. The Committee believes that FCF performance is a relevant measure of our ability to generate cash to fund our operations and key business investments and to return capital to our shareowners. The Committee believes that operating income, exclusive of tax, interest and foreign exchange exposure, should be the focus of our business units. The Committee believes that FCF performance is a relevant measure of the business units’ ability to generate cash to fund their operations and key business investments.
* As reported in our 2023 Annual Report on Form 10-K.

Why we use non-GAAP financial metrics for our annual incentives
The Committee believes annual incentives should not be positively or negatively impacted by short-term decisions made in the best interest of RTX’s long-term business strategies. Our non-GAAP performance measures encourage decision-making that considers long-term value creation but does not conflict with our short-term incentive metrics. Adjustments noted above allow for a clearer assessment of business performance and more closely align our annual incentive goals with the non-GAAP financial expectations we communicate to shareowners.

OUR CORPORATE RESPONSIBILITY SCORECARD

RTX is committed to building a company that embraces diversity, equity and inclusion, attracts and retains the talented employees necessary to drive our mission, and ensures our operations do not compromise the environmental health of future generations. For us, advancing these commitments is both a business and social imperative, and requires our leadership team to be held accountable for making tangible progress. RTX management and the Board of Directors view corporate responsibility as integral to our long-term strategy, our business operations, our values and how we engage with our stakeholders.

To accelerate the pace of our progress, our Executive Annual Incentive Plan incorporates a Corporate Responsibility Scorecard (“CRS”), which includes two categories—People & Culture and Sustainability.

As part of our continued emphasis on our corporate responsibility initiatives, the Committee determined that for 2023, our CRS would be evaluated based on four RTX-wide metrics with preestablished quantitative goals, rather than on a qualitative basis. These CRS goals, listed below, reinforce our commitment to our long-term goals and strengthen alignment between the interests of executives and shareowners.

Metric Definition Why it’s Important
Total Representation %       RTX’s global women and U.S. people of color professional and management employees, as a percentage of all of RTX’s global professional and management employees as of year-end.       Supports the Company’s long-term aspirations to increase representation of employee groups that are underrepresented at the Company. We believe that the collective talents of our people—with a broad range of backgrounds, experiences and perspectives—drive the innovation we require to create the products and technologies that will propel our Company and industry forward.
Employee Retention Rate The number of employees who did not separate from RTX due to what the Company considers voluntary controllable reasons divided by the average month-end RTX employee headcount during the year. Employee retention is key to our business performance, our productivity and our operations. Our success is contingent upon our ability to retain highly talented employees who drive the innovation needed to meet the evolving needs of our customers.
Greenhouse Gas (“GHG”) Emissions Amount of GHG (in metric tons of CO2) RTX emitted during the year. Reduction in GHG emissions mitigates the impact of climate change-related business disruption.
Water Usage Amount of water (in gallons) RTX used during the year. Reduction in water usage enables our business to better navigate the impacts of climate change-related droughts.

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HOW WE PERFORMED ON OUR 2023 FINANCIAL GOALS

The Committee established goals for earnings and free cash flow at threshold, target and maximum performance levels both for the Company overall and for each business unit. Performance relative to these goals determines the financial performance factors used to fund the annual incentive pool for Corporate executives and for executives in each business unit.

Performance below the threshold level will result in 0% funding for that metric, while performance above the maximum level cannot exceed the maximum funding level of 200%. Performance that falls between the threshold, target and maximum levels results in funding between the applicable levels.

2023 COMPANY-WIDE FINANCIAL GOALS, RESULTS AND FINANCIAL PERFORMANCE FACTORS

2023 Goals
Financial Metric       Weight       Threshold
(50% funding)
      Target
(100% funding)
      Maximum
(200% funding)
      2023
Results(1)
      Financial
Performance Factors
Earnings—adjusted net income ($M) 40% $6,305 $7,420 $8,680 $7,436 101%
Free Cash Flow ($M) 40% $3,750 $4,750 $6,350 $4,753 100%
RTX Financial Performance Factor 101%
(1) Adjusted net income and free cash flow are metrics used solely for AIP purposes and are defined in Appendix B on page 122. These metrics may differ from other non-GAAP metrics used and described in Appendix A.

In accordance with the AIP definition for net income and free cash flow, the RTX’s 2023 GAAP net income of $3,195 million was adjusted to $7,436 million and RTX’s 2023 free cash flow of $5,468 million was adjusted to $4,753 million.

A number of factors are important when comparing our year-over-year performance goals and results measured for AIP purposes. Specifically, for 2023, our assumption related to the provision of the 2017 Tax Cuts and Jobs Act requiring research and experimental expenditures to be capitalized for tax purposes differed from the assumption we used to establish goals in 2022. When establishing goals in early 2022, we assumed the law would be repealed. This assumption was in line with how we reported our financial guidance to investors for the year. Ultimately, the law was not repealed, and resulted in $1.6 billion in incremental cash taxes that negatively impacted our 2022 free cash flow. In line with our definition for measuring AIP performance, and consistent with how we reported 2022 performance to our investors, we neutralized the 2022 results used to measure AIP for the impact of this law not being repealed. However, for 2023, both the AIP performance goals established and the financial expectations communicated to shareowners were based on the law remaining in place. Since the law was not changed during 2023, no adjustment was required.

2023 BUSINESS UNIT FINANCIAL GOALS, RESULTS AND FINANCIAL PERFORMANCE FACTORS

Business Unit Goals and Results(2)
Business Unit Earnings Business Unit FCF
What 2023 financial goals were set for annual incentive purposes?       Adjusted operating income goals ranged from $1,535 million to $3,910 million for our business units.       FCF goals ranged from $1,150 million to $2,935 million for our business units.
What were the financial results used for annual incentive purposes? Adjusted business unit operating income ranged from $1,570 million to $3,905 million. FCF results ranged from $1,179 million to $2,695 million.
What were the resulting financial performance factors for each metric? Ranged from 0% to 114% of target. Ranged from 56% to 116% of target.
What were the financial performance factors after applying the 50% weighting of the Company-wide factor for each metric? Ranged from 51% to 108% of target. Ranged from 78% to 108% of target.
(2) See table on page 51 and Appendix B on page 122 for details on how we calculate earnings and FCF for the purposes of determining business unit financial performance factors.

When combining the factors for each metric shown above, the financial performance factors for our business units ranged from 79% to 106% of target.

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HOW WE PERFORMED ON THE CORPORATE RESPONSIBILITY SCORECARD

The 2023 Corporate Responsibility Scorecard goals, results and performance factors are shown below:

            2023 Goals            
CRS Metric(1)     Weight     Threshold
(50% funding)
    Target
(100% funding)
    Maximum
(200% funding)
    2023
Results
    CRS
Performance Factors
Total Representation % 5% 42.6% 43.3% 44.6% 42.9% 71%
Employee Retention Rate (%) 5% 92.0% 93.3% 95.5% 95.0% 177%
People & Culture 124%
GHG Emissions
(metric tons of CO
2e)
5% 1,694,499 1,472,665 1,275,242 1,452,220 110%
Water Usage (gallons) 5% 1,743,109,069 1,586,117,140 1,439,015,871 1,613,500,499 91%
Sustainability 101%
(1) See page 51 for definitions of the Corporate Responsibility Scorecard metrics.

HOW PERFORMANCE AFFECTED PAYOUTS AND THE COMMITTEE’S USE OF DISCRETION

The table below shows the weighted performance factors for each financial and CRS metric, resulting mathematically in the overall RTX performance factor, and the reduction of that RTX performance factor through Committee discretion.

RTX Metrics(2)       Weight       Unweighted
Performance Factor
      Weighted
Performance Factor
Earnings (adjusted net income) 40% 101% 40.4%
Free Cash Flow 40% 100% 40.0%
Total Representation % 5% 71% 3.6%
Employee Retention Rate 5% 177% 8.9%
GHG Emissions 5% 110% 5.5%
Water Usage 5% 91% 4.6%
2023 RTX Performance Factor (calculated based on formula) 103%
2023 RTX Performance Factor (with Committee discretion) 98%
(2) Adjusted net income and free cash flow are financial metrics used solely for AIP purposes and are defined in Appendix B on page 122. These metrics may differ from other non-GAAP metrics used and described in Appendix A. See page 51 for definitions of the Corporate Responsibility Scorecard metrics.

For our business units, the weighted performance factors ranged from 86% to 107% of target. After the Committee applied discretion, the final business unit performance factors ranged from 86% to 98% of target.

As previously mentioned, the definition of adjusted net income used for AIP purposes excludes the impacts of changes in tax laws and accounting rules, restructuring costs, acquisitions and divestitures (including acquisition accounting adjustments), and significant and/ or nonrecurring items. These adjustments help to more closely align our annual incentive goals and results with the non-GAAP financial expectations and performance we communicate to shareowners, and ensure that our AIP drives short-term decision-making that is in the best interests of RTX’s long-term business strategies.

Consistent with how we reported adjusted net income to our shareowners for the year, the AIP definition excludes the impact of the Pratt & Whitney powder metal manufacturing matter (see page 1). Nevertheless, the Committee considered the impact of this matter on our shareowners and customers and reduced the RTX performance factor from 103% to 98%, and further reduced the performance factors used for Mr. Hayes and Mr. Calio’s annual incentive awards to 83% and 93% of target, respectively.

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Long-Term Incentive (“LTI”) Awards

LTI MIX

The Committee annually reviews the design of our LTI awards to ensure consistency with our program’s fundamental objective of aligning the interests of executives and shareowners while attracting and retaining talented senior leaders.

In 2023, the LTI mix for our NEOs was 60% performance share units (“PSUs”) and 40% stock appreciation rights (“SARs”). The Committee believes each LTI vehicle serves a specific objective:

PSUs encourage the achievement of important financial goals and align payouts with the shareowner experience.
SARs motivate prudent long-term decision-making and have strong pay-for-performance alignment since they have no value if the stock price does not increase from the price on the grant date.

PERFORMANCE SHARE UNITS

2023-2025 PSUs. 2023 PSUs will vest following the end of a three-year performance period, subject to Company performance relative to preestablished financial performance goals. Executives must also be employed by the Company on the vesting date, with exceptions in the case of death, disability, qualifying separation within two years of a change-in-control, retirement and certain involuntary terminations.

PSUs are designed to deliver market median compensation at target levels of performance. Below- or above-target performance will result in variations from market median payouts. Payouts range from 0%, if all metrics fall below threshold-level performance, to 200% of target, if all metrics meet or exceed the maximum-level performance. Each PSU converts into one share of RTX Common Stock upon vesting. Unvested PSUs do not earn dividend equivalents. The goals established for our 2023–2025 PSUs are as follows:

PERFORMANCE GOALS AND WEIGHTINGS FOR 2023–2025 PSUs

Metric         Weighting         Threshold
(25% payout)
        Target
(100% payout)
        Maximum
(200% payout)
Adjusted Earnings Per Share(1)
Measured using a compound annual growth rate (CAGR) over the three-year performance period
Goals align with our mid-range strategic business plan
Reflects what the Committee determined to be a challenging, yet attainable goal
5.7% 11.6% 15.1%
Return on Invested Capital (“ROIC”)(1)
Calculated using a quarterly average over the three-year performance period
6.5% 7.5% 8.3%
Total Shareowner Return (“TSR”) vs. Core A&D Peers(2)
Measures RTX’s cumulative three-year TSR(3) percentile rank relative to our nine Core A&D Peers
Payout for this portion of the award is capped at 100% of target if RTX’s TSR is negative
25th percentile 50th percentile 75th percentile