LLL L3 Technologies, Inc.

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

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant o

Check the appropriate box:

L3 Technologies, Inc.
(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

600 Third Avenue
New York, NY 10016

Dear Fellow Shareholder:

On behalf of the Board of Directors, I cordially invite you to attend the Annual Meeting of Shareholders of L3 Technologies, Inc., to be held at 11:00 a.m., Eastern Daylight Time, on Monday, May 7, 2018, at The Wagner at The Battery (formerly The Ritz-Carlton New York, Battery Park), located at Two West Street, New York, New York 10004. The notice and proxy statement for the Annual Meeting are attached to this letter and describe the business to be conducted at the Annual Meeting.

In accordance with the rules of the Securities and Exchange Commission, we sent a Notice of Internet Availability of Proxy Materials on or about March 26, 2018 to our shareholders of record as of the close of business on March 12, 2018. We also provided access to our proxy materials over the Internet beginning on that date. If you received a Notice of Internet Availability of Proxy Materials by mail and did not receive, but would like to receive, a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability of Proxy Materials.

To have your vote recorded, you should vote over the Internet or by telephone. In addition, if you have requested or received a paper copy of the proxy materials, you may vote by signing, dating and returning the proxy card sent to you in the envelope accompanying the proxy materials sent to you. We encourage you to vote by any of these methods even if you currently plan to attend the Annual Meeting. By doing so, you will ensure that your shares are represented and voted at the Annual Meeting. If you decide to attend, you can still vote your shares in person if you wish. If you wish to attend the Annual Meeting in person, you will need to register and request an admission ticket in advance. You can register and request a ticket by following the instructions set forth on page 9 of this proxy statement.

On behalf of the Board of Directors, I thank you for your cooperation and look forward to seeing you on May 7, 2018.

March 26, 2018

Very truly yours,
 
Christopher E. Kubasik
Chief Executive Officer, President and Director

SHAREHOLDER ENGAGEMENT

In recent years, we have made a concerted effort to engage with our shareholders both during and outside the proxy season in order to have a better understanding of their perspectives on our Company, including matters of corporate governance, as well as our strategies and performance. This dialogue, in which both management and directors participate, as appropriate, has helped inform the Board’s decision-making and ensures our interests remain well-aligned with those of our shareholders.

During 2017, the Company’s extensive outreach efforts, which included members of Company management along with the Chair of the Nominating/Corporate Governance Committee, resulted in dialogue with shareholders representing over 50% in the aggregate of the Company’s outstanding Common Stock. We also regularly attend investor conferences and hold one-on-one meetings with shareholders and potential investors throughout the United States. In addition, we have telephonic calls with shareholders and analysts on a periodic basis, review correspondence submitted by shareholders to management and/or the Board and have discussions with proxy advisory services. In response to investor feedback received during these outreach efforts, we have enhanced our disclosures to provide additional information regarding our sustainability efforts.

Shareholders may access investor information about the Company through our website at http://www.L3T.com/investor-relations.

SUMMARY OF 2017 BUSINESS PERFORMANCE

For more information regarding L3’s 2017 performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

PROXY STATEMENT SUMMARY

Key Governance Features of Our Executive Compensation Program

At the 2017 Annual Meeting, approximately 96% of the votes cast approved, on a non-binding advisory basis, the compensation of our NEOs, demonstrating the effectiveness of the substantive changes made to our compensation program over the past several years in response to shareholder feedback. The following summary highlights our commitment to executive compensation practices that reinforce our pay-for-performance culture and include corporate governance practices that are considered by investors to reflect market “best practices:”

What We Do		What We Don’t Do
	Pay-for-Performance – Emphasis on long-term, performance-based compensation and meaningful stock ownership guidelines to align executive and shareholder interests		No Tax Gross-ups – No excise tax gross-ups on severance or change in control payments
	Formula-Based Incentive Plans – Transparent, formulaic incentive plans designed to promote annual and long-term business success		No Repricing – No repricing of stock options or other equity-based awards without shareholder approval
	Enhanced CEO Performance Conditions – Chief Executive Officer’s annual stock option grant is subject to performance conditions based on consolidated EPS and FCF		No Unearned Pension Plan/SERP Credit – No pension plan/SERP credit for years not worked with L3 or its predecessor companies
	“Clawback” Provisions – Clawback policy that applies to all incentive compensation, including equity-based awards		No Excessive Perquisites – Perquisites are modest and consistent with competitive practices
	Double Trigger for Severance – Double trigger provisions for cash severance payable in the event of a change in control, and no excessive severance or change in control provisions		No Unearned Dividends – No payment of dividends on stock options or on other equity-based awards prior to vesting
	Annual Risk Assessment – Annual compensation risk assessment to ensure program does not encourage excessive risk-taking		No Hedging or Pledging – No hedging or pledging of L3 stock permitted by executives, employees and non-employee directors

In addition, at the 2017 Annual Meeting, approximately 89% of the votes cast supported having a shareholder vote to approve the compensation of the Company’s named executive officers every year. In light of such vote, and consistent with the Company’s recommendation, the Company’s Board of Directors determined that it currently intends to include an advisory, non-binding vote to approve the compensation of the Company’s named executive officers every year until the next required vote on the frequency of shareholder votes on the compensation of the Company’s named executive officers.

QUESTIONS AND ANSWERS ABOUT
THE 2018 ANNUAL MEETING AND VOTING  

On or about March 26, 2018, we either mailed you a notice (the “Notice”) notifying you how to vote online and how to electronically access a copy of this Proxy Statement, our Summary Annual Report and our Annual Report on Form 10-K for the year ended December 31, 2017 (together referred to as the “Proxy Materials”) or mailed you a complete set of the Proxy Materials. If you have not received but would like to receive printed copies of these documents, including a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice.

This Proxy Statement is being made available to the holders of our Common Stock in connection with the solicitation of proxies for use at the Annual Meeting to be held at The Wagner at The Battery (formerly The Ritz-Carlton New York, Battery Park), located at Two West Street, New York, New York 10004 at 11:00 a.m., Eastern Daylight Time, on Monday, May 7, 2018. The proxies are solicited by our Board of Directors on our behalf for use at the Annual Meeting and any adjournments or postponements of the Annual Meeting.

Shareholders not attending our Annual Meeting may choose to vote their shares of Common Stock by allowing someone else to cast votes on their behalf. We are soliciting your voting instructions (that is, your proxy) on behalf of our Board of Directors for use at the Annual Meeting and any adjournments or postponements of the Annual Meeting. The proxies we are soliciting designate Christopher E. Kubasik, Ralph G. D’Ambrosio and Ann D. Davidson (the “Proxyholders”) as the persons who would individually be authorized to vote your shares in accordance with your

instructions. Alternatively, if you own your shares of our Common Stock directly in your name in our stock records (a “shareholder of record”) maintained by Computershare Trust Company, N.A. (“Computershare”), you may appoint a person (who need not be a shareholder), other than the Proxyholders, to represent you at the Annual Meeting by completing another proper proxy. Such completed proxy should be returned in the envelope provided to you for that purpose (if you have requested or received a paper copy of the Proxy Materials).

Our Board of Directors has fixed the close of business on March 12, 2018 as the Record Date for the Annual Meeting. Only shareholders at the Record Date are entitled to notice of, and to vote at, the Annual Meeting or at any adjournments or postponements thereof, in person or by proxy.

At the Record Date, there were 78,284,974 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. Each holder of Common Stock is entitled to one vote for each share of our Common Stock held by such holder.

By Internet: If you are a shareholder of record, or if you own shares of Common Stock through the L3 Technologies Master Savings Plan or the Aviation Communications & Surveillance Systems 401(k) Plan (each, an “L3 401(k) Plan”), you can vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 16-digit Control Number included on your Notice or your paper voting instruction form (if you received a paper copy of the Proxy Materials).

By Telephone: If you are a shareholder of record, or if you own shares of Common Stock through an L3 401(k) Plan, you can vote using a touch-tone telephone by calling 1-800-690-6903, 24 hours a day, seven days a week. You

will need the 16-digit Control Number included on your Annual Meeting Notice card or your paper voting instruction form (if you received a paper copy of the Proxy Materials).

By Mail: If you have received a paper copy of the Proxy Materials by mail, you may complete, sign, date and return by mail the paper proxy card or voting instruction form sent to you in the envelope provided to you with your Proxy Materials or voting instruction form.

In Person: All shareholders of record may vote in person at the meeting. If you hold your shares through a bank, brokerage firm or other nominee in “street name” (instead of as a registered holder), you must obtain a legal proxy from your broker, bank or other nominee and bring the legal proxy

to the meeting in order to vote in person at the meeting. If you hold your shares through an L3 401(k) Plan, you may attend, but may not vote in person at, the Annual Meeting. For more detail, please see Question 13.

The Internet and telephone voting procedures, which comply with Delaware law and the rules of the Securities and Exchange Commission (the “SEC”), are designed to authenticate shareholders’ identities, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.

Through your Bank, Broker or Other Nominee: If you hold your shares through a bank, brokerage firm or other nominee in street name instead of as a registered holder, you may vote by submitting your voting instructions to your bank, broker or other nominee. In most instances, you will be able to do this over the Internet, by telephone, or by mail as indicated above. Please refer to the information from your bank, broker or other nominee on how to submit voting instructions.

See also “– Casting Your Vote” on page 1 .

If you are a shareholder of record, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 6, 2018.

If you own your shares of our Common Stock through an L3 401(k) Plan, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 2, 2018.

If you hold your shares in street name, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 6, 2018.

Proxies submitted by mail, as described above, must be received no later than 11:59 p.m., Eastern Daylight Time, on May 6, 2018, if you are a shareholder of record, or by 11:59 p.m., Eastern Daylight Time, on May 2, 2018, if you own your shares through an L3 401(k) Plan.

Notwithstanding the above, if you hold your shares in street name and you submit voting instructions to your bank, broker or other nominee, your instructions must be received by the bank, broker or other nominee prior to the deadline set forth in the information from your bank, broker or other nominee on how to submit voting instructions.

In order for us to conduct the meeting, the holders of a majority of the outstanding shares of our Common Stock represented in person or by proxy shall constitute a quorum at the Annual Meeting.

Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail.

Abstentions and instances where brokers are prohibited from exercising discretionary authority for beneficial owners who have not returned a proxy (so-called “broker non-votes”) will be counted for purposes of determining a quorum.

Shareholders of Record: If you are a shareholder of record, your shares will not be voted if you do not provide your proxy unless you vote in person at the meeting. It is important that you vote your shares.

Holders of Common Stock through an L3 401(k) Plan: If you own shares of our Common Stock through an L3 401(k) Plan and you do not provide voting instructions, the shares in your 401(k) Plan account will be voted by the trustee of the 401(k) Plan in the same proportion as the shares of Common Stock held by the 401(k) Plan for which voting instructions have been received from other participants in the plan, except as otherwise required by law. It is, therefore, important that you vote your shares.

Street Name Holders: If your shares are held in street name and you do not provide voting instructions, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under New York Stock Exchange (“NYSE”) rules, shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions. Only the Auditor Ratification Proposal is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at the meeting (specifically, the election of director nominees, the Say-on-Pay Proposal, the Shareholder Written Consent Proposal and the Shareholder GHG Proposal) are not considered “routine” under NYSE rules, so the broker, bank or other nominee cannot vote your shares on any of these

proposals unless you provide voting instructions for each of these matters. If you do not provide voting instructions on a “non-routine” matter, your shares will not be voted on that

matter, which is referred to as a “broker non-vote.” It is, therefore, important that you vote your shares.

If a shareholder delivers a proxy pursuant to this solicitation but does not specify a choice with respect to any proposal set forth in this Proxy Statement, the underlying shares will be voted on that proposal in accordance with the recommendation of our Board of Directors. With respect to

any other matters that may properly come before the Annual Meeting, or any adjournment or postponement thereof, the underlying shares will be voted in accordance with the discretion of the Proxyholders.

Any proxy delivered pursuant to this solicitation is revocable at the option of the person(s) executing the proxy upon our receipt, prior to the time the proxy is voted, of a duly executed instrument revoking it, or of a duly executed proxy bearing a later date, or by such person(s) voting in person at the Annual Meeting. Unless revoked, all proxies representing shares entitled to vote that are delivered pursuant to this solicitation will be voted at the Annual Meeting and, where a choice has been specified on the proxy card, will be voted in accordance with such specification.

To revoke a proxy previously submitted over the Internet, by telephone or by mail, you may simply vote again at a later date, using the same procedures, in which case your later submitted vote will be recorded and your earlier vote revoked. You may also attend the Annual Meeting and vote in person.

If your shares are held in street name and you previously provided voting instructions to your broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions.

The vote required to approve all of the proposals listed herein assumes the presence of a quorum.

Please note that you may receive multiple copies of the Notice or Proxy Materials (electronically and/or by mail). These materials may not be duplicates as you may receive separate copies of the Notice or Proxy Materials for each type of account in which you hold shares of our Common

Stock. Please be sure to vote all of your shares in each of your accounts in accordance with the directions on the proxy card(s) and/or voting instruction form(s) that you receive. In the case of duplicate votes for shares in a particular account, your last vote is the one that counts.

The cost of this solicitation of proxies will be paid by the Company. The solicitation will be made primarily via the Internet and by mail, but our officers and regular employees may also solicit proxies by telephone, facsimile, or in person.

We also have retained Georgeson Inc. to assist in soliciting proxies. We expect to pay Georgeson Inc. approximately $10,000 plus expenses in connection with its solicitation of proxies.

If you wish to attend the Annual Meeting, you must be a shareholder on the Record Date, and you must register and request an admission ticket in advance.

Tickets will be issued to registered and beneficial owners. If you hold your shares of our Common Stock through a bank or brokerage firm (i.e., you are not a registered holder), or if you hold shares of our Common Stock through an L3 401(k) Plan, you may register and request an admission ticket by visiting www.proxyvote.com and following the instructions provided (you will need the 16-digit Control Number included on your Notice or your paper voting instruction form (if you received a paper copy of the Proxy Materials)). If you own your shares of our Common Stock directly in your name in our stock records maintained by Computershare, you may register and request an admission ticket by visiting www.proxyvote.com and following the instructions provided (you will need the 16-digit Control Number included on your Annual Meeting Notice card).

Requests for admission tickets will be processed in the order in which they are received and must be requested no later than May 6, 2018. Please note that seating is limited and admission to the meeting will be on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a

driver’s license or passport with their admission ticket. Seating will begin at 10:30 a.m., and the meeting will begin at 11:00 a.m. Cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the Annual Meeting. You will be required to enter through a security check point before being granted access to the Annual Meeting.

If you plan to attend the Annual Meeting and vote in person, we still encourage you to vote in advance by Internet, telephone or (if you received a paper copy of the Proxy Materials) by mail so that your vote will be counted even if you later decide not to attend the Annual Meeting. Voting your proxy by the Internet, telephone or mail will not limit your right to vote at the Annual Meeting if you later decide to attend in person. If you own your shares of our Common Stock through an L3 401(k) Plan, you may not vote your shares in person at the annual meeting and must instead vote in advance of the annual meeting in the manners set forth under “– Casting Your Vote” on page 1 . If you own your shares of our Common Stock in street name and wish to vote in person at the Annual Meeting, you must request a legal proxy from your bank or broker or obtain a proxy from the record holder.

PROPOSALS REQUIRING YOUR VOTE  

PROPOSAL 1 – ELECTION OF DIRECTORS

The full Board of Directors has considered and nominated the following slate of nominees for a one-year term expiring in 2019: Claude R. Canizares, Thomas A. Corcoran, Ann E. Dunwoody, Lewis Kramer, Christopher E. Kubasik, Robert B. Millard, Lloyd W. Newton, Vincent Pagano, Jr. and H. Hugh Shelton. Action will be taken at the Annual Meeting for the election of these nine nominees. Arthur L. Simon, who currently serves as a director, and Michael T. Strianese, the Company’s Executive Chairman, are not standing for re-election and will complete their service to the Company at the conclusion of the Annual Meeting. The Company is grateful to Messrs. Simon and Strianese for their many years of service on the Board and additionally, to Mr. Strianese for his many years of leadership as the Company’s Chairman, President and Chief Executive Officer.

It is intended that the proxies delivered pursuant to this solicitation will be voted in favor of the election of each of Claude R. Canizares, Thomas A. Corcoran, Ann E. Dunwoody, Lewis Kramer, Christopher E. Kubasik, Robert B. Millard, Lloyd W. Newton, Vincent Pagano, Jr. and H. Hugh Shelton except in cases of proxies bearing contrary instructions. In the event that these nominees should become unavailable for election due to any presently unforeseen reason, the persons named in the proxy will have the right to use their discretion to vote for a substitute.

Nominees for Election to the Board of Directors in 2018

The following information describes the offices held and other business directorships of each nominee. Beneficial ownership of equity securities of the nominees is described in “Security Ownership of Management” on page 40 .

The particular experiences, qualifications, attributes or skills of each nominee that the Nominating/Corporate Governance Committee believes will advance the Company’s goals are included in the individual biographies below. The Nominating/Corporate Governance Committee and the Board believe that each of the nominees for election at the 2018 Annual Meeting possesses a strong and unique set of attributes. The Nominating/Corporate Governance Committee and the Board believe that, as a group, these nominees provide the Board with an optimal balance of experience, leadership, competencies, qualifications and skills.

Director Since: 2003     Board Committees: •   Audit and Ethics     Age: 72

CLAUDE R. CANIZARES Position, Principal Occupation and Professional Experience: Bruno Rossi Professor of Physics, Massachusetts Institute of Technology. Since 1971, Professor Canizares has been at MIT, where until recently he served as Vice President. Prior positions include Vice President for Research, Associate Provost, and Director of the Center for Space Research. In addition, he is a principal investigator on NASA’s Chandra X-ray Observatory and Associate Director of its science center.     Other Directorships, Trusteeships and Memberships: Member of the National Academy of Sciences and the International Academy of Astronautics; Fellow of the American Academy of Arts and Sciences, the American Physical Society and the American Association for the Advancement of Science. Professor Canizares serves on the Department of Commerce’s Emerging Technology and Research Advisory Committee and the National Research Council’s (NRC) Advisory Committee for the Division of Engineering and Physical Sciences. He chairs the Auditing Committee of the National Academy of Sciences. Professor Canizares has served on the Air Force Scientific Advisory Board, the NASA Advisory Council, and the Council of the National Academy of Sciences.     Director Qualifications: The Board of Directors considered Professor Canizares’ distinguished career as a tenured professor at MIT including his past responsibility for over 20 research laboratories, including Lincoln Laboratory, with an aggregate annual research budget of $1.5 billion, as well as his extensive knowledge of the aerospace industry.

We believe that the information disclosed in this Proxy Statement demonstrates that our executive compensation program is well-designed and is working as intended. In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the related rules of the SEC, we are submitting for shareholder consideration the following resolution to approve, in a non-binding, advisory vote, the compensation paid to our named executive officers for fiscal 2017 as disclosed beginning on page 41 of this Proxy Statement:

“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion, is hereby APPROVED.”

The Board of Directors recommends a vote FOR approval of
the compensation paid to our named executive officers.  

amount and must retain 100% of the net shares acquired under equity-based awards until the ownership requirement is met. In furtherance of this requirement, a significant portion of our non-employee directors’ compensation is comprised of RSUs, which generally vest one year after the grant date and convert into shares of Common Stock upon the earlier of the date on which the recipient ceases to be a director or a qualifying change in control. Taking into account our non-employee directors’ ownership of RSUs, as reflected under “Security Ownership of Management”, all of our non-employee directors are in compliance with our stock ownership guidelines. Accordingly, through our non-employee directors’ receipt and retention of RSUs, our stock ownership guidelines accomplish their desired objective—to align the economic interests of our directors and shareholders.

For the foregoing reasons, the Board of Directors believes that this shareholder proposal is in the best interests of the Company and our shareholders. Therefore, the Board of Directors unanimously recommends a vote FOR this shareholder proposal.

The Board of Directors recommends a vote FOR
the Shareholder Written Consent Proposal.

BOARD OF DIRECTORS RESPONSE TO SHAREHOLDER GHG PROPOSAL

The Board acknowledges the importance of addressing and minimizing the environmental impact of the Company’s operations. To that end, we are committed to conducting our operations and activities in a manner that protects the environment and conserves natural resources. That said, the Board also believes that it is premature at this time, and would not be an efficient use of the Company’s resources, to adopt quantitative goals for the reduction of greenhouse gas emissions and to publish a report to shareholders on these goals and plans to achieve such goals. The subject of greenhouse gas emissions, especially potential future legislation and regulation, is currently unsettled. We believe it would be prudent to have a better understanding of the details of future legislative and regulatory programs and technologies before establishing and committing to greenhouse gas reduction goals. Moreover, the Board does not believe that adopting strict greenhouse gas emissions goals would provide significant incremental benefits to the Company, our shareholders or the environment beyond the Company’s current practices.

It is our policy that no employee shall engage in any conduct that violates any environmental, health or safety law or is otherwise inconsistent with the health and safety needs of our employees and the environmental needs of our communities. We are also committed to the continual improvement of our environmental management systems, our environmental, health and safety programs and to the prevention of pollution. Consistent with this commitment, we maintain policies that require the following, among other things:

We believe that these practices and policies, among others, sufficiently limit the Company’s environmental footprint. Moreover, measuring the success of the Company’s environmental initiatives against pre-established greenhouse gas goals may present a misleading view of the Company’s progress in reducing emissions given the Company’s evolving business portfolio. Not only is the Company continually adjusting the businesses within its portfolio, but the environmental impact of the businesses added to or removed from our portfolio may be significantly different, making such comparisons misleading.

The Company and the Board both understand the importance of operating in an environmentally responsible manner. The Board does not believe, however, that the Company's adoption of time-bound goals for reducing greenhouse gas emissions Company-wide, and the issuance of a report on plans to achieve these goals, is the most effective use of time and resources in further reducing greenhouse gas emissions. The Board believes that the interests of shareholders are better served through the Company's current environmental initiatives, with objectives tailored for the Company's multiple businesses and locations. Therefore, the Board recommends a vote AGAINST this proposal.

The Board of Directors recommends a vote AGAINST
the Shareholder GHG Proposal.

THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS  

Our Board of Directors oversees the management of our business and affairs, as provided by Delaware law, and, during 2017, conducted its business through meetings of the Board of Directors and four standing committees: Audit, Compensation, Nominating/Corporate Governance and Executive Committees. In February 2018, the Board determined that it did not require an Executive Committee and eliminated the Executive Committee as a standing committee of the Board. At that time, the Board of Directors also determined to change the name of the Audit Committee to the Audit and Ethics Committee. From time to time, other special committees may be established under the direction of the Board of Directors when necessary to address specific issues.

LEADERSHIP STRUCTURE

How We Select Our Leadership Structure

Board structures vary greatly among U.S. public corporations. According to a recent survey, 49% of S&P 500 companies combine the positions of Chief Executive Officer and Chairman, and only 28% of the S&P 500 have an independent chairman. The Board of Directors is of the view that “one-size” does not fit all. One leadership structure is not more effective at creating long-term shareholder value and the decision of whether to combine or separate the positions of Chief Executive Officer and Chairman should vary company to company and depend upon a company’s particular circumstances at a given point in time. The Board of Directors believes that an effective leadership structure could be achieved either by combining or separating the Chief Executive Officer and Chairman positions, if the structure encourages the free and open dialogue of competing views and provides for strong checks and balances. Specifically, an effective governance structure must balance the powers of the Chief Executive Officer and the independent directors and ensure that the independent directors are fully informed, able to discuss and debate the issues that they deem important, and able to provide effective oversight of management.

Our Current Leadership Structure

On January 1, 2018, Christopher E. Kubasik succeeded Michael T. Strianese as Chief Executive Officer of L3. To help ensure a smooth transition, the Board determined that L3 would be best served by having Mr. Strianese serve as Executive Chairman through the Annual Meeting. As Executive Chairman, Mr. Strianese has continued to lead the Board in its governance and oversight responsibilities and has provided assistance and counsel to Mr. Kubasik with respect to the day-to-day management of the Company. Following the Annual Meeting, the Board will recombine the roles of Chairman and Chief Executive Officer and continue its practice of electing a strong lead independent director. The Board believes this leadership structure is in the best interest of L3 at this time as it allows for a balance of power between the Chief Executive Officer and the independent directors and provides an environment in which its independent directors are fully informed, have significant input into the content of Board meeting agendas and are able to provide objective and thoughtful oversight of management. The Board also believes that L3’s leadership structure will not affect the Board’s role in risk oversight of the Company. In addition, the Board of Directors believes that combining the roles of Chairman and Chief Executive Officer gives L3 the best chance to continue its strong performance over the long term. With the competitive environment as challenging as it is, it continues to be important for L3 to increasingly seek out business opportunities in the international community. In L3’s industry, the Board of Directors believes that access to decision-makers in foreign countries is made easier when the roles of Chairman and Chief Executive Officer are combined as their customs often dictate having comparable titles when conducting negotiations. Moreover, since most of L3’s industry peers have combined the roles of Chairman and Chief Executive Officer, L3 believes that separating such roles would put us at a competitive disadvantage.

Responsibilities of Our Lead Independent Director

The Board of Directors believes that if the Chairman is an employee of the Company, then appointing a lead independent director is necessary for effective governance. Accordingly, the Company’s Corporate Governance Guidelines provide that, in the event the Chief Executive Officer and Chairman positions are combined, the independent members of the Board of

Directors will elect a “Lead Independent Director.” The Lead Independent Director focuses on optimizing the Board’s processes and ensuring that the Board is prioritizing the right matters. Specifically, the lead independent director has the following responsibilities (and may also perform other functions at the Board’s request), as set forth in the Company’s Corporate Governance Guidelines:

The Board of Directors believes that the responsibilities delegated to the Lead Independent Director are substantially similar to many of the functions typically fulfilled by a board chairman. The Board of Directors believes that its Lead Independent Director position balances the need for effective and independent oversight of management with the need for strong, unified leadership. The Board of Directors believes that one of the key elements of effective, independent oversight is that the independent directors meet in executive session on a regular basis without the presence of management. Accordingly, in 2017, the independent directors met in executive session eight times with the Lead Independent Director presiding at such meetings.

INDEPENDENCE

The Board of Directors has affirmatively determined that no director nominee other than Mr. Kubasik, including those who serve on the Audit and Ethics, Compensation and Nominating/Corporate Governance Committees of the Board of Directors, has a material relationship with us, either directly or as a partner, shareholder or officer of an organization that has a relationship with us. Therefore, all of our director nominees, other than Mr. Kubasik, are “independent” under all applicable standards.

Pursuant to the rules of the NYSE, a director is not independent unless the Board of Directors affirmatively determines that he or she does not have a direct or indirect material relationship with the Company. Furthermore, as part of our Corporate Governance Guidelines, the Board of Directors has adopted categorical standards to assist it in evaluating the independence of each of its directors. The categorical standards are intended to assist the Board of Directors in determining whether or not certain relationships between our directors and us, either directly or as a partner, shareholder or officer of an organization that has a relationship with us, are “material relationships” for purposes of the NYSE independence standards. The categorical standards establish thresholds at which such relationships are deemed not to be material. Our Corporate Governance Guidelines, which include our categorical standards of independence, can be obtained through our website at http://www.L3T.com.

The Board of Directors has affirmatively determined that no director nominee other than Mr. Kubasik, including those who serve on the Audit and Ethics, Compensation and Nominating/Corporate Governance Committees of the Board of Directors, has a material relationship with us, either directly or as a partner, shareholder or officer of an organization that has a

relationship with us. Accordingly, the Board of Directors has concluded that all of our director nominees, other than Mr. Kubasik, are “independent” under the rules of the NYSE and our Corporate Governance Guidelines.

In connection with its independence determination, the Board of Directors considered that:

In addition, the Board of Directors has determined that Professor Canizares and Messrs. Corcoran, Kramer, Pagano and Simon, the current members of the Audit and Ethics Committee, and Messrs. Corcoran, Millard and Kramer and General (Ret.) Newton, the current members of the Compensation Committee, are “independent” in accordance with the NYSE standards applicable to members of the Audit and Ethics Committee and Compensation Committee, respectively.

BOARD AND GOVERNANCE MATTERS

Directors are expected to attend board meetings and meetings of the committees on which they serve, to spend the time needed and to meet as frequently as necessary in order to properly discharge their responsibilities. In addition, to the extent reasonably practicable, directors are expected to attend shareholder meetings. During the fiscal year ended December 31, 2017, the Board of Directors held eight meetings. Each director attended at least 75% of the combined number of meetings of the Board of Directors and meetings of committees on which he or she served during the period in 2017 in which he or she served as a director or member of such committee, as applicable. All of our directors who served on the Board at the time of our 2017 Annual Meeting attended the meeting in person. In accordance with applicable NYSE listing requirements, our independent directors hold regular executive sessions at which management, including the Chief Executive Officer, is not present. Mr. Millard, our Lead Independent Director of the Board of Directors, presides at the regularly held executive sessions of the independent directors.

BOARD OF DIRECTORS COMPOSITION

The Board and the Nominating/Corporate Governance Committee takes a long-term approach to the composition of the Board of Directors. Since 2011, four new independent directors have joined the Board. We believe that our Board’s blend of tenure strikes a balance that provides superior Company, regulatory and industry knowledge, while executing effective oversight and independence in the best interests of our shareholders.

Tenure of Continuing Directors

We believe that electing directors with a mix of tenures facilitates effective Board oversight. Accordingly, our Nominating/Corporate Governance Committee regularly considers the tenure of our directors when assessing the overall composition of our Board. We believe that the current composition of our Board reflects the appropriate balance of longer-term directors with a deep knowledge of the Company’s business and operations and new directors who bring a fresh perspective to the boardroom.

Director Skills and Independence

The Board of Directors seeks to ensure that the Board is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board of Directors to satisfy its oversight responsibilities effectively. In that regard, the Nominating/Corporate Governance Committee is responsible for recommending candidates for all directorships to be filled by the Board of Directors or by the shareholders at an annual or special meeting. In identifying candidates for membership on the Board of Directors, the Nominating/Corporate Governance Committee takes into account (1) minimum individual qualifications, such as strength of character, mature judgment, industry knowledge or experience and an ability to work collegially with the other members of the Board of Directors, and (2) all other factors it considers appropriate.

In considering Board nominees, the Nominating/Corporate Governance Committee evaluates nominees in the context of the Board as a whole with a focus on ensuring that our Board reflect an appropriate mix of business and professional experiences, skills and perspectives. Such skills include, among others:

Diversity and Inclusion

Although the Board of Directors does not have a formal policy with regard to the consideration of diversity in identifying director nominees, among the many factors that the Nominating/Corporate Governance Committee carefully considers are the benefits to the Company of diversity, including gender and racial diversity, in board composition. Women and minority candidates are included in every pool from which board nominees are chosen, and our director searches also include nominees from non-traditional environments, including military, government and academia. Thirty percent of our Board is currently comprised of female or minority directors, including one female, one African-American and one Cuban-American.

Identification and Evaluation of Director Candidates

As part of its recurring activities, the Nominating/Corporate Governance Committee seeks to identify qualified candidates to sit on the Board of Directors. To identify and recruit qualified candidates for the Board, the Nominating/Corporate Governance Committee has utilized from time to time the services of a professional search firm, which recommends candidates that satisfy the criteria defined by the Board of Directors. The search firm provides background research and pertinent information regarding prospective candidates. The Board of Directors has also sought referrals from other members of the Board, management, shareholders and other sources. After conducting an initial evaluation of a candidate, one or more members of the Nominating/Corporate Governance Committee will interview that candidate if the Nominating/Corporate Governance Committee believes the candidate might be suitable to be a director and may also ask the candidate to meet with other directors and management. If the Nominating/Corporate Governance Committee believes a candidate would be a valuable addition to the Board of Directors, it will recommend to the full Board of Directors that candidate’s election.

The Nominating/Corporate Governance Committee will consider candidates for nomination as a director recommended by shareholders, directors, officers, third party search firms and other sources.

The Nominating/Corporate Governance Committee will review all candidates for director in the same manner, regardless of the source of the recommendation. Individuals recommended by shareholders for nomination as a director will be considered in accordance with the procedures described under “Questions and Answers About Board Communications, Company Documents and Shareholder Proposals” on page 91 of this Proxy Statement.

When considering whether the Board’s directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of L3’s business and structure, the Board of Directors focused primarily on results of the annual Board and committee evaluations and on the information discussed in each of the Board members’ or nominees’ biographical information set forth on pages 10 to 14 . In addition, in connection with the nominations of the current slate of director nominees, the Board of Directors considered their valuable contributions to L3’s success during their years of Board service.

Board and Committee Assessments

Each year, the Nominating/Corporate Governance Committee evaluates each director to obtain his or her assessment of the effectiveness of the Board and its committees. The purpose of these assessments is to identify opportunities for improvement on a number of relevant metrics such as composition, conduct of meetings, relationship between the Board and management, succession planning and strategy and performance. The Chairman of the Nominating/Corporate Governance Committee conducts the evaluation through written questionnaires and one-on-one meetings with individual directors, reviews all of the responses and reports the results to the Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee then summarizes the evaluations and identifies areas in which the Board and its committees could improve its performance and discusses its findings with the Board and each of the other committees. As described above, the Nominating/Corporate Governance Committee also routinely evaluates the composition of the Board to ensure that its members have the requisite skills, experience and diversity to effectively oversee the business of the Company. Furthermore, during 2017, the Nominating/Corporate Governance Committee specifically engaged a third party executive search firm to assess the skill set of the Board and to issue recommendations with respect to potential director candidates in light of this assessment.

Onboarding and Continuing Education

Upon joining the Board, directors are provided with an orientation about the Company, including our business operations, strategy and governance. Directors are introduced to senior members of management and given the opportunity to tour key facilities. In addition, Directors are provided access to, and encouraged to attend, outside director continuing education

programs sponsored by educational and other institutions, such as the National Association of Corporate Directors, to assist them in staying well informed of developments in corporate governance and critical issues relating to their board service.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board has established various committees to assist it with the performance of its responsibilities. In February 2018, the Board eliminated the Executive Committee as a standing committee of the Board and renamed the Audit Committee as the Audit and Ethics Committee. As a result, the Board now has three standing committees: the Audit and Ethics Committee, Compensation Committee and Nominating/Corporate Governance Committee. The Board designates the members of these committees and the committee chairs based on the recommendations of the Nominating/Corporate Governance Committee. The chair of each committee develops the agenda for its committee, and each committee regularly provides a full report to the Board.

The Board has adopted written charters for each of the Audit and Ethics, Compensation and Nominating/Corporate Governance Committees. These charters are available on the Company’s website at http://www.L3T.com/investor-relations/corporate-governance.

The following table summarizes the primary responsibilities of the committees:

COMPENSATION COMMITTEE USE OF CONSULTANTS

As set forth in its charter, the Compensation Committee has the sole authority to retain or terminate, as necessary or appropriate, outside consultants to provide advice to the Compensation Committee in connection with its fulfillment of its responsibilities. The Compensation Committee engages Frederic W. Cook (“FW Cook”) to serve as the Compensation Committee’s independent consultant. FW Cook and its affiliates do not provide any services to the Company or any of the Company’s affiliates other than advising the Compensation Committee on director and executive officer compensation. In 2017, the Compensation Committee requested that FW Cook advise it directly on a variety of compensation-related matters, including:

In the course of conducting its activities, FW Cook attended meetings of the Compensation Committee and presented its findings and recommendations to the Compensation Committee for discussion. During 2017, FW Cook also met with management to obtain and validate data, and review materials. In March of 2018, the Compensation Committee evaluated whether any work performed by FW Cook raised any conflict of interest and determined that it did not.

In 2017, the Compensation Committee also retained Janet M. DenUyl, LLC (“DenUyl”) to advise the committee in connection with its periodic review of plan design and benefit levels with respect to the Company’s retirement plans, including as compared to the retirement plan designs and benefit levels of the companies within the compensation peer group used by the Compensation Committee to benchmark executive pay levels. DenUyl met with management to obtain and validate data and review materials, and subsequently met with the Compensation Committee to present finding and recommendations for discussion. Prior to its engagement of DenUyl, the Compensation Committee evaluated whether any work to be performed by DenUyl would raise any conflict of interest and determined that it would not.

the Audit and Ethics Committee and the Board of Directors. In fulfilling his risk management responsibilities, the Chief Financial Officer works closely with members of the senior management team, including the Company’s General Counsel, the Senior Vice President of Corporate Strategy and Technology, the Chief Information Officer, the Controller and Principal Accounting Officer, Treasurer, the Vice President — Planning and each of the segment group presidents and segment chief financial officers.

On behalf of the Board of Directors, the Audit and Ethics Committee plays a key role in the oversight of the Company’s enterprise risk management function. In this regard, the Audit and Ethics Committee discusses policies with respect to risk assessment and risk management, and the Company’s Chief Financial Officer meets with the Audit and Ethics Committee at least five times per year to specifically discuss the enterprise risks facing the Company, highlighting any new risks that may have arisen since they last met, including updates with respect to cybersecurity risks, among other risks. As it relates to cybersecurity risks, the Company’s Chief Information Officer also periodically briefs the Audit and Ethics Committee on developments throughout the year and presents to the full Board of Directors at least annually. Additionally, at each Board of Directors meeting, the Chief Executive Officer and Chief Financial Officer report information about major risks facing the Company.

CORPORATE RESPONSIBILITY AND SUSTAINABILITY

Corporate responsibility and sustainability play an important role in our business, operating strategies and long-term value creation for our shareholders, customers and employees. We believe that performance is paramount, both in what we deliver and how we deliver it. Accountability and integrity define how we conduct business as we help the men and women who keep our world safe. We believe that strong environmental, social and governance (ESG) programs and practices are critical to attracting the best talent, executing on our strategies, maintaining a robust supplier base and innovating to develop cost-effective solutions that meet our customers’ evolving realities.

We are committed to conducting operations and activities in a manner that provides and maintains safe and healthful working conditions, protects the environment and conserves natural resources. In meeting this commitment, it is our policy that no employee shall engage in any conduct that violates any environmental, health or safety law or is otherwise inconsistent with the health and safety needs of our employees and the environmental needs of our communities. We are also committed to the continual improvement of our environmental management systems, our environmental, health and safety programs and to the prevention of pollution. Consistent with this commitment, we maintain policies that require the following, among other things:

In addition, we have built effective partnerships with our suppliers and utilize transparent corporate governance and leadership practices. We also champion corporate citizenship programs to advance education, support military service members and their families and collaborate with members of our communities. We are particularly proud of our reputation as one of the top employers for veterans as rated by Forbes Magazine. We recognize the importance of ESG considerations and are firmly committed to conducting the Company’s business in a responsible manner.

POLITICAL CONTRIBUTIONS AND LOBBYING

Pursuant to the Company’s political contributions policy, the Company has a global policy against making contributions to political parties, political committees or candidates using Company resources (including monetary and in-kind services), even where permitted by law. In the United States, the Company maintains a political action committee (the “PAC”) which operates under the regulations of the Federal Election Commission and makes federal political contributions to federal candidates that meet specified criteria aligned with the Company’s interests. The contributions made by the PAC are not funded by corporate funds and are fully funded by voluntary contributions made by eligible employees. Corporate funds and facilities, as permitted by law, are used to provide administrative support, including the solicitation of funds from eligible employees and the distribution of contributions. The Company does not penalize in any way eligible employees who do not contribute to the PAC.

The PAC operates in compliance with all applicable laws governing PACs, including laws requiring public disclosure of contributions. The Nominating/Corporate Governance Committee oversees the Company’s political activities. The Company’s political contributions policy is available through the “Corporate Governance” section of our website accessible through http://www.L3T.com/investor-relations/corporate-governance.

EXECUTIVES AND CERTAIN OTHER OFFICERS OF THE COMPANY  

Set forth below is certain information regarding each of our current executives, other than Mr. Kubasik who is presented under “Proposals Requiring Your Vote – Proposal 1 – Election of Directors – Nominees For Election to the Board of Directors in 2018” beginning on page 10, and certain of our other officers.

SECURITY OWNERSHIP OF MANAGEMENT  

As of March 7, 2018, there were 78,285,599 shares of our Common Stock outstanding. The following table shows the amount of Common Stock beneficially owned (unless otherwise indicated) by our named executive officers, our directors, and by all of our current executive officers and directors as a group.

Except as otherwise indicated, all information listed below is as of March 7, 2018.

COMPENSATION DISCUSSION AND ANALYSIS  

This Compensation Discussion and Analysis describes L3’s executive compensation program related to the year ended December 31, 2017 (our 2017 fiscal year). This section details the compensation framework applied by the Compensation Committee of our Board of Directors (the “Committee”) in determining the pay levels and programs available to our named executive officers for whom compensation is disclosed in the compensation tables included in the Tabular Executive Compensation Disclosure section of this proxy statement beginning on page 65 . Our named executive officers for the 2017 fiscal year were:

As discussed in “The Board of Directors and Certain Governance Matters—Leadership Structure” on page 23, Mr. Kubasik succeeded Mr. Strianese as our Chief Executive Officer effective January 1, 2018. Mr. Strianese has continued to serve as our Executive Chairman since that time. For a discussion of the compensation arrangements entered into with Messrs. Kubasik and Strianese in connection with this transition, see “Offer Letter with Christopher E. Kubasik” on page 60 and “Retirement Agreement with Michael T. Strianese” on page 60 .

References in this Compensation Discussion and Analysis (and in the Tabular Executive Compensation Disclosure section of this proxy statement beginning on page 65 ) to our Chief Executive Officer (or CEO) and our Chief Operating Officer (or COO) refer to Messrs. Strianese and Kubasik, respectively, consistent with their titles during our 2017 fiscal year.

COMPANY BACKGROUND AND 2017 PERFORMANCE ACHIEVEMENTS

Company Background . L3 is a prime contractor in Intelligence, Surveillance and Reconnaissance (“ISR”) systems, aircraft sustainment (including modifications and fleet management of special mission aircraft), simulation and training, night vision and image intensification equipment, and security and detection systems. L3 is also a leading provider of a broad range of communication, electronic and sensor systems used on military, homeland security and commercial platforms. Approximately 70% of our consolidated net sales for 2017 were made to the U.S. Government (the “USG”), including 66% to the Department of Defense (the “DoD”). Accordingly, our sales, results of operations and cash flows are correlated to DoD budget and spending levels. The DoD budget for the USG fiscal year ended September 30, 2017 increased by 4% from the prior USG fiscal year. The remaining 30% of our sales were made to international and commercial customers. Additionally, most of our businesses are short-cycle in nature, with programs or contracts that have performance periods of a year or less, and, consequently, changes in business trends can rapidly affect our sales volume, results of operations and cash flows.

In October 2017, our Board of Directors approved a plan to explore strategic alternatives to sell or otherwise divest our Vertex Aerospace business, which we expect to consummate in 2018. The divestiture of the Vertex Aerospace business represents a strategic shift by us to exit the logistics solution and maintenance services business for military aircraft where we do not provide complex ISR systems integration and modification. The Vertex Aerospace business generated sales of $1.4 billion in 2017 and $1.3 billion in 2016. The assets and liabilities and results of operations of the Vertex Aerospace business are reported as discontinued operations in our 2017 financial statements and are excluded from the specific financial results set forth in “2017 Performance Achievements” below.

2017 Performance Achievements . L3 delivered strong financial performance for 2017, highlighted by the items described below.

operations decreased by 4% to $985 million for 2017, as compared to $1,022 million for 2016, our FCF from continuing operations increased 3% to $862 million in 2017, as compared to $834 million for 2016. The FCF results discussed in this paragraph are subject to the adjustments set forth in “– Reconciliation of Non-GAAP Measures to GAAP Measures” on page 63 .

COMPENSATION PHILOSOPHY, 2017 TARGET PAY AND 2017 INCENTIVE PLAN PAYOUTS

Compensation Philosophy . Our compensation philosophy supports a pay-for-performance culture. We target base salaries and annual and long-term incentive opportunities to approximate market median compensation levels, subject to adjustments based on experience, performance, the other individual factors as described in “– Use of Market Data and Competitive Compensation Positioning” beginning on page 47 and as otherwise appropriate. The majority of each executive’s target pay is in the form of incentive compensation, which is subject to future performance to have any realized value. See the information in “– Mix of Pay” on page 46 .

2017 Target Pay . The table below details each named executive officer’s 2017 base salary, target annual incentive opportunity (“target bonus”) and grant date target value of long-term incentive awards (collectively, “target pay”), and changes in target pay relative to 2016 levels.

For 2017, the Committee approved ordinary course increases to the total target pay of Messrs. Strianese and D’Ambrosio, and a 7% increase in the target value of Mr. Von Schwarz’s total target pay to bring his pay closer to market median. Mr. Kubasik’s increase to his total target pay reflected his strong 2016 performance and his relative importance to the Company’s long-term success. Following these pay adjustments, the target pay of our named executive officers for 2017 fell, on average, within a competitive range of 85% to 115% of market median. For a further discussion, see “– Use of Market Data and Competitive Compensation Positioning” beginning on page 47 .

2017 Incentive Plan Payouts . Payouts under our annual incentive plan and our long-term incentive plan performance awards are subject to the achievement of pre-established targets.

With respect to our annual incentive plan, our overall 2017 corporate financial performance was significantly above plan targets, which are based on consolidated EPS and FCF, and the personal performance of each of our corporate named executive officers (Messrs. Strianese, Kubasik and D’Ambrosio and Ms. Davidson) was also assessed as above target. Accordingly, calculated payouts under our annual incentive plan were above target for our corporate named executive officers. Overall 2017 financial performance at our Aerospace Systems segment also exceeded plan targets, which are based on segment operating income and FCF, but the personal performance of our segment named executive officer (Mr. Von Schwarz), who serves as the president of our Aerospace Systems segment, was assessed as below target. Accordingly, his calculated payout under our annual incentive plan exceeded target, but was reduced to reflect his personal performance rating.

Notwithstanding the formula-based calculation of these payouts under our annual incentive plan, management and the Committee agreed that the tax benefits derived from the enactment of the 2017 Tax Reform Law should be excluded from the performance calculations under the annual incentive plan. Accordingly, payouts for the named executive officers were reduced to exclude the impact of the estimated tax benefit. For a further discussion, see “– Elements of 2017 Target Pay – Annual Incentives” beginning on page 49 .

For our long-term performance awards that vested on December 31, 2017, our three-year performance was above target for EPS, resulting in a 132.97% payout for this measure, but was below target for relative total shareholder return, resulting in a 65.38% payout for this measure. Based on these performance award achievements, our named executive officers received performance award payouts that averaged 99% of their target awards for these performance measures. For a further discussion, see “– Payment of Performance Awards for the 2015-2017 Award Cycle” on page 59 .

2017 SHAREHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION (“S ay - o n -P ay ”)

At our 2017 annual shareholders meeting, approximately 96% of the votes cast on our Say-on-Pay proposal were voted in favor of the compensation paid to our named executive officers for 2016. We believe that this strong level of shareholder support demonstrates, among other things, the effectiveness of the significant changes made to our compensation program over the past several years in response to shareholder feedback. The Committee considers the outcome of Say-On-Pay votes and other shareholder input in making decisions regarding the executive compensation program.

PROGRAM OVERVIEW

The table below outlines the principal elements of our executive compensation program. Detailed descriptions of each element of compensation and discussion of how the Committee determined compensation levels for 2017 can be found in the section “– Elements of 2017 Target Pay” beginning on page 49 .

DETERMINING EXECUTIVE COMPENSATION

Role of the Compensation Committee . L3’s executive compensation program is administered by the Committee. The Committee is ultimately responsible for the review and approval of compensation for L3’s Chief Executive Officer and all other executive officers, including the other named executive officers. Key areas of responsibility for the Committee are described in “The Board of Directors and Certain Governance Matters —Committees of the Board of Directors” beginning on page 28 .

Role of Management and the Chief Executive Officer . The Company’s human resources, finance and legal departments assist the Committee in the design and development of competitive compensation programs by providing data and analyses to the

Committee and FW Cook, the Committee’s independent compensation consultant, in order to ensure that L3’s programs and incentives align with and support the Company’s business strategy. Management also recommends incentive plan metrics, performance targets and other plan objectives to be achieved, based on expected Company performance and subject to Committee approval.

For 2017, the Chief Executive Officer (acting jointly with the Chief Operating Officer in the case of personal ratings for Mr. D’Ambrosio and Ms. Davidson under the annual incentive plan and all elements of compensation for Mr. Von Schwarz) reviewed the performance of the other executive officers relative to their individual goals and Company performance and submitted recommendations to the Committee for proposed base salary adjustments, target bonuses and personal ratings under the annual incentive plan, and grant date target values for long-term incentive awards. The Chief Executive Officer and the Chief Operating Officer further provided the Committee with an assessment of their own performance for 2017, but otherwise had no role in determining their own compensation, nor did the Chief Executive Officer make any recommendation as to the personal rating for the Chief Operating Officer under the annual incentive plan for 2017. Except as described above, no other executive officer participated in the setting of his or her own compensation or the compensation of any other executive officer.

Role of Compensation Consultants . The Committee has the sole authority to select, retain, terminate and approve the fees payable to outside consultants to provide it with advice on various aspects of executive compensation design and delivery. The Committee has retained FW Cook to advise the Committee on executive and non-employee director compensation generally. In 2017, the Committee also retained Janet M. DenUyl, LLC to advise the Committee in connection with its periodic review of plan design and benefit levels with respect to the Company’s retirement plans. For a further description, see “The Board of Directors and Certain Governance Matters—Compensation Committee Use of Consultants” on page 32 .

MIX OF PAY

The Committee believes that L3’s pay mix strongly supports the Company’s pay-for-performance culture. In 2017, 68% of the Chief Executive Officer’s 2017 target pay was “at risk” and subject to future performance to have any realized value.

Base salary and restricted stock units (“RSUs”) are the only elements of 2017 target pay that are not contingent on future performance to have value (“fixed” pay). However, they both serve to attract and retain top executive talent, and the use of these pay elements is consistent with competitive market practices. As illustrated below, the mix of incentive compensation for our named executive officers is balanced to avoid the risk of emphasizing short-term gains at the expense of long-term performance. The emphasis on long-term incentives demonstrates our strong commitment to the alignment of management and shareholder interests over time.

USE OF MARKET DATA AND COMPETITIVE COMPENSATION POSITIONING

Compensation Peer Group . The Committee believes that the success of our Company is dependent upon its ability to continue to attract and retain high-performing executives. To ensure the comparability of our executive compensation practices and pay levels, the Committee has historically monitored executive pay at leading defense, aerospace and other industrial companies (the “compensation peer group”) with whom L3 competes for business, executive talent or investor capital. The Committee evaluates each peer company on an annual basis to determine its continued suitability from a pay benchmarking perspective. The selection criteria examined include:

The table below shows the composition of our peer group used to benchmark target pay in 2017, and indicates those companies that were added or removed for 2017 as compared to the peer group used to benchmark target pay in 2016.

The peer group used to benchmark target pay in 2017 was established in connection with the Committee’s review of the suitability of the peer group companies conducted in June 2016. At that time, the Company considered L3’s projected revenues following the sale of its National Security Solutions business in February 2016 and the pending separation of Danaher into two independent companies (which was completed in July 2016). In consideration of these matters, the Committee determined to remove Danaher from the peer group to be used for 2017, and to add Ingersoll-Rand, Spirit AeroSystems and TransDigm Group to the peer group. Ingersoll-Rand is an industrial machinery company that shares many business characteristics and is similar in size to L3. Spirit AeroSystems and TransDigm Group are both aerospace and defense companies that, while smaller in size than L3, compete with L3 for business, investor capital or executive talent.

In June 2017, the Committee conducted its review of the suitability of the peer group companies to be used to benchmark target pay in 2018. The Committee determined to remove Eaton and add Orbital ATK to the peer group. Eaton’s aerospace segment is the smallest among its five segments, and has declined over time to only 9% of Eaton’s total revenue. Orbital ATK is an aerospace and defense company that falls within appropriate size parameters and competes with L3 in similar markets. The table below shows the resulting peer group that the Committee has determined to use to benchmark executive officer target pay levels for fiscal 2018.

Use of Market Data . In reviewing competitive compensation levels for 2017, the Committee considered compensation peer group data for all named executive officers other than Ms. Davidson. The Committee did not utilize compensation peer group data for Ms. Davidson (who served as our General Counsel and Corporate Secretary in 2017) due to the limited number of benchmarking matches for her position within the compensation peer group. Instead, the Committee used survey data from the Willis Towers Watson Executive Compensation Database General Industry survey (the “General Industry Survey Data”) for this purpose. For Mr. Von Schwarz (who served as President of our Aerospace Systems segment in 2017), the Committee considered competitive compensation levels based on the average of the compensation peer group data and the General Industry Survey Data because it believed that including a broader industry group more accurately reflects the labor market for segment presidents and ensures a meaningful sample size given the revenue of the segments they lead. The General Industry Survey Data utilized for Ms. Davidson and Mr. Von Schwarz was size-adjusted by FW Cook to reflect the annual revenues of the Company and of our Aerospace Systems segment, respectively.

Competitive Market Positioning . The Committee’s practice is to make pay decisions regarding the elements of compensation that compose each named executive officer’s target pay (base salary, target bonus and grant date target value of long-term incentives) in February of each fiscal year. As part of its decision-making process, the Committee compares each named executive officer’s target pay for the fiscal year against the market median; however, the Committee does not use market data in isolation in determining pay. Instead, competitive market data serves as one of many considerations used by the Committee in determining base salary adjustments and target pay opportunities for both annual and long-term incentives. The primary factors considered by the Committee in making its annual pay determinations is shown below.

The target pay of our named executive officers for 2017 fell, on average, within a competitive range of 85% to 115% of market median.

ELEMENTS OF 2017 TARGET PAY

Base Salary

Base salary serves as the foundation of an executive’s compensation and is an important component in L3’s ability to attract and retain executive talent. On an individual basis, the Committee considers each executive’s role and responsibilities, experience, tenure, business results and individual performance, competitive market pay levels, and internal pay equity considerations in making base salary adjustments. In 2017, the Committee did not increase base salary for Mr. Strianese. The Committee approved base salary increases of 3.0% for Messrs. Kubasik and D’Ambrosio and Ms. Davidson. In addition, Mr. Von Schwarz received a base salary increase of 6.0% to get his pay closer to market levels. All base salary increases for 2017 were approved by the Committee on February 21, 2017 and made effective as of April 1, 2017.

Note: Amounts reflect annualized base salary rates in effect at the end of the fiscal years indicated.

Annual Incentives

The annual incentive plan provides senior executives with the opportunity to earn annual cash incentive awards based on corporate, segment and individual performance relative to pre-established internal targets.

The Committee established the 2017 corporate and segment financial targets under the annual incentive plan, as well as individual performance goals and weightings, in February 2017. The corporate financial targets were based on management’s most recent consolidated internal financial plan presented to L3’s Board of Directors (the “2017 Plan”), which formed the basis for L3’s financial guidance for 2017 EPS and FCF disclosed to investors in January 2017. The individual segment financial targets were based on internal segment financial plans that were consistent with the 2017 Plan.

Based on L3’s actual 2017 financial performance relative to plan and the Committee’s assessment of the named executive officers’ individual performance for 2017, the Committee approved 2017 annual incentive payouts for the named executive officers as detailed in the steps below.

STEP 1. Determine target bonus at beginning of fiscal year

Annual incentive plan (“AIP”) target bonuses are set as a percent of base salary in connection with the determination of target pay for each named executive officer. The 2017 target bonus for each of the named executive officers was held constant, as a percentage of their respective base salaries, from 2016 levels.

STEP 2. Determine the financial rating based on performance for the fiscal year

Financial ratings are based on a weighted-average assessment of L3’s consolidated performance (or, for segment presidents, both L3’s and their respective segment’s performance) relative to pre-established targets for key financial measures.

For corporate named executive officers, our annual incentive plan is focused on L3’s consolidated EPS and FCF performance (with FCF calculated as net cash from operating activities, less capital expenditures, net of dispositions) because we believe that these metrics constitute two of the most important financial measures that create shareholder value.

For segment presidents, our plan emphasizes the respective segment’s OI and FCF performance because we consider those to be important financial measures that segment presidents can directly influence in order to increase L3’s consolidated EPS and FCF. Our plan also takes into account L3’s consolidated EPS and FCF results in evaluating segment presidents’ financial ratings in order to provide a degree of alignment for segment presidents with L3’s overall performance.

The table below provides the relative weightings of these performance measures that are utilized in evaluating each named executive officer’s financial rating. We believe that the weightings appropriately reflect the importance of these measures to our overall financial success.

Pay-for-Performance: A financial rating of 100% indicates weighted-average performance at target levels (that is, at plan). Performance that exceeds plan by 15% (or by 25% for segment presidents) results in a maximum financial rating of 200%. If performance is below plan by 15% (or by 25% for segment presidents), this results in a threshold financial rating of 50%. If performance is below threshold, this results in a financial rating of zero. Performance is interpolated between these points. Based on the increased range of volatility for segment-level financial results as compared to L3’s consolidated financial results, we believe it is appropriate to consider a wider range of performance at the segment level.

For purposes of calculating actual financial results under the annual incentive plan, the Committee excludes the effects of pre-established categories of items that it believes are not reflective of operating performance. Accordingly, in February 2017, the Committee determined to exclude the following pre-established categories of adjustments in calculating L3’s consolidated EPS and FCF under the plan for 2017, as applicable: