Raytheon board won't give CEO a raise

BOSTON --Defense contractor Raytheon Co.'s board on Wednesday said it won't give Chief Executive William Swanson a raise this year and will cut his stock compensation next year because he failed to properly credit others in his booklet of folksy management advice.

The Waltham, Mass.-based company's board -- of which Swanson is chairman -- made the announcement in a statement after Raytheon's annual shareholders meeting in Arlington, Va.

Outgoing lead director Warren Rudman, a former U.S. Senator from New Hampshire, and incoming lead director Michael Ruettgers expressed "deep concern" over recent disclosures that Swanson copied management advice without giving credit to the original author in his free booklet, "Swanson's Unwritten Rules of Management."

The board said it won't raise the 57-year-old's salary above his 2005 level, which was $1.12 million, according to a regulatory filing.

The board also will reduce the amount of restricted stock Swanson can receive next year by 20 percent. Last year, Swanson's restricted stock award was valued at $2.96 million.

But the board said it had "full confidence" in Swanson's leadership of the $22-billion-a-year company, and credited the 33-year Raytheon employee with "extraordinary vision and performance" since taking over as CEO three years ago.

Swanson admitted failing to give proper credit for many of the sayings in the booklet after The New York Times on April 24 published a story describing its similarities to a 1944 book called "The Unwritten Laws of Engineering," by W.J. King, a University of California at Los Angeles professor.

At Wednesday's annual Raytheon meeting, Swanson apologized to his company's shareholders, board, management, and 80,000 employees. He also apologized "to those whose material I wish I had treated with greater care," according a prepared text of his speech at the meeting.

"This was an error in judgment on my part which I sincerely regret," he said.

Swanson's speech focused largely on gains in Raytheon's defense business that more than doubled the company's profit to $871 million last year.

Swanson's 2004 booklet has attained cult-like status among business leaders. Raytheon has shipped more than 300,000 free copies, but halted the shipments last week.

Shares of Raytheon rose 6 cents to close at $45.87 on the New York Stock Exchange.