Three senior executives in Raytheon Technologies Corp.’s missiles division have departed the company, in a shake up in the aerospace giant’s defense business.
The departure of the unit’s chief financial officer, vice president of contracts and general counsel of the Missiles & Defense division were announced last month in an internal email seen by Bloomberg.
The email, sent by Raytheon Missiles & Defense President Wesley Kremer on Jan. 28, called it a “significant change” but didn’t elaborate on why the executives had left.
This inconspicuous news would have probably remained unnoticed if only one executive had departed. But when senior executives leave in bunches, one cannot help but wonder.
The CFO departure in particular seems quite abrupt a year only after Raytheon merged with United Technologies, and is somewhat reminiscent of Raytheon putting its chief financial officer on leave back in 2010 amid an SEC investigation into improper payments.
With some exceptions, fleeing talent could be an indication that a company is having trouble.
The exits certainly seem to coincide with Raytheon navigating additional legal concerns. The Company and its subsidiaries are presently subject to various disputes, government investigations and litigation matters across jurisdictions.
I won’t bore you to death with the full list of litigation (which is quite voluminous), but let’s examine some of them that may be of interest since they involve DOJ/SEC investigations.
Antitrust Investigation & Related Workers Lawsuits
Raytheon reported in its latest SEC 10-K filing that it is a target of a DOJ antitrust investigation into hiring practices in the aerospace industry.
The move aligns with the Biden administration’s increased focus on no-poaching agreements that limit hiring others’ workers. The DOJ indicated as early as 2016 that such practices could be subject to criminal enforcement. No-poach cases have traditionally been fought through civil actions in the U.S. But the fact the DOJ is now addressing them from an antitrust criminal angle is noteworthy.
The wage-fixing allegations were first brought to public attention in December 2021, when a former outsourcing manager at Pratt & Whitney, Mahesh Patel, was charged with “conspiracy in restraint of trade.” Patel is accused of acting as the main enforcer of the “no poaching” agreement, allegedly “berating” those who cheated on the deal by continuing to recruit from each other’s companies.
Shortly after, five alleged co-conspirators were also charged along with Patel, in a criminal indictment filed in the United States District Court for the District of Connecticut, charging each of them with one count of violating the federal antitrust laws.
The investigation has triggered a series of civil lawsuits from workers who allege their opportunities to advance in the industry and secure higher pay were frustrated by the purported scheme.
In its SEC filing, Raytheon Technologies said it expects the lawsuits to eventually be consolidated into a single joint complaint.
In 2019 Raytheon had received a subpoena as part of a DOJ criminal investigation into purported agreements not to solicit or hire employees in violation of the federal antitrust laws.
While the investigation has focused on alleged hiring restrictions between and among Pratt & Whitney and certain of its suppliers of outsourced engineering services, the subpoena also included requests regarding Collins Aerospace, acquired through Raytheon’s recent merger with United Technologies.
Raytheon was advised that the Company is a target of the DOJ investigation, and Raytheon continues to cooperate with the investigation. No criminal charge has been filed against the Company or its affiliates.