L3Harris ousts CEO over conduct, shares drop more than 4%

L3Harris Technologies fired CEO Chris Kubasik on Sunday after learning he engaged in "certain conduct … that was not consistent with the values of the Company," the defense contractor said Monday. Shares of L3Harris fell more than 4% on the news.

The board appointed Sam Mehta as chief executive officer and president. Mehta had been president of the Space & Mission Systems and Communications & Spectrum Dominance segments. The ouster was unrelated to L3Harris's financial reporting, controls, customer relationships or operational performance, the company said in its statement.

Kubasik's departure comes seven months after the Defense Department committed to a $1 billion convertible preferred equity investment in L3Harris's missile solutions business. That business is slated to become a separate company. An initial public offering for the missile unit has been pushed from the second half of 2026 to mid-2027.

Kubasik, 65, had been CEO since 2021 and also served as chairman. The board named Lewis Hay III, its lead independent director, as independent chairman. Hay called Mehta "a proven executive who brings deep knowledge of our business, priorities and culture" and said his readiness reflected "the Board's robust succession planning."

A Securities and Exchange Commission filing detailing Kubasik's separation agreement says he "does not admit, and expressly disclaims, any violation of Company policy or basis for termination for 'cause.'" Under the agreement, Kubasik will forgo any bonus under the 2026 incentive plan but will retain nearly 384,000 stock options.

The news outlet Semafor reported, citing two people briefed on the investigation, that Kubasik was ousted after an independent probe found he had engaged in an inappropriate relationship with an employee. CNBC has asked L3Harris whether that report is accurate. L3Harris's statement said the board "determined that it would be in the best interests of the Company to enter into a separation agreement with Kubasik" after its investigation with independent counsel.

The situation mirrors a 2012 episode at Lockheed Martin. The board of the larger defense contractor asked for Kubasik's resignation as president and chief operating officer weeks before he was scheduled to become CEO. Lockheed said at the time that an ethics investigation confirmed he had a close personal relationship with a subordinate employee.

Mehta, in his own statement, said he is "honored by the opportunity to serve as President and CEO of L3Harris" and that the company is "well-positioned to continue executing our focused growth strategy." Hay added that Mehta is "ideally suited to become President and CEO of L3Harris at this important time in our company's and our nation's history."

The board did not provide further details on the conduct or the investigation's timeline. Mehta begins his role immediately.