Shares of L3Harris Technologies (LHX) fell roughly 3% on Monday after the defense contractor announced that Chief Executive Officer Christopher Kubasik had stepped down, effective immediately, following an internal conduct review.

The stock was trading at $282.54, down 3.2%, while the broader S&P 500 was off just 0.1%. The Melbourne, Florida-based company is one of the largest U.S. defense primes, competing with Lockheed Martin, RTX, Northrop Grumman, and General Dynamics for Pentagon budgets.

Conduct Inconsistent With Company Values

The company said it "became aware of certain conduct by Kubasik that was not consistent with the values of the Company as outlined in its Code of Conduct." L3Harris was clear that the matter had nothing to do with financial reporting, internal controls, customer relationships, or operational performance. As a top supplier to the U.S. government, L3Harris operates under strict federal procurement rules that place a premium on ethics and compliance.

Following an investigation assisted by independent counsel, the board determined that a separation agreement with Kubasik was in the best interests of the company.

Alongside the leadership change, Lewis Hay III, previously Lead Independent Director, was named Independent Chairman of the Board.

"The Board and Chris have agreed that implementing our succession plan today is the right thing to do. We thank him for his service," Hay said.

Sam Mehta Takes the Helm

Sam Mehta has been named the company's new president and CEO, effective immediately. He joined L3Harris in 2023 and most recently served as president of the Space and Mission Systems (SMS) and Communications and Spectrum Dominance (CSD) segments, which together account for more than 80% of the company's total revenue.

"I am honored by the opportunity to serve as President and CEO of L3Harris," Mehta said. "Today, L3Harris has a portfolio purpose-built for the future of warfare, and we are well-positioned to continue executing our focused growth strategy as The Trusted Disruptor."

Two additional appointments were announced alongside his promotion. Lauren Barnes was named President of SMS, and Christopher Aebli was named President of CSD, both effective immediately.

Kubasik's departure ends a long run at the helm. He joined L3 Technologies in 2015, steered the 2019 merger with Harris, took the CEO title of the combined company in June 2021, and oversaw the 2023 acquisition of Aerojet Rocketdyne, a roughly $4.7 billion deal that made L3Harris a leading producer of solid rocket motors used in missiles and space launch.

LHX Stock Has Lagged Peers

When Kubasik became CEO, LHX stock traded around $215. Coming into Monday, shares were up roughly 35% since then, but that gain trailed the S&P 500 by around 45 percentage points over the same period.

Vertical Research Partners analyst Rob Stallard noted on Monday that it has "not escaped investors' attention that L3 Harris Technologies' stock has underperformed its U.S. defense peers under Kubasik's leadership," adding that the underperformance versus peers amounts to roughly 45 percentage points over five years.

The analyst offered measured words for the incoming chief executive: "We have high regard for Sam Mehta, who in our experience has been an effective manager and a good communicator. He may be a catalyst for closing the performance gap."

The stock was already under pressure before Monday's announcement. LHX had fallen nearly 20% since fighting in Iran began in early March, as investors grew cautious about defense spending should Democrats retake the House in the 2026 midterm elections. The wariness comes despite a broader climb in global military spending to record levels in recent years, driven by the war in Ukraine and other conflicts.

Despite the leadership shake-up, L3Harris reaffirmed its full 2026 guidance, including its targets for consolidated revenue, organic growth, segment operating margin, GAAP EPS, and free cash flow.