President-elect Joe Biden’s choice to be Defense secretary, retired Gen. Lloyd Austin, stands to make up to $1.7 million when he leaves the board of defense contractor Raytheon Technologies Corp. if he’s confirmed, according to his financial disclosure forms.
The disclosures, released Sunday, do not give an exact value of Austin’s stock holdings related to his position on the Raytheon board of directors, but place the range from about $800,000 to about $1.75 million.
In ethics forms, Austin pledged to fully divest from Raytheon within 90 days of being confirmed, as well as to recuse himself from decisions involving the company for a year unless a Pentagon ethics official determines the need for his participation outweighs the perception of a conflict of interest.
It’s not uncommon for Defense secretaries to have ties to contractors. Three of the people who led the Pentagon in the Trump administration had defense contractor connections: former Secretary James Mattis was on the board at General Dynamics; former Secretary Mark Esper was Raytheon’s top lobbyist and former acting Secretary Patrick Shanahan was an executive at Boeing.
But it is a practice blasted by progressive Democrats and other critics of the Pentagon’s so-called revolving door, and is an issue likely to be raised during Austin’s Senate Armed Services Committee confirmation hearing next week.
Austin took a board seat at United Technologies Corp. shortly after he retired from the military in 2016. He became a board member at Raytheon after it merged with United Technologies in 2020.
As part of his compensation, he was given stock at Raytheon, as well as at two spin-off companies from the merger — Otis Worldwide Corp. and Carrier Global Corp.
The exact value of his payout when he divests his stock will be based on the closing value on the date of his resignation, according to the ethics disclosure.
Austin has also been on a Booz Allen Hamilton advisory board since 2018, a position his ethics form said he will resign. He will also recuse himself from decisions involving Booz Allen Hamilton for a year, according to the disclosure.
Austin also said in his disclosure that the consulting firm he founded, Austin Strategy Group, will cease operations while he is Defense secretary and that he will recuse himself from decisions involving former clients.
Austin is also a partner at Pine Island Capital Partners, an investment firm that has been buying up small defense contractors.
Austin said he has a loan agreement with Pine Island. He will divest his interest in the loan for the original loan amount, “thereby liquidating any rights I may have to any future interest in the company,” he wrote in the ethics form.