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SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant   þ

Filed by a Party other than the Registrant   ¨

Check the appropriate box;

Exelis Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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March 26, 2014

Exelis Inc.

1650 Tysons Blvd.

Suite 1700

McLean, VA 22102

Dear Fellow Shareholders:

Enclosed are the Notice of Annual Meeting and Proxy Statement for the Exelis Inc. 2014 Annual Meeting of Shareholders. This year’s meeting is intended to address only the business included on the agenda. Details of the business to be conducted at the Annual Meeting are given in the accompanying Notice of Annual Meeting and Proxy Statement which provides information required by applicable laws and regulations.

Your vote is important and we encourage you to vote whether you are a registered owner or a beneficial owner. In accordance with U.S. Securities and Exchange Commission rules, we are using the Internet as our primary means of furnishing proxy materials to shareholders. Because we are using the Internet, most shareholders will not receive paper copies of our proxy materials. We will instead send these shareholders a notice with instructions for accessing the proxy materials and voting via the Internet. This notice also provides information on how shareholders may obtain paper copies of our proxy materials if they so choose. We believe use of the Internet makes the proxy distribution process more efficient, less costly and helps in conserving natural resources.

If you are the registered owner of Exelis common stock, you may vote your shares by making a toll-free telephone call or using the Internet. Details of these voting options are explained in the Proxy Statement. If you choose to receive paper copies of our proxy materials, you can vote by completing and returning the enclosed proxy card by mail as soon as possible.

If you are a beneficial owner and someone else, such as your bank, broker or trustee is the owner of record, the owner of record will communicate with you about how to vote your shares.

Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. If you are a registered owner of Exelis common stock and do not plan to vote in person at the Annual Meeting, you may vote via the Internet, by telephone or, if you receive a paper proxy card in the mail, by mailing the completed proxy card. Voting by any of these methods will ensure your representation at the Annual Meeting.

Sincerely,

David F. Melcher

Chief Executive Officer and President

Ralph F. Hake

Chairman of the Board of Directors

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March 26, 2014

NOTICE OF 2014 Annual Meeting

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By order of the Board of Directors,

Ann D. Davidson

Senior Vice President,

Chief Legal Officer and Corporate Secretary

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Exelis Quick Facts

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2014 Proxy Statement

Introduction

Your vote is very important. For this reason, the Board of Directors of Exelis Inc. (“Exelis” or the “Company”) is requesting that you allow your common stock to be represented at the annual meeting by the proxies named on the proxy card. This statement is being sent or made available to you in connection with this request and has been prepared for the Board by our management.

On October 31, 2011 (the “Distribution Date”), Exelis Inc. became an independent, publicly traded company (the “Separation” or “Spin-Off”) as a result of ITT Corporation’s (“ITT”) distribution of its shares of Exelis to ITT shareholders. On the Distribution Date, ITT shareholders of record as of the close of business on October 17, 2011 (the “Distribution Record Date”) were entitled to receive one share of Exelis common stock and one share of Xylem Inc. (“Xylem”) common stock for every share of ITT common stock held as of the Distribution Record Date (the “Distribution”). The Exelis 2014 Proxy Statement provides information related to Exelis’ second full year as an independent, publicly traded company. References to ITT are included only as needed to explain necessary historical information.

Information about the Proxy Statement and Voting

Beginning on or about March 26, 2014, this Proxy Statement is being mailed or made available, as the case may be, to shareholders who were Exelis shareholders as of the March 14, 2014 record date (the “Record Date”), as part of the Board of Directors’ solicitation of proxies for the Exelis 2014 Annual Meeting and any postponements or adjournments thereof. This Proxy Statement, the Annual Report to Shareholders, and the 2013 Annual Report on Form 10-K (which have been furnished to shareholders eligible to vote at the 2014 Annual Meeting) contain information that the Board of Directors believes offers an informed view of Exelis and meets the regulations of the SEC for proxy solicitations.

You can vote if you owned shares of the Company’s common stock as of the close of business on the Record Date.

You are voting on the following items of business, which are described on pages 13 to 25:

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If you are a registered owner, you can either vote in person at the Annual Meeting or by proxy, whether or not you attend the Annual Meeting. If you are a beneficial owner, you may vote by submitting voting instructions to your bank, broker, trustee or other nominee. If you are a beneficial owner and your shares are held in a bank or brokerage account, you will need to obtain a proxy, executed in your favor, from your bank or broker to be able to vote in person at the Annual Meeting. If you are a beneficial owner and your shares are held through any of the Exelis savings plans for salaried or hourly employees, your shares held in the Exelis savings plans cannot be voted in person at the Annual Meeting.

If you vote by proxy, you can vote by following the voting procedures on the proxy card. You may vote:

Since it is impractical for all shareholders to attend the Annual Meeting and vote in person, the Board of Directors recommends that you appoint the three people named on the accompanying proxy card to act as your proxies at the 2014 Annual Meeting.

The proxies vote your shares in accordance with your voting instructions. If you appoint the proxies but do not provide voting instructions, they will vote as recommended by the Board of Directors, except as discussed below under “What is a broker non-vote”. If any other matters not described in this Proxy Statement are properly brought before the meeting for a vote, the proxies will use their discretion in deciding how to vote on those matters.

You have one vote for every share of Exelis common stock that you owned on the Record Date.

The Board of Directors recommends a vote FOR the election of each of the Class III Director nominees of the Board of Directors (Item 1), FOR the ratification of the appointment of Deloitte as the Exelis Independent Registered Public Accounting Firm for 2014 (Item 2), FOR the proposal to declassify the Board of Directors starting in 2015 (Item 3), FOR the proposal to allow shareholders to call a Special Meeting (Item 4) and FOR the advisory approval of the compensation of our named executive officers (Item 5).

You can revoke your proxy at any time before it is exercised by mailing a new proxy card with a later date or casting a new vote by the Internet or telephone, as applicable. You can also send a written revocation to the Corporate Secretary at the Exelis Corporate Headquarters address listed on page 2 of the Proxy Statement. If you come to the Annual Meeting, you can ask that the proxy you submitted earlier not be used.

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The NYSE has rules that govern brokers who have record ownership of listed company stock held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“discretionary matters”) but do not have discretion to vote uninstructed shares as to certain other matters (“non-discretionary matters”). A broker may return a proxy card on behalf of a beneficial owner from whom the broker has not received instructions that casts a vote with regard to discretionary matters but expressly states that the broker is not voting as to non-discretionary matters. The broker’s inability to vote with respect to the non-discretionary matters to which the broker has not received instructions from the beneficial owner is referred to as a “broker non-vote.” Under current NYSE interpretations, agenda Item 2, the ratification of Deloitte as the Company’s Independent Registered Public Accounting Firm is considered a discretionary item. Your broker does not have discretion to vote your shares held in street name on Items 1, 3, 4 or 5, each of which is considered a non-discretionary item.

Under Indiana law, the law of the state where the Company is incorporated, broker non-votes and abstentions are counted to determine whether there is a quorum present but an abstention or broker non-vote will have no effect on the outcome of the proposals. There are five formal items scheduled to be voted upon at the Annual Meeting as described on pages 13 to 25. As of the date of this Proxy Statement, the Board of Directors is not aware of any business other than as described in this Proxy Statement that will be presented for a vote at the 2014 Annual Meeting.

The Amended and Restated Articles of Incorporation and By-laws provide that in uncontested elections, Directors shall be elected by a majority of the votes cast (that is, the number of votes cast “for” a Director nominee must exceed the number of votes cast “against” that nominee). The By-laws provide that in uncontested elections, any Director nominee who fails to be elected by a majority, but who also is a Director at the time, shall promptly provide a written resignation, as a holdover Director, to the Chairman of the Board or the Corporate Secretary. The Nominating and Governance Committee (or the equivalent committee then in existence) shall promptly consider the resignation and all relevant facts and circumstances concerning any vote and the best interests of the Company and its shareholders. The Board will act on the Nominating and Governance Committee’s recommendation no later than its next regularly scheduled Board meeting or within 90 days after certification of the shareholder vote, whichever is earlier, and the Board will promptly publicly disclose its decision and the reasons for its decision. Further, Items 2 through 4 of the proposed agenda items require that the votes cast in favor of the proposal exceed the votes cast against the proposal. Item 5 is advisory in nature and is non-binding.

As of the Record Date, 190,141,571 shares of Exelis common stock were outstanding and entitled to vote at the Annual Meeting.

In order to conduct business at the Annual Meeting it is necessary to have a quorum. The presence in person or by proxy of holders of a majority of the outstanding shares of common stock entitled to vote will constitute a quorum for the transaction of business at the Annual Meeting. In the event of abstentions or broker non-votes, the shares represented will be considered present for quorum purposes.

With respect to agenda Items 1 through 5 you may vote for, against or abstain from voting.

If shares you own are held in an Exelis savings plan for salaried or hourly employees, a stock brokerage account, bank or by another holder of record, you are considered the “beneficial owner” because someone else holds the shares on your behalf. If

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the shares you own are held in a Morgan Stanley account for restricted stock or restricted stock units or registered in your name directly with Computershare, our transfer agent, you are the registered owner and the “shareholder of record.”

If you participate in any of the Exelis savings plans for salaried or hourly employees, your plan trustee will vote the Exelis shares credited to your savings plan account in accordance with your voting instructions, except as otherwise provided in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. You will receive only one proxy card. Your savings plan shares and any shares you own as the shareholder of record, including ownership through the Exelis Direct Purchase, Sale and Dividend Reinvestment Plan, will be set out separately on the proxy card. The trustee votes the shares on your behalf because you are the beneficial owner, not the shareholder of record, of the savings plan shares. The trustee votes the savings plan shares for which no voting instructions are received (“Undirected Shares”) in the same proportion as the shares for which the trustee receives voting instructions, except as otherwise provided in accordance with ERISA. Under the savings plans, participants are “named fiduciaries” to the extent of their authority to direct the voting of Exelis shares credited to their savings plan accounts and their proportionate share of Undirected Shares. By submitting voting instructions by telephone, the Internet or by signing and returning the voting instruction card, you direct the trustee of the savings plans to vote these shares, in person or by proxy at the Annual Meeting. Exelis salaried or hourly plan participants should mail their confidential voting instruction card to Broadridge Financial Solutions, Inc. (“Broadridge”), acting as tabulation agent, or vote by telephone or Internet. Instructions must be received by Broadridge no later than 11:59 p.m. Eastern Time three days before the Annual Meeting.

As of the Record Date, Wells Fargo Institutional Retirement and Trust, as the trustee for the employee salaried savings plan, held 6,033,706 shares of Exelis common stock (approximately 3.17% of the outstanding shares) and JP Morgan Chase & Co., as the trustee for the hourly employee savings plans, held 314,957 shares of Exelis common stock (approximately .17% of the outstanding shares).

A representative from Broadridge counts the votes. A representative of Broadridge will act as an Inspector of Election for the 2014 Annual Meeting. The Inspector of Election monitors the voting and certifies whether the votes of shareholders are kept in confidence in compliance with the Exelis confidential voting policy.

Exelis pays the full cost of soliciting proxies from registered owners. Exelis has appointed Okapi Partners LLC to help with the solicitation effort. Exelis will pay Okapi Partners LLC a fee of $10,000 plus reimbursement of expenses, to assist with the solicitation and reimburse brokers, nominees, custodians and other fiduciaries for their costs in sending proxy materials to beneficial owners.

Directors, officers or other regular employees of Exelis may solicit proxies from shareholders in person or by telephone, facsimile transmission or other electronic communication.

Rule 14a-8 of the Securities Exchange Act of 1934, or the “Exchange Act,” establishes the eligibility requirements and the procedures that must be followed for a shareholder proposal to be included in a public company’s proxy materials. If you want us to consider including a shareholder proposal in next year’s proxy statement, you must deliver such proposal, in writing, to Ann D. Davidson, our Chief Legal Officer and Corporate Secretary at our principal executive offices on or before

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November 26, 2014 and comply with applicable eligibility requirements and procedures. Any other matters proposed to be submitted for consideration at next year’s annual meeting of shareholders (other than a shareholder proposal included in our proxy materials pursuant to Rule 14a-8 of the rules promulgated under the Securities Exchange Act of 1934, as amended) must be given in writing to our Corporate Secretary and received at our principal executive offices not less than 90 days nor more than 120 days prior to the date we first sent or made these proxy materials available to shareholders. Therefore, to be presented at our 2015 Annual Meeting, such a proposal must be received on or after November 26, 2014 but not later than December 26, 2014. The proposal must contain specific information required by our By-laws, which are on file with the Securities and Exchange Commission and may be obtained from our Corporate Secretary upon written request. If a shareholder proposal is received before or after the range of dates specified above, our proxy materials for the next annual meeting of shareholder may confer discretionary authority to vote on such matter without any discussion of the matter in the proxy materials.

In accordance with procedures and requirements set forth in our By-laws shareholders may propose nominees for election to the Board of Directors only after providing timely written notice, as set forth in the preceding section. To be timely, notice of Director nomination or any other business for consideration at the shareholders’ meeting must be received by our Corporate Secretary at our principal executive offices no less than 90 days nor more than 120 days prior to the date we released our Proxy Statement to shareholders in connection with last years’ annual meeting. Therefore, to be presented at our 2015 Annual Meeting, such a proposal must be received on or after November 26, 2014 but not later than December 26, 2014. The nomination and notice must meet all other qualifications and requirements of the Company’s Corporate Governance Principles, By-laws and Regulation 14A of the Exchange Act. The nominee will be evaluated by the Nominating and Governance Committee of the Board using the same standards as it uses for all Director nominees. These standards are discussed in further detail below at pages 28 to 29 under “Information about the Board of Directors-Director Selection, Composition, and Diversity.” No one may be nominated for election as a Director after he or she has reached 72 years of age. (You can request a copy of the nomination requirements from the Corporate Secretary of Exelis.)

We will announce preliminary voting results at the 2014 Annual Meeting and will publish final results in a Current Report on Form 8-K that we expect to file with the SEC within four business days after the 2014 Annual Meeting. If final voting results are not available to us in time to file a Form 8-K with the SEC within four business days after the 2014 Annual Meeting, we intend to file a Form 8-K to disclose preliminary voting results and, within four business days after the final results are known, we will file an additional Form 8-K with the SEC to disclose the final voting results.

SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more shareholders sharing the same address by delivering a single proxy statement or a single notice addressed to those shareholders. This process, which is commonly referred to as “householding”, provides cost savings for companies. Some brokers household proxy materials, delivering a single proxy statement or notice to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be sending householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, please notify your broker. You can request prompt delivery of a copy of the proxy materials by writing to: Corporate Secretary, Exelis Inc., 1650 Tysons Boulevard, Suite 1700, McLean, VA 22102 or by calling 703.790.6300.

We make available, free of charge on our website, all of our filings that are made electronically with the SEC, including Forms 10-K, 10-Q, and 8-K. To access these filings, go to our website (www.exelisinc.com) and click on “SEC Filings” under the “Investors” heading. Copies of our Annual Report on Form 10-K for the year ended December 31, 2013, including financial statements and schedules thereto, filed with the SEC, are also available without charge to shareholders upon written request addressed to: Corporate Secretary, Exelis Inc., 1650 Tysons Boulevard, Suite 1700, McLean, Virginia 22102.

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In accordance with SEC rules, we are using the Internet as our primary means of furnishing proxy materials to shareholders. Because we are using the Internet, most shareholders will not receive paper copies of our proxy materials. We will instead send these shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our Proxy Statement, Annual Report to Shareholders and 2013 Annual Report on Form 10-K, and voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information on how shareholders may obtain paper copies of our proxy materials if they so choose.

The Compensation and Personnel Committee (“Compensation Committee”) established share ownership guidelines, as set forth below, for our non-management Directors and corporate officers that are consistent with general market practices. Share ownership guidelines for non-management Directors and corporate officers were first approved by the Exelis Board of Directors in December of 2011. The approved guidelines require share ownership, expressed as a multiple of base salary, for all senior corporate officers. The guidelines specify the desired levels of Company stock ownership and encourage a set of behaviors for each corporate officer to reach the guideline levels. Non-management Directors receive a portion of their retainer in restricted stock units (also referred to as “RSUs”), which are paid in shares when the restricted stock units vest. Non-management Directors are encouraged to hold such shares until their total share ownership meets or exceeds the ownership guidelines. The share ownership guidelines for non-management Directors and senior corporate officers are as follows:

In achieving these ownership levels, shares owned outright, Exelis restricted stock and restricted stock units, shares held in the Exelis dividend reinvestment plan, shares owned in the Exelis Salaried Investment and Savings Plan (the “ISP”), and “phantom” shares held in a fund that tracks the Company’s stock in the deferred compensation plan are considered. With respect to corporate officers, to attain the ownership levels set forth in the guidelines, it is expected that any restricted shares or restricted stock units paid in shares when the restricted stock units vest will be held, and that all shares acquired through the exercise of stock options will be held, until the guidelines are met, except, in all cases, to the extent necessary to meet tax obligations. Compliance with the guidelines is monitored periodically. Non-management Directors and corporate officers are afforded five years to meet the guidelines. As of January 31, 2014, non-management Directors and corporate officers have attained levels that will permit attainment of share ownership at the guideline levels within five years. Several senior corporate officers, including Mr. Melcher, have ownership levels in excess of the guidelines.

Stock Ownership of Directors and Executive Officers:

The following table shows, as of January 31, 2014, the beneficial ownership of Exelis common stock and options exercisable within 60 days of that date by each Director, by each of the executive officers named in the Summary Compensation Table on page 62, and by all Directors and executive officers as a group. In addition, we have provided information about ownership of options and restricted stock units that provide economic linkage to Exelis common stock but do not represent actual beneficial ownership of shares.

The number of shares beneficially owned by each non-management Director or executive officer has been determined under the rules of the SEC, which provide that beneficial ownership includes any shares as to which a person has the right to acquire beneficial ownership within 60 days through the exercise of any option or other right. Unless otherwise indicated, each non-management Director or executive officer has sole dispositive and voting power or shares those powers with his or her spouse.

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There were 189,448,735 shares of Exelis common stock outstanding on January 31, 2014.

Stock Ownership of Directors and Executive Officers

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The following table sets forth the number of shares of our common stock beneficially owned, directly or indirectly, be each person known to us to beneficially own more than 5% of our outstanding common stock. This information is based solely upon the beneficial ownership of these persons as reported to us as of the date of the most recent Schedule 13D or 13G filed with the SEC on behalf of such person. Each person or entity has sole voting and investment power with respect to the shares beneficially owned by that person or entity, except as otherwise indicated. This information does not include holdings by the trustee with respect to individual participants in the Exelis Salaried Investment and Savings Plan. The percentages below are based on the number of shares of our common stock issued and outstanding as of December 31, 2013.

Section 16(a) of the Exchange Act requires that the Company’s executive officers and directors, and any persons beneficially owning more than 10% of a registered class of the Company’s equity securities, file reports of ownership and changes in ownership with the SEC within specified time periods. To the Company’s knowledge, based upon a review of the copies of the reports furnished to the Company and written representations that no other reports were required, all filing requirements were satisfied in a timely manner for the year ended December 31, 2013.

Proposals to be Voted on at the 2014 Annual Meeting

Our Amended and Restated Articles of Incorporation provides for a classified Board of Directors divided into three classes designated Class I, Class II and Class III, each serving staggered three-year terms. The terms of the Class III directors expire at the 2014 Annual Meeting of Shareholders. The terms of the Class I and Class II Directors will expire at the 2015 and 2016 Annual Meetings of Shareholders, respectively. Directors elected by the shareholders at an annual meeting to succeed those Directors whose terms expire at such meeting are of the same class as the directors they succeed and are elected for a term to expire at the third annual meeting of shareholders after their election and until their successors are duly elected and qualified.

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Should the shareholders approve the proposal to amend the Company’s Amended and Restated Articles of Incorporation to declassify the Board of Directors, Class I Directors will stand for election on an annual basis beginning in 2015. Class II and III Directors will stand for election on an annual basis beginning in 2016 and 2017, respectively.

The election of directors requires the affirmative vote of a majority of the votes cast at the Annual Meeting of Shareholders. Accordingly, abstentions and broker non-votes will not have any effect on the election of a director.

The full Board of Directors has considered and nominated three Class III nominees for election as Directors at the 2014 Annual Meeting, to serve for a three-year term. Each of the Class III nominees is currently serving as a Director of Exelis and has agreed to continue to serve if elected until his or her earlier retirement, resignation or death. If unforeseen circumstances arise before the 2014 Annual Meeting and a nominee becomes unable to serve, the Board of Directors could reduce the size of the Board or nominate another candidate for election.

If the Board of Directors nominates another candidate, the proxies could use their discretion to vote for that nominee.

The following information describes the biographical information, offices held, other business directorships, additional director experience, qualifications, attributes and skills and the class and term of each nominee. Beneficial ownership of equity securities of the nominees is described in the discussion of “Stock Ownership of Directors and Executive Officers” starting on page 12.

Class III — Directors Standing for Election Whose Terms Expire in 2014:

		General Paul J. Kern, U.S. Army (Ret.)   Senior Counselor, The Cohen Group

Director Biographical Information: General Kern, age 68, has served as a Senior Counselor to the Cohen Group since January 2005. He served as President and Chief Operating Officer of AM General LLC, a world leader in the design, engineering, production, and technical and parts support of military and special purpose vehicles from August 2008 to January 2010. In November 2004, General Kern retired from the United States Army as Commanding General, Army Materiel Command (AMC). General Kern graduated from the U.S. Military Academy at West Point. He holds masters degrees in both Civil and Mechanical Engineering from the University of Michigan, and he was a Senior Security Fellow at the John F. Kennedy School at Harvard University.

Directorships at Public Companies for the Preceding Five Years: General Kern has been a Director of Exelis since October 2011. He has been a Director of ITT a diversified leading manufacturer of highly engineered critical components and customized technology solutions for growing industrial end-markets since August 2008. General Kern has served as a Director of iRobot Corporation, a designer and builder of robots, since 2006. From 2005 to 2007, he was a Director of EDO Corporation, a provider of information technology solutions and systems engineering, which was acquired by ITT in December 2007. He was a director of Anteon Corporation, a designer and manufacturer of products for the aerospace, defense, intelligence and commercial markets, from 2005 until 2006 when it was sold to General Dynamics.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: General Kern has extensive international strategic business and defense-related experience. He is a leading figure on defense transformation, as well as a highly decorated combat veteran. General Kern achieved recognized prominence as a four-star general with the Army and spearheaded Army efforts to direct supply chain improvement efforts, modernize weapons systems, and maintain field readiness, while still controlling costs. He serves on the advisory boards of Oakridge National Lab Advisory Board and FNH USA. General Kern also serves on the Board of Directors of CoVant Technologies LLC, and AT Solutions, a subsidiary of CoVant Technologies. Mr. Kern is a member of the Defense Science Board and National Academy of Engineering.

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		Mark L. Reuss   Executive Vice President, Global Product Development, Purchasing and Supply Chain, General Motors Company

Director Biographical Information: Mr. Reuss, age 50, serves as General Motors Executive Vice President, Global Product Development, Purchasing and Supply Chain. From 2009 to 2013, Mr. Reuss was GM Vice President and President of GM North America. Before this, he briefly served as Vice President of Engineering, responsible for all engineering for GM worldwide. Mr. Reuss managed GM’s operations in Australia and New Zealand as Chairman and Managing Director of GM Holden Ltd. from February 2008 until July 2009. He also served on the GM Asia Pacific Strategy Board and was President of Australia’s Federal Chamber of Automotive Industries, leading negotiations for long-term government support and a 10-year policy plan to restructure the Australian auto industry. Mr. Reuss previously held numerous engineering and management positions across GM brands. He serves on the Advisory board of the University of Michigan Ross School of Business, the Advisory Board of Cranbrook Horizon Upward Bound and the Cranbrook Schools Board of Trustees and is Vice Chairman of the GM Foundation. Mr. Reuss received a bachelor of engineering degree in mechanical engineering from Vanderbilt University and a master of business administration from Duke University.

Directorships at Public Companies for the Preceding Five Years: Mr. Reuss has served as an Exelis Director since early November 2011.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Mr. Reuss is responsible for GM’s performance, manufacturing, portfolio and dealer network in the United States, Canada and Mexico. He brings over 30 years of experience in global business, operations management, engineering and long-term government support contract negotiations. He has served on the GM North America Disclosure and Audit Committee since December 2009.

		Billie I. Williamson   Retired Partner, Ernst & Young, LLP.

Director Biographical Information: Ms. Williamson, age 61, served as Ernst & Young’s Americas Inclusiveness Officer and Senior Assurance Partner prior to her retirement at the end of 2011. She began her career at Ernst & Young in 1974 and spent the first 19 years in the audit practice, becoming one of only five female partners promoted in 1984. She then left to become CFO of AMX Corp. in Dallas and subsequently Senior Vice President, Finance of Marriott International, Inc. in Washington, D. C. She rejoined Ernst & Young in 1998 where she became a senior client-serving partner. From 2006-2008, Ms. Williamson served as a member of Ernst & Young’s Americas Executive Board which functions as the Board of Directors for E&Y. She also served on the U.S. Executive Board, responsible for partnership matters for the firm. Ms. Williamson is on the board of Annie’s Inc., Extrusions, Inc., a privately held company, and is a partner in the Ida Family Ltd. Partnership. In February 2013, Ms. Williamson was elected to the board of Energy Futures Holdings Corporation, a privately held energy company with a portfolio of competitive and regulated energy companies. Ms. Williamson graduated from Southern Methodist University and was granted her CPA Certificate in the State of Texas in 1976. Ms. Williamson serves on the Board of Directors of the Dallas Holocaust Museum / Center for Education and Tolerance, Board of the Governors for the Dallas Symphony Association, is a member of the Board of Trustees for the Dallas Symphony Foundation, and is a member of the Hockaday School Audit Committee and the Audit and Finance Committee of the Communities Foundation of Texas.

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Directorships at Public Companies for the Preceding Five Years: Ms. Williamson has served as an Exelis Director since January 1, 2012. In March 2012, Ms. Williamson joined the Board of Directors of Annie’s Inc., a natural and organic food company, where she is a member of the Compensation and Audit Committees.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: As a Senior Assurance Partner at Ernst & Young, Ms. Williamson served some of the firm’s largest global accounts in aerospace, technology and other industries. She worked with Chief Executive Officers of major companies to structure acquisitions and determine financial strategy. As a member of Ernst & Young’s Americas Executive Board, Ms. Williamson dealt with strategic and operational matters, providing additional relevant experience.

The Board of Directors recommends that you vote FOR the election of each of the proposed three Class III nominees listed above to the Exelis Board of Directors.

Continuing Members of the Board of Directors

The following information describes the offices held, biographical information, other business directorships, additional director experience, qualifications, attributes and skills, and the class and term of each director whose term continues beyond the 2014 Annual Meeting and who is not subject to election this year. Beneficial ownership of equity securities of continuing members of the Board of Directors is described in the discussion of “Stock Ownership of Directors and Executive Officers” starting on page 12.

Class I — Directors Whose Terms Will Expire In 2015

		Ralph F. Hake, Non-Executive Chairman, Exelis Inc.   Former Chairman and Chief Executive Officer, Maytag Corporation

Director Biographical Information: Mr. Hake, age 65, was Chairman and Chief Executive Officer of Maytag Corporation, an appliance manufacturer and distributor, from June 2001 to March 2006. He served as Executive Vice President and Chief Financial Officer for Fluor Corporation, an engineering and construction firm from 1999 to 2001. From 1987 to 1999, Mr. Hake served in various executive capacities at Whirlpool Corporation, a manufacturer and distributor of home appliances, including Chief Financial Officer and Senior Executive Vice President for global operations. Mr. Hake is a 1971 business and economics graduate of the University of Cincinnati and holds an M.B.A. from the University of Chicago.

Directorships at Public Companies for the Preceding Five Years: Mr. Hake has been a Director of Exelis since October 2011. He was a Director of ITT Corporation from 2002 to November 2011. He has served as a Director of Owens-Corning Corporation, a provider of composites and building materials, since 2006. Mr. Hake was a Director of Maytag Corporation from June 2001 through March 2006. Mr. Hake served as non-executive Chairman of Smurfit-Stone Corporation from 2010 until its acquisition by RockTenn Company on May 28, 2011. Mr. Hake served as a Director of RockTenn through January 25, 2013.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Mr. Hake has extensive global management and financial experience. He served on the Board of Directors for the National Association of Manufacturers and was Chairman of the organization’s taxation and economic policy group.

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Director Biographical Information: Lieutenant General (Ret.) David F. Melcher, age 59, serves as Chief Executive Officer and President of Exelis. Previously he was President of ITT Defense & Information Solutions and served on the ITT Strategic Council from December 2008 until the Company’s Spin-Off from ITT on October 31, 2011. Mr. Melcher joined ITT in August 2008 as Vice President of Strategy and Business Development for Defense & Information Solutions following 32 years of distinguished service in the U.S. Army. He currently serves on the Executive Committee of the Board of Directors for the Aerospace Industries Association and the National Defense Industrial Association’s Board of Trustees. Mr. Melcher holds a bachelor’s degree in civil engineering from the U.S. Military Academy at West Point and two masters degrees, including one in business administration from Harvard University and another in public administration from Shippensburg University.

Directorships at Public Companies for the Preceding Five Years: Mr. Melcher serves as a Director and as the Chief Executive Officer and President of Exelis. In December 2013 Mr. Melcher joined the Board of Directors of C. R. Bard, Inc., a leading multinational developer, manufacturer, and marketer of medical technologies in the vascular, urology, oncology and surgical specialty product fields.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: As Chief Executive Officer and President, Mr. Melcher has extensive knowledge of our Company’s business and operations. He has more than 25 years of defense community experience in program management, strategy development and finance, working with key decision makers within the Army, Department of Defense, Office of Management and Budget, and Congress. Mr. Melcher has extensive international strategic business, budget, policymaking and defense-related experience, has demonstrated leadership and management experience with the U.S. Army, and has served as the Army’s Military Deputy for Budget and Deputy Chief of Staff for Programs in the Pentagon, and as Commander of the Corps of Engineers, Southwestern Division in Dallas, TX.

Director Biographical Information: Mr. Bulls, age 58, is the founder and Chairman of Jones Lang LaSalle’s Public Institutions specialty, a practice focused on delivering integrated real estate solutions to government entities, nonprofit organizations, transportation facilities, and higher education institutions. He also serves as an International Director of Global Markets at Jones Lang LaSalle focusing on business developments, mergers and acquisitions. Mr. Bulls serves as Chief Executive Officer of Bulls Advisory Group, a real estate consulting and advisory firm. He also co-founded and served as President and CEO of Bulls Capital Partners, a commercial mortgage banking firm. Before joining Jones Lang LaSalle, Mr. Bulls completed almost 12 years of active duty service with the United States Army working in the Office of the Assistant Secretary of the Army for Financial Management at the Pentagon and as an Assistant Professor of Economics and Finance at West Point. He retired as a Colonel in the U.S. Army Reserves in 2008. He is a member of the Executive Leadership Council, an organization of senior African American business executives from Fortune 500 companies, and former Chairman of the Board of Directors of the Executive Leadership Foundation. He is a former Vice Chairman and currently serves as a director of the West Point Association of Graduates Board of Directors, and is a member of Leadership

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Washington, and the Real Estate Executive Council (REEC). Mr. Bulls is a founding member and served as the inaugural President of the African American Real Estate Professionals (AAREP) of Washington, D.C. He is also a member of the Real Estate Advisory Committee for the New York State Teachers’ Retirement System (NYSTRS), one of the largest pension funds in the nation. Mr. Bulls received a bachelor of science degree in engineering from the U.S. Military Academy at West Point and a master’s of business administration degree in finance from Harvard Business School. Mr. Bulls has served on the board of USAA, a privately held insurance and financial services company since November 2010.

Directorships at Public Companies for the Preceding Five Years: Mr. Bulls has served as an Exelis director since early November, 2011. Mr. Bulls has served on the board of Comfort Systems, USA, Inc., a provider of heating, ventilation and air conditioning services, since February 2001 and Tyco International Ltd. since March 5, 2014.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Mr. Bulls brings over 35 years’ experience in development, leadership, operations, teaching, investment management and business development/retention. He serves as a Director for Rasmussen College, a post-secondary, for-profit educational services organization.

Class II — Directors Whose Term Expires In 2016

		John J. Hamre   President and Chief Executive Officer, Center for Strategic & International Studies (“CSIS”)

Director Biographical Information: Dr. Hamre, age 63, was elected President and Chief Executive Officer of CSIS, a public policy research institution dedicated to strategic, bipartisan global analysis and policy impact, in April of 2000. Prior to joining CSIS, he served as U.S. Deputy Secretary of Defense from 1997 to 2000 and Under Secretary of Defense (Comptroller) from 1993 to 1997. He received a B.A. degree, with highest distinction, from Augustana College in Sioux Falls, South Dakota, was a Rockefeller Fellow at Harvard Divinity School and was awarded a Ph.D., with distinction, from the School of Advanced International Studies, Johns Hopkins University, in 1978.

Directorships at Public Companies for the Preceding Five Years: Dr. Hamre has been a Director of Exelis since October 2011. He served as a Director of ITT, a diversified leading manufacturer of highly engineered critical components and customized technology solutions for growing industrial end-markets from 2000 to 2011. He has served as a Director of SAIC, Inc. a provider of scientific, engineering, systems integration and technical services to government and commercial markets since 2005. In September 2013 SAIC, Inc. spun off SAIC, as a separate public company, and renamed itself Leidos. Dr. Hamre now serves as a director of the new SAIC and continues to serve as a director of Leidos (formerly SAIC, Inc.). He also served as a Director of Xylem Inc., a leading global water technology provider from October 2011 to May 2013. Dr. Hamre was previously a Director of Choicepoint, Inc., a provider of identification and credential verification services, from May 2002 through September 2008 and Oshkosh Corporation, a designer, manufacturer and marketer of specialty vehicles and vehicle bodies from 2009 through January 2012.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Dr. Hamre has extensive strategic and international experience, particularly with respect to defense related businesses. He has achieved recognized prominence in strategic, international and defense fields. Dr. Hamre is a Director of MITRE Corporation, a not-for-profit organization chartered to work in the public interest, with expertise in systems engineering, information technology, operational concepts, and enterprise modernization and is a member of the Governance Business Division Committee of the Bechtel Corporation board, a leader in engineering, construction, management, and development services.

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Director Biographical Information: Mr. Moore, age 59, currently serves as President and Chief Executive Officer of PJM Advisors, LLC, an investment and advisory firm. Mr. Moore holds a bachelor’s degree in business administration from DePaul University and currently serves on the university’s board of trustees. He also serves as a Director on the Boards of the Metropolitan YMCA of St. Louis, Boys Hope/Girls Hope, St. Louis Zoological Society and the Big Shoulders Fund.

Directorships at Public Companies for the Preceding Five Years: Mr. Moore has served as an Exelis Director since early November 2011. He also has served as a Director of Archer Daniels Midland Company, a global food processing and commodities trading corporation, since November 2003 and was a Director of Ralcorp Holdings, Inc., a manufacturer of private brand food products, until its acquisition by ConAgra on January 29, 2013. Mr. Moore was a Director at Smurfit-Stone Corporation from 2002 to 2011.

Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Mr. Moore serves on the North American Review Board of American Air Liquide. Mr. Moore has extensive governance, operational and financial experience in multiple industry sectors, including board service at various public companies. He served as the former Chairman and Chief Executive Officer of Smurfit-Stone Container Corporation, an industry leader in the manufacturing of integrated containerboard and corrugated packaging products and one of the world’s largest paper recyclers, and as its Chief Executive Officer from June 2010 to May 2011 when it was acquired by RockTenn Corporation.

Director Biographical Information: Mr. Yost, age 66, served as Director and Chief Executive Officer of AmerisourceBergen, a comprehensive pharmaceutical services provider, from August 2001 until July 1, 2011. Previously, he served as President of AmerisourceBergen, Chairman and Chief Executive Officer of AmeriSource Health Corporation, and President and Chief Executive Officer of AmeriSource Health. Mr. Yost served as a member of the Board at Penn Medicine, overseeing the University of Pennsylvania School of Medicine and hospital from 2006 to 2012. He serves on the U.S. Air Force Academy Endowment Board. Mr. Yost is a graduate of the U.S. Air Force Academy and holds a master of business administration from the University of California, Los Angeles (UCLA).

Directorships at Public Companies for the Preceding Five Years: Mr. Yost has served as an Exelis Director since early November 2011. Mr. Yost was a Director and Chief Executive Officer of AmerisourceBergen from August 2001 to July 2011. Since 2009, he has served on the board of Tyco International Ltd., a leading provider of electronic security products and services, fire protection and detection products and services. In January 2012, Mr. Yost joined the Board of Directors at Marsh & McLennan Companies, a global professional services firm providing advice and solutions in the areas of risk, strategy, and human capital. In August 2012, Mr. Yost joined the Board of Directors at Bank of America Corporation, a bank holding company and financial holding company.

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Additional Director Experience, Qualifications, Attributes or Skills Relevant to Board Membership: Mr. Yost brings over 36 years of experience in business leadership, operations, manufacturing and services in the healthcare equipment and services industry.

The Board of Directors has appointed Deloitte as the Exelis independent registered public accounting firm for 2014, based on the appointment by the Exelis Audit Committee. Shareholder ratification is not required for making such appointment for the fiscal year ending December 31, 2014 because the Audit Committee has responsibility for the appointment of our independent registered public accounting firm. The appointment is being submitted to shareholders for ratification with a view toward soliciting the opinion of shareholders, which opinion will be taken into consideration in future deliberations. No determination has been made as to what action the Board of Directors or the Audit Committee would take if shareholders do not ratify the appointment. Even if the appointment is ratified, the Audit Committee retains discretion to appoint a new independent registered public accounting firm at any time if the Audit Committee concludes such a change would be in the best interests of Exelis and its shareholders. We expect that representatives of Deloitte will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions. Deloitte is a registered public accounting firm as provided by the Public Company Accounting Oversight Board (“PCAOB”). Representatives of Deloitte attended all regularly scheduled meetings of the Audit Committee during 2013. The Audit Committee annually reviews and considers Deloitte’s performance of the Company’s Audit.

Performance factors reviewed include Deloitte’s:

The Audit Committee also reviewed the terms and conditions of Deloitte’s engagement letter. The Audit Committee discussed these considerations as well as Deloitte’s fees and services with Deloitte and Company management. The Audit Committee also determined that any non-audit services (services other than those described in the annual audit services engagement letter) provided by Deloitte were permitted under the rules and regulations concerning auditor independence promulgated by the SEC and rules promulgated by the PCAOB in Rule 3526.

Independent Registered Public Accounting Firm Fees

The following table summarizes aggregate fees billed for the years ended December 31, 2013 and 2012 by Deloitte, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates:

Below is summary information about Deloitte & Touche fees for services during fiscal years 2013 and 2012:

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Pre-Approval of Audit and Non-Audit Services

The Audit Committee pre-approves audit and permitted non-audit services provided by Deloitte. The Audit Committee has also adopted a policy on pre-approval of permitted audit related and non-audit services provided by Deloitte and permitted certain non-audit services provided by outside internal audit service providers. The purpose of the policy is to identify thresholds for services, project amounts and circumstances where Deloitte and any outside internal audit service providers may perform permitted non-audit services. A second level of review and approval by the Audit Committee is required when such permitted non-audit services, project amounts, or circumstances exceed specified amounts.

The Audit Committee has determined that, where practical, all permitted non-audit services shall first be placed for competitive bid prior to selection of a service provider. Management may select the party deemed best suited for the particular engagement, which may or may not be Deloitte. Providers other than Deloitte shall be preferred in the selection process for permitted non-audit service-related work. The policy and its implementation are reviewed and reaffirmed on a regular basis to assure conformance with applicable rules.

The Audit Committee has approved specific categories of audit, audit-related and tax services incremental to the normal auditing function, which Deloitte may provide without further Audit Committee pre-approval. These categories include among others, the following:

The Audit Committee has also approved specific categories of audit-related services, including the assessment and review of internal controls and the effectiveness of those controls, which outside internal audit service providers may provide without further approval.

If fees for any pre-approved non-audit services provided by either Deloitte or any outside internal audit service provider exceed a pre-determined threshold during any calendar year, any additional proposed non-audit services provided by that service provider must be submitted for second-level approval by the Audit Committee. Other audit, audit-related and tax services which have not been pre-approved are subject to specific prior approval. The Audit Committee reviews the fees paid or committed to Deloitte on at least a quarterly basis.

The Company may not engage Deloitte to provide the services described below:

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Employees of Deloitte who are senior manager level or above, including lead or concurring partners and who have been involved with the Company in the independent audit, shall not be employed by the Company in any capacity for a period of five years after the termination of their activities on the Company account.

The Board of Directors recommends you vote FOR the ratification of appointment of the Company’s Independent Registered Public Accounting Firm for 2014.

The Board of Directors has unanimously adopted, and recommends that the Company’s shareholders approve an amendment to our Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) that would phase in the declassification of our Board of Directors (the “Declassification Amendment”) as described below and set forth on Annex 1. The Board of Directors has adopted corresponding amendments to our Amended and Restated By-laws (the “By-laws”), as described below and set forth on Annex 2, which will become effective if the Declassification Amendment receives the requisite approval by shareholders at the Annual Meeting and the filing of such amendment with the Indiana Secretary of State.

Background of the Proposal

The Nominating and Governance Committee and the Board of Directors regularly review our corporate governance practices to ensure that such practices, including the procedures for the election of directors, remain in the best interests of the Company, its shareholders and other relevant constituencies. The Board of Directors believes that its classified structure, which was implemented in 2011 when Exelis became an independent, publicly traded company, provided stability and continuity in the leadership of the business and affairs of the Company. A classified board also allowed Exelis, as a newly public company to focus on its long-term growth strategies and commitment to long-term shareholder value. While the Board believes these remain important considerations, the Board recognizes the benefit of providing our shareholders an opportunity to vote on the performance of all our directors on an annual basis, The Board also recognizes the corporate governance sentiment among some shareholders and investors in favor of annual elections.

Exelis is an Indiana corporation. Indiana corporate law requires public companies incorporated in Indiana to have a classified board unless the company provides in its by-laws within thirty (30) days of becoming a public company a provision electing to not be governed by the Indiana law mandate with respect to classified boards. Because the Company timely included language in its by-laws electing not to be governed by the mandatory classification provision of Indiana law, Exelis is able to present this management proposal to declassify our Board.

The Nominating and Governance Committee, which is composed entirely of independent directors, and the Board of Directors thoughtfully considered the proposal to declassify our Board. Upon the unanimous recommendation of the Nominating and Governance Committee, the Board of Directors determined that it is appropriate to propose declassifying the Board on a phased-in basis, commencing with the Company’s 2015 Annual Meeting of Shareholders, subject to the requisite approval by shareholders of this Proposal. This phase-in period is intended to support the Company’s execution of its long-term business strategy in support of value creation and the long-term interests of all shareholders and other constituencies, while also being responsive to the concerns of certain shareholders and investors that believe annual elections increase the accountability of directors to the shareholders.

Proposed Amendment to Articles of Incorporation and By-laws

Currently, members of our Board of Directors are elected for staggered terms of three years. If the Declassification Amendment is approved, commencing with the class of directors standing for election at our 2015 Annual Meeting of

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Shareholders, the directors up for election each year will stand for election for one-year terms, expiring at the next annual meeting of shareholders. The directors who are elected or appointed prior to the 2015 Annual Meeting will continue to hold office until the end of the three-year terms for which they were elected or appointed to serve. In all cases, each director will hold office until his or her successor has been elected and qualified or until such director’s earlier death, retirement, resignation. Annex I shows the proposed changes to Exelis’ Articles of Incorporation. Annex 2 shows the proposed changes to Exelis’ By-laws, with deletions indicated by strikeouts and additions indicated by underlining.

Effective Date

Under the laws of the state of Indiana, if the Declassification Amendment proposal receives the requisite approval by the shareholders at the Annual Meeting, the proposed amendment to Article Fifth of the Articles of Incorporation described above will become effective upon the filing of appropriate amendment documentation with the Indiana Secretary of State, which filing is expected to take place shortly after shareholder approval.

Under the laws of the state of Indiana, the Declassification Amendment proposal is approved if the shareholder votes cast favoring the action exceed the votes opposing the action. Abstentions and broker non-votes will have no effect on the outcome of the proposal. The amendment to the Amended and Restated Articles of Incorporation will become effective upon the filing of Articles of Amendment to the Amended and Restated Articles of Incorporation with the Indiana Secretary of State containing changes substantially in the form attached as Annex 1, which the Company intends to do promptly after the Annual Meeting, at which time the corresponding amendments to the By-laws, substantially in the form attached as Annex 2, would become effective. If this proposal does not receive the requisite approval by the shareholders at the Annual Meeting, the proposed amendments to the Articles of Incorporation and By-laws will not be implemented and the Company’s Board will remain classified.

BOARD RECOMMENDATION: The Board of Directors recommends that you vote FOR the proposal to approve the amendment to the Company’s Amended and Restated Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors commencing with the Annual Meeting to be held in 2015.

Background of the Proposal

Currently, the Company’s Amended and Restated Articles of Incorporation provide that only the entire Board of Directors (by majority vote) and the Chairman of the Board may call a special meeting of shareholders. The Board of Directors has determined that extending the right to call a special meeting of shareholders to those shareholders having a significant economic interest in the Company is in the best interest of shareholders of the Company. The Board of Directors believes that establishing an ownership threshold of, and economic interest in, at least twenty-five percent (25%) of the voting power of the outstanding shares of capital stock of the Company for shareholders to request a special meeting strikes an appropriate balance between enhancing the rights of shareholders and seeking to avoid the situations that could arise if the threshold were set too low. The Board of Directors believes that a special meeting should only be held to cover special or extraordinary events, such as when fiduciary, strategic, significant transactional or similar considerations dictate that the matter be addressed on an expeditious basis, rather than waiting until the next annual meeting. Organizing and preparing for a special meeting involves significant management commitment of time and focus, and imposes substantial legal, administrative and distribution costs. The Board of Directors believes that setting the threshold too low carries a risk of frequent meeting requests, potentially covering agenda items relevant only to particular constituencies as opposed to shareholders generally, with significant cost, management distraction and diversion of other corporate resources. The Board of Directors therefore has concluded that a lower threshold would not be in the best interest of shareholders and accordingly has chosen to propose a threshold percentage of twenty-five percent (25%).

Proposed Amendment to Articles of Incorporation and By-laws

The Company’s Board of Directors has proposed, and recommends that shareholders approve at the Annual Meeting, an amendment to the Company’s Amended and Restated Articles of Incorporation that would require the Secretary of the Company to call a special meeting upon the written request of shareholders of record having, as of the date of the special meeting request, at least twenty-five (25%) percent of the voting power (excluding derivative securities from the determination of satisfaction of

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such threshold in order to ensure that the shareholder(s) seeking to call a special meeting have a true economic interest in the Company) of the outstanding shares of capital stock of the Company, provided that such special meeting request is in accordance with the By-laws of the Company (the “Special Meeting Amendment”).

The Board of Directors has also adopted corresponding amendments to the Company’s By-laws, which amendments will become effective upon the approval by shareholders of the Special Meeting Amendment proposal to amend the Company’s Amended and Restated Articles of Incorporation and filing of such amendment with the Indiana Secretary of State. The By-laws amendment contains procedural and informational requirements shareholders must satisfy in order to call a special meeting. The procedural and informational requirements for shareholders to call a special meeting include: no business may be conducted at the special meeting except as set forth in the Company’s notice of meeting; no shareholder special meeting request shall be effective if received by the Secretary during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting; a special meeting request shall not be effective if an annual or special meeting of shareholders that included an identical or substantially similar item of business (“similar business”) was held not more than 120 days before the special meeting request was received by the Secretary; a special meeting will not be held if the Board of Directors or the Chairman of the Board has called or calls for an annual or special meeting to be held within 90 days after the special meeting request is received by the Secretary and the business to be conducted at such meeting included the similar business; any reduction in the aggregate net long position of the requesting shareholder below the twenty-five percent (25%) threshold following the delivery of the special meeting request shall constitute a revocation of such special meeting request; and in determining whether the twenty-five percent (25%) threshold has been satisfied where multiple requests are submitted, only requests dated and delivered to the Secretary within 60 days of the earliest dated special meeting request and identifying substantially the same purpose or purposes of the special meeting and substantially the same matters proposed to be acted on at the meeting will be considered together. The descriptions of the proposed amendments to the Amended and Restated Articles of Incorporation and By-laws are qualified in their entirety by the text of the proposed amendments to the Amended and Restated Articles of Incorporation, set forth in Annex 3, and the corresponding amendment to the By-laws, set forth in Annex 4 with deletions indicated by strikeouts and additions indicated by underlining.

Effective Date

Under the laws of the state of Indiana, the Special Meeting Amendment is approved if the shareholder votes favoring the action exceed the votes opposing the action. Abstentions and broker non-votes will have no effect on the outcome of this proposal. The amendment to the Amended and Restated Articles of Incorporation will become effective upon the filing of Articles of Amendment to the Amended and Restated Articles of Incorporation with the Secretary of State of the State of Indiana containing changes substantially in the form attached as Annex 3, which the Company intends to do promptly after the Annual Meeting, at which time the corresponding amendments to the By-laws, substantially in the form attached as Annex 4, would become effective. If this proposal does not receive the requisite approval by the shareholders at the Annual Meeting, the proposed amendments to the Articles of Incorporation and By-laws will not be implemented and the right to call a special meeting will remain exclusively with the Board of Directors and the Chairman of the Board.

BOARD RECOMMENDATION: The Board of Directors recommends you vote FOR the proposal to amend the Company’s Amended and Restated Articles of Incorporation to allow shareholders to call special meetings.

In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)) and the related rules of the SEC, we are including in these proxy materials a separate resolution subject to shareholder vote to approve, on an advisory basis, the compensation of our named executive officers. The text of the resolution in respect of Proposal No. 5 is as follows:

“RESOLVED, that the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables, and any related narrative discussion, is hereby APPROVED.”

In considering their vote, shareholders may wish to review with care the information on the Company’s compensation policies and decisions regarding the named executive officers presented in Compensation Discussion and Analysis on pages 44 to 60.

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In particular, shareholders should note that the Company’s Compensation Committee bases its executive compensation decisions on the following key objectives:

While the results of the vote are advisory in nature, the Board of Directors intends to carefully consider the results of the vote.

The Board of Directors has adopted a policy providing for an annual advisory vote on executive compensation. Unless the Board of Directors modifies this policy, the next advisory vote on executive compensation will occur at the 2015 annual meeting of shareholders.

The Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers.

The following table sets forth information concerning the shares of common stock that may be issued under equity compensation plans as of December 31, 2013.

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Information about the Board of Directors

During 2013, there were 5 regularly scheduled Exelis Board meetings and 20 meetings of its three standing Committees. All Directors attended at least 80% of all meetings of the Exelis Board and standing Committees on which they served. In conjunction with the regular meetings, those Directors who are not employees of Exelis met privately (without management) following each Board meeting during the year. The non-executive Chairman presides over these private meetings. It is Company practice that all Directors attend the Company’s Annual Meeting. All Directors attended the 2013 Annual Meeting of Shareholders. For 2014, the Board has scheduled five regular meetings.

The Company’s By-laws require that a majority of the Directors must be independent directors. Additionally, the Company’s non-management Directors must meet the independence standards of the NYSE and the Company’s Corporate Governance Principles. The Charters of the Audit, Compensation and Personnel and Nominating and Governance Committees require all members of those committees to be independent directors in accordance with the rules of the NYSE.

Each year, the Company’s Directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions. Additionally, Directors and executive officers must promptly advise the Corporate Secretary if there are any changes to the information previously provided.

The Nominating and Governance Committee annually reviews and considers all relevant facts and circumstances with respect to independence for each Director standing for election prior to recommending selection as part of the slate of Directors presented to the shareholders for election at the Company’s Annual Meeting. The Nominating and Governance Committee reviews its recommendations with the full Board, which separately considers and evaluates the independence of Directors standing for re-election using the standards described above on an annual basis.

In February 2014, the Board considered regular commercial sales and payments in the ordinary course of business as well as charitable contributions with respect to each of the non-management Directors, including the Class III Directors, standing for election at the Company’s 2014 Annual Meeting. In particular, the Board evaluated the amount of sales to Exelis or purchases by Exelis with respect to companies where any of the Directors serve or served as an employee, executive officer or director.

In no instance was a Director a current employee, or was an immediate family member of a Director a current executive officer of a company that has made payments to, or received payments from the Company for property or services in an amount which, in any of the last three fiscal years, exceeded the greater of $1 million, or 2% of each respective company’s consolidated gross revenues. The Board also considered the Company’s charitable contributions to non-profit organizations with respect to each of the non-management Directors. No contribution exceeded 1% of the consolidated gross revenues of any non-profit organization. With respect to each non-management Director, Exelis made no contribution of $120,000 or greater to any charitable or non-profit organization.

In affirmatively determining the independence of Directors who serve on the Compensation Committee, the Board also considered other factors it considered relevant to determining whether any such Director has a relationship to the Company

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which is material to that Director’s ability to be independent from management in connection with the duties of a Compensation Committee member, including among other things, the source of compensation of each such Director, including any consulting, advisory or other compensatory fees paid by the Company, and whether the Director has an affiliate relationship with the Company, a subsidiary of the Company, or an affiliate of a subsidiary of the Company.

Based on its annual review, the Board of Directors has affirmatively determined, after considering all relevant facts and circumstances, that each of Messrs. Bulls, Hake, Hamre, Kern, Moore, Reuss and Yost, and Ms. Williamson is independent and none has a material relationship with the Company and that all non-management Directors, including all members of the Audit, Compensation and Personnel and Nominating and Governance Committees meet NYSE corporate governance rules and independence standards for listed companies, which is also the independence standard for directors as set forth in the Company’s Corporate Governance Principles. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships, among others. Mr. Melcher is the Chief Executive Officer and President of Exelis and is not an independent director.

The Board of Directors sets policy for Exelis and advises and counsels the Chief Executive Officer and the executive officers who manage the Company’s business and affairs. The Board of Directors is responsible for assuring that:

The Board of Directors has adopted the Corporate Governance Principles and Charters for each of its standing committees. The Corporate Governance Principles provide, among other things, that the Board of Directors is responsible for selecting the Chairman of the Board of Directors and the Chief Executive Officer in any way it considers in the best interests of the Company. The Board of Directors of the Company has determined that the Chairman should be a non-executive Chair, to provide additional guidance, advice, and counsel and to allow the Chief Executive Officer and President to focus on managing Exelis businesses and strategy. The non-executive Chair presides at regularly scheduled private sessions of the non-management Directors and, with input from the Chief Executive Officer, establishes the agenda for meetings of the Board of Directors. The Corporate Governance Principles further provide that Directors must be able to devote the requisite time for preparation and attendance at regularly scheduled Board of Directors and Board of Directors Committee meetings, as well as be able to participate in other matters necessary for good corporate governance. To help assure that Directors are able to fulfill their commitments to the Company, the Corporate Governance Principles provide that Directors who are chief executive officers of publicly traded companies may serve on not more than two public company boards (including the Exelis Board of Directors) in addition to service on their own board and other Directors who are not chief executive officers of publicly traded companies may not serve on more than four public company boards (including the Exelis Board of

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Directors). The Corporate Governance Principles and Committee charters are reviewed by the Board at least annually and posted on the Company’s website at http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights. A copy of the Corporate Governance Principles will be provided, free of charge, to any shareholder upon request to the Corporate Secretary of Exelis.

The Board of Directors believes that the decision as to whether to combine or separate the chief executive officer and Chairman of the Board of Directors positions will depend on the facts and circumstances facing the Company at a given time and could change over time. In today’s challenging economic and regulatory environment, directors, more than ever, are required to spend a substantial amount of time and energy in successfully navigating a wide variety of issues and in guiding the policies and practices of the companies they oversee. To that end, although we do not have a formal policy with respect to separation of the Chairman and Chief Executive Officer positions, we believe that, having a separate Chairman, whose sole job is to lead the Board, allows our Chief Executive Officer and President to completely focus his time and energy on running the day-to-day operations of our Company. The Board believes that the Company’s current leadership structure does not adversely affect the Board’s role in risk oversight of the Company.

Interested parties may contact the non-executive Chairman, all outside Directors as a group, the entire Board of Directors, a committee of the Board of Directors or an individual Director by submitting a letter to the desired recipient in a sealed envelope labeled “non-executive Chairman,” “Outside Directors,” “Board of Directors”, or with the name of the Board committee or a specific director. This sealed envelope should be placed in a larger envelope and mailed to the Corporate Secretary, Exelis Inc. 1650 Tysons Blvd., Suite 1700, McLean VA, 22102, USA. The Corporate Secretary will forward the sealed envelope to the designated recipient.

The Board of Directors has primary responsibility for overall risk oversight, including the Company’s risk profile and management controls. The Audit Committee of the Board monitors the Company’s operational and regulatory risk management and risk assessment program, including risk mitigation processes. The General Internal Auditor has responsibility for assessing, monitoring and auditing the Company’s global risk profile, reports directly to the Audit Committee and reports on a functional basis to the Chief Financial Officer. The Audit Committee and the Board of Directors monitors financial liquidity and financing risk. The Compensation Committee reviews and assesses compensation and incentive program risks to ensure that the Company’s compensation programs encourage innovation and balance appropriate business risk and rewards without encouraging risk-taking behaviors which may have a material adverse effect on the Company. The Compensation Committee structures compensation so that unnecessary or excessive risk-taking behavior is discouraged and behaviors correlated with long-term value creation are encouraged. The Board and its Audit and Compensation Committees receive regular reports with respect to the Company’s risk profile and risk management controls.

Directors of the Company must be persons of integrity, with significant accomplishments and recognized business stature. The Nominating and Governance Committee desires that the Board of Directors be diverse in terms of its viewpoints, professional experience, education and skills as well as race, gender and national origin. In addition, the Exelis Corporate Governance Principles state that, as part of the membership criteria for new Board members, individuals must possess such attributes and experiences that are necessary to provide a broad range of personal characteristics including diversity, management skills, and technological, business and international experience.

On an annual basis, as part of its self-evaluation, the Board of Directors assesses whether the mix of directors is appropriate for the Company. In addition, the Nominating and Governance Committee assesses the effectiveness of these criteria by referring to the criteria when it periodically assesses the composition of the Board. To be considered by the Nominating and Governance Committee as a Director candidate, a nominee must meet the requirements of the Corporate Governance Principles.

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The Board of Directors believes that the Company’s directors, in the aggregate, provide the broad range of personal characteristics, attributes and experiences appropriate for the Company. Following the 2014 Annual Meeting, assuming all director nominees are elected, the Board will include one female director and one African American director, as well as directors from diverse professional backgrounds, including technology, financial, pharmaceutical and manufacturing industries as well as governmental and non-governmental agencies. When it has a vacancy to fill, the Board of Directors considers diverse candidates for membership on the Board and includes diversity as a specific factor when conducting any search. As part of its process in identifying new candidates to join the Board of the Directors, the Nominating and Governance Committee considers whether and to what extent a candidate’s attributes and experiences will individually and collectively complement the existing Board, recognizing that the Exelis businesses and operations are diverse and global in nature.

In addition to these minimum qualifications, the Nominating and Governance Committee evaluates each nominee’s skills to determine if those skills are complementary to the skills demonstrated by current Board members. The Nominating and Governance Committee also evaluates the Board’s needs for operational, technical, management, financial, international or other expertise.

Prior to recommending nominees for election as Directors, the Company’s Nominating and Governance Committee engages in a deliberative, evaluative process to ensure each nominee possesses the skills and attributes that individually and collectively will contribute to an effective Board of Directors. Biographical information for each candidate for election as a Director is evaluated and candidates for election participate in interviews with existing Board members and management. Each candidate is subject to thorough background checks. Director nominees must be willing to commit the requisite time for preparation and attendance at regularly scheduled Board and Committee meetings and participation in other matters necessary for good corporate governance.

The Nominating and Governance Committee identifies Director candidates through a variety of sources including search firms, personal references and business contacts. The Nominating and Governance Committee will consider director nominees recommended by shareholders for election to the Company’s Board who meet the qualification standards described above (See Section II F of the Nominating and Governance Charter at http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights) The Nominating and Governance Committee also evaluates and makes recommendations to the Board of Directors concerning appointment of Directors to Board Committees, selection of Board Committee Chairs, Committee member qualifications, Committee member appointment and removal, Committee structure and operations and proposal of the Board slate for election at the Annual Meeting of Shareholders, consistent with criteria approved by the Board of Directors.

The Board of Directors typically reviews non-management Director compensation on a biennial basis. Non-management Director compensation was last reviewed in May 2013. Upon the recommendation of Pay Governance LLC, an independent compensation consulting firm, and after review by the Compensation Committee, the Exelis Nominating and Governance Committee recommended, and the full Board of Directors of Exelis approved, a total compensation level of $190,000 for Exelis non-management Directors comprised of $100,000 in cash or deferred cash, at each non-management Director’s election, and $90,000 in restricted stock units for the full-year tenure. The full-year tenure extends from the date of the Annual Meeting to the day prior to the next Annual Meeting. Incremental pay for the full-year tenure includes an additional $15,000 cash retainer for the Audit Committee Chair. The non-executive Chairman of the Board receives an additional $125,000 comprised of $62,500 in cash retainer and $62,500 in restricted stock units for the full-year tenure. The incremental payments for the Audit Committee Chair and the non-executive Chairman were based on the significant responsibilities involved with these positions and a consideration of current competitive data. Directors choosing deferred cash may elect to have the deferred cash deposited into an interest-bearing cash account, at an interest rate determined as of the Company’s annual meeting, or deposited into an account that tracks the performance of Exelis common stock.

Key features of Director RSUs:

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The following table sets forth information concerning the 2013 compensation awarded to non-management Directors of Exelis for the fiscal year ending December 31, 2013.

Director Compensation Table

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The table below represents restricted stock, restricted stock units and stock options outstanding as of December 31, 2013 for our non-management Directors.

Restricted Stock, Restricted Stock Unit and

Stock Option Awards Outstanding at Fiscal Year-End

All Exelis non-management Directors were granted restricted stock units under the 2011 Plan. Restricted shares previously awarded under the ITT 1996 Plan which preceded the ITT 2003 Plan, and under which restricted shares are still outstanding, provided that each Director’s restricted shares are held in escrow and may not be transferred in any manner until one of the following events occurs:

Under the ITT 2003 Plan and the ITT 1996 Plan, non-management Directors may choose to extend the restriction period for not more than two successive five-year periods, or until six months and one day following the non-management Director’s termination from service from the Board of Directors under certain permitted circumstances. Under the 2011 Plan, non-management Directors may choose to extend the restriction period until the date the Director separates from service or the earlier of the separation from service date or a date selected subsequent to the scheduled vesting date. The non-management Director may make a subsequent deferral election for a period of not less than five years from the date such amounts would otherwise have been settled and paid under the deferral election then in effect, subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). Section 409A is an Internal Revenue Code section that deals specifically with non-qualified deferred compensation plans and provides requirements and rules for timing of deferrals and distributions under those plans.

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The ITT 1996 Plan also provided that if a Director ceased serving on the Board under any other circumstances, shares with respect to which the ITT 1996 Plan restrictions have not been lifted would be forfeited. Under the ITT 2003 Plan, the period of restriction for restricted stock awarded is five years. The Nominating and Governance Committee and the Compensation Committee may determine that a Director, whose service from the Board of Directors is terminated, has fulfilled the purpose for which the grant of restricted stock was made and lift the restriction for all or a portion of restricted stock awards. Time and form of payment for outstanding restricted stock received after 2004, as well as elections to have the cash retainer deferred after 2004, have been modified, with the consent of each Director, to comply with Section 409A.

Exelis reimburses non-management Directors for expenses they incur to travel to and from Board of Director, Committee and shareholder meetings and for other Company-business related expenses (including travel expenses of spouses if they are specifically invited to attend an event for appropriate business purposes). Such travel may include use of the Company aircraft, if available and approved in advance by the Chief Executive Officer and President of Exelis. Director airfare is reimbursed at no greater than first-class travel rates.

As permitted by its By-laws, Exelis indemnifies its Directors to the full extent permitted by law and maintains insurance to protect the Directors from liabilities, including certain instances where it could not otherwise indemnify them. All Directors are covered under a non-contributory group accidental death and dismemberment policy that provides each of them with $1,500,000 of coverage. They may elect to purchase additional coverage under that policy for them and their family members. Non-management Directors also may elect to participate in an optional non-contributory group life insurance plan that provides $100,000 of coverage.

The Company and the Board have adopted formal written policies for evaluation of potential related person transactions, as those terms are defined in the SEC’s rules for executive compensation and related person disclosure, which provide for review and pre-approval of transactions which may or are expected to exceed $120,000 involving non-management Directors, Executive Officers, beneficial owners of five percent or more of the Company’s common stock or other securities and any immediate family of such persons. The Company’s policy generally groups transactions with related persons into two categories: (1) transactions requiring the approval of the Nominating and Governance Committee and (2) certain transactions, including ordinary course transactions below established financial thresholds, that are deemed pre-approved by the Nominating and Governance Committee. In reviewing related person transactions that are not deemed pre-approved for approval or ratification, the Nominating and Governance Committee considers the relevant facts and circumstances, including:

The Nominating and Governance Committee is deemed to have pre-approved certain transactions identified in Item 404(a) of Regulation S-K that are not required to be disclosed even if the amount involved exceeds $120,000. In addition, any transaction with another company at which a related person’s only relationship is as an employee (other than an executive officer), director and/or beneficial owner of less than 10% of that company’s shares is deemed pre-approved; provided, however, that with respect to directors, if a director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, such transaction shall be reviewed by the Nominating and Governance Committee and not considered appropriate for automatic pre-approval. Regardless of whether a transaction is deemed pre-approved; all transactions in any amount are required to be reported to the

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Nominating and Governance Committee. Subsequent to the adoption of the written procedures above, the Company has followed these procedures regarding all reportable related person transactions. The Company’s Related Person Transaction Policy is posted on the Company’s website at: http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights.

The Company has adopted the Exelis Code of Conduct which applies to all employees, including the Company’s Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer and, where applicable, to its non-management Directors. The Code of Conduct is posted on the Company’s website at:

http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights. The Company discloses any changes or waivers from the Code of Conduct for the Company’s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, its non-management Directors and other executive officers on its website. In addition, the Company will disclose within four business days any substantive changes in or waivers of the Code of Conduct granted to our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, or persons performing similar functions, by posting such information on our website rather than by filing a Form 8-K. There were no substantive changes in or waivers of the Code of Conduct granted to our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, or persons performing similar functions in 2013. A copy of the Code of Conduct will be provided, free of charge, to any shareholder upon request to the Corporate Secretary of Exelis.

Audit Committee Responsibilities:    The Audit Committee has responsibility, among other things, to meet periodically with management and with both our independent registered public accounting firm and internal auditor to review audit results and the adequacy of and compliance with our system of internal controls. In addition, the Audit Committee will appoint or discharge our independent auditor, and review and approve auditing services, audit related services and permissible non-audit services to be provided by the independent auditor in order to evaluate the impact of undertaking such added services on the independence of the auditor. The responsibilities of the Audit Committee are more fully described in our Audit Committee charter. The Board of Directors has affirmatively determined that each of the members of the Audit Committee is independent and financially literate. Further, the Board of Directors has determined that Mr. Moore, Mr. Bulls, Mr. Hake and Ms. Williamson possess accounting or related financial management expertise within the meaning of the NYSE listing standards and that Ms. Williamson qualifies as an “audit committee financial expert” as defined under the applicable SEC rules.

Compensation and Personnel Committee Responsibilities:    The Compensation Committee oversees all compensation and benefit programs and actions that affect our senior executive officers, including the NEOs. The Compensation Committee also provides strategic direction for our overall compensation structure, policies and programs and oversees and approves the continuity planning process. The responsibilities of the Compensation Committee are more fully described in the Compensation Committee charter.

Each member of the Compensation Committee is a non-management Director. The Board has reviewed the background, experience, financial interests, employment, commercial, charitable, familial and other relationships of each of Messrs. Kern,

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Hake, Reuss and Yost, and has determined that, each such person is (i) a “Non-Employee director” of the Company as defined under Rule 16b-3 of the Exchange Act and (ii) an “outside director” as defined under Treasury Regulation Section 1.162-27(e)(3)(i) of the Internal Revenue Code of 1986, as amended.

Compensation Committee Interlocks and Insider Participation:    There are no Compensation Committee interlocks involving any members of the Compensation Committee. None of the members of the Compensation Committee during fiscal year 2013 or as of the date of this Proxy Statement has been an officer or employee of the Company and no executive officer of the Company served on the Compensation Committee or board of any company that employed any member of the Compensation Committee or Board of Directors.

Nominating and Governance Committee Responsibilities:    The Nominating and Governance Committee is responsible for, among other things, developing and recommending to the Board of Directors criteria for identifying and evaluating director candidates; identifying, reviewing the qualifications of and proposing candidates for election to the Board of Directors; and assessing the contributions and independence of incumbent directors in determining whether to recommend them for reelection to the Board of Directors. The Nominating and Governance Committee also reviews and recommends action to the Board of Directors on matters concerning transactions with related persons and matters involving corporate governance and, in general, oversees the evaluation of the Board of Directors. The responsibilities of the Nominating and Governance Committee are more fully described in the Nominating and Governance Committee charter.

Audit Committee

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Although more than one member of the Board of Directors satisfies the requirements of an audit committee financial expert, the Board of Directors has identified Billie I. Williamson as the Company’s audit committee financial expert. A copy of the Audit Committee Charter is available on the Company’s website at: http://investors.exelisinc.com/phoenix.zhtml?c= 248208&p=irol-govhighlights. The Company will provide, free of charge, a copy of the Audit Committee Charter to any shareholder, upon request to the Corporate Secretary of Exelis.

Compensation and Personnel Committee

Detail regarding the processes and procedures used to determine executive compensation is found in the Compensation Discussion and Analysis starting on page 44. A copy of the Compensation and Personnel Committee Charter is available on the Company’s website at: http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights. The Company will provide, free of charge, a copy of the Compensation and Personnel Committee Charter to any shareholder, upon request to the Corporate Secretary of Exelis.

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Nominating and Governance Committee

As described on page — the Nominating and Governance Committee will consider director nominees recommended by shareholders for election to the Company’s Board who meet the qualification standards. (See Section II.F of the Nominating and Governance Charter at http://investors.exelisinc.com/phoenix.zhtml?c=248208&p=irol-govhighlights)

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Report of the Audit Committee

The following Report of the Audit Committee does not constitute soliciting material and the Report should not be deemed filed or incorporated by reference into any other previous or future filings by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.

Role of the Audit Committee.    The Audit Committee of the Board of Directors provides oversight on matters relating to the Company’s financial reporting process and ensures that the Company develops and maintains adequate financial controls and procedures, and monitors compliance with these processes. This includes responsibility for, among other things:

The Audit Committee has oversight responsibility for confirming the scope and monitoring the progress and results of internal audits conducted by the Company’s internal auditor. The Audit Committee discussed with the Company’s internal auditors and Deloitte the plans for their respective audits. The Audit Committee met with the internal auditors and Deloitte, with and without management present, and discussed results of their examinations, their evaluation of the Company’s internal controls, and the Company’s financial reporting.

The Company’s management has primary responsibility for the financial statements, including the Company’s system of disclosure and internal controls. The Audit Committee may investigate any matter brought to its attention. In that regard, the Audit Committee has full access to all books, records, facilities and personnel of the Company and the Audit Committee may retain outside counsel, auditors or other independent experts to assist the Committee in performing its responsibilities. Any individual may also bring matters to the Audit Committee confidentially or on an anonymous basis, by submitting the matter in a sealed envelope addressed to the “Audit Committee” to the Corporate Secretary who then forwards the sealed envelope to the Audit Committee.

Sarbanes-Oxley Act of 2002 (“SOX”) Compliance.    The Audit Committee has responsibility for monitoring all elements of the Company’s compliance with Sections 302 and 404 of SOX relating to internal control over financial reporting.

Audit Committee Charter.    The Board of Directors has adopted a written charter for the Audit Committee, which the Board of Directors and the Audit Committee review, and at least annually update and reaffirm. The Charter sets out the purpose, membership and organization, and key responsibilities of the Audit Committee.

Composition of the Audit Committee.    The Audit Committee comprises four members of the Company’s Board. The Board of Directors has determined that each Audit Committee member meets the independence standards set out in the requirements of the New York Stock Exchange currently in effect, including the audit committee independence requirements of Rule 10A-3 of the Exchange Act. No member of the Audit Committee has any relationship with the Company that may interfere with the exercise of independence from management and the Company. All members of the Audit Committee, in the business judgment of the full Board of Directors, are financially literate and several have accounting or related financial management expertise.

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Regular Review of Financial Statements.    The Audit Committee reviewed and discussed the Company’s audited financial statements with management. The Audit Committee, management and Deloitte reviewed and discussed the Company’s unaudited financial statements before the release of a quarter’s earnings report and filing on Form 10-Q, and the Company’s audited financial statements before the annual earnings release and filing of the Company’s 2013 Form 10-K.

Communications with Deloitte.    The Audit Committee has discussed with Deloitte the matters required to be discussed by Auditing Standard No. 16 Communications with Audit Committees, issued by the Public Company Accounting Oversight Board. The Audit Committee met privately with Deloitte five times during 2013.

Independence of Deloitte.    Deloitte is directly accountable to the Audit Committee and the Board of Directors. The Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the Audit Committee concerning independence and has discussed with Deloitte their independence from management and the Company, any disclosed relationships and the impact of those relationships on Deloitte’s independence.

Recommendation Regarding Annual Report on Form 10-K.    In performing its oversight function with regard to the 2013 financial statements, the Audit Committee relied on financial statements and information prepared by the Company’s management. It also relied on information provided by the internal audit staff as well as Deloitte. The Audit Committee reviewed and discussed with management the Company’s audited financial statements as of and for the year ended December 31, 2013. Based on these discussions, and the information received and reviewed, the Audit Committee recommended to the Company’s Board of Directors and the Board of Directors has approved including the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

This report is furnished by the members of the Audit Committee.

Patrick J. Moore, Chair

Herman E. Bulls

Ralph F. Hake

Billie I. Williamson

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Compensation Committee Report

The following Report of the Compensation and Personnel Committee does not constitute soliciting material and the Report should not be deemed filed or incorporated by reference into any other previous or future filings by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.

The Compensation and Personnel Committee of the Board of Directors (the “Compensation Committee”) approves and oversees administration of the Company’s executive compensation program and senior leadership development and continuity programs. The Compensation Committee’s primary objective is to establish a competitive executive compensation program that clearly links executive compensation to business performance and shareholder return. The Compensation Committee considers appropriate risk factors in structuring compensation to discourage unnecessary or excessive risk-taking behaviors and encourage long-term value creation.

Recommendation Regarding Compensation Discussion and Analysis

In performing its oversight function during 2013 with regard to the Compensation Discussion and Analysis prepared by management, the Compensation Committee relied on statements and information prepared by the Company’s management. It also relied on information provided by Pay Governance, LLC, the independent compensation consultant to the Compensation Committee. The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on this review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for 2013 and this Proxy Statement.

This report is furnished by the members of the 2013 Exelis Compensation and Personnel Committee.

Paul J. Kern, Chair

Ralph F. Hake

Mark L. Reuss

R. David Yost

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Compensation Discussion and Analysis

Executive Summary

On May 8, 2013, we held an advisory vote to approve named executive officer compensation (“Say on Pay”). Approximately 93% of the votes cast were in favor of our named executive officer compensation. The Compensation Committee was advised of the results of this advisory vote. The Compensation Committee considered the results, and based on the support in favor of our named executive compensation, determined to maintain the current compensation philosophy and policies implementing that philosophy. Shareholders will be asked to provide an advisory vote on executive compensation on an annual basis.

The Compensation Committee established that the Company’s executive compensation program is designed to support Exelis’ business strategy and to be reasonable, fair, fully disclosed and consistently aligned with long-term value creation. The Compensation Committee believes this compensation philosophy encourages individual and group behaviors that balance risk and reward and assists Exelis in achieving steady, sustained growth and earnings performance. To that end, the Compensation Committee adopted what it believes is a best practice executive compensation program that emphasizes Pay for Performance. A substantial portion of executive compensation is tied to the Company’s internal business financial performance and share price performance. If internal business performance or share price performance falls below identified thresholds, at-risk incentive compensation is reduced or not paid at all.

Pay for Performance: Compensation for our NEOs ties a significant portion of compensation to performance. Pay components include salary, long-term awards, including restricted stock units (“RSUs”), stock options and Total Shareholder Return (“TSR”), and Annual Incentive Plan (“AIP”) awards. Compensation for NEOs discussed in this Compensation Discussion and Analysis reflects Exelis financial performance for 2013. The values of RSU and option grants provide absolute alignment with the growth or decline in Exelis share price. The AIP provides a cash payout if certain financial metrics, including earnings per share (“EPS”), are met. The TSR award provides for a cash payment based on Exelis TSR performance relative to the two Aerospace/Defense industry peer groups which comprise the Exelis TSR performance index described on page 55. 2013 cash-based incentives are described in the table below:

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Compensation Discussion and Analysis

The Compensation Committee retained an independent consultant, Pay Governance LLC (the “Compensation Consultant”) in 2013 as an advisor for NEO compensation. The Compensation Consultant provided objective expert analyses, assessments, research and recommendations for executive compensation programs, incentives, perquisites, and compensation standards as well as analysis of material prepared by Exelis for the Compensation Committee review. The Compensation Consultant also provided base salary, annual incentive targets and long-term incentive targets for a group of peer companies (the “Exelis Compensation Peer Group”) to be used as a reference.

The services performed by the independent Compensation Consultant were for and at the direction of the Compensation Committee. The Compensation Committee is directly responsible for the appointment, compensation, and oversight of the Compensation Consultant.

In connection with the engagement of the Compensation Consultant, the Compensation Committee considered various factors bearing on the independence of the Compensation Consultant, including, but not limited to, the following:

The Compensation Committee affirmatively determined the Compensation Consultant was independent and has no conflicts of interest with the Company or the Board of Directors.

In 2013 the Compensation Consultant also acted as an advisor to the Nominating and Governance Committee in connection with Director compensation. In 2013, Exelis’ human resources, finance and legal departments supported the work of the Compensation Committee, provided information, answered questions and responded to requests from the Compensation Consultant.

The Exelis Compensation Peer Group is described below. The Compensation Committee considered this competitive market data in addition to recommendations from Exelis’ Chief Executive Officer and Senior Vice President, Chief Human Resources Officer in determining executive compensation. The Compensation Committee delegated to the Senior Vice President, Chief Human Resources Officer responsibility for administering the executive compensation program.

The Exelis Compensation Peer Group for compensation comparison consists of select Aerospace / Defense companies with annual revenues greater than $1 billion that were available in the Towers Watson’s compensation survey database. The Compensation Committee considers these companies as being most representative of the companies which comprise the marketplace in which Exelis competes for business talent. Data from these companies were adjusted, using a regression analysis, to reflect Exelis’ annual revenue. Data reviewed included competitive market information for each compensation component and total compensation.

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The 2013 Exelis Compensation Peer Group consists of:

For 2013, the Exelis Compensation Peer Group from 2012 was modified to delete Goodrich Corporation because it was acquired during 2012 and Kaman Corporation because its compensation data was not available in the Towers Watson’s survey database. SAIC, Rolls-Royce, and General Atomics were added because, in the view of the Compensation Committee, these companies met the criteria described above.

The Compensation Committee reviews compensation in detail during the first quarter of every year. This review includes:

The actual award date of stock options, restricted stock units and target TSR awards is determined on the date the Compensation Committee approves these awards, which is typically the March meeting of the Compensation Committee. (Meeting dates for the following year’s regular Exelis Board and Committee meetings are scheduled during the prior year.) Target TSR awards reflect a three-year performance period starting on January 1 of the year in which the Compensation

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Committee approves the award. Participants in the Long-Term Incentive Award Program receive notification of their award as soon as reasonably practical after the grant date. The Compensation Committee reviewed and assessed the performance of the NEOs during 2013. The Compensation Committee will continue to review and assess the performance of the Chief Executive Officer and all senior executives and authorize compensation actions it believes are appropriate and commensurate with relevant competitive data and the approved compensation program.

The Compensation Committee considered individual performance, including consideration of the following qualitative performance factors, in addition to the quantitative measures discussed in this Compensation Discussion and Analysis. While there is no formal weighting of qualitative factors, the following factors were considered in making compensation decisions:

The compensation program objectives, principles and approaches reflect Exelis business needs and strategy. The following sections provide more detailed information about the Exelis compensation program.

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Annual base salary, annual incentive targets and long-term incentive targets for Exelis’ NEO positions were compared with those of similar positions in the Exelis Compensation Peer Group. This information was used to provide the market median dollar value for annual base salary, annual incentives and long-term incentives. Compensation levels that are approximately 10% above or below the market median dollar value are considered to be within the market median range. The Compensation Committee considers a position’s strategic value, Exelis’ objectives and strategies and individual experience and performance in the position when making comparative decisions. The Compensation Committee could, but was not required to, consider prior year’s compensation, including short-term or long-term incentive payouts, restricted stock unit vesting or option exercises in compensation decisions for the named executive officers.

The following chart sets out the 2013 annual base salary, annual incentive target, long-term incentive target and the total compensation for each NEO relative to the market median dollar value. For Messrs. Melcher and Milligan and Ms. Davidson, the compensation components and overall compensation reflect the relatively short tenure of each individual in their current corporate positions. In 2013, Ms. Davidson received a 5.3 % salary increase to align her salary level closer to the market range and to recognize her performance and contributions to the Company in her role.

Individual Executive Positions — Percentage of Median

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The following sections, including information supplied in tabular form, provide information about principles and approaches with respect to Base Salary, the AIP and long-term incentive target awards for Exelis. The Compensation Committee developed programs for our Base Salary, AIP and long-term incentive target awards, reflecting what the Compensation Committee considered appropriate measures, goals, and targets based on our competitive marketplace.

BASE SALARY

ANNUAL INCENTIVE PLAN (AIP)

Overview of the AIP

AIP awards to NEOs are made under the Exelis Inc. Annual Incentive Plan for Executive Officers, which first became effective as of October 31, 2011 following the Spin-Off of Exelis from ITT. The Exelis Inc. Annual Incentive Plan for Executive Officers was subsequently approved by Exelis shareholders on May 8, 2013. 2013 target AIP awards for NEOs were approved by our Compensation Committee in March 2013 under the October 31, 2011 Exelis Inc. Annual Incentive Plan for Executive Officers.

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2013 Performance Metrics

To focus the businesses on the operating performance of the enterprise, 2013 internal performance metric attainment and payout design emphasized corporate performance. The Compensation Committee determined that the metrics noted below would be most closely predictive of optimal operating performance in 2013.

2013 Internal Performance Metrics

2013 Internal Performance Metrics and Payout Design

Exelis pays for AIP performance that clearly demonstrates achievement of plan goals. Exelis establishes strong incentives for revenue and earnings per share performance and sets aggressive goals for operating cash flow and ROIC metrics. In order to achieve an AIP payout, each metric must meet a certain threshold for that component to be considered in the calculation. For example, revenue performance below the 90% revenue target would result in the revenue metric being reflected as zero in the AIP calculation. In 2013, each performance component of the AIP and the overall AIP award was capped at 200%. Results between points were interpolated.

2013 AIP Performance Targets and Performance

The Compensation Committee, after considering management recommendations, established 2013 AIP performance targets for the NEOs based on the applicable performance metrics and Exelis’ approved annual operating plan, taking into consideration Exelis’ aspirational business goals. Successful attainment of both qualitative factors and quantitative factors (described in “Compensation Discussion and Analysis — Our Executive Compensation Program — Qualitative Considerations” and “Compensation Discussion and Analysis — 2013 Internal Performance Metric Attainment and Payout Design”) are achievable only if the enterprise and the individual NEOs perform at levels established by the Compensation Committee. As permitted by the AIP, the Compensation Committee may exclude the impact of acquisitions, dispositions and other special items in computing the AIP payout.

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2013 AIP Awards Paid in 2014

On February 19, 2014, the 2013 AIP awards for Messrs. Milligan, Young and Procopio and Ms. Davidson were reviewed and approved by Mr. Melcher in his role as Chief Executive Officer and President of Exelis and 2013 AIP awards for all NEOs, including Mr. Melcher, were reviewed and approved by the Compensation Committee. Negative discretion was exercised for Mr. Young by the Compensation Committee, after consideration of the recommendation of Mr. Melcher, to more appropriately reflect the specific 2013 performance of the Geospatial business unit. 2013 AIP Awards for NEOs are included in the Summary Compensation Table below in the “Non-Equity Incentive Plan Compensation” column. The Compensation Committee excluded the impact of acquisitions, dispositions and other special items in computing AIP performance relating to AIP targets. The performance and payout percentages for each component of the AIP were as follows:

The following table illustrates the calculation of the 2013 AIP Awards paid in 2014. (Sum of Components may differ from Actual Award amounts due to rounding.)

The Exelis long-term incentive award for senior executives has three components, each of which directly ties long-term compensation to long-term value creation and shareholder return. The 2013 long-term incentive program awards were allocated as follows:

2013 Named Executive Officers

Long-Term Incentive Mix

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The 2013 awards were granted on March 8, 2013. A valuation based on the March 8, 2013 grant date was used to determine the number of options and restricted stock units to be granted pursuant to this allocation. The number of options to be granted was based on the Black-Scholes value on the March 8, 2013 grant date. The number of restricted stock units to be granted was based on the closing price of Exelis stock on the grant date. TSR awards represented 30% of the total target long-term award.

The Compensation Committee selected vesting terms for restricted stock units and non-qualified stock options based on the Compensation Consultant’s review and assessment of current competitive practice, as well as the Compensation Committee’s view of the vesting terms appropriate for Exelis. The Compensation Committee determined allocations among restricted stock units and non-qualified stock options based on the view that a balanced award of restricted stock units and non-qualified stock options provides a combination of incentives for absolute share price appreciation. The Compensation Committee considers the Compensation Consultant’s review and assessment of current competitive practice, as well as individual performance, in determining the individual’s total target award.

On March 6, 2014 awards were granted to NEOs for the 2014 performance year. The Compensation Committee determined to adjust the long-term incentive mix for named executive officers to reduce the percentage of non-qualified options. The 2014 long-term incentive mix allocation adopted by the Compensation Committee is comprised of 20% non-qualified stock options, 40% restricted stock units and 40% TSR. Further, restricted stock units awarded in 2014 will vest in one-third annual installments on the anniversary of the grant date. These adjustments reflect current competitive market trends in the Exelis Compensation Peer Group.

2014 Named Executive Officers

Long-Term Incentive Mix

Restrictive Covenants for Exelis Long-Term Incentive Awards: Starting in 2012, the Compensation Committee approved modifications to the restricted stock unit, non-qualified stock option and TSR award terms and conditions upon termination of employment by the participant.

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Breach of either the non-solicitation or non-competition provisions will result in forfeiture of the award, or if the participant has disposed of all or any portion of the award prior to the date of such forfeiture, recovery of an amount equal to the aggregate after-tax proceeds.

Restricted Stock Unit Component

Grants of restricted stock units provide NEOs with stock ownership of unrestricted shares after the restriction lapses. NEOs received restricted stock unit awards because, in the judgment of the Compensation Committee and based on management recommendations, these individuals were in positions most likely to assist in the achievement of Exelis’ long-term value creation goals and to create shareholder value over time. The Compensation Committee reviewed all proposed awards of restricted stock units for NEOs prior to grant, including awards based on performance, retention-based awards and awards contemplated for new executive employees as part of employment offers.

Key elements of the 2013 restricted stock unit award program were:

Non-Qualified Stock Options Component

Non-qualified stock options permit optionees to buy Exelis stock in the future at a price equal to the stock’s value on the date the option was granted, which is referred to as the option exercise price. Non-qualified stock option terms were selected after the Compensation Committee’s review and assessment of terms the market and general competitive practice.

For Mr. Melcher, non-qualified stock options granted in 2010 and 2011 prior to the Spin-Off from ITT do not vest until three years after the award date. This delayed vesting is referred to as three-year cliff vesting. Non-qualified stock option awards granted to Mr. Melcher prior to 2010 vest in one-third cumulative annual installments on the anniversary date of the award. Stock options granted to Mr. Melcher on November 11, 2011 and on March 6, 2012 vest in one-third cumulative annual installments on the anniversary date of the award. Stock options awarded to Messrs. Milligan, Young, and Procopio and Ms. Davidson in 2011, 2012 and 2013 vest in one-third cumulative annual installments on the anniversary date of the award. In 2013, the fair value of stock options granted under the employee stock option program was calculated using a Black-Scholes valuation model.

Key elements of the 2013 non-qualified stock option program were:

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The following table provides a summary of some of the main characteristics of restricted stock units and non-qualified stock options.

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TSR Award Component

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2013 TSR awards are weighted as follows:

2013 TSR Performance Index

In 2013 the Compensation Committee’s rationale for this bifurcated weighting was based on considerations of the relatively small Exelis concentrated peer group of companies with high exposure to non-commercial Aerospace/Defense businesses and a broader Aerospace/Defense industry group with commercial revenues. The Compensation Committee determined that equal weighting of the two groups provides a more balanced comparison.

The performance goals and payments for TSR awards derived from the combination of these two groups, is described in the table below. The first row describes the payout formula and payout of the target value based on the Exelis rank in a concentrated peer group. The second row describes the payout formula and payout of the target value based on the Exelis percentile rank with respect to the S&P 1500 Aerospace/Defense Index.

Performance Goals and Payments for the TSR Awards

* Payouts for the S&P 1500 Aerospace / Defense Index are interpolated for intermediate percentiles.

Amount of target TSR awards.    Exelis target TSR awards provided to NEOs are generally based on a participant’s position, competitive market data, individual performance and anticipated potential contributions to Exelis long-term goals. The Compensation Committee considered individual performance and competitive market data in determining individual target TSR awards.

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Key elements of 2013 TSR awards include:

For 2014, the Compensation Committee determined to use the S&P 1500 Aerospace/Defense Index as the sole index for the 2014 TSR performance index, because of the reduced number of companies in the concentrated peer group ranking and the changing business dynamics.

The following table describes the 2013 long-term incentive awards for the NEOs, as determined by the Compensation Committee on March 8, 2013.

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The Exelis Salaried Investment and Savings Plan (the “ISP”) and the ITT Salaried Retirement Plan, a qualified defined benefit pension plan, renamed the Exelis Salaried Retirement Plan (the“SRP”), were transferred to Exelis in connection with the Distribution. Employees are vested under the SRP after 3 years of eligibility service.

Effective January 1, 2012 (the “effective date”), the Compensation Committee adopted and implemented modifications to the ISP and the SRP. On that date, all current, eligible U.S. Exelis employees, including the NEOs, had a one-time opportunity to choose participation in the ISP or the SRP. Employees who chose the ISP stopped accruing benefits under the SRP on the effective date. Employees who chose the SRP alternative will not receive any further employer matching or base contributions under the ISP, but they may continue to make their own contributions under the ISP. The SRP is described in detail in the narrative to the Pension Benefits in “Compensation Tables — Pension Benefits” and in the Pension Benefits table. For those employees who chose the ISP, Exelis will continue to credit the employee’s ISP account each pay period throughout the year with a base contribution, regardless of whether the employee makes individual contributions. Effective January 1, 2012, the new base contribution will be based on the following formula:

In addition, an employee receives a dollar-for-dollar match (100%) on the first 1% of eligible pay contributed by the employee into the ISP and a 50% match on the next 5% of eligible pay contributed into the ISP. An employee will be vested immediately in all individual and company contributions under the ISP. As of the January 1, 2012, contributions to the ISP automatically increased to 6% of eligible pay if an employee is saving less than 6% as of January 1, 2012 or not saving at all. By contributing 6% of eligible pay, an employee will receive the maximum employer matching contribution.

Under the Exelis SRP, employees will continue to earn a pension plan benefit, but only under the Traditional Pension Plan formula; the Pension Equity Plan (“PEP”) formula will be discontinued as of January 1, 2012.

However, under the PEP, any benefit amount employees have accrued under the PEP will be credited with interest under the PEP formula. The PEP interest rate will be the greater of the 10-year Treasury bond as of December 31 of the prior year or 3.25%. When an employee leaves Exelis, at any age, the employee receives the PEP amount accrued, if vested. The Traditional Pension Plan and PEP are described on pages 70 to 73.

On May 29, 2013, the Exelis Compensation Committee approved amendments to the SRP effective December 31, 2016, to freeze all benefit accruals for all persons entitled to benefits under the SRP by freezing the accrual of “Benefit Service” and the crediting of “Compensation,” as such terms are defined in the SRP, as of December 31, 2016. As a result, final average pay formulas will not reflect future compensation increases or benefit service after December 31, 2016. Eligibility service will continue to accrue for all persons entitled to benefits under the SRP.

Excess Savings Plan:

Federal law limits the amount of compensation that can be used to determine employee and employer contribution amounts ($255,000 in 2013) to the ISP. Accordingly, Exelis established and maintains a non-qualified, unfunded Exelis Excess Savings Plan to provide key employees an opportunity to earn benefits in excess of the benefits that may be earned under tax-qualified ISP. This plan is discussed in more detail in the narrative to the “Nonqualified Deferred Compensation” table describe in “Compensation Tables — Nonqualified Deferred Compensation”.

Excess Pension Plans:

The four excess pension plans, together with all associated assets and liabilities, were transferred to Exelis and renamed the Exelis Excess Pension Plans (collectively the “Excess Pension Plans.). Following the Spin-Off from ITT, Exelis employees who elected to participate in the SRP continued to accrue benefits under the Excess Pension Plans. Benefits under the Excess Pension Plans were frozen, as of the January 1, 2012, for Exelis employees who did not elect to continue participation in the

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SRP. In the event of a change of control, any excess plan benefits would be immediately payable, subject to any applicable restrictions under Section 409A with respect to form and timing of payments, and would be paid in a single discounted sum. The single-sum payment provision provided executives the earliest possible access to the funds in the event of a change of control, which avoids leaving unfunded pension payments in the hands of the acquirer.

On May 29, 2013, the Exelis Compensation Committee approved amendments similar to the SRP described above for the Excess Pension Plans, each a non-qualified defined benefit pension plan. The amendments will freeze all further benefit accruals under the Excess Pension Plans as of December 31, 2016 for all persons entitled to benefits thereunder. As a result, final average pay formulas in the Excess Pension Plans will not reflect future compensation increases or benefit service after December 31, 2016. Eligibility service will continue to accrue for all persons entitled to benefits under the Excess Pension Plans.

Exelis adopted the Exelis Deferred Compensation Plan, which is described in more detail in “Compensation Tables — Nonqualified Deferred Compensation.” Under the Exelis Deferred Compensation Plan, an executive has an opportunity to defer receipt of between 2% and 90% of any AIP payments he or she earns. The amount of deferred compensation ultimately received reflects the performance of benchmark investment funds made available under the Exelis Deferred Compensation Plan as selected by the executive. Participants in the Exelis Deferred Compensation Plan may elect a fund that tracks the performance of Exelis common stock.

Exelis maintains two severance plans for its senior executives — the Senior Executive Severance Pay Plan and the Special Senior Executive Severance Pay Plan. The Senior Executive Severance Pay Plan provides a period of transition for senior executives who are U.S. citizens or who are employed in the U.S. if Exelis terminates a senior executive’s employment without cause. The Special Senior Executive Severance Pay Plan’s purpose is to provide compensation in the case of termination of employment in connection with an acceleration event (defined in “Payments Upon Termination or Change in Control”) including a change of control. These Severance Plan Arrangements are described in more detail “Compensation Tables — Potential Post-Employment Compensation”. The Senior Executive Severance Pay Plan and Special Senior Executive Severance Pay Plan were reviewed and approved by the Compensation Committee. The severance plans apply to Exelis key employees as defined by Section 409A. The Exelis severance plan arrangements were not considered in determining other elements of compensation. Messrs. Milligan, Young, and Procopio and Ms. Davidson are covered under the Senior Executive Severance Pay Plan and are covered at the higher level of benefits under the Special Senior Executive Severance Pay Plan. Mr. Melcher is covered under the Melcher Employment Letter and the Special Senior Executive Severance Pay Plan.

As described more fully in “Compensation Tables — Change of Control Arrangements,” many of Exelis’ short-term and long-term incentive plans, severance arrangements and nonqualified deferred compensation plans provide additional or accelerated benefits upon a change of control. Generally, these change of control provisions were intended to put the executive in the same position he or she would have been in had the change of control not occurred. The changes of control provisions allow executives to focus on preserving value for shareholders when evaluating situations that, without change of control provisions, could be personally adverse to the executive. See “Compensation Tables — Change of Control Arrangements” for a discussion of the impact of change of control arrangements with respect to equity and TSR awards.

On November 2, 2011, Exelis established a grantor trust (“Rabbi Trust”) for the purpose of assisting Exelis with the payment of certain nonqualified deferred compensation obligations in the event of a change in control of Exelis. Exelis made a nominal contribution to establish the Rabbi Trust and, under the terms of the trust agreement, Exelis is obligated to contribute an amount equal to 110 % of the Exelis’ obligations under eight nonqualified deferred compensation plans, including the excess pension, excess savings, deferred compensation and special senior executive severance pay plans described above, at the time of an “Acceleration Event,” as defined in such plans and the Rabbi Trust.

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Employee Benefits

Executives participate in Exelis’ broad-based employee benefits program. The program includes 1) either a pension program or an investment and savings plan which includes before-tax and after-tax savings features, 2) group medical and dental coverage, 3) group life insurance and 4) group accidental death and dismemberment insurance. Other benefit plans in which the NEOs may participate include short-and long-term disability insurance, vision coverage, and flexible spending account plan or a health savings account if enrolled in the corresponding appropriate medical plan.

Certain Perquisites for the NEOs

Exelis provides only those perquisites that it considers to be reasonable and consistent with competitive practice. Such perquisites are not tax-protected. Perquisites (which are described more fully in “Compensation Tables — Summary Compensation Table — All Other Compensation Table” and the related narrative) available for NEOs include a car allowance of up to $1,300 per month and financial and estate planning. The Compensation Committee will continue to review benefits and perquisites to assure the benefits and perquisites are reasonable and consistent with competitive practice.

Clawback Policy:

In 2011, Exelis, upon the recommendation of the Compensation Committee, adopted a policy that provides for clawback of performance-based compensation if the Board of Directors determines that a senior executive has engaged in fraud or willful misconduct that caused or otherwise contributed to the need for a material restatement of Exelis’ financial results. In such a situation, the Board of Directors of Exelis will review all compensation awarded to or earned by a senior executive on the basis of Exelis’ financial performance during fiscal periods materially affected by the restatement. This includes annual cash incentive and bonus awards and all forms of equity-based compensation. If, in the Board of Directors view, the compensation related to Exelis’ financial performance would have been lower if it had been based on the restated results, the Board of Directors will, to the extent permitted by applicable law, seek recoupment from that senior executive any portion of such compensation as it deems appropriate after review of all relevant facts and circumstances. NEOs of Exelis are covered by this policy.

Exelis typically closes the stock trading window for insiders in advance of, and for a period of time immediately following earnings releases and Board and Committee meetings, because Exelis and insiders may be in possession of material non-public information.

The Compensation Committee meeting, at which compensation decisions and awards are typically made, usually occurs during a Board meeting period. Therefore, awards may be made at a time when Exelis is in possession of material non-public information. The Compensation Committee does not consider the possible possession of material non-public information when it determines the number of non-qualified stock options granted, price of options granted or timing of non-qualified stock options granted, number of restricted stock unit awards or TSR awards. Rather, it uses competitive data, individual performance and retention considerations when it grants non-qualified stock options, restricted stock units and TSR awards under the long-term incentive program.

Non-qualified stock option awards and restricted stock unit awards granted to NEOs and restricted stock unit awards granted to Directors are awarded and priced on the same date as the approval date. Exelis may also award restricted stock units and non-qualified stock options in the case of the promotion of an existing employee or hiring of a new employee. Again, these awards may be made at a time when Exelis is in possession of material non-public information related to the promotion or the hiring of a new employee or other matters. Exelis does not time its release of material non-public information for the purpose of affecting the value of executive compensation, and executive compensation decisions are not timed to the release of material non-public information.

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Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that Exelis may deduct in any one year with respect to its Chief Executive Officer and the three other highest-paid named executive officers, other than the Chief Financial Officer. There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. Compensation attributable to awards under Exelis’ AIP and long-term incentive program are generally intended to qualify as performance-based compensation under Section 162(m). However, the Compensation Committee may award compensation that does not so qualify. There may be situations in which the prudent use of discretion in determining pay levels would be in the best interests of Exelis and its shareholders and, therefore, desirable. In those situations where discretion is used, awards could be structured in ways that would not permit them to qualify as performance-based compensation under Section 162(m). There are uncertainties as to the application of Section 162(m). Consequently, it is possible that our deduction may be challenged or disallowed.

Exelis utilizes a best-net provision in its plans to address the golden parachute tax rules under Section 280G and 4999 of the Internal Revenue Code. Under the “best net” provisions, if payments triggered by a change-of-control would be subject to an excise tax, then the payments either (1) would be reduced by the amount needed to avoid triggering the tax, or (2) would not be reduced, depending on which alternative left the executive in the best after-tax position. We also consider Section 409A of the Internal Revenue Code when designing and administering our compensation plan agreements and programs, with the intent that they will comply Section 409A, or an applicable exemption.

Exelis has a policy that prohibits employees from taking advantage of, disclosing, or using any confidential information for the purpose of personal gain, including buying, selling, or trading in any Exelis security. The Board of Directors has adopted a parallel policy. These policies include prohibitions against hedging, speculation or other investments where the share owner’s economic interest is disassociated from share ownership. Further, Directors and executives annually receive specific instructions which prohibit engaging in certain trading with respect to equity securities of Exelis including short sales and transactions involving puts, calls, and listed and unlisted options (other than exercises of company granted stock options).

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In 2013, the Compensation Committee evaluated risk factors associated with the Company’s businesses in determining compensation structure and pay practices. The structure of the Exelis Board of Directors and Committees facilitated this evaluation and determination. During 2013, the Non-executive Chair of the Board was a member of the Audit and Compensation Committees. This dual Committee membership provided insight into Exelis’ business risks and afforded the Compensation Committee access to information necessary to consider the impact of business risks on compensation structure and pay practices. Further, overall enterprise risk was considered and discussed at Board meetings, providing additional important information to the Compensation Committee. Compensation across the enterprise is structured so that unnecessary or excessive risk-taking behavior is discouraged. Total compensation for senior officers is heavily weighted toward long-term compensation consistent with the Exelis compensation philosophy. This focus on long-term compensation discourages behaviors that encourage short-term risks. The Chief Executive Officer and President attends the Compensation Committee meetings and the Senior Vice President and Chief Financial Officer attends those portions of the Compensation Committee meetings at which plan features and design configurations for the annual and long-term incentive plans are considered and approved. The Compensation Committee determined that the compensation structure did not create risks that would have a material adverse effect on the company. The following table summarizes 2013 Exelis compensation components or policies and relevant risk mitigation factors:

Risk Assessment Across the Enterprise