2018 Proxy Statement

TEXTRON 2018 PROXY STATEMENT 14 7H[WURQ PDLQWDLQV D 'HIHUUHG ,QFRPH 3ODQ IRU 1RQ (PSOR\HH 'LUHFWRUV WKH ³'LUHFWRUV 'HIHUUHG ,QFRPH 3ODQ´ XQGHU which they can defer all or part of their cash compensation until retirement from the Board. Deferrals are made either into DQ LQWHUHVW EHDULQJ DFFRXQW ZKLFK EHDUV LQWHUHVW DW D PRQWKO\ UDWH WKDW LV RQH WZHOIWK RI WKH JUHDWHU RI DQG WKH average for the month of the Moody’s Corporate Bond Yield Index, but in either case, not to exceed a monthly rate equal to 120% of the Applicable Federal Rate as provided under Section 1274(d) of the Internal Revenue Code, or into an account consisting of Textron stock units, which are equivalent in value to Textron common stock. Textron credits dividend equivalents to the stock unit account. Directors were required to defer a minimum of $120,000 of their 2017 annual retainer into the stock unit account. Textron sponsors a Directors Charitable Award Program that was closed to new participants in 2004. Under the program, Textron contributes up to $1,000,000 to the Textron Charitable Trust on behalf of each participating director upon his or KHU GHDWK DQG WKH 7UXVW GRQDWHV RI WKDW DPRXQW LQ DFFRUGDQFH ZLWK WKH GLUHFWRU¶V UHFRPPHQGDWLRQ DPRQJ XS WR ¿YH charitable organizations. Textron currently maintains life insurance policies on the lives of the participating directors, the proceeds of which may be used to fund these contributions. The premiums on the policies insuring our current directors who participate in this program (Ms. Bader and Messrs. Clark, Evans, Fish and Gagné) have been fully paid so there ZHUH QR H[SHQGLWXUHV DVVRFLDWHG ZLWK WKHVH SROLFLHV GXULQJ 7KH GLUHFWRUV GR QRW UHFHLYH DQ\ GLUHFW ¿QDQFLDO EHQH¿W IURP WKLV SURJUDP VLQFH WKH LQVXUDQFH SURFHHGV DQG FKDULWDEOH GHGXFWLRQV DFFUXH VROHO\ WR 7H[WURQ 1RQ HPSOR\HH directors also are eligible to participate in the Textron Matching Gift Program under which Textron will match contributions RI GLUHFWRUV DQG IXOO WLPH HPSOR\HHV WR HOLJLEOH FKDULWDEOH RUJDQL]DWLRQV DW D UDWLR XS WR D PD[LPXP RI SHU \HDU 1RQ HPSOR\HH GLUHFWRUV DUH HOLJLEOH WR UHFHLYH DZDUGV JUDQWHG XQGHU WKH 7H[WURQ ,QF /RQJ 7HUP ,QFHQWLYH 3ODQ 2WKHU WKDQ D RQH WLPH JUDQW RI UHVWULFWHG VWRFN UHFHLYHG XSRQ MRLQLQJ WKH %RDUG WKH\ FXUUHQWO\ GR QRW UHFHLYH DQ\ VXFK awards. This grant of restricted stock, in the amount of 2,000 shares, does not vest until the director has completed at OHDVW ¿YH \HDUV RI %RDUG VHUYLFH DQG DOO VXFFHVVLYH WHUPV RI %RDUG VHUYLFH WR ZKLFK KH RU VKH LV QRPLQDWHG DQG HOHFWHG or in the event of death or disability or a change in control of Textron. None of our directors receive compensation for serving on the Board from any shareholder or other third party. Employee directors do not receive fees or other compensation for their service on the Board or its committees. CHANGES TO DIRECTOR COMPENSATION PROGRAM FOR 2018 In December 2017, the Nominating and Corporate Governance Committee conducted its annual review of the type and DPRXQW RI FRPSHQVDWLRQ SDLG WR RXU QRQ HPSOR\HH GLUHFWRUV IRU WKHLU VHUYLFH RQ RXU %RDUG DQG LWV FRPPLWWHHV 7KH Committee considered the results of an analysis prepared by its independent compensation consultant, Semler Brossy &RQVXOWLQJ *URXS ZKLFK LQFOXGHG QRQ HPSOR\HH GLUHFWRU FRPSHQVDWLRQ WUHQGV DQG GDWD IURP 7H[WURQ¶V 7DOHQW 3HHU *URXS FRPSDQLHV DV ZHOO DV FRPSDQLHV LQFOXGHG LQ WKH 1$&' $QQXDO 'LUHFWRU &RPSHQVDWLRQ 6XUYH\ $IWHU LWV UHYLHZ WKH &RPPLWWHH UHFRPPHQGHG DQG WKH %RDUG DSSURYHG FKDQJHV WR WKH FRPSHQVDWLRQ SURJUDP IRU RXU QRQ HPSOR\HH directors for 2018, as follows: • Increase the annual Board retainer from $235,000 to 260,000, of which at least $135,000 must be deferred into the stock unit account of the Directors’ Deferred Income Plan • Increase the annual Lead Director retainer from $25,000 to $30,000 • Increase the annual retainer for the Nominating and Corporate Governance Committee chair from $10,000 to $15,000 and for the Organization and Compensation Committee chair from $12,500 to $20,000 These changes are intended to align Textron’s program more closely with peer company practices. The Board believes that modest, biennial increases are preferable to less frequent, larger increases which otherwise would be needed to keep pace with peer company levels.