2018 Proxy Statement

TEXTRON 2018 PROXY STATEMENT 20 COMPENSATION DISCUSSION AND ANALYSIS EXECUTIVE SUMMARY BUSINESS OVERVIEW During 2017, we maintained focus on investing in our businesses through continued development of new products and services and the acquisition of Arctic Cat, a platform to expand and grow our Textron Specialized Vehicles business. In addition, we continued to take cost reduction actions through the execution of our restructuring plans and integration activities LQ RUGHU WR UHDOLJQ RXU EXVLQHVVHV LPSURYH RYHUDOO RSHUDWLQJ HI¿FLHQF\ DQG EHWWHU SRVLWLRQ RXU EXVLQHVVHV IRU WKH IXWXUH We generated $947 million in cash from operating activities of our manufacturing businesses, which contributed to our investments of $634 million in research and development activities, $423 million in capital expenditures, and $316 million to acquire Arctic Cat, consistent with our strategy of developing new products and services and completing strategic acquisitions WR VXSSRUW JURZWK DQG FUHDWH ORQJ WHUP VKDUHKROGHU YDOXH ,Q DGGLWLRQ ZH UHWXUQHG PLOOLRQ WR RXU VKDUHKROGHUV WKURXJK share repurchases and dividend payments. Our 2017 revenues were $14.2 billion, an increase of 3% over 2016 revenues, ZKLOH VHJPHQW SUR¿W IRU WKH \HDU ZDV ELOOLRQ D GHFUHDVH RI IURP &RQWLQXHG H[HFXWLRQ RI RXU UHVWUXFWXULQJ plan and the restructuring and integration of the Arctic Cat acquisition resulted in special charges of $130 million. Despite the year’s challenges, we had a number of notable accomplishments during the year that we expect to contribute to ORQJ WHUP VKDUHKROGHU YDOXH LQFOXGLQJ WKH IROORZLQJ • Textron Aviation’s Citation Latitude achieved its milestone 100th customer delivery during the fourth quarter of 2017, and the EXVLQHVV FRQWLQXHG WR SUHSDUH LWV QHZHVW ODUJH FDELQ MHW WKH &LWDWLRQ /RQJLWXGH IRU )$$ FHUWL¿FDWLRQ DQG HQWU\ LQWR VHUYLFH ZKLFK LV H[SHFWHG LQ HDUO\ 7H[WURQ $YLDWLRQ DOVR LQWURGXFHG WKH &HVVQD 6N\&RXULHU D QHZ WZLQ HQJLQH ODUJH XWLOLW\ turboprop for which FedEx Express has signed on as launch customer with an initial order for 50 aircraft and an option to order 50 more. • 7KH %HOO 9 9DORU DFKLHYHG LWV ¿UVW ÀLJKW LQ 'HFHPEHU 7KLV QH[W JHQHUDWLRQ YHUWLFDO OLIW DLUFUDIW LV EHLQJ GHYHORSHG DV SDUW of the Joint Multi Role Technology Demonstrator initiative in order to compete to replace aging utility and attack helicopters for the U.S. Armed Forces over the next decade. On the commercial side, customers began taking deliveries of Bell’s QHZHVW DLUFUDIW WKH %HOO -HW 5DQJHU ; DQG ÀLJKW WHVWLQJ UHVXPHG IRU WKH %HOO 5HOHQWOHVV SURJUDP • :LWK WKH DFTXLVLWLRQ RI $UFWLF &DW LQ 0DUFK 7H[WURQ 6SHFLDOL]HG 9HKLFOHV VLJQL¿FDQWO\ H[SDQGHG LWV SURGXFW OLQH XS DQG LWV GHDOHU QHWZRUN ZKLOH LQWURGXFLQJ QHZ SURGXFWV OLNH WKH +DYRF ; VLGH E\ VLGH DQG WKH $UFWLF &DW =5 VQRZPRELOH 769 DOVR LQWURGXFHG WKH QHZ ( = *2 (/L7( JROI FDU SRZHUHG E\ D OLWKLXP LRQ EDWWHU\ WKDW ORZHUV PDLQWHQDQFH FRVWV and fuel emissions. • Textron Systems received a Foreign Military Sales order for the Afghan National Army for 55 Mobile Strike Force Vehicles with the potential for up to 200 additional units. Textron Systems introduced its new NIGHTWARDEN Tactical Unmanned $LUFUDIW 6\VWHP 78$6 DV LWV QH[W JHQHUDWLRQ SODWIRUP • .DXWH[ ZRQ FRQWUDFWV ZLWK 6KDQJKDL $XWRPRWLYH ,QGXVWU\ &RUSRUDWLRQ 6$,& IRU VHYHQ QHZ YHKLFOH SURJUDPV Revenues ($ in millions) Segment Profit ($ in millions) $15,000 $0 $1,400 $0 2016 2017 2016 2017 $13,788 $14,198 $1,309 $1,169