2018 Proxy Statement

23 TEXTRON 2018 PROXY STATEMENT At-Risk Compensation TARGET PAY HOW DOES THE COMMITTEE SET TARGET PAY? 7DUJHW WRWDO SD\ FRQVLVWV RI WKUHH FRPSRQHQWV L EDVH VDODU\ LL WDUJHW DQQXDO LQFHQWLYH FRPSHQVDWLRQ DQG LLL WDUJHW ORQJ term incentive compensation. In setting target pay, the Committee addresses each component with reference to a talent peer group median and makes its determinations based on individual responsibilities, complexity of position versus that of the market benchmarks, performance, experience, and future potential. The target incentive compensation components are set as a percentage of base salary, varying for each NEO. The objectives of the three components are as follows: Component Objective Base Salary • 3URYLGH PDUNHW FRPSHWLWLYH ¿[HG SD\ UHÀHFWLYH RI DQ H[HFXWLYH¶V UHVSRQVLELOLWLHV position and performance Target Annual Incentive • )RFXV H[HFXWLYHV RQ H[HFXWLQJ WKH &RPSDQ\¶V VKRUW WHUP EXVLQHVV JRDOV 7DUJHW /RQJ 7HUP Incentive • $OLJQ H[HFXWLYH FRPSHQVDWLRQ ZLWK LQFUHDVLQJ ORQJ WHUP VKDUHKROGHU YDOXH HOW DOES THE COMMITTEE SELECT THE TALENT PEER GROUP? The Committee references a “talent” peer group of companies, recommended by its independent compensation consultant and approved by the Committee, as part of its process in establishing target pay for each NEO. The Committee believes that complexity and size are the most important factors in establishing this group of companies to provide appropriate references for target pay levels, with industry playing a secondary role. In addition to market capitalization and enterprise value, as well as the availability of information in the compensation survey database, selection criteria for the talent peer group for 2017 included: • 3XEOLFO\ WUDGHG FRPSDQLHV WKDW DUH KHDGTXDUWHUHG LQ WKH 8 6 • Revenue of approximately $5 billion to $40 billion, with at least 10% from outside the U.S. • Median revenue for peer group approximates Textron’s revenue • Revenue in the aerospace/defense, technology/engineering, general manufacturing and/or automotive industries