2019 Proxy Statement

TEXTRON 2019 PROXY STATEMENT 23 2018 Say-on-Pay Advisory Vote on Executive Compensation At our 201 annual meeting, shareholders expressed substantial support for the compensation of our named executive of¿cers (“NEOs” or “executives”), with approximately 9 of the votes cast for approval of the say on pay advisory vote on executive compensation. The Committee evaluated the results of the 201 advisory vote at its July meeting and made no changes to our executive compensation program and policies as a result of the vote. Compensation Philosophy Textron’s compensation philosophy is to establish target total pay with reference to a talent peer group and to tie a substantial portion of our executives’ compensation to performance against objective business goals and stock price performance. This approach helps us to recruit and retain talented executives, incentivizes our executives to achieve desired business goals and aligns their interests with the interests of our shareholders. Compensation Program Components Total pay for Textron’s executives consists of base salary, annual incentive compensation and long term incentive compensation. Our annual incentive compensation program is designed to reward performance against annual business goals established by the Committee at the beginning of each year and is payable in cash. The long term incentive compensation program is directly linked to stock price through three award types: stock options, restricted stock units (“RSUs”) and performance share units (“PSUs”). PSUs reward performance against annual business goals set by the Committee for each year of a three year performance period. The Committee then may use its negative discretion to decrease the payout based on how Textron’s three year total shareholder return (“TSR”) compares to a performance peer group. PSUs are payable in cash based upon our stock price. 2018 Incentive Compensation Payouts The two main performance goals set by the Committee for 201 ²applicable to our annual incentive compensation program as well as to the PSUs under our long term incentive compensation program²focused on pro¿tability and cash Àow, which are key business priorities for Textron. For 201 , the annual incentive compensation program paid out at 119.9 of target for our executives, reÀecting performance that exceeded targets set at the beginning of the year. PSUs awarded for the 2016 201 performance cycle were subject to business goals set annually by the Committee during the three year performance period and then subject to a negative discretionary adjustment by the Committee. Performance against these goals resulted in a multiplier of 107.1 of the number of PSUs granted, however, the Committee applied a 27 discretionary reduction. This adjustment resulted in a ¿nal number of units paid of 7 .2 of the initial number of 2016 201 PSUs granted. OVERVIEWAND OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM The objectives of Textron’s compensation program for executive of¿cers are: ‡ Encouraging world class performance ‡ Attracting and retaining high performing talent ‡ Focusing executives on delivering balanced performance by providing (i) both cash and equity incentives and (ii) both annual and long term incentives ‡ Aligning executive compensation with shareholder value To achieve these objectives, the Committee uses the following ¿ve guidelines for designing and implementing executive compensation programs at Textron: Target total pay should be set in reference to the median target total pay of a talent peer group Incentive compensation should pay higher when Textron performs well and lower if Textron underperforms Performance goals should align interests of executives with long term interests of shareholders Compensation programs should not incentivize executives to conduct business in ways which could put the Company at undue risk Indirect compensation should provide the same level of bene¿ts given to other salaried employees 1 2 3 4 5