2019 Proxy Statement

24 TEXTRON 2019 PROXY STATEMENT TARGET PAY How Does the Committee Set Target Pay? Target total pay consists of three components: (i) base salary, (ii) target annual incentive compensation and (iii) target long 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: At-Risk Compensation Base Salary ‡ Provide market competitive ¿xed pay reÀective of an executive’s responsibilities, position and performance Target Annual Incentive ‡ Focus executives on executing the Company’s short term business goals Target Long Term Incentive ‡ Align executive compensation with increasing long term shareholder value 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 201 included: ‡ Publicly traded companies that are headquartered in the U.S. ‡ Revenue of approximately $ billion to $ 0 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 Component Objective