2019 Proxy Statement

TEXTRON 2019 PROXY STATEMENT 29 Annual Incentive Compensation Payouts and Performance Analysis The Committee established the weighting for the 201 annual incentive compensation performance goals described above as 60 pro¿tability, 5 cash Àow and 5 workforce diversity. The net operating pro¿t goal set by the Committee for 201 was higher than in the previous year to focus management on improving execution in order to increase pro¿t margin. The cash Àow goal for 201 was lower than the previous year’s goal due to the inclusion in 2017’s goal of a one time tax settlement received during that year and the exclusion of restructuring cash outÀows as well as Arctic Cat related deal and integration payments in 2017, as disclosed in our 201 proxy statement. In addition, the 201 targets were adjusted to reÀect the disposition of our Tools & Test businesses which closed mid year. Both targets were challenging in light of uncertain global economic and market conditions. Payouts for each individual could range from 0 to 200 of target based on performance. The formula for determining 201 annual incentive compensation for executive of¿cers, and the resulting percentage earned, are detailed below: What Were Our Performance Goals? Performance goals for the 201 annual incentive compensation program and the 201 performance period for PSU awards under the long term incentive compensation program focused on pro¿tability and cash Àow, with an additional goal related to workforce diversity applicable only to annual incentive compensation. The pro¿tability target focused executives on delivery of segment pro¿t in each of our segments. The cash Àow target focused executives on improving operational ef¿ciency and sustaining the strength of the balance sheet. The diversity metric focused management on having a diverse employee pro¿le. In addition, PSUs are subject to a discretionary TSR modi¿er that can decrease, but not increase, the payout by as much as 0 , based on how Textron’s three year TSR compares to our performance peer group. (1) “Enterprise NOP” means our total “Segment pro¿t” as reported in our Annual Report on Form 10 .. Segment pro¿t for the manufacturing segments excluded interest expense, certain corporate expenses, gains losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. 60% 59.7% 35% 53.2% 5% 7.0% Threshold 0 Payout Target 100 Payout Actual: $1,267 $ 27 $1,577 $955 $2 9 .0 1.0 Maximum 200 Payout Component :eighting Component Payout 119.9% Total Earned Enterprise NOP (1) Manufacturing Cash Flow (2) Improvement in :orkforce Diversity ( ) Actual: $784 Actual: 1.5% 2018 Annual Incentive Compensation Calculation ($ in millions) $1,269 $59 1.0