2019 Proxy Statement

30 TEXTRON 2019 PROXY STATEMENT At its January 2019 meeting, the Committee discussed the annual incentive compensation awards to be paid to the NEOs for the 201 performance period and considered input from the full Board. The Committee concluded that the calculated payouts appropriately reÀected the Company’s performance for 201 and approved the payouts as calculated above. Annual incentive compensation targets and payouts for 2016, 2017 and 201 for each NEO are shown below: Prior Year Performance Analysis The Committee believes that a pay for performance analysis should compare Company performance vs. peer performance over the time period an incentive is earned and that operating metrics are the appropriate performance comparator for annual incentive awards. Therefore, to validate that Textron’s annual incentive compensation is appropriately linked to the executives’ performance, the Committee reviewed the annual incentive compensation paid to Textron’s CEO in 201 , with respect to 2017, compared to Textron’s year over year operating performance for that year, relative to the annual incentive compensation paid to the peer companies’ CEOs compared to the year over year operating performance of the performance peer group companies for the corresponding year. :hile exactly comparable data was not available for all peer companies, indicative comparisons were made using publicly reported GAAP operating cash Àows and pre tax earnings from continuing operations. As was the case for previous years, the Committee’s comparative analysis conducted in 201 for payouts related to the 2017 performance period con¿rmed the strong correlation between Textron’s annual incentive compensation payouts and its performance relative to its peers. (2) “Manufacturing Cash Flow” generally represents “Manufacturing cash Àow before pension contributions” (a non GAAP measure) as reported in our quarterly earnings releases. This measure adjusts net cash from operating activities of continuing operations for dividends received from Textron Financial Corporation (“TFC”), capital contributions provided under the Support Agreement with TFC and debt agreements, capital expenditures, proceeds from the sale of property, plant and equipment and contributions to our pension plans. For 201 , our Manufacturing Cash Flow performance calculation excludes taxes paid related to the gain realized on the Tools & Test business disposition. ( ) “Improvement in :orkforce Diversity” means the change in the number of U.S. full time salaried diverse employees in relation to all full time U.S. salaried employees. Name Position Target Payout Target Payout Target Payout Scott C. Donnelly CEO $1,615,600 $1,619,000 $1, 00,000 $2,160,000 $1, 5 ,000 $2,22 ,000 Frank T. Connor CFO 07,500 09,000 50,000 1,020,000 50,000 1,019,000 E. Robert Lupone General Counsel 525,000 526,000 5 7,500 657,000 570,000 6 ,000 Julie G. Duffy E9P, HR N A N A 2 5,000 2,000 00,000 60,000 2016 2017 2018 Annual Incentive Compensation Targets and Payouts