Textron 2021 Proxy Statement

26 TEXTRON 2021 PROXY STATEMENT 2020 Say-on-Pay Advisory Vote on Executive Compensation and 2020 Shareholder Outreach Executive compensation decisions at Textron are made by the Committee. One of the guiding objectives of Textron’s compensation program, as established by the Committee, is to align executive compensation with shareholder value creation. Therefore, the Board and the Committee carefully consider the full range of shareholder feedback and vote outcomes from our Annual Meeting each year. At our 2020 Annual Meeting, 66% of our shareholders approved our advisory say-on-pay vote on 2019 executive compensation, an 11% improvement over the previous year, but still lower than the above 90% levels that our say-on- pay votes had obtained prior to 2019. We again engaged in proactive shareholder outreach in Fall of 2020 to hear the views of our shareholders on our new program design, as well as to discuss environmental, social and governance (“ESG”) matters. We contacted shareholders representing over 70% of our outstanding shares to engage with them and hear their views on our executive compensation program. While many shareholders provided us with feedback that they did not believe a call was necessary or did not respond, shareholders representing approximately 34% of our outstanding shares participated in engagement calls with our Executive Vice President, Human Resources, our Vice President of Investor Relations, and our Senior Executive Counsel. Our Executive Director, Environmental, Health & Safety also participated on several calls. During these calls, shareholders provided positive feedback with respect to the announced design changes to our long-term incentive compensation program for 2020, with acknowledgement that shareholders will evaluate the program’s pay for performance alignment once the program’s three-year cycles begin to be completed. Shareholders with whom we discussed compensation stated that they did not believe additional changes were needed to our executive compensation program beyond those already announced. We also had robust discussions with shareholders around ESG topics and COVID-19’s impact on Textron, including shareholders’ views on executive compensation adjustments as a result of COVID-19 impacts. Throughout this process, shareholder feedback on compensation matters was presented and discussed with the Committee and shared with our Board. Compensation Philosophy Textron’s compensation philosophy is to establish target total pay with reference to a talent peer group median 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. 2020 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 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: performance share units (“PSUs”), restricted stock units (“RSUs”) and stock options. Beginning in 2020, PSUs represent 50% of long-term incentives awarded to our NEOs and will be earned based on performance against pre-established business goals set by the Committee as well as based on relative total shareholder return (“TSR”), all measured over a three-year performance period. PSUs are payable in cash based upon our stock price at the end of the performance cycle.