Textron 2021 Proxy Statement

TEXTRON 2021 PROXY STATEMENT 27 2020 Incentive Compensation Payouts The three performance goals set by the Committee for 2020’s annual incentive compensation program focused on profitability, cash flow and hiring diversity, which are key business priorities for Textron. For 2020, the payout for the annual incentive compensation program was 40.1% of target for our CEO, reflecting below target performance for both the profitability and cash flow goals due to the unprecedented impact of the COVID-19 pandemic on our businesses. For the other NEOs, the Committee determined to exclude COVID-19-related idle facility costs when calculating Company performance against the 2020 annual incentive compensation financial goals resulting in an annual incentive payout of 65.2% of target. PSUs awarded for the 2018–2020 performance cycle were subject to profitability and cash flow goals set annually by the Committee during the three-year performance period, after which the Committee could apply a negative discretionary adjustment. Performance against these goals resulted in a multiplier of 82.1% of the number of PSUs granted, to which the Committee applied a 15% discretionary reduction based on its review of relative total shareholder return and other factors. This adjustment resulted in a final number of units paid of 69.8% of the initial number of 2018–2020 PSUs granted. OVERVIEWAND OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM The objectives of Textron’s compensation program for executive officers are: • Encouraging world class performance • 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 • Attracting and retaining high-performing talent To achieve these objectives, the Committee uses the following five 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 payout should be 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 benefits given to other salaried employees 1 2 3 4 5