Textron 2021 Proxy Statement

32 TEXTRON 2021 PROXY STATEMENT Our annual and long-term incentive compensation programs for 2020 are summarized in the following table: Target Long-Term Incentive Performance Share Units 50% • Represent cash value of one share of common stock • Span a three-year performance period with vesting at the end of the third fiscal year • Percentage earned (0% to 200%) is based upon the achievement of performance goals set by the Committee at the beginning of the three-year performance period • Relative TSR benchmarked against the S&P 500 is used as one of the performance metrics in order to maintain focus on stock performance as a relative measure of company performance while improving program clarity • Incentivize achievement of Company performance goals over a sustained period in order to build shareholder value Restricted Stock Units 25% • Represent the right to receive shares of common stock upon vesting • Vest in full on the third anniversary of the grant date • Final value depends on the change in stock price over the vesting period • The Committee believes that RSUs help to retain executives because RSUs, unlike stock options, have value upon vesting even in a declining market Stock Options 25% • Provide value only if the stock price goes up during the 10-year term of the option, resulting in a direct incentive to increase Textron’s stock price • Vest ratably over three years on each anniversary of the grant date • Target value and performance goals are set in the first quarter of each year • Enterprise-wide performance goals are determined by aggregating the goals for each of our business units which are set to focus the businesses primarily on generating profitability and cash flow, consistent with expected market conditions • Percentage earned (0% to 200%) is determined after the end of the fiscal year based upon the achievement of performance goals • Payout is subject to discretion based on the Committee’s and Board’s judgment Target Annual Incentive At-Risk Compensation Component/Award Type Description See page 25 for a chart comparing the 2020 LTIC program to the previous LTIC program. Which Companies Does the Committee Use to Compare Our Per formance? As discussed above, the S&P 500 will be used to measure relative TSR performance for the 2020-2022 PSU awards granted to NEOs in 2020. The performance peer group used for measuring relative TSR performance for PSU awards granted prior to 2020 are set forth in the proxy statement for the year of grant.