Textron 2021 Proxy Statement

36 TEXTRON 2021 PROXY STATEMENT Long-Term Incentive Compensation Payouts and Per formance Analysis Performance Share Units Payouts for the 2018-2020 PSU cycle were based upon performance for each of the annual periods within the 2018-2020 cycle against performance goals set for three one-year performance periods, weighted equally, subject to a TSR modifier that can decrease, but not increase, the final payout up to 40%, based on the relative ranking of Textron’s three-year TSR performance compared to that of our 2018 performance peers and the Committee’s discretion. In considering the multi-year performance focus of the PSUs, the Committee made no adjustment to the PSU financial performance calculation due to the impact of the pandemic. The performance achieved against the threshold, target and maximum payouts for the 2018-2020 PSU cycle, and the resulting percentage earned by the executive officers after application of the TSR modifier, are detailed below: 2018–2020 Per formance Share Unit Calculation ($ in millions) 60% 60% 60% 59.9% 53.9% 0.0% 40% 40% 40% 50.4% 42.6% 39.6% Threshold 50% Payout Target 100% Payout Actual: $1,270 $827 $868 $806 $1,577 $1,692 $1,534 $955 $924 $928 $249 $277 $276 Maximum 150% Payout Component Weighting Component Payout 110.3% Total Earned 96.5% 39.6% Enterprise NOP Enterprise NOP Enterprise NOP Manufacturing Cash Flow Manufacturing Cash Flow Manufacturing Cash Flow Actual: $751 Actual: $784 Actual: $642 Actual: $596 2018 2019 2020 $598 $1,372 $1,269 $600 $1,246 $602 Actual: $1,267 82.1% Units Earned as % of Original Award -15% TSR Modifier applied by O&C Committee 69.8% Final Payout as % of Original Award The performance metrics for 2020 are described in more detail in the 2020 Annual Incentive Compensation Calculation chart on page 33 and for previous years are described in the proxy statement for the applicable year. Payouts are made in cash and could range from 0% to 150% of target based on performance. Two measures impact the value of PSU cash payouts: (i) the number of units earned is based on Textron’s performance against operating metrics and may be adjusted downward (but not upward), based upon the relative ranking of the Company’s three- year TSR performance compared to the TSR performance of its performance peer companies and the Committee’s discretion and (ii) the value of each unit earned is based on Textron’s stock price at the end of the performance cycle. To validate that the Company’s PSU awards link pay to performance, the Committee evaluated the PSU payouts on the basis of both relative performance (TSR performance vs. 2018 performance peer group companies) and absolute performance (change in stock price) and concluded that the payouts were appropriately linked to Textron’s overall performance.