Textron 2021 Proxy Statement

40 TEXTRON 2021 PROXY STATEMENT TAX CONSIDERATIONS The Committee considers tax and accounting implications in determining all elements of our compensation plans, programs and arrangements, although they are not the only factors considered. In some cases, other important considerations may outweigh tax or accounting considerations, and the Committee maintains the flexibility to compensate its officers in accordance with the Company’s compensation philosophy. Section 162(m) of the Internal Revenue Code provides that no U.S. income tax deduction is allowable to a publicly held corporation for compensation in excess of $1 million paid to certain named executive officers of the Company. Under the tax law applicable in 2017 and prior years, “performance-based compensation” was exempt from the $1 million limitation if certain requirements were met. In the past, several elements of our named executive officers’ compensation were intended to be deductible under Section 162(m) as performance-based compensation. The Tax Cuts and Jobs Act of 2017 eliminated the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017. As a result, we expect that compensation paid to our named executive officers, including performance-based compensation, in excess of $1 million generally will not be tax-deductible.