Annual Incentive Compensation Payouts and Performance Analysis As described in Key 2022 Performance Highlights on page 24, Textron’s 2022 performance exceeded target for both the cash flow and hiring diversity metrics. Performance on the profitability metric was slightly below target. The formula for determining 2022 annual incentive compensation payouts for executive officers and the resulting percentage earned are detailed below: 2022 Annual Incentive Compensation Calculation ($ in millions) Financial Metric Threshold Performance Target Performance Maximum Performance Actual Performance Component Weighting Component Payout Enterprise NOP(1) $804 $1,281 $1,629 $1,233(4) 60% 54% Manufacturing Cash Flow(2) $323 $ 719 $1,115 $1,188(4) 35% 70% Hiring Diversity Performance(3) 36.8% 46.8% 56.8% 48.7% 5% 5.95% Total Earned 130% (1) “Enterprise NOP” means our total “Segment profit” as reported in our annual report on Form 10-K. For 2022, segment profit for the manufacturing segments includes non-service components of net periodic benefit cost/(income) and excludes interest expense, net, certain corporate expenses, gains/ losses on major business dispositions and special charges. The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense. (2) “Manufacturing Cash Flow” means “Manufacturing cash flow before pension contributions” as reported in our quarterly earnings releases. Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) as follows: deducts capital expenditures, includes proceeds from insurance recoveries and the sale of property, plant and equipment, excludes dividends received from TFC and capital contributions provided to TFC under the Support Agreement and debt agreements, and adds back pension contributions. (3) “Hiring Diversity Performance” represents the percentage of full-time U.S. salaried newly-hired employees who identify as female or diverse based on race or ethnicity. (4) For Enterprise NOP and Manufacturing Cash Flow, Actual Performance has been adjusted to exclude the impact of the Pipistrel acquisition. Annual incentive compensation targets and payouts for 2020, 2021 and 2022 for each NEO are shown below: Annual Incentive Compensation Targets and Payouts 2020 2021 2022 Name Position Target Payout Target Payout Target Payout Scott C. Donnelly CEO $1,854,000 $744,000 $1,854,000 $3,639,000 $2,080,000 $2,704,000 Frank T. Connor CFO $1,000,000 $652,000 $1,000,000 $1,963,000 $1,100,000 $1,430,000 E. Robert Lupone General Counsel $ 600,000 $391,000 $ 619,000 $1,215,000 $ 652,500 $ 848,000 Julie G. Duffy EVP, CHRO $ 450,000 $293,000 $ 469,000 $ 920,000 $ 495,000 $ 644,000 Prior Year Performance Analysis As it does each year, the Committee conducted a comparative analysis of the annual incentive compensation paid to Textron’s CEO in 2022, with respect to 2021, compared to Textron’s year-over-year operating performance for that year, relative to the annual incentive compensation paid to the talent peer companies’ CEOs compared to the year-over-year operating performance of the peer group companies. While exactly comparable data was not available for all peer companies, indicative comparisons were made using publicly reported GAAP operating cash flows and pre-tax earnings from continuing operations. The Committee’s comparative analysis confirmed the strong correlation between Textron’s annual incentive compensation payouts and its performance relative to the talent peer companies. 32 TEXTRON 2023 PROXY STATEMENT
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