CAP versus Net Income As shown in the chart below, the Company’s net income increased significantly from 2020 to 2021 and also increased from 2021 to 2022. This measure is somewhat aligned with the calculated CAP for both the PEO and the Non-PEO NEOs, although, the correlation related to Net Income impact is overshadowed by the impact of changes in the Company’s stock price on CAP primarily due to the Company’s use of equity incentives that are tied directly to stock price, as described above. Notably, the Company does not use Net Income to determine compensation levels or long-term incentive plan payouts. CAP versus Manufacturing Cash Flow before Pension Contributions As shown in the chart below, the Company’s Manufacturing Cash Flow before Pension Contributions increased significantly from 2020 to 2021 and modestly from 2021 to 2022, despite a significant increase in cash taxes due to a change in tax law that became effective in 2022. This measure affects CAP for both the PEO and the Non-PEO NEOs by impacting the extent to which performance share units were earned in 2022, although that impact was overshadowed by the impact of changes in the Company’s stock price on CAP, primarily due to the Company’s use of equity incentives that are tied directly to stock price, as described above. In particular, Textron’s common stock price increased 59.7%, from $48.33 at the end of the 2020 fiscal year to $77.20 at the end of the 2021 fiscal year, resulting in a substantially greater fair value of outstanding and unvested equity awards and a substantial increase in year-over-year CAP. Likewise, while Manufacturing Cash Flow before Pension Contributions increased modestly from 2021 to 2022, year-over-year CAP decreased, primarily due to an 8.3% decrease in Textron’s common stock price from $77.20 at the end of 2021 to $70.80 at year end 2022. 54 TEXTRON 2023 PROXY STATEMENT
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