Changes to the Talent Peer Group Consistent with the evaluation approach taken in 2022, the compensation consultant’s 2023 review and discussions with management resulted in recommended changes to the 2023 talent peer group, referenced in setting target direct compensation for 2024. The Committee approved the recommendation to add Howmet Aerospace Inc., Huntington Ingalls Industries Inc., and TransDigm Group to the 2023 talent peer group and to remove The Goodyear Tire & Rubber Company, KBR, Inc., and Terex Corporation. These changes to the talent peer group increased the number of aerospace and defense companies in the peer group, while decreasing the companies in other industries, to better align the talent peer group with Textron’s current and expected future business focus. How did the Committee Make 2023 Target Direct Compensation Decisions? Prior to making decisions on compensation, the Committee reviewed the following items: ● Compensation data for each NEO ● A detailed compensation benchmarking study comparing each NEO’s current target direct compensation by component and in total to the market median of the talent peer group ● Supplemental benchmarking data for the CEO and CFO using longer-tenured executives from the talent peer group ● Supplemental analysis for the CEO and CFO of projected 2022 realized pay, including salary, annual and long-term incentive plan payouts, and market value at vesting of RSUs and stock options vesting in 2022, compared to CEOs and CFOs from the talent peer group Additionally, the CEO provided input to the Committee regarding compensation decisions for NEOs other than himself, including his assessment of each individual’s responsibilities and performance, the complexity of their position against market benchmarks, their experience and future potential. In approving 2023 target direct compensation, the Committee considered the CEO’s input, as well as the benchmarking data, and made its own assessment of competitive pay and performance. The Committee’s philosophy with respect to the CEO has been to provide target total direct compensation for Mr. Donnelly at levels generally competitive with market median, taking into consideration his longer tenure and leadership contributions. In addition, the Committee has placed greater emphasis on increases in Mr. Donnelly’s long-term incentive compensation, which is tied to the Company’s stock price performance and, with respect to PSUs, is heavily performance-based, in order to align his interests with our shareholders’ interests. This approach has resulted in a pay mix that is in close alignment with talent peer group practices which also emphasizes long-term incentive pay. After a review of Mr. Donnelly’s performance, the benchmarking study and the supplemental benchmarking data and analysis described above, the market data, the Company’s 2022 above-plan financial results despite a challenging business environment, and relative TSR performance, the compensation consultant recommended, and the Committee determined, to increase his target total direct compensation by approximately 8%. The increase consisted of a 5% market adjustment in his base salary, an increase in his target short-term incentive compensation from 160% to 170% of his base salary, and an 8% increase in target long-term incentive compensation from $12 million to $13 million. With the additional emphasis on performance-based pay, these increases resulted in 2023 target total direct compensation for Mr. Donnelly of approximately 3% above the market median of the talent peer group, based upon the benchmarking study. In addition, after considering the factors described above, the Committee determined to increase 2023 base salaries for each of the other named executive officers. Mr. Connor’s base salary was increased by 4.5%, and Mr. Lupone and Ms. Duffy’s base salaries were increased by 4.6% and 6.1%, respectively. The Committee did not increase annual and long-term incentives as a percentage of base salary for Mr. Connor, Mr. Lupone, or Ms. Duffy, so each of their target incentive dollar amounts increased only as a result of their base salary increases. TEXTRON 2024 PROXY STATEMENT 29
RkJQdWJsaXNoZXIy MjQ2MDYz