Annual Incentive Compensation Payouts and Performance Analysis As described in Key 2023 Performance Highlights on page 23, Textron’s 2023 performance exceeded target for both the profitability and cash flow metrics. Performance on the hiring diversity metric was slightly below target. The formula for determining 2023 annual incentive compensation payouts for executive officers and the resulting percentage earned are detailed below: 2023 Annual Incentive Compensation Calculation ($ in millions) Financial Metric Threshold Performance Target Performance Maximum Performance Actual Performance Component Weighting Component Payout Enterprise NOP(1) $913 $1,284 $1,664 $1,327 60% 66.79% Manufacturing Cash Flow(2) $391 $ 846 $1,301 $ 931 35% 41.54% Hiring Diversity Performance(3) 37.3% 47.3% 57.3% 46.5% 5% 4.60% Total Earned 112.93% (1) “Enterprise NOP” means our total “Segment profit” as reported in our annual report on Form 10-K. Segment profit for the manufacturing segments excludes certain corporate expenses; interest expense, net for the Manufacturing group; LIFO inventory provision; intangible asset amortization; non- service components of pension and postretirement income, net; 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. This measure 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 Textron Financial Corporation (TFC) and capital contributions to TFC provided 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. Annual incentive compensation targets and payouts for 2021, 2022 and 2023 for each NEO are shown below: Annual Incentive Compensation Targets and Payouts 2021 2022 2023 Name Position Target Payout Target Payout Target Payout Scott C. Donnelly CEO $1,854,000 $3,639,000 $2,080,000 $2,704,000 $2,320,500 $2,621,000 Frank T. Connor CFO $1,000,000 $1,963,000 $1,100,000 $1,430,000 $1,150,000 $1,299,000 E. Robert Lupone General Counsel $ 619,000 $1,215,000 $ 652,500 $ 848,000 $ 682,500 $ 771,000 Julie G. Duffy EVP, CHRO $ 469,000 $ 920,000 $ 495,000 $ 644,000 $ 525,000 $ 593,000 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 2023, with respect to 2022. The Committee compared Textron’s year-over-year operating performance for 2022, relative to the annual incentive compensation paid to the talent peer group 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 2024 PROXY STATEMENT
RkJQdWJsaXNoZXIy MjQ2MDYz