Textron 2020 Proxy Statement

22 TEXTRON 2020 PROXY STATEMENT 2019 Shareholder Outreach and New 2020 Long-Term Incentive Compensation Program Design Executive compensation decisions at Textron are made by our Board’s Organization and Compensation Committee (the “Committee”). One of the guiding objectives of Textron’s compensation program, as established by the Committee, is to align executive compensation with creating value for our shareholders. Therefore, the Board and the Committee take shareholder feedback and vote outcomes at our Annual Meeting seriously. In 2019, to obtain more direct input from our shareholders on our compensation program, we meaningfully increased our proactive shareholder outreach both before and after our 2019 Annual Meeting. Prior to our 2019 Annual Meeting, we contacted most of our top 30 shareholders to discuss our executive compensation program. A Textron management team led by our Executive Vice President, Human Resources, and including our Vice President of Investor Relations, our Director of Executive Compensation and our Executive Counsel conducted engagement calls with shareholders representing approximately 21% of our outstanding shares. Our Lead Director was also involved in our outreach and participated on an engagement call with one of our larger shareholders. In addition, our Vice President of Investor Relations spoke to additional shareholders representing approximately 23% of our outstanding shares. In total prior to the Annual Meeting, we had direct discussions with shareholders representing approximately 45% of our outstanding shares. During these calls, we communicated the Committee’s perspective with respect to our compensation program and invited feedback from our shareholders. Several shareholders expressed a preference for a greater emphasis on performance-based awards in our long-term incentive compensation program and indicated that a three-year performance period for the metrics in our performance share units (“PSUs”) would be preferable to the three one-year performance periods we have been using for these awards. In addition, some inquired about the use of the same performance metrics in both the annual and long-term incentive compensation programs. In addition, in early 2019 and before our 2019 Annual Meeting, the Committee had initiated a rigorous Request-for-Proposals evaluation process with multiple firms to select its next independent compensation consultant in order to get a fresh, independent look at strategies that best align executive compensation with company performance and shareholder value. Following in-depth interviews and evaluations of several firms, the Committee chose a new consultant who was retained in July 2019. In the five years prior to 2019, shareholder approval of our say-on-pay advisory votes was above 92% in each year, ranging from 92% to 95%. At our 2019 Annual Meeting, 55% of our shareholders approved our advisory say-on-pay vote on our 2018 executive compensation. Following our 2019 Annual Meeting, we conducted an in-depth review of the company’s executive compensation program with the assistance of the Committee’s new independent compensation consultant. This review focused on our long-term incentive compensation program and included benchmarking competitive pay practices against peer companies, reviewing the efficacy of our program’s performance metrics in driving strategic business objectives and analyzing other potential long-term performance metrics. The in-depth review of our executive compensation program identified several alternatives for program design. Before deciding upon design changes, the Committee sought to obtain additional shareholder input through a second round of discussions. In the latter half of 2019, we contacted shareholders representing approximately 52% of our outstanding shares to seek an opportunity to engage with them and hear their views on our executive compensation program. While some shareholders provided us with feedback that they did not believe a call was necessary, shareholders representing approximately 39% of our outstanding shares participated in engagement calls with our management team described above. The Committee Chair was also involved in this round of shareholder outreach and participated on an engagement call with one of our larger shareholders. On these calls, we heard the views of our shareholders on various aspects of our executive compensation program and specific input on potential changes to our long-term incentive compensation program. We also held calls with the two leading proxy advisory firms. Throughout this process, shareholder feedback was presented and discussed with the Committee and shared with our Board. General compensation program themes that emerged from these shareholder discussions included: •  Our shareholders would like more differentiation between the annual incentive and long-term incentive compensation programs, both with regard to performance period and metrics; •  Our shareholders are not prescriptive on inclusion of particular metrics but desire performance metrics that drive company business strategy and creation of long-term shareholder value; and •  Our shareholders generally prefer a long-term incentive compensation award mix in which at least 50% of the award is subject to performance-based metrics.