Textron 2020 Proxy Statement

26 TEXTRON 2020 PROXY STATEMENT TARGET PAY How Does the Committee Establish Target Pay? Target total pay consists of three components: (i) base salary, (ii) target annual incentive compensation and (iii) target long- term incentive compensation. In establishing target pay, the Committee addresses each component with reference to a talent peer group median and makes its determinations based on individual responsibilities, complexity of position versus that of the market benchmarks, performance, experience and future potential. The target incentive compensation components are established as a percentage of base salary, varying for each NEO. The objectives of the three components are as follows: At-Risk Compensation Base Salary • Provide market-competitive fixed pay reflective of an executive’s responsibilities, position, experience and performance Target Annual Incentive • Focus executives on executing the Company’s short-term business goals Target Long-Term Incentive • Align executive compensation with increasing long-term shareholder value How Does the Committee Select the Talent Peer Group? The Committee references a “talent” peer group of companies, recommended by its independent compensation consultant and approved by the Committee, as part of its process in establishing target pay for each NEO. The compensation consultant advised the Committee that revenue/market capitalization and industry/business fit are the most important factors in establishing this group of companies to provide appropriate references for target pay levels, followed by global reach and peer similarity, as well as availability of compensation data. Selection criteria for the talent peer group used to set 2019 compensation included: • Publicly-traded companies that are headquartered in the U.S. • Revenue of approximately $4 billion to $40 billion, with at least 10% from outside the U.S. • Median revenue for peer group approximates Textron’s revenue • Revenue in the aerospace/defense, technology/engineering, general manufacturing and/or automotive industries Component Objective