Textron 2020 Proxy Statement

TEXTRON 2020 PROXY STATEMENT 35 RISKS RELATED TO COMPENSATION The Committee strives to set compensation policies for senior executives which do not encourage excessive risk-taking that could endanger the Company. For 2019, the Committee completed a full review of managing risk within our executive compensation program. This review was informed by a risk analysis of our executive compensation program conducted by the Committee’s independent compensation consultant. The consultant’s risk analysis concluded that our executive compensation program has no elements that are likely to cause a material adverse outcome for the Company. This annual review helps the Committee to structure executive compensation programs that are designed to avoid exposing the Company to unwarranted risk. OTHER COMPENSATION PROGRAMS As mentioned above, Textron provides certain other compensation programs (such as retirement/death benefits) that are designed to provide to NEOs the same level of benefits provided to non-executive officers and, in most cases, all salaried employees. Certain of these programs provide benefits over any caps mandated by government regulations, including: • Textron Spillover Pension Plan : Non-qualified benefit plan to make up for IRS limits to qualified pension plans and, in the case of Mr. Donnelly, to provide a “wrap-around” pension benefit which takes into account his final average compensation with Textron and his combined service with Textron and his former employer, GE, and reduces this benefit by the amount of any other pension benefits which he is eligible to receive under Textron and GE pension plans. • Textron Spillover Savings Plan: Non-qualified benefit plan to make up for IRS limits to qualified savings plans. Textron provides a program to executives which benefits them by allowing for tax planning and also benefits the Company, in that cash payments by the Company are delayed: • Deferred Income Plan for Textron Executives: Non-qualified plan that allows participants to defer compensation. ROLE OF INDEPENDENT COMPENSATION CONSULTANT Under its charter, the Committee has the authority to retain outside consultants or advisors as it deems necessary to provide desired expertise and counsel. At the beginning of 2019, the Committee continued to use the services of Pay Governance LLC as its independent compensation consultant, however, early in the year, the Committee initiated a rigorous Request-for-Proposals process with multiple firms to select its next independent compensation consultant. The Committee, along with representatives from management, conducted in-depth interviews with several firms before ultimately retaining Pearl Meyer as its independent compensation consultant, effective July 2019. Pay Governance reported, and Pearl Meyer reports, directly and exclusively to the Committee, and each was retained to provide advice regarding current and emerging best practices with regard to executive compensation. In addition, as described above, Pearl Meyer will annually conduct a risk review of our executive compensation program. A representative from Pay Governance, and then Pearl Meyer, attended each of the Committee’s seven meetings in 2019. Neither Pay Governance nor Pearl Meyer provides any other services to the Committee or the Company. The Committee has determined that both Pay Governance and Pearl Meyer are independent and that the work of Pay Governance and Pearl Meyer with the Committee for 2019 has not raised any conflict of interest. STOCK OWNERSHIP REQUIREMENTS One objective of our executive compensation program is to align the financial interests of our NEOs with the interests of our shareholders. As a result, we require that senior executives accumulate and maintain a minimum level of stock ownership in the Company which may be achieved through direct ownership of shares, Textron Savings Plan shares, unvested RSUs and vested/ unvested share equivalents in Textron compensation and benefit plans. Minimum ownership levels are expressed as a multiple of base salary as follows: five times for the CEO and three times for other NEOs. New executive officers are given five years to reach their required ownership level. All NEOs currently meet their respective stock ownership requirements or are within their initial five-year period.