TEXTRON 2022 PROXY STATEMENT 25 • Textron Systems won a contract award with the U.S. Army which upgraded our existing Shadow® Tactical Unmanned Aircraft System (TUAS) to the Block III configuration. Our Common Unmanned Surface Vehicle (CUSV®) demonstrated its survivability by successfully completing underwater explosion shock testing. Textron Systems and Howe & Howe advanced the Robotic Combat Vehicle-Medium program with the delivery of four RIPSAW® M5 Vehicles and a fifth all-electric version of the RIPSAW M5. • Textron Specialized Vehicles expanded the use of Lithium-ion battery technology to power its products, including the E-Z-GO Liberty, the industry’s first vehicle with four forward-facing seats in a compact, golf-car-sized footprint, and Textron GSE’s new TUG 660 Li belt loader, with quiet, energy-efficient and low-cost operation for our airline and air-freight customers. Kautex won new contracts with automotive OEM customers, successfully securing eight contract awards for its hybrid electric fuel systems. Overview of 2021 Executive Compensation Decisions and Results Key compensation decisions and results for 2021 include the following: • 2021 Base Salaries: The Committee determined not to increase 2021 base salaries for Messrs. Donnelly and Connor and to provide an increase of $25,000 each for Mr. Lupone and Ms. Duffy based on consideration of market benchmarking and 2020 financial results. • 2021 Target Incentive Compensation: Annual and long-term incentive compensation as a percentage of base salary were not increased for any of the named executive officers, so target incentive dollar amounts for Mr. Lupone and Ms. Duffy increased only as a result of their base salary increases. • 2021 Long-Term Incentive Awards: Maintained the allocation first instituted in 2020 of 50% PSUs, 25% stock options, and 25% RSUs, in light of general shareholder support for this structure. • 2021 Short-Term Incentive Results: The calculated payout for 2021 was 196.3% of target. This reflects performance at or near maximum for the annual incentive compensation program’s key financial goals of profitability and cash flow, as well as above-target performance for our hiring diversity goal. These results are well-aligned with the key performance highlights discussed above and recognize management’s success in navigating through significant operating volatility and uncertainty in 2021. • 2019-2021 Long-Term Incentive Results: The calculated payout for the 2019-2021 PSU award was 95.3%, which reflects the average of results on the profitability and cash flow goals set annually during the performance period: 2021 was above target, 2020 was well below target due to pandemic impacts, and 2019 was near target. The Committee used its discretion to reduce the final payout by 15%, based on Textron’s three-year relative TSR performance compared to the 2019 performance peer group. The final payout was 81.0% of the original award, which reflects the negative impacts of the pandemic over the three-year period. Executive Compensation Highlights The following summarizes key aspects of our executive compensation program: Practices we employ • Annual shareholder engagement program includes discussion of executive compensation with Board involvement in both shareholder calls and consideration of feedback received • Pay for performance—substantial portion of executives’ compensation tied to Company performance against pre-established goals set by the Committee • Fifty percent (50%) of long-term incentive awards subject to performance-based metrics to closely align with long-term company performance • Pay aligned with shareholder interests—substantial portion of executives’ target compensation, including more than 75% of CEO’s target compensation, is in the form of equity-based long-term incentives • Annual incentive compensation includes hiring diversity performance goal
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