TEXTRON 2022 PROXY STATEMENT 27 Our annual and long-term incentive compensation programs for 2021 are summarized in the following table: Long-Term Incentive Performance Share Units 50% • Represent cash value of one share of common stock • Span a three-year performance period with vesting at the end of the third fiscal year • Percentage earned (0% to 200%) is based upon the achievement of performance goals set by the Committee at the beginning of the three-year performance period • Relative TSR benchmarked against the S&P 500 is used as one of the performance metrics in order to maintain focus on stock performance as a relative measure of company performance while improving program clarity • Incentivize achievement of Company performance goals over a sustained period in order to build shareholder value Restricted Stock Units 25% • Represent the right to receive one share of common stock upon vesting • Vest in full on the third anniversary of the grant date • Final value depends on the change in stock price over the vesting period • The Committee believes that RSUs help to retain executives because RSUs, unlike stock options, have value upon vesting even in a declining market Stock Options 25% • Provide value only if the stock price goes up during the 10-year term of the option, resulting in a direct incentive to increase Textron’s stock price • Vest ratably over three years on each anniversary of the grant date • Target value and performance goals are set in the first quarter of each year • Enterprise-wide performance goals are determined by aggregating the goals for each of our business units which are set to focus the businesses primarily on generating profitability and cash flow, consistent with expected market conditions • Percentage earned (0% to 200%) is determined after the end of the fiscal year based upon the achievement of performance goals • Payout is subject to discretion based on the Committee’s and Board’s judgment Annual Incentive At-Risk Compensation Component/Award Type Description OVERVIEW AND OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM The objectives of Textron’s compensation program for executive officers are: • Encouraging world class performance • Focusing executives on delivering balanced performance by providing (i) both cash and equity incentives and (ii) both annual and long-term incentives • Aligning executive compensation with shareholder value • Attracting and retaining high-performing talent
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