TEXTRON 2022 PROXY STATEMENT 57 OUR RESPONSE TO THE SHAREHOLDER PROPOSAL After careful consideration, the Board believes that the proposal is both contrary to the best interests of Textron and its shareholders and unnecessary given Textron’s shareholders already have a meaningful right to call a special meeting. For the reasons discussed below, the Board recommends that shareholders vote AGAINST the proposal. The Board recognizes the importance of giving shareholders a meaningful right to call special meetings in appropriate circumstances. Textron’s By-Laws already provide that a special meeting of shareholders may be called at the written request of one or more shareholders who have owned continuously for a period of at least one year at least twenty-five percent (25%) of the outstanding shares of the Company’s common stock. In addition to a shareholder-requested special meeting, special meetings of shareholders may be called by the Chief Executive Officer or the Board, each of whom has a fiduciary duty under the law to act in the best interests of Textron and its shareholders. The Board strongly believes that this structure strikes the appropriate balance between the ability of shareholders to call a special meeting, while protecting the long-term interests of all shareholders and avoiding the unnecessary distraction and expenditure of company resources on issues that may not be of importance to our shareholders generally. Moreover, a threshold of twenty-five percent (25%) is preferred over ten percent (10%) by most of our larger institutional shareholders and is prevalent among our peer companies and at companies in the S&P 500. Lowering the threshold for calling a special meeting would enable special-interest shareholder groups, with no duty to act in the best interests of Textron and its shareholders, to pursue their own narrow agendas and interests not shared by our broader shareholder base. Likewise, removing the one-year holding period could subject the Company to regular disruptions by very short-term-oriented shareholders interested in matters that do not serve the long-term interests of the Company and other shareholders. Additionally, special meetings require substantial time and financial resources. Given Textron’s size and our large number of shareholders, holding a special shareholder meeting is costly, time-consuming, and distracting, requiring significant resources associated with preparing, printing, and distributing required proxy materials, as well as diverting the Board and management’s time and attention from business operations to prepare for and conduct the special meeting. Because of these burdens, the Board believes that special meetings should only be held to address extraordinary events considered by a meaningful percentage of outstanding shares to be of sufficient urgency that it cannot wait until the next annual meeting. Therefore, the Board strongly believes that the twenty-five percent (25%) threshold and the one-year holding period is a reasonable structure that appropriately balances shareholders’ ability to call a special meeting with not mandating the company expend significant time and resources on a special meeting that only a small minority of shareholders wants and that may not be in the long-term best interests of the Company and all our shareholders. The Board believes this proposal should be evaluated in the context of Textron’s strong existing corporate governance policies. In addition to the existing right of shareholders to call a special meeting, the Company’s current corporate governance policies and practices provide shareholders with several avenues to communicate their priorities to the Board and management and promote Board accountability. These policies include the ability for shareholders to communicate directly with the Board of Directors, the annual election of directors using a majority vote standard, the opportunity for shareholders to ask questions at the Annual Shareholders’ Meeting, and a market-standard proxy access right that permits shareholders to include their director nominees in our proxy statement under certain circumstances. Additionally, Textron management, our independent Lead Director, and members of the Board engage in communication with shareholders, financial analysts, and shareholder advisory services throughout the year to discuss their views on governance, executive compensation, and a variety of other topics, and we regularly incorporate feedback from such discussions into our governance policies and practices. The Board believes our existing special meeting right strikes the right balance between the rights of shareholders to call a special meeting when an urgent, extraordinary event arises, on the one hand, and protecting against the potential for misuse of that special meeting right by a small minority of shareholders who may have narrow, short-term interests to call a meeting that would disrupt the effective management of the Company and be detrimental to shareholder interests, on the other. Adopting this proposal and lowering the threshold to ten percent (10%) without a one-year holding period would allow a small minority of shareholders that may have not held a financial stake in the Company for a meaningful period of time to waste time and resources on matters that may serve only narrow interests. The Board therefore believes that the potential for abuse and disenfranchisement of shareholders and other adverse consequences associated with adopting the proposal outweighs any potential benefits to our shareholders. Accordingly, the Board of Directors recommends a vote AGAINST this proposal (Item 4 on the proxy card).
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