APPROVAL OF THE TEXTRON INC. 2024 LONG-TERM INCENTIVE PLAN On February 21, 2024, the Board of Directors adopted, subject to shareholder approval, the Textron Inc. 2024 Long-Term Incentive Plan (the “2024 Plan”). Like our previous long-term incentive plans, the purpose of the 2024 Plan is to (a) promote our long-term success and to increase shareholder value by providing participating employees with incentives to contribute to the long-term growth and profitability of the Company and (b) assist the Company in attracting, retaining and motivating highly qualified individuals who are in a position to make significant contributions to the Company and its subsidiaries. Key Data Regarding Equity Compensation at Textron The Company currently administers its equity compensation programs under the Textron Inc. 2015 Long-Term Incentive Plan (the “2015 Plan”). The Company also has equity awards outstanding under the Textron Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”), however, no new awards may be granted under the 2007 Plan. If the 2024 Plan is approved by shareholders, it will become effective on April 24, 2024, and replace the 2015 Plan, and no further awards would be made thereafter under the 2015 Plan. The 2024 Plan, if approved, will provide for the issuance of 10,000,000 shares, which as of March 2, 2024 would have represented approximately 5.2% of the Company’s outstanding common equity. The maximum aggregate number of shares that may be issued under the 2024 Plan will be increased by the number of shares subject to awards granted under the 2015 Plan that, after March 2, 2024, cease to be subject to such awards due to cancellation, forfeiture, or expiration of such awards. In addition, the maximum number of shares that may be issued for all purposes under the 2024 Plan will be reduced by one share for every share subject to an award granted under the 2015 Plan after March 2, 2024 and prior to the date the 2024 Plan becomes effective. The following table sets forth information regarding outstanding equity awards payable in shares under the 2015 Plan, 2007 Plan, and shares available for future equity awards under the 2015 Plan as of March 2, 2024: Total shares underlying outstanding stock options 7,233,851 Weighted average exercise price of outstanding stock options $ 60.64 Weighted average remaining contractual life of outstanding stock options 6.42 years Total share underlying outstanding unvested time-based restricted stock unit awards 324,333 Total shares available for grant* 4,206,773 *Upon shareholder approval of the 2024 Plan, these shares will no longer be available for grant. Company Considerations in Adopting the 2024 Plan The Compensation Committee recommended, and the Board approved, the number of shares to be authorized under the 2024 Plan based upon management’s recommendation. In developing such recommendation, management considered various factors, including potential dilution (both overall and on an annual basis), burn rate, overhang and the Company’s historical grant practices. Annual dilution, for this purpose, is measured as the total number of shares subject to equity awards granted in a given year less cancellations and other shares returned to the reserve that year, divided by total common shares outstanding at the end of the year. Annual dilution for our equity compensation program for fiscal 2023 was 0.50%. The number of shares subject to equity awards that we grant annually is commonly expressed as a percentage of total shares outstanding and referred to as burn rate. Burn rate is another measure of dilution that shows how rapidly a company is depleting its shares reserved for equity compensation plans, and differs from annual dilution because it does not take into account cancellations and other shares returned to the reserve. We have calculated the burn rate under our equity compensation program for the past three fiscal years, as set forth in the following table: TEXTRON 2024 PROXY STATEMENT 57
RkJQdWJsaXNoZXIy MjQ2MDYz