Time Period Shares Subject to Options/SARs Shares Subject to Awards Other Than Options/ SARs Total Granted Weighted Average Number of Shares Outstanding Burn Rate (%) (Shares in thousands) Fiscal 2023 1,026 125 1,151 199,719 0.58% Fiscal 2022 1,232 104 1,336 212,809 0.63% Fiscal 2021 1,489 145 1,634 224,106 0.73% The three-year average burn rate is 0.65%. An additional metric that is used to measure the cumulative impact of a company’s equity compensation program is overhang, which is measured as the number of shares subject to equity awards outstanding but not exercised or settled, plus number of shares available to be granted, divided by total common shares outstanding at the end of the year. Our overhang as of March 2, 2024 was 6.1%; if the 2024 Plan is approved, our overhang as of that date would increase to 9.1%. The Company estimates that the availability of 10,000,000 shares under the 2024 Plan would provide a sufficient number of shares to enable us to continue to make awards at historical average annual rates for approximately the next seven years. However, there can be no certainty as to the future use of shares under the 2024 Plan, if approved by shareholders, as the Company may grant a different mix of equity awards than in the past, and other factors such as the Company’s stock price may affect the rate at which shares are utilized under the 2024 Plan. Promotion of Good Corporate Governance Practices The 2024 Plan has been designed to include a number of provisions that promote best practices by reinforcing the alignment between equity compensation arrangements for eligible employees and shareholders’ interests. These provisions include, but are not limited to, the following: · No Below-Market Options. Stock options and stock appreciation rights may not be granted with exercise prices lower than the market value of the underlying shares on the grant date; · No Repricing Underwater Options. Unless specifically approved by shareholders, stock options and stock appreciation rights may not be repriced or cancelled and re-granted or exchanged for cash or a new award with a lower (or no) exercise price at a time when the exercise price of an option/stock appreciation right is above the fair market value of a share of common stock, other than in connection with a change in our capitalization; · One-Year Minimum Vesting Condition. All stock-based awards under the 2024 Plan shall have a minimum vesting period of at least one year from the grant date of the award, provided that (i) vesting may be accelerated as a result of death, disability, or a change of control and (ii) a maximum of 5% of the shares authorized for issuance under the 2024 Plan may be issued pursuant to awards that do not comply with this minimum vesting requirement; · No Liberal Share Recycling. Shares retained by or delivered to the Company to pay the exercise price of a stock option or stock appreciation right or to satisfy tax withholding obligations in connection with the exercise or settlement of any award, all of the shares covered by a stock-settled Stock Appreciation Right (to the extent exercised) and shares purchased by us in the open market using the proceeds of stock option exercises do not again become available for issuance under future awards; · Limitation on Dividends and Dividend Equivalents. No dividends or dividend equivalents shall be paid with respect to (i) options or stock appreciation rights or (ii) any Award that is not yet vested, and dividends or dividend equivalents credited in respect of an Award that is not yet vested shall be subject to the same restrictions and risk of forfeiture as the underlying Award, and shall be paid or settled at the same time as shares on which they were credited are paid or settled under the Award; · No Tax Gross-Ups. The 2024 Plan does not provide for any tax gross-ups; · No Automatic Grants. The 2024 Plan does not provide for “reload” grants to participants; and · No Evergreen Provision. The 2024 Plan does not include an “evergreen” feature pursuant to which the shares authorized for issuance can be automatically replenished. 58 TEXTRON 2024 PROXY STATEMENT
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