Substitute Awards Substitute Awards are Awards granted upon assumption of, or in substitution or exchange for, outstanding employee equity awards previously granted by a company or other entity acquired by Textron or with which Textron combines pursuant to the terms of an equity compensation plan that was approved by the shareholders of such company or other entity. Substitute Awards do not count against the number of Shares authorized and available for issuance under the 2024 Plan, and the restrictions in the 2024 Plan on repricing stock options and stock appreciation rights, as well as the one-year minimum vesting provisions, do not apply with respect to Substitute Awards. Non-Employee Director RSU Program For their service on the Board, each year, as of the date of the Annual Meeting of Shareholders, non-employee directors receive Share-settled restricted stock units (“RSUs”), in an amount established by resolution of the full Board of Directors, subject to the Plan’s limits. The Plan limits the value of Awards (measured as of the date of grant based on the grant date fair value for financial reporting purposes) granted to a non-employee director in any one calendar year to no more than $500,000. For 2024, each of the non-employee directors will receive RSUs valued at $165,000. The RSUs vest one year from the date of grant unless the director elects to defer settlement of the RSUs until the director’s separation from service on the Board. The RSUs are prorated for directors who serve on the Board for a portion of the year. Clawback Provision The 2024 Plan includes provisions implementing the new Recovery Policy described on page 36 which requires the “clawback” of certain incentivebased compensation paid to current and former Executive Officers (as defined in the Plan) if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws and such executives would have received less incentive-based compensation under the restated numbers than they actually received. Dividends The 2024 Plan permits the payment of dividends and dividend equivalents with respect to awards, except that no dividends or dividend equivalents shall be paid with respect to (i) stock options or stock appreciation rights or (ii) any Award that is not yet vested. 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. Amendment and Termination If approved by shareholders, the 2024 Plan will become effective on April 24, 2024. The Board can amend or terminate the 2024 Plan at any time in any manner, but any such amendment is subject to the approval of the Company’s shareholders to the extent required by law or by any applicable listing standard. In addition, no such amendment or termination may impair the rights of any Participant under his or her award without such Participant’s consent. Unless the 2024 Plan is terminated earlier, no grants may be made under the 2024 Plan after the tenth anniversary of the Effective Date. New Plan Benefits A new plan benefits table for the 2024 Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the 2024 Plan if the 2024 Plan was then in effect, as described in the proxy rules, are not provided because all awards made under the 2024 Plan will be made at the Committee’s discretion, or in the case of awards to non-employee directors, by the Board or the Nominating and Corporate Governance Committee of the Board (including the amount of annual RSU awards), in each case, subject to the terms of the 2024 Plan. As of the date of this Proxy Statement, no awards have been granted under the 2024 Plan. Therefore, the benefits and amounts that will be received or allocated under the 2024 Plan are not determinable at this time, except that on April 24, 2024, the date of the Annual Meeting of Shareholders, each non-employee director will receive an award of RSUs valued at $165,000. In addition, please refer to the Summary Compensation Table for Fiscal 2023 in this proxy statement which sets forth certain information regarding awards granted to our NEOs during fiscal 2023. TEXTRON 2024 PROXY STATEMENT 61
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