def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Textron Inc.
(Name of Registrant as Specified In Its Charter)
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NOTICE OF ANNUAL
MEETING
To the Shareholders of Textron Inc.:
The 2011 annual meeting of shareholders of Textron Inc. will be
held on Wednesday, April 27, 2011, at 11:00 a.m. at
The Renaissance Providence Hotel, 5 Avenue of the Arts,
Providence, Rhode Island for the following purposes:
1. To elect the four directors named in the proxy statement
to hold office until the next annual shareholders meeting;
2. To hold an advisory vote on executive compensation;
3. To hold an advisory vote on the frequency of advisory
votes on executive compensation;
4. To approve an amendment to our Restated Certificate of
Incorporation to provide a right for holders of not less than
25% of the Companys outstanding shares of common stock to
call a special meeting of shareholders;
5. To ratify the appointment by the Audit Committee of
Ernst & Young LLP as Textrons independent
registered public accounting firm for 2011; and
6. To transact any other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
You are entitled to vote all shares of common stock registered
in your name at the close of business on March 4, 2011. If
your shares are held in the name of your broker or bank and you
wish to attend the meeting in person, you should request your
broker or bank to issue you a proxy covering your shares.
Whether or not you plan to attend the meeting, we urge you to
complete, sign and date the enclosed proxy card and return it in
the accompanying postage-paid envelope as soon as possible so
that your shares may be represented at the meeting. Shareholders
of record also have the option of voting their shares via the
Internet or by using a toll-free telephone number. Instructions
on how to vote either via the Internet or by telephone are
included on the proxy card.
A list of shareholders entitled to vote at the 2011 annual
meeting will be open to examination by any shareholder, for any
purpose germane to the meeting, for ten days prior to the
meeting, at Textrons principal executive office,
40 Westminster Street, Providence, Rhode Island 02903.
By order of the Board of Directors,
Terrence ODonnell
Executive Vice President,
General Counsel and Corporate Secretary
Providence, Rhode Island
March 14, 2011
YOUR VOTE IS IMPORTANT
UNDER RECENT RULE CHANGES, BROKERS ARE NOT PERMITTED TO
VOTE ON THE ELECTION OF DIRECTORS OR ON CERTAIN OTHER
PROPOSALS WITHOUT INSTRUCTIONS FROM THE BENEFICIAL
OWNER. THEREFORE, IF YOUR SHARES ARE HELD IN THE NAME OF
YOUR BROKER OR BANK, IT IS IMPORTANT THAT YOU VOTE. WE ENCOURAGE
YOU TO VOTE PROMPTLY, EVEN IF YOU INTEND TO ATTEND THE ANNUAL
MEETING.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 27, 2011:
The Companys Proxy Statement for the 2011 Annual
Meeting of Shareholders, the Annual Report to Shareholders for
the fiscal year ended January 1, 2011 and the
Companys Annual Report on
Form 10-K
for the fiscal year ended January 1, 2011 are available at
www.textron.com under Investor
Relations Annual Report & Proxy
Materials.
Contents
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PROXY STATEMENT
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1
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General
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1
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Shareholders Who May Vote
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1
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Voting
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1
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Savings Plan Participants
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1
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Revoking a Proxy
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1
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Required Vote
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2
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Costs of Proxy Solicitation
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2
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Confidential Voting Policy
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2
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Attending the Meeting
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2
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ELECTION OF DIRECTORS
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3
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Nominees for Director
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3
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Directors Continuing in Office
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4
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The Board of Directors
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6
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Director Compensation Table
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11
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Board Committees
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11
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SECURITY OWNERSHIP
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14
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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16
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AUDIT COMMITTEE REPORT
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16
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COMPENSATION COMMITTEE REPORT
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COMPENSATION DISCUSSION AND ANALYSIS
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17
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Overview and Objectives of Compensation Program
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17
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Elements of the Compensation Program
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19
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Role of Independent Compensation Consultant
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21
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2010 Compensation Actions for Named Executive Officers
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22
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Stock Ownership Requirements
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26
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Hedging Restrictions
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26
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Accounting and Tax Considerations
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26
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Compensation Arrangements Relating to Termination of Employment
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EXECUTIVE COMPENSATION
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27
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Summary Compensation Table
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27
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Grants of Plan-Based Awards in Fiscal 2010
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29
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Outstanding Equity Awards at 2010 Fiscal Year-End
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31
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Option Exercises and Stock Vested in Fiscal 2010
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32
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Pension Benefits in Fiscal 2010
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Nonqualified Deferred Compensation
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Potential Payments Upon Termination or Change in Control
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36
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Equity Compensation Plan Information
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44
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Evaluation of Risk in Compensation Plans
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Transactions with Related Persons
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ADVISORY VOTE ON EXECUTIVE COMPENSATION
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FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
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APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION GRANTING TO HOLDERS OF NOT LESS THAN 25% OF THE
COMPANYS SHARES THE RIGHT TO CALL A SPECIAL MEETING
OF SHAREHOLDERS
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47
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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Fees to Independent Auditors
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OTHER MATTERS TO COME BEFORE THE MEETING
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SHAREHOLDER PROPOSALS AND OTHER MATTERS FOR 2012 ANNUAL
MEETING
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49
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DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
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50
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TEXTRON
INC.
PROXY STATEMENT
General
This proxy statement, which is being mailed on or about
March 14, 2011, to each person entitled to receive the
accompanying notice of annual meeting, is furnished in
connection with the solicitation by the Board of Directors of
Textron Inc. of proxies to be voted at the annual meeting of
shareholders to be held on April 27, 2011, at 11:00 am, and
at any adjournments or postponements thereof. Textrons
principal executive office is located at 40 Westminster
Street, Providence, Rhode Island 02903.
Shareholders
Who May Vote
All shareholders of record at the close of business on
March 4, 2011 will be entitled to vote. As of March 4,
2011, Textron had outstanding 276,158,767 shares of common
stock, each of which is entitled to one vote with respect to
each matter to be voted upon at the meeting. Proxies are
solicited to give all shareholders who are entitled to vote on
the matters that come before the meeting the opportunity to do
so whether or not they attend the meeting in person.
Voting
All shareholders may vote by mail. Shareholders of
record may also vote via the Internet or by using the toll-free
telephone number listed on the proxy card. Internet and
telephone voting information is provided on the proxy card. A
control number, located on the lower right portion of the proxy
card, is designated to verify a shareholders identity and
allow the shareholder to vote the shares and confirm that the
voting instructions have been recorded properly. If you vote
via the Internet or by telephone, please do not return a signed
proxy card. Shareholders who hold their shares through a
bank or broker can vote via the Internet or by telephone if
these options are offered by the bank or broker.
If voting by mail, please complete, sign, date and return your
proxy card enclosed with the proxy statement in the accompanying
postage-paid envelope. You can specify how you want your shares
voted on each proposal by marking the appropriate boxes on the
proxy card. If your proxy card is signed and returned without
specifying a vote or an abstention on any proposal, it will be
voted according to the recommendation of the Board of Directors
on that proposal. That recommendation is shown for each proposal
on the proxy card.
You also may vote in person at the meeting. If your shares
are held in the name of your broker or bank and you wish to vote
in person at the meeting, you must request your broker or bank
to issue you a proxy covering your shares.
Savings
Plan Participants
If you are a participant in a Textron savings plan with a
Textron stock fund as an investment option, the accompanying
proxy card shows the number of shares allocated to your account
under the plan. When you vote via the Internet or by telephone,
or your proxy card is returned properly signed, the plan trustee
will vote your proportionate interest in the plan shares in the
manner you direct, or if you vote by mail and make no direction,
in proportion to directions received from the other plan
participants (except for any shares allocated to your Tax Credit
Account under the Textron Savings Plan, which will be voted only
as you direct). All directions will be held in confidence.
Revoking
a Proxy
Whether voting by mail, via the Internet or by telephone, if you
are a shareholder of record you may revoke your proxy at any
time before it is voted by submitting a new proxy with a later
date, voting via the Internet or by telephone at a later time,
delivering a written notice of revocation to Textrons
corporate secretary, or voting in person at the meeting. If your
shares are held in the name of your broker or bank, you may
change or revoke your voting instructions by contacting the bank
or brokerage firm or other nominee holding the shares or by
obtaining a legal proxy from such institution and voting in
person at the annual meeting.
1
Required
Vote
A quorum is required to conduct business at the meeting. A
quorum requires the presence, in person or by proxy, of the
holders of a majority of the issued and outstanding shares
entitled to vote at the meeting. Abstentions and broker
non-votes are counted as present and entitled to
vote for purposes of determining a quorum. A broker non-vote
occurs when you fail to provide voting instructions to your
broker for shares owned by you but held in the name of your
broker and your broker does not have authority to vote without
instructions from you. Under those circumstances, your broker
may be authorized to vote for you without your instructions on
some routine matters but is prohibited from voting without your
instructions on other non-routine matters. Routine matters
include ratification of independent public accountants and the
amendment to our Restated Certificate of Incorporation.
Non-routine matters include the election of directors and the
advisory votes related to executive compensation. Those items
for which your broker cannot vote result in broker non-votes.
Election of each of the four nominees for director requires a
vote of the majority of the votes cast at the meeting, which
means that the number of shares voted for a nominee
for director must exceed the number of shares voted
against that nominee. Abstentions and broker
non-votes are not counted for this purpose and will have no
effect on the outcome of the election.
The advisory resolution regarding the compensation of our named
executive officers and the advisory vote regarding the frequency
of a shareholder vote on the compensation of our named executive
officers require the affirmative vote of a majority of the
shares present in person or represented by proxy and entitled to
vote on the matter. Abstentions will have the same effect as
negative votes, and broker non-votes will have no effect on the
outcome of the vote.
The affirmative vote of the holders of a majority of the
outstanding shares entitled to vote on the matter will be
required to approve the proposed amendment to the Restated
Certificate of Incorporation to provide for the right of 25%
holders to call a special meeting. Abstentions will be counted
toward the tabulation of votes and will have the same effect as
negative votes.
Approval of the ratification of the appointment of the
independent registered public accounting firm requires the
affirmative vote of a majority of the shares present in person
or represented by proxy and entitled to vote on the matter.
Abstentions will have the same effect as negative votes.
Costs of
Proxy Solicitation
Textron pays all the cost of this solicitation of proxies.
Textron will request that persons who hold shares for others,
such as banks and brokers, solicit the owners of those shares
and will reimburse them for their reasonable
out-of-pocket
expenses for those solicitations. In addition to solicitation by
mail, Textron employees may solicit proxies by telephone, by
electronic means and in person, without additional compensation
for these services. Textron has hired Alliance Advisors, LLC of
Bloomfield, New Jersey, a proxy solicitation organization, to
assist in this solicitation process for a fee of $14,000, plus
reasonable
out-of-pocket
expenses.
Confidential
Voting Policy
Under Textrons policy on confidential voting, individual
votes of shareholders are kept confidential from Textrons
directors, officers and employees, except for certain specific
and limited exceptions. Comments of shareholders written on
proxies or ballots are transcribed and provided to
Textrons Corporate Secretary. Votes are counted by
employees of American Stock Transfer &
Trust Company, LLC (AST), Textrons
independent transfer agent and registrar, and certified by
Inspectors of Election who are employees of AST.
Attending
the Meeting
If your shares are held in the name of your bank or broker and
you plan to attend the meeting, please bring proof of ownership
with you to the meeting. A bank or brokerage account statement
showing that you owned voting stock of Textron on March 4,
2011, is acceptable proof to obtain admittance to the meeting.
If you are a shareholder of record, no proof is required.
2
ELECTION
OF DIRECTORS
The Board of Directors is currently composed of twelve members
split among three classes of directors, designated Class I,
Class II and Class III. At our 2010 annual meeting,
shareholders approved a resolution to phase out the
classification of the Board of Directors and instead provide for
the annual election of directors. Therefore, beginning with this
annual meeting, directors will be elected to hold office until
the next annual shareholders meeting and until successors
are duly elected or appointed and qualified. It is the intention
of the persons named on the accompanying proxy card, unless
otherwise instructed, to vote For each of the
following directors who have been nominated for election: Mr.
Conway, Mr. Gagné, Mr. Hancock and
Mr. Trotter. Each nominee presently serves as a
Class III director of Textron, except for Mr. Conway who
would be new to our Board. If any director nominee is unable or
unwilling to serve as a nominee at the time of the annual
meeting, the persons named as proxies may vote for a substitute
nominee designated by the present Board to fill the vacancy or
for the balance of the nominees, leaving a vacancy. Information
is furnished below with respect to each nominee for election and
each director continuing in office. Thomas B. Wheeler, a
director since 1993, will retire from the Board of Directors
effective as of the annual meeting. The Board of Directors
recommends a vote FOR each of the director nominees
(Items 1 through 4 on the proxy card).
Nominees
for Director
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James T. Conway
Mr. Conway, 63, is a retired General in the United States Marine Corps who served as the 34th Commandant of the Marine Corps from 2006 through his retirement in 2010 and concurrently as a member of the Joint Chiefs of Staff. Prior to being named Commandant, Mr. Conway served as Director of Operations (J-3) on the Joint Chiefs of Staff. Among his previous postings were Commanding General of I Marine Expeditionary Force from 2002 through 2006, which involved two combat tours in Iraq, Commanding General of the 1st Marine Division, and President of the Marine Corps University.
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Paul E. Gagné Director Since 1995
Mr. Gagné, 64, is Chairman of Wajax Corporation, a leading Canadian distributor and support service provider of mobile equipment, industrial components and power systems, a position he has held since May 2006. Prior to assuming his current position he was President and Chief Executive Officer of Avenor Inc., a publicly-traded Canadian forest products company, serving in that capacity from 1991 until November 1997, when he left the company. In 1998, Mr. Gagné joined Kruger Inc., a Canadian privately held producer of paper and tissue, as a consultant in corporate strategic planning, serving in that capacity until December 2002. He has been on the Board of Wajax Corporation since 1996, and he is also a director of CAE Inc. (since 2006), and Inmet Mining Corporation (since 1996). Mr. Gagné previously served as a director of Fraser Papers Inc. from 2005 through 2011.
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Dain M. Hancock Director Since 2005
Mr. Hancock, 69, was Executive Vice President of Lockheed Martin Corporation and President of Lockheed Martins Aeronautics Company until his retirement in January 2005. Lockheed Martin is principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services. He joined Lockheed Martin in 1993 as Vice President when Lockheed acquired General Dynamics Corporations military aircraft business, with which Mr. Hancock began his industrial career. Mr. Hancock served in various key executive positions before becoming President of Lockheed Martin Tactical Aircraft Systems in 1995 and Executive Vice President of Lockheed Martin Corporation and President of the Aeronautics Company in 2000.
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Lloyd G. Trotter Director Since 2008
Mr. Trotter, 65, is a managing partner of GenNx 360 Capital Partners, a private equity buyout firm focused on industrial business-to-business companies. Mr. Trotter was Vice Chairman of General Electric Company, a diversified technology, media and financial services company, and President and Chief Executive Officer of GE Industrial, one of GEs principal businesses, a role he assumed in 2006 and held until his retirement in February 2008. Mr. Trotter previously was Executive Vice President of Operations of GE and, from 2004 to 2006, he served as President and Chief Executive Officer of GE Consumer and Industrial, a role he assumed following the 2004 merger of GEs Consumer Products, Industrial Systems and Supply businesses. He began his GE career in 1970 and held various production, technology and management positions in several GE businesses, before being named a GE Senior Vice President and President and Chief Executive Officer of Industrial Systems in 1998. Mr. Trotter also serves as a director of PepsiCo, Inc. (since 2008) and of Daimler A.G. (since 2009).
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Directors
Continuing in Office
Class I Terms Expiring in 2012
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Scott C. Donnelly Director Since 2009
Mr. Donnelly, 49, is Chairman, President and Chief Executive Officer of Textron. Mr. Donnelly joined Textron in June 2008 as Executive Vice President and Chief Operating Officer and was promoted to President and Chief Operating Officer in January 2009. He was appointed to the Board of Directors in October 2009, became Chief Executive Officer of Textron in December 2009 and Chairman of the Board in September 2010. Previously, Mr. Donnelly was the President and CEO of General Electric Companys Aviation business unit, a position he had held since July 2005. GEs Aviation business unit is a $16 billion maker of commercial and military jet engines and components as well as integrated digital, electric power and mechanical systems for aircraft. Prior to July 2005, Mr. Donnelly served as Senior Vice President of GE Global Research, one of the worlds largest and most diversified industrial research organizations with facilities in the U.S., India, China and Germany and held various other management positions since joining General Electric in 1989.
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Lawrence K. Fish Director Since 1999
Mr. Fish, 66, is the retired Chairman and Chief Executive Officer of Citizens Financial Group, Inc., a multi-state bank holding company. He was named Chairman, President and Chief Executive Officer upon joining the bank in 1992 and held that position until relinquishing the title of President in 2005 and the title of Chief Executive Officer in 2007 and retiring in March 2009. Mr. Fish also serves as Chairman of the Board of Directors of Houghton Mifflin Harcourt (since 2010) and as a director of Tiffany & Co. (since 2008).
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Joe T. Ford Director Since 1998
Mr. Ford, 73, currently is a partner in Westrock Capital Partners, LLC, a private investment company. Mr. Ford was Chairman of ALLTEL Corporation, a telecommunications company, until his retirement in November 2007. He was named President of ALLTEL upon its formation in 1983 from a merger between Allied Telephone Company and Mid-Continent Telephone Corporation, became Chief Executive Officer in 1987, assumed the title of Chairman in 1991 and retired as the Chief Executive Officer in July 2002. Mr. Ford previously served as a director of EnPro Industries, Inc. from 2002 through 2009.
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4
Class II
Terms Expiring in 2013
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Kathleen M. Bader Director Since 2004
Ms. Bader, 60, was President and Chief Executive Officer of NatureWorks LLC, which makes proprietary plastic resins and was formerly known as Cargill Dow LLC, until her retirement in January 2006. Formerly she was a Business President of a $4.2 billion plastics portfolio at the Dow Chemical Company, a diversified chemical company. She joined Dow in 1973, held various management positions in Dows global and North American operations, before becoming Chairman, President and Chief Executive Officer of Cargill Dow LLC, at the time an equal joint venture between Dow and Cargill Incorporated, in February 2004. She assumed the position of President and Chief Executive Officer of NatureWorks in February 2005 following Cargills acquisition of Dows interest in Cargill Dow. Ms. Bader previously served as a director of Halliburton Company from 2007 to 2008 and served for seven years on President Bushs Homeland Security Advisory Council.
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R. Kerry Clark Director Since 2003
Mr. Clark, 58, is the retired Chairman and Chief Executive Officer of Cardinal Health, Inc., a leading provider of services supporting the health care industry. He joined Cardinal Health in April 2006 as President and Chief Executive Officer, became Chairman in November 2007 and retired in September 2009. Prior to joining Cardinal Health he was Vice Chairman of the Board, P&G Family Health, and a director of The Procter and Gamble Company, which markets consumer products in over 140 countries, from 2002-2006. He joined Procter and Gamble in 1974 and served in various key executive positions before becoming Vice Chairman of the Board in 2002, and held that position until leaving the company in April 2006. Mr. Clark became a director of General Mills, Inc. in 2009 and is also a partner and director of Hauser Capital Partners LLC, an investment firm.
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Ivor J. Evans Director Since 2003
Mr. Evans, 68, has been an Operating Partner at Thayer / Hidden Creek, a private equity firm, since April 2005. Mr. Evans served as Vice Chairman of Union Pacific Corporation, one of Americas leading transportation companies until his retirement in March 2005. He joined Union Pacific in 1998 as President and Chief Operating Officer of the Union Pacific Railroad, and became Vice Chairman in January 2004. From 1989 to 1998, he served in various executive positions at Emerson Electric Company, including Senior Vice President, Industrial Components and Equipment. Mr. Evans is a director of Cooper Industries (since 2003), Arvin Meritor, Inc. (since 2005), Spirit AeroSystems (since 2005) and Roadrunner Transportation Systems, Inc. (since 2005).
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Lord Powell of Bayswater KCMG Director Since 2001
Lord Powell, 69, previously served as Private Secretary and advisor on foreign affairs and defense to British Prime Ministers Margaret Thatcher and John Major from 1983 to 1991. He is a director of LVMH Moët Hennessy-Louis Vuitton (since 1996), Caterpillar Inc. (since 2000), Mandarin Oriental Hotel Group (since 1992), Schindler Holding Ltd. (since 2003), and Hong Kong Land Holdings Limited (since 2008) and was a director of Yell Group (from 2002-2009).
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James L. Ziemer Director Since 2007
Mr. Ziemer, 61, was the President and Chief Executive Officer and a director of Harley-Davidson, Inc. until his retirement in April 2009. Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and MV Agusta Group, which design, manufacture and sell motorcycles and related parts and accessories, and Harley-Davidson Financial Services, which provides related financing and insurance. Mr. Ziemer had been a director of Harley-Davidson, Inc. since December 2004 and was named President and Chief Executive Officer in April 2005. He previously served as Vice President and Chief Financial Officer of Harley-Davidson from December 1990 to April 2005 and President of The Harley-Davidson Foundation, Inc. from 1993 to 2006. Mr. Ziemer is also a director of Thor Industries, Inc. (since 2010).
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The Board
of Directors
Experience,
Qualifications, Attributes and Skills
The Board of Directors believes that the Board, as a whole,
should possess a combination of skills, professional experience
and diversity of backgrounds necessary to oversee the
Companys business. In addition, the Board believes that
there are certain attributes that every director should possess,
as reflected in the Boards membership criteria.
Accordingly, the Board and the Nominating and Corporate
Governance Committee consider the qualifications of directors
and director candidates individually and in the broader context
of the Boards overall composition and the Companys
current and future needs.
The Nominating and Corporate Governance Committee is responsible
for developing and recommending criteria for director nominees
to the Board for approval. All of our current Board members
share certain qualifications and attributes consistent with
these criteria, which are set forth in the Companys
Corporate Governance Guidelines and Policies and are summarized
below under Board Committees Nominating and
Corporate Governance Committee. These criteria include
possessing specific skills and experience aligned with
Textrons strategic direction and operating challenges and
that complement the overall composition of the Board. In
addition, each Board member has demonstrated core business
competencies, including high achievement and a record of
success. All of our Board members are enthusiastic about Textron
and devote sufficient time to be fully engaged in their role as
a Textron Board member. Finally, all of our directors, other
than our current CEO, satisfy the independence standards
established by the New York Stock Exchange.
As discussed below, Textrons directors have experience
with businesses that operate in industries in which Textron
operates, such as the defense, aviation, manufacturing and
finance industries, or that involve skills, such as marketing or
product branding, that are implicated by Textrons
operations. The following highlights the specific experience,
qualifications, attributes and skills of our individual Board
members that have led the Nominating and Corporate Governance
Committee to conclude that these individuals should continue to
serve on our Board and to nominate Mr. Conway for service on our
Board:
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Mr. Donnelly, Textrons current Chairman,
President and CEO, has significant experience, gained in a
variety of positions at General Electric, in the aerospace and
defense sector, innovation, manufacturing, portfolio management,
talent development and business processes. Mr. Donnelly
brings to the Board first-hand, real-time experience in, and
understanding of, Textron operations gained through his service
with the Company as Chief Operating Officer and now Chairman,
President and CEO.
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Ms. Bader has significant experience in strategic
planning and change management, acquired through her leadership
roles at Dow Chemical Company and NatureWorks LLC; she has
expertise in managing strategic business process implementation
and its attendant cultural transformation within global
industrial business environments. She also brings to Textron
extensive experience in managing turnarounds, Six Sigma,
customer loyalty and employee satisfaction and the expansion of
international business.
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6
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Mr. Clark provides the Board with extensive
expertise in establishing brand equity worldwide and extending
strategic initiatives globally, developed through his
thirty-year career at Procter and Gamble, as well as leadership
in enhancing customer service and advancing customer
relationships. His experience as CEO of Cardinal Health provides
additional insight and value in corporate governance, talent
development, change management, marketing and business
development.
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Mr. Conway managed significant operating budgets and
addressed complex operational and strategic issues in his roles
as a senior Marine Corps officer and his positions as Commandant
and as a member of the Joint Chiefs of Staff.
Mr. Conways deep understanding of the
U.S. military and broad knowledge of the defense industry
and international security issues, combined with his
demonstrated leadership and management skills, make him a
valuable strategic advisor, especially with respect to our
defense businesses.
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Mr. Evans has extensive experience in several
industries in which Textron operates, including the
transportation and manufacturing industries. His considerable
experience in restructuring and cost containment, developed
through his work with Emerson and Union Pacific, contributes to
the Boards evaluation of the Companys long-term
strategic plans and decisions to restructure operations in light
of the recent economic headwinds. His work at Thayer/Hidden
Creek brings to the Textron Board valuable experience and
insight in portfolio management, mergers and acquisitions,
corporate finance and operations management.
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Mr. Fish has significant experience in the highest
levels of leadership in the financial sector and brings to
Textron considerable expertise in banking and commercial
finance, corporate governance, corporate finance and the
domestic and international financial markets. This experience
assists the Board in its oversight of the Companys finance
business and other financial matters of importance to the
Company.
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Mr. Ford brings to the Board extensive experience in
general management, business development, talent development and
mergers and acquisitions, acquired through his career and his
positions as Chairman and CEO of ALLTEL. His deep understanding
of corporate finance and portfolio management enables him to
contribute to the Boards assessment of Textrons
strategy and financing and treasury operations as well as its
oversight of Textrons finance business.
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Mr. Gagné has significant executive management
and financial management experience as well as expertise in
corporate strategic planning and risk management, gained through
his service and leadership roles in a number of business
enterprises, including as CEO of Avenor Inc., a Canadian public
company. Mr. Gagné provides Textron with a seasoned
assessment of Canadian business opportunities and practices and
other international business opportunities. He is also an
audit committee financial expert under the criteria
adopted by the Securities and Exchange Commission and brings to
the Audit Committee exceptional experience and understanding in
the auditing and accounting fields.
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Mr. Hancocks extensive expertise in driving
and growing business within the highly competitive aerospace and
defense arena, developed through his
39-year
career at Lockheed Martin and General Dynamics, provides insight
to the Board in overseeing Textrons defense and aerospace
businesses. He brings to Textron a deep understanding of working
with the Department of Defense (i.e. program management,
contracting, international defense markets), as well as
aerospace manufacturing and general management.
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Lord Powell has extensive international business and
national security experience garnered through distinguished
high-level government service and service in the private sector.
He is an expert on many global regions where Textron does
business and has keen insight into geopolitical considerations
that affect Textrons efforts to increase its worldwide
footprint. He also has a deep understanding of two significant
Textron markets: international defense industries and the
requirements of governments for equipment and services and has
developed significant experience in matters relevant to
executive compensation.
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Mr. Trotter has significant experience through his
leadership roles within General Electric, a diversified company
with a financial services component in a variety of fields of
importance to Textron. He has broad expertise in building
powerful brands worldwide, implementing world-class processes
and developing talented people. He also has deep knowledge of
manufacturing operations, supply chain management and the
development of international business opportunities, each of
which is important to Textrons operations.
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7
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Mr. Ziemer provides the Board with extensive
expertise in establishing brand equity worldwide and leadership
in fostering outstanding customer satisfaction and loyalty,
developed through his forty-year career at Harley-Davidson.
Mr. Ziemers significant experience with the captive
finance business model assists the Board in its oversight of our
Textron Financial business, and he is an audit committee
financial expert under the criteria adopted by the
Securities and Exchange Commission.
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Meetings
and Organization
During 2010, the Board of Directors held seven meetings, and the
Executive Committee of the Board met seven times. The Board has
standing Audit, Nominating and Corporate Governance, and
Organization and Compensation committees. Directors are expected
to regularly attend Board meetings and meetings of committees on
which they serve and also the annual meeting of shareholders.
All directors attended at least 75% of the total number of Board
and applicable committee meetings. All directors attended the
2010 annual meeting of shareholders.
Corporate
Governance
Textrons Corporate Governance Guidelines and Policies,
originally adopted in 1996 and most recently revised in
September 2010, meet or exceed the listing standards adopted by
the New York Stock Exchange and are posted on Textrons
website, www.textron.com, under Investor
Relations Corporate Governance/Governance Guidelines
and Policies, and are also available in print upon request
to Textrons Corporate Secretary.
Code
of Ethics
Textrons Business Conduct Guidelines, originally adopted
in 1979 and most recently revised in September 2010, are
applicable to all employees of Textron including the principal
executive officer, the principal financial officer and the
principal accounting officer. The Business Conduct Guidelines
are also applicable to directors with respect to their
responsibilities as members of the Board of Directors. The
Business Conduct Guidelines are posted on Textrons
website, www.textron.com, under About
Textron Our Commitment/Code of Ethics, and are
also available in print upon request to Textrons Corporate
Secretary. Any amendments to the Business Conduct Guidelines or
the grant of a waiver from a provision of the Business Conduct
Guidelines requiring disclosure under applicable Securities and
Exchange Commission rules will be disclosed on our website, at
the address specified above.
Director
Independence
The Board of Directors has determined that Ms. Bader,
Messrs. Clark, Evans, Fish, Ford, Gagné, Hancock,
Trotter, Wheeler and Ziemer and Lord Powell, are independent,
and anticipates that it will determine that Mr. Conway is
independent, as defined under the listing standards of the New
York Stock Exchange, based on the criteria set forth in the
Textron Corporate Governance Guidelines and Policies which are
posted on Textrons website as described above. In making
its determination, the Board examined relationships between
directors or their affiliates with Textron and its affiliates
and determined that each such relationship did not impair the
directors independence. Specifically, the Board considered
the fact that: (a) in 2008, Mr. Fords company,
Wooster Capital, LLC, purchased a 6.25% interest in a business
jet from CitationAir (formerly Citation Shares), a Textron
company; and (b) in each of 2008, 2009 and 2010, the
Textron Charitable Trust made a $10,000 donation to the Atlantic
Partnership for which Lord Powell serves as Chairman.
Other
Directorships
Textrons Corporate Governance Guidelines and Policies
limit the number of other public company boards on which
non-management directors may serve to five in the case of a
director who is not a public company chief executive officer and
three in the case of a director who is a chief executive officer
of a public company.
Leadership
Structure
Historically, as reflected in the Textron Corporate Governance
Guidelines and Policies, the Board has determined that the
practice of combining the positions of Chairman of the Board and
Chief Executive Officer
8
serves the best interests of Textron and its shareholders. This
is because, due to the size and multi-industry nature of the
Companys business, the Board believes that the CEO, with
his extensive knowledge of the Companys businesses and
full time focus on the business affairs of the Company, makes a
more effective Chairman than an independent director. The Board
has committed to review, at least once every two years, whether
combining these positions serves the best interests of Textron
and its shareholders.
The functions of the Board are carried out by the full Board,
and when delegated, by the Board committees, with each director
being a full and equal participant. The Board is committed to
high standards of corporate governance and its Corporate
Governance Guidelines and Policies were designed, in part, to
ensure the independence of the Board and include a formal
process for the evaluation of CEO performance by all
non-employee Board members. The evaluation is used by the
Organization and Compensation Committee as a basis to recommend
the compensation of the CEO. In addition, the Audit Committee,
the Nominating and Corporate Governance Committee, and the
Organization and Compensation Committee are composed entirely of
independent directors. Each of these committees charters
provides that the committee may seek the counsel of independent
advisors and each routinely meets in an executive session
without management present. The Board and each of its three
principal committees perform an annual self-evaluation.
The independent Directors annually designate a director from
among the chairs of the Audit Committee, the Nominating and
Corporate Governance Committee and the Organization and
Compensation Committee to serve as Lead Director who will, among
other functions, preside at all meetings of the Board at which
the Chairman is not present, serve as liaison, when needed,
between the CEO and the independent Directors, and approve Board
meeting agendas and the type of materials to be distributed to
the Board. Textrons Corporate Governance Guidelines and
Policies also require that the Board meet in executive session
for non-management directors without management present at each
regularly scheduled Board meeting. Textrons Lead Director
presides at such sessions. Additional executive sessions may be
convened at any time at the request of a director, and, in such
event, the Lead Director presides. During 2010, the independent
directors met in executive session without management present
during each of the Boards seven meetings. Currently, Lord
Powell serves as Lead Director. The Nominating and Corporate
Governance Committee reassesses on an annual basis the
continuing effectiveness of the role of Lead Director.
Risk
Management
The Board oversees the Companys enterprise risk management
process. Management reviews the process, including
identification of key risks and steps taken to address them,
with the full Board on a periodic basis. These reviews occur at
an annual dedicated risk management session and as part of the
Boards annual review of the Companys strategy.
Although the full Board is responsible for this oversight
function, the Organization and Compensation Committee, the
Nominating and Corporate Governance Committee and the Audit
Committee assist the Board in discharging its oversight duties.
The Organization and Compensation Committee reviews risks
related to the subject matters enumerated in its charter,
including risks associated with the Companys compensation
programs, to provide incentive compensation arrangements for
senior executives that do not encourage inappropriate risk
taking. The Nominating and Corporate Governance Committee
considers risks related to the subject matters for which it is
responsible as identified in its charter, including risks
associated with corporate governance. Similarly, the Audit
Committee will discuss with management and the independent
auditor, as appropriate, (i) risks related to its duties
and responsibilities as described in its charter,
(ii) managements policies and processes for risk
assessment and risk management and (iii) in the period
between the Boards risk oversight reviews,
managements evaluation of the Companys major risks
and the steps management has taken or proposes to take to
monitor and mitigate such risks.
Accordingly, while each of the three committees contributes to
the risk management oversight function by assisting the Board in
the manner outlined above, the Board itself remains responsible
for the oversight of the Companys risk management program.
9
Shareholder
Communications to the Board
Shareholders or other interested parties wishing to communicate
with the Board of Directors, the Lead Director, the
non-management directors as a group or with any individual
director may do so by calling
(866) 698-6655
(toll-free) or
(401) 457-2269,
writing to Board of Directors at Textron Inc.,
40 Westminster Street, Providence, Rhode Island 02903, or
by e-mail to
textrondirectors@textron.com. The telephone numbers and
addresses are also listed on the Textron website. All
communications received via the above methods will be sent to
the Board of Directors, the Lead Director, the non-management
directors or the specified director.
Compensation
of Directors
During 2010, for their service on the Board, non-employee
directors were paid an annual retainer of $215,000. Non-employee
directors who served on the Executive Committee, the Special
Committee or one of the standing committees, other than the
Audit Committee, received $1,500 for each committee meeting
attended. Textron reimburses each director for his or her
expenses in attending Board or committee meetings. Non-employee
directors who served on the Audit Committee received $2,500 for
each committee meeting attended. The chairmen of the Audit
Committee, the Nominating and Corporate Governance Committee and
the Organization and Compensation Committee received,
respectively, an additional $15,000, $10,000 and $12,500, and
the Lead Director an additional $15,000.
Textron maintains a Deferred Income Plan for Non-Employee
Directors (the Directors Deferred Income Plan) under
which they can defer all or part of their cash compensation
until retirement from the Board. Deferrals are made either into
an interest bearing account which bears interest at a monthly
rate that is one-twelfth of the greater of 8% and the average
for the month of the Moodys Corporate Bond Yield Index,
but in either case, not to exceed a monthly rate equal to 120%
of the Applicable Federal Rate as provided under
Section 1274(d) of the Internal Revenue Code, or into an
account consisting of Textron stock units, which are equivalent
in value to Textron common stock. Textron credits dividend
equivalents to the stock unit account. Each year, directors are
required to defer a minimum of $100,000 of their annual retainer
into the stock unit account.
Textron sponsors a Directors Charitable Award Program which
contributes up to $1,000,000 to the Textron Charitable Trust on
behalf of each participating director upon his or her death, and
the Trust donates 50% of that amount in accordance with the
directors recommendation among up to five charitable
organizations. In most cases, payment of the contributions
ultimately is recoverable from life insurance policies that
Textron maintains on the lives of directors for this purpose. In
2010, Textron paid a total of $111,848 in premiums on these
policies. The directors do not receive any direct financial
benefit from this program since the insurance proceeds and
charitable deductions accrue solely to Textron. The program was
closed to new participants in 2004. Non-employee directors also
are eligible to participate in the Textron Matching Gift Program
under which Textron will match contributions of directors and
full-time employees to eligible charitable organizations at a
1:1 ratio up to a maximum of $7,500 per year.
In February 2010, Textron restructured its program for allowing
non-employee directors access to personal use of its aircraft.
In order to reduce the cost of the program, increase available
flight hours and improve scheduling flexibility, Textron
conveyed management and control of a Citation X to CitationAir
in return for CitationAir operating a program which bases the
hourly expense for use of its aircraft upon the direct and
indirect operating expenses to Textron of the Citation X.
Non-employee directors are required to reimburse Textron per
flight hour based upon this hourly expense multiplied by a ratio
factor assigned to the various aircraft in the CitationAir
fleet. During 2010, Lewis Campbell reimbursed the Company
$156,409 for his personal use of CitationAir aircraft.
Non-employee directors are eligible to receive awards of
options, restricted stock, restricted stock units, stock
appreciation rights, performance stock, performance share unit
or other awards granted under the Textron Inc. 2007 Long-Term
Incentive Plan, although, other than the grant of restricted
stock received upon joining the Board, they have not received
any such awards.
In order to align the financial interests of our directors with
the interests of our shareholders, we require that our directors
maintain a specified level of stock ownership equal to eight
times the portion of their annual retainer payable in cash;
toward this end, we require all non-employee directors to defer
a minimum of $100,000 of their annual retainer into the stock
unit account of the Directors Deferred Income Plan. All
10
directors currently meet the stock ownership requirement which
allows them to achieve the required level of ownership over time
in the case of directors who have more recently joined the
Board. We also have a stock retention policy restricting
non-management directors from transferring stock units or
restricted stock while they serve on the Board.
In December 2010, following a review of the non-employee
directors compensation and benefits program by the
Nominating and Corporate Governance Committee, on recommendation
of the committee, the Board determined not to make any
modifications to the program for 2011.
Employee directors do not receive fees or other compensation for
their service on the Board or its committees.
Director
Compensation Table
The following table provides 2010 compensation information for
our directors other than Mr. Donnelly, whose compensation
is reported in the Summary Compensation Table on page 27.
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Fees Earned
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All Other
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or Paid in
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Stock
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Compensation
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Name
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Cash ($)(1)
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Awards ($)(2)
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($)(3)
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Total ($)
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Kathleen M. Bader
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$
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146,000
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$
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100,000
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$
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18,152
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$
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264,152
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Lewis B. Campbell
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266,667
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6,190
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272,857
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R. Kerry Clark
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152,000
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$
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100,000
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27,035
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279,035
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Ivor J. Evans
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125,500
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$
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100,000
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32,622
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258,122
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Lawrence K. Fish
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144,000
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$
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100,000
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1,250
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245,250
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Joe T. Ford
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121,000
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$
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100,000
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0
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221,000
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Paul E. Gagné
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165,725
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$
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100,000
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0
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265,725
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Dain M. Hancock
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142,500
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$
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100,000
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0
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242,500
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Lord Powell of Bayswater KCMG
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169,137
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$
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100,000
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26,800
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295,937
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Lloyd G. Trotter
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133,000
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$
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100,000
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0
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233,000
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Thomas B. Wheeler
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121,000
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$
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100,000
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7,500
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228,500
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James L. Ziemer
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161,637
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$
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100,000
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0
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261,637
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(1) |
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The fees disclosed in this column do not include $100,000 of
annual retainer, for each director other than Mr. Campbell,
which they were required to defer into the stock unit account
under the Directors Deferred Income Plan. |
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(2) |
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The amounts in this column represent the grant date fair value,
in accordance with financial accounting standards, of the
portion of the directors annual retainer deferred into the
stock unit account under the Directors Deferred Income Plan. |
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(3) |
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The amounts in this column represent (i) the cost of life
insurance premiums relating to the Directors Charitable Award
Program described above for Ms. Bader, Mr. Clark,
Mr. Evans and Lord Powell; the premiums for Mr. Fish,
Mr. Ford, Mr. Gagné and Mr. Wheeler have
been fully paid prior to 2009, and Mr. Hancock,
Mr. Trotter and Mr. Ziemer do not participate in the
program because they joined the Board after the program was
closed to new participants and (ii) the amount of matching
contributions made by the Company on behalf of participating
directors pursuant to the Textron Matching Gift Program which,
for Mr. Clark, Mr. Evans, and Mr. Wheeler, was
$7,500, for Mr. Campbell was $6,190, for Ms. Bader was
$5,000, for Lord Powell was $2,000, and for Mr. Fish was
$1,250. |
Board
Committees
Audit
Committee
The Audit Committee pursuant to its charter, as amended in
December 2010, assists the Board of Directors with its oversight
of (i) the integrity of Textrons financial
statements, (ii) Textrons compliance with legal and
regulatory requirements, (iii) the independent
auditors qualifications and independence, and
(iv) the performance of Textrons internal audit
function and independent auditor. The Audit Committee is
directly responsible for the appointment, retention,
compensation and oversight of Textrons independent
auditors. A
11
copy of the charter is posted on Textrons website under
Investor Relations Corporate Governance/Board
Committees and Charters, and is also available in print
upon request to Textrons Corporate Secretary. The
following five independent directors presently comprise the
committee: Mr. Ziemer (Chairman), Ms. Bader,
Mr. Clark, Mr. Gagné and Mr. Hancock. The
Board has determined that each member of the committee is
independent as independence is defined for audit committee
members in the listing standards of the New York Stock Exchange.
No member of the committee simultaneously serves on the audit
committees of more than three public companies. The Board of
Directors has determined that Mr. Gagné and
Mr. Ziemer each are audit committee financial
experts under the criteria adopted by the Securities and
Exchange Commission. During 2010, the committee met ten times
and a subcommittee of the Audit Committee met once.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee pursuant to
its charter, as amended in July 2010, (i) identifies
individuals to become Board members, and recommends that the
Board select the director nominees for the next annual meeting
of shareholders, (ii) develops and recommends to the Board
a set of corporate governance principles applicable to Textron
and (iii) makes recommendations on compensation of the
Board of Directors. A copy of the committees charter is
posted on Textrons website under Investor
Relations Corporate Governance/Board Committees and
Charters, and is also available in print upon request to
Textrons Corporate Secretary.
In making its recommendations on director nominees to the Board,
the committee will consider suggestions regarding possible
candidates from a variety of sources, including shareholders.
Nominees suggested by shareholders will be communicated to the
committee for consideration in the committees selection
process. Shareholder-recommended candidates are evaluated using
the same criteria used for other candidates. The committee also
periodically retains a third-party search firm to assist in the
identification and evaluation of candidates; such third-party
search firm identified and recommended Mr. Conway as a
candidate for the committees consideration. Though the
committee does not have a formal policy for considering
diversity in identifying nominees for director, it seeks a
variety of occupational and personal backgrounds on the Board in
order to obtain a range of viewpoints and perspectives.
Textrons Amended and Restated By-Laws contain a provision
which imposes certain requirements upon nominations for
directors made by shareholders at the annual meeting of
shareholders or a special meeting of shareholders at which
directors are to be elected. Shareholders wishing to nominate an
individual for director at the annual meeting must submit timely
notice of nomination within the time limits described below
under the heading Shareholder Proposals and Other Matters
for 2012 Annual Meeting on page 49, to the committee,
c/o Textrons
Corporate Secretary, along with the information described in our
By-Laws.
The committee annually reviews the Board of Directors
composition, the appropriate size of the Board, the results of
the review of the Boards overall performance and the
strategy of the Company to determine future requirements for
Board members over the next year or two. All candidates are
evaluated against those requirements and the criteria for
membership to the Board set forth in the Corporate Governance
Guidelines and Policies including: (i) exemplary personal
ethics and integrity; (ii) specific skills and experience
aligned with Textrons strategic direction and operating
challenges and that complement the overall composition of the
Board; (iii) core business competencies of high achievement
and a record of success; (iv) financial literacy and a
history of making good business decisions and exposure to best
practices; (v) interpersonal skills that maximize group
dynamics, including respect for others; (vi) strong
communications skills and confidence to ask tough questions; and
(vii) enthusiasm for Textron and sufficient time to be
fully engaged. In addition, the Guidelines and Policies provide
that no more than three of the Companys directors will not
be independent under the standards of the New York Stock
Exchange. All recommendations of nominees to the Board by the
committee are made solely on the basis of merit.
In making its recommendations on Board compensation, the
committee annually reviews the director compensation and
benefits program and consults with outside board compensation
advisors, as appropriate.
12
The following five directors presently comprise the committee:
Mr. Fish (Chairman), Ms. Bader, Mr. Ford,
Mr. Trotter and Mr. Wheeler. The Board of Directors
has determined that each member of the committee is independent
under the New York Stock Exchange listing standards. During
2010, the committee met four times.
Organization
and Compensation Committee
The Organization and Compensation Committee pursuant to its
charter, as revised in July 2010, (i) approves compensation
arrangements, including merit salary increases and any annual
and long-term incentive compensation, with respect to the Chief
Executive Officer and other executive officers of the Company;
(ii) oversees and, where appropriate, approves compensation
arrangements applicable to other corporate officers;
(iii) amends any executive compensation plan or
nonqualified deferred compensation of the Company and its
subsidiaries to the same extent that the plan may be amended by
the Board; (iv) administers the executive compensation
plans and nonqualified deferred compensation plans of the
Company and its subsidiaries; (v) approves the Chief
Executive Officers and other executive officers
responsibilities and performance against pre-established
performance goals; and (vi) plans for the succession of the
Companys management. A copy of the committees
charter is posted on Textrons website under Investor
Relations Corporate Governance/Board Committees and
Charters, and is also available in print upon request to
Textrons Corporate Secretary. See the Compensation
Discussion and Analysis (CD&A), beginning on page 17
for more information on the committees processes and the
role of management and consultants in determining the form and
amount of executive compensation. The following five directors
presently comprise the committee: Lord Powell (Chairman),
Mr. Clark, Mr. Evans, Mr. Gagné and
Mr. Trotter. The Board of Directors has determined that
each member of the committee is independent under the New York
Stock Exchange listing standards. During 2010, the committee met
seven times.
Special
Committee
At its September 2008 meeting, the Board of Directors designated
a Special Committee to review and report to the full Board on
Textron Financial Corporation (TFC) strategic and
operational issues; the Board appointed Mr. Trotter as
Chairman, and Mr. Campbell, Mr. Fish,
Mr. Gagné, Mr. Powell and Mr. Ziemer as
members of the Committee. At its February 2009 meeting, the
Board reconstituted the Special Committee such that it was
comprised of Mr. Trotter, as Chairman, Mr. Fish,
Mr. Gagné and Mr. Ziemer, and its charge was to
assist the Board in its review and oversight of Textrons
liquidity plan, the liquidation of TFCs non-captive
finance business and such other matters as the Board may from
time to time assign. At the beginning of the 2010 fiscal year,
the Special Committee met once and was deemed to have completed
its assignment, and these matters were again assumed by the full
Board.
Compensation
Committee Interlocks and Insider Participation
The members of the Organization and Compensation Committee
during fiscal year 2010 consisted of Lord Powell, who served as
the Chairman, Mr. Clark, Mr. Evans,
Mr. Gagné and Mr. Trotter. No member of the
Organization and Compensation Committee is or has been an
executive officer or employee of Textron (or any of its
subsidiaries), and no compensation committee
interlocks existed during fiscal year 2010.
13
SECURITY
OWNERSHIP
The following table sets forth information regarding the
beneficial ownership of our common stock as of January 1,
2011, unless otherwise noted, by:
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Each person or group known by us to own beneficially more than
5% of our common stock;
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Each of our directors;
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Each of our named executive officers, as defined under
Securities and Exchange Commission rules
(NEOs); and
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All of our current directors and executive officers as a group.
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Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes
any shares over which a person exercises sole or shared voting
or investment power. Shares of common stock subject to options
that are exercisable, or restricted stock units that will vest,
within 60 days of January 1, 2011, and shares held for
the executive officers by the trustee under the Textron Savings
Plan, are considered outstanding and beneficially owned by the
person holding the option or unit or participating in the Plan
but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person.
Each stockholder listed below has sole voting and investment
power with respect to the shares beneficially owned, except in
those cases in which the voting or investment power is shared
with the trustee or as otherwise noted.
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Number of Shares of
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Percent of
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Directors and Executive
Officers
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Common Stock
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Class
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Kathleen M. Bader
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22,216
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(1)
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*
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John D. Butler
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230,829
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(2)(3)
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*
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R. Kerry Clark
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7,000
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(1)
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*
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Frank T. Connor
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82,474
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(2)(3)
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*
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Scott C. Donnelly
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232,277
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(2)(3)
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*
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Ivor J. Evans
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7,000
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(1)
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*
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Lawrence K. Fish
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39,000
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(1)
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*
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Joe T. Ford
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9,000
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(1)
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*
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Paul E. Gagné
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5,169
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(1)
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*
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Dain M. Hancock
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2,127
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(1)
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*
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Terrence ODonnell
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323,062
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(2)(3)
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*
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Lord Powell of Bayswater KCMG
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2,123
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(1)
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*
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Lloyd G. Trotter
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2,070
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(1)
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*
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Thomas B. Wheeler
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5,751
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(1)
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*
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James L. Ziemer
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2,110
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(1)
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*
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All current directors and executive officers as a group
(15 persons)
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972,208
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|
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*
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Beneficial Holders of More than 5%
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BlackRock, Inc.(4)
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17,970,101
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6.52
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FMR LLC(5)
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34,881,068
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12.65
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The Bank of New York Mellon Corporation(6)
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16,754,105
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6.08
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T. Rowe Price Associates, Inc.(7)
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16,434,956
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5.96
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Wellington Management Company, LLP(8)
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13,833,224
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5.02
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* |
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Less than 1% of the outstanding shares of common stock. |
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(1) |
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Excludes stock units held by our non-employee directors under
the Directors Deferred Income Plan that are paid in cash
following termination of service as a director, based upon the
value of Textron common stock, as follows: Ms. Bader,
34,621 shares; Mr. Clark, 53,441 shares;
Mr. Evans, 32,442 shares; Mr. Fish, |
14
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71,114 shares; Mr. Ford, 84,404 shares;
Mr. Gagné, 72,084 shares; Mr. Hancock,
51,695 shares; Lord Powell, 36,402 shares;
Mr. Trotter, 38,583 shares; Mr. Wheeler,
86,722 shares; and Mr. Ziemer, 38,506 shares. |
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(2) |
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Includes the following shares obtainable within 60 days of
January 1, 2011, upon the vesting of restricted stock units
or the exercise of stock options: Mr. Butler,
195,486 shares; Mr. Connor, 81,312 shares;
Mr. Donnelly, 185,699 shares; Mr. ODonnell,
284,915 shares; and all current directors and executive
officers as a group, 747,412 shares. |
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(3) |
|
Excludes (i) stock units held under non-qualified deferred
compensation plans that are paid in cash, based upon the value
of Textron common stock, as follows: Mr. Butler,
116,748 shares; Mr. Connor, 1,537 shares;
Mr. Donnelly, 4,356 shares; Mr. ODonnell,
89,056 shares; (ii) RSUs payable in cash, based upon
the value of Textron common stock, as follows: Mr. Butler,
33,129 shares; Mr. Connor, 87,127 shares;
Mr. Donnelly, 203,663 shares; and
Mr. ODonnell, 36,955 shares; (iii) unvested
RSUs payable in stock, as follows: Mr. Butler,
8,496 shares; Mr. Donnelly, 77,946 shares; and
Mr. ODonnell, 9,074 shares; (iv) unvested
PSUs that are paid in cash when earned and valued based upon the
value of Textron common stock, as follows: Mr. Butler,
76,749 shares; Mr. Connor, 171,878 shares;
Mr. Donnelly, 351,598 shares; and
Mr. ODonnell, 85,614 shares. |
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(4) |
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Based on information disclosed in a Schedule 13G filed by
BlackRock, Inc. on February 9, 2011. According to this
filing, BlackRock, Inc. beneficially owns, has the sole power to
vote and to dispose of or direct the disposition of these
shares. The address for BlackRock, Inc. is 40 East 52nd Street,
New York, NY 10022. |
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(5) |
|
Based on information disclosed in Amendment No. 4 to
Schedule 13G filed by FMR LLC and Edward C. Johnson 3d on
February 14, 2011. According to this filing, Fidelity
Management & Research Company, a wholly-owned
subsidiary of FMR LLC, beneficially owns 34,530,586 shares
of Textron common stock (including 759,619 shares resulting
from the assumed conversion of $9,970,000 principal amount of
Textrons convertible notes) as a result of acting as
investment advisor to various investment companies (the
Funds) with the power to direct the voting of those
shares held by the Boards of Trustees of the Funds; Strategic
Advisers, Inc., a wholly-owned subsidiary of FMR LLC,
beneficially owns 3,314 of these shares; Pyramis Global
Advisors, LLC, a wholly-owned subsidiary of FMR LLC,
beneficially owns 199,620 of these shares (including
199,620 shares resulting from the assumed conversion of
$2,620,000 principal amount of Textrons convertible
notes); Pyramis Global Advisors Trust Company, a
wholly-owned subsidiary of FMR LLC, beneficially owns 119,033 of
these shares (including 23,619 shares resulting from the
assumed conversion of $310,000 principal amount of
Textrons convertible notes); and FIL Limited, a separate
corporate entity, beneficially owns 28,515 of these shares.
Edward C. Johnson 3d and FMR LLC, through their control of the
subsidiaries of FMR LLC and related entities, have the sole
power to dispose of or direct the disposition of all
34,881,068 shares and the sole power to vote or direct the
voting of 351,882 of these shares. The address for FMR LLC is 82
Devonshire Street, Boston, MA 02109. |
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(6) |
|
Based on information disclosed in a Schedule 13G filed by
The Bank of New York Mellon Corporation on February 4,
2011. According to this filing, all of these shares are
beneficially owned by The Bank of New York Mellon
Corporation and the following direct or indirect subsidiaries in
their various fiduciary capacities: The Bank of New York Mellon,
The Bank of New York Mellon Trust Company, National
Association, BNY Mellon, National Association, BNY Mellon Trust
of Delaware, The Boston Company Asset Management LLC, The
Dreyfus Corporation, Mellon Capital Management Corporation,
Pershing LLC, B.N.Y. Holdings (Delaware) Corporation, MAM (MA)
Holding Trust, MBC Investments Corporation and Pershing Group
LLC. The Bank of New York Mellon Corporation has sole power to
vote 14,951,321 of these shares and sole dispositive power as to
15,955,429 of these shares. The address for The Bank of New York
Mellon Corporation is One Wall Street, 31st Floor, New York, NY
10286. |
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(7) |
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Based on information disclosed in a Schedule 13G filed by
T. Rowe Price Associates, Inc. on February 10, 2011.
According to this filing, T. Rowe Price Associates, Inc., in its
capacity as investment adviser for various individual and
institutional investors, is deemed to beneficially own these
shares as to which it has sole dispositive power (including
1,539,886 shares resulting from the assumed exercise of
conversion rights) and, with respect to 4,140,432 of these
shares, sole voting power (including 252,952 shares |
15
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resulting from the assumed exercise of conversion rights);
however, T. Rowe Price Associates, Inc. expressly disclaims such
beneficial ownership. The address for T. Rowe Price Associates,
Inc. is 100 E. Pratt Street, Baltimore, MD 21202. |
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(8) |
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Based on information disclosed in a Schedule 13G filed by
Wellington Management Company, LLP on February 14, 2011.
According to this filing, Wellington Management Company, LLP, in
its capacity as investment adviser, may be deemed to
beneficially own these shares which are held of record by
clients of Wellington Management Company, LLP who share
dispositive power with respect to all of these shares and voting
power with respect to 7,493,024 of these shares. The address for
Wellington Management Company, LLP is 280 Congress Street,
Boston, MA 02210. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires Textrons directors, executive officers
and controller to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission and to provide copies of such reports to
Textron. As an administrative matter, Textron assists its
reporting persons in fulfilling their responsibilities to
prepare and file reports pursuant to Section 16(a),
including with respect to making determinations on the
availability of exemptions from reporting.
Based solely upon a review of copies of such reports and written
representations of the reporting persons, to our knowledge,
during the 2010 fiscal year, all such reporting persons timely
filed all of the reports they were required to file under
Section 16(a), except that one transaction for
Mr. Connor relating to the vesting of a portion of a
cash-settled restricted stock unit award was not reported on a
timely basis because it was inadvertently not included on
Mr. Connors March 3, 2010 Form 4 due to an
administrative error in recording the awards vesting date.
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board of Directors has furnished the
following report on its activities:
The committee reviewed and discussed the audited consolidated
financial statements and the related schedules in the Annual
Report referred to below with management. The committee also
reviewed with management and the independent registered public
accounting firm (the independent auditors) the
reasonableness of significant judgments and the clarity of
disclosures in the financial statements, the quality, not just
the acceptability, of the Companys accounting principles
and such other matters as are required to be discussed with the
committee by Statement on Auditing Standards No. 61 (as
amended), as adopted by the Public Company Accounting Oversight
Board in Rule 3200T. In addition, the committee discussed
with the independent auditors the auditors independence
from management and the Company including the matters in the
written disclosures and the letter from the independent auditors
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountants communication with the audit committee
concerning independence and considered the possible effect of
non-audit services on the auditors independence.
The committee discussed with the Companys internal and
independent auditors the overall scope and plans for their
respective audits and met with the internal and independent
auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the
Companys internal controls, including internal controls
over financial reporting, and the overall quality of the
Companys financial reporting. The committee also reviewed
the Companys compliance program. Ten committee meetings
were held during the year.
In reliance on the reviews and discussions referred to above,
the committee recommended to the Board of Directors that the
audited consolidated financial statements and the related
schedules be included in the Annual Report on
Form 10-K
for the fiscal year ended January 1, 2011, to be filed with
the Securities and Exchange Commission. The committee also
reported to the Board that it had selected
16
Ernst & Young LLP as the Companys independent
auditors for 2011, and recommended that this selection be
submitted to the shareholders for ratification.
JAMES L. ZIEMER, CHAIRMAN
KATHLEEN M. BADER
R. KERRY CLARK
PAUL E. GAGNÉ
DAIN M. HANCOCK
COMPENSATION
COMMITTEE REPORT
The Organization and Compensation Committee of the Board of
Directors has furnished the following report:
The committee reviewed the Compensation Discussion and Analysis
to be included in Textrons 2011 proxy statement and
discussed that Analysis with management.
Based on its review and discussions with management, the
committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in
Textrons 2011 proxy statement and Textrons Annual
Report on
Form 10-K
for the fiscal year ended January 1, 2011.
This report is submitted by the Organization and Compensation
Committee.
LORD POWELL OF BAYSWATER KCMG, CHAIRMAN
R. KERRY CLARK
IVOR J. EVANS
PAUL E. GAGNÉ
LLOYD G. TROTTER
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
and Objectives of Compensation Program
Textrons compensation program in 2010 continued to link
executive compensation tightly to the companys long-term
performance, both in absolute terms and relative to the market.
The Organization and Compensation Committee strives to
strengthen the bond between compensation and the interests of
shareholders as reflected in the share price. In structuring the
compensation program, the Committee weighs incentivizing
business leaders to strive for superior performance and ensuring
that Textron is competitive in the markets in which we compete
for talent, while being sensitive to investor opinion on
executive pay. We have further developed our review processes
and oversight of our executive compensation programs so that
they are designed to not transgress the Companys risk
boundaries. In summary, we believe we have compensation policies
which are fair to employees and fair to shareholders.
The Committee also strives to provide that Textrons
executive compensation policies keep pace with evolving best
practices. We have made a series of changes over the past few
years, including prospectively eliminating formal employment
contracts for new executive officers in order to, among other
things, eliminate individual termination protection for new
executives, eliminating certain perquisites for executives,
prohibiting future agreements to
gross-up
executives for taxes, and reducing incentive award complexity.
These changes have helped to further align Textrons
compensation policies with current best pay practices.
The primary objectives of our executive compensation program for
2010 were to:
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Incentivize management to deliver superior Company performance
by basing both annual and long-term incentive compensation on
performance goals key to the Companys financial success
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17
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Provide balanced motivation between short- and long-term
performance of the Company by varying performance periods and
vesting periods of incentive programs
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Motivate executives to produce strong and sustained financial
performance for the long-term benefit of shareholders, by
including an equity component in the compensation program and
maintaining stock ownership requirements and hedging
restrictions for senior executives
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Establish market competitive compensation levels by benchmarking
our senior executive compensation against a peer group
recommended by our independent compensation consultant
|
Given the weakness in some of the Companys industries and
general economic uncertainty during 2010, the Committee kept
target compensation levels relatively flat during 2010 for
Textrons executive officers while generally targeting the
median compensation levels determined by its independent
compensation consultant.
With input from the independent compensation consultant, and
after consultation with the Board, the Committee approves the
design and level for each element of compensation for our named
executive officers (NEOs). Executive officer
compensation is made up of the following key components with a
significant emphasis on pay at risk, largely focused on
long-term incentives:
The performance goals established for the 2010 executive
compensation program were balanced between (i) a
profitability target, measured by manufacturing earnings, in
order to focus executives on delivery of shareholder value, and
(ii) a cash efficiency metric, comprised of manufacturing
cash flow and goals relating to net targeted finance receivable
liquidations by TFC vs. acceptable loss ratios, to incentivize
executives to advance the Companys strategies of improving
operational efficiency, strengthening our balance sheet and
exiting the non-captive finance business. A comparison of
achievement of performance measures and Company stock price
versus actual payout for incentive programs ending in 2010, as
shown in the following charts, illustrates that the link between
incentive program payouts and Company performance is working as
intended:
2008
2010 PSU Payout Based on Achievement Against Performance
Metrics
As reflected above, Company performance for the financial
metrics impacting the 2008-2010 PSU payouts was below target
levels resulting in payouts of 2.9% of the target award value of
the PSUs at their
18
grant date, after factoring in actual performance against the
ROIC-WACC and EPS performance metrics as well as the reduction
in the Companys stock price from the grant date to the end
of the vesting period. See 2010 Compensation
Actions for Named Executive Officers 2010
Long-Term Incentive Compensation Payments, below for
additional details.
2010 AIC
Payout Percentage Based on Achievement Against Financial
Performance Metrics
As reflected above, Company performance for the financial
metrics impacting the 2010 AIC payout percentage each exceeded
target levels resulting in payouts of 147.3% of target. See
2010 Compensation Actions for named Executive
Officers 2010 Annual Incentive Compensation
Payments below for additional details.
The Committee also strives to set compensation policies which do
not encourage excessive risk-taking by senior executives which
could endanger the Company. During 2010, the Committee completed
a full review of managing risk within the compensation programs.
This review helps the Committee to structure executive
compensation programs that are designed to avoid exposing the
Company to unwarranted risk.
Elements
of the Compensation Program
Each year the Committee (1) reviews the compensation
program for executive officers by drawing on relevant
professional studies and literature, obtaining relevant market
data and trends from its independent compensation consultant,
and consulting with senior management and the Board and
(2) approves, or recommends to the Board for approval, such
changes and refinements as it deems necessary to provide that
compensation for our executives remains in line with Company
strategy and competitive practices. The Committee has designed a
compensation program comprised of the following primary
elements: base salary, short-term incentive compensation,
long-term incentive compensation and post-employment benefits.
The Committee believes that each element is necessary in order
to remain competitive within our peer group and provide
incentives appropriate for our strategy. The Committee believes
that the Companys incentive compensation programs
establish a clear link between pay and performance by motivating
the achievement of both short-term and long-term business
objectives.
Compensation
Mix
The mix of compensation elements is not set according to
pre-established guidelines but reflects the general goal of
giving greater weight to long-term and objective
performance-based compensation. The Committee has created a
compensation structure that emphasizes at-risk compensation
elements, with the greatest focus given to long-term incentives
to align management interests with those of shareholders. The
Committee continues to believe that the CEOs compensation
should, even more so than other senior executives, be linked to
the long-term performance of the Company. Therefore, the CEO has
a greater percentage of both long-term incentive compensation
and performance-based compensation than the other
19
NEOs. The compensation decisions made in 2010 for
Mr. Donnelly, who serves as our CEO, and our other NEOs,
resulted in relative compensation opportunities set forth in the
chart below:
(Target total compensation illustrated above consists of
annualized base salary, short-term incentive compensation target
opportunity, and long-term incentive compensation target
opportunity, but excludes perquisites and post-employment
benefits.)
Base
Salary
Each year, the Committee reviews and approves base salaries for
NEOs. In support of this review, the independent compensation
consultant provides relevant benchmark data and analysis. The
Committee targets base salaries for NEOs at competitive levels,
i.e. generally at the median for executives in positions with
similar responsibilities within the compensation peer group. The
Committee also acknowledges that individual base salaries may
vary based on factors such as individual responsibilities,
complexity of position versus that of the market benchmark(s),
performance, experience, and future potential. During 2010, base
salaries for NEOs remained flat.
Annual
Incentive Compensation
The Committee, after discussions with the independent
compensation consultant, approves the annual incentive structure
and performance goals in the first quarter of each year. An
eligible executives target opportunity is established as a
percentage of his base salary. For 2010, the target incentive
percentages for the NEOs ranged from 65% to 120% of base salary
depending on position. The Committee approved these targets to
provide market-competitive levels of target incentive
opportunity.
Long-Term
Incentive Compensation
Our long-term incentive compensation program is focused on
rewarding multi-year financial and operational performance as
well as long-term growth in shareholder value. Long-term
incentive grants are made on March 1 (or the closest trading day
prior to March 1 if it is not a trading day) in each year. When
determining the level of the grant, the Committee considers each
NEOs functional and enterprise management
responsibilities, past performance, potential contributions to
the Companys profitability and growth, the value of prior
long-term incentive grants, competitive data regarding prevalent
grant levels and potential equity dilution to shareholders (with
no particular goals or weightings assigned to the foregoing
factors). The three long-term incentive vehicles awarded to NEOs
in 2010 are described below under 2010 Compensation
Actions for Named Executive Officers 2010
Long-Term Incentive Grants.
20
Retirement/Death
Benefits
We provide certain retirement/death benefits that are only
available to select senior executives (including certain NEOs)
that typically depend on one or a combination of age
and/or
service. Post-employment benefits available in 2010 included:
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Supplemental Retirement Plan for Textron Key Executives
(SERP): Non-qualified enhanced
pension benefit
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Textron Spillover Pension Plan: Non-qualified
benefit plan to make up for IRS limits in qualified pension
plans and, in the case of Mr. Donnelly, to provide a
wrap-around pension benefit which takes into account
his final average compensation with Textron and his combined
service with Textron and GE and reduces this benefit by the
amount of any other benefits which he is eligible to receive
under Textron and GE pension plans
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Textron Spillover Savings Plan: Non-qualified
benefit plan to make up for IRS limits in qualified savings plans
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Survivor Benefit Plan for Textron Key
Executives: An additional 2x base salary paid as
a death benefit
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Deferred Income Plan for Textron
Executives: Non-qualified plan that provides
elective and non-elective deferred compensation
|
Role of
Independent Compensation Consultant
Under its charter, the Committee has the authority to retain
outside consultants or advisors as it deems necessary to provide
desired expertise and counsel. In 2010, the Committee engaged
the services of Pay Governance LLC as its compensation
consultant. Pay Governance reports directly and exclusively to
the Committee and provides expert, objective support regarding
current and emerging best practices with regard to executive
compensation. A representative from Pay Governance attended each
of the seven Committee meetings in 2010. Pay Governance LLC does
not separately provide any other services to the Company.
The independent compensation consultant provides direct and
candid advice on any executive compensation matter. Examples of
specific services provided in 2010 are:
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Advised the Committee on the composition of the compensation
peer group
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Prepared analyses and recommendations for senior executive
compensation levels as compared to the compensation peer group
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Evaluated the Companys compensation program and advised
the Committee on alternative designs for consideration
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Provided comments on compensation matters on their own volition
as appropriate
|
Establishing
an Appropriate Compensation Peer Group
The Committee feels strongly about being informed on current pay
practices and trends in the marketplace. To enhance the
relevance of this market perspective to Textron, the Committee
has adopted criteria for selecting compensation comparator
companies. These criteria include the selection of companies
that are representative of the employment market in which our
Company competes for executive talent, that operate in similar
industries, have significant global operations, and that have
median annual revenue that approximates Textrons revenue.
The companies comprising the compensation peer group consist of
20 companies with fiscal year 2009 revenues ranging from
$4 billion to $34 billion with a median of
$12.9 billion, compared to Textrons fiscal year 2009
revenues of $10.5 billion. There were two changes from the
peer group used in the prior year. Texas Instruments has been
replaced by Tyco Electronics, another company in the
technology/engineering sector.
21
Also, Lexmark has been removed from the peer group since their
fiscal year 2009 revenues fell well below the range established
for Textrons peer group. The compensation peer group for
2010 was:
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3M Company
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Medtronic, Inc.
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Boston Scientific Corporation
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Northrop Grumman Corporation
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Eaton Corporation
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Parker-Hannifin Corporation
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Emerson Electric Co.
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Pitney Bowes Inc.
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EMC Corporation
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QUALCOMM Incorporated
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General Dynamics Corporation
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Raytheon Company
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Goodrich Corporation
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|
|
|
Seagate Technology
|
|
|
Honeywell International Inc.
|
|
|
|
Rockwell Automation, Inc.
|
|
|
ITT Corporation
|
|
|
|
Tyco Electronics
|
|
|
L-3 Communications
|
|
|
|
Xerox Corporation
|
2010
Compensation Actions for Named Executive Officers
The
Committees 2010 Process
The Committee reviewed various performance and market data while
considering 2010 compensation for the NEOs, including:
individual and Company performance, financial performance
relative to strategic and financial peers, relevant market data
and input from the Committees independent compensation
consultant. The Committee evaluated the NEOs compensation
in light of comparison data provided by its independent
compensation consultant on total compensation levels at the peer
group companies. Because the total compensation of each of the
NEOs was within approximately twenty percent of the median of
the peer group for comparable positions, with two NEOs below the
median and two above, the Committee determined that the total
compensation was at market-competitive levels.
Prior to making decisions or recommendations, the Committee also
reviewed the specific historical situation for each NEO and was
provided tally sheets, which reflect the potential share-derived
wealth of the NEOs and their accumulated retirement benefits,
potential payouts of stock-based compensation, stock ownership
and cash versus non-cash compensation for each executive from
prior years. Additionally, the CEO provided input into
compensation decisions for NEOs other than himself, including
his assessment of each individuals responsibilities and
performance, the complexity of their position against market
benchmarks, and their experience and future potential. Final
decisions regarding compensation were made by the Committee
based on feedback from the full Board.
2010
Base Salary Actions
In January 2010, the Committee reviewed current benchmark data
for the NEOs prepared and presented by the independent
compensation consultant. The data presented showed that the base
salary for each NEO remained at competitive levels for
executives in positions with similar responsibilities at
comparable companies, factoring in the criteria described above
under Elements of the Compensation Program
Base Salary. The Committee approved no base salary
increases for 2010 for the NEOs.
2010
Annual Incentive Compensation Payments
The Committee established the performance metrics for annual
incentive compensation for fiscal 2010 as 50% cash efficiency,
45% earnings, and 5% workforce diversity. The Committee placed
the greatest weight on the cash efficiency metric to incentivize
executives to advance the Companys strategies of improving
operational efficiency, strengthening our balance sheet through
repayment of debt and exiting the non-captive finance business.
The earnings metric was intended to focus executives on creating
shareholder value through increased profitability, and the
diversity metric was maintained from prior years to continue the
Companys focus on having a diverse employee profile. The
percentage that could be earned on each of these metrics ranged
from 0% to 200% based on a predetermined payout scale
established by the Committee.
22
The formula for determining 2010 annual incentive compensation
for the NEOs, and the resulting percentage earned is detailed
below:
2010
Annual Incentive Compensation Calculation
($
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
Percent
|
|
Component
|
|
Weighted
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Achievement
|
|
|
Earned(1)
|
|
Weighting
|
|
Payout
|
Earnings(2)
|
|
$
|
208
|
|
|
$
|
417
|
|
|
$
|
833
|
|
|
$
|
515
|
|
|
|
|
123.65
|
%
|
|
|
45
|
%
|
|
|
55.64
|
%
|
Cash Efficiency Manufacturing(3)
|
|
|
514
|
|
|
|
642
|
|
|
|
770
|
|
|
|
692
|
|
|
|
|
138.98
|
|
|
|
25
|
|
|
|
34.75
|
|
Cash Efficiency Financing Operations(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200.00
|
|
|
|
25
|
|
|
|
50.00
|
|
Loss Ratio
|
|
|
24.0
|
%
|
|
|
20.0
|
%
|
|
|
15.9
|
%
|
|
|
14.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation
|
|
$
|
1,670
|
|
|
$
|
1,945
|
|
|
$
|
2,220
|
|
|
$
|
2,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Workforce Diversity
|
|
|
(2.78
|
)%
|
|
|
0.45
|
%
|
|
|
3.68
|
%
|
|
|
1.68
|
%
|
|
|
|
138.20
|
|
|
|
5
|
|
|
|
6.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Award % Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
147.30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Results below threshold earn 0%; results at
target earn 100%; results at maximum
earn 200%, in each case, with percentage earned determined
through proration if actual achievement falls between threshold
and target or target and maximum. |
|
(2) |
|
The earnings target was a
non-GAAP
measure defined as segment profit for the manufacturing group,
less corporate expenses and manufacturing group net interest
expense. |
|
(3) |
|
The cash efficiency metric was based (i) 50% upon achieving
manufacturing cash flow of $642 million and (ii) 50%
upon Textron Financial Corporation achieving a
$1.945 billion net finance receivable liquidation target
with a 20% loss ratio. Our definition of manufacturing free cash
flow is a non-GAAP measure which adjusts net cash from operating
activities of continuing operations for dividends received from,
and capital contributions made to, TFC, capital expenditures,
proceeds from the sale of property, plant and equipment and
voluntary contributions to our pension plans. |
At its January 2011 meeting, the Committee discussed the annual
incentive compensation awards to be paid to the NEOs for the
2010 performance period. Each Committee member also provided
feedback to help determine final compensation decisions for the
NEOs. Prior to finalizing these decisions, the Committee
solicited input from the Board. After consideration of these
inputs, the Committee concluded that the calculated result
appropriately awarded the years performance and approved a
payment equal to the calculated payout of 147.3% for all
executive officers, resulting in the following annual incentive
compensation payments:
2010
Annual Incentive Compensation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
Target % of
|
|
Target
|
|
Annual IC
|
Name
|
|
Salary
|
|
Earned
|
|
Paid
|
|
S.C. Donnelly
|
|
|
120
|
%
|
|
|
147.3
|
%
|
|
$
|
1,767,600
|
|
F.T. Connor
|
|
|
85
|
%
|
|
|
147.3
|
%
|
|
|
939,038
|
|
J.D. Butler
|
|
|
65
|
%
|
|
|
147.3
|
%
|
|
|
536,172
|
|
T. ODonnell
|
|
|
65
|
%
|
|
|
147.3
|
%
|
|
|
502,661
|
|
2010
Long-Term Incentive Compensation Payments
In 2008, the following grants of performance share units for the
2008-2010
performance period were made to the NEOs: For Mr. Donnelly,
31,497 PSUs; for Mr. Butler, 11,125 PSUs; and for
Mr. ODonnell, 12,405 PSUs.
23
For the
2008-2010
PSU grants, the formula for determining the actual percentage of
the award earned following the three-year performance period was:
|
|
|
(1)
|
|
The cumulative EPS target for the
2008-2010
performance share unit cycle was $12.61. Performance below 80%
of the target results in no payout for this component of the
award. For the three-year performance period ended
January 1, 2011, earnings per share for incentive
compensation purposes was $4.66. As a result, 0% of this
component (weighted at 50%) was earned.
|
|
(2)
|
|
If Textrons average return on
invested capital (ROIC) is 8% higher than the average weighted
average cost of capital (WACC) over the award period, then 100%
of this portion of the award will be earned. Performance above
or below target is interpolated based on the below scale:
|
|
|
|
|
|
|
|
2008-2010 PSU ROIC-WACC
|
|
Payout Scale
|
|
ROIC-WACC
|
|
|
|
|
Performance
|
|
|
% Earned
|
|
|
|
0
|
%
|
|
|
0
|
%
|
|
8
|
%
|
|
|
100
|
%
|
|
16
|
%
|
|
|
150
|
%
|
|
|
|
|
|
For the three-year performance
period ended January 1, 2011, ROIC for incentive
compensation purposes was 10.83%, or 1.32% higher than the
companys cost of capital of 9.51%. As a result, 16.58% of
this component (weighted at 50%) was earned.
|
With zero percent of the EPS component earned and 16.58% of the
ROIC-WACC component earned, and each component weighted at 50%,
8.29% of the PSU awards for the 2008-2010 performance period
were earned. Valuing each performance share unit earned at a
share price of $24.483 (the average closing market value of
Textron common stock for the first ten trading days of the
fiscal year following the end of the performance period), in
January 2011, the Committee approved the following PSU payments
for the
2008-2010
performance period:
Payments
for the
2008-2010
PSU Performance Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
|
|
PSU
|
|
|
PSUs
|
|
Target
|
|
PSUs
|
|
Payment for
|
Name
|
|
Granted
|
|
Earned
|
|
Earned
|
|
2008-2010
|
|
S.C. Donnelly
|
|
|
31,497
|
|
|
|
8.29
|
%
|
|
|
2,611
|
|
|
$
|
63,925
|
|
J.D. Butler
|
|
|
11,125
|
|
|
|
8.29
|
%
|
|
|
922
|
|
|
|
22,573
|
|
T. ODonnell
|
|
|
12,405
|
|
|
|
8.29
|
%
|
|
|
1,028
|
|
|
|
25,169
|
|
The PSU payments reflected above represent just 2.9% of the
original target award value of the PSUs at their grant date, due
to the decrease in the Companys stock price from the grant
date to the end of the vesting period.
2010
Long-Term Incentive Grants
In its December 2009, January 2010 and February 2010 meetings,
the Committees primary considerations in setting 2010
long-term incentive (LTIC) grant levels included the level of
each NEOs target total direct compensation (base salary,
annual incentive compensation, and long-term incentive
compensation) in comparison to compensation comparators, past
grant levels, market changes determined by the independent
compensation consultant, and stock prices in early 2010 (with no
specific goals or weightings assigned to such factors). With
less volatile stock prices, the Committee decided to eliminate
performance cash units (PCUs) as a component of LTIC. Textron
granted PCUs as a component of the 2009 LTIC awards to mitigate
incentives
24
leveraged with stock price, which, in the environment of
depressed stock prices which prevailed at the time of those
grants, reduced payout exposure to the Company.
For 2010, NEOs had the opportunity to realize long-term
incentive compensation through three vehicles:
(1) cash-settled performance share units (PSUs),
(2) cash-settled restricted stock units (RSUs) and
(3) stock options. The mix of award types granted was 40%
of the award value for each executive officer in the form of
PSUs, 30% in the form of RSUs and 30% in the form of stock
options. The Committee determined that this allocation of value
appropriately balanced the Committees long-term incentive
compensation goals of retention, link to shareholders, and
wealth accumulation opportunities. All three grant types align
with shareholder interests, as each grant type is structured to
link to stock price, whether directly or indirectly through
payout impacted by Total Shareholder Return, as described below.
|
|
|
|
|
Performance Share Units
|
Performance share unit awards span a three-year performance
period, with vesting at the end of the third fiscal year. NEOs
may earn from 0% to 150% of the units originally granted based
upon the achievement of performance goals established by the
Committee. Upon vesting, all earned PSUs are valued based on the
value of our common stock and are paid in cash in the first
quarter following the performance period. Payouts for the
2010 2012 PSU cycle will be based 50% upon
achievement of earnings goals and 50% on achievement of cash
efficiency goals; the Committee will set the earnings and cash
efficiency goals on an annual basis. Similar to the 2009 grant,
the Committee again applied a total shareholder return
(TSR) metric to the PSUs; the Committee may exercise
negative discretion linked to TSR for the entire three-year
performance period by up to -40%. The Committee adopted a
three-year cumulative TSR goal for the entire
2010-2012
performance period which will link payout directly with
performance versus the S&P 500 during this period. This
award type combines incentive for increasing share price, as
well as meeting absolute (earnings and cash efficiency) and
relative (TSR) objective performance metrics set by the
Committee.
Restricted stock units, settled in cash, typically constitute
the right to receive the value of one share of common stock upon
vesting which occurs for one-fifth of the units on each
anniversary of the date of grant. This award type combines
incentive for increasing share price, as well as serving to
retain top talent in a manner that is less sensitive to share
price fluctuation than stock options.
Stock options vest ratably over three years beginning on the
first anniversary of the date of grant. Stock options are
granted with an exercise price equal to the closing price of
common stock traded on the New York Stock Exchange on the date
of the grant. This award type aligns the interest of management
with shareholders by providing value only based on share price
increase.
The table below displays the total LTIC value approved by the
Committee for 2010. Also provided is the percentage allocation
across the three long-term incentive components and the number
of shares granted:
2010
Long-Term Incentive Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2010-2012)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Grant
|
|
|
Performance
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
Date Fair
|
|
|
Period
|
|
|
Stock Units
|
|
|
Stock Options
|
|
|
|
|
|
|
Value
|
|
|
(40% of Value)
|
|
|
(30% of Value)
|
|
|
(30% of Value)
|
|
|
Stock Option
|
|
Name
|
|
($s)
|
|
|
(share units)
|
|
|
(share units)
|
|
|
(shares)
|
|
|
Exercise Price
|
|
|
S.C. Donnelly
|
|
$
|
5,859,613
|
|
|
|
145,623
|
|
|
|
87,374
|
|
|
|
235,602
|
|
|
$
|
20.21
|
|
F.T. Connor
|
|
|
2,087,483
|
|
|
|
51,878
|
|
|
|
31,127
|
|
|
|
83,933
|
|
|
|
20.21
|
|
J.D. Butler
|
|
|
1,016,217
|
|
|
|
25,255
|
|
|
|
15,153
|
|
|
|
40,860
|
|
|
|
20.21
|
|
T. ODonnell
|
|
|
1,133,511
|
|
|
|
28,170
|
|
|
|
16,902
|
|
|
|
45,576
|
|
|
|
20.21
|
|
25
Stock
Ownership Requirements
One objective of our executive compensation program is to align
the financial interests of our NEOs with the interests of our
shareholders. As a result, we require that senior executives
maintain a minimum level of stock ownership which may be
achieved through outright ownership of shares, Textron Savings
Plan shares, unvested restricted stock units, and unvested share
equivalents in Textron compensation and benefit plans. Minimum
ownership levels are expressed as a multiple of base salary as
follows: five times for the CEO, and three times for other NEOs.
All NEOs currently meet their respective stock ownership
requirements based on the methodology approved by the Committee.
Hedging
Restrictions
Our executives, including our NEOs, are prohibited from engaging
in short sales of Textron securities and from engaging in
transactions in publicly-traded options, such as puts, calls and
other derivative securities, involving Textron securities.
Accounting
and Tax Considerations
Section 162(m) of the Internal Revenue Code provides that
no U.S. income tax deduction is allowable to a publicly
held corporation for non-performance-based compensation in
excess of $1 million paid to a covered
employee. The definition of a covered employee includes
the chief executive officer and any other employee (other than
the chief financial officer) whose compensation is required to
be reported in the Summary Compensation Table, if those
individuals are employed by the Company at year end.
Performance-based compensation is exempt from the
$1 million limitation. Performance-based compensation must
be payable based upon meeting pre-established and objective
performance goals established by the Committee under a plan that
has been approved by shareholders and where the Committee
certifies that the performance goals were satisfied prior to
payment. Per Section 162(m), performance goals are not
objective if the Committee does not set performance standards in
a timely fashion, has any discretion to pay amounts in excess of
those earned in accordance with the achievement of these
pre-established performance standards, or pays such compensation
when the performance criteria are not met.
Our policy generally has been to maximize the compensation that
would qualify as performance-based compensation under
Section 162(m), while preserving the Committees
discretionary ability to reward individual and team performance.
Textron stock options granted under the 1999 Long-Term Incentive
Plan and the 2007 Long-Term Incentive Plan qualify as
performance-based compensation. Annual incentive compensation
awards, performance share unit awards and performance cash unit
awards each have financial components that may qualify as
performance-based compensation. These types of awards typically
also include a discretionary component based on completion of
individual performance objectives that may not qualify as
performance-based compensation.
Textron allows executives, including those whose income might
otherwise be subject to the $1 million limitation, to defer
compensation voluntarily into the Deferred Income Plan for
Textron Executives. Compensation thus deferred is not counted
toward the $1 million limitation.
A portion of the expenses incurred by Textron related to
non-business travel on Company aircraft by the NEOs or certain
other executives may not be deductible as business expenses
under the Internal Revenue Code. As a result, providing personal
use of Company aircraft as a perquisite to such executives may
result in an increased tax expense to the Company.
Compensation
Arrangements Relating to Termination of Employment
Employment agreements and plan design provisions provide varying
levels of protection to NEOs in the event of termination.
Mr. Donnellys letter agreement and
Mr. ODonnells and Mr. Butlers
employment agreement each use standardized events such as death,
disability, retirement and termination under voluntary,
involuntary (for cause), involuntary (not for cause or for good
reason), or change in control circumstances to trigger payments.
When Mr. ODonnell and Mr. Butler originally
agreed to the terms of their agreements more than ten years ago,
termination benefits triggered by these events were set based on
a combination of prevailing market practice at the time,
historical practice at Textron, and other factors unique to each
executive. Mr. Donnellys termination benefits
26
are consistent with the terms of our previous CEOs
agreement and were approved by the Committee upon
Mr. Donnellys initial hiring in 2008 in order to
attract him to Textron. Since hiring Mr. Donnelly, the
Committee no longer agrees to formal employment contracts which
provide for individual termination protection. Mr. Connor,
who was hired as the Companys Chief Financial Officer in
August 2009, is eligible for termination benefits available to
all corporate officers as provided by the Textron Inc. Severance
Plan for Key Executives.
With regard to retirement benefits, in order for Textron to
attract Mr. Donnelly to join the Company after his
19 year career at GE, his pension benefits were designed to
take into account his years of service at GE so that he would
not be disadvantaged by joining Textron. This benefit has been
affected through the adoption of an amendment to the Textron
Spillover Pension Plan adding an appendix which provides a
wrap-around pension benefit to Mr. Donnelly in
order to compensate for pension benefits at GE that would
otherwise not keep pace with his increasing compensation over
the course of his career upon joining Textron. The benefit takes
into account his service with both GE and Textron and uses the
definition of pensionable compensation and final average
compensation in the Textron Spillover Pension Plan. This
nonqualified pension benefit will become 100% vested upon the
earlier of his completion of ten years of service with Textron
or his attainment of age 62 while employed by Textron and
will be reduced by the combined value of any other benefit which
he is eligible to receive under (i) a tax-qualified defined
benefit plan maintained by GE, (ii) a tax-qualified defined
benefit plan maintained by Textron and (iii) the Textron
Spillover Pension Plan.
Mr. Connors letter agreement provides for an enhanced
pension benefit which will give him an additional three years of
credited service under the Textron Spillover Pension Plan,
subject to the vesting terms of that Plan.
EXECUTIVE
COMPENSATION
The following Summary Compensation Table sets forth information
concerning compensation of our principal executive officer,
principal financial officer and each other individual who was
serving as an executive officer at the end of Textrons
2010 fiscal year (each, an NEO and collectively, the
NEOs). Compensation that was deferred by these
officers under the Deferred Income Plan is included below as
compensation paid.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
Total ($)
|
|
|
Scott C. Donnelly
|
|
|
2010
|
|
|
$
|
1,000,000
|
|
|
$
|
0
|
|
|
$
|
3,836,253
|
|
|
$
|
1,741,099
|
|
|
$
|
1,767,600
|
|
|
$
|
297,737
|
|
|
$
|
71,331
|
|
|
$
|
8,714,020
|
|
Chairman, President and Chief
|
|
|
2009
|
|
|
|
860,962
|
(6)
|
|
|
0
|
|
|
|
2,170,184
|
|
|
|
226,679
|
|
|
|
824,486
|
|
|
|
985,480
|
|
|
|
47,948
|
|
|
|
5,115,739
|
|
Executive Officer
|
|
|
2008
|
|
|
|
425,000
|
|
|
|
4,590,000
|
|
|
|
9,951,668
|
|
|
|
2,694,000
|
|
|
|
1,320,000
|
|
|
|
492,118
|
|
|
|
2,482,922
|
|
|
|
21,955,708
|
|
Frank T. Connor
|
|
|
2010
|
|
|
|
750,000
|
|
|
|
0
|
|
|
|
1,473,502
|
|
|
|
620,265
|
|
|
|
939,038
|
|
|
|
192,971
|
|
|
|
52,700
|
|
|
|
4,028,476
|
|
Executive Vice President and
|
|
|
2009
|
|
|
|
302,885
|
|
|
|
0
|
|
|
|
1,568,845
|
|
|
|
491,760
|
|
|
|
655,988
|
|
|
|
146,600
|
|
|
|
20,044
|
|
|
|
3,186,121
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Butler
|
|
|
2010
|
|
|
|
560,000
|
|
|
|
0
|
|
|
|
727,896
|
|
|
|
301,955
|
|
|
|
536,172
|
|
|
|
1,464,623
|
|
|
|
71,923
|
|
|
|
3,662,569
|
|
Executive Vice President
|
|
|
2009
|
|
|
|
560,000
|
|
|
|
0
|
|
|
|
412,603
|
|
|
|
56,671
|
|
|
|
374,556
|
|
|
|
892,902
|
|
|
|
61,407
|
|
|
|
2,358,138
|
|
Administration and Chief
|
|
|
2008
|
|
|
|
560,000
|
|
|
|
0
|
|
|
|
647,869
|
|
|
|
424,621
|
|
|
|
204,495
|
|
|
|
1,928,552
|
|
|
|
169,947
|
|
|
|
3,935,484
|
|
Human Resources Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrence ODonnell
|
|
|
2010
|
|
|
|
525,000
|
|
|
|
0
|
|
|
|
811,900
|
|
|
|
336,807
|
|
|
|
502,661
|
|
|
|
313,592
|
|
|
|
31,150
|
|
|
|
2,521,110
|
|
Executive Vice President,
|
|
|
2009
|
|
|
|
525,000
|
|
|
|
0
|
|
|
|
460,234
|
|
|
|
63,218
|
|
|
|
351,146
|
|
|
|
200,346
|
|
|
|
31,150
|
|
|
|
1,631,095
|
|
General Counsel and Corporate
|
|
|
2008
|
|
|
|
525,000
|
|
|
|
0
|
|
|
|
1,097,713
|
|
|
|
444,052
|
|
|
|
191,714
|
|
|
|
2,211,961
|
|
|
|
370,538
|
|
|
|
4,840,978
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The numbers shown in this column for 2010 represent the grant
date fair values of equity awards granted during the fiscal
year, whether settled in stock or cash. These awards include
performance share units (PSUs) (granted in 2009 and 2010),
performance cash units (PCUs) (granted in 2009) and
restricted stock units (RSUs) (granted in 2010), which are
described in the CD&A. For PSUs and PCUs, since |
27
|
|
|
|
|
performance criteria are established on an annual basis, the
amounts shown are for the first year of the three-year
performance period beginning in 2010, plus the second year of
the three-year performance cycle beginning in 2009. The grant
date fair value of each equity-based component is detailed below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
|
|
Mr.
|
|
Mr.
|
|
Mr.
|
|
|
Donnelly
|
|
Connor
|
|
Butler
|
|
ODonnell
|
|
Performance Share Units
|
|
$
|
1,082,816
|
|
|
$
|
844,425
|
|
|
$
|
210,654
|
|
|
$
|
234,978
|
|
Performance Cash Units
|
|
|
987,608
|
|
|
|
0
|
|
|
|
211,000
|
|
|
|
235,333
|
|
Restricted Stock Units
|
|
|
1,765,829
|
|
|
|
629,077
|
|
|
|
306,242
|
|
|
|
341,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,836,253
|
|
|
$
|
1,473,502
|
|
|
$
|
727,896
|
|
|
$
|
811,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The PSU and PCU values above represent target performance. If
maximum performance is achieved, then the total value would be:
Mr. Donnelly $4,871,466, Mr. Connor $1,895,714, Mr.
Butler $938,723 and Mr. ODonnell $1,047,055.
|
|
|
|
(2) |
|
The amounts that appear in this column represent the grant date
fair value of stock options granted during the fiscal year. The
number of shares underlying the stock options granted to each
NEO during 2010 is detailed in the Grants of Plan Based Awards
Table on page 29. |
|
(3) |
|
The amounts in this column reflect annual incentive compensation
payable under Textrons Short-Term Incentive Plan. |
|
(4) |
|
The amounts in this column are primarily attributable to the
executives change in actuarial present value of
accumulated pension benefit under all defined benefit plans in
which the NEOs participate from January 3, 2010 to
January 1, 2011. This column also includes above-market
Non-Qualified Deferred Compensation (NQDC), earnings. Earnings
are considered above-market if they were higher than
120% of the long-term Applicable Federal Rate with compounding.
Deferred Income Plan participants may elect to make their
deferrals into either a Moodys account or a Textron stock
unit account. The interest rates applicable to the Moodys
Account are either the Moodys rate or a Moodys
Plus rate, depending upon when the deferral was made and
the circumstances under which Textron employment ends. For
purposes of this table, the Moodys rate has been used for
deferrals after 2001, a fixed Moodys Plus rate of 10% has
been used for deferrals made between 1988 and 2001, and a fixed
Moodys Plus rate of 11% has been used for deferrals made
prior to 1988. See footnote 3 to the Nonqualified Deferred
Compensation table on page 35. |
The table below summarizes these amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Donnelly
|
|
Mr. Connor
|
|
Mr. Butler
|
|
Mr. ODonnell
|
|
Change in Pension Value
|
|
$
|
297,737
|
|
|
$
|
192,971
|
|
|
$
|
1,364,025
|
|
|
$
|
195,407
|
|
NQDC Above Market Earnings
|
|
|
0
|
|
|
|
0
|
|
|
|
100,598
|
|
|
|
118,185
|
|
|
|
|
(5) |
|
The amounts listed include the incremental cost to Textron in
2010 of providing various perquisites and all other compensation
for 2010, as detailed below: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Donnelly
|
|
Mr. Connor
|
|
Mr. Butler
|
|
Mr. ODonnell
|
|
Supplemental Svgs Plan Contrib(a)
|
|
$
|
37,750
|
|
|
$
|
27,414
|
|
|
$
|
15,750
|
|
|
$
|
14,000
|
|
Contributions to Textron Savings Plan
|
|
|
12,250
|
|
|
|
10,086
|
|
|
|
12,250
|
|
|
|
12,250
|
|
Contributions to Retirement Plans (RAP)
|
|
|
4,900
|
|
|
|
4,900
|
|
|
|
4,900
|
|
|
|
4,900
|
|
Perquisites(b)
|
|
|
16,431
|
|
|
|
10,300
|
|
|
|
39,023
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
71,331
|
|
|
$
|
52,700
|
|
|
$
|
71,923
|
|
|
$
|
31,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
These amounts represent the value of cash-settled Textron stock
units credited to the NEOs Spillover Savings Plan account
during the year. |
|
(b) |
|
These amounts include the cost to Textron of personal benefits
provided to executives, including annual physical exams and
parking. Also included is (i) for Mr. Donnelly, the
$10,200 cost paid by Textron for a company pilot to be trained
to fly the Cessna Caravan, deemed reportable under the proxy
rules because this employee may provide assistance to
Mr. Donnelly with respect to his |
28
|
|
|
|
|
personal Caravan aircraft, and (ii) for Mr. Butler,
$34,968 in incremental cost to Textron for personal usage of
corporate aircraft. For proxy reporting purposes, Textron values
the personal use of corporate aircraft by using an incremental
cost method that takes into account variable factors such as
cost per flight hour (by aircraft type), landing fees, and
hangar fees. The incremental cost of locating aircraft to the
origin of a personal trip, or returning aircraft from the
completion of a personal trip, known as deadhead
flights, are also included in the amount reported. In addition,
infrequently, a family member or guest travels with an executive
on a business flight; the aggregate incremental cost to Textron
of such flights is de minimis and no amount attributable
to these flights is reflected in the table. |
|
|
|
(6) |
|
Effective December 1, 2009, Mr. Donnellys base salary
was increased form $850,000 to $1,000,000 per year as a result
of his appointment to the position of Chief Executive Officer. |
Grants of
Plan-Based Awards in Fiscal 2010
The following table sets forth information on plan-based
compensation awards granted during Textrons 2010 fiscal
year to the NEOs. Annual grants were approved on
February 23, 2010 for grant on March 1, 2010.
Grants of
Plan-Based Awards in 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Equity Incentive Plan Awards
|
|
Shares of
|
|
Number of
|
|
Exercise or
|
|
Fair Value of
|
|
|
|
|
|
|
Thresh-
|
|
|
|
|
|
Thresh-
|
|
|
|
|
|
Stock or
|
|
Securities
|
|
Base Price of
|
|
Stock &
|
|
|
Grant
|
|
|
|
hold
|
|
Target
|
|
Maximum
|
|
hold
|
|
Target
|
|
Maximum
|
|
Stock
|
|
Underlying
|
|
Option
|
|
Option
|
Name
|
|
Date
|
|
Grant Type
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Units (#)
|
|
Options
|
|
Awards
|
|
Awards(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. C. Donnelly
|
|
|
|
|
|
|
Annual IC(1
|
)
|
|
|
0
|
|
|
|
1,200,000
|
|
|
|
2,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
2,754,022
|
|
|
|
5,163,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
784,228
|
|
|
|
|
3/1/2010
|
|
|
|
Restricted Stk
Units (3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,374
|
|
|
|
|
|
|
|
|
|
|
|
1,765,829
|
|
|
|
|
3/1/2010
|
|
|
|
Stock Options(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,602
|
|
|
|
20.210
|
|
|
|
1,741,099
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
298,588
|
|
|
|
|
3/1/2010
|
|
|
|
PCUs(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
987,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. T. Connor
|
|
|
|
|
|
|
Annual IC(1
|
)
|
|
|
0
|
|
|
|
637,500
|
|
|
|
1,275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
981,117
|
|
|
|
1,839,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
279,380
|
|
|
|
|
3/1/2010
|
|
|
|
Restricted Stk
Units (3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,127
|
|
|
|
|
|
|
|
|
|
|
|
629,077
|
|
|
|
|
3/1/2010
|
|
|
|
Stock Options(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,933
|
|
|
|
20.210
|
|
|
|
620,265
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
565,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. D. Butler
|
|
|
|
|
|
|
Annual IC(1
|
)
|
|
|
0
|
|
|
|
364,000
|
|
|
|
728,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
477,623
|
|
|
|
895,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,007
|
|
|
|
|
3/1/2010
|
|
|
|
Restricted Stk
Units (3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,153
|
|
|
|
|
|
|
|
|
|
|
|
306,242
|
|
|
|
|
3/1/2010
|
|
|
|
Stock Options(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,860
|
|
|
|
20.210
|
|
|
|
301,955
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,647
|
|
|
|
|
3/1/2010
|
|
|
|
PCUs(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
211,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. ODonnell
|
|
|
|
|
|
|
Annual IC(1
|
)
|
|
|
0
|
|
|
|
341,250
|
|
|
|
682,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
532,751
|
|
|
|
998,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,705
|
|
|
|
|
3/1/2010
|
|
|
|
Restricted Stk
Units (3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,902
|
|
|
|
|
|
|
|
|
|
|
|
341,589
|
|
|
|
|
3/1/2010
|
|
|
|
Stock Options(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,576
|
|
|
|
20.210
|
|
|
|
336,807
|
|
|
|
|
3/1/2010
|
|
|
|
PSUs(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,273
|
|
|
|
|
3/1/2010
|
|
|
|
PCUs(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,333
|
|
|
|
|
(1) |
|
These amounts refer to awards of annual incentive compensation
made under the Textron Inc. Short-Term Incentive Plan. The
performance metrics and methodology for calculating payments are
described in the CD&A. |
|
(2) |
|
These amounts refer to performance share unit grants made under
the Textron Inc. 2007 Long-Term Incentive Plan, which are
performance-based long-term grants of share units paid in cash,
designed to reward the achievement of specified goals over three
distinct fiscal-year performance periods. The performance
metrics and methodology for calculating payments are described
in the CD&A. Grants of PSUs in 2010 vest following fiscal
2012. The target amount to be paid in 2013 assumes
100% earned (prior to the TSR modifier) and is based on the
fiscal year-end share price of $23.64. The maximum
that can be paid per the plan design is 150% of the PSUs granted
prior to the application of the TSR modifier, as described in
the CD&A. |
29
|
|
|
(3) |
|
These amounts represent the number of restricted stock units
granted in 2010 pursuant to the Textron Inc. 2007 Long-Term
Incentive Plan. Grants of these restricted stock units vest
ratably over five years, beginning on March 1, 2011, and
annually thereafter. |
|
(4) |
|
These amounts represent the number of stock options granted in
2010 pursuant to the Textron Inc. 2007 Long-Term Incentive Plan.
All annual grants of stock options vest ratably over three
years, beginning on March 1, 2011, and annually thereafter.
The exercise price for stock option grants is equal to the
closing price on the grant date. |
|
(5) |
|
Reflects the grant date value of the 2010 portion of the
2009-2011
PSU grant. |
|
(6) |
|
Reflects the grant date value of the 2010 portion of the
2009-2011
PCU grant. |
|
(7) |
|
With respect to PSUs granted in 2010, the amounts in this column
represent the value of only the 2010 portion of the
2010-2012
grant since the grant is subject to three single-year
performance periods (2010, 2011 and 2012). With respect to PSUs
and PCUs granted in 2009, the amounts in this column represent
the value of only the 2010 portion of the
2009-2011
grant since the grant is subject to three single-year
performance periods (2009, 2010 and 2011). |
30
Outstanding
Equity Awards at 2010 Fiscal Year-End
The following table sets forth information with respect to the
NEOs concerning unexercised options, stock awards that have not
yet vested, and equity incentive plan awards as of the end of
our 2010 fiscal year.
Outstanding
Equity Awards at Fiscal Year-End 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares,
|
|
Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Units, or
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Market Value
|
|
Other
|
|
Units, or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Units of
|
|
of Shares or
|
|
Rights
|
|
Other
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Type of
|
|
|
|
Stock
|
|
Units of Stock
|
|
That Have
|
|
Rights That
|
|
|
Grant
|
|
Options (#)
|
|
Options (#)
|
|
Exercise
|
|
Expiration
|
|
Stock
|
|
Grant
|
|
That Have
|
|
That Have Not
|
|
Not
|
|
Have Not
|
Name
|
|
Date(1)
|
|
Exerciseable
|
|
Unexerciseable
|
|
Price ($)(2)
|
|
Date
|
|
Award(3)
|
|
Year
|
|
Not Vested (#)
|
|
Vested ($)(4)
|
|
Vested (#)
|
|
Vested ($)(5)
|
|
S. C. Donnelly
|
|
|
7/3/2008
|
|
|
|
40,000
|
|
|
|
160,000
|
|
|
|
47.84000
|
|
|
|
7/3/2018
|
|
|
|
PSU
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
145,623
|
|
|
|
2,754,022
|
|
|
|
|
2/27/2009
|
|
|
|
33,583
|
|
|
|
67,163
|
|
|
|
5.65000
|
|
|
|
2/27/2019
|
|
|
|
RSU
|
|
|
|
2010
|
|
|
|
87,374
|
|
|
|
2,065,521
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
0
|
|
|
|
235,602
|
|
|
|
20.21000
|
|
|
|
3/1/2020
|
|
|
|
PSU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
205,975
|
|
|
|
3,895,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
3,166,250
|
|
|
|
2,533,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
537,283
|
|
|
|
429,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
2009
|
|
|
|
71,904
|
|
|
|
1,699,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
2009
|
|
|
|
44,385
|
|
|
|
1,049,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
2008
|
|
|
|
77,946
|
|
|
|
1,842,643
|
|
|
|
|
|
|
|
|
|
F. T. Connor
|
|
|
8/5/2009
|
|
|
|
26,667
|
|
|
|
53,333
|
|
|
|
14.34000
|
|
|
|
8/5/2019
|
|
|
|
PSU
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
51,878
|
|
|
|
981,117
|
|
|
|
|
3/1/2010
|
|
|
|
0
|
|
|
|
83,933
|
|
|
|
20.21000
|
|
|
|
3/1/2020
|
|
|
|
RSU
|
|
|
|
2010
|
|
|
|
31,127
|
|
|
|
735,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
2,269,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
2009
|
|
|
|
56,000
|
|
|
|
1,323,840
|
|
|
|
|
|
|
|
|
|
J. D. Butler
|
|
|
1/15/2002
|
|
|
|
4,884
|
|
|
|
0
|
|
|
|
20.47500
|
|
|
|
1/15/2012
|
|
|
|
PSU
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
25,255
|
|
|
|
477,623
|
|
|
|
|
1/15/2003
|
|
|
|
4,536
|
|
|
|
0
|
|
|
|
22.04250
|
|
|
|
1/15/2013
|
|
|
|
RSU
|
|
|
|
2010
|
|
|
|
15,153
|
|
|
|
358,217
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2004
|
|
|
|
3,544
|
|
|
|
0
|
|
|
|
28.21500
|
|
|
|
2/12/2014
|
|
|
|
PSU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
51,494
|
|
|
|
973,855
|
|
|
|
|
2/23/2005
|
|
|
|
38,260
|
|
|
|
0
|
|
|
|
38.28750
|
|
|
|
2/23/2015
|
|
|
|
PCU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
791,250
|
|
|
|
633,000
|
|
|
|
|
3/1/2006
|
|
|
|
33,146
|
|
|
|
0
|
|
|
|
43.97500
|
|
|
|
3/1/2016
|
|
|
|
RSU
|
|
|
|
2009
|
|
|
|
17,976
|
|
|
|
424,953
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2007
|
|
|
|
42,746
|
|
|
|
0
|
|
|
|
45.85000
|
|
|
|
3/1/2017
|
|
|
|
RSU
|
|
|
|
2008
|
|
|
|
7,540
|
|
|
|
178,246
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2008
|
|
|
|
18,965
|
|
|
|
9,481
|
|
|
|
54.17000
|
|
|
|
2/28/2018
|
|
|
|
RSU
|
|
|
|
2007
|
|
|
|
6,940
|
|
|
|
164,062
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2009
|
|
|
|
8,396
|
|
|
|
16,791
|
|
|
|
5.65000
|
|
|
|
2/27/2019
|
|
|
|
RSU
|
|
|
|
2006
|
|
|
|
3,528
|
|
|
|
83,402
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
0
|
|
|
|
40,860
|
|
|
|
20.21000
|
|
|
|
3/1/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. ODonnell
|
|
|
1/15/2003
|
|
|
|
53,464
|
|
|
|
0
|
|
|
|
22.04250
|
|
|
|
1/15/2013
|
|
|
|
PSU
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
28,170
|
|
|
|
532,751
|
|
|
|
|
2/12/2004
|
|
|
|
41,856
|
|
|
|
0
|
|
|
|
28.21500
|
|
|
|
2/12/2014
|
|
|
|
RSU
|
|
|
|
2010
|
|
|
|
16,902
|
|
|
|
399,563
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2005
|
|
|
|
38,260
|
|
|
|
0
|
|
|
|
38.28750
|
|
|
|
2/23/2015
|
|
|
|
PSU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
57,444
|
|
|
|
1,086,381
|
|
|
|
|
3/1/2006
|
|
|
|
33,146
|
|
|
|
0
|
|
|
|
43.97500
|
|
|
|
3/1/2016
|
|
|
|
PCU
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
882,500
|
|
|
|
706,000
|
|
|
|
|
3/1/2007
|
|
|
|
42,746
|
|
|
|
0
|
|
|
|
45.85000
|
|
|
|
3/1/2017
|
|
|
|
RSU
|
|
|
|
2009
|
|
|
|
20,053
|
|
|
|
474,053
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2008
|
|
|
|
21,146
|
|
|
|
10,572
|
|
|
|
54.17000
|
|
|
|
2/28/2018
|
|
|
|
RSU
|
|
|
|
2008
|
|
|
|
8,407
|
|
|
|
198,741
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2009
|
|
|
|
9,366
|
|
|
|
18,731
|
|
|
|
5.65000
|
|
|
|
2/27/2019
|
|
|
|
RSU
|
|
|
|
2007
|
|
|
|
6,940
|
|
|
|
164,062
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2010
|
|
|
|
0
|
|
|
|
45,576
|
|
|
|
20.21000
|
|
|
|
3/1/2020
|
|
|
|
RSU
|
|
|
|
2006
|
|
|
|
3,528
|
|
|
|
83,402
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Stock option awards associated with each annual grant vest
ratably over three years on each anniversary of the grant date. |
|
(2) |
|
For grants in 2007 and beyond, the exercise price of stock
options is equal to the closing price on the date of grant. For
grants prior to 2007, per the procedures described in the 1999
Long-Term Incentive Plan, the exercise price for these grants
was equal to the average of the high and low trading prices on
the grant date. |
|
(3) |
|
The following types of stock awards are shown in this table: |
|
|
|
(i) |
|
PSU refers to performance share units. These
units reward achievement of long-term goals over a three-year
performance period, vesting at the end of the third fiscal year.
They are settled in cash and valued based on the average closing
price of Textron common stock for the first ten trading days of
the fiscal year following vesting. Further information about
these awards can be found in the CD&A. |
31
|
|
|
(ii) |
|
PCU refers to performance cash units. These
units reward achievement of long-term goals over a three-year
performance period, vesting at the end of the third fiscal year.
They are settled in cash and each unit earned is valued at $1.00
on the date of payment. |
|
(iii) |
|
RSU refers to restricted stock units. RSUs
granted in 2008 and prior, vest ratably over three years
beginning on the third anniversary of the date of grant. Upon
vesting, common stock will be issued to the executive. RSUs
granted in 2009 and 2010 are payable in cash and vest ratably
over five years, except that the special RSU awards granted to
Mr. Donnelly in 2009, consisting of 66,578 units vest
ratably over three years. Beginning in 2011, the Committee has
determined that RSUs granted to the NEOs will again be settled
in stock. |
|
|
|
(4) |
|
The market value of RSUs that have not vested as of
January 1, 2011 was calculated using the fiscal year-end
closing share price of $23.64 multiplied by the number of
unvested shares or share units as of that date. |
|
(5) |
|
The market value of PSUs that have not vested as of year-end
2010 was calculated using the fiscal year-end closing share
price of $23.64 multiplied by the number of unvested units
assuming 100% of the units are earned (prior to the TSR
modifier). PSUs granted in 2009 and 2010 vest, to the extent
earned, on December 31, 2011 and on December 29, 2012,
respectively. The market value of PSUs and PCUs that have not
yet vested was calculated assuming that 100% (prior to the TSR
modifier) of the units are earned. |
Option
Exercises and Stock Vested in Fiscal 2010
The following table provides information concerning the vesting
of stock, including performance share units and restricted stock
units, during Textrons 2010 fiscal year for each NEO.
There were no exercises of stock options by the NEOs during the
2010 fiscal year.
Stock
Vested in Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Type of
|
|
|
Shares or Units
|
|
|
Value
|
|
|
|
Equity
|
|
|
Acquired on
|
|
|
Realized on
|
|
Name
|
|
Award(1)
|
|
|
Vesting
|
|
|
Vesting ($)(2)
|
|
S. C. Donnelly
|
|
|
PSU
|
|
|
|
2,611
|
|
|
$
|
63,925
|
|
|
|
|
RSU
|
|
|
|
79,142
|
|
|
|
1,620,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,684,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. T. Connor
|
|
|
PSU
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
RSU
|
|
|
|
14,000
|
|
|
|
282,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
282,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. D. Butler
|
|
|
PSU
|
|
|
|
922
|
|
|
|
22,573
|
|
|
|
|
RSU
|
|
|
|
14,679
|
|
|
|
294,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
317,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. ODonnell
|
|
|
PSU
|
|
|
|
1,028
|
|
|
|
25,169
|
|
|
|
|
RSU
|
|
|
|
15,199
|
|
|
|
305,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
330,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
PSU refers to performance share units,
RSU refers to restricted stock units as described in
more detail in the footnotes to the previous table. |
|
(2) |
|
Valuation methodology is described in the previous table. |
32
Pension
Benefits in Fiscal 2010
The table below sets forth information on the pension benefits
for the NEOs under each of the Companys pension plans:
Pension
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
Number of Years of
|
|
|
Present Value of
|
|
|
During Last
|
|
Name
|
|
Plan Name
|
|
Credited Service
|
|
|
Accumulated Benefit
|
|
|
Fiscal Year
|
|
|
S. C. Donnelly
|
|
TRP
|
|
|
2.50
|
|
|
$
|
33,459
|
|
|
|
0
|
|
|
|
SPP
|
|
|
2.50
|
|
|
|
211,560
|
|
|
|
0
|
|
|
|
Wrap Around
|
|
|
21.50
|
(1)
|
|
|
1,530,316
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
1,775,335
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. T. Connor
|
|
TRP
|
|
|
1.42
|
|
|
|
21,998
|
|
|
|
0
|
|
|
|
SPP (Regular Svc)
|
|
|
1.42
|
|
|
|
86,920
|
|
|
|
0
|
|
|
|
SPP (Extra Svc)
|
|
|
3.00
|
(1)
|
|
|
230,653
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
339,571
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. D. Butler
|
|
TRP
|
|
|
13.50
|
|
|
|
435,314
|
|
|
|
0
|
|
|
|
SPP
|
|
|
13.50
|
|
|
|
4,752,975
|
|
|
|
0
|
|
|
|
SRP
|
|
|
N/A
|
(2)
|
|
|
8,202,199
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
13,390,488
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. ODonnell
|
|
TRP
|
|
|
10.75
|
|
|
|
367,857
|
|
|
|
0
|
|
|
|
SPP
|
|
|
10.75
|
|
|
|
3,900,483
|
|
|
|
0
|
|
|
|
SRP
|
|
|
N/A
|
(2)
|
|
|
9,011,024
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
13,279,364
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Years of extra service granted to the executive by contract. |
|
(2) |
|
Benefits under the SRP are not based upon years of service but
are based upon age. |
The plan names and a brief description of each are as follows:
TRP:
Textron Retirement Program
Effective January 1, 2007, Textron consolidated its
retirement benefits for U.S. salaried and eligible
bargained employees into a single program, the Textron
Retirement Program. The TRP is designed to be a
floor-offset arrangement which has two parts. The
first is a traditional defined pension benefit which provides a
set monthly income (pension) at retirement through a formula
based on age, years of service, and annual compensation. The
second is a new defined contribution benefit called the Textron
Retirement Account Plan. The traditional plan design formula is
slightly different than the prior plan as it is no longer
integrated with social security. The benefit provided to the
participant will be the greater of the traditional pension
benefit or the value provided by the Retirement Account Plan.
Transition rules between the prior plan design and the new plan
design provide that participants who meet certain rules will be
grandfathered. This means that their benefit will be calculated
under the prior pension formula as well as the new TRP and they
will receive the larger amount of the two. Mr. Butler and
Mr. ODonnell meet the grandfathering rules. The TRP
is funded and tax qualified.
Benefits under the new defined pension formula are based on one
and one-third percent of eligible compensation. Benefits under
the prior formula are based on a one percent annual benefit for
compensation up to the covered compensation level
($48,896 in 2010), plus an additional amount equal to one and
one-half percent of eligible compensation in excess of covered
compensation. Eligible Compensation includes base
salary plus annual incentive payments in a given year, up to the
401(a)(17) limit ($245,000 in 2010). The
33
benefit formula is calculated based on eligible employees
highest consecutive five-year average eligible compensation
throughout their career at Textron. Provided an employee meets
the five years of qualifying service to become vested in the
plan, the accumulated benefit earned during an employees
career is payable in monthly installments after retirement.
While the normal retirement age under the Plan is 65, eligible
grandfathered employees can earn a full benefit upon attainment
of age 62. Eligible employees who meet defined age and
service criteria can retire and begin collecting a reduced
benefit as early as age 55. As of January 1, 2011,
Mr. Butler and Mr. ODonnell qualified for a full
benefit due to their age and service to Textron.
Under the Retirement Account Plan, Textron makes annual
contributions to a participants account equal to 2% of
eligible compensation up to the 401(a)(17) limit ($245,000 in
2010), and the account balance is adjusted for investment gains
and losses. The participant may receive the account in a lump
sum or as an actuarially equivalent annuity upon termination of
employment at any age. The value of any distribution from the
Retirement Account Plan offsets benefits accrued after 2006
under the pension formula.
SPP:
Spillover Pension Plan
In 2007, the Supplemental Benefits Plan was amended and renamed
the Spillover Pension Plan. Although there are some design
changes, the changes do not impact the NEOs who were eligible
for this plan prior to January 1, 2007. Federal law limits
the annual amount that tax-qualified pension plans may pay.
Textron maintains this unfunded Plan to compensate certain
Textron executives for pension benefits that would have been
earned but for these limitations. The formula for the SPP is the
same as the formula for the defined benefit portion of the
qualified plan. Eligible compensation components include base
salary, annual incentive compensation earned in a given year
(paid in a given year, after 2006), and for certain eligible
participants, including the current NEOs, except for
Mr. Donnelly and Mr. Connor, performance share unit
payments. The amount included in the formula equals the total of
these components (whether or not deferred), less the 401(a)(17)
limit noted above ($245,000 in 2010). Benefits under this plan
also vest after five years of qualifying service, and are
generally paid under the same age and service requirements as
the defined benefit portion of the TRP. This plan is unfunded
and not qualified for tax purposes.
In 2008, an appendix was added to this plan for certain
designated participants hired on or after January 1, 2008,
including Mr. Donnelly, to provide a
Wrap-Around pension benefit. This appendix will
recognize an additional benefit service accrual identified in
the offer letter of the designated participant and the resulting
calculation will be offset by the prior employer age 65
benefit as described in the offer letter, and any qualified and
non-qualified age 65 benefit provided by Textron. Specific
to Mr. Donnelly, refer to the CD&A for details on his
Wrap-Around benefit.
SRP:
Supplemental Retirement Plan
Certain executives, as approved individually by the Organization
and Compensation Committee, also participate in the Supplemental
Retirement Plan for Textron Key Executives, which provides
benefits to participants who remain in the employ of Textron
until at least age 60. Mr. Butler and
Mr. ODonnell are participants in this plan and both
qualify to receive benefits under the plan, which is unfunded
and not qualified for tax purposes. The SRP was closed to new
entrants in 2008.
Under this plan, participating executives are entitled to
receive a pension benefit equal to 50% of their highest
consecutive five years of eligible earnings at age 65,
reduced by any amounts to which they are entitled under the
Textron plans described above and, except as may be provided in
individual employment agreements, those of any prior employer. A
reduced benefit of between 25% and 45% of their highest
consecutive five-year average compensation is earned under this
plan for retirement at the ages of 60 to 64, respectively. The
definition of eligible compensation for purposes of calculating
a benefit under the SRP is the same as the definition of
eligible compensation under the SPP as described above, except
that eligible compensation under the SRP excludes performance
share units awarded after 2005 for participating NEOs.
If a participant in this plan is entitled to receive a
retirement benefit under the SPP or any other non-qualified plan
that would be subtracted from the benefit under this plan, the
amount of the benefit shall be
34
calculated under the SPP but the benefit shall be paid
exclusively at the time and in the form provided under this
plan, as if the other plans benefit were part of the
participants benefit under this plan, even if the
participant is not otherwise eligible to receive any retirement
benefit under this plan (for example, because he retired before
his benefit under this plan vested or because his benefit under
the plan is fully offset by his other plan benefits).
Nonqualified
Deferred Compensation
The table below shows the deferred compensation activity for
each NEO during 2010 under non-qualified deferred compensation
plans maintained by Textron.
Nonqualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings in
|
|
Withdrawals/
|
|
Balance at
|
Name
|
|
Plan Name
|
|
Last FY ($)(1)
|
|
Last FY ($)(2)
|
|
Last FY ($)(3)
|
|
Distributions ($)
|
|
Last FYE ($)(4)
|
|
S.C. Donnelly
|
|
Deferred Income Plan
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
Spillover Savings Plan
|
|
|
0
|
|
|
|
37,750
|
|
|
|
17,676
|
|
|
|
0
|
|
|
|
102,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
$
|
37,750
|
|
|
$
|
17,676
|
|
|
$
|
0
|
|
|
$
|
102,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F.T. Connor
|
|
Deferred Income Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
Spillover Savings Plan
|
|
|
0
|
|
|
|
27,413
|
|
|
|
4,866
|
|
|
|
0
|
|
|
|
36,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
$
|
27,413
|
|
|
$
|
4,866
|
|
|
$
|
0
|
|
|
$
|
36,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.D. Butler
|
|
Deferred Income Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
1,205,708
|
|
|
|
0
|
|
|
|
15,153,559
|
|
|
|
Spillover Savings Plan
|
|
|
0
|
|
|
|
15,750
|
|
|
|
33,466
|
|
|
|
0
|
|
|
|
168,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
$
|
15,750
|
|
|
$
|
1,239,174
|
|
|
$
|
0
|
|
|
$
|
15,322,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. ODonnell
|
|
Deferred Income Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
1,072,055
|
|
|
|
0
|
|
|
|
14,038,006
|
|
|
|
Spillover Savings Plan
|
|
|
0
|
|
|
|
14,000
|
|
|
|
25,966
|
|
|
|
0
|
|
|
|
131,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0
|
|
|
$
|
14,000
|
|
|
$
|
1,098,021
|
|
|
$
|
0
|
|
|
$
|
14,169,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents an elective deferral into the Deferred Income Plan
for Textron Executives (the DIP) as described below.
Executives who choose to voluntarily defer a portion of their
income into the DIP have reduced their cash compensation in the
year of payment in exchange for an unsecured promise by the
Company to pay the principal and any earnings to the executive
upon the executives termination. The Plan provides certain
distribution elections to receive DIP balances upon termination,
but in no case can distributions begin until six months have
elapsed since the end of the executives employment (in
accordance with Section 409A). |
|
(2) |
|
The amounts shown in this column include contributions made by
Textron into each executives notional deferred income
account in the Textron Spillover Savings Plan (the
SSP) in 2010. As per plan provisions, Textron
provides a 10% match on any voluntary deferral into the Textron
stock unit account. These amounts also include contributions to
the Spillover Savings Plan (SSP), which are also reported in the
All Other Compensation column in the Summary
Compensation table. |
|
(3) |
|
The amounts in this column reflect aggregate earnings during the
fiscal year on amounts accrued in the participants
accounts under the DIP and the SSP, if applicable, based upon
the terms of each plan, as described below. To the extent the
credited rate exceeds 120% of the long-term Applicable Federal
Rate, such earnings are considered above-market
earnings; in this case, the amount of these earnings that
are considered above-market are also reported in the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column in the Summary Compensation
Table. The amount of above-market interest attributable to each
executive is as follows: $100,598 for Mr. Butler and
$118,185 for Mr. ODonnell. |
|
(4) |
|
Of these balances, the following amounts were reported in
Summary Compensation Tables in prior-year proxy statements
beginning with the 2007 proxy statement (for fiscal 2006): Mr.
Donnelly $40,548, Mr. Connor $2,894, Mr. Butler $772,930,
and Mr. ODonnell $1,955,353. The amounts in the preceding
sentence do not include: (i) amounts deferred prior to fiscal
2006, and (ii) deferrals of certain cash-settled stock unit
awards, all of which are reflected in the aggregate balances
shown above. This information is |
35
|
|
|
|
|
provided to clarify the extent to which amounts payable as
deferred compensation represent compensation reported in our
prior proxy statements, rather than additional currently earned
compensation. |
The plan names and a brief description of each are as follows:
DIP:
Deferred Income Plan for Textron Executives
NEOs deferring compensation into this plan have forgone current
compensation in exchange for an unsecured promise from the
Company to pay the deferred amount after employment ends. NEOs
can defer up to 25% of base salary and up to 80% of certain
other cash compensation including Annual IC and long-term
incentive distributions settled in cash. The
principal amount that is deferred can be credited
with either a Moodys-based interest rate or a rate of
return that approximates the return on investment for a share of
Textron common stock, including dividend equivalents, based upon
the elections made annually by each NEO. The interest rates
applicable to the Moodys account are either the
Moodys Rate or a Moodys Plus rate. The
Moodys rate is the average Moodys Corporate Bond
Yield Index as published by Moodys Investors Service, Inc.
The compounded Moodys yield for 2010 was 5.48%, which was
applied to all deferrals made subsequent to December 31,
2001. For DIP participant deferrals made prior to January 1988,
the rate will be either the Moodys rate plus 3%, but not
less than 11%, (the Moodys Plus rate) or the
Moodys rate but not less than 8%, and for deferrals made
from January 1988 through December 2001, the rate will be either
the Moodys rate plus 2%, but not less than 10% (the
Moodys Plus rate), or the Moodys rate,
but not less than 8%. The applicable rates depend on the
circumstances under which Textron employment ends. Textron makes
a matching contribution in the NEOs stock unit account
equal to 10% of any elective deferred income allocated initially
by the NEO to the stock unit account.
Per the DIP plan document, the earnings on the Moodys
account balance will be credited using the Moodys Plus
rate if Textron employment ends (i) at or after age 62
(other than for less than acceptable performance or by reason of
death); (ii) as a result of total disability as defined
under the Textron Master Retirement Plan; or (iii) under
other circumstances approved in writing by Textrons Chief
Executive Officer and Chief Human Resources Officer.
SSP:
Textron Spillover Savings Plan
This plan makes up for forgone company match into the
tax-qualified Textron Savings Plan because of federal
compensation limits, and as a result of deferring income under
the Deferred Income Plan for Textron Executives (DIP). NEO
contributions to the qualified savings plan are capped at 10% of
eligible compensation up to the 401(a)(17) limit ($245,000 in
2010) due to federal limits. Contributions under the
Spillover Savings Plan are in the form of unfunded book-entry
accounts credited as stock units, which earn dividend
equivalents, which are reinvested into stock units.
Potential
Payments Upon Termination or Change in Control
The discussion and tables below reflect the amount of
compensation that would become payable to each of the NEOs,
under existing plans and arrangements if the named
executives employment had terminated on December 31,
2010, the last business day of Textrons 2010 fiscal year.
Information is provided with respect to the following
termination scenarios voluntary, for cause, not for
cause, change in control, death, disability or retirement, and
is based upon the named executives compensation and
service levels as of such date and, if applicable, based on the
Companys closing stock price on that date.
In addition, in connection with any actual termination of
employment, the Company may determine to enter into an agreement
or to establish an arrangement providing additional benefits or
amounts, or altering the terms of benefits described below,
consistent with the terms of employment contracts and as the
Organization and Compensation Committee believes appropriate.
The actual amounts that would be paid upon a NEOs
termination of employment can be determined only at the time of
such executives separation from the Company. Due to the
number of factors that affect the nature and amount of any
benefits provided upon the events discussed below, any actual
amounts paid or distributed may be higher or lower than reported
below. Factors that could affect these amounts include the
timing during the year of any such event, the Companys
share price and the executives age. In connection with
certain terminations of employment, the
36
executive would be required to execute a release of claims and
comply with noncompetition provisions to receive all of the
benefits provided by his employment agreement.
Mr. ODonnell and Mr. Butler have employment
contracts with Textron that provide for a three-year initial
term, with successive one-year renewal provisions. Also, the
contracts provide for specified levels of severance protection
based on the reason for termination, including change in
control, irrespective of the remaining term of the agreement.
The contracts provide excise tax protection, subject to certain
conditions, for change in control terminations.
Mr. Donnelly does not have an employment agreement with
Textron for a specific term, however his letter agreement with
the Company provides similar separation benefits and excise tax
protection in the event of his involuntary termination without
cause or termination for good reason. Mr. Connor has only
the severance benefits provided by the Textron Inc. Severance
Plan for Key Executives.
Mr. ODonnells and Mr. Butlers
contracts and Mr. Donnellys letter agreement with the
Company (collectively, the NEOs Contracts)
provide that base salary will not be reduced and the officers
will remain eligible for participation in Textrons
executive compensation and benefit plans during the term of the
contracts. As permitted by his employment contract with Textron,
Mr. ODonnell remains a partner of the
Washington, D.C. law firm, Williams & Connolly
LLP, which has provided legal services to Textron for over
thirty years. Mr. ODonnell does not receive any share
in firm income resulting from services provided by the firm to
Textron. The Nominating and Corporate Governance Committee
annually reviews Textrons relationship with
Williams & Connolly.
Payments
Made Upon a Voluntary Termination by an Executive.
Voluntary termination occurs when the NEO leaves the Company at
his own will (e.g., voluntary resignation). Upon a voluntary
termination executives are entitled only to their accrued
obligations. Additionally, those executives that are retirement
eligible or early-retirement eligible (defined as the attainment
of one of the following conditions, per the Textron Master
Retirement Plan (qualified pension plan): (i) age 60;
(ii) 20 years of service to Textron; or
(iii) age 55 with at least 10 years of service to
Textron) as of December 31, 2010 (Mr. Butler and
Mr. ODonnell) would be entitled to the following:
|
|
|
|
|
Treatment of Long-Term Incentive Awards:
|
|
|
|
|
|
Restricted stock units outstanding for six months or more will
be subject to pro-rata vesting acceleration through the
termination date
|
|
|
|
Performance share units outstanding for twelve months or more
will be subject to pro-rata vesting through the termination
date, with payment based on actual performance
|
|
|
|
Performance cash units will be subject to pro-rata vesting
through the termination date, with payment based on actual
performance
|
|
|
|
Unvested stock options shall continue to vest per their normal
vesting schedule for a period of 36 months after termination
|
Payments
Made Upon a Termination for Cause by the
Company.
A for cause termination occurs when a NEO is
separated from Textron after engaging in one or more activities
specified in the NEOs employment contract or in our
non-qualified plans, including, but not limited to:
(i) conviction of, or pleading nolo contendere or
guilty to, a felony (other than a traffic infraction or a crime
involving vicarious liability under certain circumstances),
(ii) willful misrepresentation, fraud or dishonesty for
personal enrichment at the expense of Textron,
(iii) willful misconduct or behavior, willful violation of
the Companys Business Conduct Guidelines, or breach of the
NEOs fiduciary duties, in each case, that results in
material harm to Textron, or (iv) any other material breach
of the employment contract. Upon a termination for
cause, executives are entitled only to their accrued
obligations.
37
Payments
Made Upon a Not for Cause Termination by the Company
or by an Executive for Good Reason.
Mr. Donnelly, Mr. Butler and
Mr. ODonnell
A not for cause termination (also called
involuntary termination) occurs when employment ends
either at the initiation of Textron, but without circumstances
that would indicate a for cause situation, or at the
initiation of the executive for Good Reason. Under
each of the NEOs Contracts, Good Reason
generally means the occurrence of one or more of the following:
(i) the assignment to the NEO of duties that are materially
inconsistent with his position, (ii) the material reduction
of the NEOs position (including, for purposes of the
employment contract with Mr. ODonnell as a result of
Textron having become a subsidiary of another entity and the
executive no longer serving in his current position for the
ultimate parent entity), (iii) the forced relocation of the
NEOs principal office, (iv) a reduction in the
NEOs salary or other benefits, (v) the failure of the
Company to deliver to the employee a satisfactory written
agreement from any successor to the Company to assume and agree
to perform under the employment contract, or (vi) other
material breach by Textron of the employment contract. Upon a
termination not for cause, or for Good
Reason, Mr. Donnelly, Mr. ODonnell and
Mr. Butler are entitled to their accrued obligations as
well as the following:
|
|
|
|
|
Cash Severance Benefit Comprised of:
|
|
|
|
|
|
Two times the sum of (i) base salary and (ii) the
greater of (a) the termination year target annual cash
incentive compensation and (b) for Mr. Donnelly and
Mr. Butler, the average annual cash incentive compensation
earned during the last three fiscal years, or, for
Mr. ODonnell, an amount equal to the multiple of
target earned in the prior year times his current years
target annual incentive compensation
|
|
|
|
A pro-rated annual cash incentive compensation payment (based on
actual performance) for the year of termination
|
|
|
|
|
|
Treatment of Long-Term Incentive Awards (including any early
retirement or retirement benefits described above for those
eligible individuals):
|
|
|
|
|
|
Outstanding restricted stock units for Mr. Butler and
Mr. ODonnell will be subject to pro-rata vesting
acceleration through the termination date
|
|
|
|
Unvested stock options for Mr. Donnelly and Mr. Butler
will be subject to full vesting acceleration for that portion of
the awards that would have vested within two years after
termination
|
|
|
|
To the extent not accelerated as provided above, unvested stock
options for Mr. Butler and Mr. ODonnell will
continue to vest per their normal vesting schedule for a period
of 36 months after termination because they are eligible
for early retirement and retirement, respectively
|
|
|
|
Performance share units and performance cash units will be
subject to pro-rata vesting through the termination date
|
|
|
|
|
|
Benefits Under Pension and Nonqualified Deferred Compensation
Plans:
|
|
|
|
|
|
For Mr. Donnelly and Mr. Butler, credit for an
additional two and one half years of age and service and
compensation under all defined benefit-type retirement plans
(including the Supplemental Retirement Plan and Spillover
Pension Plan)
|
|
|
|
For Mr. Donnelly and Mr. Butler, a payment equal to
two times the amount of maximum Company annual contribution or
match to any defined contribution-type plan in which the
executive participates
|
|
|
|
Mr. Butler would also be entitled to enhanced early
retirement benefits under the Supplemental Retirement Plan
|
38
|
|
|
|
|
Continuation of Insurance Coverage:
|
|
|
|
|
|
For Mr. Donnelly and Mr. Butler, continued coverage
(or the cash equivalent thereof) for two years under the
Companys term life insurance and long-term disability
insurance plans, and, to the extent eligible on the date of
termination, under the survivor benefit, accidental death and
dismemberment insurance and dependent life insurance plans
|
|
|
|
Except for Mr. Donnelly who is not yet eligible for
retirement, coverage under retiree health and welfare plans on
the same terms that apply to other salaried retirees
(Mr. ODonnell is entitled to Company paid COBRA
coverage for 18 months)
|
Mr. Connor
The Key Executive Severance Plan, in which Mr. Connor
participates, provides severance pay for involuntary termination
only if the executive signs a release provided in and required
by the plan document. This severance pay is equal to the sum of:
(i) Mr. Connors annual rate of base salary at
the date of severance, and (ii) the larger of (a) the
average of his three most recent actual awards of annual
incentive compensation (whether or not deferred) and
(b) his current target incentive compensation under the
annual incentive compensation plan.
Payments
Made Upon a Termination in Connection with a Change in
Control.
Mr. Donnelly, Mr. Butler and
Mr. ODonnell
A change in control termination would occur if
Mr. Donnelly, Mr. Butler or Mr. ODonnell
experiences a not for cause termination during the
period beginning 180 days before a change in control and
ending on the second anniversary of the change in control. For
purposes of each of the NEOs Contracts, a change in
control generally means the occurrence of any of the
following events: (i) any person unrelated to Textron
acquires more than 30% of Textrons then outstanding voting
stock, (ii) a majority of the members of the Board of
Directors are replaced in any two-year period other than in
specific circumstances, (iii) the consummation of a merger
or consolidation of Textron with any other corporation, other
than a merger or consolidation in which Textrons voting
securities outstanding immediately prior to such merger or
consolidation continue to represent at least 50% of the combined
voting securities of Textron or such surviving entity
immediately after such merger or consolidation, or
(iv) shareholder approval of an agreement for the sale or
disposition of all or substantially all of Textrons assets
or a plan of complete liquidation. Upon a termination in
connection with a change in control,
Mr. Donnelly, Mr. Butler and Mr. ODonnell
are entitled to their accrued obligations as well as the
following:
|
|
|
|
|
Cash Severance Benefit Comprised of:
|
|
|
|
|
|
Three times base salary
|
|
|
|
Pro-rated portion of the greater of (i) the termination
year target annual cash incentive compensation and (ii) the
prior year annual cash incentive compensation
|
|
|
|
Three times the greater of (i) the highest annual cash
incentive compensation (or the average annual cash incentive
compensation for Mr. Donnelly and Mr. Butler) over the
three years prior to the earlier of the change of control or the
termination and (ii) the termination year target annual
cash incentive compensation
|
|
|
|
|
|
Treatment of Long-Term Incentive Awards:
|
|
|
|
|
|
Outstanding unvested stock options, performance share units and
restricted stock units for each of the NEOs will be subject to
immediate and full vesting acceleration as of the termination
date; PSUs and PCUs granted in 2009 and 2010 will be paid based
on actual performance through the change in control
|
39
|
|
|
|
|
Benefits Under Pension and Nonqualified Deferred Compensation
Plans:
|
|
|
|
|
|
Full vesting and credit for an additional three years of age and
service and compensation under all defined benefit-type
retirement plans (including the Supplemental Retirement Plan and
Spillover Pension Plan)
|
|
|
|
Full vesting acceleration under the Spillover Savings Plan
|
|
|
|
A payment equal to three times the amount of maximum Company
annual contribution or match to any defined contribution-type
plan in which the executive participates
|
|
|
|
Mr. Butler would also be entitled to enhanced early
retirement benefits under the Supplemental Retirement Plan
|
|
|
|
|
|
Continuation of Insurance Coverage:
|
|
|
|
|
|
Continued coverage (or the cash equivalent thereof) for three
years under the Companys term life insurance and long-term
disability insurance plans, and, to the extent eligible on the
date of termination, under the survivor benefit, accidental
death and dismemberment insurance and dependent life insurance
plans
|
|
|
|
Except for Mr. Donnelly, who is not yet eligible for
retirement, coverage under the Companys retiree health and
welfare plans on the same terms that apply to other salaried
retirees
|
|
|
|
|
|
Additional Perquisites: Outplacement assistance for
up to one year following termination
|
|
|
|
Tax Gross-Up
Payment: Subject to certain conditions, the Company
would
gross-up
severance payments to cover the executives excise taxes
determined in accordance with Section 280G of the Internal
Revenue Code.
|
Mr. Connor
The Key Executive Severance Plan, in which Mr. Connor
participates, provides severance pay and severance benefits in
the event of a change of control only if the executive signs a
release provided in and required by the plan document. The
severance pay is equal to the sum of:
(i) Mr. Connors annual rate of base salary at
the date of severance, and (ii) the larger of
(a) the average of his three most recent actual awards of
annual incentive compensation (whether or not deferred) and
(b) his current target incentive compensation under the
annual incentive compensation plan. In addition, medical and
dental benefits would be provided by Textron to the executive
and to his dependents, on terms which are not less favorable to
them than the terms existing immediately before severance. Such
severance benefits shall be continued for eighteen months
following severance (or, if less, until the executive or
dependent obtains comparable coverage under another
employers plan or Medicare).
In addition, in the event of a change of control,
Mr. Connor would receive (i) full vesting acceleration
under the Spillover Pension Plan and Spillover Savings Plan and
(ii) full vesting of all long-term incentive awards which
would be payable in the same manner as the other NEOs.
Payments
Made Upon a Termination in Connection with Death, Disability or
Retirement.
Upon a termination in connection with death, disability or due
to retirement at or after the executives attainment of
age 65, executives are entitled to their accrued
obligations as well as the following:
|
|
|
|
|
Cash Benefit Comprised of:
|
|
|
|
|
|
For Mr. Butler, upon a termination due to disability, a
payment equal to three times his target annual cash incentive
compensation for the termination year and continued base salary
(reduced by disability benefits) for two years
|
|
|
|
For Mr. ODonnell, upon a termination due to
disability before becoming eligible for the Companys
disability benefits program, base salary continuation during the
period from termination until he becomes eligible for such
benefits
|
40
|
|
|
|
|
For Mr. Butler and Mr. ODonnell, upon the
executives death while employed by Textron, a payment to
their beneficiaries equal to three times base salary under the
Survivor Benefit Plan
|
|
|
|
|
|
Treatment of Long-Term Incentive Awards:
|
|
|
|
|
|
For all NEOs, upon a termination due to disability or death, all
RSUs outstanding for at least six months will vest pro-rata,
outstanding stock options will vest in full, and PSUs and PCUs
outstanding for at least twelve months will vest pro-rata
|
|
|
|
|
|
Benefits Under Pension and Nonqualified Deferred Compensation
Plans:
|
|
|
|
|
|
Full vesting of benefits under the Textron Savings Plan,
Spillover Savings Plan, Deferred Income Plan and Retirement
Account Plan upon disability or death
|
|
|
|
For the Deferred Income Plan, Mr. Butler would receive the
same benefits following termination due to disability as he
would for termination without cause (described above), and would
receive enhanced early retirement benefits upon his death.
|
|
|
|
|
|
Continuation of Insurance Coverage. Mr. Butler would
receive the same benefits following termination due to
disability as he would for termination without cause (described
above).
|
The following tables show potential payment to our continuing
NEOs under existing agreements, plans or other arrangements, for
various scenarios involving a change in control or termination
of employment of each of our NEOs, assuming the termination date
to be December 31, 2010, and, where applicable, using the
closing price of our common stock of $23.64 (as reported on the
New York Stock Exchange on December 31, 2010, the last
trading day of our fiscal year).
Mr. Donnelly
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Change In
|
|
Type of Compensation
|
|
Voluntary(1)
|
|
|
Disability
|
|
|
Death
|
|
|
For Cause
|
|
|
Cause
|
|
|
Control
|
|
|
Annual Incentive/Severance
|
|
$
|
1,767,600
|
|
|
$
|
1,767,600
|
|
|
$
|
1,767,600
|
|
|
$
|
0
|
|
|
$
|
6,167,600
|
|
|
$
|
7,800,000
|
|
RSUs settled in stock or cash
|
|
|
0
|
|
|
|
3,968,290
|
|
|
|
3,968,290
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,657,229
|
|
Stock Options
|
|
|
0
|
|
|
|
2,620,535
|
|
|
|
2,620,535
|
|
|
|
0
|
|
|
|
2,351,164
|
|
|
|
2,620,535
|
|
Cash settlement of PSUs and PCUs(2)
|
|
|
2,022,356
|
|
|
|
5,396,022
|
|
|
|
5,396,022
|
|
|
|
0
|
|
|
|
6,054,429
|
|
|
|
9,257,639
|
|
Cash settlement of Deferred Income Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Pension benefit(3)
|
|
|
0
|
|
|
|
1,530,316
|
|
|
|
1,713,666
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,252,557
|
|
Savings Plan benefit
|
|
|
141,727
|
|
|
|
263,283
|
|
|
|
263,283
|
|
|
|
141,727
|
|
|
|
141,727
|
|
|
|
263,283
|
|
Other benefits(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
118,596
|
|
|
|
307,894
|
|
Survivor Death Benefit
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax gross-up
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,916,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
$
|
3,931,683
|
|
|
$
|
15,546,046
|
|
|
$
|
15,729,396
|
|
|
$
|
141,727
|
|
|
$
|
14,833,516
|
|
|
$
|
39,075,651
|
|
Less: accumulated deferred income plan and vested pension and
savings plan benefits
|
|
|
(141,727
|
)
|
|
|
(141,727
|
)
|
|
|
(141,727
|
)
|
|
|
(141,727
|
)
|
|
|
(141,727
|
)
|
|
|
(141,727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Triggered due to Termination
|
|
$
|
3,789,956
|
|
|
$
|
15,404,319
|
|
|
$
|
15,587,669
|
|
|
$
|
0
|
|
|
$
|
14,691,789
|
|
|
$
|
38,933,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Connor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Change In
|
|
Type of Compensation
|
|
Voluntary(1)
|
|
|
Disability
|
|
|
Death
|
|
|
For Cause
|
|
|
Cause
|
|
|
Control
|
|
|
Annual Incentive/Severance
|
|
$
|
939,038
|
|
|
$
|
939,038
|
|
|
$
|
939,038
|
|
|
$
|
0
|
|
|
$
|
2,326,538
|
|
|
$
|
2,326,538
|
|
RSUs settled in stock or cash
|
|
|
0
|
|
|
|
909,735
|
|
|
|
909,735
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,059,682
|
|
Stock Options
|
|
|
0
|
|
|
|
1,031,890
|
|
|
|
1,031,890
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,031,890
|
|
Cash settlement of PSUs and PCUs(2)
|
|
|
0
|
|
|
|
1,786,342
|
|
|
|
1,786,342
|
|
|
|
0
|
|
|
|
1,786,342
|
|
|
|
3,102,446
|
|
Cash settlement of Deferred Income Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Pension benefit(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
122,699
|
|
Savings Plan benefit
|
|
|
60,118
|
|
|
|
123,924
|
|
|
|
123,924
|
|
|
|
60,118
|
|
|
|
60,118
|
|
|
|
123,924
|
|
Other benefits(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19,229
|
|
Survivor Death Benefit
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax gross-up
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
$
|
999,156
|
|
|
$
|
4,790,929
|
|
|
$
|
4,790,929
|
|
|
$
|
60,118
|
|
|
$
|
4,172,998
|
|
|
$
|
8,786,408
|
|
Less: accumulated deferred income plan and vested pension and
savings plan benefits
|
|
|
(60,118
|
)
|
|
|
(60,118
|
)
|
|
|
(60,118
|
)
|
|
|
(60,118
|
)
|
|
|
(60,118
|
)
|
|
|
(60,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Triggered due to
Termination
|
|
$
|
939,038
|
|
|
$
|
4,730,811
|
|
|
$
|
4,730,811
|
|
|
$
|
0
|
|
|
$
|
4,112,880
|
|
|
$
|
8,726,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Butler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Change In
|
|
Type of Compensation
|
|
Voluntary(1)
|
|
|
Disability
|
|
|
Death
|
|
|
For Cause
|
|
|
Cause
|
|
|
Control
|
|
|
Annual Incentive/Severance
|
|
$
|
536,172
|
|
|
$
|
2,748,172
|
|
|
$
|
536,172
|
|
|
$
|
0
|
|
|
$
|
2,527,539
|
|
|
$
|
3,361,607
|
|
RSUs settled in stock or cash
|
|
|
772,234
|
|
|
|
772,234
|
|
|
|
772,234
|
|
|
|
0
|
|
|
|
772,234
|
|
|
|
1,208,894
|
|
Stock Options
|
|
|
615,968
|
|
|
|
615,968
|
|
|
|
615,968
|
|
|
|
615,968
|
|
|
|
615,968
|
|
|
|
615,968
|
|
Cash settlement of PSUs and PCUs(2)
|
|
|
1,364,468
|
|
|
|
1,364,468
|
|
|
|
1,364,468
|
|
|
|
0
|
|
|
|
1,364,468
|
|
|
|
2,032,096
|
|
Cash settlement of Deferred Income Plan
|
|
|
15,153,559
|
|
|
|
15,153,559
|
|
|
|
15,153,559
|
|
|
|
15,153,559
|
|
|
|
15,153,559
|
|
|
|
15,153,559
|
|
Pension benefit(3)
|
|
|
12,191,647
|
|
|
|
13,883,006
|
|
|
|
7,516,086
|
|
|
|
12,191,647
|
|
|
|
14,841,986
|
|
|
|
14,313,098
|
|
Savings Plan benefit
|
|
|
649,106
|
|
|
|
649,106
|
|
|
|
649,106
|
|
|
|
649,106
|
|
|
|
649,106
|
|
|
|
649,106
|
|
Other benefits(4)
|
|
|
0
|
|
|
|
70,316
|
|
|
|
0
|
|
|
|
0
|
|
|
|
71,048
|
|
|
|
196,572
|
|
Survivor Death Benefit
|
|
|
409,922
|
|
|
|
409,922
|
|
|
|
1,680,000
|
|
|
|
0
|
|
|
|
409,922
|
|
|
|
409,922
|
|
Tax gross-up
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
$
|
31,693,076
|
|
|
$
|
35,666,751
|
|
|
$
|
28,287,593
|
|
|
$
|
27,994,312
|
|
|
$
|
36,405,830
|
|
|
$
|
37,940,822
|
|
Less: accumulated deferred income plan and vested pension and
savings plan benefits
|
|
|
(27,994,312
|
)
|
|
|
(27,994,312
|
)
|
|
|
(27,994,312
|
)
|
|
|
(27,994,312
|
)
|
|
|
(27,994,312
|
)
|
|
|
(27,994,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Triggered due to Termination
|
|
$
|
3,698,764
|
|
|
$
|
7,672,439
|
|
|
$
|
293,281
|
|
|
$
|
0
|
|
|
$
|
8,411,518
|
|
|
$
|
9,946,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Mr. ODonnell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Change In
|
|
Type of Compensation
|
|
Voluntary(1)
|
|
|
Disability
|
|
|
Death
|
|
|
For Cause
|
|
|
Cause
|
|
|
Control
|
|
|
Annual Incentive/Severance
|
|
$
|
502,661
|
|
|
$
|
502,661
|
|
|
$
|
502,661
|
|
|
$
|
0
|
|
|
$
|
2,254,954
|
|
|
$
|
4,125,161
|
|
RSUs settled in stock or cash
|
|
|
836,743
|
|
|
|
836,743
|
|
|
|
836,743
|
|
|
|
0
|
|
|
|
836,743
|
|
|
|
1,319,851
|
|
Stock Options
|
|
|
747,199
|
|
|
|
747,199
|
|
|
|
747,199
|
|
|
|
0
|
|
|
|
747,199
|
|
|
|
747,199
|
|
Cash settlement of PSUs and PCUs(2)
|
|
|
1,521,975
|
|
|
|
1,521,975
|
|
|
|
1,521,975
|
|
|
|
0
|
|
|
|
1,521,975
|
|
|
|
2,243,751
|
|
Cash settlement of Deferred Income Plan
|
|
|
14,038,006
|
|
|
|
14,038,006
|
|
|
|
14,038,006
|
|
|
|
13,948,510
|
|
|
|
14,038,006
|
|
|
|
14,038,006
|
|
Pension benefit(3)
|
|
|
13,279,365
|
|
|
|
13,279,365
|
|
|
|
6,554,550
|
|
|
|
13,279,365
|
|
|
|
13,279,365
|
|
|
|
12,327,168
|
|
Savings Plan benefit
|
|
|
542,121
|
|
|
|
542,121
|
|
|
|
542,121
|
|
|
|
542,121
|
|
|
|
542,121
|
|
|
|
542,121
|
|
Other benefits(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11,739
|
|
|
|
195,899
|
|
Survivor Death Benefit
|
|
|
439,956
|
|
|
|
439,956
|
|
|
|
1,575,000
|
|
|
|
0
|
|
|
|
439,956
|
|
|
|
439,956
|
|
Tax gross-up
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Total
|
|
$
|
31,908,026
|
|
|
$
|
31,908,026
|
|
|
$
|
26,318,255
|
|
|
$
|
27,769,996
|
|
|
$
|
33,672,058
|
|
|
$
|
35,979,112
|
|
Less: accumulated deferred income plan and vested pension and
savings plan benefits
|
|
|
(27,769,996
|
)
|
|
|
(27,769,996
|
)
|
|
|
(27,769,996
|
)
|
|
|
(27,769,996
|
)
|
|
|
(27,769,996
|
)
|
|
|
(27,769,996
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Triggered due to Termination
|
|
$
|
4,138,030
|
|
|
$
|
4,138,030
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,902,062
|
|
|
$
|
8,209,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Butler and Mr. ODonnell were eligible for
early-retirement and retirement, respectively, due to their age
and service with the Company as of January 1, 2011, while
Mr. Donnelly and Mr. Connor are not yet
early-retirement eligible; as such, in each case, the benefits
included in the voluntary column in the tables above
are reflective of the benefits that would be payable to these
executives if retirement had occurred on
December 31, 2010. |
|
(2) |
|
Potential PSU and PCU payouts have been calculated assuming that
the
2009-2011
PSU and PCU cycles will be paid at 99.43% of target, and the
2010-2012
PSU cycle at 107.78% of target. These figures are based on
actual Company performance against goals for 2009 and 2010, and
target Company performance against goals for 2011. In addition,
the figures assume median total shareholder return. |
|
(3) |
|
Potential pension benefits have been calculated assuming
(a) a discount rate of 5.75%; (b) a normal retirement
age of 65 for all NEOs; and (c) the election by each NEO of
a 50% Joint & Survivor annuity which provides benefits
to the NEOs surviving spouse upon the NEOs death
equal to 50% of the benefit otherwise paid to the NEO. |
|
(4) |
|
Includes (a) health and welfare benefits for each NEO, and
(b) outplacement assistance for one year (administrative
assistant, office space, office equipment) for
Mr. Donnelly, Mr. Butler, and Mr. ODonnell
under the Change In Control scenario. |
43
Equity
Compensation Plan Information
The following table sets forth, as of the end of Textrons
2010 fiscal year, for all Textron compensation plans previously
approved by shareholders, (a) the number of securities to
be issued upon the exercise of outstanding options, warrants and
rights, (b) the weighted-average exercise price of the
outstanding options, warrants and rights, and (c) the
number of securities remaining available for future issuance
under the plans other than securities to be issued upon the
exercise of the outstanding options, warrants and rights. There
are no compensation plans not previously approved by
shareholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
Number of Securities
|
|
|
Number of
|
|
|
|
Remaining Available for
|
|
|
Securities to be
|
|
|
|
Future Issuance Under
|
|
|
Issued Upon
|
|
Weighted-Average
|
|
Equity Compensation
|
|
|
Exercise of
|
|
Exercise Price of
|
|
Plans (Excluding
|
|
|
Outstanding Options,
|
|
Outstanding Options,
|
|
Securities Reflected in
|
Plan category
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Column (a))
|
|
Equity compensation plans approved by shareholders
|
|
|
7,688,000
|
(1)
|
|
$
|
28.15
|
|
|
|
14,211,000
|
|
Equity compensation plans not approved by shareholders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
|
7,688,000
|
|
|
$
|
28.15
|
|
|
|
14,211,000
|
|
|
|
|
(1) |
|
Includes 796,352 unvested shares that may be issued under
previously granted restricted stock units. |
Evaluation
of Risk in Compensation Plans
In addition to the Companys incentive compensation
arrangements applicable to senior executives throughout the
enterprise, the Companys business units maintain incentive
compensation plans and programs in which business unit employees
below the senior executive level participate (such as sales
incentive plans and incentive programs linked to safety and
customer service, etc.). Textrons management reviews these
business unit incentive compensation plans and programs as they
relate to risk management practices and risk-taking incentives.
Transactions
with Related Persons
Since the beginning of Textrons 2010 fiscal year, there
have been no transactions and there are no currently proposed
transactions, in which Textron was or is to be a participant and
the amount involved exceeds $120,000 and in which any related
person had or will have a direct or indirect material interest,
except that on November 1, 2007, Wooster Capital, LLC,
which is wholly-owned by Mr. Ford, one of our directors,
entered into an agreement to purchase a 6.25% interest in a
Cessna Sovereign from CitationAir (formerly Citation Shares), a
Textron company. The Agreement, pursuant to which Wooster
Capital paid $975,290 upon signing, is for a five year term and
provides for monthly fuel payments which are reconciled annually
with actual expenses incurred; during 2010 the payments totaled
$332,471 and during 2011, the payments will be $27,936 per
month, with a reconciliation for actual expenses at year end.
Under Textrons Corporate Governance Guidelines and
Policies, all related party transactions are subject to approval
or ratification by the Nominating and Corporate Governance
Committee. Related party transactions, referred to as
Interested Transactions with Related Parties under
the Guidelines, are generally defined as any transaction,
arrangement or relationship or series of similar transactions,
arrangements or relationships (including any indebtedness or
guarantee of indebtedness) where the Company is a participant,
in which the aggregate amount involved since the beginning of
the Companys last fiscal year exceeds or is expected to
exceed $100,000 and an executive officer, director, nominee or
greater than 5% beneficial holder or immediate family member of
any of the foregoing has or will have a direct or indirect
interest (other than solely as a result of being a director or a
less than 10% beneficial owner of another entity). In
determining whether to approve or ratify such a transaction, the
committee takes into account, among other factors it deems
appropriate, whether the transaction is on terms no less
favorable than terms generally available to an unaffiliated
third party under the same or similar circumstances and the
extent of the related persons interest in the transaction.
44
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
Textrons shareholders are entitled to an advisory
(nonbinding) vote to approve the compensation of our named
executive officers as disclosed in this proxy statement. This
say on pay vote is required by Section 14A of
the Securities Exchange Act of 1934, as amended, which was
recently enacted as part of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act).
Pursuant to the Dodd-Frank Act, the vote is advisory only, and
it is not binding on Textron or on our Board of Directors.
Although the vote is non-binding, the Organization and
Compensation Committee and the Board will carefully consider the
outcome of the vote when making future compensation decisions.
As described in the Compensation Discussion and Analysis section
of this proxy statement, Textrons executive compensation
policies are designed to link executive compensation tightly to
the Companys long-term performance, both in absolute terms
and relative to the market. Textrons principal executive
compensation policies include:
|
|
|
|
|
Incentivizing management to deliver superior Company performance
by basing both annual and long-term incentive compensation on
performance goals key to the Companys financial success;
|
|
|
|
Providing balanced motivation between short- and long-term
performance by varying performance periods and vesting periods
of incentive programs;
|
|
|
|
Motivating executives to produce strong and sustained financial
performance for the long-term benefit of shareholders by
including an equity component in the compensation program and
maintaining stock ownership requirements and hedging
restrictions for senior executives;
|
|
|
|
Establishing market competitive compensation levels by
benchmarking its senior executive compensation against a peer
group recommended by its independent compensation consultant and
generally targeting senior executive compensation at the median
of this group; and
|
|
|
|
Maintaining a compensation structure that provides an increased
portion of compensation at-risk for more senior positions, while
mitigating incentives to make overly risky decisions.
|
The Organization and Compensation Committee regularly reviews
Textrons executive compensation policies to keep pace with
evolving best practices and in recent years has made a series of
changes, including:
|
|
|
|
|
In response to the economic circumstances of 2009, reducing
long-term incentive target compensation for senior executives by
20 percent and introducing performance cash units which are
linked to financial performance and not directly leveraged on
stock price, thereby mitigating excessive pay-outs;
|
|
|
|
Eliminating certain perquisites;
|
|
|
|
Foregoing formal employment contracts for new executive officers
in order to, among other things, eliminate individual
termination protection for new executives;
|
|
|
|
Prohibiting future agreements to
gross-up
executives for taxes; and
|
|
|
|
Reducing incentive award complexity.
|
Textrons Board of Directors believes that the
Companys executive compensation program is working to
align managements interests with those of our
shareholders to support long-term value creation.
Accordingly, Textron shareholders are being asked to vote
FOR the following advisory resolution at the annual
meeting:
RESOLVED, that the shareholders approve the Companys
compensation of its named executives officers, as disclosed in
the Proxy Statement for the 2011 Annual Meeting of Shareholders
pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the Compensation Discussion
and Analysis and the compensation tables regarding named
executive officer compensation, together with the accompanying
narrative disclosure.
45
Recommendation
of the Board of Directors
The Board of Directors recommends that you vote
FOR the resolution approving the Companys
executive compensation (Item 5 on the proxy card).
FREQUENCY
OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Act, Textrons shareholders are
entitled to vote regarding whether the shareholder advisory vote
on executive compensation as required by Section 14A of the
Securities Exchange Act of 1934, as amended (and as described
above) should occur every one, two or three years. Pursuant to
the Dodd-Frank Act, the vote on the frequency of the say
on pay vote is advisory only, and it is not binding on
Textron or on our Board of Directors. Although the vote is
non-binding, the Organization and Compensation Committee and the
Board will carefully consider the outcome of the vote when
determining the frequency of future say on pay shareholder
advisory votes.
After careful consideration, the Board has determined that an
advisory vote on executive compensation that occurs every year
is the most appropriate alternative for Textron at this time,
and therefore the Board recommends that you vote for a one-year
interval for the advisory vote on executive compensation.
In formulating its recommendation, the Board considered that an
annual advisory vote on executive compensation will allow
Textrons shareholders to provide us with their direct
input on our compensation philosophy, policies and practices as
disclosed in the proxy statement each year. We understand that
Textrons shareholders may have different views as to what
is the best approach for Textron, and we look forward to hearing
from our shareholders as to their preferences on the frequency
of an advisory vote on executive compensation.
Although the Board recommends a
say-on-pay
vote every year, shareholders are not voting to approve or
disapprove of the Boards recommendation. Shareholders will
be able to specify one of four choices for this proposal on the
proxy card: one year, two years, three years or abstain.
Recommendation
of the Board of Directors
The Board of Directors recommends that you vote for the
frequency of 1 YEAR (Item 6 on the proxy
card).
46
APPROVAL
OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION GRANTING
TO HOLDERS OF NOT LESS THAN 25% OF THE COMPANYS
SHARES THE RIGHT TO CALL A SPECIAL MEETING OF
SHAREHOLDERS
The Board is proposing, for approval by our shareholders, an
amendment (the Amendment) to the Companys
Restated Certificate of Incorporation to allow holders of not
less than 25% of the Companys outstanding shares of common
stock the right to call a special meeting of shareholders,
subject to certain limitations and procedures described below.
Our
Current Special Meeting Provision
Our Restated Certificate of Incorporation does not currently
provide for any shareholder right to call a special meeting, and
our Amended and Restated By-Laws only allow special meetings of
shareholders to be called by the Chief Executive Officer or by
order of the Board of Directors. As a result, shareholders do
not presently have the right or ability to call a special
meeting of the shareholders.
The
Proposed Amendment
The Nominating and Corporate Governance Committee, as well as
the Board, have carefully considered the implications of
amending our Restated Certificate of Incorporation to allow
shareholders to call a special meeting of the shareholders and
have determined that the Amendment is advisable and in the best
interest of the Company and its shareholders.
The Board recognizes that providing for a shareholder right to
call special meetings is consistent with best corporate
governance practices, however, the Board believes that special
meetings of shareholders should be extraordinary events that are
held only when fiduciary obligations or strategic concerns
require that the matters to be addressed not be delayed until
the next annual meeting. Moreover, because special meetings are
expensive for the Company and potentially disruptive to its
normal business operations, the Board believes that a small
minority of shareholders should not be entitled to utilize the
mechanism of special meetings for their own interests, which may
not be shared by the majority of shareholders of the Company.
Likewise, the Board believes that only shareholders with a
long-term interest in the Company should be entitled to utilize
the special meeting mechanism. In light of these considerations,
the Board believes that establishing an ownership threshold of
25%, along with a minimum one year holding period and certain
procedural requirements and limitations, in order for
shareholders to call a special meeting achieves a reasonable
balance between enhancing shareholder rights and adequately
protecting shareholder interests.
The Board has adopted resolutions approving and declaring the
advisability of adopting the Amendment, subject to shareholder
approval. The Amendment, if adopted, would amend
Article SEVENTH of the Restated Certificate of
Incorporation to allow shareholders that own of record, and have
owned for at least a one year period, not less than 25% of the
outstanding shares of common stock of the Company the right,
subject to certain limitations and procedures set forth in our
Amended and Restated By-Laws, to require the Corporate Secretary
of the Company to call a special meeting of the shareholders. A
copy of the Amendment is attached as Appendix A to this
proxy statement. The Amendment would not amend any other
provisions of our Restated Certificate of Incorporation.
The
By-Law Limitations and Procedures
The Board has adopted resolutions approving a corresponding
amendment to Section 2.03 of our Amended and Restated
By-Laws (the By-Law Amendment) which would become
effective upon shareholder approval of the Amendment. The By-Law
Amendment would establish the procedures by which shareholders
may require the Corporate Secretary to call a special meeting.
The By-Law Amendment would impose certain procedural
requirements on shareholders requesting such a meeting
(including the provision of the same information required for
shareholder proposals at annual meetings under our advance
notice by-law provisions). The By-Law Amendment would also
impose qualifications designed to prevent duplicative and
unnecessary meetings by eliminating proposals that:
|
|
|
|
|
are not proper subjects for shareholder action under, or involve
a violation of, applicable law;
|
47
|
|
|
|
|
are received during the period beginning 90 days prior to
the anniversary of the prior annual meeting of shareholders and
ending on the date of the next annual meeting of shareholders;
|
|
|
|
are substantially similar to another item, other than the
election of directors, that was presented at a meeting of
shareholders held within the prior 12 months, as determined
in good faith by the Board; or
|
|
|
|
are substantially similar to another item that is included in
our notice as an item of business to be brought before a
shareholder meeting that has been called but not yet held or
that is called for a date within 90 days of the receipt of
the request, as determined in good faith by the Board.
|
The By-Law Amendment would provide that a special meeting must
be called within 90 calendar days after the receipt by the
Corporate Secretary of valid requests by holders of the
requisite number of shares.
Effectiveness
of the Amendment
If the Amendment is approved by the shareholders, then the
Amendment will become effective upon it being filed with the
Secretary of State of the State of Delaware, which the Company
intends to do promptly following action by shareholders at the
2011 annual meeting. If the Amendment is not approved by the
requisite vote, then the Amendment will not be filed with the
Secretary of State of the State of Delaware, the By-Law
Amendment would not become effective, and our shareholders would
not have the ability to call a special meeting of shareholders.
Recommendation
of the Board of Directors
The Board of Directors recommends that you vote
FOR the proposed amendment to our Restated
Certificate of Incorporation granting to holders of not less
than 25% of the Companys shares the right to call a
special meeting of shareholders (Item 7 on the proxy
card).
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed the firm of Ernst &
Young LLP to audit Textrons consolidated financial
statements for 2010, but as a matter of good corporate
governance the Board is asking shareholders to ratify that
appointment of Ernst & Young LLP as independent
registered public accounting firm for 2011. If shareholders do
not ratify the appointment, the Audit Committee will reconsider
its selection. A representative or representatives of
Ernst & Young LLP will be present at the annual
meeting, will have the opportunity to make a statement and will
be available to respond to appropriate questions.
Fees to
Independent Auditors
The following table presents fees billed for professional
services rendered by Ernst & Young LLP for the audit
of Textrons annual financial statements, the reviews of
the financial statements in Textrons
Forms 10-Q,
and other services in connection with statutory and regulatory
filings and engagements for 2009 and 2010 and fees billed in
2009 and 2010 for audit-related services, tax services and all
other services rendered by Ernst & Young LLP.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2010
|
|
|
Audit Fees
|
|
$
|
7,911,000
|
|
|
$
|
7,801,000
|
|
Audit-Related Fees(1)
|
|
|
622,000
|
|
|
|
584,000
|
|
Tax Fees(2)
|
|
|
533,000
|
|
|
|
184,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
9,066,000
|
|
|
$
|
8,569,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit-related fees include fees for employee benefit plan
audits, due diligence relating to acquisitions and dispositions,
attest services not required by statute or regulation, and
consultations concerning financial accounting and reporting
matters not classified as audit. |
|
(2) |
|
Tax fees include fees for tax services relating to
consultations, compliance, dispositions, and expatriate services. |
48
Under the Audit and Non-Audit Services Pre-Approval Policy
adopted by the Audit Committee, all audit and non-audit services
to be performed by the independent auditor for Textron require
pre-approval by the Audit Committee. The Audit Committee may
delegate pre-approval authority to one or more of its members.
Any pre-approvals pursuant to delegated authority shall be
reported to the Audit Committee at its next scheduled meeting.
The Audit Committee cannot delegate pre-approval authority to
management.
All audit-related services, tax services and other services for
2010 were pre-approved by the Audit Committee, which determined
that such services would not impair the independence of the
auditor and are consistent with the Securities and Exchange
Commissions rules on auditor independence.
The Board of Directors recommends a vote FOR
ratification of the appointment by the Audit Committee of
Ernst & Young LLP (Item 8 on the proxy card).
OTHER
MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any matters which will
be brought before the meeting other than those specifically set
forth in the notice thereof. If any other matter properly comes
before the meeting, it is intended that the persons named in and
acting under the enclosed form of proxy or their substitutes
will vote thereon in accordance with their best judgment.
SHAREHOLDER
PROPOSALS AND OTHER MATTERS FOR 2012 ANNUAL
MEETING
Shareholder proposals to be considered for inclusion in the
proxy statement and form of proxy relating to the 2012 annual
meeting of shareholders under
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, must be
received by Textron, at 40 Westminster Street, Providence,
Rhode Island 02903, on or before November 15, 2011.
If shareholders instead wish to bring other business before a
shareholder meeting, timely notice must be received by Textron
in advance of the meeting. Under Textrons Amended and
Restated By-Laws, such notice must be received not less than 90
nor more than 150 days before the anniversary date of the
immediately preceding annual meeting of shareholders (but if the
annual meeting is called for a date that is more than
30 days before or more than 60 days after the
anniversary date, then the notice must be received no later than
the close of business on the 90th day before the date of
the annual meeting or 10 days after public disclosure of
the meeting is first made, whichever occurs later) or, between
November 29, 2011 and January 28, 2012, for the 2012
annual meeting. The notice must include the information required
by our By-Laws. These requirements are separate from the
requirements a shareholder must meet to have a proposal included
in Textrons proxy statement under
Rule 14a-8.
These time limits also apply to nominations submitted by
shareholders under our By-Laws and in determining whether notice
is timely for purposes of rules adopted by the Securities and
Exchange Commission relating to the exercise of discretionary
voting authority by Textron.
49
DELIVERY
OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
The broker, bank or other nominee for any shareholder who is a
beneficial owner, but not the record holder, of the
Companys shares may deliver only one copy of the
Companys proxy statement and annual report to multiple
shareholders who share the same address, unless that broker,
bank or other nominee has received contrary instructions from
one or more of the shareholders. The Company will deliver
promptly, upon written or oral request, a separate copy of the
proxy statement and annual report to a shareholder at a shared
address to which a single copy of the documents was delivered. A
shareholder who wishes to receive a separate copy of the proxy
statement and annual report, now or in the future, should submit
their request to the Company by telephone at
(401) 457-2353
or by submitting a written request to the Corporate Secretary at
Textron Inc., 40 Westminster Street, Providence, Rhode
Island 02903. Beneficial owners sharing an address who are
receiving multiple copies of proxy materials and annual reports
and wish to receive a single copy of such materials in the
future will need to contact their broker, bank or other nominee
to request that only a single copy of each document be mailed to
all shareholders at the shared address in the future.
By order of the Board of Directors,
Terrence ODonnell
Executive Vice President, General Counsel and
Corporate Secretary
March 14, 2011
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE VOTE YOUR PROXY VIA INTERNET OR
TELEPHONE (SEE ENCLOSED PROXY CARD) OR FILL IN, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED.
50
Appendix A
Proposed
Amendment
Article SEVENTH of the Restated Certificate of
Incorporation is proposed to be amended by adding the following
language:
A special meeting of the stockholders for any purpose or
purposes proper under applicable law may be called at any time
by (i) the Chief Executive Officer; or (ii) the Board
of Directors; or (iii) the Corporate Secretary of the
Corporation at the written request of one or more holders of
record of the Corporation that have owned continuously for a
period of at least one year at least twenty-five percent (25%)
of the outstanding shares of Common Stock of the Corporation,
provided such request complies with the form and terms,
conditions, procedures or limitations as may be set forth in the
By-Laws of the Corporation, as may be amended from time to time.
A-1