TEXTRON INC, DEF 14A filed on 3/7/2024
Proxy Statement (definitive)
v3.24.0.1
Cover
12 Months Ended
Dec. 31, 2023
Cover [Abstract]  
Document Type DEF 14A
Entity Registrant Name TEXTRON INC.
Entity Central Index Key 0000217346
Amendment Flag false
v3.24.0.1
Pay vs Performance Disclosure
12 Months Ended
Dec. 31, 2023
USD ($)
Dec. 31, 2022
USD ($)
Dec. 31, 2021
USD ($)
Dec. 31, 2020
USD ($)
Pay vs Performance Disclosure [Table]        
Pay vs Performance [Table Text Block]
            Value of Initial Fixed $100 Investment
based on:(2)
   
    Summary
Compensation
Table Total for
PEO ($)
Compensation
Actually Paid
to PEO ($)(1)
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs ($)
Average
Compensation
Actually Paid
to Non-PEO
NEOs ($)(1)
Company
Total
Shareholder
Return
(TSR)
($)
Peer Group
TSR
S&P 500
A&D Index
TSR ($)
Peer Group
TSR
S&P 500
Industrials
Index
TSR ($)
Net
Income
($) (in
millions)
Manufacturing
Cash
Flow
before
Pension
Contributions(3)
                     
2023   20,391,762 27,994,633 4,921,857 6,004,863 181.4 119.1 150.2 921 931
2022   15,367,279 18,736,482 3,881,920 4,533,894 159.5 111.5 127.2 861 1,188
2021   18,576,014 45,821,710 4,819,441 9,366,481 173.7   95.0 134.5 746 1,149
2020   17,770,781 15,822,859 4,206,109 3,770,432 108.6   83.9 111.1 309    596
     
PEO Total Compensation Amount $ 20,391,762 $ 15,367,279 $ 18,576,014 $ 17,770,781
PEO Actually Paid Compensation Amount [1] $ 27,994,633 18,736,482 45,821,710 15,822,859
Adjustment To PEO Compensation, Footnote [Text Block]

“Compensation Actually Paid” is defined by the SEC to include amounts not actually received by the PEO or non-PEO NEOs. The calculation of CAP is required to include, not only actual take-home pay for the reported year, but (i) an alternate valuation of pension benefits accrued during the year, (ii) the year-end value of equity awards granted during the reported year, and (iii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested or through the end of the reported fiscal year. The reconciliation below sets forth adjustments made to the Summary Compensation Table Total for Mr. Donnelly and the average of the Summary Compensation Table Total for the Non- PEO NEOs to arrive at “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs”, in the manner prescribed by SEC rules.

 

    PEO   Non-PEO NEOs (average)  
                                     
    2023   2022   2021   2020     2023   2022   2021   2020  
                                     
Summary Compensation Table (“SCT”) Total   $ 20,391,762   $ 15,367,279   $ 18,576,014   $ 17,770,781     $ 4,921,857   $ 3,881,920   $ 4,819,441   $4,206,109  
Adjustments:                                    
Deduction for Change in Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the SCT   (2,682,449 )   (95,972 ) (2,838,193 )   (759,247 )   (216,984 ) (708,553 )
Increase for “Service Cost” for pension plans   413,267   576,449   580,054   512,139     129,420   162,591   165,031   188,354  

 

    PEO   Non-PEO NEOs (average)  
                                     
    2023   2022   2021   2020     2023   2022   2021   2020  
                                     
Deduction for the grant date fair value of stock awards (PSUs and RSUs) awarded during the year, reported under the “Stock Awards” column in the SCT   (10,100,586 ) (8,314,479 ) (10,500,442 ) (10,522,576 )   (1,697,740 ) (1,444,119 ) (1,828,820 ) (1,797,292 )
Deduction for the grant date fair value of options awarded during the year, reported under the “Option Awards” column in the SCT   (3,477,679 ) (2,905,358 ) (3,011,625 ) (2,493,513 )   (584,526 ) (504,602 ) (527,116 ) (429,833 )
Increase for year-end fair value of awards granted during year that remain outstanding and unvested as of year-end(1)   14,676,737   12,650,262   22,165,513   13,307,527     2,466,901   2,190,502   3,879,540   2,293,943  
Increase/deduction for change in fair value from prior year-end to current year-end of awards granted prior to year that were outstanding and unvested as of year-end(1)   4,093,826   1,079,909   14,602,311   1,043,862     711,301   194,183   2,484,003   170,048  
Increase/deduction for change in fair value from prior year-end to vesting date of awards granted prior to year that vested during the year   4,665,339   264,240   3,486,240   (977,153 )   814,467   50,307   588,100   (155,581 )
Increase for value of dividend equivalents   14,355   18,180    19,617   19,985     2,469   3,112    3,286   3,237  
Total Adjustments   7,602,871   3,369,203   27,245,696   (1,947,922 )   1,083,005   651,974   4,547,040   (435,677 )
“Compensation Actually Paid”   $27,994,633   $18,736,482   $45,821,710   $15,822,859     $6,004,863   $4,533,894   $9,366,481   $3,770,432  

 

 

(1) We calculate the fair value of our PSUs, which are typically settled in cash, but, in the Committee’s discretion, can be settled in shares of common stock, cash, or a combination of both, in accordance with GAAP, based on the closing price of our common stock and the number of units, as adjusted based on estimates with respect to performance on the relevant metrics. On the grant date, we assume performance at target on the metrics. Following the grant date, we apply the actual relative TSR as of the valuation date, and, for the remaining performance periods, we utilize estimates of performance against the target for each operating metric.
     
Non-PEO NEO Average Total Compensation Amount $ 4,921,857 3,881,920 4,819,441 4,206,109
Non-PEO NEO Average Compensation Actually Paid Amount [1] $ 6,004,863 4,533,894 9,366,481 3,770,432
Compensation Actually Paid vs. Total Shareholder Return [Text Block]

CAP versus TSR

 

As shown in the chart below, the calculated CAP for both the PEO and the Non-PEO NEOs is correlated with the Company’s TSR for each of the years set forth in the table above. This is due primarily to the Company’s use of equity awards in the long-term incentive compensation plan, which results in the alignment of the value of our executives’ outstanding and unvested awards with shareholders’ interests. As described in detail in the Compensation Discussion and Analysis beginning on page 23, awards issued under our long-term incentive compensation program are directly linked to stock price and represent a substantial portion of our NEOs’ compensation which serves to align our executives’ interests with our shareholders’ interests. Textron’s common stock price increased 59.7%, from $48.33 at the end of the 2020 fiscal year to $77.20 at the end of the 2021 fiscal year, resulting in a substantially greater fair value of outstanding and unvested equity awards and a substantial increase in year-over-year CAP.

 

From the end of the 2021 fiscal year to the end of the 2022 fiscal year, Textron’s common stock price decreased 8.3% from $77.20 to $70.80 which is reflected in the lower CAP for 2022. Textron’s common stock price then increased 13.6%, from $70.80 at the end of 2022 to $80.42 at the end of fiscal year 2023, resulting again in an increase in year- over-year CAP for 2023. The impact of equity incentive compensation is greater for the PEO’s CAP calculation because the portion of his compensation that is delivered in the form of equity incentives is greater than that portion for the Non-PEO NEOs.

 

 

     
Compensation Actually Paid vs. Net Income [Text Block]

CAP versus Net Income

 

As shown in the chart below, the Company’s net income increased significantly from 2020 to 2021 and also increased in both periods from 2021 to 2022 and 2022 to 2023. This measure is somewhat aligned with the calculated CAP for both the PEO and the Non-PEO NEOs, although, the correlation related to Net Income impact is overshadowed by the impact of changes in the Company’s stock price on CAP primarily due to the Company’s use of equity incentives that are tied directly to stock price, as described above. Notably, the Company does not use Net Income to determine compensation levels or long-term incentive plan payouts.

 

 

     
Compensation Actually Paid vs. Company Selected Measure [Text Block]

CAP versus Manufacturing Cash Flow before Pension Contributions

 

As shown in the chart below, the Company’s Manufacturing Cash Flow before Pension Contributions increased significantly from 2020 to 2021, modestly from 2021 to 2022, and decreased from 2022 to 2023. This measure affects CAP for both the PEO and the Non-PEO NEOs by impacting the extent to which performance share units are earned over the performance periods, however this impact is overshadowed by the impact that changes in the Company’s stock price have on CAP, primarily due to the Company’s use of equity incentives that are tied directly to stock price, as described above.

 

 

 

     
Total Shareholder Return Vs Peer Group [Text Block]

Company’s TSR versus Peer Groups’ TSR

 

As shown in the chart below, the Company’s cumulative TSR is correlated with the S&P 500 Industrials index cumulative TSR. It is not as closely aligned with the S&P 500 A&D index cumulative TSR. Because Textron is a multi-industry company with businesses in the aerospace and defense industry as well as other industrial manufacturing businesses, both indices are relevant for comparison, although neither is an ideal peer group. Due to consolidation in the A&D industry, that index reflects the results of only eleven companies, including Textron, making each company’s impact arguably outsized, especially the impact of large companies, given that the returns shown are weighted based on market capitalization. Since the S&P 500 Industrials index includes a greater number of companies than the S&P 500 A&D index, using this index for comparison mitigates the effect of companies with outlying performance.

 

 

 

     
Tabular List [Table Text Block]

Financial Performance Measures

 

The following list of financial performance measures represents, in the Company’s assessment, the most important financial performance measures used by the Company to link Compensation Actually Paid (“CAP”) to the NEOs to company performance for the 2023 fiscal year. Please see the Compensation Discussion and Analysis beginning on page 23 for additional discussion of how these factors affected our NEOs’ compensation.

 

Descriptions of Relationships

Manufacturing Cash Flow before Pension Contributions

Average Return on Investment Capital

Cumulative Manufacturing Cash Flow

Enterprise Net Operating Profit

Relative TSR compared to the S&P 500

 

Set forth below are descriptions of the relationship between CAP and each of the financial performance metrics set forth in the Pay versus Performance table above, as well as a description of the relationship of the Company’s Total Shareholder Return (“TSR”) compared to our Peer Groups’ TSR.

 

     
Total Shareholder Return Amount [2] $ 181.4 159.5 173.7 108.6
Peer Group Total Shareholder Return Amount [2] 119.1 111.5 95.0 83.9
Peer Group Total Shareholder Return Amount [2] 150.2 127.2 134.5 111.1
Net Income (Loss) Attributable to Parent $ 921,000,000 $ 861,000,000 $ 746,000,000 $ 309,000,000
Company Selected Measure Amount [3] 931 1,188 1,149 596
PEO Name Mr. Donnelly      
Measure [Axis]: 1        
Pay vs Performance Disclosure [Table]        
Measure Name   Manufacturing Cash Flow before Pension Contributions    
Measure [Axis]: 2        
Pay vs Performance Disclosure [Table]        
Measure Name   Average Return on Investment Capital    
Measure [Axis]: 3        
Pay vs Performance Disclosure [Table]        
Measure Name   Cumulative Manufacturing Cash Flow    
Measure [Axis]: 4        
Pay vs Performance Disclosure [Table]        
Measure Name   Enterprise Net Operating Profit    
Measure [Axis]: 5        
Pay vs Performance Disclosure [Table]        
Measure Name   Relative TSR compared to the S&P 500    
PEO [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount $ 7,602,871 $ 3,369,203 $ 27,245,696 $ (1,947,922)
PEO [Member] | Deduction For Change In Actuarial Present Values Reported Under Change In Pension Value And Nonqualified Deferred Compensation Earnings [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (2,682,449) (95,972) (2,838,193)
PEO [Member] | Increase For Service Cost For Pension Plans [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 413,267 576,449 580,054 512,139
PEO [Member] | Deduction For Grant Date Fair Value Of Stock Awarded Reported Under Stock Awards Column [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (10,100,586) (8,314,479) (10,500,442) (10,522,576)
PEO [Member] | Deduction For Amounts Grant Date Fair Value Of Options Awarded [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (3,477,679) (2,905,358) (3,011,625) (2,493,513)
PEO [Member] | Increase For Year End Fair Value Of Awards Granted That Remins Outstanding And Unvested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount [4] 14,676,737 12,650,262 22,165,513 13,307,527
PEO [Member] | Increase Decrease For Change In Fair Value Of Award Granted That Were Outstanding And Vested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount [4] 4,093,826 1,079,909 14,602,311 1,043,862
PEO [Member] | Increase Decrease For Change In Fair Value To Vesting Date Of Awards Granted That Vested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 4,665,339 264,240 3,486,240 (977,153)
PEO [Member] | Increase For Value Of Dividend Equivalents Earned On Restricted Stock Units [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 14,355 18,180 19,617 19,985
Non-PEO NEO [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 1,083,005 651,974 4,547,040 (435,677)
Non-PEO NEO [Member] | Deduction For Change In Actuarial Present Values Reported Under Change In Pension Value And Nonqualified Deferred Compensation Earnings [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (759,247) (216,984) (708,553)
Non-PEO NEO [Member] | Increase For Service Cost For Pension Plans [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 129,420 162,591 165,031 188,354
Non-PEO NEO [Member] | Deduction For Grant Date Fair Value Of Stock Awarded Reported Under Stock Awards Column [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (1,697,740) (1,444) (1,828,820) (1,797,292)
Non-PEO NEO [Member] | Deduction For Amounts Grant Date Fair Value Of Options Awarded [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount (584,526) (504,602) (527,116) (429,833)
Non-PEO NEO [Member] | Increase For Year End Fair Value Of Awards Granted That Remins Outstanding And Unvested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount [4] 2,466,901 2,190,502 3,879,540 2,293,943
Non-PEO NEO [Member] | Increase Decrease For Change In Fair Value Of Award Granted That Were Outstanding And Vested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount [4] 711,301 194,183 2,484,003 170,048
Non-PEO NEO [Member] | Increase Decrease For Change In Fair Value To Vesting Date Of Awards Granted That Vested [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount 814,467 50,307 588,100 (155,581)
Non-PEO NEO [Member] | Increase For Value Of Dividend Equivalents Earned On Restricted Stock Units [Member]        
Pay vs Performance Disclosure [Table]        
Adjustment to Compensation Amount $ 2,469 $ 3,112 $ 3,286 $ 3,237
[1] During each year in the table above, Mr. Donnelly was Textron’s Principal Executive Officer (“PEO”) and our other Named Executive Officers (“Non-PEO NEOs”) consisted of Mr. Connor, Mr. Lupone and Ms. Duffy.
[2] Represents the value as of the end of each year indicated of $100 invested on December 31, 2019 in the Company’s stock or in one of the indicated Peer Group indices.
[3] 2022’s Manufacturing Cash Flow before Pension Contributions has been adjusted to exclude the impact of the Pipistrel acquisition consistent with the prior year’s presentation.
[4] We calculate the fair value of our PSUs, which are typically settled in cash, but, in the Committee’s discretion, can be settled in shares of common stock, cash, or a combination of both, in accordance with GAAP, based on the closing price of our common stock and the number of units, as adjusted based on estimates with respect to performance on the relevant metrics. On the grant date, we assume performance at target on the metrics. Following the grant date, we apply the actual relative TSR as of the valuation date, and, for the remaining performance periods, we utilize estimates of performance against the target for each operating metric.