<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Textron Inc.
(Name of Registrant as Specified In Its Charter)
Textron Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
TEXTRON
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notice of 1994 Annual Meeting and Proxy Statement
- --------------------------------------------------------------------------------
<PAGE> 3
TEXTRON
March 16, 1994
Dear Fellow Shareholder:
You are invited to attend the 1994 Annual Meeting of Textron Shareholders
to be held on Wednesday, April 27, 1994, at 10:30 a.m. at the Omni Biltmore
Hotel, Kennedy Plaza, Providence, Rhode Island.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be transacted at the meeting. Your Board of Directors
unanimously recommends that you vote for proposals 1, 2 and 3.
We will report on company operations and our progress in improving
profitability and shareholder value. We will also review the challenges and
opportunities that the company faces as we move forward. We welcome this
occasion for dialogue with our shareholders and look forward to your comments
and questions.
We hope you find it convenient to attend the meeting. Whether or not you
plan to attend, you can be sure your shares are represented at the meeting by
promptly completing, signing, dating and returning the accompanying proxy card.
We appreciate your continuing interest in Textron.
Sincerely,
/S/ JAMES F. HARDYMON
James F. Hardymon
Chairman and
Chief Executive Officer
<PAGE> 4
<TABLE>
CONTENTS
<C> <S> <C>
Notice of Annual Meeting........................................... 1
Proxy Statement.................................................... 2
* Election of Directors......................................... 2
Security Ownership of Certain Beneficial Holders.............. 9
Security Ownership of Management.............................. 9
Report of the Organization and Compensation Committee on
Executive Compensation........................................ 11
Executive Compensation........................................ 15
Summary Compensation Table.................................. 15
Stock Option Grants in Last Fiscal Year..................... 16
Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values...................... 17
Long-Term Incentive Plan Awards in Last Fiscal Year......... 18
Pension Plan Table.......................................... 18
Performance Graph............................................. 21
* Approval of the Textron 1994 Long-Term Incentive Plan......... 22
* Ratification of Appointment of Independent Auditors........... 25
Voting of Proxies............................................. 25
Other Matters to Come Before the Meeting...................... 27
Solicitation of Proxies....................................... 27
Shareholder Proposals for 1995 Annual Meeting................. 27
---------------------
* To be voted on at the meeting.
---------------------
</TABLE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE> 5
TEXTRON
------------------------
NOTICE OF ANNUAL MEETING
------------------------
To Textron Shareholders:
The 1994 annual meeting of shareholders of Textron Inc. will be held on
Wednesday, April 27, 1994, at 10:30 a.m. at the Omni Biltmore Hotel, Kennedy
Plaza, Providence, Rhode Island for the following purposes:
1. To elect four directors in Class I for a term of three years in
accordance with Textron's By-Laws (Item 1).
2. To approve the adoption of the Textron 1994 Long-Term Incentive
Plan, which is RECOMMENDED by the Board of Directors (Item 2).
3. To ratify the appointment of Ernst & Young as Textron's
independent auditors for 1994, which is RECOMMENDED by the Board of
Directors (Item 3).
4. To transact such other business as may properly come before the
meeting.
You are entitled to vote all shares of Common and Preferred Stock
registered in your name at the close of business on March 4, 1994. If you attend
the meeting and desire to vote in person, your proxy will not be used. 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 SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS SOON AS
POSSIBLE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
A list of shareholders entitled to vote at the 1994 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 Textron's corporate office, 40 Westminster
Street, Providence, Rhode Island 02903.
By order of the Board of Directors,
/S/ KAREN A. QUINN-QUINTIN
Karen A. Quinn-Quintin
Vice President and Secretary
Providence, Rhode Island
March 16, 1994
1
<PAGE> 6
TEXTRON INC.
PROXY STATEMENT
GENERAL
This proxy statement, which is being mailed on or about March 16, 1994, 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, 1994, and at any adjournments thereof. Textron's principal
executive office is located at 40 Westminster Street, Providence, Rhode Island
02903.
All shareholders of record at the close of business on March 4, 1994, will
be entitled to vote. The stock transfer books will remain open. As of March 4,
1994, Textron had outstanding 88,605,596 shares of Common Stock; 311,769 shares
of $2.08 Cumulative Convertible Preferred Stock, Series A; and 137,732 shares of
$1.40 Convertible Preferred Dividend Stock, Series B (preferred only as to
dividends), each of which is entitled to one vote with respect to each matter to
be voted upon at the meeting. All shareholders vote as one class.
ELECTION OF DIRECTORS
The Board of Directors is composed of three classes of directors,
designated Class I, Class II and Class III. One class of directors is elected
each year to hold office for a three-year term and until successors of such
class are duly elected and qualified. It is the intention of the persons named
in the accompanying proxy, unless otherwise instructed, to vote to elect Messrs.
Campbell, Dickson, Macomber and Snow to Class I. Each nominee presently serves
as a director of Textron. Information is furnished below with respect to each
nominee for election and each director continuing in office.
NOMINEES FOR DIRECTOR
CLASS I -- NOMINEES FOR TERMS EXPIRING IN 1997
LEWIS B. CAMPBELL DIRECTOR SINCE JANUARY 1994
Mr. Campbell, 47, is President and chief operating
officer of Textron. He joined Textron in September 1992 as
Executive Vice President and chief operating officer and
assumed his present position on January 1, 1994. Prior to
joining Textron he was a Vice President of General Motors
Corporation and General Manager of GM's GMC Truck Division. He
began his career at GM in 1968 and progressed through various
product design, engineering, manufacturing and management
positions. Mr. Campbell served as a Vice President of GM and
General Manager of its Flint Automotive Division
Buick-Oldsmobile-Cadillac Group from 1988 to 1991 and became
General Manager of its GMC Truck Division in 1991. Mr.
Campbell is a director of Avco Financial Services, Inc., The
Paul Revere Corporation and Citizens Financial Group, Inc.
Mr. Campbell is a member of the Executive Committee.
2
<PAGE> 7
R. STUART DICKSON DIRECTOR SINCE 1984
Mr. Dickson, 64, is former Chairman of the Board of
Ruddick Corporation, a diversified holding company with
interests in industrial sewing thread, regional supermarkets,
business forms and venture capital businesses. He served in
that capacity from 1968 until February 1994. Mr. Dickson
currently serves as Chairman of the Ruddick Executive
Committee. Mr. Dickson is a director of First Union
Corporation, PCA International and United Dominion Industries.
He is Chairman of the Charlotte-Mecklenburg Hospital
Authority and a trustee of Davidson College.
Mr. Dickson is a member of the Audit Committee and the Pension Committee.
- --------------------------------------------------------------------------------
JOHN D. MACOMBER DIRECTOR SINCE OCTOBER 1993
Mr. Macomber, 66, is Principal of JDM Investment Group, a
private investment firm. He was chief executive officer of
Celanese Corporation, a diversified chemical company, from
1977 to 1986 and also served as Chairman from 1980 to 1986. He
served as Chairman and President of the Export-Import Bank of
the United States from 1989 to 1992. He is a director of
Bristol Myers Squibb Co., The Brown Group, Inc., DNA Plant
Technology Corporation, Pilkington Ltd. and Xerox Corporation
and a member of the International Advisory Board of Compagnie
Financiere de Paribas.
Mr. Macomber is Chairman of the Council for Excellence in
Government and a trustee of The Rockefeller University,
Carnegie Institute of Washington and Phillips Academy Andover.
Mr. Macomber is a member of the Audit Committee and the Nominating
Committee.
- --------------------------------------------------------------------------------
JOHN W. SNOW DIRECTOR SINCE 1991
Mr. Snow, 54, is Chairman, President, chief executive
officer and a director of CSX Corporation, an international
transportation company that offers a variety of rail,
container-shipping, trucking and barge services. He joined a
predecessor company of CSX Corporation in 1977 as Vice
President-Government Affairs and progressed through various
executive positions. Mr. Snow became President and a director
of CSX Corporation in 1988, chief executive officer in 1989
and Chairman in 1991.
Mr. Snow is a director of Dominion Resources, Inc.,
NationsBank Corporation and Bassett Furniture Industries, Inc.
and a member of the board of the Virginia Museum of Fine Arts.
Mr. Snow is a member of the Executive Committee and the Organization and
Compensation Committee.
- --------------------------------------------------------------------------------
3
<PAGE> 8
DIRECTORS CONTINUING IN OFFICE
CLASS II -- TERMS EXPIRE IN 1995
JAMES F. HARDYMON DIRECTOR SINCE 1989
Mr. Hardymon, 59, is Chairman and chief executive officer
of Textron. He joined Textron in December 1989 as President
and chief operating officer, became chief executive officer in
January 1992, assumed the additional title of Chairman in
January 1993 and relinquished the title of President to Mr.
Campbell in January 1994. Prior to joining Textron, Mr.
Hardymon was President, chief operating officer and a director
of Emerson Electric Co., a global manufacturer of electrical
and electronic products and systems. Mr. Hardymon joined
Emerson Electric's Browning Manufacturing Division in 1961 and
progressed through various executive positions at Emerson. Mr.
Hardymon served as Vice Chairman and chief operating officer
of Emerson from 1987 to 1988, and then served as President and
chief operating officer of Emerson until joining Textron in 1989. Mr. Hardymon
also served as a director of Emerson from 1987 until he joined Textron. Mr.
Hardymon is a director of Avco Financial Services, Inc., The Paul Revere
Corporation and Fleet Financial Group, Inc.
Mr. Hardymon is Chairman of the Executive Committee.
- --------------------------------------------------------------------------------
WEBB C. HAYES, III DIRECTOR SINCE 1970
Mr. Hayes, 73, is a partner in the law firm of Baker &
Hostetler, Washington, D.C., with which he has been associated
since 1948.
Mr. Hayes is a member of the Executive Committee and the
Nominating Committee.
- --------------------------------------------------------------------------------
BARBARA SCOTT PREISKEL DIRECTOR SINCE 1975
Mrs. Preiskel, 69, is a director of the American Stores
Company, General Electric Company, Massachusetts Mutual Life
Insurance Company and The Washington Post Company. She is
Chairman of New York Community Trust, a member of the board of
the New York Philharmonic, a trustee of Wellesley College and
a trustee of the Ford Foundation. Mrs. Preiskel is a former
Senior Vice President and General Counsel of the Motion
Picture Association of America, Inc. She joined the
Association in 1959 as Deputy Attorney, was elected a Vice
President in 1971 and served as Senior Vice President from
1977 to 1983.
Mrs. Preiskel is Chairman of the Nominating Committee and
a member of the Pension Committee.
- --------------------------------------------------------------------------------
4
<PAGE> 9
THOMAS B. WHEELER DIRECTOR SINCE MAY 1993
Mr. Wheeler, 57, is President, chief executive officer
and a director of Massachusetts Mutual Life Insurance Company.
He was a member of the Massachusetts Mutual field sales force
from 1962 to 1983, served as Executive Vice President of
Massachusetts Mutual's insurance and financial management line
from 1983 to 1986, became President and chief operating
officer in 1987 and assumed his current position in 1988. He
is a director of the Bank of Boston Corporation.
Mr. Wheeler is Chairman of the Massachusetts Business
Roundtable, a trustee of Springfield College, the Basketball
Hall of Fame and the Springfield Orchestra Association and a
member of the Yale University Development Board.
Mr. Wheeler is a member of the Audit Committee and the Pension Committee.
- --------------------------------------------------------------------------------
CLASS III -- TERMS EXPIRE IN 1996
H. JESSE ARNELLE DIRECTOR SINCE DECEMBER 1993
Mr. Arnelle, 59, is senior partner in the law firm of
Arnelle & Hastie, San Francisco. He co-founded the firm in
1985. He is a director of FPL Group, Inc., Wells Fargo &
Company and Wells Fargo Bank, N.A., WMX Technologies, Inc. and
Eastman Chemical Corporation.
Mr. Arnelle is Vice Chairman of the Board of Trustees of
Pennsylvania State University and a director of the National
Football Foundation and College Hall of Fame, the Bay Area
UNICEF and the San Francisco Opera.
Mr. Arnelle is a member of the Organization and Compensation Committee
and the Pension Committee.
- --------------------------------------------------------------------------------
B. F. DOLAN DIRECTOR SINCE 1980
Mr. Dolan, 66, is retired Chairman of Textron. Mr. Dolan
was a founder of E-Z-Go Car, a manufacturer of golf cars, and
served as President of that company from 1954 until 1960, when
Textron acquired E-Z-Go. He was President of Textron's E-Z-Go
Division from 1960 to 1973, President of Textron's Polaris
E-Z-Go Division from 1973 to 1976, President of Textron's
Homelite Division from 1976 to 1979 and Executive Vice
President-Operations of Textron from 1979 to 1980. He served
as chief operating officer of Textron from 1980 to 1985, as
President from 1980 until 1989 and as chief executive officer
from 1985 until January 1992. He assumed the additional title
of Chairman in 1986 and served in that capacity until his
retirement at the end of 1992. He is a director of Allendale
Mutual Insurance Company, First Union Corporation, FPL Group Inc. and Ruddick
Corporation.
Mr. Dolan is a member of the Executive Committee and the Nominating
Committee.
5
<PAGE> 10
SAM F. SEGNAR DIRECTOR SINCE 1982
Mr. Segnar, 66, is retired Chairman and chief executive
officer of Enron Corporation and former Chairman of the Board
of Vista Chemical Co.
Mr. Segnar is a director of Hartmarx Corporation, Seagull
Energy Corporation, Gulf States Utilities Company, ProBank,
N.A. and Mapco Inc. and an advisory director of Pilko and
Associates Inc. He is a trustee of the John Cooper School,
Texas A&M Institute of Bio-Science and Technology and the
Texas A&M School of Business Administration. He is a member of
the National Advisory Board of The First Commercial Bank
Corporation.
Mr. Segnar is a member of the Executive Committee and the Nominating
Committee.
- --------------------------------------------------------------------------------
JEAN HEAD SISCO DIRECTOR SINCE 1975
Mrs. Sisco, 68, is a partner in the international trade
consulting firm of Sisco Associates. She is a director of The
Neiman Marcus Group, Inc., Santa Fe Pacific Corporation,
Chiquita Brands International, Inc., Washington Mutual
Investors Fund, Inc., K-Tron International, Inc. and
McArthur/Glen Realty Corporation. She held various executive
offices with the Washington, D.C. department store chain of
Woodward & Lothrop from 1950 to 1974. She served as a
consultant on governmental and public affairs to the American
Retail Federation from 1974 to 1977. She is a director of
Reading is Fundamental, the National Conference of Christians
and Jews, the Washington Ballet and the International Women's
Forum, and Chairman of the National Association of Corporate
Directors.
Mrs. Sisco is a member of the Audit Committee and the Organization and
Compensation Committee.
- --------------------------------------------------------------------------------
MARTIN D. WALKER DIRECTOR SINCE 1986
Mr. Walker, 61, is Chairman, chief executive officer and
a director of M. A. Hanna Company, an international specialty
chemicals company. From 1982 to 1986, Mr. Walker was Executive
Vice President and a member of the Office of the Chief
Executive of Rockwell International Corporation, a
multi-industry company engaged in electronics, aerospace,
automotive and graphics businesses. Mr. Walker served as
Senior Vice President of Rockwell and President of its
Automotive Operations from 1978 to 1982. Mr. Walker was a
director of Ex-Cell-O Corporation from 1983 until its
acquisition by Textron in 1986.
Mr. Walker is a director of Comerica, Inc. and The Reynolds and Reynolds
Company.
Mr. Walker is Chairman of the Pension Committee and a member of the
Organization and Compensation Committee.
6
<PAGE> 11
THE BOARD OF DIRECTORS
Meetings, Organization and Remuneration
During 1993, the Board of Directors met eight times and the Executive
Committee of the Board met once. The Board has standing Audit, Nominating,
Organization and Compensation, and Pension Committees.
For their service on the Board, non-employee directors are paid an annual
retainer of $30,000 plus $1,200 for each meeting of the Board attended.
Directors who serve on the Executive Committee or one of the standing committees
receive $1,200 for each committee meeting attended; and the chairman of each
standing committee receives an additional $5,000 per year.
Textron maintains a deferred income plan for non-employee directors under
which they may defer all or part of their cash compensation, for payment after
retirement from the Board. Compensation may be deferred either into an interest
bearing account or into an account consisting of Textron stock units, which are
fictional shares of Textron Common Stock, the value of which varies with the
price of Textron Common Stock. Directors must defer a minimum of 25 percent of
their annual retainer into the stock unit account. At the end of each calendar
quarter, Textron will contribute to the stock unit account an additional amount
equal to 25 percent of the amount deferred by the director into this account
during the quarter. One half of this additional amount will vest on December 31
of the year in which payment was deferred and one-half on the next December 31.
Textron also credits dividend equivalents to the stock unit account.
Non-employee directors who have completed at least five years of service as
a Textron director prior to retirement from the Board of Directors are eligible
to participate in a pension plan. Each director who qualifies will receive an
annual pension benefit in an amount equal to the annual retainer in effect at
the time of the director's retirement, commencing after the later of the
director's retirement or seventieth birthday, subject to acceleration by the
Board to any date after a retired director's sixty-fifth birthday and, in the
case of retirement due to total disability, to any date after such retirement.
The pension will continue for the life of the retired director.
Each non-employee director has received 1,000 restricted shares of Textron
Common Stock. Except in the case of the director's death or disability or a
change in control of Textron, the director may not sell or transfer the shares
until he or she has completed all of his or her successive terms as a Director
and is eligible to receive benefits under Textron's pension plan for
non-employee directors.
Employee directors do not receive fees or other compensation for their
service on the Board or its committees. Each member of the Board is reimbursed
for expenses incurred in connection with each Board or committee meeting
attended.
Audit Committee
The Audit Committee recommends to the Board the selection of independent
auditors to conduct the annual audit of Textron's financial statements; reviews
the scope and costs of the audit plans of the independent auditors and Textron's
internal auditors and the scope and costs of non-audit services provided by the
independent auditors; reviews with management and the independent auditors
Textron's annual financial statements, including major accounting, financial
reporting and disclosure decisions related thereto; reviews Textron's programs
to ensure compliance by employees with important Textron policies; and reviews
with management, the independent auditors and the internal auditors, their views
as to the adequacy of Textron's internal accounting controls. The Audit
Committee is available to meet privately and separately with the independent
auditors and the internal auditors without management being present.
The following six non-employee directors presently comprise the Audit
Committee: Mr. William M. Ellinghaus (Chairman), Mr. Dickson, Mr. Macomber, Mrs.
Sisco, Mr. J. Paul Sticht and Mr. Wheeler.
7
<PAGE> 12
Messrs. Ellinghaus and Sticht are retiring from the Board in April 1994. During
1993, the Audit Committee met six times. Various members of management
(including the Executive Vice President and Chief Financial Officer, the
Executive Vice President and General Counsel, the Vice President and Controller,
and the Vice President-Audit and Business Ethics) are regularly invited to be
present at Audit Committee meetings. The Vice President-Audit and Business
Ethics has direct access to the Audit Committee and to Textron's chief executive
officer if at any time he wishes to report or consult on any matter.
Nominating Committee
The Nominating Committee reviews the qualifications of, and recommends to
the Board, individuals for nomination by the Board as directors of Textron.
Textron's By-Laws contain a provision which imposes certain requirements upon
nominations for directors other than those made by the Board. In making its
recommendations to the Board, the Nominating Committee will consider suggestions
from a variety of sources, including shareholders, regarding possible
candidates. Shareholders wishing to recommend individuals as candidates for
nomination by the Board should submit their recommendations in writing by
December 1 of the year preceding the annual meeting of shareholders to the
Nominating Committee, c/o Office of the Secretary, Textron Inc., 40 Westminster
Street, Providence, Rhode Island 02903, along with a description of the proposed
candidate's qualifications, including business, professional and educational
background, a list of directorships held, if any, and other pertinent
biographical information as well as a written consent from the proposed
candidate. The following six non-employee directors presently comprise the
Nominating Committee: Mrs. Preiskel (Chairman), Mr. Dolan, Mr. Hayes, Mr.
Macomber, Mr. Segnar and Mr. Sticht. The Nominating Committee met four times
during 1993.
Organization and Compensation Committee
The Organization and Compensation Committee recommends to the Board
compensation for senior corporate officers and approves salary and incentive
compensation for other principal corporate officers. In addition, the
Organization and Compensation Committee establishes compensation plans, reviews
the responsibilities and performance of senior corporate officers, plans for
their succession, and reviews changes in principal corporate officers. The
following six non-employee directors presently comprise the Organization and
Compensation Committee: Mr. Joseph R. Carter (Chairman), Mr. Arnelle, Mr.
Ellinghaus, Mrs. Sisco, Mr. Snow and Mr. Walker. Mr. Carter is retiring from the
Board in April 1994. During 1993, the Organization and Compensation Committee
met five times.
Pension Committee
The Pension Committee is responsible for overseeing the operations of
Textron's tax-qualified retirement plans. The Pension Committee reviews the
qualifications of independent actuaries and auditors, the management of
investments, the accounting for and the valuation of plans, and any significant
changes in their design and funding, and makes recommendations to the Board
relating to the foregoing. The following six non-employee directors presently
comprise the Pension Committee: Mr. Walker (Chairman), Mr. Arnelle, Mr. Carter,
Mr. Dickson, Mrs. Preiskel and Mr. Wheeler. During 1993, the Pension Committee
met three times.
8
<PAGE> 13
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table lists all shareholders known by Textron to own
beneficially more than five percent of any class of Textron's voting stock as of
January 1, 1994:
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------- ----------------- --------
<S> <C> <C> <C>
Common Stock........ Bankers Trust Company, 280 Park Avenue, 17,383,815 shares(1) 19.66%
New York, New York 10017
Common Stock........ FMR Corp., 82 Devonshire Street, 5,540,184 shares(2) 6.27%
Boston, Massachusetts 02109
- ---------------
<FN>
(1) Bankers Trust Company has informed Textron that the reported number
includes 894,928 shares as to which Bankers Trust Company has sole voting power
and 6,500 shares as to which it shares voting power, 1,524,295 shares as to
which it has sole investment power and 6,500 shares as to which it shares
investment power, and 15,853,020 shares (17.93% of the class) which it holds as
Trustee under the Textron Savings Plan and as to which it disclaims any
beneficial interest. Shares held by Bankers Trust Company as Trustee under the
Textron Savings Plan will be voted at the annual meeting in accordance with
instructions from the participants in the Plan, or, in the absence of
instructions, by Bankers Trust Company as Trustee in accordance with the Plan.
(2) Pursuant to a statement filed by FMR Corp. with the Securities and
Exchange Commission in accordance with Rule 13d of the Securities Exchange Act
of 1934 on behalf of itself, Fidelity Management and Research Company, Fidelity
Management Trust Company, Fidelity International Limited and Edward C. Johnson,
Chairman of FMR Corp., FMR Corp. has reported that it has sole voting power over
754,738 shares and sole investment power over 5,540,184 shares.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below are the number of shares of all classes of Textron stock
beneficially owned by each director of Textron, by each executive officer of
Textron named in the Summary Compensation Table on page 15 of this Proxy
Statement and by all current directors and executive officers as a group.
Messrs. Carter, Ellinghaus and Sticht are retiring from the Board of Directors
in April 1994. Directors and executive officers as a group owned less than one
percent of the outstanding shares of Common Stock. Ownership indicated is as of
January 1, 1994.
The table includes shares held for Textron executive officers and for Mr.
Dolan by the bank trustee under the Textron Savings Plan, shares obtainable upon
the exercise of stock options exercisable within 60 days of January 1, 1994, and
shares held jointly. Each director and officer has sole voting and investment
power over his or her shares, except in those cases in which the voting or
investment power is shared with the bank trustee under the Textron Savings Plan
or as otherwise noted. In addition to the shares of Common Stock listed below,
as of January 1, 1994, Textron's executive officers held a total of 439,263
stock units and performance share units, the cash value of which will be equal
to the value of Textron's Common Stock at the time of payment.
9
<PAGE> 14
<TABLE>
<CAPTION>
NUMBER
OF SHARES
NAME OF COMMON STOCK
---- ---------------
<S> <C>
H. Jesse Arnelle......................................................... 1,000
Lewis B. Campbell........................................................ 36,381(1)
Joseph R. Carter......................................................... 5,000
R. Stuart Dickson........................................................ 21,194(2)
B. F. Dolan.............................................................. 126,372(3)
William M. Ellinghaus.................................................... 1,548
James F. Hardymon........................................................ 99,528(4)
Webb C. Hayes, III....................................................... 2,250
John D. Macomber......................................................... 3,000
Richard A. McWhirter..................................................... 46,530(5)
Barbara Scott Preiskel................................................... 2,657
Sam F. Segnar............................................................ 1,891(6)
Jean Head Sisco.......................................................... 1,892
John W. Snow............................................................. 2,000(7)
Thomas D. Soutter........................................................ 59,602(8)
J. Paul Sticht........................................................... 6,000
Martin D. Walker......................................................... 1,661(9)
William F. Wayland....................................................... 26,140(10)
Thomas B. Wheeler........................................................ 1,005
All current Directors and Executive Officers as a Group (38 persons)..... 793,485(11)
- ---------------
</TABLE>
(1) Includes 35,999 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994.
(2) Includes 17,000 shares as to which voting and investment powers are
shared.
(3) Includes 27,500 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994.
(4) Includes 86,958 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994.
(5) Includes 38,824 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994, and 3,000 shares as to which
voting and investment powers are shared.
(6) Includes 500 shares as to which voting and investment powers are
shared.
(7) Includes 1,000 shares as to which voting and investment power are
shared.
(8) Includes 36,108 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994.
(9) Includes 504 shares as to which voting and investment powers are
shared.
(10) Includes 21,138 shares obtainable upon the exercise of stock options
exercisable within 60 days of January 1, 1994.
(footnotes continued on following page)
10
<PAGE> 15
(footnotes continued from preceding page)
(11) Includes 22,204 shares as to which voting and investment powers are
shared, 400 shares as to which no voting or investment powers are held and as to
which beneficial ownership is disclaimed and 503,877 shares obtainable upon the
exercise of stock options exercisable within 60 days of January 1, 1994.
---------------------
As required by Securities and Exchange Commission rules, Textron notes that
Mr. Hayes filed a late Form 4 report concerning a transaction involving shares
of Textron Common Stock that occurred at the end of October 1993. The report was
filed one month after the due date.
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors has
furnished the following report on executive compensation:
EXECUTIVE COMPENSATION PHILOSOPHY
The objective of Textron's executive compensation program is to attract and
retain the most qualified executives to lead our diversified corporation and to
motivate them to produce strong financial performance for the benefit of our
shareholders. To meet this objective, the total compensation program is designed
to be competitive with the total compensation programs provided by other
corporations of comparable revenue size in industries with which we compete for
customers and executives, and to provide total compensation opportunities at the
75th percentile of those corporations for achieving outstanding performance. In
determining competitive compensation for each of the components of executive
compensation described below, Textron analyzes data from several independent
compensation surveys of such comparable corporations. The companies included in
the compensation surveys (the "surveyed companies") are not identical to those
included in the peer group compiled for the performance graph on page 21 of this
Proxy Statement, although many companies are included in both groups. The number
of surveyed companies is greater than the number of companies included in the
peer group.
EXECUTIVE COMPENSATION PROGRAM
Each year the Organization and Compensation Committee, which is comprised
entirely of outside directors, recommends to the Board of Directors compensation
arrangements for Textron's executive officers, including the officers named in
the Summary Compensation Table on page 15 of this Proxy Statement (the "Named
Officers"). Such compensation arrangements, all of which are subject to approval
by the full Board of Directors, include annual salary levels, salary grade
ranges, annual and long-term incentive plans and grants thereunder, standards of
performance for new grants, payouts from past grants, plan participation and
program design. The full Board of Directors unanimously approved the
recommendations made by the Organization and Compensation Committee for 1993.
Mr. Hardymon did not, however, participate in the deliberations of the
Organization and Compensation Committee or Board of Directors regarding his own
compensation.
Textron's executive compensation program is comprised of three principal
components: salary, annual incentive compensation and long-term incentive
compensation.
11
<PAGE> 16
SALARY
Salary ranges for Textron's executive officers, which were increased by
three percent in 1993, were set so that the midpoints of the ranges approximate
the 50th percentile for comparable positions in the surveyed companies.
Individual salaries were considered for adjustment periodically, based on
position in salary range, individual performance and potential, and/or change in
duties or level of responsibility.
ANNUAL INCENTIVE COMPENSATION
All executive officers participate in Textron's Annual Incentive
Compensation Plan. In 1993, target annual incentive compensation opportunities
were established so that the combination of base salary and target annual
incentive awards (60% of salary for the chief executive officer and the chief
operating officer and 50% of salary for the other Named Officers) would place
the compensation of Textron's executive officers at the 50th percentile of
compensation for comparable positions in the surveyed companies. Maximum annual
incentive payments are twice the target award levels. The factors considered by
the Committee in recommending the 1993 incentive compensation awards to
executive officers included the degree to which certain overall corporate and
individual performance objectives were achieved. Earnings per share and cash
flow were the key corporate financial objectives. Nonfinancial objectives varied
for individual executive officers depending upon their responsibilities. The
annual incentive compensation paid to the Named Officers is reported in the
"Bonus" column of the Summary Compensation Table on page 15 of this Proxy
Statement.
LONG-TERM INCENTIVE COMPENSATION
Under the Textron 1990 Long-Term Incentive Plan, approved by Textron
shareholders at the 1990 Annual Meeting (the "1990 Plan"), executive officers
may be granted awards of stock options, performance share units, or both. The
1990 Plan was revised in 1992 to further align Textron's executive compensation
program with shareholders' interests by awarding performance share units instead
of performance units. Performance share units are described in the discussion of
the proposed Textron 1994 Long-Term Incentive Plan under the heading,
"Performance Share Units" on page 23 of this Proxy Statement. Ranges previously
established by the Committee for stock option grants and performance share unit
awards enable the Committee to make grants and awards that can produce total
compensation opportunities at the 75th percentile of competitive practice at the
surveyed companies.
1993 GRANTS OF STOCK OPTIONS
Under the 1990 Plan, the Committee recommends to the Board of Directors the
number of stock options to be granted based on the executive officer's functions
and responsibilities, past and expected future performance, potential
contributions to Textron's profitability and growth and prior option grants. In
accordance with the 1990 Plan, stock options granted in 1993 were at a purchase
price equal to 100% of the fair market value of Textron Common Stock at the time
of the option grant. The grants were made within the ranges described above
under the heading, "Long-Term Incentive Compensation." Information on the stock
options granted during fiscal year 1993 to the Named Officers appears in the
table on page 16 of this Proxy Statement.
1993 PAYOUTS OF PREVIOUSLY GRANTED PERFORMANCE UNITS
The Committee recommended to the Board of Directors the payout to executive
officers of performance units for the three-year performance cycle ended at the
end of 1993 at a range of 94% to 100% of the stated value of such performance
units based 75% on three-year aggregate earnings per share and 25% on
discretionary performance measures, including return on equity, balance sheet
strength, succession planning and shareholder value. Information on the 1993
payouts to the Named Officers of previously granted performance units appears in
the table on page 15 of this Proxy Statement.
12
<PAGE> 17
1993 AWARDS OF PERFORMANCE SHARE UNITS
For the three-year performance cycle starting at the beginning of 1994,
each performance share unit granted and earned under the 1990 Plan will be
valued for payment purposes at the then current market value of Textron Common
Stock at the end of the three-year performance period. Pursuant to the 1990
Plan, the Committee determined the number of performance share units to be
granted to executive officers for the 1994-1996 performance cycle based on the
functions and responsibilities of the executive officer and the executive
officer's potential contributions to Textron's profitability and growth. Awards
of performance units and performance share units in prior years were taken into
account when making new awards. In 1993, awards of performance share units were
made to executive officers within the ranges described under the heading,
"Long-Term Incentive Compensation," on page 12 of this Proxy Statement. The
three-year performance measures or targets are based 75% on earnings per share
growth and 25% on discretionary performance measures, including the executive
officer's individual performance. Information on the 1993 awards of performance
share units appears in the table on page 18 of this Proxy Statement.
CEO COMPENSATION
As in the past, in determining the overall level of Mr. Hardymon's
compensation and each component thereof, the Committee took into consideration
information provided by independent, professional compensation consultants. As
reported in the Summary Compensation Table on page 15 of this Proxy Statement,
Mr. Hardymon's salary was $725,000 for 1993. In determining this amount, the
Committee considered the fact that in 1992, Mr. Hardymon's base salary of
$650,000 was below the 25th percentile of compensation paid at the surveyed
companies for the Chairman and chief executive officer position because 1992 was
his first year as chief executive officer. The increase for 1993 placed Mr.
Hardymon's base salary at the 30th percentile for his position. The Committee
also took into account Mr. Hardymon's performance and his assumption of
additional responsibilities as Chairman, as well as recent changes to the 1990
Plan increasing the relative emphasis upon long-term compensation. The Committee
recommended and the Board approved a 1993 annual incentive award of $950,000.
This award level reflects the fact that all of Mr. Hardymon's objectives were
fully met or substantially exceeded for 1993. Mr. Hardymon succeeded in meeting
his objective of improving two key financial measures, earnings per share and
free cash flow. Textron's 1993 earnings per share improvement over 1992 and the
year to year growth in Textron's free cash flow significantly exceeded the
planned levels. Mr. Hardymon's nonfinancial objectives consisted of fully
documenting a Textron Strategic Plan, finalizing the transition of operations to
Mr. Campbell and maintaining the high level of public image enjoyed by Textron
with each of its constituencies. In addition, the Committee considered Textron's
accomplishments during 1993, including a total shareholder return of 33 percent
(see the Performance Graph on page 21 of this Proxy Statement); an 11 percent
increase in Textron's quarterly common stock dividend; the acquisition of
Textron Acustar Plastics, which strengthened Textron's standing in the
automotive industry; and the successful completion of a public offering of 17
percent of the stock of The Paul Revere Corporation.
Mr. Hardymon's payout of $381,656 under the performance unit segment of the
1990 Plan was at 100% of the stated value of the performance units granted to
him for the 1991-1993 cycle. The Committee determined that the 100% payout was
appropriate as aggregate earnings per share over the three-year period exceeded
targeted earnings per share for that period and discretionary performance
measures (return on investment, balance sheet strength, succession planning and
shareholder value) were all successfully met. During 1993, Mr. Hardymon received
a grant of 50,000 stock options and an award of 20,000 performance share units
for the 1994-1996 cycle. These grant levels were the same as those granted to
him during 1992.
Based on competitive compensation information which the Committee has
reviewed, the Committee believes that for 1993, the total of Mr. Hardymon's
salary, annual incentive compensation and 1990 Plan payout was slightly above
the median of the surveyed companies. Mr. Hardymon also received compensation
13
<PAGE> 18
under various Textron benefit and compensation plans. (See footnotes (5) and (6)
to the Summary Compensation Table on page 16 of this Proxy Statement.)
RECENT TAX LEGISLATION
Effective January 1, 1994, Section 162(m) of the Internal Revenue Code
provides that no U.S. income tax deduction is allowable to a publicly held
corporation for compensation in excess of $1 million paid to the chief executive
officer or any other employee whose compensation is required to be reported in
the Summary Compensation Table, if those individuals are employed by the
corporation at year end. "Performance-Based Compensation" is exempt from the $1
million limitation. Performance-Based Compensation must be based upon meeting
pre-established and objective performance goals which must be approved by the
Company's shareholders. Under currently proposed Treasury Regulations,
performance goals are not objective if they are not based on a formula and if
the Committee has any discretion to pay amounts in excess of the pre-established
performance schedule or to pay the compensation if the performance goals are not
met. Compensation deferred under the Deferred Income Plan for Textron Key
Executives also is not subject to the $1 million limitation.
Textron's current policy is to preserve the measure of discretion that the
Committee has in the past exercised in administering Textron's annual and
long-term incentive plans. Textron does intend, however, to qualify stock option
awards under the proposed Textron 1994 Long-Term Incentive Plan for the
Performance-Based Compensation exception by placing a limitation on the number
of stock options that can be granted to any one individual. This limitation is
described in the discussion of the proposed Textron 1994 Long-Term Incentive
Plan under the heading, "Approval of the Textron 1994 Long-Term Incentive Plan,"
on page 22 of this Proxy Statement.
The Deferred Income Plan for Textron Key Executives encourages individuals,
including those whose income might otherwise be subject to the $1 million
limitation, to defer incentive compensation amounts until the individual's
employment with Textron ends, at which time the deductibility of such
compensation will not be subject to Section 162(m). In addition, annual
incentive compensation payable to executive officers in excess of specified
levels must be deferred. Consequently, Textron believes that the $1 million
limitation of Section 162(m) of the Internal Revenue Code will not have a
material effect on Textron's income tax expense in the near term regardless of
whether its payments of incentive compensation qualify as Performance-Based
Compensation.
The Committee will continue to assess the effect of the new tax rules on
Textron.
THE TEXTRON 1994 LONG-TERM INCENTIVE PLAN
The Committee recommends to the shareholders that they approve the adoption
of the Textron 1994 Long-Term Incentive Plan. The Plan implements the strategy
of the Committee and the Board of Directors of basing a substantial component of
executive officers' compensation on the value they generate for Textron's
shareholders and reflects their belief that the best measure of shareholder
value is the performance of Textron Common Stock. The Textron 1994 Long-Term
Incentive Plan is described on pages 22 through 25 below.
This report is submitted by the Organization and Compensation Committee.
Mr. Arnelle did not join the Committee until February 1994 and, therefore, did
not participate in the preparation of this report.
JOSEPH R. CARTER, CHAIRMAN
WILLIAM M. ELLINGHAUS
JEAN HEAD SISCO
JOHN W. SNOW
MARTIN D. WALKER
14
<PAGE> 19
<TABLE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information concerning
compensation of (i) Textron's chief executive officer at the end of 1993 and
(ii) the four most highly compensated executive officers of Textron other than
the chief executive officer, who were serving as executive officers at the end
of 1993 (collectively, the "Named Officers"), for Textron's 1991, 1992 and 1993
fiscal years. Compensation which was deferred by the Named Officers under
Textron's Deferred Income Plan is included below as compensation paid.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------
AWARDS
----------------------------- PAYOUTS
ANNUAL COMPENSATION RESTRICTED SECURITIES -------
NAME AND PRINCIPAL -------------------------- STOCK AWARDS UNDERLYING LTIP ALL OTHER
POSITION(1) YEAR SALARY ($) BONUS ($)(2) ($)(5) OPTIONS (#) PAYOUTS ($) COMPENSATION ($)(6)
- -------------------- ---- ---------- ------------- ------------ ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. F. Hardymon 1993 $725,000 $ 950,000 $ 250,102 50,000 $ 381,656 $ 214,805
Chairman, President 1992 650,000 1,202,502(3) -0- 50,000 325,007 189,400
and Chief Executive 1991 535,000 680,000 -0- 25,000 325,007
Officer
L. B. Campbell 1993 366,666 740,760(4) -0- 42,000 -0- 105,390
Executive Vice 1992 94,231 299,262(4) -0- 57,000 -0- 18,225
President and Chief 1991
Operating Officer
T. D. Soutter 1993 392,000 350,000 17,500 17,600 223,819 98,697
Executive Vice 1992 377,000 363,000 -0- 17,600 198,338 96,254
President and 1991 362,000 358,000 -0- 10,575 163,731
General Counsel
W. F. Wayland 1993 325,000 340,000 99,484 20,000 179,184 87,139
Executive Vice 1992 305,000 408,000(3) -0- 17,600 159,638 78,533
President 1991 290,000 261,000 -0- 8,475 128,908
Administration and
Chief Human
Resources Officer
R. A. McWhirter 1993 285,000 260,000 32,829 26,600 131,316 72,347
Executive Vice 1992 245,000 225,193(3) -0- 9,000 117,309 49,856
President and Chief 1991 233,000 184,000 -0- 6,200 111,191
Financial Officer
</TABLE>
- ---------------
(1) In 1991, Mr. Hardymon was President and Chief Operating Officer of Textron.
He became President and Chief Executive Officer on January 1, 1992, and
assumed the additional title of Chairman on January 1, 1993. Mr. Campbell
joined Textron as Executive Vice President and Chief Operating Officer in
September 1992. Mr. Campbell succeeded Mr. Hardymon as President on January
1, 1994. Mr. Wayland became Executive Vice President Administration and
Chief Human Resources Officer in January 1993; he was previously Executive
Vice President Human Resources. Mr. McWhirter became Executive Vice
President and Chief Financial Officer in January 1993; he was previously
Senior Vice President and Secretary.
(2) Except as described in notes (3) and (4), this column lists amounts paid to
the Named Officers pursuant to Textron's Annual Incentive Compensation
Plan.
(3) Annual incentive compensation awards for 1992 to Messrs. Hardymon, Wayland
and McWhirter were $850,000, $300,000 and $190,000, respectively. The
amounts listed as paid to them for 1992 also include the market value on
the date of contribution of Textron's contributions of stock units
($352,502 in the case of Mr. Hardymon, $108,000 in the case of Mr. Wayland
and $35,193 in the case of Mr. McWhirter) as a result of their respective
elections to defer all or part of their annual and/or long-term incentive
compensation into the stock unit fund of the Deferred Income Plan. These
amounts were reported in the 1993 Proxy Statement in the "All Other
Compensation" column.
(footnotes continued on following page)
15
<PAGE> 20
(footnotes continued from preceding page)
(4) The amount listed as paid to Mr. Campbell for 1992 includes $80,000 annual
incentive compensation, $50,000 to replace matching stock under a stock
savings plan forfeited as a result of his leaving General Motors
Corporation to join Textron and $169,262 as the first installment of a
special relocation allowance. The amount listed as paid to Mr. Campbell for
1993 includes $450,000 annual incentive compensation, $200,000 as a special
payment in lieu of long-term compensation and $90,760 as the balance of the
special relocation allowance. Mr. Campbell was not eligible for a payout
under the performance unit component of the 1990 Long-Term Incentive Plan
in 1993.
(5) Amounts listed in the Summary Compensation Table as "Restricted Stock
Awards" are not amounts of restricted stock but are unvested contributions
made by Textron under the Deferred Income Plan as a result of the officers'
elections to defer all or part of their annual and/or long-term incentive
compensation into the stock unit fund of the Deferred Income Plan. These
contributions are credited in the form of stock units, which are not actual
shares of stock but are units paid in cash with a value that varies with
the price of Textron Common Stock. Stock units are designed to further
align the executives' interests with those of the shareholders. Fifty
percent of Textron's contribution vests at the end of the first calendar
year following the year in which the deferred income was earned and fifty
percent vests at the end of the next calendar year. Dividend equivalents
are credited to the stock unit fund accounts of participants in the
Deferred Income Plan. As of January 1, 1994, 4,472 unvested stock units
with a market value of $260,511 were credited to the account of Mr.
Hardymon, 313 unvested stock units with a market value of $18,228 were
credited to the account of Mr. Soutter, 1,779 unvested stock units with a
market value of $103,624 were credited to the account of Mr. Wayland and
587 unvested stock units with a market value of $34,195 were credited to
the account of Mr. McWhirter. As of January 1, 1994, the market value of
the 50,000 shares of Common Stock which Mr. Hardymon will be entitled to
receive upon retirement from Textron if he remains in the employ of Textron
through November 30, 1999, as described on page 19 of this Proxy Statement,
was $2,912,500.
(6) In accordance with a release issued by the Securities and Exchange
Commission, amounts of "All Other Compensation" for 1991 are excluded from
the Summary Compensation Table. Amounts listed as "All Other Compensation"
for 1993 are comprised of the following: (i) Textron's contributions under
the Textron Savings Plan and the Savings Plan component of the Supplemental
Benefits Plan of $36,250, $18,333, $19,600, $16,250 and $14,250 for Messrs.
Hardymon, Campbell, Soutter, Wayland and McWhirter, respectively, and (ii)
Textron's contributions under the Profit Sharing component of the
Supplemental Benefits Plan of $178,555, $87,057, $79,097, $70,889 and
$58,097 for Messrs. Hardymon, Campbell, Soutter, Wayland and McWhirter,
respectively.
<TABLE>
STOCK OPTION GRANTS
The following table sets forth information on grants of stock options
during Textron's 1993 fiscal year to the Named Officers under the 1990 Plan. The
number of stock options granted to the Named Officers during Textron's 1993
fiscal year is also listed in the Summary Compensation Table on page 15 of this
Proxy Statement in the column entitled "Securities Underlying Options."
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
NUMBER OF TOTAL STOCK PRICE APPRECIATION
OF OPTIONS
SECURITIES GRANTED EXERCISE FOR OPTION TERM($)(2)
UNDERLYING TO OR
OPTIONS EMPLOYEES BASE ----------------------
GRANTED(#) IN FISCAL PRICE EXPIRATION FIVE TEN
NAME (1) YEAR ($/SHARE) DATE PERCENT PERCENT
---- ---------- --------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
J. F. Hardymon....................... 50,000 3.9% $56.625 12/14/03 $1,780,560 $4,512,285
L. B. Campbell....................... 42,000 3.3 56.625 12/14/03 1,495,670 3,790,319
T. D. Soutter........................ 17,600 1.4 56.625 12/14/03 626,757 1,588,324
W. F. Wayland........................ 20,000 1.6 56.625 12/14/03 712,224 1,804,914
R. A. McWhirter...................... 8,600(3) 0.7 43.625 02/23/03 235,945 597,932
18,000 1.4 56.625 12/14/03 641,002 1,624,423
</TABLE>
(footnotes on following page)
16
<PAGE> 21
(footnotes to table on preceding page)
- ---------------
(1) Fifty percent of the options granted may be exercised not earlier than one
year from the date of grant and the balance of the options granted may be
exercised not earlier than two years from the date of grant. All options
were granted on December 15, 1993, except for 8,600 options granted to Mr.
McWhirter on February 24, 1993, to supplement his December 1992 grant as a
result of his promotion to Executive Vice President and Chief Financial
Officer on January 1, 1993. All options were granted at a purchase price per
share of 100% of the fair market value of Textron Common Stock on the date
of grant. Outstanding options will be exercisable immediately and in full in
the event of certain changes in control of Textron as defined in the 1990
Plan.
(2) The dollar amounts under these columns are the result of calculations at the
five percent and ten percent rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the price of Textron Common Stock. No gain to the
optionees is possible without an increase in stock price, which will benefit
all shareholders commensurately. At a five percent and ten percent annual
rate of stock price appreciation, the stock price would be approximately
$92.24 and $146.87, respectively, at the end of the ten-year term of the
options for options granted on December 15, 1993. The corresponding stock
prices for options granted on February 24, 1993, would be $71.06 and
$113.15, respectively.
(3) Granted in February 1993 to supplement Mr. McWhirter's December 1992 grant
as a result of his promotion to Executive Vice President and Chief Financial
Officer on January 1, 1993.
<TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information, with respect to the Named
Officers, concerning: (i) the exercise during fiscal year 1993 of stock options
and (ii) unexercised options held as of the end of Textron's 1993 fiscal year,
which were granted to the Named Officers during 1993 and in prior fiscal years
under either the 1990 Plan or a predecessor plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES JANUARY 1, 1994(#) AT JANUARY 1, 1994($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.F. Hardymon........... -0- $ -0- 86,958 75,001 $2,150,493 $ 468,766
L.B. Campbell........... -0- -0- 35,999 78,001 762,821 831,116
T.D. Soutter............ 4,610 161,350 36,108 26,401 912,238 165,015
W.F. Wayland............ 17,421 581,165 21,138 28,801 441,575 168,916
R.A. McWhirter.......... 1,500 50,813 34,524 31,101 985,614 224,791
- ---------------
<FN>
(1) Based on the closing price of Textron Common Stock on the New York Stock
Exchange -- Composite Transactions on December 31, 1993 ($58.25).
</TABLE>
17
<PAGE> 22
<TABLE>
LONG-TERM INCENTIVE PLAN
The following table provides information concerning performance share unit
awards made during Textron's 1993 fiscal year to the Named Officers pursuant to
the 1990 Plan for the 1994-1996 performance cycle.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD
PERFORMANCE UNTIL MATURATION ESTIMATED FUTURE PAYOUTS UNDER
NAME SHARE UNITS (#) OR PAYOUT NON-STOCK PRICE BASED PLANS
---- --------------- ---------------- ------------------------------
TARGET NUMBER OF
PERFORMANCE SHARE UNITS (#)
<S> <C> <C> <C>
J.F. Hardymon............... 20,000 3 years 20,000
L.B. Campbell............... 12,000 3 years 12,000
T.D. Soutter................ 6,400 3 years 6,400
W.F. Wayland................ 6,800 3 years 6,800
R.A. McWhirter.............. 2,400(1) 3 years 2,400
6,400 3 years 6,400
- ---------------
<FN>
(1) Granted in February 1993 to supplement R.A. McWhirter's December 1992 grant
for the 1993-1995 performance cycle as a result of his promotion to
Executive Vice President and Chief Financial Officer on January 1, 1993.
</TABLE>
The number of performance share units earned by the Named Officers at the
end of the three-year performance cycle will be determined by the Board of
Directors upon the recommendation of the Organization and Compensation Committee
and will be based 75% on earnings per share growth and 25% on discretionary
performance measures, including the Named Officer's individual performance. If
the earnings per share growth target and other performance measures are met, the
target number of performance share units will be paid out. If the results are
less than the target, the payment of a lesser number of performance share units
may be authorized by the Board of Directors. The 1990 Plan permits payment in
excess of target awards at the sole discretion of the Board of Directors for
extraordinary performance. Payouts, which are made in cash, will be determined
by multiplying the number of performance share units earned by the then current
market value of Textron Common Stock at the end of the performance period.
<TABLE>
PENSION PLAN
The following table sets forth the estimated annual pension benefits
payable upon retirement under the Textron Pension Plan formula to persons in the
specified remuneration and years of service classifications.
<CAPTION>
ESTIMATED ANNUAL PENSION FOR
HIGHEST CONSECUTIVE REPRESENTATIVE YEARS OF CREDITED SERVICE
FIVE-YEAR ----------------------------------------------------------
AVERAGE COMPENSATION 10 15 20 25 30 35
- -------------------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 500,000....................... $ 73,985 $110,978 $147,971 $184,963 $ 221,956 $ 258,948
600,000....................... 88,985 133,478 177,971 222,463 266,956 311,448
750,000....................... 111,485 167,228 222,971 278,713 334,456 390,198
1,000,000....................... 148,985 223,478 297,971 372,463 446,956 521,448
1,250,000....................... 186,485 279,728 372,971 466,213 559,456 652,698
1,500,000....................... 223,985 335,978 447,971 559,963 671,956 783,948
1,750,000....................... 261,485 392,228 522,971 653,713 784,456 915,198
2,000,000....................... 298,985 448,478 597,971 747,463 896,956 1,046,448
2,250,000....................... 336,485 504,728 672,971 841,213 1,009,456 1,177,698
</TABLE>
18
<PAGE> 23
Benefits under the Textron Pension Plan formula are based upon the salaried
employee's highest five-year average compensation. Compensation for such
purposes means compensation listed in the "Salary" and "LTIP Payouts" columns,
and annual incentive compensation included in the "Bonus" column, of the Summary
Compensation Table on page 15 of this Proxy Statement. As of December 31, 1993,
the years of credited service for the Named Officers were as follows: Mr.
Hardymon, 4 years; Mr. Campbell, 1 year; Mr. Soutter, 25 years; Mr. Wayland, 9
years; and Mr. McWhirter, 29 years.
Annual pension amounts shown in the table above are not subject to any
offset for Social Security benefits. The Textron Pension Plan is integrated with
Social Security, however, and the amounts in the table reflect that integration.
Annual pension amounts shown in the table are subject to annual pension
limitations imposed by the Internal Revenue Code of 1986, as amended ("IRC"). To
compensate certain Textron officers, including the Named Officers, for the
effect of these limitations, Textron maintains a Supplemental Benefits Plan.
Under an agreement with Textron, Mr. Hardymon is entitled to receive
supplemental pension payments equal to the excess, if any, of an annual pension
benefit of $453,118 over the amounts to which he is entitled under the plans of
Textron and a prior employer, provided Mr. Hardymon remains in the employ of
Textron through November 30, 1999. Under an agreement with Textron, Mr. Campbell
is entitled to receive supplemental pension payments in an amount equal to his
non-vested benefits accrued under the Textron Pension Plan if his employment is
terminated by Textron prior to the completion of five years of service. Under an
agreement with Textron, Mr. Wayland is entitled to receive supplemental pension
payments equal to the excess, if any, of amounts payable under the provisions of
the Textron Pension Plan for the period of his employment plus eight years of
additional credited service, over the amounts he actually receives from the
plans of Textron and a prior employer. Mr. McWhirter, who was an officer of
Ex-Cell-O Corporation at the time it was acquired by Textron, is entitled to
receive supplemental pension payments that are intended to compensate him for
the difference, if any, between the benefit under the Textron Pension Plan and
the amount which he would have received under a former Ex-Cell-O Corporation
pension plan which was merged into the Textron Pension Plan.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
Messrs. Hardymon, Campbell, Soutter, Wayland and McWhirter have employment
contracts with Textron through December 1996 which provide that during the term
of the contract, their base salary will not be reduced and they will remain
eligible for participation in Textron's executive compensation and benefit
plans. The contracts with Messrs. Hardymon, Campbell, Soutter, Wayland and
McWhirter are automatically extended each January for an additional year unless
contrary notice is given.
Mr. Hardymon's contract provides that he will receive 50,000 shares of
Textron Common Stock upon retirement from Textron if he remains in the employ of
Textron through November 30, 1999. If Mr. Hardymon's employment ends because of
his disability or death prior to such date, he or his estate may receive a pro
rata portion of the shares at the discretion of the Board of Directors.
The Named Officers participate in certain benefit plans which have
provisions that will apply in the event of a change in control of Textron (as
defined in the plans). The Survivor Benefit Plan provides that, upon a change in
control, certain assets (generally, paid up life insurance in a face amount
equal to two times the base salary of an active or former executive) will be
transferred to each active or former executive or beneficiary. The Supplemental
Benefits Plan and the Deferred Income Plan provide that in the event of a change
in control of Textron, the amounts accrued under such plans will become payable
immediately. However, supplemental savings accounts under the Supplemental
Benefits Plan may be distributed only upon death,
19
<PAGE> 24
disability, retirement or termination from Textron. The Annual Incentive
Compensation Plan establishes minimum incentive compensation awards for the
fiscal year in which the change in control occurs. The 1990 Long-Term Incentive
Plan provides that outstanding options will become exercisable immediately and
in full, and the stated value of all outstanding performance units or
performance share units will be deemed earned and will be payable immediately
and in full in the event of a change in control of Textron. The Textron Savings
Plan provides for full vesting of the accounts of participants whose employment
ends within two years after a change in control of Textron. The Textron Pension
Plan provides that (i) if the Textron Pension Plan is terminated within three
years after a change in control of Textron, surplus assets will be applied to
increase the benefits of active participants up to maximum limits provided by
the IRC, and (ii) in the event of a plan merger, consolidation or transfer
within three years after such a change in control, the vested accrued benefit of
each affected individual will be increased as provided in item (i), will be
fully vested, and will be satisfied through the purchase of a guaranteed annuity
contract.
TRANSACTIONS WITH MANAGEMENT
Mr. Wayland and one other executive officer had thirty-year home mortgage
loans outstanding during 1993 from a subsidiary of Textron. The interest rate on
the loan to Mr. Wayland was ten percent a year, the maximum outstanding balance
of such loan during 1993 was $235,570 and the balance outstanding under such
loan as of February 1, 1994, was $232,413. The interest rate on the loan to the
other executive officer was ten percent a year until July 31, 1993, and seven
percent a year thereafter, the maximum outstanding balance of such loan during
1993 was $141,386 and the balance outstanding under such loan as of February 1,
1994, was $116,297.
During 1993, Surplus Notes (the "Notes") issued in the aggregate principal
amount of $20,000,000 by Massachusetts Mutual Life Insurance Company, of which
Mr. Wheeler is President and chief executive officer, were purchased in the
ordinary course of business for various investment accounts of The Paul Revere
Insurance Group. The Notes are due November 15, 2023, and bear interest at the
rate of 7.625 percent a year. The maximum outstanding balance of this
indebtedness during 1993 was $20,000,000 and the balance outstanding as of
February 1, 1994, was $20,000,000. Textron owns approximately 83 percent of The
Paul Revere Corporation, the parent corporation of the companies of The Paul
Revere Insurance Group.
20
<PAGE> 25
<TABLE>
PERFORMANCE GRAPH
Set forth below is a stock performance graph which shows the change in
market value of $100 invested on December 31, 1988, in Textron Common Stock,
Standard & Poor's 500 Stock Index and a peer group index. The cumulative total
shareholder return assumes dividends are reinvested. Textron is a multi-industry
company with operations in Manufacturing and Financial Services, Its business
segments are Aircraft, Automotive, Industrial, Systems and Components, Finance
and Paul Revere. The peer group consists of every company in the following
Standard & Poor's 500 price index industry groups: aerospace/defense,
conglomerates, financial/life insurance, financial/personal loans and
manufacturing (diversified industrial). The peer group also includes two
diversified companies in comparable industries in the miscellaneous industrials
group -- Allied Signal and TRW, Inc. The companies in the indices are weighted
by market capitalization.
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TEXTRON INC. S&P 500 PEER GROUP
<S> <C> <C> <C>
Dec. 31, 1988 100.00 100.00 100.00
Dec. 31, 1989 107.73 131.59 121.14
Dec. 31, 1990 124.98 127.49 111.81
Dec. 31, 1991 186.39 166.17 137.06
Dec. 31, 1992 216.72 178.81 157.93
Dec. 31, 1993 288.56 196.75 197.42
</TABLE>
21
<PAGE> 26
APPROVAL OF THE TEXTRON 1994 LONG-TERM INCENTIVE PLAN
On February 23, 1994, the Board of Directors adopted, subject to
shareholder approval, the Textron 1994 Long-Term Incentive Plan (the "1994
Plan") as part of a continuing program to attract, retain and motivate key
employees. Textron's employee benefit programs have included long-term incentive
plans approved by the shareholders in 1982, 1987 and 1990. Through the grant of
awards based on Textron's long-term performance, these plans have increased the
personal involvement of officers and other selected employees in Textron's
continued growth and success. The 1982 and 1987 Long-Term Incentive Plans have
expired, and no further awards can be made thereunder. If the 1994 Plan is
approved by the shareholders, it would become effective on April 27, 1994, and
replace the current 1990 Long-Term Incentive Plan, under which no further awards
would be made. The Board of Directors believes that a long-term, equity based
incentive compensation program that reflects the performance of Textron Common
Stock should continue to be available in order to encourage participants to
enhance the value of Textron, the price of Textron Common Stock and the return
to shareholders.
The 1994 Plan is substantially the same as the 1990 Long-Term Incentive
Plan. The 1994 Plan authorizes the granting of awards to key employees of
Textron and its related companies in either or both of the following forms: (i)
options to purchase Textron Common Stock and (ii) performance share units.
Awards may be granted to any key employee of Textron, its divisions or its
subsidiaries, including full-time employees who are directors. Directors who are
not full-time employees of Textron, its divisions or its subsidiaries are not
eligible to receive awards under the 1994 Plan.
The total number of shares of Textron Common Stock for which options may be
granted under the 1994 Plan is 5,000,000, and the maximum number of stock
options that may be granted to any individual in any calendar year is 75,000, in
each case subject to adjustment as described below. Shares of Textron Common
Stock issued upon exercise of options may be either authorized but unissued
shares or previously issued shares held in the treasury. The maximum number of
performance share units which may be granted under the 1994 Plan is 1,200,000,
subject to adjustment as described below. The closing price of Textron Common
Stock as reported for New York Stock Exchange Composite Transactions on March 4,
1994, was $57.50.
The 1994 Plan will be administered by the Organization and Compensation
Committee of the Board of Directors (the "Committee") which will determine the
key employees to whom awards will be granted, the form and amount of awards, the
dates of grant and the terms and provisions of each award (which need not be
identical). No member of the Committee will be eligible to receive an award
under the 1994 Plan. The Board of Directors may delegate the Committee's
responsibilities to one or more officers or committees of Textron, but all
decisions concerning the 1994 Plan that relate to executive officers of Textron
will be made by the Committee.
STOCK OPTIONS
The 1994 Plan provides for both incentive stock options ("Incentive
Options"), as defined in section 422 of the Internal Revenue Code, and
non-qualified options.
All options granted under the 1994 Plan will be evidenced in writing. Each
option will be at a purchase price per share of not less than 100 percent of the
fair market value of Textron Common Stock at the time the option is granted. The
purchase price must be paid in full at the time of exercise. The purchase price
may be paid in cash, in shares of Textron Common Stock with a value equal to the
exercise price or in a combination thereof. The term of each option will be for
such period as the Committee determines, but no Incentive Option may be
exercised later than ten years after the date of grant.
22
<PAGE> 27
If an optionee ceases to be an employee during the term of an option, the
optionee may exercise the option within specified periods after such
termination. Discharge for cause, however, terminates all option rights
immediately. In the case of death of an optionee, the option may be exercised by
the optionee's estate within one year after death or until expiration of the
option, whichever occurs first. During an optionee's lifetime, options may be
exercised only by the optionee or the optionee's legal guardian or
representative.
PERFORMANCE SHARE UNITS
To implement the policy of the Board of Directors that an increasing
proportion of executive officer compensation should reflect the performance of
Textron Common Stock, the 1990 Long-Term Incentive Plan was amended in December
1992 to discontinue awards of performance units and instead to award performance
share units. Performance share units are fictional shares of Textron Common
Stock which are valued for payment purposes at the market value of Textron
Common Stock on the date the performance share units are earned. The 1994 Plan
continues this approach.
All performance share unit grants under the 1994 Plan will be evidenced in
writing. In making each grant of performance share units, the Committee will
establish the applicable performance measures or primary and minimum performance
targets and the period during which those performance measures or performance
targets are to be accomplished. Each performance measure or target will be
expressed as an increase in Textron's earnings per share, net operating profit
or return on equity or in terms of any other standard, financial or otherwise,
which the Committee may determine. Attainment of a primary performance target
will result in the earning of all performance share units related to that
target. Failure to attain a minimum performance target will result in the
failure to earn any performance share units related to that target. Attainment
between the primary and minimum performance targets will result in the earning
of a portion of the performance share units related to those targets, in the
discretion of the Committee. Achievement beyond a primary performance target may
result in the earning of more than the value of the performance share units
related to that target, as the Committee may determine. For purposes of
determining whether performance targets have been met, the Committee may, in its
discretion, equitably restate Textron's earnings per share, net operating
profit, return on equity or any other factor utilized in establishing the
performance targets to take into account the effect of acquisitions or
dispositions, extraordinary and non-recurring events, recapitalizations, stock
dividends, stock splits or other similar events or any change in accounting
practices, tax laws or other laws or regulations that significantly affect
Textron's financial performance. Payment of earned performance share units will
be in cash in an amount equal to the product of the number of performance share
units earned and the current value of Textron Common Stock for the date on which
the performance share units have been earned.
In the case of the death, disability or normal or early retirement of a
grantee more than one year into an award period, performance share units may
continue to be earned as if the grantee's employment had not ended. In other
cases in which Textron employment ends more than one year into an award period,
a former employee will continue to earn related performance share units only as
determined by the Committee. Upon any termination of employment for less than
acceptable performance, all outstanding performance share units will be
cancelled.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax consequences under the
Internal Revenue Code with respect to Incentive Options, non-qualified options
and performance share units.
23
<PAGE> 28
Incentive Options
An optionee will not realize taxable income and Textron will not receive
any deduction at the time of a grant or exercise of Incentive Options. If shares
acquired upon the exercise of Incentive Options are not disposed of within two
years from the date of grant, nor within one year from the date of exercise, any
gain or loss realized upon disposition of the shares will be treated as
long-term capital gain or loss. If the shares received upon exercise of an
Incentive Option are disposed of prior to the end of the applicable holding
periods described above, the difference between (a) the lesser of the fair
market value of the shares on the date of exercise or the price received upon
disposition of the shares and (b) the exercise price will be taxable to the
optionee as ordinary income in the year in which such disposition occurs, and
Textron will be entitled to a deduction in the amount of such ordinary income
recognized by the optionee. Any further gain or loss upon disposition will be
treated as short-term or long-term capital gain or loss depending on the holding
period of the shares. If Incentive Options are exercised with Textron Common
Stock previously owned by the optionee, such exercise will not be considered a
taxable disposition of the previously owned stock unless such stock was itself
received on exercise of Incentive Options and the holding periods described
above for the exchanged stock have not been satisfied. To the extent that the
aggregate option price of an optionee's Incentive Options which become
exercisable in any year exceeds $100,000, such options will be treated as
non-qualified options. If Incentive Options are exercised more than three months
after the optionee's employment with Textron has ended, the Incentive Options
will be treated as non-qualified options. For purposes of the alternative
minimum tax only, the excess of the fair market value of the shares at the time
of exercise of Incentive Options over the option price will be treated as
additional income unless such shares are disposed of in the year of exercise.
Non-qualified Options
An optionee will not recognize taxable income and Textron will not receive
any deduction at the time of the grant of non-qualified options. Upon the
exercise of non-qualified options, the excess of the fair market value on the
date of exercise of the shares received over the exercise price for such shares
will be taxable to the optionee as ordinary income, and Textron will be entitled
to a deduction at that time for the amount of such ordinary income recognized by
the optionee. The subsequent sale of such shares by the optionee will be treated
as short-term or long-term capital gain or loss, as the case may be, in an
amount equal to the difference between the amount realized on such sale and the
fair market value of the shares at the time of exercise. If options are
exercised with Textron Common Stock previously owned by the optionee, such
exercise will not be considered a taxable disposition of the previously owned
stock and no gain or loss will be recognized with respect to such stock upon
such exercise. If additional shares are received by the optionee, the excess of
the fair market value of all of the shares received over the sum of the fair
market value of all of the shares surrendered and any cash payment made by the
optionee upon exercise will be taxable as ordinary income to the optionee and
will be deductible by Textron.
Performance Share Units
An employee will not recognize taxable income and Textron will not receive
any deduction by reason of the grant or award of a performance share unit. The
employee will recognize ordinary income equal to the cash paid to the employee
at the time a performance share unit is earned and paid, and Textron will be
entitled to a deduction for the amount of such ordinary income recognized by the
employee.
GENERAL
It is presently expected that in the first year following approval of the
1994 Plan, approximately 55 key executives, including executive officers, will
receive awards of performance share units coupled with stock options and that
approximately 400 other employees who are not executive officers will receive
stock options
24
<PAGE> 29
without awards of performance share units. Information relating to the most
recent prior awards to the Named Officers under the 1990 Long-Term Incentive
Plan is contained in the Summary Compensation Table and the Stock Option Grants
in Last Fiscal Year and Long-Term Incentive Plan Awards in Last Fiscal Year
tables on pages 15, 16 and 18 of this Proxy Statement.
The maximum number of shares of Textron Common Stock that may be subject to
options, the maximum number of Performance Share Units available for grant, the
number of shares of Common Stock covered by each outstanding option or
Performance Share Unit and the price per share thereof, and the maximum number
of options that may be granted to any individual employee will be adjusted in
the event of a recapitalization, stock dividend, stock split or other similar
event. In addition, shares which are subject to options which expire unexercised
or which are terminated or cancelled will be added to the remaining maximum
number of shares of Textron Common Stock that may be subject to options.
The Board of Directors may at any time terminate the 1994 Plan or any part
thereof and may from time to time amend the 1994 Plan as it may deem advisable,
but the Board may not, without shareholder approval, increase the aggregate
number of shares of Textron Common Stock which may be issued under the 1994 Plan
(except as such number may be adjusted in the event of a recapitalization, stock
dividend, stock split or similar event), or extend the period during which an
Incentive Option may be exercised beyond ten years. Termination or amendment may
not, without the consent of the participant, affect the participant's rights
under an award previously granted.
Awards granted under the 1994 Plan are not assignable or transferable by
the recipient thereof, except by will or by the laws of descent and
distribution.
The 1994 Plan provides that outstanding options will be exercisable
immediately and in full, and all outstanding performance share units will be
deemed earned and payable immediately and in full, in the event of certain
changes in control of Textron described in the Plan, unless determined otherwise
by the Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF
THE TEXTRON 1994 LONG-TERM INCENTIVE PLAN (ITEM 2 ON THE PROXY CARD).
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Ernst & Young audited the consolidated financial statements of
Textron for 1993. The Board of Directors desires to continue the services of
this firm for 1994. Accordingly, the Board of Directors recommends to the
shareholders ratification of the appointment of Ernst & Young to audit the
consolidated financial statements of Textron for 1994. If this resolution is
defeated, the Board of Directors will reconsider its selection.
A representative of Ernst & Young will be present at the annual meeting,
will have the opportunity to make a statement and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG (ITEM 3 ON THE PROXY CARD).
VOTING OF PROXIES
Each valid proxy in the enclosed form received by Textron will be voted by
the persons named therein. Unless the shareholder specifies otherwise, the
shares represented by the proxy will be voted in favor of the election of the
four nominees in Class I described in this Proxy Statement on pages 2 and 3. The
Board of Directors knows of no reason why any of the nominees so named would be
unavailable for election. If any
25
<PAGE> 30
nominee should be unavailable for election by reason of death or otherwise, the
proxies may be voted for the election of such other person as may be recommended
by the Board of Directors.
Where a choice is specified on the proxy with respect to the proposals set
forth therein, the shares represented by the proxy will be voted in accordance
with the specification so made. Where a choice is not so specified, the shares
represented by the proxy will be voted for approval of the adoption of the 1994
Plan and for ratification of the appointment of Ernst & Young as independent
auditors.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by delivering a written notice of revocation to the
Secretary of Textron at 40 Westminster Street, Providence, Rhode Island 02903,
by submitting a subsequent proxy or by voting in person at the meeting.
The four nominees for director receiving the greatest number of votes cast
in person or by proxy will be elected. Abstentions and broker non-votes will
have no effect on the outcome of the election of directors. Approval of the
adoption of the 1994 Plan and ratification of the appointment of Ernst & Young
as independent auditors each requires the favorable vote of a majority of shares
present in person at the 1994 Annual Meeting or represented by proxy and
entitled to vote thereon. Abstaining from voting on either the 1994 Plan or the
appointment of auditors will have the same effect as voting against the
proposal. Broker non-votes on either proposal will not be included in the
calculation of shares entitled to vote for such proposal and will have no effect
on the outcome.
Textron's policy on confidential voting provides that no proxy, ballot or
voting materials that identify the vote of a specific shareholder will be
disclosed to Textron or its directors, officers or employees except (a) as
required by law or for the defense of legal proceedings, (b) if the shareholder
requests disclosure or (c) in a proxy contest if the party soliciting proxies in
opposition does not agree to observe Textron's confidential voting policy.
Comments of shareholders written on proxies or ballots are transcribed and
provided to the Secretary of Textron. Votes are counted by employees of First
Chicago Trust Company of New York, Textron's independent transfer agent and
registrar, and certified by Inspectors of Election who are employees of First
Chicago Trust Company of New York.
FOR TEXTRON AND TEXTRON CANADA SAVINGS PLAN PARTICIPANTS: For participants
in the Textron Savings Plan (the "TSP"), the accompanying proxy card indicates
the number of shares allocated to the participant's account under the TSP and
the number of shares, if any, allocated to the participant's Tax Credit Account
under the TSP by Bankers Trust Company, as trustee for the TSP ("Bankers
Trust"). When a participant's proxy card is returned properly signed, Bankers
Trust will vote the participant's proportionate interest in the shares of
Textron Common Stock held by Bankers Trust under the TSP in the manner the
participant directs, or if the participant makes no direction, Bankers Trust
will vote, with respect to the election of directors and the two proposals, the
participant's proportionate interest in the shares of Textron Common Stock held
by Bankers Trust under the TSP (except shares allocated to the participant's Tax
Credit Account) in proportion to instructions received from other TSP
participants. Shares allocated to a participant's Tax Credit Account will be
voted only as the participant directs. For participants in the Textron Canada
Savings Plan (the "TCSP"), the accompanying proxy card indicates the number of
shares allocated to the participant's account under the TCSP by Royal Trust
Corporation of Canada, as trustee for the TCSP ("Royal Trust"). When the
participant's proxy card is returned properly signed, Royal Trust will vote such
shares in the manner the participant directs, or if the participant makes no
direction, Royal Trust will vote with respect to the election of directors and
the two proposals all shares of Textron Common Stock allocated to the
participant's accounts under the TCSP in proportion to instructions received
from other TCSP participants. All such directions will be held in confidence.
26
<PAGE> 31
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.
SOLICITATION OF PROXIES
All expenses incurred in connection with this solicitation will be borne by
Textron. Textron may request banks and brokers to solicit their customers who
have a beneficial interest in Textron's stock registered in the names of
nominees and will reimburse such banks and brokers for their reasonable
out-of-pocket expenses of such solicitations. In addition to the use of the
mails, solicitation may be made by employees of Textron by telephone, telegraph,
cable and personal interview, without additional compensation for such services.
Textron has retained D. F. King & Co., Inc., of New York, New York, a proxy
soliciting organization, to solicit management proxies for the annual meeting.
The fees of such organization in connection therewith are estimated to be
$15,000, plus reasonable out-of-pocket expenses.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1995 annual meeting
of Textron shareholders must be received by Textron for inclusion in the proxy
statement and form of proxy relating thereto on or before November 17, 1994.
Textron's By-Laws contain provisions which impose certain additional
requirements upon shareholder proposals.
By order of the Board of Directors,
/s/ Karen A. Quinn-Quintin
Karen A. Quinn-Quintin
Vice President and Secretary
March 16, 1994
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING IN PERSON, PLEASE FILL IN, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENVELOPE PROVIDED.
27
<PAGE> 32
TEXTRON INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
P ANNUAL MEETING OF SHAREHOLDERS APRIL 27, 1994
R The undersigned hereby appoints James F. Hardymon, Thomas D. Soutter and
Karen A. Quinn-Quintin, or any one or more of them, attorneys with full power
O of substitution and revocation to each, for and in the name of the undersigned
with all the powers the undersigned would possess if personally present, to
X vote the shares of the undersigned in Textron Inc. as indicated on the
proposals referred to on the reverse side hereof at the annual meeting of its
Y shareholders to be held April 27, 1994, and at any adjournments thereof, and
in their, his or her discretion upon any other matter which may properly come
before said meeting.
This card also constitutes voting instructions (i) to the Trustee under the
Textron Savings Plan to vote, in person
or by proxy, the proportionate interest (Change of Address/Comments)
of the undersigned in the shares of
Common Stock of Textron Inc. held by the __________________________________
Trustee under such Plan and (ii) to the
Trustee under the Textron Canada __________________________________
Savings Plan to vote, in person or
by proxy, all shares of Common Stock of __________________________________
Textron Inc. allocated to the accounts
of the undersigned under such Plan, in __________________________________
each case as described in the proxy
statement. (If you have written in the above
space, please mark the corresponding
box on the reverse side of this card).
SEE
REVERSE
SIDE
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING
OF
TEXTRON SHAREHOLDERS
AGENDA
------
Regular Shareholders Business
To elect four Directors in Class I for a term of three years
To approve adoption of the Textron 1994 Long-Term Incentive Plan
To ratify appointment of independent auditors for 1994
To transact such other business as may properly come before the meeting
Shareholders Forum
Report on progress of Textron
Discussion with shareholders
<PAGE> 33
/X/ Please mark your votes
as in this example.
This proxy when properly executed will be voted as directed by the undersigned
shareholder(s). If no direction is made, this proxy will be voted FOR the
nominees listed below and FOR proposals 2 and 3, or if this card constitutes
voting instructions to a savings plan trustee, such trustee will vote as
described in the proxy statement.
<TABLE>
<CAPTION>
The Board of Directors recommends that you vote FOR the nominees listed below and FOR proposals 2 and 3.
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of FOR* WITHHELD FROM ALL NOMINEES: 2. Proposal to approve / / / / / /
Directors / / / / Lewis B. Campbell adoption of the Textron
R. Stuart Dickson 1994 Long - Term
John D. Macomber Incentive Plan
John W. Snow
3. Ratification / / / / / /
of appointment
of independent
auditors.
*Except vote withheld from the following Nominee(s):
_____________________________________________________
/ / Change of Address/
Comments on
Reverse Side
</TABLE>
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
__________________________________________________________
__________________________________________________________
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING
OF
TEXTRON SHAREHOLDERS
Wednesday, April 27, 1994
10:30 a.m.
Omni Biltmore Hotel
Kennedy Plaza
Providence, Rhode Island
IMPORTANT NOTICE
----------------
IT IS IMPORTANT THAT YOU VOTE, SIGN AND
RETURN THE ABOVE PROXY AS SOON AS POSSIBLE.
BY DOING SO, YOU MAY SAVE TEXTRON THE
EXPENSE OF ADDITIONAL SOLICITATION.
<PAGE> 34
[TEXTRON]
James F. Hardymon
Chairman and CEO 40 Westminster Street
Textron Inc. Providence, RI 02903
Dear Fellow Participant:
Textron's Annual Shareholders Meeting will be held on April 27, 1994. As a
Participant in a Textron Savings Plan, you are entitled to instruct the Plan's
Trustee as to how to vote your shares of Textron Stock. YOUR VOTE IS IMPORTANT.
Enclosed with this letter is the proxy statement for the meeting, our 1993
Annual Report to Shareholders, and a voting card. Please complete your voting
card and mail it in the enclosed envelope. If the Trustee does not receive this
card by April 22, 1994, your shares will be voted in accordance with the
provisions of the Plan.
The subject of each proposal to be voted on is shown on the voting card
and more fully explained in the proxy statement. The Board of Directors
recommends that you instruct the Trustee to vote FOR Items 1, 2, and 3.
Thank you for your continued support.
Sincerely,
Jim Hardymon
Enclosures
<PAGE> 35
TEXTRON
1994 LONG-TERM INCENTIVE PLAN
ARTICLE I -- GENERAL
1.1 PURPOSE. This Plan authorizes the grant of stock options ("Options")
and/or performance share units ("Performance Share Units") to officers and other
selected employees of Textron Inc. ("Textron") and its related companies to
induce them to continue as Textron employees and to reward them for improvement
in Textron's long-term performance.
1.2 ADMINISTRATION. (a) The Board of Directors of Textron (the "Board")
shall appoint from among its members a committee (the "Committee") consisting of
no fewer than three directors, none of whom shall be eligible, and none of whom
shall have been eligible at any time within one year prior to or after
exercising discretion in administering the Plan, for any award under the Plan or
under any other employee benefit plan of Textron or any related company. Unless
otherwise specified by the Board, the Committee, for purposes hereof, shall mean
the Organization and Compensation Committee of the Board.
(b) The Committee shall have the power subject to and within the limits of
the Plan:
(1) to determine from time to time which eligible persons shall be
granted Options under the Plan, which Options shall be "Incentive Options"
and which shall be "Non-Qualified Options," as each is hereinafter defined,
the term of each granted Option, the time or times during the term of each
Option within which all or portions of the Option may be exercised and the
number of shares covered by each Option;
(2) to determine from time to time which eligible persons shall be
granted Performance Share Units under the Plan, to fix the number of
Performance Share Units covered by each grant and the conditions of each
grant;
(3) to construe and interpret the Plan and to establish, amend and
revoke rules and regulations for its administration. The Committee, in the
exercise of this power, shall generally determine all questions of policy
and expediency that may arise and may correct any defect, omission or
inconsistency in the Plan or in any agreement evidencing an award hereunder
in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective;
(4) to prescribe the terms and provisions of any award under an Option
or Performance Share Unit granted pursuant to this Plan;
(5) to authorize payments in accordance with Sections 2.5, 3.3, 3.4 or
3.6; and
(6) generally, to exercise such powers and to perform such acts in
connection with the Plan as are deemed necessary or expedient to promote
the best interests of Textron.
(c) The Board at any time may designate one or more officers or committees
of Textron to act in place of the Committee in making any determination or
taking any action under the Plan. Notwithstanding the above, all decisions
concerning the Plan that relate to persons who are Directors or Principal
Officers of Textron shall be made by the Committee.
(d) The Board at any time may revest administration of the Plan, including
all powers and duties of the Committee, in the Board, provided that in any
matter relating to the administration of the Plan, a majority of the Board and a
majority of the directors acting on such matter shall not be eligible, and shall
not have been eligible at any time within one year prior thereto, for a grant
under the Plan or under any other employee benefit plan of Textron or any
related company. In such event all references herein to the Committee shall be
deemed to refer to the Board.
A-1
<PAGE> 36
(e) All actions of the Board, the Committee or any designate under Section
1.2(c) in connection with the Plan shall be final, conclusive and binding. No
member of the Board, the Committee or any designated committee, nor any
designated officer, shall be liable for any action taken or decision made in
good faith relating to the Plan or any grant or award hereunder.
1.3 ELIGIBILITY. The Committee may grant Options or Performance Share
Units under the Plan to any full-time employee of Textron or of any related
company (determined at the date of grant) who is a corporate officer, Division
or subsidiary president, administrative or professional employee, or other
selected employee capable of making a substantial contribution to the success of
Textron. Options or Performance Share Units may be granted to full-time
employees who are also members of the Board. In making grants and determining
their form and amount, the Committee shall consider functions and
responsibilities of the employee, the employee's potential contributions to
profitability and sound growth of Textron and such other factors as the
Committee deems relevant.
1.4 GRANTS. Grants under the Plan may be comprised of either or both of
the following:
(a) Options as described in Article II; and
(b) Performance Share Units as described in Article III;
1.5 EFFECTIVE DATE OF PLAN. The Plan shall be submitted to Textron
shareholders for approval at the annual meeting on April 27, 1994, or at any
adjournment of such meeting, and shall become effective immediately following
its approval by the affirmative vote of the holders of a majority of the shares
present and entitled to vote at such meeting.
1.6 AGGREGATE LIMITATION ON GRANTS. (a) Shares of Textron Common Stock
("Common Stock") which may be issued pursuant to grants under the Plan may be
either authorized and unissued shares of Common Stock or authorized and issued
shares of Common Stock purchased or acquired by Textron for this or any other
purpose. Subject to section 4.9(a) (relating to adjustments upon changes in
stock), the maximum number of shares of Common Stock which may be subject to
Options under the Plan shall be 5,000,000, and the maximum number of Performance
Share Units which may be granted under the Plan shall be 1,200,000.
(b) In the event that (1) any Option granted under the Plan expires
unexercised or is terminated or cancelled for any reason without having been
exercised in full or (2) all or any part of any Performance Share Units granted
under the Plan are terminated or unearnable for any reason, the number of shares
of Common Stock theretofore subject to such Option, or the number of such
Performance Share Units, or the unexercised, terminated, cancelled or unearnable
portion thereof, shall be added to the remaining number of shares of Common
Stock and Performance Share Units, respectively, available for grant under the
Plan.
ARTICLE II -- OPTIONS
2.1 GRANT OF OPTIONS. The Committee may from time to time, subject to the
provisions of the Plan and such other terms and conditions as it may prescribe,
grant to eligible employees one or more Options to purchase shares of Common
Stock under the Plan. A maximum of 75,000 Options can be granted to any eligible
employee during any calendar year. Options granted hereunder may be incentive
stock options ("Incentive Options") under Section 422 of the Internal Revenue
Code of 1986, as it may be amended. Section 422 and the Internal Revenue Code of
1986, as each may be in effect from time to time, are hereinafter referred to,
respectively as Section 422 and the Code. Options granted hereunder which are
not Incentive Options are referred to as "Non-Qualified Options."
A-2
<PAGE> 37
2.2 OPTION AGREEMENTS. The grant of an Option shall be evidenced by a
written Option Agreement, executed by Textron and the optionee, stating the
number of shares of Common Stock subject to the Option, designating whether and
to what extent the Option is an Incentive Option and containing such investment
representations and other terms and conditions as the Committee may from time to
time determine, or as may be required by Section 422 or any other applicable
law.
2.3 OPTION PRICE. The purchase price for the Common Stock covered by any
Option granted under the Plan shall in no case be less than 100% of the fair
market value of such Common Stock at the time the Option is granted. The
purchase price of the shares as to which an Option shall be exercised shall be
paid in full at the time of exercise at the election of the optionee (1) in
cash, (2) by tendering to Textron shares of Common Stock then owned by the
optionee having a fair market value equal to such purchase price, or (3) partly
in cash and partly in shares of Common Stock valued at fair market value.
2.4 TERM OF OPTION. The term of each Option granted under the Plan shall
be for such period as the Committee shall determine but not more than 10 years
from the date of grant thereof in the case of an Incentive Option. Each Option
shall be subject to earlier termination as provided in Section 2.6 or under
Section 2.7, if applicable.
2.5 EXERCISE OF OPTION. Each Option granted under the Plan shall be
exercisable on such date or dates during the term thereof and for such number of
shares of Common Stock as may be provided in the Option Agreement evidencing its
grant provided that an Option shall not be exercisable for less than 50 shares
(or the remaining number of shares subject to the Option if that number is less
than 50). No option shall be exercisable for at least six months after the date
of its issuance. To exercise an Option as to all or part of the shares covered
thereby, an optionee shall furnish to the Secretary of Textron at Textron's
principal office written notice of such exercise together with the purchase
price for the shares. The notice shall specify the number of shares then being
purchased. In the discretion of the Committee, the Option Agreement may provide
that shares may be issued in the name of the optionee and another person jointly
with rights of survivorship. During the life of the optionee, an Option shall be
exercisable only by the optionee or by the optionee's guardian or legal
representative.
2.6 TERMINATION OF EMPLOYMENT. (a) If an optionee's employment with
Textron or a related company shall terminate for cause, as determined by the
Committee, all Options held by the optionee shall expire immediately.
(b) If the employment with Textron and its related companies of an optionee
who is not described in Section 2.6(a) shall end after the optionee has become
eligible under a Textron salaried employees' pension plan for a normal or an
early retirement benefit, the optionee shall have the right to exercise each
Option granted to the optionee within 36 months after the end of the optionee's
employment (or within such shorter period as may be specified in the related
Option Agreement) to the extent the Option is exercisable at the time of
exercise.
(c) If an optionee's employment with Textron and its related companies
shall end as a result of the optionee's total disability, the optionee shall
have the right to exercise each Option granted to the optionee as to all
unexercised shares until the expiration of its term. For purposes of the
foregoing sentence and section 3.5(b)(1), "total disability" shall mean a
permanent mental or physical disability as determined by the Committee.
(d) If an optionee shall die while employed by Textron or a related company
or while any Option granted to the optionee is still exercisable under Section
2.6(b), (c) or (e), any such Option may be exercised as to all unexercised
shares within a period of one year from the date of the optionee's death by the
executor or
A-3
<PAGE> 38
administrator of the optionee's estate or by the person or persons to whom the
optionee shall have transferred such right by will or by the laws of descent or
distribution.
(e) If an optionee's employment with Textron and its related companies
shall end for any reason not specified in Sections 2.6(a), (b), (c) or (d), the
optionee shall have the right to exercise each Option granted to the optionee
within three months after his or her termination but, unless otherwise
determined by the Committee, only to the extent the Option is exercisable at the
time of such termination of employment.
(f) Notwithstanding anything to the contrary in this Section 2.6, in no
event shall an Option be exercisable after the expiration of its term.
2.7 INCENTIVE OPTIONS. (a) Incentive Options shall be subject to the
additional terms and conditions of this Section 2.7.
(b) No Incentive Option shall be issued hereunder to any individual who, at
the time the Incentive Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of Textron or
any related company.
(c) To the extent that the aggregate fair market value (determined as of
the time the Incentive Option is granted) of the Common Stock with respect to
which any incentive stock options granted are exercisable for the first time by
an optionee during any calendar year (under all employee benefit plans of
Textron and its related companies) exceeds $100,000 (or such larger maximum as
may be permitted under the Code for incentive stock options granted to an
individual employee at the time the Incentive Option is granted), such options
shall be treated as Non-Qualified Options.
(d) Any optionee who disposes of shares of Common Stock acquired by or
pursuant to exercise of an Incentive Option by sale, exchange, gift or other
disposition described in Section 424(c) of the Code, either (1) within two years
after the date of the grant of the Incentive Option under which the shares were
acquired, or (2) within one year of the acquisition of such shares, shall notify
the Secretary of Textron at Textron's principal office of such disposition, the
amount realized, the exercise price and the date of exercise of such shares.
Textron shall have the right to withhold from other sums which it may owe to the
optionee, or to accept remittance by the optionee of sums in lieu of, an amount
sufficient to satisfy any Federal, state and local withholding tax requirements
relating to such a disposition.
(e) The Option Agreement with respect to Incentive Options shall contain
such other provisions as may be required by Section 422 or any other applicable
law.
ARTICLE III -- PERFORMANCE SHARE UNITS
3.1 AWARD OF PERFORMANCE SHARE UNITS. (a) The Committee may, from time to
time, subject to the provisions of the Plan and such other terms and conditions
as the Committee may prescribe, grant to eligible employees one or more
Performance Share Units. Such grants shall be evidenced in writing.
(b) "Performance Share Units" means fictional shares of Textron Common
Stock accumulated and accounted for under this Plan for the sole purpose of
determining the cash amount of any distribution on account of earned Performance
Share Units. The existence of Performance Share Units is for record-keeping
purposes only and does not require any segregation of assets.
3.2 CONDITIONS OF GRANT. When a grant of Performance Share Units is made,
the Committee shall determine: (1) the number of Performance Share Units
included in the grant; (2) the primary and minimum performance targets
("Performance Targets") or measures ("Performance Measures"), as described
further in Section 3.4; and (3) the period ("Award Period") during which the
Performance Targets or Performance Measures are to be accomplished.
A-4
<PAGE> 39
3.3 PAYMENT FOR PERFORMANCE SHARE UNITS. Payment in respect of earned
Performance Share Units shall be due not more than 90 days after the Award
Period for such Performance Share Units has ended. Such payment shall be in an
amount determined under Section 3.6, or in a greater amount pursuant to the last
two sentences of Section 3.4, and shall be made in one or more equal annual
installments subject to such terms and conditions as the Committee shall
specify. Payments for Performance Share Units shall be made in cash.
3.4 PERFORMANCE MEASURES AND PERFORMANCE TARGETS. Upon making a grant of
Performance Share Units, the Committee shall establish one or more Performance
Measures or primary and minimum Performance Targets to be attained for the Award
Period as a condition of the related Performance Share Units being earned in
whole or part. The Committee may establish Performance Measures or Performance
Targets for Textron and for any of its Divisions, subsidiaries or other business
units. Performance Measures or Performance Targets may be expressed as an
increase in Textron's earnings per share, net operating profit, return on equity
or in terms of any other standard, financial or otherwise, as the Committee may
determine. Attainment of a primary Performance Target in an Award Period shall
result in the earning of all of the Performance Share Units related to that
Performance Target. Failure to attain a minimum Performance Target in an Award
Period shall result in the failure to earn any of Performance Share Units
related to that Performance Target. Attainment between a primary and a minimum
Performance Target in an Award Period shall result in the earning of a portion
of the Performance Share Units related to those Performance Targets, as the
Committee or, in the case of non-officers, the chief executive officer of
Textron, may determine. Achievement beyond a primary Performance Target may
result in the earning of more than the value of the Performance Share Units
related to that Performance Target, as the Committee may determine. Performance
Share Units, or any amount in excess of the value of the Performance Share
Units, related to one or more Performance Measures shall be earned only as
determined by the Committee.
3.5 TERMINATION OF EMPLOYMENT. (a) If a grantee's employment with Textron
or a related company shall terminate for less than acceptable performance, as
determined by the Committee, all of the grantee's outstanding Performance Share
Units will be cancelled immediately.
(b) If the employment with Textron and its related companies of a grantee
who is not described in Section 3.5(a) shall end during an Award Period but more
than one year after its beginning:
(1) due to death or total disability, or after the grantee has become
eligible for an early or normal retirement benefit under a Textron pension
plan for salaried employees, the grantee or the grantee's successor in
interest shall be entitled to payment on account of the Performance Share
Units earned during that Award Period, if any, as if the grantee's
employment had continued throughout that Award Period; or
(2) otherwise than as described in Section 3.5(b)(1), the Committee
may deem all or any portion of the grantee's Performance Share Units for
that Award Period to have been earned.
(c) If a grantee's employment with Textron and its related companies shall
end during an Award Period but one year or less after its beginning, all of the
grantee's Performance Share Units relating to that Award Period shall be
cancelled.
3.6 AMOUNT OF PAYMENT FOR SHARE UNITS. Any payment with respect to earned
Performance Share Units shall be made in cash and shall be in an amount equal to
the product of (1) the current value of Textron Common Stock on the date on
which they are deemed earned, times (2) the number of whole and fractional
Performance Share Units which have been earned. For purposes of this Plan,
earned Performance Share Units shall be deemed earned as of the last day of the
applicable Award Period unless the Committee determines otherwise.
A-5
<PAGE> 40
3.7 CURRENT VALUE. As used in the Plan, the "current value" of a share of
Textron Common Stock on any date shall be the average of the composite closing
prices therefor, as reported in The Wall Street Journal, for the ten trading
days after the date.
ARTICLE IV -- MISCELLANEOUS
4.1 GENERAL RESTRICTION. Each grant or award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that any listing or registration of the shares of Common Stock or any consent or
approval of any governmental body, or any other agreement or consent, is
necessary or desirable as a condition of a grant, an award or issuance of Common
Stock or cash in satisfaction thereof, such grant or award may not be
consummated unless each such requirement is satisfied in a manner acceptable to
the Committee.
4.2 NON-ASSIGNABILITY. No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution.
4.3 WITHHOLDING TAXES. Whenever Textron proposes to or is required to
issue or transfer shares of Common Stock under the Plan, Textron shall have the
right to withhold or to require the participant to remit to Textron an amount
sufficient to satisfy any Federal, state and local withholding tax requirements.
Whenever under the Plan payments by Textron are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any Federal, state and
local withholding tax requirements.
4.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in any agreement
entered into pursuant to it shall confer upon any participant the right to
continue in the employment of Textron or a related company or affect any right
which Textron or a related company may have to terminate the employment of such
participant.
4.5 NON-UNIFORM DETERMINATION. The determinations under the Plan of the
Committee or of any designate (including without limitation its determinations
of the persons to receive grants or awards, the form, amount, timing and payment
of such grants or awards, the terms and provisions of such grants or awards, and
the establishment of Performance Measures or Performance Targets) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, whether or not such persons are
similarly situated.
4.6 NO RIGHTS AS SHAREHOLDERS. Recipients of grants or awards under the
Plan shall have no rights as shareholders of Textron unless and until
certificates for shares of Common Stock are issued to them.
4.7 FAIR MARKET VALUE. Except as may be required by Section 422 or any
other applicable law, as used in the Plan, "fair market value" on any date shall
be the simple average of the high and low prices of the Common Stock on the New
York Stock Exchange Composite Transactions Listing on such date.
4.8 RELATED COMPANY. As used in the Plan "related company" means any
corporation in which Textron at the time in question owns, directly or
indirectly, stock possessing 50 percent or more of the total combined voting
power of all classes of stock and any corporation which at the time in question
owns, directly or indirectly, a similar interest in Textron.
4.9 ADJUSTMENTS FOR CERTAIN CHANGES. (a) The aggregate number of shares of
Common Stock and of Performance Share Units available for grant under the Plan,
the number of shares of Common Stock covered by each outstanding Option or
Performance Share Unit and the price per share thereof, and the maximum number
of Options that can be awarded to any eligible employee shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, stock dividend or any other
increase or decrease in such shares effective without receipt of consideration
by Textron.
A-6
<PAGE> 41
(b) The Committee may in its discretion and for purposes of determining
whether Performance Measures or Performance Targets have been met, equitably
restate Textron's earnings per share, net operating profit, return on equity or
any other standard utilized in establishing the Performance Measures or
Performance Targets in order to take into account the effect, if any, of (1)
acquisitions or dispositions of businesses by Textron, (2) extraordinary and
non-recurring events, (3) a change in capitalization described in Section
4.9(a), or (4) any change in accounting practices, tax laws or other laws or
regulations that, in the opinion of the Committee, significantly affects the
financial performance of Textron.
4.10 CHANGE IN CONTROL. (a) Notwithstanding any other provision of this
Plan, in the event of a change in control as defined in Section 4.10(b):
(1) the Award Period for each outstanding Performance Share Unit shall
end, and each such unit shall be deemed to have been earned, as of the end
of the Award Period and shall be payable immediately and in full; and
(2) each unexpired Option shall be exercisable, beginning immediately,
as to all remaining shares subject to the Option.
(b) For purposes of this Plan, a "change in control" shall occur if (i) any
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Act")) other than Textron, any
"person" who on February 23, 1994 was a director or officer of Textron, any
trustee or other fiduciary holding Common Stock under an employee benefit plan
of Textron or a related company, or any corporation which is owned, directly or
indirectly, by the stockholders of Textron in substantially the same proportions
as their ownership of Common Stock, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act) of more than thirty percent (30%) of the
then outstanding voting stock of Textron, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board (and any new director whose election by the Board or whose nomination
for election by Textron's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority thereof,
or (iii) the shareholders of Textron approve a merger or consolidation of
Textron with any other corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of Textron
or such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of Textron approve a plan of complete
liquidation of Textron of an agreement for the sale or disposition by Textron of
all or substantially all of Textron's assets.
4.11 AMENDMENT OR TERMINATION OF THE PLAN. The Board, without further
approval of the shareholders, may at any time terminate the Plan or any part
thereof and may from time to time amend the Plan as it may deem advisable
including with respect to Incentive Options any changes deemed necessary or
desirable to comply with Section 422 and any regulations thereunder; provided,
however, that without shareholder approval, the Board may not (a) increase the
aggregate number of shares of Common Stock which may be issued under the Plan
(other than increases permitted under Section 4.9(a)) or (b) extend the period
during which an Incentive Option may be exercised beyond 10 years. Termination
or amendment of the Plan shall not, without the consent of the individual,
affect any right of such individual (including without limitation any right
under Section 4.10) under an award previously granted.
A-7
