<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Revised Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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] No fee required.
[ ] 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 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
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[Textron Logo]
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NOTICE OF ANNUAL MEETING
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To the Shareholders of Textron Inc.:
The 2000 annual meeting of shareholders of Textron Inc. will be held on
Wednesday, April 26, 2000, at 10:30 a.m. at the Rhode Island Convention Center,
One Sabin Street, Providence, Rhode Island for the following purposes:
1. To elect five directors in Class I for a term of three years in
accordance with Textron's By-Laws (Item 1 on the proxy card).
2. To ratify the appointment of Ernst & Young LLP as Textron's
independent auditors for 2000, which is RECOMMENDED by the Board of
Directors (Item 2 on the proxy card).
3. To consider and act upon the shareholder proposal set forth in the
accompanying proxy statement, which is OPPOSED by the Board of Directors
(Item 3 on the proxy card).
4. To transact any 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 3, 2000. 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 COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE SO THAT YOUR SHARES MAY BE REPRESENTED
AT THE MEETING.
A list of shareholders entitled to vote at the 2000 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/ Frederick K. Butler
Frederick K. Butler
Vice President Business Ethics and
Corporate Secretary
Providence, Rhode Island
March 10, 2000
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CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Proxy Statement............................................. 1
General................................................ 1
Shareholders Who May Vote.............................. 1
How to Vote............................................ 1
How Proxies Work....................................... 1
Savings Plan Participants.............................. 1
Revoking a Proxy....................................... 1
Required Vote.......................................... 1
Costs of Proxy Solicitation............................ 2
Confidential Voting Policy............................. 2
Attending the Meeting.................................. 2
Election of Directors (ITEM 1 ON THE PROXY CARD)............ 2
Security Ownership of Certain Beneficial Holders............ 9
Security Ownership of Management............................ 10
Report of the Organization and Compensation Committee on
Executive Compensation.................................... 11
Executive Compensation...................................... 15
Summary Compensation Table............................. 15
Stock Option/SAR Grants in Last Fiscal Year............ 16
Aggregate Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values......................... 17
Long-Term Incentive Plan Awards in Last Fiscal Year.... 17
Pension Plan Table..................................... 18
Performance Graph........................................... 21
Ratification of Appointment of Independent Auditors (ITEM 2
ON THE PROXY CARD)........................................ 21
Shareholder Proposal (ITEM 3 ON THE PROXY CARD)............. 22
Other Matters to Come Before the Meeting.................... 23
Shareholder Proposals and Other Matters for 2001 Annual
Meeting................................................... 24
</TABLE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE> 4
TEXTRON INC.
PROXY STATEMENT
GENERAL
This Proxy Statement, which is being mailed on or about March 15, 2000, 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 26, 2000, and at any adjournments thereof. Textron's principal
executive office is located at 40 Westminster Street, Providence, Rhode Island
02903.
SHAREHOLDERS WHO MAY VOTE
All shareholders of record at the close of business on March 3, 2000, will
be entitled to vote. As of March 3, 2000, Textron had outstanding 146,301,559
shares of Common Stock; 155,781 shares of $2.08 Cumulative Convertible Preferred
Stock, Series A; and 72,819 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.
HOW TO VOTE
You may vote by proxy or in person at the meeting. To vote by proxy, please
complete, sign, date and return your proxy card in the accompanying postage-paid
envelope. If your shares are held in the name of your broker or bank and you
wish to vote in person at the meeting, you should request your broker or bank to
issue you a proxy covering your shares.
HOW PROXIES WORK
When you sign, date, and return the enclosed proxy card, your shares will
be voted at the meeting in the manner you direct. If you do not specify how to
vote, your shares will be voted for the election of the five nominees for
director described below, for ratification of the appointment of Ernst & Young
LLP as Textron's independent auditors, and against the shareholder proposal
described below.
SAVINGS PLAN PARTICIPANTS
If you are a participant in a Textron savings plan with a Textron stock
fund as an investment option, the accompanying proxy card shows the number of
shares allocated to your account under the plan. When your proxy card is
returned properly signed, the plan trustee will vote your proportionate interest
in the plan shares in the manner you direct, or if you make no direction, in
proportion to directions received from the other plan participants (except for
any shares allocated to your Tax Credit Account under the Textron Savings Plan,
which will be voted only as you direct.) All directions will be held in
confidence.
REVOKING A PROXY
You may revoke your proxy at any time before it is voted by submitting a
new proxy with a later date, delivering a written notice of revocation to
Textron's corporate secretary, or voting in person at the meeting.
REQUIRED VOTE
A quorum is required to conduct business at the meeting. A quorum requires
the presence, in person or by proxy, of the holders of a majority of the votes
entitled to be cast at the meeting. Abstentions and broker "non-
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votes" are counted as present and entitled to vote for purposes of determining a
quorum. A broker non-vote occurs when you fail to provide voting instructions to
your broker for shares owned by you but held in the name of your broker. Under
those circumstances, your broker may be authorized to vote for you on some
routine items but is prohibited from voting on other items. Those items for
which your broker cannot vote result in broker non-votes.
The five nominees for director receiving the greatest number of votes at
the meeting will be elected. Abstentions and broker non-votes are not counted
for this purpose and will have no effect on the outcome of the election.
Approval of the ratification of the appointment of auditors and the
shareholder proposal requires the affirmative vote of a majority of shares
present in person or represented by proxy, and entitled to vote on the matter.
For this purpose, if you vote to "abstain" on a proposal, your shares will be
treated as present and will have the same effect as if you voted against the
proposal. Broker non-votes, however, are not counted for this purpose and have
no effect on the outcome of the vote. All shareholders vote as one class.
COSTS OF PROXY SOLICITATION
Textron pays all the cost of this solicitation of proxies. Textron will
request that persons who hold shares for others, such as banks and brokers,
solicit the owners of those shares and will reimburse them for their reasonable
out-of-pocket expenses for those solicitations. In addition to solicitation by
mail, Textron employees may solicit proxies by telephone, by electronic means
and in person, without additional compensation for these services. Textron has
hired D.F. King & Co., Inc., of New York, New York, a proxy solicitation
organization, to assist in this solicitation process for a fee of $13,500, plus
reasonable out-of-pocket expenses.
CONFIDENTIAL VOTING POLICY
Under Textron's policy on confidential voting, individual votes of
shareholders are kept confidential from Textron's directors, officers and
employees, except for certain specific and limited exceptions. Comments of
shareholders written on proxies or ballots are transcribed and provided to
Textron's corporate secretary. 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.
ATTENDING THE MEETING
If your shares are held in the name of your bank or broker and you plan to
attend the meeting, please bring proof of ownership with you to the meeting. A
bank or brokerage account statement showing that you owned voting stock of
Textron on March 3, 2000, is acceptable proof. If you are a registered holder,
no proof is required.
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 card, unless otherwise instructed, to vote to elect
Teresa Beck, Lewis B. Campbell, R. Stuart Dickson, Lawrence K. Fish and Joe T.
Ford to Class I. Each nominee presently serves as a director of Textron. In May
1999, in order to assure continuity and stability in management of the business
and affairs of Textron, the Board reassigned Mr. Fish from Class II to Class I
and Mr. Janitz from Class I to Class II. Information is furnished below with
respect to each nominee for election and each director continuing in office.
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NOMINEES FOR DIRECTOR
CLASS I -- NOMINEES FOR TERMS EXPIRING IN 2003
(Photo of Teresa Beck)
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(Photo of Lewis B. Campbell)
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(Photo of R. Stuart Dickson)
TERESA BECK DIRECTOR SINCE 1996
Ms. Beck, 45, is the former President of American Stores Company, one of
the nation's largest food and drug retailers. She joined
American Stores Company in 1982, became Senior Vice President
of Finance and Assistant Secretary in 1989, Executive Vice
President, Administration in 1992, Executive Vice President,
Finance in 1994 and chief financial officer in 1995 and served
as President from 1998 until leaving the company in June 1999.
Ms. Beck is a director of Albertson's, Inc. and Questar
Corporation. She is a member of the Board of Directors of The
Children's Center (Utah) and Partners in Education.
LEWIS B. CAMPBELL DIRECTOR SINCE 1994
Mr. Campbell, 53, is Chairman and chief executive officer of Textron. He
joined Textron in 1992 as Executive Vice President and chief
operating officer, became President and chief operating
officer in 1994, assumed the title of chief executive officer
and relinquished the title of chief operating officer in July
1998, and assumed the title of Chairman and relinquished the
title of President in February 1999. Prior to joining Textron
he was a Vice President of General Motors Corporation and
General Manager of its GMC Truck Division. Mr. Campbell is a
director of Bristol Myers Squibb Co.
R. STUART DICKSON DIRECTOR SINCE 1984
Mr. Dickson, 70, was Chairman of the Board of Ruddick Corporation, a
diversified holding company with interests in industrial
sewing thread and regional supermarkets, from 1968 until 1994.
Mr. Dickson currently serves as Chairman of the Ruddick
Executive Committee. Mr. Dickson is a director of Ruddick
Corporation, First Union Corporation, United Dominion
Industries and Dimon Incorporated. He is Chairman Emeritus of
the Charlotte-Mecklenburg Hospital Authority.
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(Photo of Lawrence K. Fish)
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(Photo of Joe T. Ford)
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LAWRENCE K. FISH DIRECTOR SINCE 1999
Mr. Fish, 55, is Chairman, President and chief executive officer of
Citizens Financial Group, Inc., a multi-state bank holding
company headquartered in Providence, Rhode Island, a position
he has held since joining the bank in 1992. He is a director
of the Royal Bank of Scotland Group and Trustee of The
Brookings Institution. Mr. Fish is a member of the Federal
Reserve Advisory Council and the past Co-Chair of the Rhode
Island Economic Development Council. He is the founding
Chairman of the Rhode Island Commission for National and
Community Service, an overseer of the Boston Symphony
Orchestra and Beth Israel Deaconess Medical Center, a trustee
and Chairman of the Audit Committee of the Rhode Island School
of Design and a trustee of Drake University.
JOE T. FORD DIRECTOR SINCE 1998
Mr. Ford, 62, is Chairman of the Board and chief executive officer of
ALLTEL Corporation, a telecommunications and information
services company. He was named President of ALLTEL upon its
formation in 1983 from a merger between Allied Telephone
Company and Mid-Continent Telephone Corporation, became chief
executive officer in 1987 and assumed his current position in
1991. Mr. Ford is a director of The Dial Corporation.
DIRECTORS CONTINUING IN OFFICE
CLASS II -- TERMS EXPIRE IN 2001
(Photo of Paul E. Gagne)
PAUL E. GAGNE DIRECTOR SINCE 1995
Mr. Gagne, 53, was President and chief executive officer of Avenor Inc., a
forest products company, and is now consultant to Kruger Inc.
in corporate strategic planning and acquisitions. He joined
Avenor in 1976, became President and chief operating officer
in 1990 and assumed the additional position of chief executive
officer in 1991, serving in that capacity until November 1997,
when he left the company. In 1998, Mr. Gagne joined Kruger
Inc., a major Canadian privately held producer of paper and
tissue. He is a director of Inmet Mining Corporation, Wajax
Limited, and Kruger Tissue Group (U.K.).
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(Photo of John A. Janitz)
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(Photo of Jean Head Sisco)
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(Photo of Thomas B. Wheeler)
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JOHN A. JANITZ DIRECTOR SINCE 1999
Mr. Janitz, 57, is President and chief operating officer of Textron. He
joined Textron in 1996 as Chairman, President and chief
executive officer of Textron Automotive Company and assumed
his present position in March 1999. From 1990 to 1996, he was
Executive Vice President and General Manager of TRW Inc.'s
Occupant Restraint Group based in Cleveland, Ohio, a worldwide
business that develops, manufactures and markets air bags,
seat belts and fastening systems. Prior to joining TRW, he was
President of Wickes Manufacturing Company, an automotive
supplier based in Southfield, Michigan.
JEAN HEAD SISCO DIRECTOR SINCE 1975
Mrs. Sisco, 74, is a partner in the international trade consulting firm of
Sisco Associates. She is a director of The Neiman Marcus
Group, Inc., Newmont Mining Corporation, Chiquita Brands
International, Inc., K-Tron International, Inc., American
Funds -- Series I and Socrates Technology. 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 Treasurer of
Reading is Fundamental, past Chairman and a director of the
National Association of Corporate Directors and Chairman of
the Leadership Foundation of the International Women's Forum.
THOMAS B. WHEELER DIRECTOR SINCE 1993
Mr. Wheeler, 63, is the retired Chairman and chief executive officer 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,
President and chief executive officer in 1988 and Chairman and
chief executive officer in 1996. He relinquished the title of
chief executive officer in January 1999 and retired as
Chairman in January 2000. Mr. Wheeler is a director of
Massachusetts Mutual Life Insurance Company. He is Chairman of
Jobs for Massachusetts and a trustee of Springfield College,
the Basketball Hall of Fame and the Springfield Orchestra
Association.
CLASS III -- TERMS EXPIRE IN 2002
(Photo of H. Jesse Arnelle)
H. JESSE ARNELLE DIRECTOR SINCE 1993
Mr. Arnelle, 66, was a senior partner in the law firm of Arnelle, Hastie,
McGee, Willis & Greene, San Francisco, with which he had been
associated from 1985 through his retirement in 1996. Following
his retirement, he became Of Counsel to the North Carolina law
firm of Womble, Carlyle, Sandridge & Rice. Mr. Arnelle is a
director of FPL Group, Inc., Waste Management, Inc., Eastman
Chemical Corporation, Armstrong World Industries, Union
Pacific Resources, Inc. and Gannett Corporation, and served
from 1990 through 1998 as a director of Wells Fargo Bank, N.A.
and Wells Fargo & Company. Mr. Arnelle is the past Chairman of
the Board of Trustees of Pennsylvania State University and a
director of the National Football Foundation and College Hall
of Fame.
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(Photo of John D. Macomber)
JOHN D. MACOMBER DIRECTOR SINCE 1993
Mr. Macomber, 72, is Principal of JDM Investment Group, a
private investment firm. He joined the firm as Principal in
1992. He served as Chairman and President of the Export-Import
Bank of the United States from 1989 to 1992. Mr. Macomber 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 is a director of The Brown
Group, Inc., IRI International, Lehman Brothers Holdings Inc.,
and Mettler-Toledo International Inc. Mr. Macomber is Chairman
of the Council for Excellence in Government and a trustee of
the Carnegie Institute of Washington and The Folger Library.
He is Vice Chairman of The Atlantic Council of the United
States and a director of the National Campaign to Prevent Teen
Pregnancy, The French-American Foundation, the National
Executive Services Corps and the National Board of the
Smithsonian Institution.
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(Photo of Brian H. Rowe)
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(Photo of Sam F. Segnar)
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BRIAN H. ROWE DIRECTOR SINCE 1995
Mr. Rowe, 68, is the retired Chairman and now a consultant of GE Aircraft
Engines, General Electric Company, a manufacturer of
combustion turbine engines for aircraft, marine and industrial
applications. He joined General Electric in 1957, became
President and chief executive officer of GEAE in 1979 and
Chairman in 1993, serving in that capacity until his
retirement in 1994. Mr. Rowe is a director of Atlas Air, Inc.,
B/E Aerospace, Fifth Third Bank, Stewart & Stevenson Services,
Inc., Convergys and Dynatech Corporation, and is Chairman of
AeroEquity, Inc.
SAM F. SEGNAR DIRECTOR SINCE 1982
Mr. Segnar, 72, is the retired Chairman and chief executive officer of
Enron Corporation and former Chairman of the Board of Vista
Chemical Co. and Collecting Bank, N.A., Houston, Texas. Mr.
Segnar is a director of Gulf States Utilities Company, and an
advisory director of Pilko and Associates Inc. He is a trustee
of the Texas A&M Institute of Bio-Science and Technology and
the Texas A&M School of Business Administration.
(Photo of Martin D. Walker)
MARTIN D. WALKER DIRECTOR SINCE 1986
Mr. Walker, 67, was Chairman and chief executive officer of M. A. Hanna
Company, an international specialty chemicals company, from
October 1998 until December 1999. He served previously in that
capacity from 1986 until 1996 and as Chairman from 1996 to
June 1997, when he retired. Mr. Walker is currently Principal
of Morwal Investments, a private investment firm. Mr. Walker
is a director of Comerica, Inc., The Timken Company, The
Goodyear Tire & Rubber Co., Lexmark International, Inc. and M.
A. Hanna Company.
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THE BOARD OF DIRECTORS
Meetings and Organization
During 1999, the Board of Directors met ten times and the Executive
Committee of the Board did not meet. The Board has standing Audit, Nominating
and Board Affairs, and Organization and Compensation committees.
Compensation of Directors
For their service on the Board, non-employee directors are paid an annual
retainer of $75,000 plus $1,500 for each meeting of the Board attended.
Non-employee directors who serve on the Executive Committee or one of the
standing committees receive $1,500 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 until retirement
from the Board. Deferrals are made either into an interest bearing account or
into an account consisting of Textron stock units, which are equivalent in value
to Textron common stock. Directors must defer a minimum of $45,000 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% of the amount deferred by the director into this account during the
quarter in excess of the minimum deferral amount. 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. In addition, once a year, on April 30, Textron will
contribute to the stock unit account an amount equal to 20% of the then current
annual retainer for each director who is serving as a director on the date of
Textron's annual meeting of shareholders and has been a director for more than
three months.
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 (as described below under the heading "Employment
Contracts and Change In Control Arrangements" on page 19), 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 at least five years of Board service.
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.
As part of Textron's support for charitable institutions and to provide an
additional source of funding for the Textron Charitable Trust, Textron
established a program under which it will contribute up to $1,000,000 to the
trust on behalf of each director upon his or her death, and the trust will
donate 50% of that amount in accordance with the director's recommendation among
up to five charitable organizations. Payment of the contributions will
ultimately be recovered from life insurance policies that Textron maintains on
the lives of directors for this purpose. The directors will not receive any
financial benefit from this program since the insurance proceeds and charitable
deductions accrue solely to Textron. The program will not result in a material
cost to Textron.
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 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; reviews Textron's compliance programs;
and reviews with management, the independent auditors
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and the internal auditors, Textron's internal accounting controls. The 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 committee: Mr. Gagne (Chairman),
Mr. Arnelle, Ms. Beck, Mr. Rowe, Mr. Segnar and Mr. Walker. During 1999, the
committee met six times. Various members of management are regularly invited to
be present at Audit Committee meetings. The Vice President Internal Audit has
direct access to the Audit Committee and to Textron's chief executive officer.
Nominating and Board Affairs Committee
The Nominating and Board Affairs 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 committee will consider
suggestions regarding possible candidates from a variety of sources, including
shareholders. Shareholders wishing to recommend individuals as candidates for
nomination by the Board must submit timely notice of nomination within the time
limits described below under the heading "Shareholder Proposals and Other
Matters for 2001 Annual Meeting" on page 24, to the committee, c/o Textron's
corporate secretary, along with a description of the proposed candidate's
qualifications and other pertinent biographical information, as well as a
written consent from the proposed candidate. In addition, the committee conducts
reviews and makes recommendations to the Board on the organization of the Board,
Board compensation, the overall performance of the Board and other matters of
corporate governance. The following seven non-employee directors presently
comprise the committee: Mr. Dickson (Chairman), Ms. Beck, Mr. Fish, Mr. Ford,
Mrs. Sisco, Mr. Walker and Mr. Wheeler. During 1999, the committee met four
times.
Organization and Compensation Committee
The Organization and Compensation Committee recommends to the Board
compensation arrangements for the officers named in the Summary Compensation
Table on page 15 and approves compensation arrangements for other executive
officers. In addition, the committee reviews the responsibilities and
performance of executive officers, plans for their succession and approves
changes in executive officers. The following eight non-employee directors
presently comprise the committee: Mr. Macomber (Chairman), Mr. Arnelle, Mr.
Fish, Mr. Ford, Mr. Rowe, Mr. Segnar, Mrs. Sisco and Mr. Wheeler. During 1999,
the committee met five times.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table lists all shareholders known by Textron to own
beneficially more than 5% of any class of Textron's voting stock as of December
31, 1999:
<TABLE>
<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............... Putnam Fiduciary Trust Company 20,463,066 shares(1) 13.9%
859 Willard Street
Quincy, Massachusetts 02169
Common Stock............... FMR Corp. 16,114,247 shares(2) 10.8%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
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(1) Putnam Fiduciary Trust Company has informed Textron that it shares voting
and investment power over the shares and that it holds the shares as Trustee
under the Textron Savings Plan and disclaims any beneficial interest. The
shares will be voted at the annual meeting in accordance with instructions
from the participants in the plan, or in the absence of instructions, by
Putnam Fiduciary 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-1 of the Securities Exchange Act of
1934, FMR Corp. has reported that it has sole voting power over 1,474,143
shares and sole investment power over 16,114,247 shares.
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SECURITY OWNERSHIP OF MANAGEMENT
Set forth below in the column headed "Number of Shares of Common Stock" is
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 and by all current directors and executive
officers as a group. Directors and executive officers as a group beneficially
owned less than 1% of the outstanding shares of common stock. Ownership
indicated is as of December 31, 1999.
The column headed "Number of Shares of Common Stock" includes shares held
for the officers by the trustee under the Textron Savings Plan, shares
obtainable upon the exercise of stock options exercisable within 60 days of
December 31, 1999, and shares held jointly. Each director and executive 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 trustee or as
otherwise noted. An objective of Textron's director and executive compensation
programs is to align the financial interests of the directors and the executive
officers with that of shareholders. Accordingly, the value of a significant
portion of the directors' and the executive officers' total compensation is
dependent upon the value they generate on behalf of shareholders. The column
headed "Total Common Stock-Based Holdings" includes common stock beneficially
owned and other common stock-based holdings in the form of stock units,
performance share units, restricted stock and cash equivalent share awards (the
value of which will increase or decrease in relation to the increase or decrease
in the price of common stock).
<TABLE>
<CAPTION>
NUMBER TOTAL
OF SHARES COMMON STOCK-
NAME OF COMMON STOCK(1)(2) BASED HOLDINGS
---- --------------------- --------------
<S> <C> <C>
H. Jesse Arnelle........................................... 2,170 8,805
Teresa Beck................................................ 2,100 6,197
John D. Butler............................................. 57,089 101,394
Lewis B. Campbell.......................................... 475,583 869,904
R. Stuart Dickson.......................................... 41,263 51,144
Lawrence K. Fish........................................... 3,000 4,274
Joe T. Ford................................................ 2,000 3,457
Paul E. Gagne.............................................. 2,114 6,298
Mary L. Howell............................................. 131,467 202,658
John J. Janitz............................................. 103,444 312,759
Stephen L. Key............................................. 142,287 238,533
John D. Macomber........................................... 11,264 20,610
Brian H. Rowe.............................................. 2,135 6,473
Sam F. Segnar.............................................. 4,144 23,260
Jean Head Sisco............................................ 4,276 21,640
Martin D. Walker........................................... 3,721 22,605
Thomas B. Wheeler.......................................... 2,272 18,370
All current directors and executive officers as a group (18
persons)................................................. 1,122,215(3) 2,106,856
</TABLE>
- ---------------
(1) Includes the following shares as to which voting and investment powers are
shared: Mr. Dickson -- 34,000 and Mr. Segnar -- 1,000.
(2) Includes the following shares obtainable upon the exercise of stock options
exercisable within 60 days of December 31, 1999: Mr. Campbell -- 460,608;
Mr. Janitz -- 102,000; Mr. Key -- 141,000; Mr. Butler -- 56,500 ; and Mrs.
Howell -- 123,764.
(3) Includes 996,372 shares obtainable upon the exercise of stock options
exercisable within 60 days of December 31, 1999.
10
<PAGE> 14
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. The committee is committed to establishing a total compensation
program that is not only very competitive by industry standards but also
demonstrates a very heavy bias towards performance and encouraging stock
ownership. 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 in which we compete for
customers and/or executives, and to provide total compensation opportunities at
or above the 75th percentile of those corporations if outstanding performance is
achieved.
EXECUTIVE COMPENSATION PROGRAM
Each year the committee, which is comprised entirely of non-employee
directors, recommends to the Board compensation arrangements for the officers
named in the Summary Compensation Table on page 15 and approves compensation
arrangements for other executive officers. These compensation arrangements
include annual salary levels, salary grade ranges, annual and long-term
incentive plan design, participation and grants thereunder, standards of
performance for new grants, and payouts from past grants.
Textron's executive compensation program is comprised of three principal
components: salary, annual incentive compensation and long-term incentive
compensation.
SALARY
Salary ranges for Textron's executive officers were increased by 2.9% for
1999. Individual salaries are considered for adjustment periodically, based on
position in salary range, individual performance and potential, and/or change in
duties or level of responsibility. As a general rule, adjustments in salary are
relatively modest, inasmuch as the primary elements of the compensation program
are intended to be delivered by the variable components described below.
ANNUAL INCENTIVE COMPENSATION
All executive officers participate in Textron's Annual Incentive
Compensation Plan. Annual incentive payments are generally limited to twice the
target award level, but the committee can make payments above these levels if it
deems performance warrants. The factors considered by the committee in
recommending 1999 incentive compensation payments for executive officers
included the degree to which certain overall corporate and individual
performance objectives were achieved such as earnings per share, top line growth
(revenues), return on invested capital and free cash flow. Individual awards
were also based on the committee's assessment of each executive officer's
performance against non-financial objectives which reflect their specific
responsibilities. The annual incentive compensation earned by the officers named
in the Summary Compensation Table is reported in the "Bonus" column of that
table.
LONG-TERM INCENTIVE COMPENSATION
Under both the Textron 1994 Long-Term Incentive Plan and the Textron 1999
Long-Term Incentive Plan, which was approved by Textron shareholders at the 1999
annual meeting, executive officers may be granted awards of stock options,
performance share units, or both. Additionally, under the 1999 plan, executive
officers may be granted awards of restricted stock.
11
<PAGE> 15
1999 Grants of Stock Options
Pursuant to the 1994 and 1999 plans, the committee recommended to the Board
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.
Overall past corporate performance was not considered in determining the number
of stock options to be granted. In accordance with the 1994 and 1999 plans,
stock options granted in 1999 were at a purchase price equal to 100% of the fair
market value of Textron common stock at the time of the option grant and become
exercisable in two installments, the first half after one year and the other
half after two years from date of grant. Information on the stock options
granted during fiscal year 1999 to the officers named in the Summary
Compensation Table appears in the table on page 16.
1999 Payouts of Previously Granted Performance Share Units
The 1999 payouts to executive officers were for performance share units
granted for the three-year performance cycle ending January 1, 2000. The
committee recommended to the Board payouts at 100% of these performance share
unit grants. The payouts were generally based 75% on three-year aggregate
earnings per share and 25% on the committee's evaluation of balance sheet
strength/asset management, shareholder value (including annual rate of dividends
and common stock performance versus Textron's proxy peers) and the executive
officer's performance. Information on the 1999 payouts to the officers named in
the Summary Compensation Table of previously granted performance share units is
reported in the "LTIP Payouts" column of that table.
1999 Performance Share Unit Grants
For the three-year performance cycle starting at the beginning of 2000,
each performance share unit granted and earned under the 1999 plan will be
valued for payment purposes at the market value of Textron common stock at the
end of the three-year performance period. The number of performance share units
granted to executive officers for the 2000-2002 performance cycle was based on
the functions and responsibilities of the executive officer and the executive
officer's potential contributions to Textron's profitability and growth. The
number of performance share units granted in prior years as well as the stock
price at the time of grant were taken into consideration in making the new
grants, but past corporate performance was not specifically taken into
consideration. Information on the 1999 grants of performance share units appears
in the "Long-Term Incentive Plan Awards in Last Fiscal Year" table on page 17.
1999 Restricted Stock Grants
The chief executive officer and the chief operating officer were granted
shares of restricted stock under the Textron 1999 Long-Term Incentive Plan for
retention purposes. Information on the 1999 grants of restricted stock is
reported in the "Restricted Stock Awards" column of the Summary Compensation
Table.
STOCK OWNERSHIP
An objective of Textron's executive compensation program is to align the
financial interests of the executive officers with the best interests of
shareholders. The committee also seeks to promote stock ownership and base a
substantial component of the executive officers' total compensation on the value
they generate on behalf of Textron's shareholders.
In addition to the long-term incentive plans described above, the Deferred
Income Plan for Textron Key Executives, in which all executive officers
participate, provides that annual incentive compensation earned in excess of
100% of target must be deferred in stock units which are equivalent in value to
shares of Textron common stock if the officer has not maintained a minimum stock
ownership level. The following minimum
12
<PAGE> 16
levels have been established: five times base salary for the chief executive
officer and chief operating officer, three times base salary for other officers
named in the Summary Compensation Table and two times base salary for other
executive officers. Newly named officers have five years to bring their holdings
up to the minimum levels. The deferred income plan also provides participants
the opportunity to defer up to 25% of base salary and up to 100% of annual and
long-term incentive compensation. Elective deferrals may be invested in either
an interest bearing account or in a stock unit account. Textron contributes a
25% premium on amounts the officers elect to defer in the stock unit account. At
least 50% of elective deferrals must be invested in stock units.
CEO COMPENSATION
As in the past, in determining the overall level of Mr. Campbell's
compensation and each component thereof, the committee took into consideration
information provided by independent, professional compensation consultants. Mr.
Campbell's salary was increased to its current level of $1,000,000 upon his
promotion to chief executive officer effective July 1, 1998. As reported in the
Summary Compensation Table, Mr. Campbell's salary remained at $1,000,000 for
1999. In determining not to increase his salary, the committee took into account
the fact that Mr. Campbell's base salary was at the 74th percentile of base
salary paid to chief executive officers at the surveyed companies.
The committee recommended and the Board approved a 1999 annual incentive
compensation award of $1,400,000, compared to an award of $1,000,000 for 1998.
In determining the level of the award, the committee took into consideration the
following factors: performance against objectives, competitive practice for the
chief executive officer position, Mr. Campbell's 1998 award and the fact that
Mr. Campbell held the chief executive officer position for only six months
during 1998. The committee determined that Mr. Campbell achieved or exceeded all
of his objectives, and the committee was extremely pleased that the sale of Avco
Financial Services was completed as scheduled and that Textron was able to
successfully redeploy the proceeds from that sale in a timely manner. Mr.
Campbell's key financial goals were to meet or exceed the 1999 operating plan
for earnings per share, top line growth (revenues), return on invested capital
and free cash flow. Mr. Campbell's non-financial objectives consisted of goals
relative to (1) increased shareholder value, (2) continued focus on top line
growth, (3) diversity, (4) increased global public image of Textron, (5)
organization progression and succession planning, (6) chief operating officer
development and (7) improved effectiveness of the management structure.
The committee determined that all of the performance share units granted to
Mr. Campbell for the 1997-1999 performance cycle were earned since aggregate
earnings per share (upon which 75% of the award was based) exceeded the targeted
level for that period and performance relative to the operating committee and
the executive leadership team (upon which 25% of the award was based) was
achieved. The value of the 1997-1999 performance share units earned by Mr.
Campbell was $2,180,400 and was determined by multiplying the number of earned
performance share units by the average closing price of Textron common stock for
the first ten trading days during December 1999. The value of the units earned
was favorably impacted by the 60% increase in the market value of Textron common
stock since the units were granted in December 1996.
In December 1999, Mr. Campbell was granted 75,000 stock options and 40,000
performance share units for the 2000-2002 performance cycle under the Textron
1999 Long-Term Incentive Plan. These grants compare to 100,000 stock options and
30,000 performance share units granted in December 1998 under the Textron 1994
Long-Term Incentive Plan. The decrease in the number of stock options granted is
attributed to the fact that the maximum number of stock options that may be
granted under the 1999 plan to any individual in any calendar year is 75,000.
The maximum under the 1994 plan was 150,000 stock options. The increase in the
number of performance share units granted was partially made to offset the
decrease in the number of options granted. The December 1999 grants placed Mr.
Campbell's long-term incentive compensation at the
13
<PAGE> 17
73rd percentile of competitive practice. The committee and the Board thought
grants at that competitive level were appropriate as it brought Mr. Campbell's
total direct compensation (base salary and annual and long-term incentive
compensation) to the 75th percentile of competitive practice.
Mr. Campbell's also received compensation under various Textron benefit and
compensation plans including restricted stock retention awards (see footnotes
(5) and (6) of the Summary Compensation Table).
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code provides that no U.S. income
tax deduction is allowable to a publicly held corporation for 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 under a plan approved by shareholders. Performance
goals are not objective if the committee has any discretion to pay amounts in
excess of those earned in accordance with the achievement of pre-established
performance criteria or to pay such compensation when the performance criteria
are not met. Compensation deferred under the deferred income plan is not subject
to the $1 million limitation.
Textron's policy has been to preserve committee discretion in determining
awards earned under Textron's annual and long-term incentive plans. Textron
stock options granted under the 1994 and 1999 Long-Term Incentive Plans do
qualify as Performance-Based Compensation. To further reduce the amount of
compensation that will not qualify for a tax deduction, an amendment to the 1994
plan to qualify as Performance-Based Compensation awards earned for a major
portion of performance share units granted under the 1994 plan was approved by
the shareholders in April 1997. Awards earned for a major portion of performance
share units granted under the 1999 plan also qualify as Performance-Based
Compensation, as do restricted stock awards. Textron will continue to preserve
committee discretion under the annual incentive compensation plan and a portion
of the 1994 and 1999 long-term incentive plans.
Textron's deferred income plan 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). Consequently, with the opportunity to defer compensation and
the qualification of a substantial portion of performance share units as
Performance-Based Compensation, Textron believes that the $1 million limitation
of Section 162(m) of the Internal Revenue Code will not have a material effect
on Textron's income tax expense in the near term. The committee will continue to
assess the effect of these tax rules on Textron.
This report is submitted by the Organization and Compensation Committee.
JOHN D. MACOMBER, CHAIRMAN
H. JESSE ARNELLE
LAWRENCE K. FISH
JOE T. FORD
BRIAN H. ROWE
SAM F. SEGNAR
JEAN HEAD SISCO
THOMAS B. WHEELER
14
<PAGE> 18
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information concerning
compensation of (i) Textron's chief executive officer at the end of 1999 and
(ii) the four most highly compensated executive officers of Textron, other than
the chief executive officer, who were serving as executive officers at the end
of 1999 for Textron's 1997, 1998 and 1999 fiscal years. Compensation which was
deferred by these officers under the Deferred Income Plan is included below as
compensation paid.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------- --------------------------------------------
AWARDS PAYOUTS
------------------------------- -------
RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL STOCK AWARDS UNDERLYING PAYOUTS COMPENSATION
POSITION(1) YEAR SALARY ($) BONUS ($) ($)(5) OPTIONS/SARS (#) ($) ($)(6)
- ------------------------ ---- ---------- --------- ------------ ---------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
L.B. Campbell 1999 $1,000,000 $1,400,000 $17,906,250 75,000 $2,180,400 $ 50,000
Chairman and Chief 1998 862,500 1,000,000 -0- 142,000 2,221,800 43,125
Executive Officer 1997 700,000 700,000 -0- 43,000 1,784,400 35,000
J.A. Janitz 1999 574,094 731,476(2) 10,775,226 75,000 872,160 28,704
President and Chief 1998 458,750 384,559 59,559 20,000 1,007,216 22,940
Operating Officer 1997 438,125 255,156 55,156 16,000 724,942 21,905
S.L. Key 1999 455,000 375,000 -0- 25,000 799,480 22,750
Executive Vice 1998 430,000 464,090 84,090 24,000 918,344 21,500
President and Chief 1997 430,000 384,048 44,047 22,000 832,720 21,500
Financial Officer
J.D. Butler 1999 420,000 390,787(2) 45,787 23,000 536,080 21,000
Executive Vice President 1998 400,000 605,959(3) 85,959 19,000 470,300 20,000
Administration and 1997 200,000 362,500(4) 12,500 47,500 250,000 5,000
Chief Human Resources
Officer
M.L. Howell 1999 370,000 310,000 -0- 22,000 545,100 18,500
Executive Vice 1998 349,250 340,000 50,000 18,000 592,480 17,461
President Government, 1997 326,333 276,556 36,556 17,000 571,008 16,315
International, Communi-
cations and Investor
Relations
</TABLE>
- ---------------
(1) Mr. Janitz, previously Chairman, President and chief executive officer of
Textron Automotive Company since 1996, became President and chief operating
officer effective March 12, 1999. Mrs. Howell, previously Executive Vice
President Government and International, became Executive Vice President
Government, International, Communications and Investor Relations on January
1, 1999.
(2) The amounts listed as paid to Messrs. Janitz and Butler for 1999 include
vested contributions made by Textron in the amounts of $31,476 and $45,787,
respectively, as a result of their elections to defer compensation into the
stock unit fund of the Deferred Income Plan.
(3) The amount listed as paid to Mr. Butler for 1998 includes $200,000 to
replace a lost compensation award from his prior employer.
(4) The amount listed as paid to Mr. Butler for 1997 includes a hiring bonus of
$100,000.
(5) The amount listed for Mr. Campbell is the market value at the time of grant
of a retention award of 200,000 shares of restricted stock. The shares will
be granted provided he is still employed by Textron, or in certain cases if
his employment ends earlier, in accordance with the following schedule and
earnings per share increases at or above an established average annual
growth rate: 50,000 shares will vest in May 2003, 2006, 2008 and 2011. As of
January 1, 2000, the market value of the 200,000 restricted shares was
$15,337,500.
Mr. Campbell will receive the cash equivalent of 50,000 shares of Textron
common stock, provided he remains in Textron's employment through January 1,
2001, or in certain cases, if his employment ends earlier. As of January 1,
2000, the market value of the 50,000 shares was $3,834,375.
(footnotes continued on following page)
15
<PAGE> 19
(footnotes continued from preceding page)
Mr. Key will receive the cash equivalent of 40,000 shares of Textron common
stock following his retirement, provided he retires from Textron at or
after age 65 or in certain cases, if his employment ends earlier. As of
January 1, 2000, the market value of the 40,000 shares was $3,067,500.
Included in the amount listed for Mr. Janitz for 1999 is $10,743,750, which
is the market value at the time of grant of a retention award of 120,000
shares of restricted stock. The shares will be granted provided he is still
employed by Textron, or in certain cases if his employment ends earlier, in
accordance with the following schedule and earnings per share increases at
or above an established average annual growth rate: 30,000, 30,000, 15,000,
15,000 and 30,000 shares will vest in October 2000, 2004, 2005, 2006, and
2007, respectively. The 120,000 shares replaced 48,000 share equivalents
that were previously granted to Mr. Janitz. As of January 1, 2000, the
market value of the 120,000 restricted shares was $9,202,500.
All other amounts listed are not restricted stock but are unvested
contributions made by Textron under the Deferred Income Plan as a result of
the officers' elections to defer 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. As of
January 1, 2000, 425 and 618 unvested stock units with a market value of
$32,592 and $47,393 were credited to the accounts of Mr. Janitz, and Mr.
Butler, respectively.
(6) Amounts listed as "All Other Compensation" for 1999 are Textron's
contributions under the Textron Savings Plan and the Savings Plan component
of the Supplemental Benefits Plan.
------------------------
STOCK OPTION GRANTS
The following table sets forth information on grants of stock options under
the Textron 1994 and 1999 Long-Term Incentive Plans during Textron's 1999 fiscal
year to the officers named in the Summary Compensation Table. The number of
stock options granted to these officers during Textron's 1999 fiscal year is
also listed in the Summary Compensation Table in the column entitled "Securities
Underlying Options/SARs."
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF
------------------------------------------------------------- STOCK PRICE
NUMBER PERCENT OF APPRECIATION
OF TOTAL EXERCISE FOR OPTION/SARS
SECURITIES OPTIONS/SARS OR TERM($)(2)
UNDERLYING GRANTED TO BASE -------------------------
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION FIVE TEN
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SHARE) DATE PERCENT PERCENT
---- ------------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
L.B. Campbell.............. 75,000 3.4% $73.03125 12/14/09 $3,444,672 $8,729,475
J.A. Janitz................ 20,000 0.9% 81.09375 03/11/09 1,019,988 2,584,851
55,000 2.5% 73.03125 12/14/09 2,526,093 6,401,615
S.L. Key................... 25,000 1.1% 73.03125 12/14/09 1,148,224 2,909,825
J.D. Butler................ 23,000 1.1% 73.03125 12/14/09 1,056,366 2,677,039
M.L. Howell................ 22,000 1.0% 73.03125 12/14/09 1,010,437 2,560,646
</TABLE>
- ---------------
(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, 1999, except for 20,000 options granted to Mr.
Janitz on March 12, 1999, as a result of his promotion to President and
chief operating officer. 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 a change in control of Textron as defined in the Textron 1994
and 1999 Long-Term Incentive Plans.
(footnotes continued on following page)
16
<PAGE> 20
(footnotes continued from preceding page)
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% 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. At a 5% and 10% annual rate of
stock price appreciation, the stock price would be approximately $118.96 and
$189.42 at the end of the ten-year term of the options granted on December
15, 1999. The corresponding stock prices for options granted on March 12,
1999, would be $132.09 and $210.34.
AGGREGATED OPTION AND STOCK APPRECIATION RIGHTS EXERCISES AND FISCAL YEAR-END
VALUES
The following table sets forth information, with respect to the officers
named in the Summary Compensation Table, concerning: (i) the exercise during
Textron's 1999 fiscal year of stock options and stock appreciation rights and
(ii) unexercised options and stock appreciation rights held as of the end of
Textron's 1999 fiscal year, which were granted to these officers during 1999 and
in prior fiscal years under either the Textron 1999 Long-Term Incentive Plan or
a predecessor plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION AND SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L.B. Campbell............. -0- $ -0- 460,608 146,001 $16,317,556 $443,754
J.A. Janitz............... -0- -0- 152,000 65,000 5,049,750 218,594
S.L. Key.................. -0- -0- 141,000 37,000 4,627,719 112,406
J.D. Butler............... -0- -0- 56,500 32,500 525,469 100,719
M.L. Howell............... -0- -0- 154,764 123,764 4,520,358 96,188
</TABLE>
LONG-TERM INCENTIVE PLAN
The following table provides information concerning performance share unit
awards made during Textron's 1999 fiscal year to the officers named in the
Summary Compensation Table pursuant to the Textron 1994 and 1999 Long-Term
Incentive Plans for the 2000-2002 performance cycle and for the prior
performance cycles referred to in the footnotes below.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<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>
L.B. Campbell......................... 40,000 3 years 40,000
J.A. Janitz........................... 5,400(1) 3 years 5,400
7,000(2) 3 years 7,000
25,000 3 years 25,000
S.L. Key.............................. 8,500 3 years 8,500
J.D. Butler........................... 8,000 3 years 8,000
M.L. Howell........................... 7,500 3 years 7,500
</TABLE>
- ---------------
(1) Granted in March 1999 to supplement Mr. Janitz's December 1997 grant for the
1998-2000 performance cycle as a result of his promotion to President and
chief operating officer.
(footnotes continued on following page)
17
<PAGE> 21
(footnotes continued from preceding page)
(2) Granted in March 1999 to supplement Mr. Janitz's December 1998 grant for the
1999-2001 performance cycle as a result of his promotion to President and
chief operating officer.
Except in the case of the chief executive officer, the number of
performance share units earned by the officers named in the Summary Compensation
Table 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 generally based 60% on earnings per share growth, 20% on
discretionary performance measures, including balance sheet strength/asset
management, support of Textron's commitment to diversity, shareholder value and
the officer's individual performance and 20% will be based on an executive
leadership team objective. In the case of the chief executive officer, 75% of
the award will be based on earnings per share growth and 25% will be based on
measures just described above except the executive leadership team objective.
Attainment of a primary performance target will result in earning 100% of the
value of the performance share units related to that target. Awards may not
exceed 100% of the value of the performance share units. Failure to attain a
minimum performance target will result in the failure to earn any performance
units related to that performance target. Attainment between the primary and
minimum performance targets will result in earning a portion of the performance
share units related to those performance targets determined by a pre-established
mathematical formula. The committee may determine an award less than that
determined by the formula but may not, however, determine an award more than
that derived by the formula.
Performance share units based on discretionary performance measures do not
qualify as Performance-Based Compensation under Section 162(m) of the Internal
Revenue Code. Performance share units related to one or more performance
measures shall be earned only as determined by the Organization and Compensation
Committee and may not exceed more than 100% of the value of such units. 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.
PENSION PLAN
The following table sets forth the estimated annual pension benefits
payable upon retirement under the Textron Master Retirement Plan formula to
persons in the specified remuneration and years of service classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------------
REMUNERATION(1) 10 15 20 25 30 35
- --------------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$1,000,000 $ 148,552 $ 222,828 $ 297,104 $ 371,380 $ 445,656 $ 519,932
1,250,000 186,052 279,078 372,104 465,130 558,156 651,182
1,500,000 223,552 335,328 447,104 558,880 670,656 782,432
1,750,000 261,052 391,578 522,104 652,630 783,156 913,682
2,000,000 298,552 447,828 597,104 746,380 895,656 1,044,932
2,250,000 336,052 504,078 672,104 840,130 1,008,156 1,176,182
2,500,000 373,552 560,328 747,104 933,880 1,120,656 1,307,432
2,750,000 411,052 616,578 822,104 1,027,630 1,233,156 1,438,682
3,000,000 448,552 672,828 897,104 1,121,380 1,345,656 1,569,932
3,250,000 486,052 729,078 972,104 1,215,130 1,458,156 1,701,182
3,500,000 523,552 785,328 1,047,104 1,308,880 1,570,656 1,832,432
3,750,000 561,052 841,578 1,122,104 1,402,630 1,683,156 1,963,682
4,000,000 598,552 897,828 1,197,104 1,496,380 1,795,656 2,094,932
4,250,000 636,052 954,078 1,272,104 1,590,130 1,908,156 2,226,182
4,500,000 673,552 1,010,328 1,347,104 1,683,880 2,020,656 2,357,432
4,750,000 711,052 1,066,578 1,422,104 1,777,630 2,133,156 2,488,682
5,000,000 748,552 1,122,828 1,497,104 1,871,380 2,245,656 2,619,932
</TABLE>
- ---------------
(1) Based on highest consecutive five-year average compensation
18
<PAGE> 22
Benefits under the formula are based upon the salaried employee's highest
consecutive 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. However, for any employee who is first awarded performance
share units after October 26, 1999, LTIP payouts shall not be included in
compensation. As of January 1, 2000, the years of credited service for the
officers named in the Summary Compensation Table were as follows: Mr. Campbell,
7 years; Mr. Janitz, 4 years; Mr. Key, 5 years; Mr. Butler, 3 years; and Mrs.
Howell, 19 years.
Annual pension amounts shown in the table above are computed on the basis
of a single life annuity, unless the participant receives another method of
payment, and are not subject to any offset for Social Security benefits. The
Textron Master Retirement 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. To compensate certain Textron executives, including the officers
named in the Summary Compensation Table, for the effect of these limitations,
Textron maintains a Supplemental Benefits Plan. Certain Textron executives,
including the officers named in the Summary Compensation Table, also participate
in the Supplemental Retirement Plan for Textron Key Executives, which provides
benefits to participants who remain in the employ of Textron until at least age
60. Under this plan, these executives are entitled to receive an annual
supplemental pension benefit equal to 50% of their highest consecutive five-year
average compensation reduced by any amounts to which they are entitled under the
plans of Textron and any prior employer if they remain in the employ of Textron
until age 65 (and a reduced benefit if they remain in the employ of Textron
until at least age 60).
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The officers named in the Summary Compensation Table and one other
executive officer have employment contracts with Textron that provide for a
three year initial term ending in July 2001, except for Mr. Janitz, whose
initial term ends in May 2002, with a one year renewal provision. The agreements
provide for specified levels of severance protection based on the reason for
termination including change in control, irrespective of the remaining term of
the agreements. The agreements provide excise tax protection for change in
control terminations. The agreements provide that base salary will not be
reduced and the officers will remain eligible for participation in Textron's
executive compensation and benefit plans during the term of the agreements.
Certain benefit plans and arrangements in which the officers named in the
Summary Compensation Table participate have provisions that will apply in the
event of a change in control of Textron under the plans. Generally, a "change of
control" under the plans will occur upon (i) any non-Textron person or group
becoming (other than by acquisition from Textron or a related company) the
beneficial owner of more than 30% of the then outstanding voting stock of
Textron, (ii) during any two-year period, directors elected or nominated by the
Board ceasing to constitute a majority thereof, (iii) shareholder approval of a
merger or consolidation of Textron with any other corporation, other than a
merger or consolidation in which the voting securities of Textron would continue
to represent more than 50% of the combined voting power of the voting securities
of Textron or such surviving entity, or (iv) shareholder approval of a plan of
complete liquidation of Textron or an agreement for the sale or disposition by
Textron of all or substantially all of its assets. 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 officer) 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, 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 Textron 1994 and 1999
Long-Term Incentive Plans provide that outstanding
19
<PAGE> 23
options will become exercisable immediately and in full, and the stated value of
all outstanding 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 Supplemental Retirement Plan for Textron Key Executives provides that in the
event of a change in control of Textron, participants will be fully vested. 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 Master Retirement Plan provides that (i) if the 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 Internal Revenue Code, 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. Mr. Campbell's and Mr. Janitz's retention awards
are payable immediately in the event of a change in control of Textron.
TRANSACTIONS WITH MANAGEMENT
InteSys Technologies, Inc., which was acquired by Textron on October 29,
1999, purchased during 1999 $1,968,441 of resin from three units of M.A. Hanna
Company, of which Mr. Walker was Chairman and chief executive officer until
retiring in December 1999. InteSys anticipates that it will purchase
approximately $2,000,000 of resin from M.A. Hanna operations in 2000.
20
<PAGE> 24
PERFORMANCE GRAPH
Set forth below is a stock performance graph which shows the change in
market value of $100 invested on December 31, 1994, 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 global,
multi-industry company with market-leading operations in four business
segments -- Aircraft, Automotive, Industrial and Finance. The peer group
consists of 18 companies in comparable industries in the following Standard &
Poor's 500 price index industry groups: aerospace/defense -- The Boeing Company,
General Dynamics Corporation, Lockheed Martin Corporation and Northrup Grumman
Corporation; auto parts & equipment -- ITT Industries, Inc. and TRW Inc.;
defense electronics -- Raytheon Company; diversified machinery -- Dover
Corporation; diversified manufacturing -- Crane Co., Honeywell International,
Inc., Illinois Tool Works Inc., Johnson Controls Inc., Tyco International LTD.
and United Technologies Corporation; electrical equipment -- Rockwell
International Company; specialized manufacturing -- Millipore Corporation, Pall
Corp. and Parker Hannifin Corp. The companies in the indices are weighted by
market capitalization.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
TEXTRON INC. S&P 500 PEER GROUP
------------ ------- ----------
<S> <C> <C> <C>
Dec. 31, 1994 100.00 100.00 100.00
Dec. 31, 1995 137.34 137.58 149.91
Dec. 31, 1996 195.78 169.17 195.70
Dec. 31, 1997 264.04 225.61 223.98
Dec. 31, 1998 326.01 290.09 236.09
Dec. 31, 1999 334.60 351.13 248.88
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP to audit
Textron's consolidated financial statements for 2000, and recommends to the
shareholders ratification of the appointment of Ernst & Young as independent
auditors for 2000. If this resolution is defeated, the Board 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 LLP (ITEM 2 ON THE PROXY CARD).
21
<PAGE> 25
SHAREHOLDER PROPOSAL
Mercy Consolidated Asset Management Program, Dominican Sisters of Hope,
Missionary Oblates of Mary Immaculate, The Sisters of St. Francis of
Philadelphia, Sisters of the Holy Cross, Sisters of Charity, BVM and the General
Board of Pension and Health Benefits of the United Methodist Church have
notified Textron that they intend to propose the following resolution at the
2000 annual meeting of shareholders (the addresses of, and the number of shares
held by, each of the proponents can be obtained upon request from Textron's
corporate secretary):
WHEREAS the proponents of this resolution believe that the Board of Textron
should establish criteria to guide management in their defense contract
bidding and implementation activities;
WHEREAS we believe that economic decision-making has both an ethical and a
financial component;
WHEREAS we believe our company's ethical responsibilities include analyzing
the effects of its decisions with respect to employees, communities, and
nations;
WHEREAS we believe decisions to develop and to produce weapons can have
grave consequences to the lives and/or freedoms of people worldwide, if the
company has not considered its ethical responsibilities ahead of time;
WHEREAS we believe that the company has shown poor judgment in this regard
by past sales of helicopters to Indonesia in light of that country's
oppression in East Timor and by recent bidding for military helicopter
sales with Turkey whose oppression of the Kurds is condemned by human
rights organizations;
WHEREAS we believe that the recent proposed joint venture for manufacturing
military helicopters in Romania was ill advised due to the country's need
to provide more adequately for its own citizen's social needs. The
International Monetary Fund has concurred by refusing to loan Romania money
for weapons;
THEREFORE BE IT RESOLVED that the shareholders request the Board of
Directors to establish a committee to research this issue and to develop
criteria for the bidding, acceptance and implementation of military
contracts and to report the results of its study to shareholders at its
2001 annual meeting. Proprietary information may be omitted and the cost
limited to a reasonable amount.
The proponents have submitted the following statement in support of this
proposal:
The proponents of this resolution believe that all human beings are
called to seek justice and peace. An ethic of stewardship of the earth must
include respect for humanity and for creation. Because we believe that
corporate social responsibility in a successful free enterprise system
demands ethical reflection and action upon activities that are socially
useful as well as economically profitable, we recommend that in
establishing ethical criteria the Board consider the following:
- Arms sales to governments that repress their citizens,
- The connection between arms sales and geographical or political
instability,
- Sales of weapons, parts, technology, and components convertible to
military use (dual-use) to foreign governments,
- Transfers of technology, including co-production agreements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
SHAREHOLDER PROPOSAL.
The Board feels strongly that this proposal is contrary to the best
interests of Textron, its shareholders and its employees.
22
<PAGE> 26
Textron is committed to doing business in full compliance with all
applicable laws and regulations and in accordance with Textron policies and
procedures regarding such matters as standards of business conduct; export
controls; transactions with governments; political contributions and activities;
relationships with customers and suppliers; protection of intellectual property;
environmental protection, health and safety; and employee and community
relations. These policies apply to all Textron operations, including those
involving military contracts. Thus, Textron's business leaders must determine
that Textron's military contract activities meet applicable legal requirements,
adhere to Textron's ethics policies and satisfy standards of sound business
judgment. In addition, all sales by Textron under the Department of Defense's
Foreign Military Sales Program or directly to foreign military organizations
must be expressly approved by the Department of State and, in some
circumstances, Congress, which receive extensive input on humanitarian concerns
from a large number of organizations and factor those concerns into their
decision making process. The Board believes that Textron's existing process for
reviewing the types of matters raised in the proposal is already sufficient.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL
(ITEM 3 ON THE PROXY CARD).
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any matters which will be brought
before the meeting other than those specifically set forth in the notice
thereof. If any other matter properly comes before the meeting, it is intended
that the persons named in and acting under the enclosed form of proxy or their
substitutes will vote thereon in accordance with their best judgment.
23
<PAGE> 27
SHAREHOLDER PROPOSALS AND OTHER MATTERS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 annual meeting
of shareholders must be received by Textron on or before November 10, 2000, for
inclusion in the proxy statement and form of proxy relating thereto. Textron's
By-Laws contain provisions which impose certain additional requirements upon
shareholder proposals.
In order for a shareholder to bring other business before a shareholder
meeting, timely notice must be received by Textron in advance of the meeting.
Under Textron's By-Laws, such notice must be received not less than 90 nor more
than 120 days before the anniversary date of the immediately preceding annual
meeting of shareholders (but if the annual meeting is called for a date that is
not within 30 days of the anniversary date, then the notice must be received
within 10 days after notice of the meeting is mailed or other public disclosure
of the meeting is made) or between December 28, 2000, and January 27, 2001, for
the 2001 annual meeting. The notice must include a description of the proposed
business, the reasons therefor, and other specified matters. These requirements
are separate from and in addition to the requirements a shareholder must meet to
have a proposal included in Textron's proxy statement. These time limits also
apply in determining whether notice is timely for purposes of rules adopted by
the Securities and Exchange Commission relating to the exercise of discretionary
voting authority by Textron.
By order of the Board of Directors,
/s/ Frederick K. Butler
Frederick K. Butler
Vice President Business Ethics and
Corporate Secretary
March 10, 2000
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 CARD IN THE ENVELOPE PROVIDED.
24
<PAGE> 28
[X] Please mark your 1596
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, FOR proposal 2 and AGAINST proposal 3, or if this card
constitutes voting instructions to a savings plan trustee, the trustee will vote
as described in the proxy statement.
The Board of Directors recommends that you vote FOR the nominees listed below
and FOR proposal 2.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FOR* WITHHELD FROM ALL NOMINEES FOR AGAINST ABSTAIN
<S> <C>
Teresa Beck 2. Ratification of appointment
1. Election of [ ] [ ] Lewis B. Campbell of independent auditors [ ] [ ] [ ]
Directors R. Stuart Dickson
Lawrence K. Fish
Joe T. Ford
*Except vote withheld from the following nominee(s): Change of address/
comments on [ ]
reverse side
- ----------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends that you vote
AGAINST proposal 3
-------------------------------------------------------
3. Shareholder proposal FOR AGAINST ABSTAIN
relating to Military
Contracts [ ] [ ] [ ]
-------------------------------------------------------
Please sign exactly as name(s) appear hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
-------------------------------------------------------
-------------------------------------------------------
SIGNATURE(S) DATE
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
TEXTRON
Annual Meeting
of
Textron Shareholders
Wednesday, April 26, 2000
10:30 a.m.
Rhode Island Convention Center
One Sabin Street
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> 29
TEXTRON INC.
Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting of Shareholders April 26, 2000
The undersigned hereby appoint(s) Lewis B. Campbell, John A. Janitz
P and Frederick K. Butler, or any one or more of them, attorneys with
full power of substitution and revocation to each, for and in the name
R of the undersigned with all the powers the undersigned would possess
if personally present, to vote the shares of the undersigned in
O Textron Inc. as indicated on the proposals referred to on the reverse
side hereof at the annual meeting of its shareholders to be held
X April 26, 2000, and at any adjournments thereof, and in their or his
discretion upon any matter which may properly come before said
Y meeting.
This card also constitutes voting instructions to the trustees under
the Textron savings plan to vote, in person or by proxy, the
proportionate interest of the undersigned in the shares of Common
Stock of Textron Inc. held by the trustees under the plans, as
described in the proxy statement.
(Change of Address/Comments)
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
(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
TEXTRON
Annual Meeting
of
Textron Shareholders
Rhode Island Convention Center
One Sabin Street
Providence, Rhode Island
<PAGE> 30
[LETTERHEAD OF LEWIS B. CAMPBELL]
March 10, 2000
Dear Fellow Participant:
Textron's Annual Meeting of Shareholders will take place on April 26, 2000.
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, along
with our 1999 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 20, 2000, your shares will be voted in accordance
with the provisions of the Plan.
The subject of each proposal is shown on the voting card and is explained
in greater detail in the proxy statement. The Board of Directors recommends that
you instruct the Trustee to vote FOR the election of the five nominees for
Director listed in ITEM 1 and FOR ITEM 2. The Board of Directors recommends that
you instruct the Trustee to vote AGAINST ITEM 3.
Thank you for your continued support.
Sincerely,
/s/ Lewis B. Campbell
Enclosures
