tenone.htm


    EXHIBIT
10.1

     

    TEXTRON
INC. SHORT-TERM INCENTIVE PLAN

     

    (As
amended and restated effective January 3, 2010)

     

    


    SECTION
1. ESTABLISHMENT AND PURPOSE

     

    1.1   Establishment
of the Plan.   Textron Inc., a Delaware company (the “Company”),
hereby establishes a short-term incentive compensation plan to be known as the
Textron Inc. Short-Term Incentive Plan (the “Plan”). The Plan permits the
awarding of cash bonuses to Employees (as defined below), based on the
achievement of performance goals that are pre-established by the Board of
Directors of the Company (the “Board”) or by the Committee (as defined
below).

     

    The Plan,
as adopted by the Board and approved by the shareholders of the Company at the
2007 annual general meeting of shareholders, is effective as of January 1, 2007
and shall continue until December 31, 2016, unless terminated earlier as set
forth in Section 10.  The Plan is amended and restated as follows,
effective July 25, 2007, to incorporate those terms necessary or advisable to
ensure that awards under the Plan are exempt from or comply with Section 409A of
the Internal Revenue Code.

     

    The Plan
has been amended from time to time since the previous
restatement.  This restatement of the Plan reflects all amendments
adopted through the date of this restatement.

     

    1.2   Purpose.   The
purposes of the Plan are to (i) provide greater motivation for certain employees
of the Company and its Subsidiaries (as defined below) to attain and maintain
the highest standards of performance, (ii) attract and retain employees of
outstanding competence, and (iii) direct the energies of employees towards the
achievement of specific business goals established for the Company and its
Subsidiaries.

     

    The
purposes of the Plan shall be carried out by the payment to Participants (as
defined below) of short-term incentive cash awards, subject to the terms and
conditions of the Plan. All compensation payable under this Plan to Participants
who are Executive Officers (as defined below) is intended to be deductible by
the Company under Section 162(m) of the Code (as defined below).

     

    SECTION
2. DEFINITIONS

     

    As used
in the Plan, the following terms shall have the meanings set forth below (unless
otherwise expressly provided).

     

    “Award
Opportunity” means the various levels of incentive awards which a Participant
may earn under the Plan, as established by the Committee pursuant to Section
5.1.  For

     

     

     

    
      
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      an individual, the Award Opportunity is
typically expressed as a minimum and maximum percentage of the individual’s
Target Incentive Award (as defined below) that define a range within which the
actual incentive award will fall.  

       

      "Base
Salary” shall mean the regular annualized base salary (determined as of January
1 of each Plan Year with respect to Executive Officers) earned by a Participant
during a Plan Year prior to any salary reduction contributions made to any
deferred compensation plans sponsored or maintained by the Company or by any
Subsidiary; provided, however, that Base Salary shall not include awards under
this Plan, any bonuses, equity awards, the matching contribution under any plan
of the Company or any of its Subsidiaries (as applicable) providing such,
overtime, relocation allowances, severance payments or any other special awards
as determined by the Committee.

    

     

    “Beneficial
Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act.

     

    “Board”
has the meaning set forth in Section 1.1.

     

    “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

     

    “Committee”
means the Organization and Compensation Committee of the Board, provided that
the Committee shall consist of three or more individuals, appointed by the Board
to administer the Plan, pursuant to Section 3, who are “outside directors” to
the extent required by and within the meaning of Section 162(m) of the Code, as
amended from time to time.

     

    “Company”
has the meaning set forth in Section 1.1.

     

    “Effective
Date” means the date the Plan becomes effective, as set forth in Section 1.1
herein.

     

    “Employee”
means an employee of the Company or a Subsidiary.

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

     

    “Executive
Officer” means a “covered employee” within the meaning of Section 162(m)(3) of
the Code or any other executive designated by the Committee for purposes of
exempting compensation payable under the Plan from the deduction limitations of
Section 162(m) of the Code.

     

    “Final Award” means the actual award earned during a
Plan Year by a Participant, as determined by the Committee at the end of such
Plan Year.

     

     

     

    
      
        
        

      

      
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    “Participant”
means an Employee who is participating in the Plan pursuant to Section
4.

     

    “Plan”
means this Textron Inc. Short-Term Incentive Plan.

     

    “Plan
Year” means the calendar year, commencing on January 1st and ending on December
31st, or any other period that the Committee designates as the performance
period for a particular performance goal pursuant to Section 5.1.

     

    “Subsidiary”
means any company or corporation in which the Company beneficially owns,
directly or indirectly, 50% or more of the securities entitled to vote in the
election of the directors of the corporation.

     

    “Target
Incentive Award” means the target award to be paid to a Participant when
performance measures are achieved, as established by the Committee. For an
individual, the Target Incentive Award is typically expressed as a percentage of
the individual’s Base Salary (as defined above).

     

    “Textron”
means Textron Inc., a Delaware corporation, and any successor of Textron
Inc.

     

    SECTION
3. ADMINISTRATION

     

    The Plan
shall be administered by the Committee. Subject to the limitations set forth in
the Plan, the Committee shall: (i) select from the Employees of the Company and
its Subsidiaries, those who shall participate in the Plan, (ii) establish Award
Opportunities in such forms and amounts as it shall determine, (iii) impose such
limitations, restrictions, and conditions upon such Award Opportunities as it
shall deem appropriate, (iv) interpret the Plan and adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) make any and all factual and legal determinations in connection with the
administration and interpretation of the Plan, (vi) correct any defect or
omission or reconcile any inconsistency in this Plan or in any Award Opportunity
granted hereunder, and (vii) make all other necessary determinations and take
all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within its
authority shall be conclusive and binding upon all parties.

     

    Except with respect to the matters that under Section
162(m) of the Code and Treasury Regulation Section 1.162-27(e) are required to
be determined or established by the Committee to qualify awards to Executive
Officers under the Plan as qualified performance-based compensation, the
Committee shall have the power to delegate to any officer or employee of the
Company the authority to administer and interpret the procedural aspects of the
Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues. To the extent of any such


     

     

     

    
      
        
        

      

      
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delegation, references to the “Committee” herein shall
be deemed to refer to the relevant delegate.

    

     

    Subject
to applicable laws, rules and regulations:  (i) no member of the
Committee (or its delegates) shall be liable for any good faith action or
determination made in connection with the operation, administration or
interpretation of the Plan and (ii) the members of the Committee (and its
delegates) shall be entitled to indemnification and reimbursement in the manner
provided in the Company’s Certificate of Incorporation as it may be amended from
time to time. In the performance of its responsibilities with respect to the
Plan, the Committee shall be entitled to rely upon information and/or
advice
furnished by the Company’s officers or employees, the Company’s accountants, the
Company’s counsel and any other party the Committee deems necessary, and no
member of the Committee shall be liable for any action taken or not taken in
reliance upon any such information and/or advice.

     

    SECTION
4. ELIGIBILITY AND PARTICIPATION

     

    4.1   Eligibility.   Each
Employee who is included in the Plan by the Committee, shall be eligible to
participate in the Plan for such Plan Year and all subsequent Plan Years,
subject to the limitations of Section 7 herein.

     

    4.2   Participation.   Participation
in the Plan shall be determined annually by the Committee based upon the
criteria set forth in the Plan. Participation in the Plan during the applicable
Plan Year shall be limited to those Employees (“Participants”) who are selected
by the Committee. Employees who are eligible to participate in the Plan shall be
notified of the performance goals and related Award Opportunities for the
relevant Plan Year.

     

    4.3   Right
to Reduce or End Eligibility.   The Committee may elect to reduce
the Award Opportunity (as described in Section 5.2 herein) or end it altogether
for any single Participant or group of Participants at any time.

     

    SECTION
5. AWARD DETERMINATION

     

    5.1   Performance
Goals.   Prior to the beginning of each Plan Year, or as soon as
practicable thereafter, the Committee shall approve or establish in writing the
performance goals for that Plan Year. Performance goals may include financial
and/or non-financial goals.

     

    Performance goals and their relative weight may vary by
job. After the performance goals are established, the Committee will align the
achievement of the performance goals with the Award Opportunities (as described
in Section 5.2 herein), such that the level of achievement at the end of the
Plan Year as compared to the pre-established performance goals set at the
beginning of the Plan Year will determine the amount of the 

     

     

     

    
      
        
        

      

      
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Final Award. The Committee also shall have the authority
to exercise subjective discretion in the determination of Final Awards to reduce
or increase a calculated award based on the Committee's qualitative assessment
of performance.

    

     

    The
performance period with respect to which awards may be payable under the Plan
shall generally be the Plan Year; provided, however, that the Committee shall
have the authority and discretion to designate different performance periods
under the Plan, in which case references to Plan Year shall be deemed to refer
to such other performance period.

     

    5.2   Award
Opportunities.   Prior to the beginning of each Plan Year, or as
soon as practicable thereafter, the Committee shall establish an Award
Opportunity for each Participant. In the event a Participant changes job levels
during a Plan Year, the Participant's Award Opportunity may be adjusted to
reflect the amount of time at each job level during the Plan Year. In addition,
if a Participant changes jobs during the year, the Participant’s goals may
change as of the effective date of the job change to reflect the different
performance goals. Each job’s performance goals will continue to be assessed on
a full-year basis to determine payouts, with the proportion of time in each job
applied to determine the final payout amount.  In the case of an Award
Opportunity that the Committee has designated as “performance-based
compensation” for purposes of Section 162(m) or Section 409A of the Code, the
Committee shall have the right to adjust the Award Opportunity as described in
this Section 5.2 only to the extent that the adjustment would not cause the
Award Opportunity to fail to qualify as “performance-based compensation” for
purposes of Section 162(m) or Section 409A, as applicable.

     

    5.3   Adjustment
of Performance Goals.   The Committee shall have the right to
adjust the performance goals and the Award Opportunities (either up or down)
during a Plan Year if it determines that the occurrence of external changes or
other unanticipated business conditions have materially affected the fairness of
the goals and have unduly influenced the Company's ability to meet them,
including without limitation, events such as material acquisitions, changes in
the capital structure of the Company, and extraordinary accounting changes. In
addition, performance goals and Award Opportunities will be calculated without
regard to any changes in accounting standards that may be required by the
Financial Accounting Standards Board after such performance goals or Award
Opportunities are established. Further, in the event of a Plan Year of less than
twelve months, the Committee shall have the right to adjust the performance
goals and the Award Opportunities accordingly, at its sole
discretion.  In the case of an Award Opportunity that the Committee
has designated as “performance-based compensation” for purposes of Section
162(m) or Section 409A of the Code, the Committee shall have the right to adjust
the performance goals or Award Opportunity as described in this Section 5.3 only
to the extent that the adjustment would not cause the Award Opportunity to fail
to qualify as “performance-based compensation” for purposes of Section 162(m) or
Section 409A, as applicable.

     

     

     

    
      
        
          
          

        

        
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5.4   Final Award
Determinations.   At the end of each Plan Year, Final Awards
shall be computed for each Participant as determined by the Committee. Each
Final Award shall be based upon the (i) Participant’s Target Incentive Award
percentage, multiplied by his Base Salary and (ii) percent satisfaction of
performance goals (as set by the Committee). Final Award amounts may vary above
or below the Target Incentive Award, based on the level of achievement of the
pre-established performance goals.

      

    

     

    5.5   Limitations.   The
amount payable to a Participant for any Plan Year shall not exceed U.S.
$4,000,000.

     

    5.6   Award
Opportunities under Section 409A.  The Committee may, in its
discretion, establish Award Opportunities that will qualify as
“performance-based compensation” under Section 409A of the Code.  An
Award Opportunity intended to qualify as “performance-based compensation” under
Section 409A of the Code shall meet the following requirements:

     

    
      	
              (a)  

            	
              For
      any Participant who is eligible to participate in the Plan on the first
      day of the performance period, the performance period shall include at
      least 12 consecutive months;

            


    

     

    
      	
              (b)  

            	
              Performance
      goals shall be established no later than 90 days after the beginning of
      the performance period, and at a time when it is not substantially certain
      that the performance goals will be met.  Performance goals may
      not be adjusted after the first 90 days of the performance period, except
      that the Committee may, consistent with Section 409A, make adjustments it
      deems necessary to reflect corporate events, such as recapitalizations or
      mergers, that would otherwise affect the performance goals;
      and

            


    

     

    
      	
              (c)  

            	
              No
      Final Award shall be paid unless the pre-established performance goals are
      satisfied.

            


    

     

    SECTION
6. PAYMENT OF FINAL AWARDS

     

    6.1   Form and Timing of
Payment.   As soon as practicable after the end of each Plan
Year, the Committee shall determine the extent to which the Company and each
Participant has achieved the performance goals for such Plan Year, including the
specific target objective(s) and the satisfaction of any other material terms of
the awards, and the Committee shall approve the amount of each Participant's
Final Award for the relevant period. Final Award payments shall be payable to
the Participant, or to his estate in the case of death, in a single lump-sum
cash payment, as soon as practicable after the end of each Plan Year, after the
Committee, in its sole discretion, has certified in writing the extent to which
the specified performance goals were achieved, but in no event later than


     

     

     

    
      
        
        

      

      
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March 15th of the year following the calendar year in
which the applicable performance period ends..

    

     

    6.2   Payment
of Partial Awards.   In the event a Participant no longer meets
the eligibility criteria as set forth in the Plan during the course of a
particular Plan Year, the Committee may, in its sole discretion, compute and pay
a partial award in a lump sum on the scheduled date in Section 6.1 for the
portion of the Plan Year that an Employee was a Participant. Unless such payment
is specifically approved by the Committee, no such payments will be made, and
continued service through the end of the Plan Year shall be required to earn an
award. Unless the Committee determines otherwise, a Participant who has earned a
Final Award with respect to a completed Plan Year who subsequently terminates
employment or otherwise ceases eligibility before the date that the Final Award
is to be paid shall be paid such Final Award on the scheduled date.

     

    6.3   Unsecured
Interest.   No Participant or any other party claiming an
interest in amounts earned under the Plan shall have any interest whatsoever in
any specific asset of the Company or of any Subsidiary. To the extent that any
party acquires a right to receive payments under the Plan, such right shall be
equivalent to that of an unsecured general creditor of the Company.

     

    SECTION
7. TERMINATION OF ELIGIBILITY OR EMPLOYMENT

     

    7.1   Termination
of Eligibility.   In the event a Participant ceases to be
eligible to participate in the Plan during a Plan Year but remains employed by
the Company or a Subsidiary through the end of such Plan Year, the Final Award
determined in accordance with Section 5.4 herein shall be reduced to reflect
participation prior to such cessation of eligibility only. The reduced award
shall be based upon the proportionate amount of Base Salary earned during the
Plan Year prior to cessation of eligibility.

     

    The Final
Award thus determined shall be payable in a lump sum as soon as practicable
following certification of the relevant performance goals by the Committee for
the Plan Year in which such termination occurs, or sooner (except with respect
to Executive Officers), as determined by the Committee in its sole
discretion.  A participant’s Final Award shall be paid no later than
March 15 of the year following the calendar year in which the applicable
performance period ends.

     

    7.2   Termination
of Employment.   In the event a Participant's employment is
terminated for any reason, all of the Participant's rights to a Final Award for
the Plan Year then in progress shall be forfeited. However, the Committee, in
its sole discretion, may pay a partial award for the portion of that Plan Year
that the Participant was employed by the Company, computed as determined by the
Committee and paid in a lump sum no later than March 15 of the year following
the calendar year in which the applicable performance period ends.

     

     

     

    
      
        
          
          

        

        
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SECTION 8. RIGHTS OF
PARTICIPANTS

      

    

     

    8.1   Employment.   Nothing
in the Plan shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company.

     

    8.2   Nontransferability.   No
right or interest of any Participant in the Plan shall be assignable or
transferable, or subject to any lien, directly, by operation of law, or
otherwise, including, but not limited to, execution, levy, garnishment,
attachment, pledge, and bankruptcy.

     

    SECTION
9. EXECUTIVE OFFICERS

     

    9.1   Applicability.   The
provisions of this Section 9 shall apply only to Executive Officers and are
intended to apply additional terms, conditions and limitations required for
amounts payable hereunder to Executive Officers to qualify as performance-based
compensation exempt from Section 162(m) of the Code. In the event of any
inconsistencies between this Section 9 and the other Plan provisions, the
provisions of this Section 9 shall control with respect to Executive
Officers.

     

    9.2   Performance Goals and Award
Opportunities.   With respect to Executive Officers, objective
written performance goals and Award Opportunities for a Plan Year shall be
established by the Committee (and the Committee only, with no delegation) (i)
while the attainment of the performance goals for the Plan Year is substantially
uncertain and (ii) no more than 90 days after the commencement of the Plan Year
(or a number of days equal to 25% of the Plan Year, if less). The performance
goals applicable to the Executive Officers shall be limited to the performance
goals listed below. The Committee may select one or more of the performance
goals specified for each Plan Year which need not be the same for each Executive
Officer in a given year. Performance goals will consist of specified levels of
one or more of the following performance criteria as the Committee deems
appropriate: operating cash flows from continuing operations, operating working
capital, free cash flow, revenues, segment profit, corporate expenses, special
charges, gain (loss) on sale of business, income from continuing operations, net
income, EBITDA—earnings before interest, taxes, depreciation and amortization,
EBIT—earnings before interest and taxes, EPS—earnings per share, as adjusted
EPS, ROA—return on assets, ROS—return on sales, ROE—return on equity,
ROIC—return on invested capital, WACC—weighted average cost of capital, total
shareholder return, stock price appreciation, growth in managed assets, organic
growth, cost performance, net cost reductions, inventory turns, selling and
administrative expense as a percentage of sales, days sales outstanding, ratio
of income to fixed charges, segment profit margins, total profit margin,
EVA—economic value added, intrinsic value and effective income tax rate. In each
case, performance goals shall be determined in accordance with generally
accepted accounting principles (subject to modifications approved by the
Committee) and shall be consistently applied on a 

     

     

     

    
      
        
        

      

      
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business unit, divisional, subsidiary or consolidated
basis or any combination thereof. Performance goals may be described in terms of
objectives that are related to the individual Participant or objectives that are
Company-wide or related to a Subsidiary, division, department, region, function
or business unit and may be measured on an absolute or cumulative basis or on
the basis of percentage of improvement over time, and may be measured in terms
of Company performance (or performance of the applicable Subsidiary, division,
department, region, function or business unit) or measured relative to selected
peer companies or a market index. In addition, for awards not intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
the Committee may establish performance goals based on other criteria as it
deems appropriate. Notwithstanding the above, for any award or portion of an
award designated to be “performance-based compensation” under Section 162(m) of
the Code, the Committee does not retain any right to increase any amount
otherwise determined under the provisions of the Plan.

    

     

    9.3   Certification
of Achievement of Performance Goals.   At the end of the Plan
Year and prior to payment, the Committee shall certify in writing the extent to
which the performance goals and any other material terms were satisfied. Final
Awards shall be computed for each Executive Officer based on (i) the
Participant's Target Incentive Award percentage, multiplied by his Base Salary
and (ii) percent satisfaction of performance goals (as certified by the
Committee). Final Award amounts may vary above or below the Target Incentive
Award based on the level of achievement of the pre-established performance
goals.

     

    9.4   Non-adjustment
of Performance Goals.   Once established, performance goals shall
not be changed during the Plan Year except as permitted consistent with the
qualified performance-based compensation exception under Section 162(m) of the
Code.

     

    9.5   Discretionary
Adjustments.   The Committee retains the discretion to eliminate
or decrease the amount of the Final Award otherwise payable to a Participant.
For any Final Award or portion of a Final Award designated to be
“performance-based compensation” under Section 162(m) of the Code, the Committee
shall not retain any right to increase any amount otherwise determined under the
provisions of the Plan.

     

     

     

    
      
        
        

      

      
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    SECTION
10. AMENDMENT AND MODIFICATION

     

    10.1  Amendment
by Board .  Subject to applicable laws, rules, and regulations, the
Board, in its sole discretion, without notice, at any time and from time to
time, may modify or amend, in whole or in part, any or all of the provisions of
the Plan, or may suspend or terminate the Plan entirely, by written resolution
or other formal action reflected in writing.

     

    10.2  Delegation
of Amendment Authority.  The Board may, to the extent permitted by
applicable law, make a non-exclusive written delegation of the authority to
amend the Plan  to a committee of the Board or to one or more officers
of Textron.  The Board may, to the extent permitted by applicable law,
authorize a committee of the Board to make a further delegation of the authority
to amend the Plan.

     

    SECTION
11. MISCELLANEOUS

     

    11.1   Jurisdiction,
Venue and Governing Law.   Except as to matters of federal law,
the Plan, and all agreements hereunder, shall be governed by and construed in
accordance with the laws of Rhode Island. Any dispute, controversy or claim
arising out of or relating to the Plan or any award under the Plan shall be
brought only in a court of competent jurisdiction in the State of Rhode Island,
and no other court, agency or tribunal shall have jurisdiction to resolve any
such dispute, controversy or claim.

     

    11.2   Withholding
Taxes.   The Company and its Subsidiaries shall have the right to
deduct from all payments under the Plan any federal, state, local and/or foreign
income, employment or other applicable payroll taxes required by law to be
withheld with respect to such payments.

     

    11.3   Gender
and Number.   Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

     

    11.4   Severability.   In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

     

    11.5   Costs
of the Plan.   All costs of implementing and administering the
Plan shall be borne by the Company.

     

    11.6   Successors.   All
obligations of the Company and its Subsidiaries under the Plan shall be binding
upon and inure to the benefit of any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, 

     

     

     

    
      
        
        

      

      
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amalgamation, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the
Company.

    

     

    11.7  Compliance With Code Section 409A.  The
Plan is intended, and shall be interpreted, to provide compensation that is
exempt from Code Section 409A under the short-term deferral rule (unless a
Participant makes a valid deferral election under a separate
plan).  The Company does not warrant that the Plan will comply with
Code Section 409A with respect to any Participant or with respect to any
payment, however.  In no event shall the Company; any affiliate of the
Company; any director, officer, or employee of the Company or an affiliate; or
any member of the Committee be liable for any additional tax, interest, or
penalty incurred by a Participant as a result of the Plan’s failure to satisfy
the requirements of Code Section 409A, or as a result of the Plan’s failure to
satisfy any other requirements of applicable tax laws.

     

     

     

    
      
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