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EXHIBIT 10.2
DEFERRED INCOME PLAN FOR TEXTRON KEY
EXECUTIVES
This Plan has been established for the
benefit of designated Textron Key
Executives to secure their goodwill,
loyalty, and achievement and to attract and
retain persons of outstanding
competence.
This Plan is restated and effective as of
January 1, 2002.
ARTICLE I -- DEFINITIONS
In this document, the following terms shall
have the meanings set forth in this
Article, unless a contrary or different
meaning is expressly provided:
1.01 "Beneficiary" means the person or
persons entitled under this Plan to
receive Plan benefits after a Participant's
death.
1.02 "Benefits Committee" means the
Benefits Committee of Textron.
1.03 "Board" means the Board of Directors
of Textron.
1.04 "Compensation" means base salary,
annual incentive compensation, cash
distributions for performance share units
under a long term incentive
compensation plan, and any other item
designated as Compensation under this Plan
by the Benefits Committee or its
designee.
1.05 "Deferral Period" means for a
Participant (1) any complete months remaining
in the calendar year in which she becomes a
Key Executive, and (2) each
succeeding calendar year in which she is a
Key Executive.
1.06 "Deferred Income" means any
Compensation the receipt of which is deferred
under this Plan.
"Automatic Deferred Income" means amounts
in excess of 100% of a Participant's
Annual Incentive Compensation Target, as
defined in Section 4.01(a) of the
Annual Incentive Compensation Plan for
Textron Employees, in the years following
a Participant's fifth full year of
participation in this Plan, but only if the
Participant has not achieved or maintained
a Minimum Stock Ownership Level.
"Discretionary Deferred Income" means
additional contributions made at Textron's
discretion to any account maintained for a
Participant under this Plan.
"Elective Deferred Income" means amounts
elected by the Participant to be
deferred under this Plan.
1.07 "Determination Date" means the last
day of each calendar month.
1.08 "Fund Election Agreement" means an
agreement in a form prescribed by the
Benefits Committee or its designee, by
which a Participant elects the funds that
will be used to determine earnings on
Deferred Income.
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1.09 "Interest" means interest computed
under Article III of this Plan.
1.10 "Key Executive" means an employee of a
Textron Company who has been and
continues to be designated as a Key
Executive under the Plan by Textron's Chief
Executive Officer and Chief Human Resources
Officer.
1.11 "Participant" means a Key Executive
who is participating in this Plan
pursuant to Article II and, unless the
context clearly indicates to the
contrary, a former Participant who is
entitled to benefits under this Plan.
1.12 "Participation Agreement" means an
agreement in a form prescribed by the
Benefits Committee or its designee, by
which a Participant elects to defer the
receipt of Compensation pursuant to this
Plan.
1.13 "Plan" means this Deferred Income Plan
for Textron Key Executives, as
amended and restated from time to time.
1.14 "Stock Ownership" means Textron shares
obtained through open market
purchases and stock option exercises,
shares in the Textron Savings Plan, stock
units in the Deferred Income Plan and in
the Supplemental Benefits Plan; and any
other share or share equivalent approved by
the Board as qualified stock
ownership.
"Minimum Stock Ownership Level" means a
dollar value of Textron shares that
equals or exceeds as of the end of the
third quarter each year:
<TABLE>
<CAPTION>
PARTICIPANT
MINIMUM STOCK OWNERSHIP LEVEL
-----------
-----------------------------
<S>
<C>
CEO/COO
5 times base salary
Other TLT Members
3 times base salary
Other Corporate Officers
2 times base salary
All Other Key Executives
1 times base salary
</TABLE>
1.15 "Textron" means Textron Inc., a
Delaware corporation, and any
successor of Textron Inc.
1.16 "Textron Company" means Textron or any
company controlled by or under
common control with Textron.
1.17 "Textron Employment" means employment
with a Textron Company. Leaves of
absence for such periods and purposes as
are approved by Textron and transfers
of employment within or between Textron
Companies shall not be deemed
interruptions of Textron Employment.
1.18 "Total Disability" has the same
meaning under this Plan as in the Textron
Master Retirement Plan with respect to any
Participant at the date his Textron
Employment ends.
ARTICLE II -- PARTICIPATION AND DEFERRED
INCOME
2.01 A Participant indicates his choices
under this Plan for a Deferral Period
by filing a Participation Agreement and, if
applicable, a Fund Election
agreement with the Benefits Committee or
its designee within the time specified
by that committee or designee.
2.02 For any complete calendar months
remaining in the calendar year in which a
Participant becomes a Key Executive, she
may defer up to 100% of her
Compensation otherwise payable during those
months. For any subsequent Deferral
Period, a Participant may defer up to 25%
of her base salary, and up to 100% of
her Compensation other than base salary,
otherwise payable
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during that period. (For purposes of this
25% limitation, "base salary" includes
any base salary the receipt of which by the
Participant is deferred under the
Textron Savings Plan or this Plan.) A
Participant may not defer any Compensation
which she has earned at the time she files
her Participation Agreement relating
thereto.
2.03 The Benefits Committee may, at a
Participant's request but in its sole
discretion, suspend in whole or in part a
Participant's commitment under any
Participation Agreement for such time as it
may deem necessary upon a finding
that the Participant has suffered a severe
financial hardship.
2.04 If at any time a Participant shall
cease to be a Key Executive, his
Participation Agreements and Deferral
Periods shall terminate at that time and
no further Deferred Income shall be
withheld from his Compensation.
2.05 No Deferred Income, Interest or
dividends shall be payable to a Participant
while he is employed by a Textron
Company.
2.06 Textron shall withhold for taxes or
other reasons as required by law.
ARTICLE III -- PARTICIPANT'S ACCOUNTS,
INTEREST, AND EARNINGS
3.01(a) For record-keeping purposes only,
Textron shall maintain a Moody's
Account, a Stock Unit Account and an
Interest Account, as is necessary, for each
Participant who has Deferred Income under
this Plan.
(b) Textron may in its sole discretion from
time to time make additional
contributions to any account maintained for
a Participant. These additional
contributions, if any, may be subject to a
vesting schedule set by the Benefits
Committee.
(c) The existence of these accounts shall
not require any segregation of
assets.
(d) Amount deferred as Elective Deferred
Income and Automatic Deferred Income
shall always be 100% vested.
3.02 The Moody's Account shall reflect a
Participant's investment in an
interest-bearing account.
(a) The Moody's Account shall be adjusted
as of each Determination Date and
shall consist of (1) the balance of the
Account as of the immediately preceding
Determination Date, (2) amounts of Deferred
Income credited to the Account in
the intervening month, and (3) Interest
earned since the immediately preceding
Determination Date based on one-twelfth of
the applicable interest rate(s)
described in Sections 3.03 or 3.04 on the
average daily balance of the Account
(or portion thereof) during the intervening
month; reduced by (4) any
distributions from the account (or portion
thereof) during the intervening
month.
(b) The interest rates applicable to the
Moody's Account shall be either the
Moody's Rate or the Moody's Plus Rate.
3.03 The Moody's Rate shall be the average
for the calendar month in which the
applicable Determination Date falls of the
Moody's Corporate Bond Yield Index as
published by Moody's Investors Service,
Inc. (or any successor thereto), or, if
such monthly yield is no longer published,
a substantially similar average
selected by the Benefits Committee. For
Participant deferrals made prior to
2002, the crediting rate shall not be less
than 8% per year.
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3.04(a) The Moody's Plus Rate applicable on
a Determination Date to any portion
of the Moody's Account which is
attributable to Deferred Income deferred before
1988 shall be the average described in
Section 3.03, plus three percentage
points. The crediting rate shall not be
less than 11% per year for deferrals
made prior to 1988.
(b) The Moody's Plus Rate applicable on a
Determination Date to any portion of
the Moody's Account which is attributable
to deferrals from 1988 through 2001
shall be the average described in Section
3.03, plus two percentage points. The
crediting rate shall not be less than 10%
per year for deferrals made from 1988
through 2001.
(c) For deferrals made on or after January
1, 2002, the Rate on the
Determination Date shall be the Moody's
Rate.
3.05 The Stock Unit Account shall consist
of stock units, which are fictional
shares of Textron Common Stock, accumulated
and accounted for under this Plan
for the sole purpose of determining the
cash amount of any distribution on
account of this portion of Deferred Income.
Notwithstanding any Plan provision
to the contrary, 100% of Automatic Deferred
Income shall be deferred to the
Stock Unit Account.
3.06 The Stock Unit Account shall be
adjusted as of each Determination Date and
shall consist of the stock units (1) in the
account as of the immediately
preceding Determination Date, (2) credited
under Section 3.07 and 3.08 during
the intervening month, and (3) credited
under Section 3.09 during the
intervening month.
3.07(a) To the extent that a Participant
puts Elective Deferred Income in the
Stock Unit Account, the amount initially
credited to her Account shall equal
110% of such Compensation deferred on or
after January 1, 2002.
(b) The amount in excess of 100% of the
Elective Deferred Income is the "Textron
Company Contribution." A Participant's
right to receive the Textron Company
Contribution, as adjusted under Section
3.09, shall become nonforfeitable
according to this schedule:
(1) 50% on
December 31 of the calendar year in which that Elective
Deferred Income otherwise would have been
paid to him, but only if his Textron
Employment continues on that December 31;
and
(2) the
remaining 50% on the next December 31, but only if his Textron
Employment continues on that next December
31.
(c) A Participant's right to receive her
Textron Company Contribution shall be
nonforfeitable in the event her Textron
employment ends because of disability or
death.
(d) A Participant's right to receive her
Textron Company Contribution shall
become nonforfeitable according to the
above schedule if a Participant ends
employment when she is at least 55 with ten
or more years of Textron service, or
is at least age 60, or has completed 20 or
more years of Textron service.
3.08 With respect to deferrals into this
Plan of amounts from the Annual
Incentive Compensation Plan for Textron
Employees and the Long Term Incentive
Plan for Textron Employees, Textron shall
credit stock units to a Participant's
Stock Unit Account, equal to the number of
shares the deferred amount could have
purchased at the "Current Value" of a share
of Textron Common
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Stock. The Current Value is defined in
Section 3.07 of the Long Term Incentive
Plan for Textron Employees. With respect to
deferrals into this Plan of any
other amounts, each month Textron shall
credit stock units to a Participant's
Stock Unit Account equal in number to the
number of shares of Textron Common
Stock that the deferred amount could have
purchased at a price per share equal
to the average of the compo
