Exhibit 10.2
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT, is entered into as of this 4th day of May, 2006 by and
between Textron Inc. (the "Company"), a Delaware corporation having
its principal office at 40 Westminster Street, Providence, Rhode
Island 02903 and John D. Butler (the "Executive").
W I T N E S S E T
H :
WHEREAS, the
Executive is presently employed by the Company;
WHEREAS, the Company
desires to continue to employ the Executive and the Executive is
willing to continue to be employed by the Company;
WHEREAS, the Company
and the Executive entered into an employment agreement as of July
23, 1998 (the "Employment Agreement"); and
WHEREAS, the Company
and the Executive desire to set forth the terms and conditions of
such continued employment in this Amended and Restated Employment
Agreement (the "Agreement").
NOW THEREFORE, in
consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other
good and valuable consideration, the adequacy and receipt of which
is acknowledged, the parties hereto agree as follows:
1. Term of Employment
The Company hereby agrees to continue to employ the Executive and
the Executive hereby accepts continued employment, in accordance
with the terms and conditions set forth herein, for a term (the
"Employment Term") commencing on the date hereof (the "Effective
Date") and terminating, unless otherwise terminated earlier in
accordance with Section 5 hereof, on the third anniversary of the
Effective Date (the "Original Employment Term"), provided that the
Employment Term shall be automatically extended, subject to earlier
termination as provided in Section 5 hereof, for successive
additional one (1) year periods (the "Additional Terms"), unless,
at least ninety (90) days prior to the end of the Original
Employment Term or the then Additional Term, the Company or the
Executive has notified the other in writing that the Employment
Term shall terminate at the end of the then current term.
2. Position and
Responsibilities
During the Employment Term, the Executive shall serve as the
Executive Vice President and Chief Human Resources Officer of the
Company or in such higher capacity as agreed by the Company and the
Executive. The Executive shall report exclusively to the Chief
Executive Officer and the Board of Directors of the Company (the
"Board"). The Executive shall, to the extent appointed or elected,
serve on the Board as a director and as a member of any committee
of the Board, in each case, without additional compensation. The
Executive shall, to the extent appointed or elected, serve as a
director or as a member of any committee of the board (or the
equivalent bodies in a non-corporate subsidiary or affiliate) of
any of the Company's subsidiaries or affiliates and as an officer
or employee (in a capacity commensurate with his position with the
Company) of any such subsidiaries or affiliates, in all cases,
without additional compensation or benefits and any compensation
paid to the Executive, or benefits provided to the Executive, in
such capacities shall be a credit with regard to the amounts due
hereunder from the Company. The Executive shall have duties,
authorities and responsibilities generally commensurate with the
duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies subject to the By-laws of
the Company and the organizational structure of the Company. The
Executive shall devote substantially all of his business time,
attention and energies to the performance of his duties hereunder,
provided the foregoing will not prevent the Executive from
participating in charitable, community or industry affairs, from
managing his and his family's personal passive investments, and
(with the consent of the Chief Executive Officer or the
Organization and Compensation Committee (or its successor) of the
Board (the "O&C Committee"), which consent will not be
unreasonably withheld, conditioned or delayed) serving on the board
of directors of other companies, provided that these activities do
not materially interfere with the performance of his duties
hereunder or create a potential business conflict or the appearance
thereof. The Company has consented to the Executive's services on
the boards of directors, if any, on which the Executive currently
serves, which boards the Executive has disclosed in writing to the
O&C Committee. The Executive may retain any compensation or
benefits received as a result of consented to service as a director
of entities not related to the Company.
3. Compensation and
Benefits
During the Employment Term, the Company shall pay and provide the
Executive the following:
3.1 Base Salary.
The Company shall pay the Executive a base salary (the "Base
Salary") in an amount which shall be established from time to time
by the O&C Committee (or as otherwise designated by the Board),
provided, however, that such base salary rate shall not be less
than his current rate of base salary. Base Salary shall be paid to
the Executive in accordance with the Company's normal payroll
practices for executives. Base Salary shall be reviewed at least
annually to ascertain whether, in the judgment of the reviewing
committee, such Base Salary should be increased. If so increased,
Base Salary shall not be thereafter decreased and shall thereafter,
as increased, be the Base Salary hereunder.
3.2 Annual
Bonus. The Company shall provide the Executive with the opportunity
to earn an annual cash bonus under the Company's current annual
incentive compensation plan for executives or a replacement plan
therefor at a level commensurate with his position, provided that
the minimum annual target award payable upon the achievement of
reasonably attainable objective performance goals shall be at least
fifty percent (50%) of Base Salary.
3.3 Long-Term
Incentives. The Company shall provide the Executive the opportunity
to earn long-term incentive awards under the current equity and
cash based plans and programs or replacements therefor at a level
commensurate with the current aggregate opportunity being provided
to the Executive.
3.4 Employee
Benefits. The Executive shall, to the extent eligible, be entitled
to participate at a level commensurate with his position in all
employee benefit welfare and retirement plans and programs, as well
as equity plans, generally provided by the Company to its senior
executives in accordance with the terms thereof as in effect from
time to time. Such plans and programs currently include, without
limitation, the Amended and Restated Supplemental Retirement Plan
for Textron Inc. Key Executives (the "SERP"), the 1994 Long-Term
Incentive Plan, the Key Executive Program (including the Deferred
Income Plan, the Supplemental Benefits Plan (the "SBP") and the
Survivor Benefit Plan), group term life insurance plan,
comprehensive health, major medical, vision and dental insurance
plans and short-term and long-term disability plans.
Notwithstanding anything in the SERP, Performance Share Units
granted after 2005 shall not be considered when determining the
benefit under the SERP.
3.5 Vacation.
The Executive shall be entitled to paid vacation in accordance with
the standard written policies of the Company with regard to
vacations of executives, but in no event less than four (4) weeks
per calendar year.
3.6 Perquisites.
The Company shall provide to the Executive, at the Company's cost,
all perquisites to which other senior executives of the Company are
generally entitled to receive and such other perquisites which are
suitable to the character of the Executive's position with the
Company and adequate for the performance of his duties hereunder
but not less than the level being provided on the date hereof
except as otherwise required because of changes in law. To the
extent legally permissible, the Company shall not treat such
amounts as income to the Executive.
3.7 Right to
Change Plans. The Company shall not be obligated by reason of this
Section 3 to institute, maintain, or refrain from changing,
amending, or discontinuing any benefit plan, program, or
perquisite, so long as such changes are similarly applicable to
executive employees generally and provided that the benefits or
additional credit specifically as set forth in Section 3.8 below
shall not be diminished.
4. Expenses
Upon submission of appropriate documentation, in accordance with
its policies in effect from time to time, the Company shall pay, or
reimburse, the Executive for all ordinary and necessary expenses,
in a reasonable amount, which the Executive incurs in performing
his duties under this Agreement including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all
dues, fees, and expenses associated with membership in various
professional, business, and civic associations and societies in
which the Executive participates in accordance with the Company's
policies in effect from time to time.
5. Termination of Employment
The Executive's employment with the Company (including but not
limited to any subsidiary or affiliate or the Company) and the
Employment Term shall terminate upon the occurrence of the first of
the following events:
(a)
Automatically on the date of the Executive's death.
(b) Upon thirty
(30) days' written notice by the Company to the Executive of a
termination due to Disability, provided such notice is delivered
during the period of Disability. The term "Disability" shall mean,
for purposes of this Agreement, the inability of the Executive, due
to injury, illness, disease or bodily or mental infirmity, to
engage in the performance of his material duties of employment with
the Company as contemplated by Section 2 herein for a period of
more than one hundred eighty (180) consecutive days or for a period
that is reasonably expected to exist for a period of more than one
hundred eighty (180) consecutive days, provided that interim
returns to work of less than ten (10) consecutive business days in
duration shall not be deemed to interfere with a determination of
consecutive absent days if the reason for absence before and after
the interim return are the same. The existence or non-existence of
a Disability shall be determined by a physician agreed upon in good
faith by the Executive (or his representatives) and the Company. It
is expressly understood that the Disability of the Executive for a
period of one hundred eighty (180) consecutive days or less shall
not constitute a failure by him to perform his duties hereunder and
shall not be deemed a breach or default and the Executive shall
receive full compensation for any such period of Disability or for
any other temporary illness or incapacity during the term of this
Agreement.
(c) Immediately
upon written notice by the Company to the Executive of a
termination due to his retirement at or after the Executive's
attainment of age sixty-five (65).
(d) Immediately
upon written notice by the Company to the Executive of a
termination for Cause, provided such notice is given within ninety
(90) days after the discovery by the Board or the Chief Executive
Officer of the Cause event and has been approved by the O&C
Committee at a meeting at which the Executive and his counsel had
the right to appear and address such meeting after receiving at
least five (5) business days written notice of the meeting and
reasonable detail of the facts and circumstances claimed to provide
a basis for such termination. The term "Cause" shall mean, for
purposes of this Agreement: (i) an act or acts of willful
misrepresentation, fraud or willful dishonesty (other than good
faith expense account disputes) by the Executive which in any case
is intended to result in his or another person or entity's
substantial personal enrichment at the expense of the Company; (ii)
any willful misconduct by the Executive with regard to the Company,
its business, assets or employees that has, or was intended to
have, a material adverse impact (economic or otherwise) on the
Company; (iii) any material, willful and knowing violation by
the Executive of (x) the Company's Business Conduct
Guidelines, or (y) any of his fiduciary duties to the Company which
in either case has, or was intended to have, a material adverse
impact (economic or otherwise) on the Company; (iv) the willful or
reckless behavior of the Executive with regard to a matter of a
material nature which has a material adverse impact (economic or
otherwise) on the Company; (v) the Executive's willful failure to
attempt to perform his duties under Section 2 hereof or his willful
failure to attempt to follow the legal written direction of the
Board, which in either case is not remedied within ten (10) days
after receipt by the Executive of a written notice from the Company
specifying the details thereof; (vi) the Executive's conviction of,
or pleading nolo contendere or guilty to, a felony
(other than (x) a traffic infraction or (y) vicarious liability
solely as a result of his position provided the Executive did not
have actual knowledge of the actions or inactions creating the
violation of the law or the Executive relied in good faith on the
advice of counsel with regard to the legality of such action or
inaction (or the advice of other specifically qualified
professionals as to the appropriate or proper action or inaction to
take with regard to matters which are not matters of legal
interpretation)); or (vii) any other material breach by the
Executive of this Agreement that is not cured by the Executive
within twenty (20) days after receipt by the Executive of a written
notice from the Company of such breach specifying the details
thereof. No action or inaction should be deemed willful if not
demonstrably willful and if taken or not taken by the Executive in
good faith as not being adverse to the best interests of the
Company. Reference in this paragraph (d) to the Company shall also
include direct and indirect subsidiaries of the Company, and
materiality and material adverse impact shall be measured based on
the action or inaction and the impact upon, and not the size of,
the Company taken as a whole, provided that after a Change in
Control, the size of the Company, taken as a whole, shall be a
relevant factor in determining materiality and material adverse
impact.
(e) Upon written
notice by the Company to the Executive of an involuntary
termination without Cause. A notice by the Company of non-renewal
of the Employment Term pursuant to Section 1 above shall be deemed
an involuntary termination of the Executive by the Company without
Cause as of the end of the Employment Term, but the Executive may
terminate at any time after the receipt of such notice and shall be
treated as if he was terminated without Cause as of such date.
(f) Upon twenty
(20) days' written notice by the Executive to the Company of a
termination for Good Reason (which notice sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
such termination) unless the Good Reason event is cured within such
twenty (20) day period. The term "Good Reason" shall mean, for
purposes of this Agreement, without the Executive's express written
consent, the occurrence of any one or more of the following: (i)
the assignment to the Executive of duties materially inconsistent
with the Executive's then authorities, duties, responsibilities,
and status (including offices, titles, and reporting requirements),
or any reduction in the Executive's then title, position (including
but not limited to as a member of the Management Committee or any
functional replacement therefor), reporting lines or a material
reduction (other than temporarily while Disabled or otherwise
incapacitated) in his then status, authorities, duties, or
responsibilities or, if then a director of the Company, failure to
be nominated or reelected as a director of the Company or removal
as such; (ii) relocation of the Executive from the principal office
of the Company (excluding reasonable travel on the Company's
business to an extent substantially consistent with the Executive's
business obligations) or relocation of the principal office of the
Company to a location which is at least fifty (50) miles from the
Company's current headquarters, provided, however, if the Executive
at the time of the relocation is not located at the principal
office, such relocation provision shall apply based on his then
location; (iii) a reduction by the Company in the Executive's Base
Salary; (iv) a reduction in the Executive's aggregate level of
participation in any of the Company's short and/or long-term
incentive compensation plans, or employee benefit or retirement
plans, policies, practices, or arrangements in which the Executive
participated as of the Effective Date, or, after a Change in
Control, participated immediately prior to the Change in Control;
(v) the failure of the Company to obtain and deliver to the
Executive a satisfactory written agreement from any successor to
the Company to assume and agree to perform this Agreement; or (vi)
any other material breach by the Company of this Agreement. The
Executive waives as a Good Reason event the change in the SERP made
by the last sentence of Section 3.4 hereof.
(g) Upon written
notice by the Executive to the Company of the Executive's voluntary
termination of employment without Good Reason (which the Company
may, in its sole discretion, make effective earlier than any notice
date). A notice by the Executive of non-renewal of the Employment
Term pursuant to Section 1 above shall be deemed a voluntary
termination by the Executive without Good Reason as of the end of
the Employment Term.
6.
Consequences of a Termination of Employment
6.1 Termination
Due to Death or Retirement. If the Employment Term ends on account
of the Executive's termination due to death pursuant to Section
5(a) above or retirement pursuant to Section 5(c) above, the
Executive (or the Executive's surviving spouse, or other
beneficiary as so designated by the Executive during his lifetime,
or to the Executive's estate, as appropriate) shall be entitled, in
lieu of any other payments or benefits, subject to Section 7(e), to
(i) payment promptly of any unpaid Base Salary, unpaid annual
incentive compensation (for the preceding fiscal year) and any
accrued vacation, (ii) reimbursement for any unreimbursed business
expenses incurred prior to the date of termination, and (iii) any
amounts, benefits or fringes due under any equity, benefit or
fringe plan, grant or program in accordance with the terms of said
plan, grant or program but without duplication (collectively, the
"Accrued Obligations"). In addition, in the event the termination
is as a result of Executive's death, the early retirement factor
under Section 2.03 of the SERP shall be one hundred percent (100%)
and the age requirement in Section 2.05 of the SERP shall not apply
and a death benefit shall be paid in accordance with such Section
in all instances.
6.2 Termination
Due To Disability. If the Employment Term ends as a result of
Disability pursuant to Section 5(b) above, the Executive shall be
entitled, in lieu of any other payments or benefits, subject to
Section 7(b) and Section 7(e) hereof, to any Accrued Obligations
and the following:
(a) Payment,
during January of the calendar year following the date of the
Executive's termination, of an amount equal to three hundred
percent (300%) of the Executive's target annual incentive
compensation award established for the fiscal year during which the
Executive's termination occurs (the "Termination Year Target
Bonus").
(b) Continued
monthly payment for two and one half (2 1/2) years of an amount
equal to the Executive's monthly Base Salary rate reduced by any
disability benefits received by the Executive under the Company's
long term disability plan for the corresponding period.
(c) Payments and
benefits as set forth in Section 6.3(c)-(j) hereof.
(d) The
Executive shall be deemed to have satisfied the definition of
"total disability" under the 1994 Long-Term Incentive Plan or the
equivalent definition under any successor plan thereto.
(e) The
Executive's early retirement factor under Section 2.03 of the
Company's SERP shall be one hundred percent (100%) (i.e. providing
a fifty percent (50%) of Final Average Compensation benefit) under
the Company's SERP, provided that the benefits payable under the
SERP that are in excess of the benefits that the Executive would
receive thereunder without such increased early retirement factor
shall not commence to be paid until two and one half (2 1/2) years
after the date of the termination of employment.
6.3 Involuntary
Termination by the Company Without Cause or Termination by the
Executive for Good Reason. If the Executive is involuntarily
terminated by the Company without Cause in accordance with Section
5(e) above or the Executive terminates his employment for Good
Reason in accordance with Section 5(f) above, the Executive shall
be entitled, in lieu of any other payments or benefits, subject to
Section 7(b) hereof, to any Accrued Obligations and the
following:
(a) Payment,
during January of the calendar year following the date of the
Executive's termination, of an amount equal to the Executive's
Termination Year Target Bonus multiplied by a fraction, the
numerator of which is the number of days during the fiscal year of
the Executive's termination that the Executive was employed by the
Company and the denominator is three hundred sixty-five (365),
provided that in no event shall such payment exceed fifty percent
(50%) of the Termination Year Target Bonus.
(b) Continued
payment off payroll for two and one-half (2 1/2) years (in
approximately equal monthly installments) of an amount equal to two
and one-half (2 1/2) times the sum of: (i) the Executive's Base
Salary, and (ii) the greater of: (x) the Termination Year Target
Bonus, or (y) the Executive's highest annual incentive compensation
award earned during the last three (3) fiscal years ending prior to
the fiscal year of termination (whether or not deferred) (the sum
of (i) and (ii) being hereinafter referred to as "Final Annual
Compensation").
(c) To the
extent eligible at such time or, if the Executive would be eligible
with credit for an additional two and one half (2 1/2) years of age
and service credit, coverage under all applicable retiree health
and other retiree welfare plans for the Executive and his
dependents (including, if he is only eligible because of the extra
age and service credit, an adjustment, to the extent necessary, to
put the Executive in the same after-tax position as if he had been
eligible for such coverage) and, if not eligible for continued
health coverage under the retiree health plan, payment of the
Executive's and Executive's eligible dependents' COBRA continuation
health coverage premiums for the Company's health insurance plan
that generally applies to senior executives for the two and
one-half (2 1/2) year period following the date of termination or,
if earlier, until the Executive and Executive's dependents cease to
be eligible for such coverage, provided that, if COBRA coverage
cannot be provided for the full period, any excess period shall be
covered under (d) below (and further provided that, if such
premiums are taxable to the Executive, an adjustment such that the
Executive has no after tax cost for the providing of such COBRA
coverage).
(d) To the
extent eligible on the date of termination, continued
participation, at no additional after tax cost to the Executive
than the Executive would have as an employee, in all welfare plans
(other than medical plans covered under (c) above), until two and
one-half (2 1/2) years after the date of termination; provided,
however, that in the event the Executive obtains other employment
that offers substantially similar or improved benefits, as to any
particular welfare plan, such continuation of coverage by the
Company for such benefits under such plan shall immediately cease.
To the extent such coverage cannot be provided under the Company's
welfare benefit plans without jeopardizing the tax status of such
plans, for underwriting reasons or because of the tax impact on the
Executive, the Company shall pay the Executive an amount such that
the Executive can purchase such benefits separately at no greater
after tax cost to the Executive than the Executive would have had
if the benefits were provided to the Executive as an employee.
(e) Two and
one-half (2 1/2) additional years of service (including age as if
such service was completed) and compensation credit (at the
Executive's "Then Compensation Level") for benefit purposes under
any defined benefit type retirement plan, including but not limited
to the SERP and the SBP if then in effect, and, if the Executive is
not eligible to receive benefits under any such plan on the date of
termination, two and one-half (2 1/2) additional years of age for
determining eligibility to receive such benefits, provided that
benefits under any such plan will not commence until the Executive
actually attains the required distribution age under the plan or
the Executive's spouse qualifies for death benefits under such plan
and further provided that, with regard to any plan qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), the additional amounts may be provided on a
nonqualified plan basis. In addition, and notwithstanding the
foregoing, with regard to the SERP the Executive's early retirement
factor under Section 2.03 shall be one hundred percent (100%) (i.e.
providing a fifty percent (50%) of Final Average Compensation
benefit) upon such termination of employment, provided that the
benefits payable under the SERP that are in excess of the benefits
that would be received thereunder without the increased early
retirement factor provided for in this sentence shall not commence
to be paid until two and one-half (2 1/2) years after such
termination of employment and all benefits under the SERP (which
have not yet then commenced to be paid) shall be paid at such time
notwithstanding the proviso in the prior sentence. "Then
Compensation Level" shall mean an annual rate of compensation equal
to the sum of (i) Final Annual Compensation and (ii) the
performance units and performance share units earned with respect
to the measurement periods ending at or about the end the fiscal
year immediately preceding the year of termination (to the extent
recognized in the definition of "Compensation" under the applicable
plan; in the case of the SERP as provided in Section 3.4 above such
that no amounts deemed earned in respect of performance share units
in 2008 (i.e. any grant after the 2005 grant) or later years shall
be included in Compensation for purposes of the SERP); provided,
however, that with respect to the year of termination, in lieu of
utilization of the amount in clause (ii) above, the Executive will
be deemed to have received in the year of termination the full
amount of performance units and performance share units earned with
regard to the measuring periods ending on or about the end of the
fiscal year immediately preceding the year of termination (whether
or not such amount is actually paid to the Executive prior to the
date of termination); provided, further, that, other than as set
forth in the immediately preceding proviso, the amounts described
in clause (ii) above shall be included in "Compensation" under the
plans referred to in this Section 6.3(e) in lieu of any amounts
actually paid to the Executive in respect of performance units and
performance share units in the year of termination and
thereafter.
(f) Payment
promptly after termination of two and one-half (2 1/2) times the
amount of the maximum Company annual contribution or match to any
defined contribution type plan in which the Executive
participates.
(g) Immediate
full vesting of any outstanding stock options that would vest
within two and one half (2 1/2) years after such termination of
employment as if the Executive had continued employment for such
two and one half (2 1/2) year period, to the extent permitted under
the plan or grant, or if such vesting is not permitted, a cash
payment equal to the difference between the fair market value of
the shares covered by the unvested options and the exercise price
of such unvested options (the "Spread") on the date of termination,
and, in both cases, to the extent such options are exercisable for
less than two and three quarters (2 3/4) years after termination
(or, if less, the remainder of the respective terms), a cash
payment equal to the Black-Scholes (based on the same methodology
used for the Company's then latest distributed proxy statement or,
if not so used, for internal valuation of the last stock option
grants made by the Company prior to the termination) future value
of such options for the lesser of two and three quarters (2 3/4)
years or the remainder of such terms (any such payments shall be
made promptly after such termination). The terms of the Executive's
outstanding options are deemed to be modified to the extent
required by this Section 6.3 (g).
(h) Payment when
it would otherwise be paid in accordance with the 1994 Long-Term
Incentive Plan of any amount due with regard to performance share
units outstanding on the date of termination to the extent
permitted under such plan, plus, outside of s
