Exhibit 10.2
Textron Inc.
PERFORMANCE SHARE
UNIT PLAN FOR TEXTRON EMPLOYEES
(April 26, 2005)
The 1999 Long-Term Incentive Plan for Textron Employees ("1999
LTIP"), when it was approved by shareholders in 1999, contained
provisions relating to Performance Share Units ("PSUs"). In 2004,
shareholders approved a proposal that removed PSUs from the 1999
LTIP since PSUs are cash-based rather than share-based
compensation. As a result of the proposal, the terms that had
governed PSUs did not change; rather, these terms were merely
separated from the terms that remained a part of the 1999 LTIP. The
Performance Share Unit Plan for Textron Employees formalizes this
separation of terms and provisions.
The Plan is stated as follows:
Article I - General
1.1 Purpose. This plan authorizes the grant of
Performance Share Units to officers and other selected employees of
Textron Inc. ("Textron") and its related companies to induce them
to continue as Textron employees and to reward them for improvement
in Textron's long-term performance.
1.2 Administration . (a) The Board of Directors of
Textron (the "Board") shall appoint from among its members a
committee (the "Committee") consisting of no fewer than three
directors, none of whom shall be eligible, and none of whom shall
have been eligible at any time within one year prior to or after
exercising discretion in administering the Plan, for any award
under the Plan or under any other employee benefit plan of Textron
or any related company, and all of whom shall certify that they are
"outside directors" as defined by the Code. Unless otherwise
specified by the Board, the Committee, for purpose hereof, shall
mean the Organization and Compensation Committee of the Board.
(b) The Committee shall have the
power subject to and within the limits of the Plan:
(1) to determine from time to time which eligible persons shall be
granted Performance Share Units under the Plan, to fix the number
of Performance Share Units covered by each grant and conditions of
each grant;
(2) to construe and interpret the Plan and to establish, amend and
revoke rules and regulations for its administration. The Committee,
in exercise of this power, shall generally determine all questions
of policy and expediency that may arise and may correct any defect,
omission or inconsistency in the Plan or in any agreement
evidencing an award hereunder in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully
effective;
(3) to prescribe the terms and provisions of any Performance Share
Units granted under the Plan;
(4) generally, to exercise such powers and to perform such acts in
connection with the Plan as are deemed necessary or expedient to
promote the best interests of Textron.
(c) The Board at any time may designate one or more officers or
committees of Textron to act in place of the Committee in making
any determination or taking any action under the Plan. The Benefits
Committee of Textron shall have the authority to adopt one or more
sub-plans of the Plan applicable to employees located in countries
other than the United States for the purpose of complying with
applicable laws and regulations of such countries. Notwithstanding
the above, all decisions concerning the Plan relate to persons who
are Directors or Corporate Officers of Textron shall be made by the
Committee.
(d) The Board at any time may revest administration of the Plan,
including all powers and duties of the Committee, in the Board,
provided that in any matter relating to administration of the Plan,
a majority of the Board and a majority of the directors acting on
such matter shall not be eligible, and shall not have been eligible
at any time within one year prior thereto, for a grant under the
Plan or under any other employee benefit plan of Textron or any
related company. In such all references herein to the Committee
shall be deemed to refer to the Board.
(e) All actions of the Board, the Committee or any designate
under Section 1.2 in con-nection with the plan shall be final,
conclusive and binding. No member of the Board, the Committee or
any designated committee, nor any designated officer, shall be
liable for any action taken or decision made in good faith relating
to the Plan or any grant or award hereunder.
1.3 Eligibility . The Committee may grant
Performance Share Units under the Plan to any full-time employee of
Textron or any related company (determined at the date of grant)
who is a corporate, division, segment or subsidiary officer,
administrative or professional employee, or other selected employee
capable of making a substantial contribution to the success of
Textron. Performance Share Units may be granted to full-time
employees who are also members of the Board. In making grants and
determining their form and amount, the Committee shall consider
functions and responsibilities of the employee, the employee's
potential contributions to profitability and sound growth of
Textron and such other factors, as the Committee deems
relevant.
1.4 Grants. Grants under the Plan may be comprised
of Performance Share Units as described in Article II.
1.5 Additional Definitions. For purposes of this
Plan, the following terms shall have the meaning specified in this
Section 1.5:
(a) "Award Period" shall mean the
period during which Performance Targets or Performance Measures are
to be accomplished.
(b) "Cause" shall mean a degree of
less than acceptable performance as is determined by the
Committee.
(c) "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time.
(d) "Common Stock" shall mean
shares of Textron common stock.
(e) "Current Value" of a share of
Common Stock on any date shall mean the average of the composite
closing prices for Textron common stock, as reported in The Wall
Street Journal , for ten trading days next following that
date.
(f) "Corporate Officer" shall mean
corporate officers of Textron who are not assistant corporate
officers.
(g) "Director" shall mean a member
of the Board of Directors of Textron.
(h) "Early Retirement" shall mean
the attainment of any of the following requirements: age 55 with 10
years of Vesting Service, age 60, or 20 years of Vesting Service.
For the purposes of this Plan, "Vesting Service" shall have the
meaning ascribed to it in Addendum A of the Textron Master
Retirement Plan (January 1, 1998 Restatement).
(i) "Performance-Based Exception"
shall mean the performance-based exception from the tax
deductibility limitations of Code section 162(m).
(j) "Performance Measures" shall
mean the performance standards described in Section 2.4 of this
Plan.
(k) "Performance Share Units" shall
mean fictional shares of Common Stock accumulated and accounted for
under this Plan for the sole purpose of determining the cash amount
of any distribution on account of awards earned pursuant to Article
III of this Plan.
(l) "Performance Targets" shall
mean the performance standards described in Article III of this
Plan
(m) "Plan" shall mean the 2004
Performance Share Units Plan for Textron Employees.
(n) "Total Disability" shall mean a
permanent mental or physical disability as determined by the
Committee.
Article II - Performance Share Units
2.1 Award of Performance Share Units. (a) The
Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Committee may
prescribe, grant to eligible employees one or more Performance
Share Unit. Such grants shall be evidenced in writing.
(b) The existence of the Performance Share Units is for record
keeping purposes only and does not require any segregation of
assets.
2.2 Conditions of Grant. When a grant of
Performance Share Units is made, the Committee shall determine: (1)
the number of Performance Share Units included in this grant; (2)
the Performance Targets or Performance Measures as described
further in Section 2.4; and (3) the Award Period during which the
Performance Targets or Performance Measurements are to be
accomplished .
2.3 Payment for Performance Share Units .
Payment in respect of earned Performance Share Units shall be due
not more than 90 days after the Award Period for such Performance
Share Units has ended. Such payment shall be in the amount
determined under Section 2.6, or in a greater amount pursuant to
the last two sentences of Section 2.4, and shall be made in one or
more equal annual installments subject to such terms and conditions
as the Committee shall specify. Payments for Performance Share
Units shall be made in cash.
2.4 Performance Measures and Performance Targets
. Upon making a grant of Performance Share Units, the
Committee shall establish the applicable Performance Measures or
Performance Targets to be attained for the Award Period as a
Condition of the related Performance Shares being earned in whole
or part. Performance Targets shall be established only in terms of
the standards set forth in Article V of this Plan. Attainment of a
primary Performance Target in an Award Period shall result in the
earning o
