January 27, 2020

Agenda – After Shareholder Feedback, Performance Period Lengthens

Textron made some changes this month to its compensation structure — two months ahead of when it annually files its proxy statement. In addition to reworking the mix of equity awards granted to executives, the compensation committee will no longer set performance goals annually but will instead transition to a three-year performance cycle.

Textron’s compensation change is likely a reaction to a declining stock price and shareholders’ “not seeing a corresponding reaction in the awards that are being passed out,” says Eric Hoffmann, VP and leader of information services at compensation consultancy Farient Advisors. For example, in 2018, despite a stark dip in the stock price, the CEO was paid at 120% of target. In 2019, Textron’s stock dropped by 2%, which Hoffmann points out was “in contrast to the stock in the S&P 500 that went up around 30% last year.”

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