PROVIDENCE – Textron Inc. will no longer reimburse top executives for the cost of the taxes they pay under a new policy the company’s board of directors adopted in February.
The Textron board of directors’ compensation committee voted in February to eliminate the perk, known as a “gross-up” payment, as part of a broader tightening of executive compensation policies at the Providence-based conglomerate, according to regulatory filings last month.
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In 2008, only one of Textron’s five top executives was reimbursed for his tax payments: Scott C. Donnelly, who joined the company last June to become its executive vice president and chief operating officer. He was promoted to president in January.
Textron paid Donnelly $1.14 million to reimburse him for taxes he paid “related to his relocation” to Rhode Island, the filing said. Donnelly was previously president and CEO of G.E. Aviation.
The committee also eliminated a number of other benefits the company gave to its executives, including company cars, country club memberships, financial planning services and income tax preparation. Executives now will have to reimburse company for personal use of Textron’s company plane as well.
Textron is one of 49 companies in the S&P 500 stock index that have eliminated gross-ups so far this year, according to The Wall Street Journal. The company did so after the American Federation of State, County and Municipal Employees union filed a shareholder resolution to end gross-ups.
“There’s no pay-for-performance connection at all,” Richard Ferlauto, the union’s director of corporate governance and pension investment, told the newspaper. “All Americans are subject to taxes except executives who have found a way to avoid them.” A spokeswoman for Textron declined to comment.
Separately, Textron CEO Lewis Campbell on Wednesday said it is “highly unlikely” the company would need to sell off any more of its divisions to shore up its finances, Bloomberg News reported.
“Given the success we have had with the Textron Financial liquidation so far, and given the recent sale of two high-value assets and other cash production opportunities, I feel now that it’s highly, highly improbable and unlikely that we’ll ever have to divest any more assets,” Campbell said after the company’s annual shareholder meeting in Providence.
Campbell also declined to comment on a report earlier this month that the company could be acquired by a group of investors from the United Arab Emirates.
Textron Inc. (NYSE: TXT) is a $14.2 billion company employing 42,000 people in 28 countries. Its brands include Bell Helicopter, Cessna Aircraft Co., Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee, among others. Additional information is available at www.textron.com.
