PROVIDENCE ––– In the world of big corporations, it is that rarest of things –– a resolution proposed by shareholders, but opposed by management, and which nevertheless prevails.

Of the two shareholder resolutions on the floor at yesterday’s annual meeting of Textron Inc. of Providence, neither passed –– but one of them came close. And that itself was a kind of victory, its chief proponent said.

At issue was what finance and tax people call a “gross-up.” It generally works like this.

A company gives a bonus or other such distribution to an executive. The executive receives not just the bonus, but also an additional amount –– a “gross-up” amount –– to cover the taxes due on the bonus.

The American Federation of State, County and Municipal Employees, a union better known as AFSCME, opposes such payments. At yesterday’s meeting, the group called on Textron to adopt a policy that would essentially ban tax gross-up payments, except in limited circumstances (such as payments to a manager to cover the cost of the manager’s relocation).

An executive’s pay should be tied to the executive’s performance, and should not depend on external factors such as tax rates, the group said in its proposal.

Tax gross-up payments represent an inefficient use of corporate resources –– especially when they are triggered by a corporate merger, acquisition or other such event, said Zachary Teutsch, investment education coordinator for AFSCME.

For example, if Lewis B. Campbell, Textron’s chairman, president and chief executive officer, were to lose his job without cause, or as a result of a change in control at the company, he would receive more than $31.8 million in tax gross-up payments alone, the group said.

In his address at yesterday’s meeting, Campbell said that the company has given “serious thought” to the AFSCME proposal. He pointed out that Textron has already eliminated most tax gross-up payments.

In a statement, the company said that a committee of its board of directors “has demonstrated its careful and sparing use of tax gross-ups, and current trends in the marketplace reinforce that this approach is reasonable and appropriate.”

However, the committee does not believe that shareholders would benefit by a permanent elimination of the company’s ability to incorporate a gross-up feature “if particular circumstances warrant its judicious use,” according to the statement.

In the end, the AFSCME proposal was defeated, with 56 percent of shareholder votes against the measure and 44 percent in favor, according to the results of a preliminary tally announced at the meeting.

Although the measure was rejected, the portion of votes cast in favor of it prompted Campbell to say, “Obviously, that is a high number.”

And Teutsch, in an interview after the meeting, described the result as a sort of victory, especially considering that it was the first time his group had proposed the resolution to shareholders.

“Textron has made progress in this direction and acknowledges that gross-ups are not a good way to compensate executives,” Teutsch said.

“We hope they’ll finish their movement in that direction,” he added.

Because of its size and prominence, Textron has often been the target of shareholder activists.

For example, shareholders at last year’s meeting rejected a proposal that called for the company to publish detailed disclosures of all its foreign sales of weapons-related products.

A similar resolution, proposed yesterday by a group of religious organizations, also failed –– about 93 percent of shareholder votes opposed the measure with about 7 percent in favor, according to preliminary vote results.

Speaking in favor of the resolution yesterday was Sister Gwen Farry, BVM, of the Sisters of Charity of the Blessed Virgin Mary, based in Dubuque, Iowa. She said she was also representing six other religious communities.

“The greater the availability of arms, the greater the violations of human rights and international humanitarian law,” the group said in a supporting statement, quoting the American Red Cross.

Campbell said Textron honors all its obligations to the United States. And in its formal response opposing the resolution, the company’s board of directors said, “Textron has in place extensive procedures to ensure that all foreign military sales are made in strict compliance with all applicable United States laws and regulations.”

Sister Farry said her group does not assert that Textron has broken any laws. However, she said, “Just because it’s legal doesn’t necessarily make it moral or ethical.”

Textron (NYSE: TXT), which has its headquarters in Providence, makes Bell helicopters, Cessna aircraft, E-Z-GO golf carts, Jacobsen lawn mowers and various other products. It had about 44,000 employees worldwide last year, including about 670 in Rhode Island.

Yesterday’s meeting, held at The Westin Providence hotel, was attended by more than 80 people, including shareholders, Textron officials and others.

Also yesterday:

•Campbell said that Textron had made “some real progress” last year. He also said that an investment of $100 in Textron in 2002 was worth $394 at the end of last year –– a performance that was sharply higher than that of a peer group category of stocks into which Textron falls, and the Standard & Poor’s index of 500 large corporations.

(According to figures from Bloomberg L.P., an investment of $100 in Textron a year ago was worth about $119 as of midday yesterday; a similar investment in the S&P 500 was worth about $93, and about $99 in the Dow Jones Industrial Average.)

•Shareholders elected Paul E. Gagne, Dain M. Hancock, Lloyd G. Trotter and Thomas B. Wheeler to three-year terms on Textron’s board of directors.

•Shareholders ratified the appointment of Ernst & Young LLP as Textron’s independent registered public accounting firm.

ndowning@projo.com