DEF 14A 1 c64436_def14a.htm 3B2 EDGAR HTML -- c64436_preflight.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.       )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [   ]
Check the appropriate box:
[  ] Preliminary Proxy Statement
[  ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[  ] Definitive Additional Materials
[  ] Soliciting Material Pursuant to §240.14a-12

Honeywell International Inc.
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
   
[  ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
     
  1)

Title of each class of securities to which transaction applies:

   

 

  2)

Aggregate number of securities to which transaction applies:

   

 

  3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

   

 

  4)

Proposed maximum aggregate value of transaction:

   

 

  5)

Total fee paid:

   
   
[  ] Fee previously paid with preliminary materials.
   
[  ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   
  1) Amount Previously Paid:
   

 

  2) Form, Schedule or Registration Statement No.
   
     
  3)

Filing Party:

   

 

  4)

Date Filed:

   

 


 

 

 

 

March 10, 2011

To Our Shareowners:

You are cordially invited to attend the Annual Meeting of Shareowners of Honeywell, which will be held at 10:30 a.m. on Monday, April 25, 2011 at our headquarters, 101 Columbia Road, Morris Township, New Jersey.

The accompanying notice of meeting and proxy statement describe the matters to be voted on at the meeting. At this year’s meeting, you will be asked to elect directors, approve the appointment of the independent accountants, cast advisory votes on executive compensation and the frequency of the advisory vote on executive compensation, approve a stock incentive plan and an incentive compensation plan, and consider two shareowner proposals. The Board of Directors recommends that you vote FOR Proposals 1, 2, 3, 5 and 6, for an annual advisory vote on executive compensation (Proposal 4) and AGAINST Proposals 7 and 8.

YOUR VOTE IS IMPORTANT. We encourage you to read the proxy statement and vote your shares as soon as possible. Shareowners may vote via the Internet, by telephone or by completing and returning a proxy card. Specific voting instructions are set forth in the proxy statement and on both the Notice of Internet Availability of Proxy Materials and proxy card.

On behalf of the Board of Directors, I want to thank you for your continued support of Honeywell.

A map and directions to Honeywell’s headquarters appear at the end of the proxy statement.

 

 

 

 

 

Sincerely,

 

 

 

 

DAVID M. COTE
Chairman and Chief Executive Officer


NOTICE OF ANNUAL MEETING OF SHAREOWNERS

The Annual Meeting of Shareowners of Honeywell International Inc. will be held on Monday, April 25, 2011 at 10:30 a.m. local time, at Honeywell’s headquarters, 101 Columbia Road, Morris Township, New Jersey to consider, if properly raised, and vote on the following matters described in the accompanying proxy statement:

 

 

 

 

Election of the ten nominees listed in the accompanying proxy statement to the Board of Directors;

 

 

 

 

Approval of the appointment of PricewaterhouseCoopers LLP as independent accountants for 2011;

 

 

 

 

An advisory vote on executive compensation;

 

 

 

 

An advisory vote on the frequency of the advisory vote on executive compensation;

 

 

 

 

Approval of the 2011 Stock Incentive Plan of Honeywell International Inc. and its Affiliates;

 

 

 

 

Approval of the Honeywell International Inc. Incentive Compensation Plan for Executive Employees;

 

 

 

 

Two shareowner proposals described on pages 85-87 in the accompanying proxy statement; and

to transact any other business that may properly come before the meeting.

The Board of Directors has determined that shareowners of record at the close of business on February 25, 2011 are entitled to notice of and to vote at the meeting.

The Securities and Exchange Commission (“SEC”) has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to shareowners in lieu of a paper copy of the proxy statement and related materials and the Company’s Annual Report to Shareowners (the “Proxy Materials”). The Notice of Internet Availability provides instructions as to how shareowners can access the Proxy Materials online, contains a listing of matters to be considered at the meeting, and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online or by completing and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the Proxy Materials are set forth on the Notice of Internet Availability.

This Notice of Annual Meeting of Shareowners and related Proxy Materials are being distributed or made available to shareowners beginning on or about March 10, 2011.

 

 

 

 

 

By Order of the Board of Directors,

 

 

 

 

Thomas F. Larkins
Vice President and Corporate Secretary

Honeywell
101 Columbia Road
Morris Township, NJ 07962

March 10, 2011


 

 

 

Table of Contents

 

Page

 

VOTING PROCEDURES

 

 

 

1

 

ATTENDANCE AT THE ANNUAL MEETING

 

 

 

4

 

PROPOSAL NO. 1: ELECTION OF DIRECTORS

 

 

 

5

 

CORPORATE GOVERNANCE

 

 

 

11

 

BOARD OF DIRECTORS

 

 

 

11

 

BOARD MEETINGS

 

 

 

11

 

BOARD LEADERSHIP STRUCTURE

 

 

 

11

 

BOARD COMMITTEES

 

 

 

12

 

BOARD’S ROLE IN RISK OVERSIGHT

 

 

 

14

 

DIRECTOR INDEPENDENCE

 

 

 

15

 

IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES

 

 

 

16

 

PROCESS FOR COMMUNICATING WITH BOARD MEMBERS

 

 

 

17

 

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

 

 

 

17

 

DIRECTOR COMPENSATION

 

 

 

18

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

 

 

20

 

STOCK OWNERSHIP INFORMATION

 

 

 

21

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

 

 

23

 

SEC FILINGS AND REPORTS; KEY CORPORATE GOVERNANCE DOCUMENTS

 

 

 

23

 

EXECUTIVE COMPENSATION

 

 

 

24

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

24

 

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT

 

 

 

43

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

 

 

43

 

SUMMARY COMPENSATION TABLE

 

 

 

44

 

GRANTS OF PLAN-BASED AWARDS—FISCAL YEAR 2010

 

 

 

46

 

OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END

 

 

 

48

 

OPTION EXERCISES AND STOCK VESTED—FISCAL YEAR 2010

 

 

 

51

 

PENSION BENEFITS

 

 

 

51

 

NONQUALIFIED DEFERRED COMPENSATION—FISCAL YEAR 2010

 

 

 

56

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

 

 

60

 

EQUITY COMPENSATION PLANS

 

 

 

68

 

AUDIT COMMITTEE REPORT

 

 

 

71

 

PROPOSAL NO. 2: APPROVAL OF INDEPENDENT ACCOUNTANTS

 

 

 

72

 

PROPOSAL NO. 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

 

 

73

 

PROPOSAL NO. 4: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

 

 

74

 

PROPOSAL NO. 5: 2011 STOCK INCENTIVE PLAN OF HONEYWELL INTERNATIONAL INC. AND ITS AFFILIATES

 

 

 

75

 

PROPOSAL NO. 6: HONEYWELL INTERNATIONAL INC. INCENTIVE COMPENSATION PLAN FOR EXECUTIVE EMPLOYEES, AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2011

 

 

 

82

 

SHAREOWNER PROPOSALS

 

 

 

85

 

PROPOSAL NO. 7: SHAREHOLDER ACTION BY WRITTEN CONSENT

 

 

 

85

 

PROPOSAL NO. 8: SPECIAL SHAREOWNER MEETINGS

 

 

 

86

 

OTHER INFORMATION

 

 

 

88

 

EXHIBIT A: 2011 STOCK INCENTIVE PLAN OF HONEYWELL INTERNATIONAL INC. AND ITS AFFILIATES

 

 

 

A–1

 

EXHIBIT B: HONEYWELL INTERNATIONAL INC. INCENTIVE COMPENSATION PLAN FOR EXECUTIVE EMPLOYEES, AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2011

 

 

 

B–1

 

DIRECTIONS TO HONEYWELL’S HEADQUARTERS

 

 

 

Back Cover

 


PROXY STATEMENT

This proxy statement is being provided to shareowners in connection with the solicitation of proxies by the Board of Directors for use at the Annual Meeting of Shareowners of Honeywell International Inc. (“Honeywell” or the “Company”) to be held on Monday, April 25, 2011.

VOTING PROCEDURES

Your Vote is Very Important

Whether or not you plan to attend the meeting, please take the time to vote your shares as soon as possible.

Notice and Access

The SEC has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to shareowners in lieu of a paper copy of the proxy statement and related materials and the Company’s Annual Report to Shareowners (the “Proxy Materials”). The Notice of Internet Availability provides instructions as to how shareowners can access the Proxy Materials online, contains a listing of matters to be considered at the meeting, and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online or by completing and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the Proxy Materials are set forth on the Notice of Internet Availability.

Important Notice Regarding Availability of Proxy Materials:

The Proxy Materials are available at www.proxyvote.com. You will need to enter the 12-digit control number located on the Notice of Internet Availability or proxy card.

Methods of Voting

Shareowners of Record

If your shares are registered directly in your name with Honeywell’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareowner of record of those shares. Shareowners of record can vote via the Internet at www.proxyvote.com, by calling (800) 690-6903 or by signing and returning a proxy card. Votes submitted by Internet or telephone must be received by 11:59 p.m. Eastern Daylight Time on April 24, 2011.

Beneficial Owners

If your shares are held in a stock brokerage account, by a bank, broker, trustee, or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your bank, broker, trustee or nominee who is considered the shareowner of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee or nominee on how to vote via the Internet or by telephone if the bank, broker, trustee or nominee offers these options or by signing and returning a proxy card. Your bank, broker, trustee or nominee will send you instructions for voting your shares. New York Stock Exchange (“NYSE”) rules prohibit brokers from voting on Proposal Nos. 1 and 3 through 8 without receiving instructions from the beneficial owner of the shares. In the absence of instructions, shares subject to such broker non-votes will not be counted as voted or as present or represented on those proposals and so will have no effect on the vote. Please note that brokers may not vote your shares on the election of directors in the absence of your specific instructions as to how to vote so we encourage you to provide instructions to your broker regarding the voting of your shares. Votes directed by Internet or telephone through such a bank, broker, trustee or nominee must be received by 11:59 p.m. Eastern Daylight Time on April 24, 2011.

Participants in Honeywell Savings Plans

Participants in the Honeywell stock funds within Honeywell savings plans are considered the beneficial owners of the shares held by the savings plans. The trustee of each savings plan is the shareowner of record for


shares held by Honeywell stock funds within that plan. Participants in Honeywell stock funds within Honeywell savings plans can direct the trustee of the relevant plan to vote their shares via the Internet at www.proxyvote.com, by calling (800) 690-6903 or by signing and returning a proxy card. The trustee will vote shares as to which no directions are received in the same ratio as shares with respect to which directions have been received from other participants in the relevant plan, unless contrary to the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, we encourage you to provide instructions to the trustee regarding the voting of your shares. Directions provided by Internet or telephone must be received by 5:00 p.m. Eastern Daylight Time on April 20, 2011.

Revoking Your Proxy

Whether you vote or direct your vote by mail, telephone or via the Internet, if you are a shareowner of record or a participant in Honeywell stock funds within Honeywell savings plans, unless otherwise noted, you may later revoke your proxy by:

 

 

 

 

sending a written statement to that effect to the Corporate Secretary of Honeywell;

 

 

 

 

submitting a properly signed proxy with a later date;

 

 

 

 

voting by telephone or via the Internet at a later time (if initially able to vote in that manner) so long as such vote or voting direction is received by the applicable date and time set forth above for shareowners of record and participants in Honeywell savings plans; or

 

 

 

 

voting in person at the Annual Meeting (except for shares held in the savings plans).

If you hold your shares through a bank, broker, trustee or nominee and you have instructed the bank, broker, trustee or nominee to vote your shares, you must follow the directions received from your bank, broker, trustee or nominee to change those instructions.

Proposals To Be Voted On and The Board’s Voting Recommendations

The following proposals, if properly raised, will be considered at the Annual Meeting. Honeywell’s Board recommends that you vote your shares as indicated below. Proposals 7 and 8 have been submitted by shareowners.

 

 

 

 

 

Proposal

 

Board’s Voting
Recommendation

   

 

   
   

 

 

FOR

 

 

1.

   

Election of Directors

 

each nominee to the Board listed on
pages 6-10

 

 

2.

   

Approval of Independent Accountants

 

FOR

 

 

3.

   

Advisory Vote on Executive Compensation
(non-binding)

 

FOR

 

 

4.

   

Advisory Vote on the Frequency of the Advisory Vote on
Executive Compensation (non-binding)

 

1 YEAR

 

 

5.

   

2011 Stock Incentive Plan of Honeywell International Inc.
and its Affiliates

 

FOR

 

 

6.

   

Honeywell International Inc. Incentive Compensation Plan For Executive Employees, Amended and Restated Effective As Of January 1, 2011

 

FOR

 

 

7.

   

Shareowner Proposal: Shareholder Action by Written Consent

 

AGAINST

 

 

8.

   

Shareowner Proposal: Special Shareowner Meetings

 

AGAINST

Quorum; Vote Required; Abstentions and Broker Non-Votes

The required quorum for the transaction of business at the meeting is a majority of the total outstanding shares of Honeywell common stock (“Common Stock”) entitled to vote at the meeting, either present in person or represented by proxy.

2


With respect to Proposal No. 1, Honeywell’s By-laws provide that in any uncontested election of directors (an election in which the number of nominees does not exceed the number of directors to be elected), any nominee who receives a greater number of votes cast “FOR” his or her election than votes cast “AGAINST” his or her election will be elected to the Board of Directors. Shares not represented in person or by proxy at the Annual Meeting and broker non-votes will have no effect on the election of directors. The By-laws also provide that any incumbent nominee who does not receive a majority of votes cast in an uncontested election is expected to promptly tender his or her resignation to the Chairman of the Board following the certification of the shareowner vote, which resignation shall be promptly considered through a process managed by the Corporate Governance and Responsibility Committee, excluding any nominees who did not receive a majority of votes cast.

The affirmative vote of a majority of shares present or represented and entitled to vote on each of Proposal Nos. 2, 3, 5, 6, 7 and 8 is required for approval of these proposals. NYSE rules require that the total votes cast on each of Proposal Nos. 5 and 6 represent over 50% of all outstanding shares (which includes shares subject to broker non-votes). Abstentions will be counted toward the tabulation of votes present or represented on these proposals and will have the same effect as votes against these proposals. The frequency of the advisory vote on executive compensation (Proposal No. 4) receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by the shareowners. Because your vote is advisory on Proposal Nos. 3 and 4, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation and the frequency of the advisory vote on executive compensation.

Other Business

The Board knows of no other matters to be presented for shareowner action at the meeting. If other matters are properly brought before the meeting, the persons named as proxies in the accompanying proxy card intend to vote the shares represented by them in accordance with their best judgment.

Confidential Voting Policy

It is our policy that any proxy, ballot or other voting material that identifies the particular vote of a shareowner and contains the shareowner’s request for confidential treatment will be kept confidential, except in the event of a contested proxy solicitation or as may be required by law. We may be informed whether or not a particular shareowner has voted and will have access to any comment written on a proxy, ballot or other material and to the identity of the commenting shareowner. Under the policy, the inspectors of election at any shareowner meeting will be independent parties unaffiliated with Honeywell.

Results of the Vote

We will announce preliminary voting results at the Annual Meeting and publish them on our website www.honeywell.com. Voting results will also be disclosed on a Form 8-K filed with the SEC within four business days after the Annual Meeting, which will be available on our website.

Shares Outstanding

At the close of business on February 25, 2011, there were 785,076,314 shares of Common Stock outstanding. Each share outstanding as of the February 25, 2011 record date is entitled to one vote at the Annual Meeting on each matter properly brought before the meeting.

Householding

Beneficial owners of Common Stock who share a single address may receive only one copy of the Notice of Internet Availability or the Proxy Materials, as the case may be, unless their broker, bank, trustee or nominee has received contrary instructions from any beneficial owner at that address. This practice, known as “householding,” is designed to reduce printing and mailing costs. If any beneficial shareowner(s) sharing a single address wish to discontinue householding and receive a separate copy of the Notice of Internet Availability or the Proxy Materials, as the case may be, they may contact Broadridge, either by calling (800) 542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.

3


ATTENDANCE AT THE ANNUAL MEETING

If you are a shareowner of record who plans to attend the meeting, please mark the appropriate box on your proxy card or follow the instructions provided when you vote via the Internet or by telephone. If your shares are held by a bank, broker, trustee or nominee and you plan to attend, please send written notification to Honeywell Shareowner Services, P.O. Box 50000, Morris Township, New Jersey 07962, and enclose evidence of your ownership of shares of Common Stock as of February 25, 2011 (such as a letter from the bank, broker, trustee or nominee confirming your ownership or a bank or brokerage firm account statement). The names of all those planning to attend will be placed on an admission list held at the registration desk at the entrance to the meeting. All shareowners attending the meeting will be asked to provide proof of identification. If your shares are held by a bank, broker, trustee or nominee and you have not provided advance written notification that you will attend the meeting, you will be admitted to the meeting only upon presentation of evidence of ownership of shares of Common Stock as of February 25, 2011.

4


Proposal No. 1: ELECTION OF DIRECTORS

Honeywell’s directors are elected at each Annual Meeting of Shareowners and hold office for one-year terms or until their successors are duly elected and qualified. The Board has nominated ten candidates for election as directors for a term ending at the 2012 Annual Meeting of Shareowners or when their successors are duly elected and qualified. All nominees except Mr. Gregg are currently serving as directors. If prior to the Annual Meeting any nominee should become unavailable to serve, the shares represented by a properly signed and returned proxy card or voted by telephone or via the Internet will be voted for the election of such other person as may be designated by the Board, or the Board may determine to leave the vacancy temporarily unfilled or reduce the authorized number of directors in accordance with the By-laws.

Directors may serve until the Annual Meeting of Shareowners immediately following their 72nd birthday. In accordance with this policy, Mr. Wright will retire at the 2011 Annual Meeting.

The Board of Directors, acting through its Corporate Governance and Responsibility Committee (“CGRC”), is responsible for nominating a slate of director nominees who collectively have the complementary experience, qualifications, skills and attributes to guide the Company and function effectively as a Board. See “Identification and Evaluation of Director Candidates” on pages 16-17 of this proxy statement for further discussion. The CGRC believes that each of the nominees has key personal attributes that are important to an effective board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion, and the ability and commitment to devote significant time and energy to service on the Board and its Committees.

Listed below are other key experiences, qualifications and skills of our director nominees that are relevant and important in light of Honeywell’s businesses and structure.

 

 

 

 

Senior Leadership Experience: Experience serving as CEO or a senior executive provides a practical understanding of how complex organizations like Honeywell function and hands-on leadership experience in core management areas, such as strategic and operational planning, financial reporting, compliance, risk management and leadership development.

 

 

 

 

Industry/Global Experience: Experience in industries, end-markets and growth segments that Honeywell serves, such as aerospace, construction, transportation, infrastructure, and energy efficiency, as well as key geographic markets where it operates, such as the United States, Latin America and Europe, enables a better understanding of the issues facing the Company’s businesses.

 

 

 

 

Financial Expertise: We believe that an understanding of finance and financial reporting processes is important for our directors to monitor and assess the Company’s operating and strategic performance and to ensure accurate financial reporting and robust controls. Our director nominees have relevant background and experience in capital markets, corporate finance, accounting and financial reporting and several satisfy the “accounting or related financial management expertise” criteria set forth in the NYSE Corporate Governance Rules.

 

 

 

 

Government Experience: Honeywell is subject to a broad array of government regulations and demand for its products and services can be impacted by changes in law or regulation in areas such as safety, security and energy efficiency. Several of our directors have experience in regulated industries, providing them with insight and perspective in working constructively and proactively with governments and agencies, both foreign and domestic. Mr. Gregg has significant public service experience in both the executive (Governor of New Hampshire) and legislative (U.S. Congressman and Senator) branches.

 

 

 

 

Public Company Board Experience: Service on the boards and board committees of other public companies provides an understanding of corporate governance practices and trends and insights into board management, relations between the board, the CEO and senior management, agenda-setting and succession planning.

Each of the nominees, other than Mr. Cote, is also independent of the Company and management. See “Director Independence” on pages 15-16 of this proxy statement.

In addition to the above, the CGRC also considered the specific experience described in the biographical details that follow in determining to nominate the individuals set forth below for election as directors.

5


 

 

 

 

 

 

 

NOMINEES FOR ELECTION

 

 

GORDON M. BETHUNE, Retired Chairman and Chief Executive Officer of Continental Airlines, Inc.

Mr. Bethune is the retired Chairman of the Board and Chief Executive Officer of Continental Airlines, Inc., an international commercial airline company. Mr. Bethune joined Continental Airlines, Inc. in February 1994 as President and Chief Operating Officer. He was elected President and Chief Executive Officer in November 1994 and Chairman of the Board and Chief Executive Officer in 1996, in which positions he served until his retirement in December of 2004. Prior to joining Continental, Mr. Bethune held senior management positions with the Boeing Company, Piedmont Airlines, Western Airlines, Inc. and Braniff Airlines. Additionally, Mr. Bethune served as Vice President/General Manager of the Boeing Renton division where he was responsible for the manufacturing and design of the B757 and B737 aircraft programs. He is licensed as a commercial pilot, type rated on the B757 and B767 airplanes and the DC-3. He is also a licensed airframe and power plant mechanic. Mr. Bethune is also a director of Prudential Financial Inc. and Sprint Nextel Corporation. He previously served as a director of Willis Group Holdings Ltd. (2004—2008). Mr. Bethune was a director of Honeywell Inc. from April 1999 to December 1999.

 

 

 

Areas of Relevant Experience: Commercial airlines, including marketing, branding, cost control and restructuring, international operations and government regulation; aircraft manufacturing, design, maintenance and repair; financial services; insurance.

 

 

 

Director since 1999

 

Age 69

 

 

 

 

 

KEVIN BURKE, Chairman, President and Chief Executive Officer of Consolidated Edison, Inc. (Con Edison)

Mr. Burke joined Con Edison in 1973 and has held positions of increasing responsibility in system planning, engineering, law, nuclear power, construction, and corporate planning. He served as senior vice president, with responsibility for customer service and for Con Edison’s electric transmission and distribution systems. In 1999, Mr. Burke was elected president of Orange & Rockland Utilities, Inc., a subsidiary of Con Edison. He was elected president and chief operating officer of Consolidated Edison Company of New York in 2000 and elected chief executive officer in 2005. Mr. Burke was appointed president and chief executive officer of Con Edison in 2005, and elected chairman in 2006. In addition, Mr. Burke is Chairman of the Board of Trustees of Consolidated Edison of New York and a director of Orange & Rockland Utilities, Inc., both of which are affiliates of Con Edison.

 

 

 

Areas of Relevant Experience: Energy production and distribution; energy efficiency; alternative sources of energy; engineering and construction; development of new service offerings; government regulation.

 

 

 

Director since 2010

 

Age 60

 

 

 

6


 

 

 

 

 

 

JAIME CHICO PARDO, President and Chief Executive Officer, ENESA, S.A. de C.V.

Mr. Chico Pardo has been President and Chief Executive Officer of ENESA, S.A. de C.V., a private fund investing in the energy and health care sectors in Mexico since March 2010. He previously served as Co-Chairman of the Board of Telefonos de Mexico, S.A.B. de C.V. (TELMEX), a telecommunications company based in Mexico City, from April 2009 until April 2010 and previously served as Chairman from October 2006 to April 2009 and its Vice Chairman and Chief Executive Officer from 1995 until 2006. Mr. Chico Pardo was Co-Chairman of the Board of IDEAL (Impulsora del Desarrollo y el Empleo en América Latina, S.A. de C.V.), a publicly listed company in Mexico engaged in investment in and management of infrastructure assets in Latin America, from 2006 until 2010. He was also Chairman of Carso Global Telecom, S.A. de C.V. from 1996 until 2010. Prior to joining TELMEX, Mr. Chico Pardo served as President and Chief Executive Officer of Grupo Condumex, S.A. de C.V., a manufacturer of products for the construction, automobile and telecommunications industries, and Euzkadi/General Tire de Mexico, a manufacturer of automotive and truck tires. Mr. Chico Pardo has also spent a number of years in the international and investment banking business. Mr. Chico Pardo is a director of CICSA (Carso Infraestructura y Construcción) where he is not planning to stand for election in 2011, IDEAL and AT&T, Inc. He also serves as a Board member of three mutual funds in the American Funds family of mutual funds. He previously served as a director of Grupo Carso, S.A. de C.V. (1991-2010) and the following of its affiliates: América Móvil, S.A.B. de C.V. (2001—2009); America Telecom, S.A.B. de C.V. (2001—2006); Carso Global Telecom, S.A. de C.V. (1996-2010); Telmex Internacional, S.A.B. de C.V. (2008-2010); and TELMEX (1991-2010). Mr. Chico Pardo was a director of Honeywell Inc. from September 1998 to December 1999.

 

 

 

Areas of Relevant Experience: Telecommunications; automotive; manufacturing; engineering; construction; management of infrastructure assets; international business, operations and finance.     

 

 

 

Director since 1999

 

Age 61

 

 

 

 

 

DAVID M. COTE, Chairman and Chief Executive Officer of Honeywell International Inc.

Mr. Cote has been Chairman and Chief Executive Officer since July 2002. He joined Honeywell as President and Chief Executive Officer in February 2002. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., a provider of products and services for the aerospace, information systems and automotive markets, from August 2001 to February 2002. From February 2001 to July 2001, he served as President and Chief Executive Officer and from November 1999 to January 2001 he served as President and Chief Operating Officer of TRW. Mr. Cote was Senior Vice President of General Electric Company and President and Chief Executive Officer of GE Appliances from June 1996 to November 1999. He is also a director of JPMorgan Chase & Co.     

 

 

 

Areas of Relevant Experience: Senior leadership roles in global, multi-industry organizations; ability to drive a consistent One Honeywell approach across a large multi-national organization; detailed knowledge and unique perspective and insights regarding the strategic and operational opportunities and challenges, economic and industry trends, and competitive and financial positioning of the Company and its businesses; significant public policy experience, including service on the bipartisan National Commission on Fiscal Responsibility and Reform and as Co-Chair of the U.S.-India CEO Forum.     

 

 

 

Director since 2002

 

Age 58

 

 

 

7


 

 

 

 

 

 

D. SCOTT DAVIS, Chairman and Chief Executive Officer of United Parcel Service, Inc. (UPS)

Mr. Davis joined UPS, a leading global provider of package delivery, specialized transportation and logistics services in 1986, and has served as Chairman and Chief Executive Officer since January 1, 2008. Prior to this, he served as Vice Chairman since December 2006 and as Senior Vice President, Chief Financial Officer and Treasurer since January 2001. Previously, Mr. Davis held various leadership positions with UPS, primarily in the finance and accounting areas. Prior to joining UPS, he was Chief Executive Officer of II Morrow, a developer of general aviation and marine navigation instruments. Mr. Davis is a Certified Public Accountant. He previously served as the chairman of the board of the Federal Reserve Bank of Atlanta (2003—2009).

 

 

 

Areas of Relevant Experience: Transportation and logistics services; international operations, global economic indicators and issues; public policy; financial reporting, accounting and controls.

 

 

 

Director since 2005

 

Age 59

 

 

 

 

 

LINNET F. DEILY, Former Deputy U.S. Trade Representative and Ambassador

Ms. Deily was Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization from 2001 to 2005. From 2000 until 2001, she was Vice Chairman of The Charles Schwab Corp. Ms. Deily served as President of the Schwab Retail Group from 1998 until 2000 and President of Schwab Institutional—Services for Investment Managers from 1996 to 1998. Prior to joining Schwab, she was the Chairman of the Board, Chief Executive Officer and President of First Interstate Bank of Texas from 1990 until 1996. She is also a director of Chevron Corporation. Ms. Deily previously served as a director of Alcatel-Lucent (2006—2008) and Lucent Technologies (2005—2006).     

 

 

 

Areas of Relevant Experience: International trade; capital markets; banking; corporate finance; government and public policy; telecommunications and information services; refinery and petrochemical industries; financial reporting; accounting and controls.     

 

 

 

Director since 2006

 

Age 65

 

 

 

8


 

 

 

 

 

 

JUDD GREGG, former U.S. Senator from New Hampshire

Senator Gregg has spent over three decades in public office, most recently serving as the United States Senator from the State of New Hampshire from January 1993 until January 2011. During his tenure in the Senate, Senator Gregg served on a number of key Senate Committees including Budget; Appropriations; Government Affairs; Banking, Housing and Urban Affairs; Commerce, Science and Transportation; Foreign Relations; and Health, Education, Labor and Pensions. He has served as the Chairman and Ranking Member of the Health, Education, Labor and Pensions Committee and the Chairman and Ranking Member of the Senate Budget Committee as well as chairman of various sub-committees. Senator Gregg served as a chief negotiator of the Emergency Economic Stabilization Act of 2008 and was the lead sponsor of the Deficit Reduction Act of 2005, and, along with the late Senator Ted Kennedy, co-authored the No Child Left Behind Act of 2001. In March 2010, Senator Gregg was appointed to President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. From 1989 to 1992, Senator Gregg was the Governor of New Hampshire and prior to that was a U.S. Representative from 1981 to 1989. He is also a director of IntercontinentalExchange, Inc.     

 

 

 

Areas of Relevant Experience: Government and public policy; financial regulatory reform; banking; tax; capital markets; science, renewable technology and research; environmental protection and conservation; healthcare; foreign policy.     

 

 

 

Nominated for Election

 

Age: 64

 

 

 

 

 

CLIVE R. HOLLICK, former Partner, Kohlberg Kravis Roberts & Co.

Lord Hollick joined Kohlberg Kravis Roberts & Co., a private equity firm, in April 2005 as a Managing Director, focusing on investments in the media and financial services sectors, and was appointed Partner in April 2006 and served as Senior Adviser from February 2009 to April 2010. Prior to that time, and beginning in 1996, Lord Hollick was the Chief Executive of United Business Media plc, a London-based, international information, broadcasting, financial services and publishing group. From 1974 to 1996, he held various leadership positions with MAI plc (which merged into United Business Media in 1996) and its predecessor companies. Lord Hollick is also a director of Diageo plc, and ProSiebenSat.1 Media AG. He previously served as a director of The Nielsen Company B.V. (2008—2009).     

 

 

 

Areas of Relevant Experience: International media (information, broadcasting, publishing and online); financial services; marketing and branding; technology and innovation; operating environment and trends in European markets; mergers and acquisitions, including in a private equity context; public policy in the UK and Europe.     

 

 

 

Director since 2003

 

Age 65

 

 

 

9


 

 

 

 

 

 

GEORGE PAZ, Chairman, President and Chief Executive Officer of Express Scripts, Inc.

Mr. Paz was elected a director of Express Scripts, Inc. in January 2004 and has served as Chairman of the Board since May 2006. Mr. Paz was elected President of Express Scripts in October 2003 and assumed the role of Chief Executive Officer in April 2005. Mr. Paz joined Express Scripts as Senior Vice President and Chief Financial Officer in January 1998 and continued to serve as its Chief Financial Officer following his election as President until April 2004.

 

 

 

Areas of Relevant Experience: Tax; financial reporting; accounting and controls; insurance and risk management; government regulation; employee health benefits.     

 

 

 

Director since 2008

 

Age 55

 

 

 

 

 

BRADLEY T. SHEARES, Former Chief Executive Officer of Reliant Pharmaceuticals, Inc., Former President, U.S. Human Health, Merck & Co., Inc.

Dr. Sheares served as Chief Executive Officer of Reliant Pharmaceuticals, Inc., a pharmaceutical company with integrated sales, marketing and development expertise that marketed a portfolio of branded cardiovascular pharmaceutical products, from January 2007 through its acquisition by GlaxoSmithKline plc in December 2007. Prior to joining Reliant, Dr. Sheares served as President of U.S. Human Health, Merck & Co., Inc. from March of 2001 until July 2006. Prior to that time, he served as Vice President, Hospital Marketing and Sales for Merck’s U.S. Human Health business. Dr. Sheares joined Merck in 1987 as a research fellow in the Merck Research Laboratories and held a wide range of positions within Merck, in business development, sales, and marketing, before becoming Vice President in 1996. He is also a director of The Progressive Corporation, Covance Inc., and Henry Schein, Inc. Dr. Sheares previously served as a director of IMS Health Incorporated (2009-2010).     

 

 

 

Areas of Relevant Experience: Sales and marketing; advertising and promotion; brand management; research and development; healthcare; complex regulatory and legal issues; risk management; mergers and acquisitions.     

 

 

 

Director since 2004

 

Age 54

 

 

 

10


CORPORATE GOVERNANCE

BOARD OF DIRECTORS

The primary functions of Honeywell’s Board of Directors are:

 

 

 

 

to oversee management performance on behalf of shareowners;

 

 

 

 

to ensure that the long-term interests of the shareowners are being served;

 

 

 

 

to monitor adherence to Honeywell standards and policies;

 

 

 

 

to promote the exercise of responsible corporate citizenship; and

 

 

 

 

to perform the duties and responsibilities assigned to the Board by the laws of Delaware, Honeywell’s state of incorporation.

BOARD MEETINGS

The Board of Directors held nine meetings during 2010. The average attendance at meetings of the Board and Board Committees during 2010 was 96%. During this period, all of the directors attended or participated in more than 89% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all Committees of the Board of Directors on which each such director served.

BOARD LEADERSHIP STRUCTURE

The Board of Directors believes that Mr. Cote’s service as both Chairman of the Board and CEO is in the best interest of the Company and its shareowners. Mr. Cote possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its businesses. Considering the size and complexity of the Company, Mr. Cote is best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters for the Company and its shareowners.

His combined role enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the Company’s shareowners, employees, customers and suppliers, particularly during times of volatile economic and industry conditions. This has been beneficial in driving a unified “One Honeywell” approach to core operating processes across a global, multi-industry organization of approximately 130,000 employees.

Each of the directors other than Mr. Cote is independent and the Board believes that the independent directors provide effective oversight of management. In addition to feedback provided during the course of Board meetings, the independent directors have regular executive sessions on at least a quarterly basis. Directors serve as the chairperson, or presiding director, for these executive sessions on a rotating basis (meeting-by-meeting) in accordance with years of service on the Board. The Company believes that this approach effectively encourages full engagement of all directors in executive sessions, while avoiding unnecessary hierarchy. Following an executive session of independent directors, the presiding director meets with the Chairman to provide feedback on matters discussed in the executive session, and/or input regarding agenda items or information requests for future Board and Committee meetings. The Board believes that this approach appropriately and effectively complements the combined CEO/Chairman structure.

Oversight is also provided through the extensive work of the Board’s Committees—Audit, Corporate Governance and Responsibility, Management Development and Compensation, and Retirement Plans—in key areas such as financial reporting, internal controls, compliance, corporate governance, succession planning and compensation programs. The Committees consist entirely of independent, non-employee directors.

In addition, at the end of each year, the Board and each of its Committees review a schedule of agenda subjects to be considered in the coming year. Each Board and Committee member is free to raise subjects that are not on the agenda at any meeting and to suggest items for inclusion on future agendas.

Although the Company believes that the combination of the Chairman and CEO roles is appropriate in the current circumstances, Honeywell’s Corporate Governance Guidelines do not establish this approach as a policy, but as a matter that is best considered as part of succession planning for the Chief Executive Officer position.

11


BOARD COMMITTEES

The Board currently has the following Committees: Audit; Corporate Governance and Responsibility; Management Development and Compensation; and Retirement Plans. Each Committee consists entirely of independent, non-employee directors. See “Director Independence” on pages 15-16. The charter of each Committee of the Board of Directors is available free of charge on our website, www.honeywell.com, under the heading “Investor Relations” (see “Corporate Governance”—“Board Committees”) or by writing to Honeywell, 101 Columbia Road, Morris Township, NJ 07962, c/o Vice President and Corporate Secretary.

The table below lists the current membership of each Committee and the number of Committee meetings held in 2010.

 

 

 

 

 

 

 

 

 

Name

 

Audit

 

Corporate Governance
and Responsibility

 

Management Development
and Compensation

 

Retirement
Plans

Mr. Bethune

 

 

 

 

 

X

   

 

 

X

 

 

 

Mr. Burke

 

 

 

X

 

 

 

 

 

 

 

 

X

 

Mr. Chico Pardo

 

 

 

 

 

X

 

 

 

 

 

 

X

*

 

Mr. Davis

 

 

 

X

 

 

 

 

 

 

X

*

 

 

 

Ms. Deily

 

 

 

X

*

 

 

 

 

X

 

 

 

 

 

Mr. Hollick

 

 

 

 

 

 

 

X

   

 

 

X

 

Mr. Paz

 

 

 

X

   

 

 

X

 

 

 

 

 

Dr. Sheares

 

 

 

 

 

 

 

X

   

 

 

X

 

Mr. Wright

 

 

 

X

   

 

 

X

*

 

 

 

 

 

2010 Meetings

 

 

 

11

   

 

 

4

   

 

 

6

   

 

 

3

 


 

 

*

 

 

 

Committee Chairperson

Mr. Wright will retire at the 2011 Annual Meeting. Effective April 25, 2011, Ms. Deily will become Chair of the Corporate Governance and Responsibility Committee and Mr. Paz will become the Chair of the Audit Committee.

The primary functions of each of the Board Committees are described below.

Audit Committee

The primary functions of this Committee are to: appoint (subject to shareowner approval), and be directly responsible for, the compensation, retention and oversight of, the firm that will serve as independent accountants to audit our financial statements and to perform services related to the audit (including the resolution of disagreements between management and the independent accountants regarding financial reporting); review the scope and results of the audit with the independent accountants; review with management and the independent accountants, prior to the filing thereof, the annual and interim financial results (including Management’s Discussion and Analysis) to be included in Forms 10-K and 10-Q, respectively; consider the adequacy and effectiveness of our internal accounting controls and auditing procedures; review, approve and thereby establish procedures for the receipt, retention and treatment of complaints received by Honeywell regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; review material legal and compliance matters and the effectiveness of the Company’s integrity and compliance program; and consider the accountants’ independence and establish policies and procedures for pre-approval of all audit and non-audit services provided to Honeywell by the independent accountants who audit its financial statements. At each meeting, Committee members meet privately with representatives of PricewaterhouseCoopers LLP, our independent accountants, and with Honeywell’s Chief Financial Officer and Vice President—Corporate Audit. The Board has determined that Ms. Deily, Mr. Davis and Mr. Paz satisfy the “accounting or related financial management expertise” requirements set forth in the NYSE Corporate Governance Rules, and has designated Ms. Deily as the “audit committee financial expert”, as such term is defined by the SEC. See page 71 for the Audit Committee Report.

Corporate Governance and Responsibility Committee

The primary functions of this Committee are to: identify and evaluate potential Director candidates and recommend to the Board the nominees to be proposed by the Company for election to the Board; review and make a recommendation to the Board regarding whether to accept a resignation tendered by a Board nominee who does not receive a majority of votes cast for his or her election in an uncontested election of directors; review

12


annually and recommend changes to the Corporate Governance Guidelines; lead the Board in its annual review of the performance of the Board and its Committees; review policies and make recommendations to the Board concerning the size and composition of the Board, the qualifications and criteria for election to the Board, retirement from the Board, compensation and benefits of non-employee directors, the conduct of business between Honeywell and any person or entity affiliated with a director, and the structure and composition of Board Committees; and review Honeywell’s policies and programs relating to health, safety and environmental matters, equal employment opportunity and such other matters, including the Company’s Code of Business Conduct, as may be brought to the attention of the Committee regarding Honeywell’s role as a responsible corporate citizen. See “Identification and Evaluation of Director Candidates” on pages 16-17 and “Director Compensation” on pages 18-20.

Management Development and Compensation Committee

The Company’s executive compensation program is administered by the Management Development and Compensation Committee. Each member of the Committee qualifies as an outside director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The primary functions of this Committee are to: evaluate and approve executive compensation plans, policies and programs, including review and approval of executive compensation-related corporate goals and objectives; review and approve the individual goals and objectives of the Company’s executive officers; evaluate the CEO’s performance relative to established goals and objectives and, together with the other independent directors, determine and approve the CEO’s compensation level; review and determine the annual salary and other remuneration (including under incentive compensation and equity-based plans) of all other officers; review and discuss with management, prior to the filing thereof, the Compensation Discussion and Analysis and other executive compensation disclosure included in this proxy statement; produce the annual Committee Report included in this proxy statement; review the management development program, including executive succession plans; and review or take such other action as may be required in connection with the bonus, stock and other benefit plans of Honeywell and its subsidiaries. See page 43 for the Management Development and Compensation Committee Report.

Role of Consultant

The Committee has sole authority to retain and terminate a compensation consultant to assist in the evaluation of CEO or senior executive compensation. Under the Committee’s established policy, its consultant cannot provide any other services to the Company. Since October 2009, the Committee has retained Pearl Meyer & Partners as its independent compensation consultant.

The consultant compiles information and provides advice regarding the components and mix (short-term/long-term; fixed/variable; cash/equity) of the executive compensation programs of the Company and its “Compensation Peer Group” (see page 28 of this proxy statement for further detail regarding the Compensation Peer Group) and analyzes the relative performance of the Company and the Compensation Peer Group with respect to the financial metrics used in the programs. The consultant also provides information regarding emerging trends and best practices in executive compensation. In addition to information compiled by the consultant, the Committee also reviews general survey data compiled and published by third parties; neither the Committee nor the Company has any input into the scope of or companies included in these third party surveys.

While the Committee reviews information provided by its consultant regarding compensation paid by the Compensation Peer Group, as well as third party survey data, as a general indicator of relevant market conditions, the Committee does not target a specific competitive position relative to the market in making its compensation determination. See “Peer Group Compensation Data” on pages 28-29 of this proxy statement for further discussion.

The consultant retained by the Committee reports to the Committee Chair and has direct access to Committee members. The consultant attends Committee meetings either in person or by telephone, and meets with the Committee in executive session without management present.

Input From Senior Management

The Committee considers input from senior management in making determinations regarding the overall executive compensation program and the individual compensation of the executive officers. As part of the Company’s annual planning process, the CEO, CFO and Senior Vice President—Human Resources and

13


Communications develop targets for the Company’s incentive compensation programs and present them to the Committee. These targets are reviewed by the Committee to ensure alignment with the Company’s strategic and annual operating plans, taking into account the targeted year-over-year and multi-year improvements as well as identified opportunities and risks. Based on performance appraisals, including an assessment of the achievement of pre-established financial and non-financial management objectives, together with a review of supplemental performance measures and prior compensation levels relative to performance, the CEO recommends base salary adjustments and cash and equity incentive award levels for the Company’s other executive officers. See “Compensation Discussion and Analysis” beginning on page 24 of this proxy statement for additional discussion. Each year, the CEO presents to the Committee and the full Board his evaluation of each executive officer’s contribution and performance over the past year, strengths and development needs and actions, and reviews succession plans for each of the executive officers.

Retirement Plans Committee

The primary functions of this Committee are to: appoint the trustees for funds of the employee pension benefit plans of Honeywell and certain subsidiaries; review funding strategies; review investment policy for fund assets; and oversee members of the committees that direct the investment of pension fund assets.

BOARD’S ROLE IN RISK OVERSIGHT

While senior management has primary responsibility for managing risk, the Board as a whole has responsibility for risk oversight, with review of certain areas being conducted by the relevant Board Committees that in turn report on their deliberations to the Board. The Board works with senior management to develop a broad portfolio view that considers and balances risk-taking for sustainable growth and competitive advantage in a manner consistent with the Company’s long-term strategic plan with actions necessary to preserve assets and protect against losses. The oversight responsibility of the Board and its Committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies and enable informed decision-making and intelligent risk-taking. These areas of focus include strategic, competitive, economic, operational, financial (accounting, credit, liquidity, and tax), legal, regulatory compliance, health, safety and environment, political, and reputational risks.

The Board and the Audit Committee review the Company’s enterprise risk management program at least annually. Throughout the year, management regularly communicates with the Board and its Committees regarding the identification, assessment and mitigation of specific risks. The Board and its Committees oversee risks associated with their respective principal areas of focus, as summarized below. Each Committee meets in executive session with key management personnel and representatives of outside advisors (for example, the Vice President—Corporate Audit meets in executive session with the Audit Committee.)

 

 

 

Board/Committee

 

Primary Areas of Risk Oversight

Full Board

 

Strategic, financial and execution risks and exposures associated with the annual operating plan, and five-year strategic plan (including matters affecting capital allocation); major litigation and regulatory exposures and other current matters that may present material risk to the Company’s operations, plans, prospects or reputation; acquisitions and divestitures (including through post-closing reviews); senior management succession planning.

 

Audit Committee

 

Risks and exposures associated with financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, investment guidelines, credit and liquidity and legal and compliance matters.

 

 

14


 

 

 

Board/Committee

 

Primary Areas of Risk Oversight

Corporate Governance and Responsibility Committee

 

Risks and exposures relating to Honeywell’s programs and policies relating to corporate governance; director succession planning; health, safety, and environment.

 

Management Development and Compensation Committee

 

Risks and exposures associated with leadership assessment, management succession planning, and executive compensation programs and arrangements, including incentive plans.

 

Retirement Plans Committee

 

Risks and exposures associated with Honeywell’s employee pension and savings plans, including their relative investment performance, asset allocation strategies and funded status.

DIRECTOR INDEPENDENCE

The Company’s Corporate Governance Guidelines state that the “Board intends that, at all times, a substantial majority of its directors will be considered independent under relevant NYSE and SEC guidelines.” The Corporate Governance and Responsibility Committee conducts an annual review of the independence of the members of the Board and its Committees and reports its findings to the full Board. Based on the report and recommendation of the Corporate Governance and Responsibility Committee, the Board has determined that each of the non-employee nominees standing for election to the Board at the Annual Meeting—Messrs. Bethune, Burke, Chico Pardo, Davis, Hollick, Paz, and Sheares and Ms. Deily—satisfies the independence criteria (including the enhanced criteria with respect to members of the Audit Committee) set forth in the applicable NYSE listing standards and SEC rules. Each of Mr. Gregg, who is standing for election to the Board for the first time, and Mr. Wright, who is retiring from the Board, is also independent under these standards. Each Board Committee member qualifies as a non-employee director within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationships (including vendor, supplier, consulting, legal, banking, accounting, charitable and family relationships) with Honeywell, other than as a director and shareowner. NYSE listing standards also impose certain per se bars to independence, which are based upon a director’s relationships with Honeywell currently and during the three years preceding the Board’s determination of independence.

The Board considered all relevant facts and circumstances in making its determinations, including the following:

 

 

 

 

No non-employee director or nominee receives any direct compensation from Honeywell other than under the director compensation program described on pages 18-20 of this proxy statement.

 

 

 

 

No immediate family member (within the meaning of the NYSE listing standards) of any non-employee director or nominee is an employee of Honeywell or otherwise receives direct compensation from Honeywell.

 

 

 

 

No non-employee director or nominee is an employee of Honeywell’s independent accountants and no non-employee director or nominee (or any of their respective immediate family members) is a current partner of Honeywell’s independent accountants, or was within the last three years, a partner or employee of Honeywell’s independent accountants and personally worked on Honeywell’s audit.

 

 

 

 

No non-employee director or nominee is a member, partner, or principal of any law firm, accounting firm or investment banking firm that receives any consulting, advisory or other fees from Honeywell.

 

 

 

 

No Honeywell executive officer is on the compensation committee of the board of directors of a company that employs any of our non-employee directors or nominees (or any of their respective immediate family members) as an executive officer.

15


 

 

 

 

No non-employee director or nominee (or any of their respective immediate family members) is indebted to Honeywell, nor is Honeywell indebted to any non-employee director or nominee (or any of their respective immediate family members).

 

 

 

 

No non-employee director or nominee serves as an executive officer of a charitable or other tax-exempt organization that received contributions from Honeywell.

 

 

 

 

Honeywell has commercial relationships (purchase and/or sale of products and services) with companies at which our directors serve, or during the last completed fiscal year served, as officers (TELMEX, UPS, and Con Edison). In each case, (i) the relevant products and services were provided on terms and conditions determined on an arms-length basis and consistent with those provided by or to similarly situated customers and suppliers; (ii) the relevant director did not initiate or negotiate the relevant transaction, each of which was in the ordinary course of business of both companies, and (iii) the combined amount of such purchases and sales was less than 0.5% of the consolidated gross revenues of each of Honeywell and the other company in each of the last three completed fiscal years. This level is significantly below the relevant per se bar to independence set forth in the NYSE listing standards, which uses a 2% of total revenue threshold and applies it to each of purchases and sales rather than the combination of the two.

 

 

 

 

While a non-employee director’s or nominee’s service as an outside director of another company with which Honeywell does business is not within the NYSE per se independence bars and would generally not be expected to raise independence issues, the Board also considered those relationships and confirmed the absence of any material commercial relationships with any such company. Specifically, those commercial relationships were in the ordinary course of business for Honeywell and the other companies involved and were on terms and conditions available to similarly situated customers and suppliers.

 

 

 

 

Although not within the NYSE per se independence bars, the Board also considered Mr. Cote’s service on a KKR Advisory Board regarding the integration and operation of acquired companies (Mr. Hollick was a Senior Adviser to KKR until April 2010) and determined that the relationship was not material.

The above information was derived from the Company’s books and records and responses to questionnaires completed by the director nominees in connection with the preparation of this proxy statement.

IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES

The Board has determined that its Corporate Governance and Responsibility Committee shall, among other responsibilities, serve as the nominating committee. The Committee consists entirely of independent directors under applicable SEC rules and NYSE listing standards. The Committee operates under a written charter adopted by the Board of Directors. A copy of the charter is available free of charge on our website www.honeywell.com, under the heading “Investor Relations” (see “Corporate Governance—Board Committees”), or by writing to Honeywell, 101 Columbia Road, Morris Township, New Jersey 07962, c/o Vice President and Corporate Secretary. The Committee is charged with seeking individuals qualified to become directors, evaluating the qualifications of individuals suggested or nominated by third parties, and recommending to the Board the nominees to be proposed by the Company for election to the Board and actions with respect to individuals nominated by third parties. The Committee considers director candidates in anticipation of upcoming director elections and other potential or expected Board vacancies.

The Committee considers director candidates suggested by members of the Committee, other directors, senior management and shareowners. The Committee has retained, at the expense of the Company, a search firm to identify potential director candidates, and is also authorized to retain other external advisors for specific purposes, including performing background reviews of potential candidates. The search firm retained by the Committee has been provided guidance as to the particular experience, skills and other characteristics that the Board is seeking. The Committee has delegated responsibility for day-to- day management and oversight of the search firm engagement to the Company’s Senior Vice President—Human Resources and Communications.

Preliminary interviews of director candidates may be conducted by the Chairman of the Committee or, at his request, any other member of the Committee, the Chairman of the Board and/or a representative of the search firm retained by the Committee. Background material pertaining to director candidates is distributed to the members of the Committee for their review. Director candidates who the Committee determines merit further consideration are interviewed by the Chairman of the Committee and such other Committee members, directors and key senior management personnel as determined by the Chairman of the Committee. The results of these interviews are considered by the Committee in its deliberations.

16


The Committee annually reviews with the Board the requisite skills and characteristics of Board members, as well as the composition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, experience and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. Directors are expected to exemplify the highest standards of personal and professional integrity; and to constructively challenge management through their active participation and questioning. In particular, the Committee seeks directors with established strong professional reputations and expertise in areas relevant to the strategy and operations of the Company’s businesses. While the Company’s Corporate Governance Guidelines do not prescribe a diversity policy or standards, as a matter of practice, the Committee takes into account diversity considerations in the context of the Board as a whole and takes into account the personal characteristics (gender, ethnicity, age) and experience (industry, professional, public service) of current and prospective directors to facilitate Board deliberations that reflect a broad range of perspectives. The Committee conducts regular reviews of current directors in light of the considerations described above and their past contributions to the Board.

Shareowners wishing to recommend a director candidate to the Committee for its consideration should write to the Committee, in care of Vice President and Corporate Secretary, Honeywell, 101 Columbia Road, Morris Township, New Jersey 07962. To receive meaningful consideration, a recommendation should include the candidate’s name, biographical data, and a description of his or her qualifications in light of the above criteria. Shareowners wishing to nominate a director should follow the procedures set forth in the Company’s By-laws and described under “Director Nominations” on page 88 of this proxy statement.

This year, one director is proposed for nomination to the Board of Directors that has not previously been nominated for election to the Board by the shareowners, Mr. Judd Gregg. Mr. Gregg was identified as a potential Director candidate by Mr. Cote who served with him on the National Commission on Fiscal Responsibility and Reform.

The Company did not receive any recommendation of a director candidate from a shareowner, or group of shareowners, that beneficially owned more than 5% of the Common Stock for at least one year as of the date of recommendation.

PROCESS FOR COMMUNICATING WITH BOARD MEMBERS

Interested parties may communicate directly with the presiding director for an upcoming meeting or the non-employee directors as a group by writing to Honeywell, 101 Columbia Road, Morris Township, New Jersey 07962, c/o Vice President and Corporate Secretary. Communications may also be sent to individual directors at the above address.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

The Company has no specific policy regarding director attendance at its Annual Meeting of Shareowners. Generally, however, Board and Committee meetings are held immediately preceding and following the Annual Meeting of Shareowners, with directors attending the Annual Meeting. All but one of the directors attended last year’s Annual Meeting of Shareowners.

17


DIRECTOR COMPENSATION

The Corporate Governance and Responsibility Committee reviews and makes recommendations to the Board regarding the form and amount of compensation for non-employee directors. Directors who are employees of Honeywell receive no compensation for service on the Board. Honeywell’s director compensation program is designed to enable continued attraction and retention of highly qualified directors by ensuring that director compensation is in line with peer companies competing for director talent, and is designed to address the time, effort, expertise and accountability required of active Board membership. In general, the Corporate Governance and Responsibility Committee and the Board believe that annual compensation for non-employee directors should consist of both a cash component, designed to compensate members for their service on the Board and its Committees, and an equity component, designed to align the interests of directors and shareowners and, by vesting over time, to create an incentive for continued service on the Board.

Annual Compensation

Each non-employee director receives an annual Board cash retainer of $80,000. Each also receives a cash fee of $2,500 for each Board meeting attended, an annual cash retainer of $10,000 for each Board Committee on which he or she serves ($15,000 for Audit Committee), and an additional Committee Chair cash retainer of $15,000 for the Audit Committee and $10,000 for all other Board Committees. While no fees are generally paid for attending Committee meetings, a $1,000 cash fee is paid for attendance at a Committee meeting, or other extraordinary meeting related to Board business, which occurs apart from a regularly scheduled Board meeting.

At the commencement of each year, $60,000 in common stock equivalents is automatically credited to each director’s account in the Deferred Compensation Plan for Non-Employee Directors, which amounts are only payable after termination of Board service, and are paid, in cash, as either a lump sum or in equal annual installments.

Each non-employee director receives an annual grant of options to purchase 5,000 shares of Common Stock at the fair market value on the date of grant, which is the date of the Annual Meeting of Shareowners. Starting in 2007, the vesting period was extended from three to four years, with the vesting occurring in four equal annual installments beginning on April 1 of the first year following the grant date and continuing on April 1 of the next three years. These options also become fully vested at the earliest of the director’s retirement from the Board on or after the mandatory retirement age set by the Board and in effect on the date of grant, death, disability or change in control, as set forth in the 2006 Stock Plan for Non-Employee Directors of Honeywell (the “Non-Employee Director Plan”) or applicable predecessor plan.

Deferred Compensation

A non-employee director may also elect to defer, until a specified calendar year or termination of Board service, all or any portion of his or her annual cash retainers and fees that are not automatically deferred, and to have such compensation credited to his or her account in the Deferred Compensation Plan for Non-Employee Directors. Amounts credited either accrue interest (4.8% for 2010 and set at 3.84% for 2011) or are valued as if invested in a Honeywell common stock fund or one of the other funds available to participants in our employee savings plan. The unit price of the Honeywell common stock fund is increased to take dividends into account. Upon a change of control, as defined in the Non-Employee Director Plan, a director may receive, pursuant to a prior election, a lump-sum payment for amounts deferred before 2006.

The non-employee directors of the Company who were previously non-employee directors of Honeywell Inc. (Messrs. Bethune, Chico Pardo and Wright) participate in the legacy Honeywell Inc. Non-Employee Directors Fee and Stock Unit Plan. The last fee deferral under this plan occurred on December 1, 1999. Since that date, deferred amounts are increased only by cash dividends that are converted into shares of Common Stock by dividing the cash amount by the closing price of the Common Stock on the dividend payment date. Payment will be made to a participating director in whole shares of Common Stock following the earlier of a change in control or the director’s termination of Board service for any reason. Fractional shares will be paid in cash. Share payments will be made to a participating director in one payment or annual installments, as elected by the director. A director may elect to change the payment form if such election is made at least one year prior to the payment date.

18


Other Benefits

Non-employee directors are also provided with $350,000 in business travel accident insurance. They are also eligible to elect $100,000 in term life insurance and medical and dental coverage for themselves and their eligible dependents that is identical to similar coverage offered to the Company’s active salaried employees. In September 2008, the Board determined that new directors would be responsible for paying premiums for term life insurance and medical and dental coverage which they elected to receive. Honeywell also matches, dollar for dollar, any charitable contribution made by a director to any qualifying educational institution or charity, up to a maximum of $25,000 in the aggregate per director, per calendar year. In addition, directors may use company aircraft for travel to and from Board and Committee meetings.

Restricted Stock Unit Grant Upon Election to Board

New non-employee directors receive a one-time grant of 3,000 restricted stock units (“RSUs”) that vest on the earliest of the fifth anniversary of continuous Board service, death, disability or change in control. During this period, the director will receive dividend equivalents that will be automatically reinvested into additional RSUs which vest according to the same schedule as the underlying RSUs to which they relate. The director may defer the receipt of the RSUs on substantially the same terms and conditions as officers of the Company with respect to new grants of RSUs.

Stock Ownership Guidelines

Director stock ownership guidelines have been adopted under which each non-employee director, while serving as a director of the Company, must (i) hold at least $300,000 of Common Stock (including restricted shares and RSUs) and/or common stock equivalents and (ii) hold net gain shares from option exercises for one year. “Net gain shares” means the number of shares obtained by exercising the option, less the number of shares the director sells to cover the exercise price of the options and pay applicable taxes. Directors have five years from election to the Board to attain the prescribed ownership threshold. All current directors have attained the prescribed ownership threshold.

Director Compensation—Fiscal Year 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Director Name

 

Fees
Earned or
Paid Cash  
(1)
($)

 

Stock
Awards  
(2)
($)

 

Option
Awards  
(2)(3)
($)

 

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings  
(4)
($)

 

All Other
Compensation  
(5)
($)

 

Total
($)

Gordon Bethune

 

 

$

 

181,000

   

 

 

$

 

54,700

   

 

$

 

34,860

   

 

$

 

10,004

   

 

$

 

280,564

 

Kevin Burke

 

 

$

 

190,000

   

 

 

$

 

54,700

   

 

 

   

 

$

 

20,004

   

 

$

 

264,704

 

Jaime Chico Pardo

 

 

$

 

188,500

   

 

 

$

 

54,700

   

 

 

   

 

$

 

1,201

   

 

$

 

244,401

 

D. Scott Davis

 

 

$

 

201,667

   

 

 

$

 

54,700

   

 

$

 

2,162

   

 

$

 

1,038

   

 

$

 

259,567

 

Linnet Deily

 

 

$

 

202,000

   

 

 

$

 

54,700

   

 

 

   

 

$

 

31,543

   

 

$

 

288,243

 

Clive Hollick

 

 

$

 

178,500

   

 

 

$

 

54,700

   

 

$

 

2,388

   

 

$

 

4,307

   

 

$

 

239,895

 

George Paz

 

 

$

 

191,000

   

 

 

$

 

54,700

   

 

 

   

 

$

 

25,004

   

 

$

 

270,704

 

Bradley Sheares

 

 

$

 

181,000

   

 

 

$

 

54,700

   

 

$

 

4,544

   

 

$

 

25,661

   

 

$

 

265,905

 

John Stafford*

 

 

$

 

122,000

   

 

 

 

   

 

$

 

58,340

   

 

$

 

25,825

   

 

$

 

206,165

 

Michael Wright

 

 

$

 

202,000

   

 

 

$

 

54,700

   

 

 

   

 

$

 

28,334

   

 

$

 

285,034

 


 

 

*

 

 

 

Mr. Stafford retired from the Board at the 2010 Annual Meeting.

 

(1)

 

 

 

All fees earned, whether paid in cash or deferred under the Deferred Compensation Plan for Non-Employee Directors (including amounts treated as deferred in the Honeywell common stock fund).

 

(2)

 

 

 

The outstanding stock awards and option awards held at December 31, 2010 by each of the listed individuals are set forth in the chart below:

19


 

 

 

 

 

Director Name

 

Outstanding
Stock Awards at 12/31/10

 

Outstanding Option
Awards at 12/31/10

Mr. Bethune

 

 

 

   

 

 

41,000

 

Mr. Burke

 

 

 

3,000

   

 

 

5,000

 

Mr. Chico Pardo

 

 

 

   

 

 

41,000

 

Mr. Davis

 

 

 

   

 

 

25,000

 

Ms. Deily

 

 

 

   

 

 

25,000

 

Mr. Hollick

 

 

 

   

 

 

35,000

 

Mr. Paz

 

 

 

3,000

   

 

 

10,000

 

Dr. Sheares

 

 

 

   

 

 

30,000

 

Mr. Stafford

 

 

 

   

 

 

36,000

 

Mr. Wright

 

 

 

   

 

 

41,000

 


 

 

(3)

 

 

 

The amounts set forth in this column represent the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Option awards for non-employee directors were made in April 2010 with a Black-Scholes value of $10.94 per share. A more detailed discussion of the assumptions used in the valuation of option awards made in fiscal year 2010 may be found in Note 20 of the Notes to the Financial Statements in the Company’s Form 10-K for the year ended December 31, 2010.

 

(4)

 

 

 

Amounts included in this column reflect above-market earnings on deferred compensation. Amounts invested in cash under the Deferred Compensation Plan for Non-Employee Directors are credited with the same rate of interest that applies to executives under the Honeywell Salary and Incentive Award Deferral Plan for Selected Employees. Deferrals for the 2006 plan year and later earn a rate of interest, compounded daily, based on the Company’s 15-year cost of borrowing. The rate is subject to change annually. For 2010, this rate was 4.8%, and is set at 3.84% for 2011. Deferrals for the 2005 plan year earn a rate of interest, compounded daily, which was set at an above-market rate before the beginning of the plan year and is subject to change annually. Deferrals for the 2004 plan year and prior plan years earn a rate of interest, compounded daily, that was set at an above-market rate before the beginning of each plan year. This rate is fixed until the deferral is distributed.

 

(5)

 

 

 

See “Director Compensation—Other Benefits” above for a description of the items included in the All Other Compensation column for 2010. Honeywell matched charitable contributions in the amounts of:

 

 

 

Director Name

 

Matched Charitable Contributions

Mr. Bethune

 

 

$

 

10,000

 

Mr. Burke

 

 

$

 

20,000

 

Ms. Deily

 

 

$

 

25,000

 

Mr. Paz

 

 

$

 

25,000

 

Dr. Sheares

 

 

$

 

25,000

 

Mr. Stafford

 

 

$

 

25,000

 

Mr. Wright

 

 

$

 

25,000

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Applicable Policies and Procedures

The Company has written policies and procedures for approval or ratification of related person transactions. Article EIGHTH of Honeywell’s Amended and Restated Certificate of Incorporation provides that a related or interested party transaction shall not be void or voidable if such transaction is duly authorized or ratified by a majority of the disinterested members of the Board of Directors. Consistent with SEC rules, a related or interested party transaction includes a transaction between the Company and a director, director nominee or executive officer of the Company or a beneficial owner of more than 5% of the Company’s Common Stock or any of their respective immediate family members. Furthermore, the Honeywell Code of Business Conduct requires that each director and executive officer report to the Board of Directors on an ongoing basis any relationship or transaction that may create or appear to create a conflict between the personal interests of those individuals (or their immediate family members) and the interests of the Company. A conflict, or appearance of a conflict, might arise, for example, by accepting gifts or loans from a current or potential customer, supplier or competitor, owning a financial interest in, or serving in a business capacity with, an outside enterprise that competes with or does or

20


wishes to do business with, the Company, serving as an intermediary for the benefit of a third party in transactions involving the Company or using confidential Company information or other corporate assets for personal profit.

If a conflict of interest or related party transaction is of a type or a nature that falls within the scope of oversight of a particular Board Committee, it is referred to that Committee for review. The Board or the responsible Committee thereof must review any potential conflict and determine whether any action is required, including whether to authorize, ratify or direct the unwinding of the relationship or transaction under consideration, as well as ensure that appropriate controls are in place to protect the Company and its shareowners. In making that determination, the Board or responsible Committee considers all relevant facts and circumstances, such as the benefits of the transaction to the Company; the terms of the transaction and whether they are arm’s-length and in the ordinary course of the Company’s business; the direct or indirect nature of the related person’s interest in the transaction; the size and expected term of the transaction; and other facts and circumstances that bear on the materiality of the related person transaction under applicable law and listing standards.

In order to ensure that all material relationships and related person transactions have been identified, reviewed and disclosed in accordance with applicable policies, procedures and regulations, each director and officer also completes and signs a questionnaire at the end of each fiscal year that requests confirmation that there are no material relationships or related person transactions between such individuals and the Company other than those previously disclosed to the Company.

Related Person Transaction

The Honeywell ADI business leases its administrative office building in Melville, New York at a current rent of $979,495 per year. Subsequent to the time that ADI entered into this lease, the property was acquired by a partnership known as “New Island Holdings.” There have been no material amendments to the lease since the property was acquired by New Island Holdings. Each of Mr. Fradin, President and Chief Executive Officer, Honeywell Automation and Control Solutions and Mr. Andreas Kramvis, President and Chief Executive Officer, Honeywell Specialty Materials, is a limited partner in New Island Holdings, holding 12% and 9% ownership interests, respectively. The limited partners of New Island Holdings receive distributions based on total lease payments generated from the portfolio of buildings that the partnership owns, less applicable mortgage and other expenses.

STOCK OWNERSHIP INFORMATION

Five Percent Owners of Company Stock

The following table sets forth information as to those holders known to Honeywell to be the beneficial owners of more than 5% of the outstanding shares of Common Stock as of December 31, 2010. State Street Corporation is listed in the table below because one of its subsidiaries (State Street Bank and Trust Company) holds 6.5% of our outstanding Common Stock as trustee for certain Honeywell savings plans. See notes below for additional details.

 

 

 

 

 

Name and Complete Mailing Address

 

Number of
Shares

 

Percent of
Common Stock
Outstanding

State Street Corporation

 

79,035,648  

(1)

 

10.1 

(2)

State Street Financial Center,

 

 

 

 

One Lincoln Street, Boston, MA 02111

 

 

 

 

BlackRock Inc.

 

39,031,150  

(3)

 

5.0

 

40 East 52nd Street, New York, NY 10022

 

 

 

 


 

 

(1)

 

 

 

State Street Corporation has shared voting power and shared dispositive power in each case in respect of the 79,035,648 shares listed above.

 

 

 

 

 

State Street Bank and Trust Company, a subsidiary of State Street Corporation, has shared voting power and shared dispositive power in each case in respect of 64,758,748 shares included above.

 

(2)

 

 

 

State Street Bank and Trust Company holds 6.5% of our outstanding Common Stock as trustee for certain Honeywell savings plans. Under the terms of the plans, State Street is required to vote shares attributable to

21


 

 

 

 

any participant in accordance with instructions received from the participant and to vote all shares for which it does not receive instructions in the same ratio as the shares for which instructions were received.

 

(3)

 

 

 

BlackRock Inc. has sole voting power and sole dispositive power in respect of all 39,031,150 shares.

Stock Ownership of Directors and Executive Officers

The following table sets forth information as of February 25, 2011 with respect to the beneficial ownership of Common Stock by each director or director nominee, each executive officer named in the Summary Compensation Table herein, and by all directors (including nominees) and executive officers of Honeywell as a group. Except as otherwise noted, the individuals listed in the table below have the sole power to vote or transfer the shares reflected in the table.

 

 

 

 

 

 

 

 

 

Name(1)

 

Total Number
of Shares
(2)

 

Components of Beneficial Ownership
(Number of Shares)

 

Common Stock
Beneficially
Owned

 

Right
to
Acquire
(3)

 

Other
Stock-Based
Holdings
(4)

Gordon M. Bethune

 

 

 

54,979

   

 

 

3,000

   

 

 

33,500

   

 

 

18,479

 

Kevin Burke

 

 

 

9,905

   

 

 

6,000

   

 

 

1,250

   

 

 

2,655

 

Jaime Chico Pardo

 

 

 

64,556

   

 

 

8,391

   

 

 

33,500

   

 

 

22,665

 

David M. Cote(5)

 

 

 

6,037,703

   

 

 

53,261

   

 

 

5,631,991

   

 

 

352,451

 

D. Scott Davis

 

 

 

33,253

   

 

 

6,000

   

 

 

17,500

   

 

 

9,753

 

Linnet F. Deily

 

 

 

28,736

   

 

 

3,000

   

 

 

17,500

   

 

 

8,236

 

Judd Gregg(6)

 

 

 

0

   

 

 

0

   

 

 

0

   

 

 

0

 

Clive R. Hollick

 

 

 

45,040

   

 

 

3,000

   

 

 

27,500

   

 

 

14,540

 

George Paz

 

 

 

9,520

   

 

 

1,000

   

 

 

3,750

   

 

 

4,770

 

Bradley T. Sheares

 

 

 

36,234

   

 

 

2,212

   

 

 

22,500

   

 

 

11,522

 

Michael W. Wright

 

 

 

138,769

   

 

 

5,250

   

 

 

33,500

   

 

 

100,019

 

David J. Anderson

 

 

 

1,431,618

   

 

 

1,333

   

 

 

1,238,250

   

 

 

192,035

 

Andreas Kramvis

 

 

 

320,755

   

 

 

21,896

   

 

 

295,050

   

 

 

3,809

 

Roger Fradin

 

 

 

1,393,940

   

 

 

150,878

   

 

 

1,126,250

   

 

 

116,812

 

Timothy Mahoney

 

 

 

192,063

   

 

 

21,409

   

 

 

167,600

   

 

 

3,054

 

All directors, nominees and executive officers as a group, including the above-named persons (20 people)

 

 

 

10,719,792

   

 

 

366,773

   

 

 

9,487,541

   

 

 

865,477

 


 

 

(1)

 

 

 

c/o Honeywell International Inc., 101 Columbia Road, Morris Township, New Jersey 07962.

 

(2)

 

 

 

The total beneficial ownership for any individual is less than 1% and the total for the group is approximately 1.37% of the shares of Common Stock outstanding.

 

(3)

 

 

 

Includes shares which the named individual or group has the right to acquire through the exercise of vested stock options, and shares which the named individual or group has the right to acquire through the vesting of performance shares, RSUs and stock options within 60 days of February 25, 2011.

 

(4)

 

 

 

Includes shares and/or share-equivalents in deferred accounts, as to which no voting or investment power exists.

 

(5)

 

 

 

During 2010, Mr. Cote was required to transfer certain shares, which had in prior years been reported as beneficially owned by him, pursuant to a domestic relations order.

 

(6)

 

 

 

Mr. Gregg is a nominee for election to the Board at the 2011 Annual Meeting of Shareowners.

22


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our Common Stock to file reports of ownership and changes in ownership of our Common Stock with the SEC. Based on the information available to us during fiscal year 2010, we believe that all applicable Section 16(a) filing requirements were met on a timely basis.

SEC FILINGS AND REPORTS; KEY CORPORATE GOVERNANCE DOCUMENTS

We maintain an internet website at http://www.honeywell.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website under the heading “Investor Relations” (see “SEC Filings & Reports”) immediately after they are filed with or furnished to the SEC. Honeywell’s Code of Business Conduct, Corporate Governance Guidelines and Charters of the Committees of the Board of Directors are also available free of charge on our website under the heading “Investor Relations” (see “Corporate Governance”), or by writing to Honeywell, 101 Columbia Road, Morris Township, New Jersey 07962, c/o Vice President and Corporate Secretary. Honeywell’s Code of Business Conduct applies to all directors, officers (including the Chief Executive Officer, Chief Financial Officer and Controller) and employees. Amendments to or waivers of the Code of Business Conduct granted to any of the Company’s directors or executive officers will be published on our website.

23


EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

In this section, we review the objectives and elements of Honeywell’s executive compensation program and discuss and analyze the 2010 compensation decisions regarding our Named Executive Officers (the CEO, CFO and three other most highly compensated executive officers):

 

 

 

 

David Cote—Chairman and Chief Executive Officer

 

 

 

 

David Anderson—Senior Vice President and Chief Financial Officer

 

 

 

 

Andreas Kramvis—President and Chief Executive Officer-Specialty Materials

 

 

 

 

Roger Fradin—President and Chief Executive Officer-Automation and Control Solutions

 

 

 

 

Timothy Mahoney—President and Chief Executive Officer-Aerospace

Executive Summary

Honeywell is a diversified technology and manufacturing leader, with global businesses organized into four strategic business groups known as SBGs: Aerospace, Automation and Control Solutions (“ACS”), Specialty Materials (“SM”) and Transportation Systems (“TS”). 2010 operating results were strong across the Company’s portfolio. Despite continued economic uncertainty, order rates grew in the Company’s short and long-cycle businesses, reflecting Honeywell’s robust focus on new products and services, great positions in good industries and investments in global expansion. Margin expansion and free cash flow growth and conversion reinforced the quality of earnings and the continued emphasis on cost discipline. Honeywell’s stock price appreciated by 35.6% in 2010, well ahead of the S&P 500 (up 12.8%).

Total Shareowner Return or TSR (stock price appreciation plus reinvested dividends) was a positive 39.5% for 2010 as company performance and improving end-markets were reflected in the share price. Honeywell’s dividend rate is increasing by 10% in 2011, representing the seventh time in the last eight years that the dividend rate has increased by 10%.

The following graph displays Honeywell’s five-year TSR against its Compensation Peer Group (as defined below) and the Standard & Poor’s 500 Stock Index for the period from December 31, 2005 to December 31, 2010. The annual changes for the five-year period shown in the graph are based on the assumption that $100 had been invested in Honeywell stock and each index on December 31, 2005 and that all dividends were reinvested.

24


Overall, the Company withstood the impact of the global economic recession much better than it had the prior downturn (2001-2002), executing both commercially and operationally in 2009 and 2010, while continuing to invest in the future.

Compensation decisions made for 2010 were aligned with the Company’s strong operational performance in 2010, with continued emphasis on both variable, at-risk compensation and long-term compensation that reinforces our focus on sustainable profitable growth and stock price appreciation. The Company has a demonstrated track record of evolving its compensation programs to reflect emerging best practices and strong corporate governance.

2010 Performance Highlights

 

 

 

 

Overall, 2010 performance reflects Honeywell’s ability to grow faster than its end markets, leverage its fixed cost base, grow margins and deliver strong free cash flow, while continuing to invest in new products, expand geographically and make progress on key process initiatives.

 

 

 

 

Revenues increased by 8% over the prior year to $33.4 billion.

 

 

 

 

Excluding the impact of the Pension MTM Adjustment (as defined below), earnings per share (“EPS”) increased by 12% from $2.69 to $3.00, reflecting new product introductions, growth in emerging regions, realization of the benefits of prior repositioning actions and the ongoing focus on disciplined cost controls. Reported EPS increased by 26% from $2.05 to $2.59.

 

 

 

 

Free cash flow (cash flow from operations less capital expenditures) increased by 6% over 2009 and was 152% of net income (excluding the impact of the Pension MTM Adjustment), reinforcing strong quality of earnings. 2010 free cash flow of $3.6 billion also reflected a voluntary $600 million cash contribution to improve the funded status of the Company’s U.S. pension plans in the fourth quarter of 2010.

 

 

 

 

Honeywell continued to make “seed planting” investments in 2010 that will form the foundation for future profitable growth. These investments included strategic acquisitions such as Sperian Protection that will enhance the Company’s position in the highly attractive personal protection equipment segment, the development of new products and technologies through our Velocity Product Development process, improving operational efficiency through the expanded deployment of the Honeywell Operating System, continued implementation of Enterprise Resource Planning systems, and funding $151 million of repositioning projects that will benefit 2011 and beyond.

 

 

 

 

Record working capital turns of 6.8 in 2010 represented an increase of 1.2 turns compared to 2009.

Pension Accounting Change

In the fourth quarter of 2010, the Company changed its policy for recognizing pension expense to a mark-to-market methodology (the “Pension Accounting Change”). The prior policy utilized a three-year smoothing of asset gains and losses and amortized asset and actuarial gains and losses outside the corridor (calculated as 10% of the greater of plan assets or projected benefit obligations) over six years (the “Prior Policy”). The amortization period under the Prior Policy was approximately half that of many other comparable companies, making it difficult for investors to compare the reported earnings of Honeywell and these companies.

Under the new pension accounting methodology, known as mark-to-market (“MTM”), the Company will recognize (1) ongoing pension expense consisting of service and interest costs and assumed returns on plan assets on a quarterly basis and (2) an annual MTM adjustment in the fourth quarter, to reflect gains or losses outside the corridor, if any, driven by changes in discount rates and/or the difference between actual and assumed returns on plan assets (the “Pension MTM Adjustment”).

The Company believes the new MTM methodology will improve transparency of its underlying operational performance and the various elements and drivers of pension expense. The Pension Accounting Change became effective for the 2010 fiscal year and has been retrospectively applied to prior periods, resulting in the recognition of $5.5 billion of deferred losses in 2010 and prior periods. The Pension Accounting Change has no impact on Honeywell’s underlying operating earnings, shareowners’ equity, cash flows or pension funded status.

Excluding the impact of the Pension MTM Adjustments on EPS in both years (($0.64) and ($0.41) in 2009 and 2010, respectively), EPS increased 12% from $2.69 in 2009 to $3.00 in 2010.

25


For a full discussion of the Pension Accounting Change, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

2010 Compensation Decisions—Summary

Based on the results and actions discussed above, the Management Development and Compensation Committee (the “Committee”) took the following key compensation actions in 2010:

 

 

 

 

Base salaries: For the second year in a row, there were no merit increases for officers including the Named Executive Officers, as the Company remained cautious in its planning in light of soft macroeconomic indicators.

 

 

 

 

Annual incentive compensation plan (“ICP”) awards: In 2009, the Named Executive Officers did not receive annual bonuses based on the CEO’s recommendation and the Committee’s desire to de-emphasize short-term compensation during the economic downturn. In 2010, the Committee determined to award ICP bonuses to the Named Executive Officers ranging from 124% to 137% of their target opportunity in recognition of the Company’s performance against pre-established financial goals, other key operational results, the achievement of non-financial management objectives, and other factors (more fully described below). The Committee also considered performance relative to pre-downturn (2007-2008) levels before making final ICP award decisions.

 

 

 

 

Long-term incentive (“LTI”) awards: In light of Company performance and in an effort to reinforce our goals of motivation and retention, the Named Executive Officers received or participated in one or more of the following LTI awards in 2010: Stock Options, Growth Plan participation, and performance- adjusted RSUs.

First, stock option grants were consistent with prior year grant levels, vest ratably over four years, and represent the most significant component of an officer’s total annual target LTI opportunity (approximately 64%).

Second, a new 2010-2011 performance cycle was established for the cash-based Growth Plan which represents approximately 36% of an officer’s total annual target LTI opportunity. The Growth Plan measures organic revenue growth and return on investment over a two-year performance cycle with any earned award to be paid 50% in 2012 and 50% in 2013, contingent on continued employment by the executive on each applicable payment date. The two-year performance cycles of the Growth Plan do not overlap, so grants are not made annually and only one award cycle is in effect at any time.

Third, in connection with the annual succession planning review conducted by the Committee and the full Board in 2010, four Named Executive Officers were awarded discretionary RSUs with the target award subject to adjustment up or down based on Honeywell’s relative TSR performance ranking against its Compensation Peer Group (as defined below). These RSUs were structured to vest over an extended period of time (up to 7 years) in order to align with retention and succession planning objectives. The Company took other succession planning actions in 2010 which are more fully described below.

Best Practices

In 2010, Honeywell voluntarily provided its shareowners with an advisory vote on executive compensation (Say on Pay vote) which was approved by over 95% of the votes cast on the proposal. These results demonstrated strong shareowner support for Honeywell’s overall executive compensation approach and the actions set forth in its 2010 Proxy Materials. The Committee takes into account the outcome of Say on Pay votes when considering future executive compensation arrangements.

The Committee regularly reviews best practices in governance and executive compensation and has revised Honeywell’s policies and practices to:

 

 

 

 

eliminate tax reimbursement payments (known as “tax gross-ups”) on both perquisites received by officers and excise taxes that may become due upon a change in control for new participants in the Company’s severance plan (in each case, effective January 1, 2010);

 

 

 

 

add a relative TSR-based adjustment mechanism to RSU grants to officers (2010);

 

 

 

 

guard the Company against competitive harm by obtaining enhanced restrictive covenants in connection with certain succession planning actions (2010);

26


 

 

 

 

lengthen the vesting periods for equity grants and require net gain shares to be held for at least one year after exercise/vesting;

 

 

 

 

require executive officers to maintain specific stock ownership levels, holding Common Stock equal in value to at least 4x their base salary (6x for the CEO);

 

 

 

 

require automatic reinvestment of dividend equivalents on RSUs into additional RSUs, which vest according to the same schedule as the underlying RSUs to which they relate;

 

 

 

 

eliminate the annual cash flexible perquisite allowance for executive officers;

 

 

 

 

reduce the interest rate on deferred compensation by tying it to the Company’s cost of capital;

 

 

 

 

permit the recapture of incentive compensation from senior executives in the event of a significant financial restatement;

 

 

 

 

permit the cancellation and recovery of equity awards from employees who leave the Company to join a competitor;

 

 

 

 

prohibit the granting of stock options with an exercise price less than the fair market value of the Company’s Common Stock on the date of grant;

 

 

 

 

prohibit the repricing (reduction in exercise price) or reloading of stock options; and

 

 

 

 

prohibit the Committee’s independent compensation consultant from performing any services for the Company.

Objectives

Honeywell’s executive compensation program is designed to achieve the following key objectives:

 

 

 

 

Attract and Retain highly qualified executives with the leadership skills, behavioral attributes and experience necessary to develop and execute business strategies, drive superior results and process improvements, meet diverse challenges and build long-term shareowner value in an enterprise with the Company’s scale, breadth, complexity and global footprint;

 

 

 

 

Pay for Performance by rewarding and differentiating among executives based on the achievement of Company, SBG and functional objectives consistent with the Honeywell Initiatives;

 

 

 

 

Align Executive and Shareowner Interests by emphasizing variable, at-risk compensation tied to an appropriate balance of near-term and long-term objectives; and

 

 

 

 

Manage Risk through oversight and compensation design features and practices that balance short-term and long-term incentives.

Compensation Decisions: Factors Considered

Introduction

The Committee considers many company and individual performance measures (discussed in detail herein). As the foundation for aligning its compensation decisions with performance, the Committee evaluates quantitative factors, such as the financial and stock performance of the Company (both on an absolute basis and in the context of the competitive marketplace), the compensation history of each executive, and pay levels and practices for the Compensation Peer Group. Nevertheless, the Committee does not believe that quantitative factors should be considered in isolation. In making its decisions, the Committee considers the compensation elements in the context of the Company’s philosophy and business goals, as well as the then-prevailing economic and competitive environment. Final compensation determinations are ultimately in the discretion of the Committee, using its expertise in assessing performance based on a wide range of factors and measures. The Committee does not believe that the factoring of the various items it considers in making its decisions regarding the size or composition of the overall compensation of each Named Executive Officer should be, or can be, reduced to a linear formula.

The Committee considers a wide range of factors and performance measures as a basis for applying judgment in determining the aggregate and individual awards under each element of the Company’s executive compensation program (subject to relevant tax rules and plan rules).

27


Considerations

The factors that generally shape the Committee’s decision making process are the following:

 

 

 

 

Overall operational and financial performance—Corporate and SBG (as discussed above and below);

 

 

 

 

The Company’s stock performance (as discussed above and below);

 

 

 

 

Named Executive Officer compensation history, including experience in the position (as discussed in this section);

 

 

 

 

Executive’s individual record of performance consistent with the Honeywell Initiatives of Growth, Productivity, Cash, People and Key Processes (as discussed in “Named Executive Officer—Performance & Direct Compensation” below);

 

 

 

 

Executive’s relative level of responsibility within Honeywell and the impact of his or her position on Honeywell’s performance with recognition that both the amount and “at-risk” nature of the compensation should increase with the level of responsibility;

 

 

 

 

Executive’s long-term leadership potential with Honeywell and associated retention risk (as discussed in “Succession Planning” below);

 

 

 

 

The senior executive succession plan (see “Succession Planning” below);

 

 

 

 

Trends and best practices in executive compensation (as discussed above in “Executive Summary”);

 

 

 

 

Stock ownership levels (as discussed in “Stock Ownership Guidelines” below);

 

 

 

 

Annual share utilization and shareowner dilution levels resulting from the compensation plans; and

 

 

 

 

Peer group comparisons, including pay levels and practices for the competitive marketplace and company performance relative to the competitive marketplace (as discussed in this section).

Peer Group Compensation Data

The Committee does not target a specific competitive position relative to the market in determining the compensation of its executive officers. However, the Committee believes it is important to understand the relevant market for executive talent to ensure that the Company’s executive compensation program supports the attraction and retention of highly qualified leaders.

The Committee maintains its awareness of market conditions through annual review of compensation data compiled by the independent compensation consultant retained by the Committee regarding a peer group of companies (listed below) having one or more of the following attributes: business operations in the industries and markets in which Honeywell participates, similar revenue and market capitalization, similar breadth of portfolio and complexity, global scope of operations and/or diversified product lines (the “Compensation Peer Group”).

 

 

 

Compensation Peer Group

 

 

 

Alcoa

 

Johnson Controls

 

 

 

Boeing

 

Lockheed Martin

 

 

 

Dow Chemical

 

Northrop Grumman

 

 

 

DuPont

 

Raytheon

 

 

 

Emerson Electric

 

Textron

 

 

 

General Dynamics

 

3M

 

 

 

General Electric

 

United Technologies

The Committee believes that Honeywell executives are potentially attractive candidates for such companies because of the depth of experience and management skill set required to manage a global company of Honeywell’s scope and complexity. The Committee periodically reviews the appropriateness of the Compensation Peer Group and the purposes for which it is used. The Committee did not make any changes to the Compensation Peer Group in 2010.

28


The Committee reviews data regarding the Compensation Peer Group with respect to base salary, target and actual annual cash incentive compensation, total annual cash compensation, long-term incentive compensation and total direct compensation for each Named Executive Officer. The Committee also reviews general industry survey data published by third parties as a general indicator of relevant market conditions and pay practices and as a broader reference point for specific business units where the breadth and relevance of Compensation Peer Group data may not be as comprehensive as desired. Neither the Committee nor the Company has any input into the scope of the companies included in these general industry surveys.

Compensation History

Each year the Committee reviews each Named Executive Officer’s three-year compensation history in total and with respect to each element of compensation, as well as projected payouts under the Company’s retirement and deferred compensation plans, and prior non-recurring types of awards or grants (e.g., “sign on” or “make whole” awards upon joining Honeywell and RSU awards for retention and/or succession planning purposes). This enables the Committee to understand how each element of compensation interacts with the other elements and to see how current compensation decisions may affect future wealth accumulation and executive retention. The Committee considers historical award and/or grant levels when determining individual annual ICP awards and option grants, as well as the value and vesting dates of unvested equity holdings in connection with assessing the need for retention arrangements. While the Committee also considers potential payouts and circumstances involving a change in control of the Company and/or termination of the executive officer’s employment, these arrangements generally do not influence the Committee’s decisions regarding current year compensation.

Succession Planning

As a result of the industry backgrounds and experience of the Company’s senior executives, and Honeywell’s history of operating performance and skills development, the Committee believes that there is a significant risk that these leaders will be presented with other career opportunities at large companies with significant resources to offer higher compensation levels. Due to the annual revenues and global and industry breadth and depth of each of the Company’s business segments, the Presidents of these segments may be considered as candidates to be CEOs of other companies.

The Committee recognizes that retention of highly qualified management talent is critical to the Company’s continued performance and to successful succession planning. The Committee annually considers, and reviews with the full Board, succession candidates for senior leadership positions under both near-term and long-term planning scenarios, taking into account demonstrated performance, leadership qualities and potential to take on a more complex scope of responsibilities. As part of this process, the Committee considers the potential retention risk regarding incumbent senior executives and the identified succession candidates, which includes a review of the vested and unvested value of historical compensation awards, the competitive landscape for executive talent, the specific succession planning time horizon for each senior executive position, and the extent of disruption likely to be caused by unplanned attrition. Since January 2004, all of the Company’s open executive officer positions have been filled with executives promoted from within Honeywell.

Where the Committee believes it to be necessary, it will take appropriate compensation actions to reinforce the succession plan and to guard against competitive activity. These retention actions are designed to:

 

 

 

 

Motivate the executive to forego outside career opportunities;

 

 

 

 

Generate value for the recipient only if he or she remains employed by the Company for the period of time deemed optimal for succession planning purposes; and

 

 

 

 

Strengthen restrictive covenants (e.g., non-compete, non-solicitation) and/or provide for transition periods that will guard against competitive harm to the Company at the time of the executive’s departure from the Company.

During 2010, the Committee approved succession planning actions for Mr. Fradin (discussed in further detail in “Named Executive Officer—Performance & Direct Compensation”) and Mr. Kramvis (discussed in further detail in “Long-Term Incentive Compensation (Equity)”).

Based on its careful consideration of the Company’s business objectives, the Committee determined that tailoring these actions to the retention circumstances for each individual executive is the most effective approach

29


and provides strong alignment with shareowner interests. The Committee believes that its 2010 actions (1) were the best means for achieving the Company’s retention and succession planning objectives while mitigating the risk of competitive harm to the Company, (2) were consistent with the design of the Company’s executive compensation program, and (3) provided for variability in value recognized by the executive based upon Company performance.

Compensation Mix

In setting total compensation, the Committee seeks to achieve the optimal balance between:

 

 

 

 

Fixed and variable (or “at risk”) pay elements;

 

 

 

 

Short- and long-term pay elements; and

 

 

 

 

Cash and equity-based elements.

The Company’s executive compensation program is designed to emphasize variable, performance-based elements that align actual compensation with shareowner value. The mix of compensation elements for Named Executive Officers, and especially the CEO, is more heavily leveraged toward variable, performance-based compensation than for the balance of the executive population. The Committee determined that the CEO should have greater emphasis on variable compensation than all other executives because his actions can have a greater influence on the performance of the Company. The 2010 compensation elements that comprise “target total annual direct compensation opportunity” for the Named Executive Officers and their approximate weightings are shown below.

 

 

 

 

 

 

 

Compensation Element

 

% of 2010
Target Total
Annual Direct
Compensation
Opportunity
(1)

 

Type of
Compensation

 

Key Objectives

 

 

 

 

 

 

 

Base Salary

 

10%–20%

 

Fixed
Annual
Cash

 

Attract and compensate high-performing and experienced leaders at a competitive level of cash compensation.

 

 

 

 

 

 

 

Annual ICP
(Bonus) Awards

 

13%–20%

 

Variable
Annual
Cash

 

Motivate and reward executives for achieving annual corporate, SBG and functional goals in key areas of financial and operational performance.

 

 

 

 

 

 

 

Long-Term Incentive Awards
Ø
Stock Options
Ø
Growth Plan Units

 

60%–73%

 

Variable
Ø
Long-Term Equity
Ø
Long-Term Cash

 

Directly align the interests of shareowners and executives and motivate long-term operational and financial performance that will build shareowner value. The mix of long-term incentive award types is intended to help attract and retain successful leaders over the long term.

 

(1)

 

 

 

Represents range when considering all Named Executive Officers. Actual mix varies by individual Named Executive Officer.

RSUs are not considered a component of a Named Executive Officer’s target total annual direct compensation as they are generally not granted on an annual basis and there is no target award level.

The percentages above are based on “target total annual direct compensation” and do not necessarily correspond to, and are not a substitute for, the amounts disclosed in the Summary Compensation Table and supplemental tables.

Compensation Elements and Decisions for 2010

Each element of Honeywell’s executive compensation program is described below.

30


Base Salary. Base salaries are primarily based on scope of responsibility and years of experience. Salary increases are based on the Committee’s evaluation of current and expected future performance and may reflect the assumption of material additional responsibilities. Typically, base salaries make up the smallest component of total compensation of the Named Executive Officers.

In 2010, consistent with the Company’s conservative cost planning in light of soft macroeconomic indicators, the Committee determined that Named Executive Officers would not receive annual merit increases. For similar reasons, no merit increases were provided in 2009.

Annual Incentive Bonus (“ICP”). Each Named Executive Officer has an annual target ICP opportunity expressed as a percentage of base salary. The CEO’s target opportunity is 175% of base salary, while the other Named Executive Officers’ target opportunities range from 80% to 100% of base salary. ICP payouts can vary significantly from year-to-year, but are capped at 200% of each Named Executive Officer’s annual ICP target opportunity. The aggregate annual ICP payout for senior executive employees is also limited to 2% of the Company’s consolidated earnings for the year (subject to adjustment for extraordinary items and the cumulative effect of changes in accounting principles).

At the beginning of each year, the Committee sets specific annual corporate financial objectives (“Pre-Established ICP Goals”) consistent with the Company’s annual operating plan which reflect then-current assumptions regarding macro-economic and key end-market conditions. At the end of the year, the Committee determines ICP plan pool funding and individual ICP awards for the Named Executive Officers based on achievement of the Pre-Established ICP Goals, as well as their discretionary evaluation of:

 

Ø

 

 

 

Other key performance measures which assess both the strength and degree of difficulty of actual corporate and SBG performance, such as:

 

 

 

 

Year-over-year variance in segment profit, margin expansion and revenue and free cash flow conversion

 

 

 

 

Quality of earnings

 

 

 

 

Relative performance of SBGs or business units within each SBG

 

 

 

 

Relevant industry and economic conditions

 

 

 

 

Relative EPS performance compared to comparable businesses

 

 

 

 

Degree of stretch in targets;

 

Ø

 

 

 

Level of ICP awards relative to performance in prior years;

 

Ø

 

 

 

Achievement of individual management objectives aligned with the Honeywell Initiatives; and

 

Ø

 

 

 

Demonstrated leadership behaviors.

The Committee does not assign specific weights to these factors, but in five of the last six years, the Committee reduced awards that otherwise would have been made based solely on performance against the Pre-Established ICP Goals.

Pre-Established ICP Goals:

The Pre-Established ICP Goals and final results (on an adjusted basis for EPS and FCF; see discussion below) for 2010 were:

 

 

 

 

 

 

 

Measure(1)

 

2010 Target

 

2010 Actual

 

Rationale for Metric

 

 

 

 

 

 

 

Earnings per share

 

$2.20—$2.40

 

$2.53

 

Measures delivery of shareowner value at the corporate level

 

 

 

 

 

 

 

Free cash flow
conversion
(2)

 

137%

 

180%

 

Emphasizes link between net income and strong cash generation during global recession

 

 

 

 

 

 

 

Working capital turns(3)

 

6.0 turns

 

6.8 turns

 

Measures efficiency and effectiveness of the Company’s business operations

31


 

(1)

 

 

 

Each SBG has corresponding objectives, with net income being used in lieu of earnings per share; unusual, infrequently occurring and/or extraordinary items are excluded in determining achievement of Corporate and SBG objectives.

 

(2)

 

 

 

Defined as free cash flow divided by net income.

 

(3)

 

 

 

Defined as sales divided by working capital, which is trade accounts receivable plus inventory less accounts payable and customer advances.

Under the terms of the ICP plan, unusual, infrequently occurring and/or extraordinary items and the cumulative effect of changes in accounting principles are excluded in determining achievement of ICP objectives. Accordingly, the impact of the Pension Accounting Change (pension expense under the MTM policy, less what pension expense would have been under the Prior Policy) was excluded from the calculation of EPS in the “2010 Actual” column of the above table, as well as from the net income component of the free cash flow conversion amount reflected in those places.

The following table displays the determination of EPS and free cash flow conversion (free cash flow divided by net income) results for ICP purposes, after excluding the effects of the change in accounting principle associated with the MTM policy adopted in 2010 (amounts below are in millions, except per share amounts):

 

 

 

 

 

For 2010 ICP
Purposes

EPS – As Reported

 

 

$

 

2.59

 

Impact of Pension MTM Adjustment

 

 

$

 

0.41

 

 

 

 

EPS Excluding the Impact of Pension MTM Adjustment

 

 

$

 

3.00

 

Impact of the Pension Accounting Change on 2010 Ongoing Pension Expense

 

 

$

 

(0.47

)

 

 

 

 

2010 EPS Excluding the Impact of Pension Accounting Change

 

 

$

 

2.53

 

 

 

 

2010 FCF

 

 

$

 

3,552

 

 

 

 

Net Income – As Reported

 

 

$

 

2,022

 

Impact of Pension MTM Adjustment

 

 

$

 

319

 

 

 

 

Net Income Excluding the Impact of Pension MTM Adjustment

 

 

$

 

2,341

 

Impact of the Pension Accounting Change on 2010 Ongoing Pension Expense

 

 

$

 

(366

)

 

 

 

 

2010 Net Income Excluding the Impact of Pension Accounting Change

 

 

$

 

1,975

 

 

 

 

Free Cash Flow Conversion Excluding Impact of Pension Accounting Change

 

 

 

180

%

 

 

 

 

Other results and factors considered:

For 2010, other key performance measures and factors considered by the Committee in its discretionary evaluation (total Company level) were:

 

 

 

 

Sales growth in 2010 of 8%, segment profit improvement of 13% and segment margin improvement of 50 basis points to a record 13.8% for the Company.

 

 

 

 

Segment profit of $4.6 billion returned to 95% of 2008 levels on 9% less revenue.

 

 

 

 

Strong pricing, new product introductions and strong delivery performance from the HON supply chain enabled delivery of 7% organic growth.

 

 

 

 

Recovery in the Company’s end markets in general industrial and automotive with strong growth in its short cycle businesses (Advanced Materials, ACS Products, Transportation Systems); Aerospace commercial aftermarket recovery lagged due to the profit / cost driven behaviors of end customers in both Air Transport and Regional as well as Business and General Aviation; long cycle businesses (UOP, Aerospace Defense & Space and ACS Solutions) remained challenged in 2010 as the end markets experienced mixed rates of recovery due to the dynamics in the refining, defense and process automation spaces.

 

 

 

 

Good cost discipline through effective management of indirect spend and labor costs, including delivery of approximately $270 million of benefits from prior repositioning actions, as well as strong volume leverage, helped offset labor-related cost increases over 2009, as some 2009 policy actions (reduced work schedules, furloughs, incentive compensation reductions), were not repeated in 2010.

32


Committee Decisions on ICP:

With respect to 2010, the Committee took the following actions with respect to ICP:

 

 

 

 

2010 ICP Targets: Set Pre-Established ICP Goals for 2010 (described above) in February based on current assumptions regarding macro-economic and key end-market conditions;

 

 

 

 

2010 ICP Payments: Based on business results against the Pre-Established ICP Goals and other key performance measures as well as other relevant factors, the Committee (and the Board in the case of the CEO), in the first quarter of 2011, awarded annual ICP bonus amounts to the CEO and other Named Executive Officers in the following amounts:

 

 

 

Mr. Cote

 

 

$

 

4,300,000

 

Mr. Anderson

 

 

$

 

1,150,000

 

Mr. Kramvis

 

 

$

 

750,000

 

Mr. Fradin

 

 

$

 

1,300,000

 

Mr. Mahoney

 

 

$

 

700,000

 

In determining 2010 ICP payment amounts, the Committee considered overall Honeywell and individual performance for each of the Named Executive Officers, as well as the relevant SBG performance for Messrs. Kramvis, Fradin and Mahoney (described below in “Named Executive Officer—Performance & Direct Compensation”).

Long-Term Incentive Compensation (Generally). All long-term incentive awards to officers are approved by the Committee (and by all of the independent directors in the case of the CEO). Since 2003, the Company has historically provided long-term incentive awards in a mix of annual stock option grants and cash-based Growth Plan Units (“GPUs”) issued in the first year of each two-year performance cycle. For 2009 only, the Committee determined that it would not provide awards under the Growth Plan due to the difficulty of setting appropriate performance targets under volatile, declining market conditions, and Named Executive Officers instead received RSUs that vest only at the end of three years. For 2010, the Committee reinstated the mix of annual stock options and awards of GPUs (for a new 2-year performance cycle) in light of the relative stabilization in global economic conditions.

In addition to annual awards of long-term incentive compensation, the Committee periodically considers discretionary RSU awards as may be deemed necessary for retention, recruitment, and succession planning.

Long-Term Incentive Compensation (Equity). Annual equity grants are made in February of each year during an open trading window period following the release of Honeywell’s final results for the preceding fiscal year. Equity grants are made pursuant to the Company’s 2006 Stock Incentive Plan and are typically subject to vesting restrictions that require executives to remain employed with the Company to receive value.

Stock Options: Options are granted with an exercise price which is set equal to the fair market value of the Company’s Common Stock on the grant date and only have value to recipients if the stock price increases over the exercise price. Options granted to Named Executive Officers vest in equal 25% increments over a four-year period and represent approximately 64% of their target total annual LTI opportunity.

The following stock option awards were made with respect to 2010:

 

 

 

 

CEO: Under his employment agreement, Mr. Cote is eligible for annual equity awards based on a target value of 230% of the sum of his current base salary and annual incentive bonus target. The Committee reviews performance, but does not set specific performance targets or identify particular weightings when determining the number of options to grant to Mr. Cote. In accordance with its charter, in reviewing the long-term incentive component of CEO annual direct compensation, the Committee considered the Company’s operational performance and relative total shareowner return for the prior fiscal year, the value of similar incentive awards to CEOs at comparable companies, and awards previously made to Mr. Cote. Based on these considerations, in February 2010, the Committee granted Mr. Cote stock options to acquire 950,000 shares in recognition of his leadership in driving sustained financial and operational performance.

 

 

 

 

Other Named Executive Officers: For each of the other Named Executive Officers, the Committee considered historical grant levels, as well as the executive officer’s performance in the prior fiscal year, his impact on overall Company performance and his potential to contribute to the future performance of the Company and to assume increased leadership responsibilities. In addition, pursuant to a prior market-driven retention action, Mr. Fradin is eligible to receive an annual stock option grant worth $2 million. Based

33


 

 

 

 

on these considerations, in February 2010, the Committee granted each of the other Named Executive Officers the stock options stated below:

 

 

 

Mr. Anderson

 

 

 

275,000

 

Mr. Kramvis

 

 

 

175,000

 

Mr. Fradin

 

 

 

275,000

 

Mr. Mahoney

 

 

 

210,000

 

Restricted Stock Units: RSUs represent a right to receive Company stock only if certain conditions are met (e.g. continued employment through a specific date or the attainment of certain performance conditions). RSUs are linked with shareowner value since their value rises or falls along with the stock price. Beginning in 2010, a portion of the RSUs granted to Named Executive Officers is linked to Honeywell’s TSR performance ranking vs. the TSR of the companies in its Compensation Peer Group (“performance-adjusted RSUs”).     

The Committee periodically grants RSUs on a discretionary basis for retention purposes. Grants are not considered annually and were most recently made in 2007. These grants vest over an extended period of time (3 to 7 years). In 2010, the Committee awarded performance-adjusted RSUs to the following four Named Executive Officers, with the target grant amounts subject to a maximum 20% up or down adjustment based on Honeywell’s relative TSR performance ranking against its Compensation Peer Group over both a 1-year and 30-month period ending December 31, 2012:

 

 

 

Mr. Anderson

 

 

 

65,000

 

Mr. Kramvis

 

 

 

40,000

 

Mr. Fradin

 

 

 

65,000

 

Mr. Mahoney

 

 

 

50,000

 

In addition, as part of its process to review and strengthen the Company’s succession plan (see “Succession Planning” on pages 29-30) and protect the Company from competitive harm, the Committee awarded Mr. Kramvis a special grant of performance-adjusted RSUs which vest 100% on the fourth anniversary of the date of grant and have a target amount of 100,000 shares, subject to a maximum up or down adjustment of 25% based on Honeywell’s relative TSR performance ranking against its Compensation Peer Group over a 4-year period (October 1, 2010 - September 30, 2014). This award was contingent upon Mr. Kramvis’ agreement to non-competition and non-solicitation obligations and other restrictive covenants. The Company has the right to clawback the value of this grant in the event of a breach by Mr. Kramvis of these restrictive covenants.

CEO 2007 Performance Shares: 2010 marked the end of the four-year performance period related to performance shares granted to the CEO in 2007. The 2007 grant was designed to only have value to the extent that the Company’s TSR over the performance period (January 1, 2007-December 31, 2010), compared favorably to the TSR of the companies that comprised the S&P 100 at the beginning of the performance period. The targeted number of shares of 125,000 would be earned if the Company’s four-year relative TSR was at 60th percentile. Potential payouts ranged from zero (if the relative four-year TSR was below the 40th percentile) to 250,000 shares (if the relative four-year TSR was 85th percentile or higher). Final earned shares will be credited with the dividends that would have been paid on them during the performance period.

As of December 31, 2010, the Company’s 4-year TSR ranked at the 83.1 percentile vs. the S&P 100 comparator group and as such, the CEO earned 240,750 shares from his 2007 performance share grant and an additional 21,032 shares attributable to dividends. In accordance with the terms of this award, 50% of these shares will be paid to the CEO in the first quarter of 2011 and the remaining 50% will be paid in the first quarter of 2012, subject to the CEO remaining continuously employed with the Company through the date of payment. No performance shares were granted to the CEO in 2010.

Long-Term Incentive Compensation (Cash). The Company adopted the Growth Plan, a cash-based long-term incentive plan, in 2003 to focus executives on achievement of specific two-year financial performance goals that are aligned with business fundamentals rather than stock price appreciation. The Growth Plan is designed to reward sustainable, profitable growth, consistent with the Honeywell Initiative on Growth and the Company’s strategic plan. GPUs are awarded in February of the first year of a two-year performance cycle. The two-year performance cycles do not overlap. In accordance with SEC reporting requirements, the full amount of the Growth Plan payouts for the full two-year cycle are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table in the second year of the performance cycle. As such, payment results for the 2010-2011 Growth Plan will be reported in the Summary Compensation Table included in Honeywell’s 2012 Proxy Materials.

34


For the Named Executive Officers, the Growth Plan represents approximately 36% of their target total annual LTI opportunity.

The 2010-2011 Growth Plan performance cycle has two equally weighted performance goals: (i) total revenue, excluding the impact of acquisitions and divestitures and (ii) average return on investment (ROI). These objectives were selected to complement, but not duplicate, the primary annual corporate financial objectives utilized for ICP purposes. Growth Plan performance targets for each goal were set at the beginning of the performance cycle. The revenue goal was based on the Company’s annual operating plan for 2010 and projected targets for 2011 that reflected more aggressive growth rates for the SBGs in anticipation of end market recovery and stabilization consistent with the Company’s five-year strategic plan. ROI goals are based on the two year revenue targets and the projected income using 2010 annual operating plan and historical rates of incremental sales conversion of income for 2011. Net investment values were projected taking into account anticipated working capital improvements over the two year period.

For each performance goal, a minimum level of achievement (i.e., threshold) must be met before the plan will fund. Plan payouts are capped at 200% of target to the extent plan maximums are met or exceeded. For SBG executives (including Messrs. Kramvis, Fradin, and Mahoney), 50% of their potential payout for the 2010-2011 performance cycle is based on achievement of total Company metrics, and the remaining 50% is based on achievement of corresponding SBG objectives for their respective SBG. For Corporate executives (including Messrs. Cote and Anderson), payouts will be based solely on the achievement of total Company level metrics.

The following table presents the 2010-2011 Growth Plan performance goals at the total Company level:

 

 

 

 

 

 

 

 

 

 

 

 

 

2010-2011 Growth Plan Performance Goals (Total Company Level)

 

 

 

 

Performance

 

Funding
Level

 

Total
Revenue
(1)

 

ROI
(Avg)
(2)

 

 

 

 

 

 

Below Threshold

 

 

 

0

%

 

 

<$62.1 Billion

 

 

<18.33

%

 

 

 

 

 

 

 

Threshold

 

 

 

50

%

 

 

$62.1 Billion

 

 

 

18.33

%

 

 

 

 

 

 

 

Target

 

 

 

100

%

 

 

$65.4 Billion

 

 

 

20.29

%

 

 

 

 

 

 

 

Maximum

 

 

 

200

%

 

 

$68.6 Billion

 

 

 

22.27

%

 

 

 

 

 

 

 

Overall Funding Threshold: 1.25% EPS CAGR(3)

 

(1)

 

 

 

Total Revenue is cumulative revenue for 2010 and 2011, excluding the impact of acquisitions and divestitures and extraordinary items.

 

(2)

 

 

 

ROI is defined as the ratio of net income before interest expense to cash employed in the Company’s businesses. ROI is a measure of the Company’s ability to convert investments such as inventory, property, plant and equipment into profits. The ROI calculation excludes the impact of acquisitions and divestitures during the performance cycle (unless there is deemed to be sufficient certainty as their completion at the time of the setting of the targets for the performance cycle) and pension income/expense. The Growth Plan goal uses an arithmetic average of ROI for 2010 and 2011.

 

(3)

 

 

 

Per the terms of the Growth Plan, excludes pension income/expense.

Upon completion of the Growth Plan performance cycle, in order to promote retention, awards earned under the Growth Plan are paid in two installments, 50% in the first quarter of the year after the performance cycle ends and 50% in the first quarter of the second year after the performance cycle ends, with each payment contingent on the executive being employed with the Company on the date payment is made. Payments are forfeited if the executive is not employed by the Company on the payout date. Thus, any awards for the 2010-2011 Growth Plan performance cycle would not be fully paid until 2013.

Retirement Plans. The Company offers certain retirement benefits to our Named Executive Officers. Specifically, Named Executive Officers may participate in broad-based plans available to all executive employees, including a defined benefit pension plan and a 401(k) savings plan that provides matching Company contributions up to the first 8% of base salary contributed to the plan (subject to IRS limitations). Because the Internal Revenue Code limits the pension benefits that can be accrued under a tax-qualified defined benefit pension plan, the Company maintains an unfunded supplemental retirement plan to replace the portion of an executive’s pension benefit subject to the IRS limitations. In addition, certain Named Executive Officers are entitled to supplemental retirement benefits deemed appropriate in light of circumstances surrounding the recruitment or retention of these individuals. These plans are explained in detail beginning on page 51.

35


Nonqualified Deferred Compensation Plans. The Company offers executive officers (including the Named Executive Officers) the ability to participate in certain nonqualified deferred compensation plans to permit retirement savings in a tax-efficient manner. Executive officers can elect to defer up to 100% of their annual ICP awards. In addition, executive officers may also participate in a supplemental savings plan maintained in order to permit deferral of base salary that cannot be contributed to the Company’s 401(k) savings plan due to Internal Revenue Code limitations. These amounts are matched by the Company only to the extent required to make up for a shortfall in the available match under the 401(k) savings plan due to such limitations. Deferred compensation balances earn interest at a fixed rate based on the Company’s 15-year cost of borrowing, which is subject to change on an annual basis (4.8% in 2010, set at 3.84% for 2011). Consistent with the long-term focus of the executive compensation program, matching contributions are treated as if invested in Company Common Stock. Distributions are limited by plan rules, prior employee elections and Internal Revenue Code restrictions. These plans are explained in detail beginning on page 56.

Benefits and Perquisites. Our Named Executive Officers are entitled to participate in Company-wide benefits such as life, medical, dental, accidental death and disability insurance that are competitive with other similarly-sized companies. The Named Executive Officers participate in these programs on the same basis as the rest of the Company’s salaried employees. The Company maintains excess liability coverage for management personnel, including the Named Executive Officers. The CEO also receives additional life insurance benefits agreed at his time of hire in 2002 to replace lost benefits from his prior employer. The Company’s security policy requires the CEO to use Company aircraft for all air travel (business or personal) to ensure the personal security of the CEO and protect the confidentiality of the Company’s business, and to have home security and back-up power systems. The Company may also permit limited personal usage of corporate aircraft by other executive officers.

Named Executive Officer—Performance & Direct Compensation

Set forth below is a discussion of the compensation actions for each Named Executive Officer, which reflects how the Committee viewed their compensation in 2010.

The tables below their 2010 Performance Summary highlight the Committee’s 2010 annual direct compensation actions (base salary, ICP award, annual stock option grant and annualized target Growth Plan award) for each Named Executive Officer and the percentage variance in total annual direct compensation compared to the prior year. A significant portion of this variance between 2010 and 2009 is attributable to (a) 2010 ICP awards (no ICP awards were made for 2009 due to the short-term impact of global economic conditions) and (b) assigning half the target value of the 2010-2011 Growth Plan award to 2010 consistent with how the Committee views and plans target LTI awards (no amount attributable to 2009 as it was not included in any Growth Plan performance cycle). As a point of reference (since compensation in 2009 was significantly reduced), the tables also note the variance between 2010 and 2008 total annual direct compensation, determined on a consistent basis, for those Named Executive Officers holding their positions for all three years. Discretionary awards made in 2010 for retention and succession planning purposes which are not a part of annual direct compensation (see “Succession Planning”) are described separately in and below the tables. The tables differ from, and are not a substitute for, the Summary Compensation Table, which presents similar information in the format required by the SEC.

Generally, the Committee’s compensation decisions for 2010 reflect impressive business results and a more favorable outlook. These results were driven by leadership actions that positioned the Company to capitalize on improving business conditions and deliver sustainable, long-term business performance. These decisions demonstrate a strong alignment between pay and performance, with an emphasis on driving long-term growth and productivity.

The Company does not define specific pay equity ratios for its senior executives or Named Executive Officers. The compensation disparity between the CEO and the other Named Executive Officers is primarily due to the CEO having significantly greater responsibilities for management and oversight of a diversified, global enterprise and the corresponding market factors reflecting this difference.

36


David Cote—Chairman and Chief Executive Officer

2010 Performance Summary:

 

 

 

 

Successfully led the Company through a challenging financial environment, positioning the Company to respond well to improved economic conditions.

 

 

 

 

Resulted in sales growth of 8%, segment profit growth of 13% and proforma EPS growth (excluding the impact of the Pension MTM Adjustment) of 12%.

 

 

 

 

Focused the businesses on the linkage between net income and strong cash generation, resulting in a 6% increase in free cash flow to $3.6 billion and proforma free cash flow conversion of 152% (excluding the impact of the Pension Accounting Change), reflecting strong quality of earnings.

 

 

 

 

Drove “seed planting” investments in growth, including strategic acquisitions (over $1 billion) and next generation technologies in each of the Company’s business segments (including energy efficiency products and solutions, wireless sensing, low global warming refrigerants and gasoline and next generation turbo technologies).

 

 

 

 

Continued focus on expansion of sales, income and census in emerging regions (India, China, Middle East).

 

 

 

 

Emerging Region sales grew approximately 14% to approximately $5.5 billion in 2010, notably over 12% and over 11% in China and India, respectively.

 

 

 

 

Emerging Region census, excluding the Sperian acquisition, increased 13%. Census in India, China and Middle East, excluding the Sperian acquisition, increased 14%.

 

 

 

 

Gained traction on key process initiatives, while effectively managing costs and capital expenditures.

 

 

 

 

Repositioning savings of approximately $270 million in 2010.

 

 

 

 

Increased capital expenditures by 7% to $651 million (from $609 million).

 

 

 

 

Continued to invest in new products / technologies.

 

 

 

 

R&D spend up 10% to $1.5 billion.

 

 

 

 

 

 

 

Annual Compensation

 

2010

 

2009

 

 

Base Salary

 

 

$

 

1,800,000

   

 

$

 

1,800,000

   

 

Annual ICP Award

 

 

$

 

4,300,000

   

 

$

 

0

   

No bonus in 2009

 

 

 

 

 

 

 

Total Annual Cash Compensation

 

 

$

 

6,100,000

   

 

$

 

1,800,000

   

 

 

 

 

 

 

 

 

Growth Plan(a)

 

 

$

 

4,750,000

   

 

 

None

   

 

Restricted Stock Units(b)

 

 

$

 

   

 

$

 

4,252,500

   

 

Stock Options(c)

 

 

$

 

8,483,500

   

 

$

 

6,374,500

   

 

 

 

 

 

 

 

 

Target Total Annual LTI Compensation

 

 

$

 

13,233,500

   

 

$

 

10,627,000

   

 

 

 

 

 

 

 

 

Total Annual Direct Compensation

 

 

$

 

19,333,500

 

 

 

$

 

12,427,000

 

 

2010 up 56% vs. 2009

 

 

 

 

 

 

 

 

 

 

 

 

2010 down 9% vs. 2008


 

 

(a)

 

 

 

2010 portion of 2010-2011 Growth Plan annualized at target payout level - not yet earned or paid.

 

(b)

 

 

 

2009—150,000 RSUs at a share price of $28.35 issued as part of annual grant due to suspension of Growth Plan.

 

(c)

 

 

 

2010—950,000 stock options with a grant date Black-Scholes value $8.93.

 

 

 

 

 

2009—950,000 stock options with a grant date Black-Scholes value $6.71.

David Anderson—Senior Vice President and Chief Financial Officer

2010 Performance Summary:

 

 

 

 

Drove working capital and cost reduction initiatives which contributed to the Company exceeding goals for segment margin and free cash flow generation. Achieved record free cash flow of $4.2 billion pre-pension ($3.6 billion including pension).

 

 

 

 

Led evaluation and implementation of the Pension Accounting Change which enhances the transparency, clarity and comparability of discussions of the Company’s operating performance.

37


 

 

 

 

Led the Corporation’s overall strategic acquisitions, divestitures, and JV process in support of the SBGs which resulted in the completion of 6 acquisitions, 2 divestiture agreements and numerous JV agreements (most notably for expansion of HBS activities in the Middle East).

 

 

 

 

Continued to drive productivity through funding of $151 million in net repositioning projects, expected to yield approximately $100 million of savings in 2011.

 

 

 

 

Advanced organizational efficiency initiatives which contributed to company-wide segment margin improvement to a record level.

 

 

 

 

Generated $34 million in annual savings through reduction in the Company’s real estate footprint.

 

 

 

 

 

 

 

Annual Compensation

 

2010

 

2009

 

 

Base Salary

 

 

$

 

900,000

   

 

$

 

900,000

   

 

Annual ICP Award

 

 

$

 

1,150,000

   

 

$

 

0

   

No Bonus in 2009

 

 

 

 

 

 

 

Total Annual Cash Compensation

 

 

$

 

2,050,000

   

 

$

 

900,000

   

 

 

 

 

 

 

 

 

Growth Plan(a)

 

 

$

 

1,375,000

   

 

 

none

   

 

Restricted Stock Units(b)

 

 

$

 

   

 

$

 

1,134,000

   

 

Stock Options(c)

 

 

$

 

2,455,750

   

 

$

 

1,845,250

   

 

 

 

 

 

 

 

 

Target Total Annual LTI Compensation

 

 

$

 

3,830,750

   

 

$

 

2,979,250

   

 

 

 

 

 

 

 

 

Total Annual Direct Compensation

 

 

$

 

5,880,750

   

 

$

 

3,879,250

   

2010 up 52% vs. 2009

 

 

 

 

 

 

 

 

 

 

 

 

2010 flat vs. 2008

Non-Annual Retention Grant

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance-Adjusted RSUs(d)

 

 

$

 

3,090,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

(a)

 

 

 

2010 portion of 2010—2011 Growth Plan annualized at target payout level - not yet earned or paid.

 

(b)

 

 

 

2009—40,000 RSUs at a share price of $28.35 issued as part of annual grant due to suspension of Growth Plan.

 

(c)

 

 

 

2010—275,000 stock options with a grant date Black-Scholes value $8.93.

 

 

 

 

 

2009—275,000 stock options with a grant date Black-Scholes value $6.71.

 

(d)

 

 

 

2010—65,000 performance-adjusted RSUs at a grant date value of $47.55 per share issued for retention purposes, vests over 4 years.

Andreas Kramvis—President and Chief Executive Officer—Specialty Materials (SM)

2010 Performance Summary:

 

 

 

 

Grew SM sales 14% despite a tempered economic landscape, driven by the short-cycle businesses serving the agricultural, HVAC and electronics industries. SM experienced above market organic growth in nearly all segments.

 

 

 

 

Increased year-over-year SM segment profit by 24%. Achieved expanded SM segment margin improvement of 120 basis points above 2009.

 

 

 

 

Delivered significant year-over-year improvement in working capital turns.

 

 

 

 

Continued rigorous focus on new product introductions and global commercial excellence helped win significant new business; including securing contracts with two automobile manufacturers for next-generation low global warming product refrigerants. Over $200 million of 2010 revenue was from new products launched in 2010.

 

 

 

 

Expanded globalization initiatives, with over 50% of sales generated outside North America. Advanced Materials sales in China and India sales were up almost 20%; and with global energy demand continuing to rise, UOP is at the forefront of new infrastructure and capacity additions in both refining and natural gas globally. Significant new project wins included the large Petrobras project in which UOP was selected to provide all process technologies for two new refineries in Brazil and in other major refineries around the world.

 

 

 

 

Invested to upgrade engineering capabilities and operating effectiveness of SM manufacturing facilities; approximately 70% of these facilities achieved record output in 2010.

38


 

 

 

 

 

 

 

Annual Compensation

 

2010

 

2009

 

 

Base Salary

 

 

$

 

550,000

   

 

$

 

550,000

   

 

Annual ICP Award

 

 

$

 

750,000

   

 

$

 

0

   

No Bonus in 2009

 

 

 

 

 

 

 

Total Annual Cash Compensation

 

 

$

 

1,300,000

 

 

 

$

 

550,000

 

 

 

 

 

 

 

 

 

 

Growth Plan(a)

 

 

$

 

875,000

 

 

 

 

none

 

 

 

Restricted Stock Units(b)

 

 

$

 

   

 

$

 

708,750

   

 

Stock Options(c)

 

 

$

 

1,562,750

   

 

$

 

1,174,250

   

 

 

 

 

 

 

 

 

Target Total Annual LTI Compensation

 

 

$

 

2,437,750

 

 

 

$

 

1,883,000

 

 

 

 

 

 

 

 

 

 

Total Annual Direct Compensation

 

 

$

 

3,737,750

   

 

$

 

2,433,000

   

2010 up 54% vs. 2009

 

 

 

 

 

 

 

 

 

 

 

 

2009—First Year as
Named Executive Officer

Non-Annual Retention & Succession Grants

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance-Adjusted RSU’s(d)

 

 

$

 

6,996,000

   

 

 

   

 

 

 

 

 

 

 

 


 

 

(a)

 

 

 

2010 portion of 2010-2011 Growth Plan annualized at target payout level - not yet earned or paid.

 

(b)

 

 

 

2009—25,000 RSUs at a share price of $28.35 issued as part of annual grant due to suspension of Growth Plan.

 

(c)

 

 

 

2010—175,000 stock options with a grant date Black-Scholes value $8.93.

 

 

 

 

 

2009—175,000 stock options with a grant date Black-Scholes value $6.71.

 

(d)

 

 

 

2010—100,000 performance-adjusted RSUs valued at a grant date value of $51.08 per share and vesting in 4 years that also required agreement to comprehensive restrictive covenants, and 40,000 performance-adjusted RSUs valued at $47.20 per share and vesting over 5 years; issued for retention and succession planning purposes.

Roger Fradin—President and Chief Executive Officer—Automation and Control Solutions (ACS)

2010 Performance Summary:

 

 

 

 

Provided strong leadership and growth of ACS; the SBG with the Company’s most diverse product portfolio.

 

 

 

 

Grew ACS sales 9% (to $13.75 billion) despite a tempered economic landscape and contraction in the commercial new construction end markets. ACS sales growth was driven by the early-cycle industrial businesses, with above market organic growth in nearly all segments.

 

 

 

 

Increased year-over-year ACS segment profit by 11%. Expanded ACS segment margins 30 basis points above 2009 through disciplined cost controls and new product launches.

 

 

 

 

Delivered year-over-year improvement in working capital turns.

 

 

 

 

Successfully completed 6 acquisitions, adding $1 billion in sales to ACS and expanding its positions and capabilities in advanced process controls, SmartGrid energy efficiency and in personal protective equipment.

 

 

 

 

Launched over 400 new products across the portfolio, aligned to the mega-trends of energy efficiency, safety and security, and globalization.

 

 

 

 

Delivered over $80 million in revenue growth from the Middle East region and India.

 

 

 

 

Deployment of the Honeywell Operating System and six sigma processes produced the first site to achieve Silver status.

39


 

 

 

 

 

 

 

Annual Compensation

 

2010

 

2009

 

 

Base Salary

 

 

$

 

1,050,000

   

 

$

 

1,050,000

   

 

Annual ICP Award

 

 

$

 

1,300,000

   

 

$

 

0

   

No bonus in 2009

 

 

 

 

 

 

 

Total Annual Cash Compensation

 

 

$

 

2,350,000

   

 

$

 

1,050,000

   

 

 

 

 

 

 

 

 

Growth Plan (a)

 

 

$

 

1,375,000

 

 

 

 

none

 

 

 

Restricted Stock Units(b)

 

 

$

 

   

 

$

 

1,134,000

   

 

Stock Options(c)

 

 

$

 

2,455,750

   

 

$

 

1,845,250

   

 

 

 

 

 

 

 

 

Target Total Annual LTI Compensation

 

 

$

 

3,830,750

   

 

$

 

2,979,250

   

 

 

 

 

 

 

 

 

Total Annual Direct Compensation

 

 

$

 

6,180,750

   

 

$

 

4,029,250

   

2010 up 53% vs. 2009

 

 

 

 

 

 

 

 

 

 

 

 

2010 flat vs. 2008

Non-Annual Retention Grant

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance-Adjusted RSUs(d)

 

 

$

 

3,068,000

   

 

 

   

 

 

 

 

 

 

 

 


 

 

(a)

 

 

 

2010 portion of 2010-2011 Growth Plan annualized at target payout level - not yet earned or paid.

 

(b)

 

 

 

2009—40,000 RSUs at a share price of $28.35 issued as part of annual grant due to suspension of Growth Plan.

 

(c)

 

 

 

2010—275,000 stock options with a grant date Black-Scholes value $8.93.

 

 

 

 

 

2009—275,000 stock options with a grant date Black-Scholes value $6.71.

 

(d)

 

 

 

2010—65,000 performance-adjusted RSUs at a grant date fair value of $47.20 per share issued for retention purposes; vests over 4 years.

Succession Planning Action:

During 2010, the Committee took the following action with respect to Mr. Fradin for retention and succession planning purposes (see “Succession Planning” on pages 29-30):

 

 

 

 

Set a pension annuity value of $1.4 million, but only to the extent his existing pension formula does not produce this amount, contingent on him remaining employed with Honeywell until age 60 (he is currently 57), and provided for full vesting of outstanding stock options and RSUs upon retirement at or after age 62, except for equity awards granted in the 12 months preceding his retirement and the portion of any equity awards still subject to performance conditions at the time of his retirement.

 

 

 

 

Such benefits were conditioned upon Mr. Fradin’s agreement to certain restrictive covenants, including an extension of his non-competition and non-solicitation obligations to the later of age 65 or two years following the termination of his employment, and his agreement to provide a transition period of at least 12 months prior to his retirement (may be reduced to 6 months under certain limited circumstances), with the Company having certain clawback rights in the event of a breach by Mr. Fradin of these restrictive covenants.

Timothy Mahoney—President and Chief Executive Officer—Aerospace

2010 Performance Summary:

 

 

 

 

Led effort that resulted in Aerospace being awarded significant systems content on the C919, the single aisle commercial airliner in China. COMAC selected Aerospace to provide the auxiliary power unit, wheels and brakes, flight controls and combined inertial reference system and air data system—bringing our total wins with COMAC to more than $11 billion over the life of the programs.

 

 

 

 

Delivered year-over-year improvement in working capital turns.

 

 

 

 

Secured Air Transport & Regional repair and overhaul wins in excess of $2.6 billion including significant win-backs from key competitors.

 

 

 

 

Delivered over $175 million in savings from cost control initiatives.

 

 

 

 

Leading the effort in building a culture with focus on a balance of short and long term growth, international expansion, and operational excellence both in development and production programs.

40


 

 

 

 

 

Annual Compensation

 

2010

 

 

Base Salary

 

 

$

 

660,000

 

 

 

Annual ICP Award

 

 

$

 

700,000

 

 

 

 

 

 

 

 

Total Annual Cash Compensation

 

 

$

 

1,360,000

 

 

 

 

 

 

 

 

Growth Plan(a)

 

 

$

 

1,050,000

 

 

 

Stock Options(b)

 

 

$

 

1,875,300

 

 

 

 

 

 

 

 

Target Total Annual LTI Compensation

 

 

$

 

2,925,300

 

 

 

 

 

 

 

 

Total Annual Direct Compensation

 

 

$

 

4,285,300

 

 

First year as Named

 

 

 

 

 

 

 

 

 

Executive Officer

Non-Annual Retention Grant

 

 

 

 

Performance-Adjusted RSUs(c)

 

 

$

 

2,377,500

 

 

 

 

 

 

 

 


 

 

(a)

 

 

 

2010 portion of 2010-2011 Growth Plan annualized at target payout level - not yet earned or paid.

 

(b)

 

 

 

2010—210,000 stock options with a grant date Black-Scholes value $8.93.

 

(c)

 

 

 

2010—50,000 performance-adjusted RSUs at a grant date fair value of $47.55 issued for retention purposes; vests over 7 years.

Risk Considerations

The Committee believes that the balanced utilization of the various elements of the Company’s executive compensation program:

 

 

 

 

Supports the achievement of competitive revenue, earnings and cash performance in variable economic and industry conditions without undue risk; and

 

 

 

 

Mitigates the potential to reward risk-taking that may produce short-term results that appear in isolation to be favorable, but that may undermine the successful execution of the Company’s long-term business strategy and destroy shareowner value.

The following risk oversight and compensation design features guard against excessive risk-taking:

 

 

 

 

Company’s processes for developing strategic and annual operating plans, approval of capital investments, internal control over financial reporting and other financial, operational and compliance policies and practices (see pages 14-15 of this proxy statement for a full discussion of the role of the Board of Directors in the risk oversight process);

 

 

 

 

Diversified nature of the Company’s overall portfolio of businesses with respect to industries and markets served (types, long cycle/short cycle), products and services sold, and geographic footprint;

 

 

 

 

Review and approval of corporate, SBG and individual executive officer objectives by the Committee to ensure that these goals are aligned with the Company’s annual operating and strategic plans, achieve the proper risk/reward balance, and do not encourage unnecessary or excessive risk-taking;

 

 

 

 

Base salaries consistent with executives’ responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;

 

 

 

 

Determination of incentive awards based on a review of a variety of indicators of performance, thus diversifying the risk associated with any single indicator of performance;

 

 

 

 

Design of long-term compensation to reward executives for driving sustainable, profitable, growth for shareowners;

 

 

 

 

Vesting periods for equity compensation awards that encourage executives to focus on sustained stock price appreciation;

 

 

 

 

The mix between fixed and variable, annual and long-term, and cash and equity compensation are designed to encourage strategies and actions that are in the Company’s long-term best interests;

 

 

 

 

Incentive plans are not overly leveraged and cap the maximum payment; design features intended to balance pay for performance with an appropriate level of risk taking. The Committee has discretionary

41


 

 

 

 

authority to adjust annual ICP payments, which further reduces any business risk associated with such plan;

 

 

 

 

Adoption of “clawback” policies which provide for the recoupment of incentive compensation paid to senior executives in event of a significant restatement of Company financial results;

 

 

 

 

“Clawback” provisions in the Company’s current stock plan that allow the Company to cancel shares or recover gains realized by an executive if non-competition provisions are violated; and

 

 

 

 

Ownership thresholds in the Company’s stock ownership guidelines that require Named Executive Officers to hold shares of Honeywell Common Stock equal to 4 to 6 times their current annual base salary, as detailed below.

Accordingly, based upon the foregoing, the Company believes that the risks arising from its compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Stock Ownership Guidelines

The Committee believes that executives will more effectively pursue the long-term interests of the Company’s shareowners if they are also shareowners. Accordingly, the Committee adopted minimum stock ownership guidelines in May 2003 for all executive officers.

Under these guidelines, the CEO must hold shares of Common Stock equal in value to six times his current annual base salary. Other executive officers are required to own shares equal in value to four times their current base salary. Shares used in determining whether these guidelines are met include shares held personally, share equivalents held in qualified and nonqualified retirement accounts, and RSUs. Executive officers have five years to meet these guidelines. Each of the Named Executive Officers has attained the prescribed ownership threshold.

In addition, the stock ownership guidelines require officers to hold for at least one year the “net shares” from RSU vesting (with respect to RSUs granted after the adoption of the stock ownership guidelines) or the “net gain shares” of Common Stock that they receive by exercising stock options. “Net shares” means the number of shares obtained from RSU vesting, less the number of shares withheld or sold to pay applicable taxes. “Net gain shares” means the number of shares obtained by exercising the option, less the number of shares the officer sells to cover the exercise price of the options and pay applicable taxes. After the one-year holding period, officers may sell net shares or net gain shares, provided that following any sale, they continue to hold shares of Common Stock in excess of the prescribed minimum stock ownership level.

The stock ownership guidelines do not apply to officers at or over age 60 who have at least 10 years of service. This allows prudent investment planning for officers nearing retirement. As of the date of this proxy statement, all of the Named Executive Officers are subject to the stock ownership guidelines.

Recoupment

The Company’s Corporate Governance Guidelines provide for the recoupment of incentive compensation paid to senior executives in the event of a significant restatement of financial results (a “Restatement”). Under the guidelines, the Board can seek recoupment if and to the extent that (i) the amount of incentive compensation was calculated based upon the achievement of financial results that were subsequently reduced due to a Restatement, (ii) the senior executive engaged in misconduct, and (iii) the amount of incentive compensation that would have been awarded to the senior executive had the financial results been properly reported would have been lower than the amount actually awarded. The complete text of the Corporate Governance Guidelines is posted on our website at www.honeywell.com (see “Investor Relations”—”Corporate Governance”).

In the event that during the two-year period following an executive officer’s termination of employment with Honeywell, he or she commences employment with or otherwise provides services to a Honeywell competitor without the Committee’s prior approval, the Company reserves the right, for awards issued under the 2003 and 2006 Stock Incentive Plans, to (i) cancel all unexercised options, (ii) forfeit all unvested GPUs and RSUs, and (iii) recover any gains attributable to options that were exercised, and any value attributable to GPUs and RSUs that were paid, during the period beginning six months before and ending two years after the executive officer’s termination of employment.

42


Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million to the Named Executive Officers (excluding the Chief Financial Officer) if certain conditions are not satisfied. Honeywell intends, to the extent practicable, to preserve deductibility of compensation paid to its Named Executive Officers while maintaining compensation programs that effectively attract, motivate and retain exceptional executives in a highly competitive environment.

The Company has designed its annual and long-term cash incentive and stock option awards to permit full deductibility. The plans under which these awards are made have been approved by the shareowners and provide for awards that are eligible for deductibility as performance-based compensation. The Committee may use its discretion to set actual compensation below the maximum amount calculated by application of the relevant performance criteria. The Committee intended that all annual ICP and Growth Plan payments to the Named Executive Officers for 2010 would be deductible for federal income tax purposes.

The Committee does not believe, however, that it would be in the best interests of the Company or its shareowners to restrict the Committee’s discretion and flexibility (an integral part of our compensation philosophy) to craft compensation plans and arrangements that may result in non-deductible compensation expenses. Accordingly, the Committee from time to time has approved elements of compensation for certain Named Executive Officers that were consistent with the objectives of the Company’s executive compensation program, but that were not fully deductible (which may include, among other things, RSU awards and a portion of the CEO’s base salary, both of which occurred in 2010).

Transactions in Company Securities

No employee, including Named Executive Officers, may engage in short sales of Honeywell securities. Also, selling or purchasing puts or calls or otherwise trading in or writing options on Honeywell’s securities by employees, officers and directors is prohibited. These same restrictions also apply to our non- employee directors.

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT

The Management Development and Compensation Committee reviewed and discussed Honeywell’s Compensation Discussion and Analysis with management. Based on this review and discussion, the Committee recommended that the Board of Directors include the Compensation Discussion and Analysis in this proxy statement and the Form 10-K for the year ended December 31, 2010 filed with the SEC.

THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

D. Scott Davis, Chair
Gordon M. Bethune
Clive R. Hollick
Bradley T. Sheares

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal year 2010, all of the members of the Management Development and Compensation Committee were independent directors, and no member was an employee or former employee of Honeywell. No Committee member had any relationship requiring disclosure under “Certain Relationships and Related Transactions” on pages 20-21 of this proxy statement. During fiscal year 2010, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on our Management Development and Compensation Committee.

43


SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and
Principal Position

 

Year

 

Salary($)(1)

 

Bonus($)(2)

 

Stock
Awards($)
(3)

 

Option
Awards($)
(4)

 

Non-Equity
Incentive
Plan
Compensation($)
(5)

 

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings($)
(6)

 

All Other
Compensation($)
(7)

 

Total

David M. Cote

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman of the

 

 

 

2010

   

 

$

 

1,800,000

   

 

$

 

4,300,000

   

 

$

 

0

   

 

$

 

8,483,500

   

 

$

 

0

   

 

$

 

5,341,583

   

 

$

 

228,929

   

 

$

 

20,154,012

 

Board and Chief

 

 

 

2009

   

 

$

 

1,800,000

   

 

$

 

0

   

 

$

 

4,252,500

   

 

$

 

6,374,500

   

 

$

 

0

   

 

$

 

384,123

   

 

$

 

412,038

   

 

$

 

13,223,161

 

Executive Officer

 

 

 

2008

   

 

$

 

1,825,962

   

 

$

 

3,500,000

   

 

$

 

0

   

 

$

 

8,983,000

   

 

$

 

14,000,000

   

 

$

 

2,097,885

   

 

$

 

422,666

   

 

$

 

30,829,513

 

David J. Anderson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Vice

 

 

 

2010

   

 

$

 

900,000

   

 

$

 

1,150,000

   

 

$

 

3,090,750

   

 

$

 

2,455,750

   

 

$

 

0

   

 

$

 

1,526,121

   

 

$

 

37,000

   

 

$

 

9,159,621

 

President, Chief

 

 

 

2009

   

 

$

 

900,000

   

 

$

 

0

   

 

$

 

1,134,000

   

 

$

 

1,845,250

   

 

$

 

0

   

 

$

 

2,604,267

   

 

$

 

39,649

   

 

$

 

6,523,166

 

Financial Officer

 

 

 

2008

   

 

$

 

905,769

   

 

$

 

975,000

   

 

$

 

0

   

 

$

 

2,211,200

   

 

$

 

3,500,000

   

 

$

 

484,736

   

 

$

 

48,172

   

 

$

 

8,124,877

 

Andreas Kramvis(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President & Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Officer,

 

 

 

2010

   

 

$

 

550,000

   

 

$

 

750,000

   

 

$

 

6,996,000

   

 

$

 

1,562,750

   

 

$

 

0

   

 

$

 

197,831

   

 

$

 

35,605

   

 

$

 

10,092,186

 

Specialty Materials

 

 

 

2009

   

 

$

 

550,000

   

 

$

 

0

   

 

$

 

708,750

   

 

$

 

1,174,250

   

 

$

 

0

   

 

$

 

219,238

   

 

$

 

79,745

   

 

$

 

2,731,983

 

Roger Fradin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President & Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Officer,

 

 

 

2010

   

 

$

 

1,050,000

   

 

$

 

1,300,000

   

 

$

 

3,068,000

   

 

$

 

2,455,750

   

 

$

 

0

   

 

$

 

525,344

   

 

$

 

66,290

   

 

$

 

8,465,384

 

Automation and

 

 

 

2009

   

 

$

 

1,050,000

   

 

$

 

0

   

 

$

 

1,134,000

   

 

$

 

1,845,250

   

 

$

 

0

   

 

$

 

669,300

   

 

$

 

119,694

   

 

$

 

4,818,244

 

Control Solutions

 

 

 

2008

   

 

$

 

1,075,962

   

 

$

 

1,150,000

   

 

$

 

0

   

 

$

 

2,211,200

   

 

$

 

3,500,000

   

 

$

 

235,073

   

 

$

 

120,256

   

 

$

 

8,292,491

 

Timothy O. Mahoney(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President & Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Officer,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

 

 

2010

   

 

$

 

660,000

   

 

$

 

700,000

   

 

$

 

2,377,500

   

 

$

 

1,875,300

   

 

$

 

0

   

 

$

 

749,734

   

 

$

 

45,829

   

 

$

 

6,408,363

 


 

 

(1)

 

 

 

Named Executive Officers did not receive a base salary adjustment in 2009 or 2010.

 

(2)

 

 

 

At the request of Mr. Cote, the Committee determined that the Named Executive Officers would receive no annual incentive bonus awards for 2009.

 

(3)

 

 

 

Amounts reflect the aggregate grant date fair value of RSU awards computed in accordance with FASB ASC Topic 718. The grant date fair value per share for RSU awards made prior to 2010 represents the average of the high and low trading prices of a share of Company common stock on the grant date. The grant date fair value per share for RSU awards made in 2010 include an assumption with respect to the achievement of the performance adjustment attached to the award (refer to page 34 of this proxy for a more detailed description of the performance adjustment). Specifically, the grant date fair value of the performance-adjusted RSUs granted on October 6, 2010 (Messrs. Anderson and Mahoney) and October 7, 2010 (Messrs. Kramvis and Fradin) were valued at $47.55 and $47.20 per share, respectively, calculated in accordance with FASB ASC Topic 718 based on a multifactor Monte Carlo model which simulates Honeywell’s stock price and TSR relative to each of the other companies in the Compensation Peer Group. The grant date fair value of the performance-adjusted RSUs granted on October 26, 2010 was valued at $51.08 (Mr. Kramvis), using the same model as described in the preceding sentence.

 

(4)

 

 

 

Amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. The fair value of each option award is calculated on the date of grant using the Black-Scholes option-pricing model. Option awards were made on February 26, 2010 with a Black-Scholes value of $8.93 per share. A more detailed discussion of the assumptions used in the valuation of option awards made in fiscal year 2010 may be found in Note 20 of the Notes to the Financial Statements in the Company’s Form 10-K for the year ended December 31, 2010.

 

(5)

 

 

 

2008 values reflect the full earned amount under the Growth Plan with respect to the 2007—2008 performance cycle, reported in a single year as required by applicable SEC rules. Actual payment of this award was made in two equal installments, the first of which was made in March 2009 and the second in March 2010. The full earned amount under the 2010-2011 performance cycle will be reported as compensation earned during 2011 with actual equal payments to be made in March 2012 and March 2013, subject to the Named Executive Officer’s continued active employment on each payment date.

 

(6)

 

 

 

Represents (a) the aggregate change in the present value of each Named Executive Officer’s accumulated benefit under the Company’s pension plans from December 2009 to December 2010 (as disclosed in the Pension Benefits table on page 52 of this proxy statement) and (b) interest earned on deferred compensation

44


 

 

 

 

in 2010 that is considered “above-market interest” under SEC rules (as discussed beginning on page 58 of this proxy statement), as shown in the following table:

 

 

 

 

 

Name

 

Change in Aggregate
Pension Value

 

Above Market
Interest

David M. Cote

 

 

$

 

4,937,059

   

 

$

 

404,524

 

David J. Anderson

 

 

$

 

1,364,976

   

 

$

 

161,145

 

Andreas Kramvis

 

 

$

 

140,865

   

 

$

 

56,966

 

Roger Fradin

 

 

$

 

400,378

   

 

$

 

124,966

 

Timothy O. Mahoney

 

 

$

 

712,647

   

 

$

 

37,087

 

 

(7)

 

 

 

For 2010, all other compensation consists of the following:

 

 

 

 

 

 

 

 

 

 

 

Item

 

Mr. Cote

 

Mr. Anderson

 

Mr. Kramvis

 

Mr. Fradin

 

Mr. Mahoney

Excess liability insurance(A)

 

 

$

 

1,000

   

 

$

 

1,000

   

 

$

 

1,000

   

 

$

 

1,000

   

 

$

 

1,000

 

Executive life insurance(B)

 

 

$

 

62,000

   

 

 

   

 

 

   

 

 

   

 

 

 

Matching Contributions(C)

 

 

$

 

72,000

   

 

$

 

36,000

   

 

$

 

22,000

   

 

$

 

42,000

   

 

$

 

26,400

 

Personal use of company aircraft(D)

 

 

$

 

91,584

   

 

 

   

 

$

 

12,605

   

 

$

 

23,290

   

 

$

 

18,429

 

Security Systems(E)

 

 

$

 

2,345

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

$

 

228,929

   

 

$

 

37,000

   

 

$

 

35,605

   

 

$

 

66,290

   

 

$

 

45,829

 

 

 

 

 

 

 

 

 

 

 

 


 

 

(A)

 

 

 

Represents the annual premiums paid by the Company to purchase excess liability insurance coverage for each Named Executive Officer.

 

(B)

 

 

 

Under the terms of Mr. Cote’s employment agreement, the Company is obligated to provide Mr. Cote with $10 million in life insurance coverage at the Company’s cost. The Company reimbursed Mr. Cote a total of $62,000 for life insurance premiums paid by him in 2010.

 

(C)

 

 

 

Represents total Company contributions to each Named Executive Officer’s accounts in the tax-qualified Honeywell Savings and Ownership Plan and the non-tax-qualified Supplemental Savings Plan.

 

(D)

 

 

 

Mr. Cote is required by Company policy to use Company aircraft for all business and personal travel. The amount shown for each Named Executive Officer represents the aggregate incremental cost of personal travel by the Named Executive Officer. This amount is calculated by multiplying the total number of personal flight hours times the average direct variable operating costs (expenses for aviation employees, business meals, aircraft maintenance, telecommunications, transportation charges, including but not limited to hangar and landing fees, aviation fuel, and commissaries) per flight hour for company aircraft. The incremental cost of locating aircraft to the origin of a personal trip or returning aircraft from the completion of a personal trip is also included in this calculation. Use of company aircraft saves substantial time and allows the CEO better access to employees and customers around the world. Over 98% of the use of company aircraft is for business purposes.

 

(E)

 

 

 

Represents the total cost paid by the Company in 2010 for monthly fees relating to a personal home security system provided to Mr. Cote by the Company.

 

(8)

 

 

 

Data not reported for 2008 as Mr. Kramvis became a Named Executive Officer in 2009.

 

(9)

 

 

 

Data not reported for 2008 and 2009 as Mr. Mahoney became a Named Executive Officer in 2010.

45


GRANTS OF PLAN-BASED AWARDS—FISCAL YEAR 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Award
Type
(1)

 

Grant
Date

 

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
(2)

 

Estimated Future Payouts
Under Equity
Incentive Plan Awards
(3)

 

All Other
Option
Awards:
Number of
Securities
Underlying
Options(#)

(4)

 

Exercise
or Base
Price of
Option
Awards
($/Sh)

 

Closing
Price on
Date of
Grant of
Option
Awards
($/Sh)

 

Grant
Date
Fair
Value
of Stock
and
Option
Awards

(5)

 

Units

 

Threshold
($)

 

Target
($)

 

Maximum
($)

 

Threshold
(#)

 

Target
(#)

 

Maximum
(#)

David M. Cote

 

NQSO

 

 

 

2/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

950,000

   

 

$

 

40.17

   

 

$

 

40.16

   

 

$

 

8,483,500

 

 

 

GPU

 

 

 

2/26/10

   

 

 

95,000

   

 

$

 

4,750,000

   

 

$

 

9,500,000

   

 

$

 

19,000,000

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

David J. Anderson

 

NQSO

 

 

 

2/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

275,000

   

 

$

 

40.17

   

 

$

 

40.16

   

 

$

 

2,455,750

 

 

 

GPU

 

 

 

2/26/10

   

 

 

27,500

   

 

$

 

1,375,000

   

 

$

 

2,750,000

   

 

$

 

5,500,000

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

RSU

 

 

 

10/6/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

52,000

   

 

 

65,000

   

 

 

78,000

   

 

 

   

 

 

   

 

 

   

 

$

 

3,090,750

 

Andreas C. Kramvis

 

NQSO

 

 

 

2/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

175,000

   

 

$

 

40.17

   

 

$

 

40.16

   

 

$

 

1,562,750

 

 

GPU

 

 

 

2/26/10

   

 

 

17,500

   

 

$

 

875,000

   

 

$

 

1,750,000

   

 

$

 

3,500,000

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

RSU

 

 

 

10/7/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

32,000

   

 

 

40,000

   

 

 

48,000

   

 

 

   

 

 

   

 

 

   

 

$

 

1,888,000

 

 

RSU

 

 

 

10/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

75,000

   

 

 

100,000

   

 

 

125,000

   

 

 

   

 

 

   

 

 

   

 

$

 

5,108,000

 

Roger Fradin

 

NQSO

 

 

 

2/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

275,000

   

 

$

 

40.17

   

 

$

 

40.16

   

 

$

 

2,455,750

 

 

GPU

 

 

 

2/26/10

   

 

 

27,500

   

 

$

 

1,375,000

   

 

$

 

2,750,000

   

 

$

 

5,500,000

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

RSU

 

 

 

10/7/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

52,000

   

 

 

65,000

   

 

 

78,000

   

 

 

   

 

 

   

 

 

   

 

$

 

3,068,000

 

Timothy O. Mahoney

 

NQSO

 

 

 

2/26/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

210,000

   

 

$

 

40.17

   

 

$

 

40.16

   

 

$

 

1,875,300

 

 

 

GPU

 

 

 

2/26/10

   

 

 

21,000

   

 

$

 

1,050,000

   

 

$

 

2,100,000

   

 

$

 

4,200,000

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

RSU

 

 

 

10/6/10

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

40,000

   

 

 

50,000

   

 

 

60,000

   

 

 

   

 

 

   

 

 

   

 

$

 

2,377,500

 


 

 

(1)

 

 

 

Award Type:

NQSO = Nonqualified Stock Option

GPU = Growth Plan Unit

RSU = Restricted Stock Unit

 

(2)

 

 

 

Represents GPUs awarded for the performance period of January 1, 2010 through December 31, 2011. Any earned award is paid out in equal installments as follows: 50% in March 2012, and 50% in March 2013 subject to the Named Executive Officer’s continued active employment on the applicable payment dates. Additional details can be found beginning on page 34 of this proxy statement.

 

(3)

 

 

 

The amounts in the Target column represent the number of RSUs granted to the Named Executive Officers on the grant date under the 2006 SIP. The RSUs granted to the Named Executive Officers, other than Mr. Kramvis’ grant of 100,000 RSUs, are subject to a 20% increase or decrease based on 1-year and 30-month relative TSR versus the Company’s Compensation Peer Group beginning July 1, 2010. Mr. Kramvis’ grant of 100,000 RSUs is subject to a 25% increase or decrease based on 4-year relative TSR versus the Company’s Compensation Peer Group beginning October 1, 2010. All grants are eligible to receive dividend equivalents in the form of additional shares which vest in accordance with the vesting schedules of the underlying RSUs.

Vesting of the awards is as follows, subject to continued active employment on the applicable vesting dates:

 

 

 

 

Mr. Anderson: 50% on October 6, 2013, and 50% on October 6, 2014

 

 

 

 

Mr. Kramvis:

 

 

 

 

40,000 RSUs: 50% on October 7, 2013, and 50% on October 7, 2015; and

 

 

 

 

100,000 RSUs: 100% on October 26, 2014

 

 

 

 

Mr. Fradin: 100% on October 7, 2014

 

 

 

 

Mr. Mahoney: 33% on October 6, 2013, 33% on October 6, 2015, and 34% on October 6, 2017

 

(4)

 

 

 

Represents stock options granted to the Named Executive Officers on the grant date. The stock options vest in equal annual installments over a period of four years.

 

(5)

 

 

 

The grant date fair value of each stock option was $8.93 calculated in accordance with FASB ASC Topic 718, using the Black-Scholes option valuation model at the time of grant. The grant date fair value of the performance-adjusted RSU awards granted on October 6, 2010 and October 7, 2010 were valued at $47.55 and $47.20 per share, respectively, calculated in accordance with FASB ASC Topic 718 based on a multifactor Monte Carlo model which simulates Honeywell’s stock price and TSR relative to each of the other companies in the Compensation Peer Group. The grant date fair value of the performance-adjusted RSU

46


 

 

 

 

award granted on October 26, 2010 was valued at $51.08, using the same model as described in the preceding sentence.

Description of Plan Based Awards

All NQSO, GPU and RSU awards granted to the Named Executive Officers in fiscal year 2010 were granted under the Company’s 2006 Stock Incentive Plan and are governed by and subject to the terms and conditions of the 2006 Stock Incentive Plan and the relevant award agreements. A detailed discussion of stock options, GPUs and RSUs can be found beginning on page 33 of this proxy statement.

47


OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Grant
Year

 

Option Awards

 

Stock Awards

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

 

Option
Exercise
Price($)

 

Option
Expiration
Date

 

Number of
Shares or
Units of
Stock That
Have Not
Vested(#)

 

Market Value
of Shares
or Units
of Stock
That Have
Not Vested($)
(1)

David M. Cote

 

 

 

2010

   

 

 

   

 

 

950,000

(2)

 

 

$

 

40.17

   

 

 

2/25/2020

   

 

 

   

 

 

 

 

 

 

 

2009

   

 

 

237,500

   

 

 

712,500

(3)

 

 

$

 

28.35

   

 

 

2/23/2019

   

 

 

157,855

(7)

 

 

 

$

 

8,391,572

 

 

 

 

2008

   

 

 

325,000

   

 

 

325,000

(4)

 

 

$

 

58.48

   

 

 

2/25/2018

   

 

 

   

 

 

 

 

 

 

 

2007

   

 

 

525,000

   

 

 

175,000

(5)

 

 

$

 

47.38

   

 

 

2/25/2017

   

 

 

261,782

(8)

 

 

 

$

 

13,916,331

 

 

 

 

2006

   

 

 

700,000

   

 

 

   

 

$

 

42.32

   

 

 

2/16/2016

   

 

 

   

 

 

 

 

 

 

 

2005

   

 

 

600,000

   

 

 

   

 

$

 

36.51

   

 

 

2/1/2015

   

 

 

   

 

 

 

 

 

 

2004

   

 

 

600,000

   

 

 

   

 

$

 

35.65

   

 

 

2/5/2014

   

 

 

   

 

 

 

 

 

 

 

2003

   

 

 

600,000

   

 

 

   

 

$

 

23.93

   

 

 

2/6/2013

   

 

 

   

 

 

 

 

 

 

2002

   

 

 

1,101,100

   

 

 

   

 

$

 

33.38

   

 

 

2/18/2012

   

 

 

378,200

(9)

 

 

 

$

 

20,105,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

   

 

 

4,688,600

   

 

 

2,162,500

   

 

 

   

 

 

   

 

 

797,837

   

 

$

 

42,413,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David J. Anderson

 

 

 

2010

   

 

 

   

 

 

275,000

(2)

 

 

 

$

 

40.17

   

 

 

2/25/2020

   

 

 

65,379

(10)

 

 

 

$

 

3,475,548

 

 

 

 

 

2009

   

 

 

68,750

   

 

 

206,250

(3)

 

 

 

$

 

28.35

   

 

 

2/23/2019

   

 

 

42,094

(7)

 

 

 

$

 

2,237,717

 

 

 

 

2008

   

 

 

80,000

   

 

 

80,000

(4)

 

 

 

$

 

58.48

   

 

 

2/25/2018

   

 

 

   

 

 

 

 

 

 

 

2007

   

 

 

131,250

   

 

 

43,750

(5)

 

 

 

$

 

47.38

   

 

 

2/25/2017

   

 

 

   

 

 

 

 

 

 

2006

   

 

 

175,000

   

 

 

   

 

$

 

42.32

   

 

 

2/16/2016

   

 

 

37,500

(11)

 

 

 

$

 

1,993,500

 

 

 

 

 

2005

   

 

 

150,000

   

 

 

   

 

$

 

36.51

   

 

 

2/1/2015

   

 

 

   

 

 

 

 

 

 

2004

   

 

 

150,000

   

 

 

   

 

$

 

35.65

   

 

 

2/5/2014

   

 

 

   

 

 

 

 

 

 

 

2003

   

 

 

262,000

   

 

 

   

 

$

 

28.13

   

 

 

7/24/2013

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

   

 

 

1,017,000

   

 

 

605,000

   

 

 

   

 

 

   

 

 

144,973

   

 

$

 

7,706,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andreas C. Kramvis

 

 

 

2010

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

100,583

(12)

 

 

 

$

 

5,346,992

 

 

 

 

2010

   

 

 

   

 

 

175,000

(2)

 

 

 

$

 

40.17

   

 

 

2/25/2020

   

 

 

40,233

(13)

 

 

 

$

 

2,138,786

 

 

 

 

 

2009

   

 

 

43,750

   

 

 

131,250

(3)

 

 

 

$

 

28.35

   

 

 

2/23/2019

   

 

 

26,309

(7)

 

 

 

$

 

1,398,586

 

 

 

 

2008

   

 

 

33,000

   

 

 

33,000

(6)

 

 

 

$

 

56.35

   

 

 

3/31/2018

   

 

 

54,084

(14)

 

 

 

$

 

2,875,105

 

 

 

 

 

2008

   

 

 

7,000

   

 

 

7,000

(4)

 

 

 

$

 

58.48

   

 

 

2/25/2018

   

 

 

3,058

(15)

 

 

 

$

 

162,563

 

 

 

 

2007

   

 

 

12,000

   

 

 

4,000

(5)

 

 

 

$

 

47.38

   

 

 

2/25/2017

   

 

 

   

 

 

 

 

 

 

 

2006

   

 

 

30,000

   

 

 

   

 

$

 

42.32

   

 

 

2/16/2016

   

 

 

   

 

 

 

 

 

 

2005

   

 

 

30,000

   

 

 

   

 

$

 

36.51

   

 

 

2/1/2015

   

 

 

   

 

 

 

 

 

 

 

2004

   

 

 

25,000

   

 

 

   

 

$

 

35.65

   

 

 

2/5/2014

   

 

 

6,800

(16)

 

 

 

$

 

361,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

   

 

 

180,750

   

 

 

350,250

   

 

 

   

 

 

   

 

 

231,067

   

 

$

 

12,283,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roger Fradin

 

 

 

2010

   

 

 

   

 

 

275,000

(2)

 

 

 

$

 

40.17

   

 

 

2/25/2020

   

 

 

65,379

(17)

 

 

 

$

 

3,475,548

 

 

 

 

2009

   

 

 

68,750

   

 

 

206,250

(3)

 

 

 

$

 

28.35

   

 

 

2/23/2019

   

 

 

42,094

(7)

 

 

 

$

 

2,237,717

 

 

 

 

 

2008

   

 

 

80,000

   

 

 

80,000

(4)

 

 

 

$

 

58.48

   

 

 

2/25/2018

   

 

 

   

 

 

 

 

 

 

2007

   

 

 

131,250

   

 

 

43,750

(5)

 

 

 

$

 

47.38

   

 

 

2/25/2017

   

 

 

   

 

 

 

 

 

 

 

2006

   

 

 

175,000

   

 

 

   

 

$

 

42.32

   

 

 

2/16/2016

   

 

 

   

 

 

 

 

 

 

2005

   

 

 

150,000

   

 

 

   

 

$

 

36.51

   

 

 

2/1/2015

   

 

 

17,000

(18)

 

 

 

$

 

903,720

 

 

 

 

 

2004

   

 

 

150,000

   

 

 

   

 

$

 

35.65

   

 

 

2/5/2014

   

 

 

   

 

 

 

 

 

 

2003

   

 

 

75,000

   

 

 

   

 

$

 

23.93

   

 

 

2/6/2013

   

 

 

   

 

 

 

 

 

 

 

2002

   

 

 

75,000

   

 

 

   

 

$

 

32.43

   

 

 

7/28/2012

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

   

 

 

905,000

   

 

 

605,000

   

 

 

   

 

 

   

 

 

124,473

   

 

$

 

6,616,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timothy O. Mahoney

 

 

 

2010

   

 

 

   

 

 

210,000

(2)

 

 

 

$

 

40.17

   

 

 

2/25/2020

   

 

 

50,291

(19)

 

 

 

$

 

2,673,470

 

 

 

 

2009

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

11,478

(20)

 

 

 

$

 

610,170

 

 

 

 

 

2009

   

 

 

10,000

   

 

 

30,000

(3)

 

 

 

$

 

28.35

   

 

 

2/23/2019

   

 

 

15,764

(21)

 

 

 

$

 

838,014

 

 

 

 

2008

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

21,849

(22)

 

 

 

$

 

1,161,493

 

 

 

 

 

2008

   

 

 

10,000

   

 

 

10,000

(4)

 

 

 

$

 

58.48

   

 

 

2/25/2018

   

 

 

4,369

(15)

 

 

 

$

 

232,256

 

 

 

 

2007

   

 

 

15,000

   

 

 

5,000

(5)

 

 

 

$

 

47.38

   

 

 

2/25/2017

   

 

 

   

 

 

 

 

 

 

 

2006

   

 

 

30,000

   

 

 

   

 

$

 

42.32

   

 

 

2/16/2016

   

 

 

11,390

(23)

 

 

 

$

 

605,492

 

 

 

 

2005

   

 

 

13,500

   

 

 

   

 

$

 

36.51

   

 

 

2/1/2015

   

 

 

   

 

 

 

 

 

 

 

2004

   

 

 

6,000

   

 

 

   

 

$

 

35.65

   

 

 

2/5/2014

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

   

 

 

84,500

   

 

 

255,000

   

 

 

   

 

 

   

 

 

115,141

   

 

$

 

6,120,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

(1)

 

 

 

Market value determined using the closing market price of $53.16 per share of Common Stock on December 31, 2010.

 

(2)

 

 

 

2010 option grant vests in four annual installments at the rate of 25% per year. The first installment vested on February 26, 2011. The remaining installments will vest on February 26, 2012, February 26, 2013, and February 26, 2014.

48


 

(3)

 

 

 

2009 option grant vests in four annual installments at the rate of 25% per year. The first two installments vested on February 24, 2010 and February 24, 2011. The remaining installments will vest on February 24, 2012, and February 24, 2013.

 

(4)

 

 

 

2008 option grant vests in four annual installments at the rate of 25% per year. The first three installments vested on February 26, 2009, February 26, 2010 and February 26, 2011. The remaining installment will vest on February 26, 2012.

 

(5)

 

 

 

2007 option grant vests in four annual installments at the rate of 25% per year. The four installments vested on February 26, 2008, February 26, 2009, February 26, 2010 and February 26, 2011.

 

(6)

 

 

 

These stock options vest in four annual installments at the rate of 25% per year. The first two installments vested on March 31, 2009, and March 31, 2010. The remaining installments will vest on March 31, 2011, and March 31, 2012.

 

(7)

 

 

 

These RSUs were granted in 2009 in lieu of GPUs and will vest on February 24, 2012. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(8)

 

 

 

Performance shares granted to Mr. Cote in 2007. Performance cycle ended December 31, 2010. Actual payout of shares as follows: 50% in March 2011, and 50% in March 2012, subject to continued active employment on applicable payment dates. Shares reflected here include dividend equivalents in the form of additional shares that will payout based on the same payment schedule of the performance shares to which they relate.

 

(9)

 

 

 

These RSUs will vest on July 1, 2012.

 

(10)

 

 

 

These RSUs will vest 50% on October 6, 2013, and 50% on October 6, 2014. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(11)

 

 

 

These RSUs will vest on July 28, 2011.

 

(12)

 

 

 

These RSUs will vest 100% on October 26, 2014. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(13)

 

 

 

These RSUs will vest 50% on October 7, 2013, and 50% on October 7, 2015. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(14)

 

 

 

These RSUs will vest 33% on each of July 25, 2011 and July 25, 2013, with the remaining RSUs vesting on July 25, 2015. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(15)

 

 

 

These RSUs vested 100% on February 26, 2011. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that vested based on the same vesting schedule of the RSUs to which they relate.

 

(16)

 

 

 

These RSUs will vest on June 14, 2011.

 

(17)

 

 

 

These RSUs will vest 100% on October 7, 2014. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(18)

 

 

 

These RSUs will vest on July 29, 2012.

 

(19)

 

 

 

These RSUs will vest 33% on each of October 6, 2013 and October 6, 2015, with the remaining RSUs vesting on October 6, 2017. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(20)

 

 

 

These RSUs will vest 33% on each of July 31, 2012 and July 31, 2014, with the remaining RSUs vesting on July 31, 2016. RSUs reflected here include dividend equivalents granted through December 31, 2010 which

49


 

 

 

 

were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(21)

 

 

 

These RSUs will vest on February 24, 2012. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(22)

 

 

 

33% of these RSUs vested on February 26, 2011, 33% will vest on February 26, 2013 and the remaining 34% will vest on February 26, 2015. RSUs reflected here include dividend equivalents granted through December 31, 2010 which were reinvested as additional unvested RSUs that will vest based on the same vesting schedule of the RSUs to which they relate.

 

(23)

 

 

 

49% of these RSUs will vest on June 28, 2011 with the remaining RSUs vesting on June 28, 2013.

50


OPTION EXERCISES AND STOCK VESTED—FISCAL YEAR 2010

 

 

 

 

 

 

 

 

 

Name

 

Option Awards

 

Stock Awards

 

Number of Shares
Acquired on
Exercise
(#)

 

Value Realized on
Exercise
($)
(1)

 

Number of Shares
Acquired on
Vesting
(#)

 

Value Realized on
Vesting
($)
(2)

David M. Cote

 

 

 

1,101,100

(3)

 

 

 

$

 

5,801,035

   

 

 

   

 

 

 

David J. Anderson

 

 

 

   

 

 

   

 

 

   

 

 

 

Andreas Kramvis

 

 

 

30,000

(4)

 

 

 

$

 

500,233

   

 

 

3,200

(6)

 

 

 

$

 

128,544

 

Roger Fradin

 

 

 

82,000

(5)

 

 

 

$

 

1,007,809

   

 

 

84,168

(7)

 

 

 

$

 

3,674,233

 

Timothy O. Mahoney

 

 

 

   

 

 

   

 

 

9,100

(8)

 

 

 

$

 

367,485

 


 

 

(1)

 

 

 

Represents “in the money” value at exercise calculated as (a) times (b) where (a) equals the difference between the market price at exercise and the exercise price, and (b) equals the total number of options exercised.

 

(2)

 

 

 

Represents the total value at vest calculated as (a) times (b), where (a) equals the average of the high and low share price of one share of Common Stock on the day of vest, and (b) equals the total number of RSUs that vested.

 

(3)

 

 

 

Represents the total number of stock options required to be exercised by Mr. Cote related to a domestic relations order. Mr. Cote will receive no economic benefit as a result of the exercise of these options. In connection with this stock option exercise, shares were withheld sufficient to cover the applicable taxes due upon exercise.

 

(4)

 

 

 

In connection with the stock option exercise, shares were withheld sufficient to cover the applicable taxes due upon exercise with Mr. Kramvis retaining a total of 5,038 net shares.

 

(5)

 

 

 

In connection with the stock option exercise, shares were withheld sufficient to cover the applicable taxes due upon exercise with Mr. Fradin retaining a total of 11,165 net shares.

 

(6)

 

 

 

In connection with the RSU vesting, shares were withheld sufficient to cover the applicable taxes due upon vesting with Mr. Kramvis retaining a total of 2,009 net shares.

 

(7)

 

 

 

In connection with the RSU vesting, shares were withheld sufficient to cover the applicable taxes due upon vesting with Mr. Fradin retaining a total of 45,264 net shares.

 

(8)

 

 

 

In connection with the RSU vesting, shares were withheld sufficient to cover the applicable taxes due upon vesting with Mr. Mahoney retaining a total of 5,983 net shares.

PENSION BENEFITS

The following table provides summary information about the pension benefits that have been earned by our Named Executive Officers under two pension plans, the Honeywell International Inc. Supplemental Executive Retirement Plan (the “SERP”) and the Honeywell International Inc. Retirement Earnings Plan (the “REP”). The SERP and REP benefits depend on the length of each Named Executive Officer’s employment with us (and companies that have been acquired by us and, with respect to Mr. Anderson, service with certain prior employers). This information is provided in the table below under the column entitled “Number of years of credited service.” The column in the table below entitled “Present value of accumulated benefit” represents a financial calculation that estimates the cash value today of the full pension benefit that has been earned by each Named Executive Officer. It is based on various assumptions, including assumptions about how long each Named Executive Officer will live and future interest rates. Additional details about the pension benefits for each Named Executive Officer follow the table.

51


Pension Benefits—Fiscal Year 2010

 

 

 

 

 

 

 

Name

 

Plan name

 

Number of years of
credited service
(#)

 

Present value of
accumulated benefits
(2)
($)

David M. Cote

 

REP

 

 

 

8.9

   

 

$

 

100,030

 

 

 

SERP

 

 

 

8.9

   

 

$

 

34,038,490

 

 

 

 

 

 

 

 

 

Total

 

 

 

   

 

$

 

34,138,520

 

 

 

 

 

 

 

 

David J. Anderson

 

REP

 

 

 

7.5

   

 

$

 

102,038

 

 

SERP

 

 

 

11.1

(1)

 

 

 

$

 

6,345,212

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

   

 

$

 

6,447,250

 

 

 

 

 

 

 

 

Andreas Kramvis

 

REP

 

 

 

23.2

   

 

$

 

469,574

 

 

 

SERP

 

 

 

23.2

   

 

$

 

315,306

 

 

 

 

 

 

 

 

 

Total

 

 

 

   

 

$

 

784,880

 

 

 

 

 

 

 

 

Roger Fradin

 

REP

 

 

 

34.6

   

 

$

 

732,126

 

 

SERP

 

 

 

34.6

   

 

$

 

1,012,448

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

   

 

$

 

1,744,574

 

 

 

 

 

 

 

 

Timothy Mahoney

 

REP

 

 

 

13.1

   

 

$

 

248,384

 

 

 

SERP

 

 

 

13.1

   

 

$

 

1,588,249

 

 

 

 

 

 

 

 

 

Total

 

 

 

   

 

$

 

1,836,633

 

 

 

 

 

 

 

 


 

 

(1)

 

 

 

The service taken into account in calculating Mr. Anderson’s SERP benefit includes 3.6 years of employment with his former employer. The portion of the present value of the accumulated SERP benefit attributable to these additional years of service is $1,619,486.

 

(2)

 

 

 

The present value of the accumulated retirement benefit for each Named Executive Officer is calculated using a 5.25% discount rate, the RP-2000 mortality table and a retirement age of 60 for Mr. Cote, 62 for Messrs. Anderson and Mahoney and 65 for Messrs. Fradin and Kramvis, the earliest ages at which the Named Executive Officer can retire without an early retirement benefit reduction.

Summary Information

 

 

 

 

The REP is a tax-qualified pension plan in which substantially all of our U.S. employees participate.

 

 

 

 

The REP complies with tax requirements applicable to broad-based pension plans, which impose dollar limits on the amount of benefits that can be provided. As a result, the pensions that can be paid under the REP for higher-paid employees represent a much smaller fraction of current income than the pensions that can be paid to less highly paid employees. We make up for this difference, in part, by providing supplemental pensions through the SERP.

 

 

 

 

In addition, Messrs. Cote, Fradin and Anderson are entitled to additional supplemental pension benefits which are described under the Contractual formula below. These additional supplemental pension benefits are also provided by the SERP.

 

 

 

 

All SERP and Contractual benefits other than Mr. Anderson’s Contractual benefit will be paid as of the first of the month following 105 days after the later of the officer’s separation from service (as that term is defined in Internal Revenue Code Section 409A) or his earliest retirement date.

Pension Benefit Calculation Formulas

Within the REP and the SERP a variety of formulas are used to determine pension benefits. Different benefit formulas apply for different groups of employees for historical reasons. Generally, as we have grown through acquisitions, we have in many cases retained the benefit formulas under pension plans that were maintained by the companies that we acquired, in order to provide continuity for employees. The differences in the benefit formulas for our Named Executive Officers reflect this history. The explanation below describes the formulas that are used to determine the amount of pension benefits for each of our Named Executive Officers under the REP and the SERP.

52


 

 

 

Name of Formula

 

Benefit Calculation

REP

 

Lump sum equal to (1) 6% of final average compensation (annual average compensation for the five calendar years out of the previous 10 calendar years that produces highest average) times (2) credited service

Allied Salaried

 

Single life annuity equal to (1)(A) 2% of final average compensation (average of compensation for the 60 consecutive months out of prior 120 months that produces highest average) times (B) credited service (up to 25 years), minus (2) 64% of estimated Social Security benefits

Signal

 

Single life annuity equal to (1)(A) 1.5% of final average compensation (average compensation for the 60 consecutive months out of the last 120 that produces the highest average) times (B) credited service (with no limit on service) minus (2)(A) 1.5% of estimated Social Security times (B) credited service up to 331/3years

Pittway

 

Single life annuity equal to (1) 1.2% of eligible compensation each year, up to the average of the Social Security wage bases, plus (2) 1.85% of eligible compensation in excess of such average

Contractual

 

For Mr. Cote, single life annuity at age 60 equal to 60% of the average of final three years of base salary and bonus

 

 

For Mr. Anderson, an annual amount equal to $125,000 payable in the form of a single life annuity if retirement occurs at or after age 60 or in the event of involuntary termination without cause or a change in control, or $175,000 if retirement occurs at or after age 62

 

 

For Mr. Fradin, single life annuity at later of age 60 or termination of employment equal to 50% of the average of final three years of base salary and bonus, subject to a $1,400,000 minimum annual benefit in most cases

For each formula listed in the chart above, compensation taken into account in calculating pension benefits includes base pay, short-term incentive compensation, payroll-based rewards and recognition and lump sum incentives. Calculations for pension formulas other than the REP formula include the annual incentive compensation in the year earned. The REP formula includes annual incentive compensation in the year paid. The amount of compensation taken into account under the REP is limited by tax rules. The amount of compensation taken into account under the SERP and under the Contractual formula is not limited by tax rules, except SERP compensation under the Pittway formula is limited to $300,000. Compensation taken into account in calculating pension benefits under the SERP for 2009 (other than for the CEO) includes the greater of annual incentive compensation earned in 2009 (paid in 2010) or paid in 2009 (earned in 2008).

The benefit formulas set forth above describe the pension benefits in terms of a lump sum cash payment (for the REP formula) or a single life annuity (for the other formulas). Participants are entitled to receive their benefits in other payment forms, including, for example joint and survivor annuities, period certain annuities and level income payments. However, the value of each available payment form is the same. Based on prior elections, Messrs. Cote, Fradin and Kramvis will receive their SERP benefits and any Contractual benefits in the form of a lump sum, and Messrs. Anderson and Mahoney will receive their SERP benefits and Contractual benefits in an annuity.

The Allied Salaried formula also provides for early retirement benefits. A participant is eligible for early retirement if the participant’s age and years of service equal or exceed 60 and the participant has attained age 50 with at least five years of service or if the participant’s age and years of service equal or exceed 80 regardless of the participant’s age. If the participant retires early, the participant’s benefit at normal retirement age is reduced by 1/4 of 1% for each month payments begin before age 62 (3% per year). In addition, the Social Security benefit reduction portion of the formula is reduced by 1/180 for each month benefits are paid between ages 60 and 65, and 1/360 for each month benefits are paid before the participant’s 60th birthday.

The Pittway formula provides for early retirement benefits. A participant is eligible for early retirement if the participant has attained age 55 with at least 10 years of service. If the participant retires early, the participant’s benefit at normal retirement age is reduced by 1/180 for each of the first 60 months and 1/360 for each of the next 60 months by which the commencement of the payment of the retirement income precedes the participant’s normal retirement date.

53


As stated above, the pension formula used to determine the amount of pension benefits under each of the plans for our Named Executive Officers differs for historical reasons. In addition, additional contractual pension benefits have been provided to certain Named Executive Officers as deemed necessary and appropriate at the time of their recruitment to the Company or to retain the executive. The table below describes which formulas are applicable to each of our Named Executive Officers.

 

 

 

 

 

Named Executive
Officer

 

Description of Total Pension Benefits

Mr. Cote

 

 

Mr. Cote’s total pension benefits are equal to his Contractual formula benefits. The amount payable pursuant to the Contractual formula is reduced by amounts calculated under the REP formula and payable under the REP and the SERP plans. Mr. Cote’s Contractual formula benefits are also reduced by amounts he will receive from the retirement plans of his former employer, General Electric Company.

 

 

 

Mr. Cote’s Contractual formula benefits are reduced by 4% per year for each year payment commences before Mr. Cote’s 60th birthday and are forfeitable if he is terminated by the Company for cause.

 

 

 

Mr. Cote is currently eligible for early retirement benefits payable under his Contractual formula. Due to subsidized early retirement, the value of his benefit on December 31, 2010 exceeds the benefit shown in the table by $1,518,715.

 

 

 

If Mr. Cote dies before he receives payment of his Contractual formula benefits, his surviving spouse will receive the lump sum equivalent of an annual benefit of 75% of the Contractual formula benefits.

 

 

 

At or after age 60, Mr. Cote is entitled to a monthly pension benefit from his former employer, General Electric Company, in an amount of $5,649.

Mr. Anderson

 

 

Mr. Anderson’s total pension benefits are equal to the sum of his Allied Salaried formula benefits and his Contractual formula benefits.

 

 

 

Mr. Anderson’s Allied Salaried formula benefits are determined by including his years of employment with a former employer, ITT Industries (3.6 years). Mr. Anderson is currently eligible for early retirement benefits payable under the Allied Salaried formula. Due to subsidized early retirement, the value of his benefit payable on December 31, 2010 exceeds the benefit shown in the table above by $201,892.

 

 

 

Mr. Anderson’s Contractual formula benefits are payable only if he retires from the Company on or after attaining age 60, he is terminated by the Company for reasons other than cause or there is a change in control of the Company.

 

 

 

Mr. Anderson’s pension benefits under the REP and a portion of his SERP benefits are determined under the REP formula. These amounts are part of, not in addition to, his Allied Salaried formula benefits.

Mr. Kramvis

 

 

Mr. Kramvis’ total pension benefits are equal to the sum of his Pittway formula benefits and his REP formula benefits.

 

 

 

Mr. Kramvis’ 17.2 years of service before January 1, 2005 will be used for his Pittway formula benefits.

 

 

 

Mr. Kramvis’ years of service after December 31, 2004 will be used for his REP formula benefits.

 

 

 

 

54


 

 

 

 

 

Named Executive
Officer

 

Description of Total Pension Benefits

 

 

 

Mr. Kramvis is currently eligible for early retirement benefits under the Pittway formula.

Mr. Fradin

 

 

Mr. Fradin’s total pension benefits are equal to the sum of his Pittway formula benefits, his REP formula benefits and his Contractual formula benefits.

 

 

 

Mr. Fradin’s 26.5 years of service before July 1, 2003 will be used for his Pittway formula benefits.

 

 

 

Mr. Fradin’s years of service after June 30, 2003 will be used for his REP formula benefits.

 

 

 

Mr. Fradin is currently eligible for early retirement benefits payable under the Pittway formula.

 

 

 

Mr. Fradin’s Contractual formula benefits are reduced by 4% per year for each year payment commences before his 60th birthday, and are forfeitable if he voluntarily leaves the Company before age 60 or is terminated by the Company for cause before age 60. Mr. Fradin’s Contractual formula benefit will be at least $1,400,000 per year provided that, until at least August 5, 2013, he is not terminated by the Company and he does not voluntarily terminate his employment with the Company or engage in an external CEO search. If Mr. Fradin’s Contractual benefits were included as part of his SERP benefits in the table, the present value of accumulated SERP benefit would increase to $13,096,448.

 

 

 

If Mr. Fradin dies before he has received a lump sum of his Contractual formula benefits, his surviving spouse will receive an annual benefit of 50% of the Contractual formula benefits.

Mr. Mahoney

 

 

Mr. Mahoney’s total pension benefits are equal to his Allied Salaried formula benefits.

 

 

 

Mr. Mahoney is currently eligible for early retirement benefits payable under the Allied Salaried formula. Due to subsidized early retirement, the value of his benefit payable on December 31, 2010 exceeds the benefit shown in the table above by $255,406.

 

 

 

A portion of Mr. Mahoney’s pension benefits under the REP and a portion of his SERP benefits are determined under the Signal formula. These amounts are part of, not in addition to, his Allied Salaried formula benefits.

55


NONQUALIFIED DEFERRED COMPENSATION—FISCAL YEAR 2010

Since 2005, the Company has taken steps to limit deferred compensation amounts owed to executives by reducing the overall interest rate earned on new deferrals and accelerating the payout of deferred amounts, thereby limiting the period over which interest is earned. These include changing the interest rate accruing on new deferrals under the Honeywell Supplemental Savings Plan (the “SS Plan”) and the Honeywell Salary and Incentive Award Deferral Plan for Selected Employees (the “DIC Plan”) from a fixed above-market rate to a rate that changes annually based on the Company’s 15-year cost of borrowing; and requiring payment of new SS Plan or DIC deferrals to begin shortly after termination of employment in a lump sum unless the participant leaves the Company after reaching retirement (age 55 with 10 years of service). In addition, cash dividend equivalents on vested deferred RSUs cannot be deferred and dividend equivalents on unvested RSUs are reinvested in additional RSUs and subject to the same vesting schedule as the underlying RSUs.

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Plan

 

Executive
contributions
in last FY
($)
(2)

 

Registrant
contributions
in last FY
($)
(2)

 

Aggregate
earnings
in last FY
($)
(2)

 

Aggregate
withdrawals/
Distributions
($)

 

Aggregate
balance
at last FYE($)
(2)

David M. Cote

 

SS Plan

 

 

$

 

127,500

   

 

$

 

63,750

   

 

$

 

322,093

   

 

$

 

   

 

$

 

2,306,368

 

 

 

DIC Plan

 

 

$

 

   

 

$

 

   

 

$

 

1,155,798

   

 

$

 

   

 

$

 

12,306,993

 

 

Deferred
RSUs
(1)

 

 

$

 

   

 

$

 

   

 

$

 

4,629,474

   

 

$

 

   

 

$

 

18,105,422

 

 

 

Unvested
Dividend
Equivalents

 

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

 

 

Growth
Plan

 

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

7,000,000

   

 

$

 

 

 

 

Performance
Shares
(3)

 

 

$

 

   

 

$

 

13,916,331

   

 

$

 

   

 

$

 

   

 

$

 

13,916,331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

 

127,500

   

 

$

 

13,980,081

   

 

$

 

6,107,365

   

 

$

 

7,000,000

   

 

$

 

46,635,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David J. Anderson

 

SS Plan

 

 

$

 

91,500

   

 

$

 

27,750

   

 

$

 

98,690

   

 

$

 

   

 

$

 

914,540

 

 

DIC Plan

 

 

$

 

   

 

$

 

   

 

$

 

399,242

   

 

$

 

   

 

$

 

4,195,908

 

 

 

Deferred
RSUs
(1)

 

 

$

 

   

 

$

 

   

 

$

 

2,577,397

   

 

$

 

   

 

$

 

10,196,317

 

 

Unvested
Dividend
Equivalents

 

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

 

 

 

Growth
Plan

 

 

$

 

   

 

$

 

   

 

$

 

   

 

$

 

1,750,000

   

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

 

91,500

   

 

$

 

27,750

   

 

$

 

3,075,329

   

 

$

 

1,750,000

   

 

$

 

15,306,765