Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
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 Section 240.14a-11(c) or Section
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 paid previously 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:
.......................................................
[Honeywell Logo]
June 14, 2002
To Our Shareowners:
You are cordially invited to attend the Annual Meeting of Shareowners of
Honeywell, which will be held at 10:00 a.m. on Monday, July 29, 2002 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. We will also take the opportunity to review our
past business results and our outlook for the future.
YOUR VOTE IS IMPORTANT. We encourage you to read the proxy statement and
vote your shares as soon as possible. A return envelope for your proxy card is
enclosed for convenience. Most shareowners will also have the option of voting
via the Internet or by telephone. Specific instructions on how to vote via the
Internet or by telephone are included on the proxy card.
A map and directions to Honeywell's headquarters appear at the end of the
proxy statement.
Sincerely,
LAWRENCE A. BOSSIDY DAVID M. COTE
LAWRENCE A. BOSSIDY DAVID M. COTE
Chairman President, Chief Executive Officer
and Chairman-Elect
Table of Contents Page
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NOTICE OF MEETING........................................... 1
PROXY STATEMENT............................................. 2
VOTING PROCEDURES........................................... 2
ATTENDANCE AT THE ANNUAL MEETING............................ 3
BOARD MEETINGS -- COMMITTEES OF THE BOARD................... 3
ELECTION OF DIRECTORS....................................... 5
DIRECTOR COMPENSATION....................................... 10
APPROVAL OF INDEPENDENT ACCOUNTANTS......................... 11
AUDIT COMMITTEE REPORT...................................... 12
AUDIT COMMITTEE CHARTER..................................... 13
STOCK OWNERSHIP INFORMATION................................. 14
EXECUTIVE COMPENSATION...................................... 15
SHAREOWNER PROPOSALS........................................ 22
OTHER INFORMATION........................................... 27
Shareowner Proposals for 2003 Annual Meeting............ 27
Director Nominations.................................... 27
Expenses of Solicitation................................ 27
DIRECTIONS TO COMPANY HEADQUARTERS......................Back Cover
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YOUR VOTE IS IMPORTANT
If you are a shareowner of record or a participant in a Honeywell savings
plan, you can vote your shares via the Internet or by telephone by following the
instructions on your proxy card. If you hold your shares through a bank or
broker, you will be able to vote via the Internet or by telephone if your bank
or broker offers these options. If voting by mail, please complete, date and
sign your proxy card and return it as soon as possible in the enclosed envelope.
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[Honeywell Logo]
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The Annual Meeting of Shareowners of Honeywell International Inc. will be
held on Monday, July 29, 2002 at 10:00 a.m. local time, at Honeywell's
headquarters, 101 Columbia Road, Morris Township, New Jersey to consider and
vote on the following matters described in the accompanying proxy statement:
Election of five directors;
Appointment of PricewaterhouseCoopers LLP as independent accountants for
2002;
Three shareowner proposals described on pages 22 through 26 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 May 31, 2002 are entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors,
Victor P. Patrick
Victor P. Patrick
Vice President and Secretary
Honeywell
101 Columbia Road
Morris Township, NJ 07962
June 14, 2002
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 to be held on Monday, July 29, 2002.
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. Your prompt voting via the Internet, telephone
or mail may save us the expense of a second mailing.
METHODS OF VOTING
All shareowners may vote by mail.
Shareowners of record, as well as shareowners who hold shares in Honeywell
savings plans, can vote via the Internet or by telephone.
Shareowners who hold their shares through a bank or broker can vote via the
Internet or by telephone if the bank or broker offers these options.
Please see your proxy card for specific voting instructions.
REVOKING YOUR PROXY
Whether you vote by mail, telephone or via the Internet, you may later
revoke your proxy by:
sending a written statement to that effect to the Secretary of Honeywell;
submitting a properly signed proxy with a later date;
voting by telephone or via the Internet at a later time; or
voting in person at the Annual Meeting (except for shares held in the
savings plans).
VOTE REQUIRED
The vote of a plurality of the shares of Common Stock present or represented
and entitled to vote at the Annual Meeting is required for election as a
director.
The affirmative vote of a majority of shares present or represented and
entitled to vote on each of Proposals 2 through 5 is required for approval.
ABSTENTIONS AND BROKER NON-VOTES
Abstentions are not counted as votes 'for' or 'against' a proposal, but are
counted in determining the number of shares present or represented on a
proposal. Therefore, since approval of Proposals 2 through 5 requires the
affirmative vote of a majority of the shares of Common Stock present or
represented, abstentions have the same effect as a vote 'against' those
proposals. New York Stock Exchange rules prohibit brokers from voting on
Proposals 3 through 5 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.
OTHER BUSINESS
The persons named as proxies in the accompanying proxy card intend to vote
against proposals which Honeywell has received from shareowners who did not
submit them for inclusion in the Proxy Statement, but have given notice that
they may seek to present them at the Annual Meeting. Such proposals are: a
proposal on 'Company policy that auditors not perform any work for the company
in addition to auditing,' and a proposal on 'Company policy to name annually the
directors who have philanthropic links to the company and the latest annual
sum.' The Board knows of no other matters to
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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.
SHARES OUTSTANDING
At the close of business on March 31, 2002, there were approximately
817,610,376 shares of Honeywell common stock outstanding. Each share outstanding
as of the May 31, 2002 record date is entitled to one vote.
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 by telephone or via the Internet. If your shares are held by a
bank, broker or other intermediary 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 (such as a letter from
the bank, broker or intermediary 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.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board of Directors held eight regular meetings and three special
meetings during 2001. The average attendance at meetings of the Board and Board
Committees during 2001 was 94%.
The Board currently has the following committees: Audit; Corporate
Governance; Corporate Responsibility; Management Development and Compensation
and Retirement Plans. Membership and principal responsibilities of the Board
committees are described below.
AUDIT COMMITTEE
The members of the Audit Committee are:
Russell E. Palmer (Chair)
Hans W. Becherer
Marshall N. Carter
Ann M. Fudge
James J. Howard
John R. Stafford
Michael W. Wright
The Audit Committee met six times in 2001. The primary functions of this
Committee are to: recommend the firm to be appointed as independent accountants
to audit our financial statements and to perform services related to the audit;
review the scope and results of the audit with the independent accountants;
review with management and the independent accountants our interim and year-end
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operating results; consider the adequacy of the internal accounting and auditing
procedures of Honeywell; and consider the accountants' independence. At each
meeting Committee members meet privately with representatives of
PricewaterhouseCoopers LLP, our independent auditors, and with the Director of
Honeywell's Corporate Audit Department.
CORPORATE GOVERNANCE COMMITTEE
The members of the Corporate Governance Committee are:
Bruce Karatz (Chair)
Hans W. Becherer
Jaime Chico Pardo
Robert P. Luciano
Russell E. Palmer
Ivan G. Seidenberg
Michael W. Wright
The Corporate Governance Committee met two times in 2001. The primary
functions of this Committee are to: review policies and make recommendations to
the Board, as appropriate, concerning the size and composition of the Board; the
qualifications and criteria for election to the Board, and procedures for
shareowner nomination of candidates for the Board; retirement from the Board;
compensation and benefits of non-employee directors; and to review periodically
the overall effectiveness of the Board. The Corporate Governance Committee of
the Board of Directors will consider qualified nominees for director recommended
by shareowners. Recommendations should be submitted in writing to the attention
of the Vice President and Secretary, Honeywell, 101 Columbia Road, Morris
Township, New Jersey 07962.
CORPORATE RESPONSIBILITY COMMITTEE
The members of the Corporate Responsibility Committee are:
Ann M. Fudge (Chair)
Gordon M. Bethune
Marshall N. Carter
James J. Howard
The Corporate Responsibility Committee met one time in 2001. The primary
function of this Committee is to review the policies and programs that are
designed to assure Honeywell's compliance with legal and ethical standards and
that affect its role as a responsible corporate citizen, including those
relating to human resources issues such as equal employment opportunity, to
health, safety and environmental matters and to proper business practices.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The members of the Management Development and Compensation Committee are:
Robert P. Luciano (Chair)
Hans W. Becherer
Gordon M. Bethune
Bruce Karatz
Ivan G. Seidenberg
John R. Stafford
The Management Development and Compensation Committee met eight times in
2001. The primary functions of this Committee are to: review and recommend the
compensation arrangements for officers; approve compensation arrangements for
other senior level employees; consider matters related to management development
and succession and recommend individuals for election as officers; 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.
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RETIREMENT PLANS COMMITTEE
The members of the Retirement Plans Committee are:
Michael W. Wright (Chair)
Jaime Chico Pardo
Ann M. Fudge
Robert P. Luciano
Russell E. Palmer
John R. Stafford
The Retirement Plans Committee met two times in 2001. The primary
responsibilities of this Committee are to: appoint the trustees for funds under
the employee pension benefit plans of Honeywell and certain subsidiaries; review
funding strategies; set investment policy for fund assets; and oversee and
appoint members of other committees investing fund assets.
ITEM 1 -- ELECTION OF DIRECTORS
NOMINEES
Honeywell's Board of Directors is divided into three classes that serve
staggered three-year terms and are as nearly equal in number as possible. The
Board has nominated five candidates for election as directors for a term ending
at the 2005 Annual Meeting.
All nominees 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 Internet
will be voted for the election of such other person as may be designated by the
Board of Directors, or the Board may determine to leave the vacancy temporarily
unfilled or reduce the authorized number of directors pursuant to the By-laws.
Mr. Lawrence A. Bossidy, our current Chairman, is expected to retire on
June 30, 2002, prior to the Annual Meeting, at which time Mr. David M. Cote will
become Chairman.
Certain information regarding each nominee and each director continuing in
office after the Annual Meeting is set forth below.
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 2005
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[Photo] MARSHALL N. CARTER, Senior Fellow at the Center for Business and
Government, John F. Kennedy School of Government, Harvard University
Mr. Carter assumed his current position in January 2001 upon his retirement from
State Street Corporation. He joined State Street Corporation and its principal
subsidiary, State Street Bank and Trust Company, as President and Chief Operating
Officer in 1991. He became Chief Executive Officer in 1992 and Chairman of the
Board in 1993. State Street is a provider of services to institutional investors
worldwide. Prior to joining State Street, Mr. Carter was with Chase Manhattan Bank
for 15 years, and before that he served as an officer in the U.S. Marine Corps.
Director since 1999 Age 62
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[Photo] DAVID M. COTE, President and Chief Executive Officer of Honeywell
International Inc.
Mr. Cote has been President and Chief Executive Officer since February 2002.
He will also become Chairman upon Mr. Bossidy's retirement, expected
June 30, 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.
Director since 2002 Age 49
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[Photo] ROBERT P. LUCIANO, Chairman Emeritus of Schering-Plough Corporation
Mr. Luciano joined Schering-Plough Corporation, a manufacturer and marketer
of pharmaceuticals and consumer products, in 1978. He served as President
from 1980 to 1986, Chief Executive Officer from 1982 through 1995, and
Chairman of the Board from 1984 through October 1998. He became Chairman
Emeritus in October 1999. He is a director of Merrill Lynch & Co.
Director since 1989 Age 68
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[Photo] JOHN R. STAFFORD, Chairman of the Board of Wyeth (formerly known as American
Home Products Corporation)
Mr. Stafford has held a number of positions with Wyeth, a manufacturer of
pharmaceutical, health care and animal health products, since joining that
company in 1970. He served as General Counsel, Vice President, Senior Vice
President and Executive Vice President before becoming President in 1981, an
office he held until 1990 and which he resumed in early 1994. Mr. Stafford
was elected Chairman of the Board and Chief Executive Officer in 1986 and
assumed his current post in May 2001. He is also a director of J.P. Morgan
Chase & Co. and Verizon Communications Inc.
Director since 1993 Age 64
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[Photo] MICHAEL W. WRIGHT, Retired Chairman, President and Chief Executive Officer
of the Board of SUPERVALU INC.
Mr. Wright was elected President and Chief Operating Officer of SUPERVALU
INC., a food distributor and retailer, in 1978, Chief Executive Officer in
1981, and Chairman of the Board in 1982. He retired as President and CEO in
June 2001, and as Chairman in May 2002. He joined SUPERVALU INC. as Senior
Vice President of Administration and as a member of the board of directors
in 1977. Prior to 1977, Mr. Wright was a partner in the law firm of Dorsey &
Whitney. Mr. Wright is also a director of Canadian Pacific Railway Limited,
Cargill, Inc., S.C. Johnson & Son, Inc. and Wells Fargo & Company. He was a
director of Honeywell Inc. from April 1987 to December 1999.
Director since 1999 Age 64
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INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2003
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[Photo] HANS W. BECHERER, Former Chairman and Chief Executive Officer of Deere &
Company
Mr. Becherer began his business career with Deere & Company, a manufacturer
of mobile power machinery and a supplier of financial services, in 1962.
After serving in a variety of managerial and executive positions, he became
a director of Deere in 1986 and was elected President and Chief Operating
Officer in 1987, President and Chief Executive Officer in 1989 and Chairman
and Chief Executive Officer in 1990 until his retirement in 2000. He is also
a director of J.P. Morgan Chase & Co. and Schering-Plough Corporation.
Director since 1991 Age 67
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[Photo] GORDON M. BETHUNE, Chairman of the Board and Chief Executive Officer of
Continental Airlines, Inc.
Mr. Bethune joined Continental Airlines, an international commercial airline
company, 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. From 1988 to 1994, Mr.
Bethune served as vice president and general manager of various divisions of
The Boeing Company, a manufacturer of commercial jetliners and military
aircraft, and he served most recently as vice president and general manager
of the Renton Division of the Commercial Airplane Group at Boeing. Prior to
1988, Mr. Bethune was senior vice president of operations for Piedmont
Airlines, and he held senior management positions as vice president of
engineering and maintenance at Western Air Lines, Inc. and at Braniff
Airlines. Mr. Bethune is also a director of ANC Corp. He was a director of
Honeywell Inc. from April 1999 to December 1999.
Director since 1999 Age 60
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[Photo] JAIME CHICO PARDO, Vice Chairman and Chief Executive Officer of Telefonos de
Mexico, S.A. de C.V. (TELMEX)
Mr. Chico Pardo joined TELMEX, a telecommunications company based in Mexico
City, as its Chief Executive Officer in 1995. From 1993 to 1995, Mr. Chico
Pardo was President and Chief Executive Officer of Grupo Condumex, S.A. de
C.V., a manufacturer of products for the construction, automobile and
telecommunications industries. Prior to 1993, Mr. Chico Pardo was President
and Chief Executive Officer of Euzkadi/General Tire de Mexico, a
manufacturer of automotive and truck tires. Mr. Chico Pardo is also
Vice-Chairman of Carso Global Telecom and a director of America Movil and
Grupo Carso. He was a director of Honeywell Inc. from September 1998 to
December 1999.
Director since 1999 Age 52
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[Photo] ANN M. FUDGE, Former President of Kraft's Beverages, Desserts & Post
Divisions and Group Vice President of Kraft Foods, Inc.
Ms. Fudge joined General Foods USA in 1986 and held several planning and
marketing positions before being appointed Executive Vice President and
General Manager of the Dinners and Enhancers Division in 1991. In 1994, she
was named President of Kraft General Foods' Maxwell House Coffee Company. In
1995, Ms. Fudge assumed the position of Executive Vice President of Kraft
Foods, Inc. while continuing to head the Maxwell House Coffee Division as
General Manager. She became President of Kraft's Maxwell House and Post
Division in 1997, a position she held until February 2001. Ms. Fudge is a
director of General Electric Company, Marriott International and the Federal
Reserve Bank of New York.
Director since 1993 Age 51
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INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2004
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[Photo] JAMES J. HOWARD, Chairman Emeritus of Xcel Energy Inc.
Mr. Howard was Chairman of the Board of Xcel Energy Inc., an energy company,
from August 2000 until August 2001. He was Chairman and Chief Executive
Officer of Northern States Power since 1988, and President since 1994. Prior
to 1987, Mr. Howard was President and Chief Operating Officer of Ameritech
Corporation. Mr. Howard is also a director of Ecolab, Inc., NRG Energy, Inc.
and Walgreen Company. He was a director of Honeywell Inc. from July 1990 to
December 1999.
Director since 1999 Age 66
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[Photo] BRUCE KARATZ, Chairman of the Board and Chief Executive Officer of KB Home
Mr. Karatz was elected Chief Executive Officer of KB Home, an international
residential and commercial builder, in 1986, and Chairman of the Board in
1993. Mr. Karatz is also a director of Edison International, The Kroger Co.,
Avery Dennison Corporation and National Golf Properties, Inc. He was a
director of Honeywell Inc. from July 1992 to December 1999.
Director since 1999 Age 56
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[Photo] RUSSELL E. PALMER, Chairman and Chief Executive Officer of the Palmer Group
Mr. Palmer established The Palmer Group, a private investment firm, in 1990,
after serving seven years as Dean of The Wharton School of the University of
Pennsylvania. He previously served as Managing Director and Chief Executive
Officer of Touche Ross International and Managing Partner and Chief
Executive Officer of Touche Ross & Co. (USA) (now Deloitte and Touche). He
is a director of The May Department Stores Company, Safeguard Scientifics,
Inc. and Verizon Communications Inc.
Director since 1987 Age 67
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[Photo] IVAN G. SEIDENBERG, President and Chief Executive Officer of Verizon
Communications Inc.
Mr. Seidenberg assumed his current position with Verizon Communications, a
telecommunications and information services provider, in April 2002. Mr.
Seidenberg was President and Co-Chief Executive Officer from June 2000, when
Bell Atlantic Corporation and GTE Corporation merged and Verizon
Communications Inc. was created. He served as Chairman and Chief Executive
Officer of Bell Atlantic from 1999 to June 2000, Vice Chairman, President
and Chief Executive Officer from June 1998 to 1999, and Vice Chairman,
President and Chief Operating Officer following the merger of NYNEX
Corporation and Bell Atlantic in 1997. He joined NYNEX in 1983 and served in
several senior management positions before becoming a director and Vice
Chairman of the Board in 1991, President and Chief Operating Officer in
1994, and Chairman and Chief Executive Officer in 1995. He is also a
director of Boston Properties, Inc., CVS Corporation, Viacom Inc. and Wyeth.
Director since 1995 Age 55
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DIRECTOR COMPENSATION
Directors who are employees of Honeywell receive no compensation for service
on the Board. Each non-employee director receives an annual Board retainer of
$65,000, of which $20,000 is automatically credited to the director's account in
the Deferred Compensation Plan for Non-Employee Directors in the form of common
stock equivalents (which are only payable after termination of Board service).
They also receive a fee of $2,000 for Board meetings attended on any day (11
during 2001), an annual retainer of $7,000 for each Board Committee served, and
an additional Committee Chair retainer of $5,000 for the Audit and Management
Development and Compensation Committees and $3,000 for all other Board
Committees. While no fees are generally paid for attending Committee meetings, a
$1,000 fee is paid for attendance at a Committee meeting, or other extraordinary
meeting related to Board business which occurs apart from a Board meeting.
Non-employee directors are also provided with $350,000 in business travel
accident insurance and are eligible to elect $100,000 in term life insurance and
medical and dental coverage for themselves and their eligible dependents.
Directors may elect to defer, until a specified calendar year or retirement
from the Board, all or any portion of their annual retainers and fees that are
not automatically deferred and to have such compensation credited to their
account in the Deferred Compensation Plan. Amounts credited either accrue
interest (10 percent for 2002) or are valued as if invested in common stock
equivalents or one of the other funds available to participants in our savings
plan. Amounts deferred in a common stock account earn amounts equivalent to
dividends. Upon a change of control, a director will be entitled to a lump-sum
payment of all deferred amounts.
Under the Stock Plan for Non-Employee Directors, each new director receives
a one-time grant of 3,000 shares of common stock, which are subject to transfer
restrictions until the director's service terminates with the consent of a
majority of the Board, provided termination occurs at or after age 65. During
the restricted period, the director has the right to receive dividends on and
the right to vote the shares. At the end of the restricted period, a director is
entitled to one-fifth of the shares granted for each year of service (up to
five). However, the shares will be forfeited if the director's service
terminates (other than for death or disability) prior to the end of the
restricted period. The Plan also provides for an annual grant to each director
of options to purchase 2,000 shares of common stock at the fair market value on
the date of grant. Option grants vest in cumulative installments of 40 percent
on April 1 of the year following the grant date and an additional 30 percent on
April 1 of each of the next two years. These options also become fully vested at
the earliest of the director's retirement from the board at or after age 70,
death, or disability.
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ITEM 2 -- APPROVAL OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, which is composed entirely
of independent directors, the Board of Directors has appointed
PricewaterhouseCoopers LLP ('PwC') as independent accountants for the Company to
audit its consolidated financial statements for 2002 and to perform
audit-related services, including review of our quarterly interim financial
information and periodic reports and registration statements filed with the
Securities and Exchange Commission and consultation in connection with various
accounting and financial reporting matters. PwC provided audit and other
services during 2001 for fees totaling $23.0 million. This included the
following fees:
Audit Fees: $5.4 million for the annual audit of the Company's
consolidated financial statements and quarterly reviews of interim financial
statements in the Company's Form 10-Q reports;
Financial Information Systems Design and Implementation Fees: $0;
All Other Fees: $8.1 million for tax services; $9.1 million for
audit-related services primarily associated with the Company's mergers and
acquisitions activity and various international regulatory filings; and
$0.4 million for all other services.
In accordance with its Charter, the Audit Committee reviews with PwC whether
the non-audit services provided by them are compatible with maintaining their
independence.
The Board has directed that the appointment of PwC be submitted to the
shareowners for approval. If the shareowners do not approve, the Audit Committee
and the Board will reconsider the appointment.
Honeywell has been advised by PwC that it will have a representative present
at the Annual Meeting who will be available to respond to appropriate questions.
The representative will also have the opportunity to make a statement if he
desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREOWNERS VOTE FOR THE APPROVAL
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.
11
AUDIT COMMITTEE REPORT
The Audit Committee of the Honeywell International Board of Directors (the
Committee) is composed of independent directors and operates under a written
charter adopted by the Board of Directors (See page 13).
Management is responsible for the Company's internal controls and preparing
the Company's consolidated financial statements. The Company's independent
accountants are responsible for performing an independent audit of the
consolidated financial statements in accordance with generally accepted auditing
standards and issuing a report thereon. The Committee is responsible for
overseeing the conduct of these activities and recommending to the Board of
Directors, subject to shareowner ratification, the selection of the Company's
independent accountants. As stated above and in the Committee's charter, the
Committee's responsibility is one of oversight. The Committee does not provide
any expert or special assurance as to Honeywell's financial statements
concerning compliance with laws, regulations or generally accepted accounting
principles. In performing its oversight function, the Committee relies, without
independent verification, on the information provided to them and on
representations made by management and the independent auditors.
The Committee reviewed and discussed the Company's consolidated financial
statements for the year ended December 31, 2001 with management and the
independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles. The Committee discussed with the
independent accountants matters required to be discussed by Statement on
Auditing Standard No. 61, Communication with Audit Committees.
The Company's independent accountants provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and the Committee discussed with
the independent accountants their independence.
Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants, the Committee recommended that the
Board of Directors include the audited consolidated financial statements in the
Form 10-K for the year ended December 31, 2001 filed with the Securities and
Exchange Commission.
THE AUDIT COMMITTEE
Russell E. Palmer, Chairman
Hans W. Becherer
Marshall N. Carter
Ann M. Fudge
James J. Howard
John R. Stafford
Michael W. Wright
12
AUDIT COMMITTEE CHARTER
The Committee shall review this Charter on an annual basis and recommend any
changes to the Board for approval.
I. COMPOSITION
The Committee shall be composed of three or more members of the Board of
Directors who meet the independence and financial expertise requirements of the
New York Stock Exchange.
The members of the Committee shall be elected by the Board at the
recommendation of the Corporate Governance Committee. If an Audit Committee
Chair is not designated or present, the members may designate a Chair by
majority vote.
II. MEETINGS
The Committee shall meet at least four times each fiscal year. The Committee
shall meet at least annually with management, the chief internal auditor and the
independent auditors in separate executive sessions.
III. RESPONSIBILITIES
The Committee shall provide assistance to the Board of Directors in
fulfilling its responsibilities relating to the Company's accounting and
financial reporting practices and internal control system.
The Company's management is responsible for preparing the Company's
financial statements and the independent auditors are responsible for auditing
those financial statements. The Committee is responsible for overseeing the
conduct of these activities by the Company's management and the independent
auditors.
The following shall be the primary activities of the Committee in carrying
out its oversight responsibilities. The Committee may, from time to time, alter
its procedures as appropriate given the circumstances and shall perform such
other functions as may be assigned to it by law, the Company's charter, the
By-laws or by the Board.
1. Review the results of each external audit of the Company's financial
statements, including any certification, report, opinion or review rendered
by the independent auditor in connection with the financial statements.
2. Review other matters related to the conduct of the audit which are
communicated to the Committee under generally accepted auditing standards.
3. Based on the review and discussions under 1 and 2 above, the
Committee will advise the Board of Directors whether it recommends that the
audited financial statements be included in the Company's Annual Report on
Form 10-K and prepare the Committee report to be included in the Company's
proxy statement in accordance with Securities and Exchange Commission rules.
4. Review with management and the independent auditors, prior to the
filing thereof, the Company's interim financial results to be included in
the Form 10-Q and the matters required to be communicated to the Audit
Committee under generally accepted auditing standards. The Chair of the
Committee may represent the entire Committee for purposes of the interim
review.
5. Recommend to the Board the firm to be engaged as the Company's
independent auditor, which firm is ultimately accountable to the Audit
Committee and the Board.
6. Approve the fees to be paid to the independent auditor, evaluate the
firm's performance and, if appropriate, recommend its discharge.
7. Receive from the independent auditor annually a formal written
statement delineating the relationships between the auditors and the Company
consistent with Independence Standards Board Standard No. 1. The Committee
shall discuss with the auditor the scope of any disclosed relationships and
their impact or potential impact on the auditor's independence and
objectivity, and recommend that the full Board take appropriate action to
satisfy itself of the auditor's independence.
13
8. Review reports of the independent auditor and the chief internal
auditor related to the adequacy of the Company's internal accounting
controls, including any management letters and management's responses to
recommendations made by the independent auditor or the chief internal
auditor.
9. Consider, in consultation with the independent auditor and the chief
internal auditor, the scope and plan of forthcoming external and internal
audits, the involvement of the internal auditors in the audit examination,
and the independent auditor's responsibility under generally accepted
auditing standards.
10. The Committee shall have the power to inquire into any financial
matters not set forth above, and shall perform such other functions as may
be assigned to it by law, or the Company's charter or By-laws, or by the
Board.
STOCK OWNERSHIP INFORMATION
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
The rules of the Securities and Exchange Commission require that we disclose
late filings of reports of stock ownership (and changes in stock ownership) by
our directors and executive officers. To the best of Honeywell's knowledge, all
of the filings for our executive officers and directors were made on a timely
basis in 2001 except that the ownership of 421 shares by Larry E. Kittelberger,
Senior Vice President Administration and Chief Information Officer, was reported
after the filing deadline.
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 Honeywell common Stock as of March 31, 2002.
PERCENT OF
COMMON
NUMBER STOCK
NAME AND COMPLETE MAILING ADDRESS OF SHARES OUTSTANDING
--------------------------------- --------- -----------
State Street Bank and Trust Company(1) ................ 89,705,304(2) 11.0
225 Franklin Street, Boston, MA 02101
Capital Research and Management Company ............... 47,698,600(3) 5.8
333 South Hope Street, Los Angeles, CA 90071
---------
(1) State Street holds 8.5% 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 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.
(2) State Street has sole voting power in respect of 17,940,269 shares; shared
voting power in respect of 70,123,654 shares; sole dispositive power in
respect of 19,608,295 shares; and shared dispositive power in respect of
70,097,009 shares. State Street disclaims beneficial ownership of all of the
shares listed above.
(3) Capital has sole voting power in respect of 0 shares; shared voting power in
respect of 0 shares; sole dispositive power in respect of 47,698,600 shares;
and shared dispositive power in respect of 0 shares. Capital disclaims
beneficial ownership of all of the shares listed above.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
In general, 'beneficial ownership' includes those shares a director or
executive officer has the power to vote or transfer, and stock options that are
exercisable currently or within 60 days. On March 31, 2002, the directors and
executive officers of Honeywell beneficially owned, in the aggregate, 7,097,223
shares of common stock which are included in the table below. Directors and
executive officers also have interests in stock-based units under Honeywell's
plans. While these units may not be
14
voted or transferred, we have included them in the table below as they represent
the total economic interest of the directors and executive officers in Honeywell
stock.
NUMBER OF
NAME SHARES(1)(2)(3)
---- ---------------
Hans W. Becherer...................................... 38,729
Gordon M. Bethune..................................... 7,965
Michael R. Bonsignore................................. 2,101,333
Lawrence A. Bossidy................................... 1,591,762
Marshall N. Carter.................................... 27,323
Jaime Chico Pardo..................................... 11,328
David M. Cote......................................... 386,698
Ann M. Fudge.......................................... 23,097
James J. Howard....................................... 41,177
Dr. Barry C. Johnson.................................. 132,940
Robert D. Johnson..................................... 352,270
Bruce Karatz.......................................... 34,858
Peter M. Kreindler.................................... 502,515
Robert M. Luciano..................................... 38,318
Russell E. Palmer..................................... 23,054
Ivan G. Seidenberg.................................... 25,921
John R. Stafford...................................... 48,071
Richard F. Wallman.................................... 732,978
Michael W. Wright..................................... 52,123
---------
(1) The total beneficial ownership for any individual is less than 0.3 percent,
and the total for the group is less than 0.9 percent, of the shares of
common stock outstanding.
(2) Includes the following number of shares or share-equivalents in deferred
accounts, as to which no voting or investment power exists: Mr. Becherer,
18,529; Mr. Bethune, 2,765; Mr. Bonsignore, 14,472; Mr. Bossidy, 19,411; Mr.
Carter, 5,123; Mr. Chico Pardo, 6,128; Ms. Fudge, 2,897; Mr. Howard, 31,181;
Dr. B. Johnson, 328; Mr. R. Johnson, 1,195, Mr. Karatz, 23,267; Mr.
Kreindler, 22,495; Mr. Luciano, 6,118; Mr. Palmer, 5,854; Mr. Seidenberg,
10,721; Mr. Stafford, 11,871; Mr. Wallman, 72,448; Mr. Wright, 41,673; and
all directors and executive officers as a group, 320,262.
(3) Includes shares which the following have the right to acquire within 60 days
through the exercise of vested stock options: Mr. Becherer, 14,200; Mr.
Bethune, 2,200; Mr. Bonsignore, 1,883,194; Mr. Bossidy, 1,500,000; Mr.
Carter, 4,200; Mr. Chico Pardo, 2,200; Ms. Fudge, 14,200; Mr. Howard, 2,200;
Dr. B. Johnson, 132,000; Mr. R. Johnson, 340,000; Mr. Karatz, 2,200; Mr.
Kreindler, 477,500; Mr. Luciano, 14,200; Mr. Palmer, 10,200; Mr. Seidenberg,
12,200; Mr. Stafford, 14,200; Mr. Wallman, 657,750; Mr. Wright, 2,200; and
all directors and executive officers as a group, 6,331,442.
REPORT ON EXECUTIVE COMPENSATION
The Management Development and Compensation Committee of the Board of
Directors, subject to the approval of the Board of Directors, determines the
compensation of Honeywell's executive officers and oversees the administration
of executive compensation programs. The Committee is composed entirely of
independent directors.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS
Honeywell's executive compensation programs are designed to attract and
retain highly qualified executives and to motivate them to maximize shareowner
returns by achieving aggressive goals. The programs link each executive's
compensation directly to Honeywell's performance. A significant portion of each
executive's compensation is dependent upon stock price appreciation and meeting
financial goals and other individual performance objectives.
15
Each year, the Committee reviews the executive compensation policies with
respect to the linkage between executive compensation and the creation of
shareowner value, as well as the competitiveness of the programs. The Committee
determines what changes, if any, are appropriate in the compensation programs of
the Company. With Board authorization, the Committee approves salary actions and
determines the amount of annual bonus and the number and amount of long-term
awards for officers.
Honeywell intends to the extent practicable, to preserve deductibility under
the Internal Revenue Code of compensation paid to its executive officers while
maintaining compensation programs to attract and retain highly qualified
executives in a competitive environment. Accordingly, compensation paid under
Honeywell's stock plan and incentive compensation plan is generally deductible
although certain compensation paid to some executives may not be deductible.
COMPONENTS OF COMPENSATION
There are three basic components to Honeywell's 'pay for performance'
system: base pay; annual incentive bonus; and long-term incentive compensation
(primarily stock options). Each component is addressed in the context of
competitive conditions. In determining competitive compensation levels,
Honeywell analyzes information from several independent compensation surveys,
which include information regarding large industrial and other companies that
compete with us for executive talent.
Base Pay. Base pay is designed to be competitive within 20% above or below
median salary levels at other large companies for equivalent positions. The
executive's actual salary relative to this competitive framework varies based on
individual performance and the individual's skills, experience and background.
Annual Incentive Bonus. Award levels, like the base salary levels, are set
with reference to competitive conditions and are intended to motivate the
executives by providing substantial bonus payments for the achievement of
aggressive goals. The actual amounts paid for 2001 were determined by
performance based on two factors: first, financial performance, which was
measured against objectives established for revenue growth, free cash flow and
earnings per share; and second, the individual executive's performance against
other specific management objectives, such as improving customer satisfaction,
increasing the use of Six Sigma processes and driving learning and digitization
strategies. Financial objectives were given greater weight than other management
objectives in determining bonus payments. The types and relative importance of
specific financial and other business objectives varied among Honeywell's
executives depending on their positions and the particular operations or
functions for which they were responsible.
Long Term Incentive Compensation. The principal purpose of the long-term
incentive compensation program is to encourage Honeywell's executives to enhance
the value of Honeywell and, hence, the price of the Common Stock and the
shareowners' return. The long-term incentive component of the compensation
system (through extended vesting) is also designed to create an incentive for
the individual to remain with Honeywell.
The long-term, equity-based compensation program consists primarily of stock
option grants that vest over a multi-year period. Honeywell periodically grants
new awards to provide continuing incentives for future performance. Like the
annual bonus, award levels are set with regard to competitive considerations,
and each individual's actual award is based upon the individual's performance,
potential for increased responsibility and contributions, leadership ability and
commitment to Honeywell's strategic efforts.
In addition to stock options, awards of restricted units, each of which
entitles the holder to one share of Common Stock on vesting, may be made on a
select basis to individual executives in order to enhance the incentive for them
to remain with Honeywell. These units vest over an extended period of up to five
years.
Shortly following the decision of the European Union prohibiting the
proposed merger of Honeywell International Inc. and General Electric in July
2001, the Committee approved grants of stock options and restricted units grants
to executive officers and approximately 6,100 other employees at all levels of
the organization. The timing of these grants was designed to reaffirm the
confidence placed in executives and to emphasize the value they provide to the
Company during periods of change. Also,
16
these awards were intended to replace the annual grant for 2001 that would have
typically been made in the first quarter.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In determining the compensation of the Chief Executive Officer, the
Committee considers three factors: the absolute and relative performance of the
business (particularly in determining bonus awards); the market for such
positions (in establishing total compensation levels); and Honeywell's
compensation strategy (in determining the mix of pay components).
In general, Honeywell's strategy is to emphasize linkage to shareowner
returns through a predominant emphasis on stock options in the total
compensation mix.
The Board of Directors asked Mr. Bossidy to return to the role of Chairman
and Chief Executive Officer of Honeywell International Inc. on July 3, 2001 to
lead the company out of the difficult situation resulting from the failed
combination with GE. In addition to addressing other key issues, Mr. Bossidy led
the recruitment of his successor and on February 19, 2002, Mr. Cote was named
President and Chief Executive Officer of Honeywell International Inc. Mr. Cote
is slated to assume the role of Chairman and Chief Executive Officer for
Honeywell International Inc. upon Mr. Bossidy's retirement on June 30, 2002.
Mr. Bossidy's actual salary for 2001 was $992,308. Consistent with
Mr. Bossidy's employment agreement covering his return to Honeywell and based on
Honeywell's financial performance in terms of revenue growth, earnings per share
growth and free cash flow, and his initiatives restoring the company to a sound
footing, Mr. Bossidy received an annual incentive payment of $1,000,000 for
2001. This incentive payment was consistent with Mr. Bossidy's employment
agreement and his achievement of performance standards set by the Board.
Mr. Bossidy also received a grant in July of 2001 of 500,000 stock options.
These options become 100% exercisable on July 1, 2002.
Mr. Bonsignore's salary and bonus were determined in accordance with his
employment agreement and his early retirement agreement.
Mr. Cote entered into an employment agreement with Honeywell International
that provides for his employment as President and Chief Executive Officer
through June 30, 2002 and Chairman and Chief Executive Officer effective
July 1, 2002 through June 30, 2007. During the term of the agreement, Mr. Cote
will have an annual salary of at least $1,500,000 and an annual bonus target of
at least 125 percent of his base salary. Mr. Cote was granted 2,202,200 stock
options and 770,000 restricted units on his start date. He also received a cash
payment of $2,700,000, the amount due him under the bonus plan of his prior
employer, but not paid by that employer.
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS:
Robert P. Luciano (Chair)
Hans W. Becherer
Gordon M. Bethune
Bruce Karatz
Ivan G. Seidenberg
John R. Stafford
17
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash compensation
with respect to Honeywell's two Chief Executive Officers during 2001 and the
other four most highly compensated officers of Honeywell during 2001.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
NAME AND RESTRICTED OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK UNITS($)(1) (SHARES) PAYOUTS($) COMPENSATION(2)
------------------ ---- --------- -------- ----------------- -------- ---------- ---------------
Lawrence A. Bossidy(3) 2001 $ 992,308 $1,000,000 -- 500,000 -- $ 211,171
Chairman of the Board 2000 500,000 -- -- -- -- 60,002
and Chief Executive Officer 1999 2,000,000 5,000,000 -- -- -- 1,383,697
Michael R. Bonsignore(4) 2001 761,538 571,154 -- -- -- 15,352,455
Chairman of the Board 2000 1,500,000 975,000 -- -- -- 356,551
and Chief Executive Officer 1999 1,087,817 2,000,000 $22,781,250 1,781,249 $2,565,000 1,039,122
Robert D. Johnson 2001 575,529 425,000 -- 250,000 -- 88,121
President and Chief 2000 550,000 400,000 -- -- 1,187,840 58,913
Executive Officer Aerospace 1999 370,833 625,000 1,882,500 400,000 -- 36,469
Peter M. Kreindler 2001 495,000 310,000 -- 200,000 -- 452,060
Sr. Vice President and 2000 480,000 275,000 -- 250,000 -- 209,625
General Counsel 1999 462,500 640,000 1,098,125 333,000 -- 386,986
Richard F. Wallman 2001 510,000 275,000 -- 200,000 -- 364,104
Sr. Vice President and 2000 480,000 235,000 -- 437,500 -- 211,042
Chief Financial Officer 1999 455,833 590,000 1,098,125 333,000 -- 352,478
Dr. Barry C. Johnson(5) 2001 500,000 270,000 -- 100,000 -- 189,112
Sr. Vice President and 2000 226,923 110,500 1,051,875 280,000 -- --
Chief Technology Officer
---------
(1) The total number of units held and their value as of December 31, 2001 were
as follows: Mr. Bossidy, 150,000 ($5,073,000); Mr. R. Johnson, 30,000
($1,014,600); Mr. Kreindler, 17,500 ($591,850); Mr. Wallman, 17,500
($591,850); and Dr. B. Johnson, 30,000 ($1,014,600). Common stock dividend
equivalents are payable on each unit. One third of the restricted units for
Mr. R. Johnson, Mr. Kreindler and Mr. Wallman will vest on April 1, 2003 if
Honeywell achieves specified operating margin targets and two thirds will
vest upon their death or total disability or upon a change of control. Mr.
Bonsignore's restricted units were forfeited upon his retirement, and 15,000
of Dr. B. Johnson's restricted units were forfeited upon his retirement.
(2) Amounts shown for 2001 consist of matching contributions made by Honeywell
under the Savings Plan and Supplemental Savings Plan: for Mr. Bossidy,
$79,385; Mr. Bonsignore, $427,846; Mr. R. Johnson, $46,336; Mr. Kreindler,
$39,600; Mr. Wallman, $36,877 and Dr. B. Johnson, $9,231; the value of life
insurance premiums: for Mr. Bossidy, $9,628; Mr. Bonsignore, $83,542;
Mr. R. Johnson, $16,147 and Mr. Kreindler, $13,781; above-market interest
earned on deferred compensation: for Mr. Bossidy, $65,454; Mr. Bonsignore,
$32,914; Mr. R. Johnson, $424; Mr. Kreindler, $161,235; Mr. Wallman,
$183,655 and Dr. B. Johnson, $4,915; management incentive awards: for Mr.
Kreindler, $200,000 and Mr. Wallman, $100,000; a special cash recognition
award: for Mr. R. Johnson, $25,000; a special stock recognition award: for
Dr. B. Johnson, $23,305; a cash retention payment: for Dr. B. Johnson,
$80,000; a Supplemental Executive Retirement Plan enhancement: for
Mr. Bonsignore, $5,225,000; a severance payment: for Mr. Bonsignore,
$9,000,000; forgiveness of interest on a tax loan: for Mr. Bonsignore,
$349,161; the value of perquisites: for Mr. Bossidy, $56,704 which includes
a $25,000 cash flexible perquisite payment and $29,641 for the value of
personal use of company-provided aircraft; Mr. Bonsignore, $219,375 which
includes $85,440 for administrative services in retirement, $48,234 for tax
gross-up of the administrative services and $42,124 for the value of
personal use of company-provided aircraft; and Dr. B. Johnson, $57,685 which
includes a $50,000 cash flexible perquisite payment.
(3) Mr. Bossidy was rehired on July 3, 2001 and is expected to retire on
June 30, 2002.
(4) Mr. Bonsignore retired on July 3, 2001.
(5) Dr. B. Johnson retired on April 12, 2002 pursuant to the Severance Plan for
Senior Executives.
18
OPTION GRANTS IN LAST FISCAL YEAR
The stock options included in the following table were all granted with an
exercise price equal to 100 percent of the fair market value of the common stock
on the date of grant.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE(1)
---- ---------- ----------- ------ ---- --------
L. A. Bossidy........................ 500,000(2) 3% $36.2700 07/15/06 $6,910,000
M. R. Bonsignore..................... -- -- -- -- --
R. D. Johnson........................ 250,000(3) 2% 36.2700 07/15/11 3,455,000
P. M. Kreindler...................... 200,000(3) 1% 36.2700 07/15/11 2,764,000
R. F. Wallman........................ 200,000(3) 1% 36.2700 07/15/11 2,764,000
Dr. B. C. Johnson.................... 100,000(3) 1% 36.2700 07/15/11 1,382,000
---------
(1) Options are valued using a Black-Scholes option pricing model which assumes
a historic five-year average volatility of 40.8 percent, the average
dividend yield for the three years ended December 31, 2001 (1.5 percent), a
5.2 percent risk-free rate of return (based on the five-year U.S. Treasury
note yield on the date of grant), and an expected option life of 5.0 years
based on past experience. No adjustments are made for non-transferability or
risk of forfeiture. Options will have no actual value unless, and then only
to the extent that, the common stock price appreciates from the grant date
to the exercise date. If the grant date present values are realized, total
shareowner value will have appreciated by approximately $11.3 billion, and
the value of the granted options reflected in the table will be less than
0.15 percent of the total shareowner appreciation.
(2) Vests 100 percent on July 1, 2002.
(3) Vests 40 percent on January 1, 2002 and 30 percent on each of January 1,
2003 and 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END(#) AT YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
L. A. Bossidy(1)............. 220,000 $7,108,552 1,500,000 500,000 -- --
M. R. Bonsignore(2).......... 207,792 5,470,594 1,883,194 -- -- --
R. D. Johnson................ 12,000 162,360 150,000 590,000 -- --
P. M. Kreindler.............. -- -- 240,000 723,000 -- $1,530,000
R. F. Wallman................ -- -- 364,000 820,500 $416,500 1,402,500
Dr. B. C. Johnson............ -- -- 92,000 288,000 -- --
---------
(1) The table reflects options exercised prior to Mr. Bossidy's return to
Honeywell on July 3, 2001.
(2) Upon his retirement, Mr. Bonsignore forfeited 500,000 unexercisable options.
19
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return on our
Common Stock to the total returns on the Standard & Poor's 500 Stock Index and
the Standard & Poor's Manufacturing (Diversified) Index. 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, 1996 and
that all quarterly dividends were reinvested at the average of the closing stock
prices at the beginning and end of the quarter.
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 1996
with dividends reinvested
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Honeywell 117 136 179 150 109
S&P 500'r' 133 171 208 189 166
S&P'r' Manufacturing
(Diversified) Index 119 138 170 202 199
EMPLOYMENT AND TERMINATION ARRANGEMENTS
Mr. Bossidy's employment agreement provides for his employment as Chairman
and Chief Executive Officer through June 30, 2002. During the term of the
agreement, Mr. Bossidy will have an annual salary of at least $2,000,000 and
will have an annual target bonus equal to 100 percent of base salary. If his
employment is terminated prior to the expiration of his agreement, Honeywell
will continue to provide Mr. Bossidy with compensation, benefits, and other
compensation arrangements for the balance of the outstanding term.
Mr. Cote's employment agreement provides for his employment as President and
Chief Executive Officer through June 30, 2002 and Chairman and Chief Executive
Officer effective July 1, 2002 through June 30, 2007. During the term of the
agreement Mr. Cote will have an annual salary of at least $1,500,000 and an
annual target bonus equal to 125 percent of his base salary. If his employment
is terminated prior to the expiration of his agreement, Honeywell will continue
to provide Mr. Cote with compensation, benefits, and other compensation
arrangements for the balance of the outstanding term.
Mr. Bonsignore's employment agreement provided for his employment as
Chairman and Chief Executive Officer through December 31, 2004. During the term
of the agreement, Mr. Bonsignore was
20
entitled to receive an annual salary of at least $1,500,000 and an annual target
bonus equal to 100 percent of base salary. Under the terms of his agreement, he
was entitled to a severance payment of three times his annual salary and bonus
upon his retirement in July 2001.
Under the Severance Plan for Senior Executives, the current executive
officers named in the Summary Compensation Table would be entitled to payments
equivalent to base salary and annual incentive bonus (and continuation of
certain benefits, such as group life and medical insurance coverage) for a
period of 36 months if their employment is terminated other than for 'gross
cause' (which includes fraud and criminal conduct). The payments would be made
in a lump sum following a change in control. The Severance Plan for Senior
Executives provides for an additional payment sufficient to eliminate the effect
of any applicable excise tax on severance payments in excess of an amount
determined under Section 280G of the Internal Revenue Code. Payments subject to
the excise tax would not be deductible by Honeywell.
RETIREMENT BENEFITS
The following table illustrates the estimated annual pension benefits which
would be provided on retirement at age 65 under Honeywell's retirement program
and an unfunded supplemental retirement plan, after applicable deductions for
Social Security benefits, to salaried employees having specified average annual
remuneration and years of service.
PENSION TABLE
-------------
AVERAGE YEARS OF CREDITED SERVICE
ANNUAL -----------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 - 30 35
------------ - -- -- -- ------- --
$ 800,000 $ 68,204 $148,204 $ 228,204 $ 308,204 $ 388,204 $ 415,086
1,000,000 88,204 188,204 288,204 388,204 488,204 520,086
1,200,000 108,204 228,204 348,204 468,204 588,204 625,086
1,400,000 128,204 268,204 408,204 548,204 688,204 730,086
2,000,000 188,204 388,204 588,204 788,204 988,204 1,045,086
4,000,000 388,204 788,204 1,188,204 1,588,204 1,988,204 2,095,086
The benefit amounts shown in the Pension Table are computed on a straight
life annuity basis. At January 1, 2002, the following individuals had the
indicated number of years of credited service for pension purposes:
Mr. Bossidy, 9; Mr. Bonsignore, 31; Mr. R. Johnson, 7; Mr. Kreindler, 10;
Mr. Wallman, 6; and Dr. B. Johnson, 2.
The amounts in the Salary and Bonus columns of the Summary Compensation
Table for 2001 would be included in computing remuneration for pension purposes
as well as any payroll based reward and recognition awards. Average annual
remuneration under the retirement program is calculated based on the highest
paid 60 consecutive months of an employee's last 120 months of employment.
Under their employment agreements, Messrs. Bossidy, Cote and Bonsignore are
entitled to receive during their lifetimes, commencing on retirement, Honeywell
facilities and services comparable to those provided prior to their retirement,
and a retirement benefit equivalent to 60 percent of final average compensation
(based on their highest three years of salary and bonus) payable annually for
life. Benefits under the agreements will be reduced by any retirement benefits
payable under Honeywell's retirement and supplemental retirement plans, and
under certain circumstances, benefits payable under retirement plans of former
employers. Mr. Bonsignore's early retirement agreement increases his retirement
benefit to 70 percent of final average compensation.
Dr. B. Johnson is covered by a pension arrangement that provides an age 60
retirement benefit of $36,139, payable annually for life, to complement the
benefit from his former employer.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with certain tax planning for Honeywell, we secured
supplemental retirement payments for three executives by funding them through an
escrow arrangement. By securing the payments, the executive's tax liability was
accelerated. We loaned each executive an amount equal to the related withholding
tax obligation at the time the payments were secured. The loans bear interest at
21
5.53 percent compounded semiannually and are due December 31, 2004. At
December 31, 2001, the amount of loans outstanding totaled $3,089,590, of which
$1,635,200 was loaned to Mr. Bonsignore, $765,450 to Mr. Wallman and $688,940 to
Dr. B. Johnson. Mr. Bonsignore's and Dr. B. Johnson's loans have been repaid.
SHAREOWNER PROPOSALS
Shareowners have given Honeywell notice of their intention to introduce the
following proposals for consideration and action by the shareowners at the
Annual Meeting. The respective proponents have provided the proposed resolutions
and accompanying statements and Honeywell is not responsible for any
inaccuracies contained therein. For the reasons stated, the Board of Directors
does not support these proposals.
ITEM 3 -- SHAREOWNER VOTING PROVISIONS
This proposal has been submitted by Harold J. Mathis, Jr., P.O. Box 1209,
Richmond, Texas 77406-1209 (the owner of 1,292 shares of Common Stock).
RESOLVED: ENACT THE 2001 SHAREHOLDER RESOLUTION ADOPTED BY 60.76%* OF
SHAREHOLDERS: RETURN TO SIMPLE MAJORITY VOTE. Shareholders request that
Honeywell International delete all requirements for more than a 51%-majority
vote. This includes Honeywell's monumental 80%-supermajority requirement.
WHY RETURN TO SIMPLE MAJORITY VOTE?
Reinstating simple majority vote is particularly important to hold Honeywell
International's management accountable. The past year's operations have shown
that Honeywell will require greater scrutiny by shareholders and directors.
The Council of Institutional Investors believes that super-majority rules are
not in the best interest of shareholders, and has asked Honeywell to state how
the majority vote received for last year's proposal will be evaluated.
The Honeywell International super-majority provision means that if the vast
majority of shareholders (but less than an overwhelming 80%) vote to change key
rules, management can ignore the majority.
On its first attempt at Honeywell, this resolution achieved an outstanding
58.81%* approval at the 2000 shareholder meeting. Shareholders do not benefit
when directors are entrenched by an 80%-vote requirement.
Management and the board continue to argue that simple majority voting is not
in the best interest of shareholders. It is unlikely that 60.76%* of
shareholders would vote against their own best interest by favoring this
proposal last year. Directors are questioning the judgment of the same
shareholders who put them into office.
Last year, Honeywell again hired one of the largest law firms in the United
States in its attempt to kill this proposal. Fortunately, their argument did
not stick with the SEC and shareholders were allowed to vote on the issue.
Free shareholders from this restrictive burden. Vote yes to return balloting
to a simple majority vote. Please note that abstentions will count as a vote
against this proposal.
Success builds upon success and your favorable vote will help build on the
60.76%* approval rate established last year.
RETURN TO SIMPLE MAJORITY VOTE
YES ON 3
-------------------
---------
*percent of yes/no votes cast.
22
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Most proposals submitted to a vote of Honeywell's shareowners, whether by
management or the shareowners, currently require a vote of a majority of the
shares represented at a meeting, whether in person or by proxy. Upon our
incorporation in 1985, however, our shareowners approved a Certificate of
Incorporation and By-laws that contained provisions requiring the vote of 80% of
the outstanding shares for certain actions. These limited provisions relate to
the elimination of the classified Board of Directors, removal of directors, the
calling of special meetings of shareowners and the requirement that shareowner
action be taken at a meeting.
These special voting provisions of our Certificate of Incorporation and
By-laws are intended to provide protection for all shareowners against
self-interested actions by one or a few large shareowners. In fact, last year's
voting results illustrate the vastly different view taken on this topic by our
smaller shareowners versus our larger shareowners. Last year a large majority of
our registered shareowners actually voted against this proposal. Of the 34,579
registered shareowners who voted on the proposal, only 8,777, or about 25%,
voted in favor of it. The proposal received a majority of total votes cast
because on average the shareowners voting in favor held much larger positions in
our stock than the shareowners voting against. Under the law, the Board has a
fiduciary duty to act in a manner it believes to be in the best interest of
Honeywell and all of the shareowners. In this case, a large majority of our
shareowners appears to agree with the Board that the current voting provisions
are in their best interest. Moreover, under our Certificate of Incorporation and
By-laws, adoption of the proposal requires the affirmative vote of the holders
of 80% of our outstanding shares. Last year the owners of only 43.48% of our
outstanding shares voted for this proposal, so its support among our shareowners
falls far short of what would be required to effect a change.
Voting provisions similar to ours are included in the governing documents of
many public corporations. They are intended to encourage a person making an
unsolicited bid for Honeywell to negotiate with the Board of Directors to reach
terms that are fair and provide the best results for all shareowners, large and
small. Without such provisions, it may be possible for the holders of a majority
of the shares represented at a meeting to take actions that would give them
effective control of Honeywell without negotiating with the Board to achieve the
best results for the other shareowners.
Adoption of this proposal would not in itself effectuate the changes
contemplated by the proposal. Further action by the shareowners would be
required to amend the By-laws and the Certificate of Incorporation. Under these
documents, an 80% vote of the outstanding shares would be required for approval.
As noted above, only 43.48% of our outstanding shares were voted in favor of
this proposal last year. Under Delaware law, amendments to the Certificate of
Incorporation require a recommendation from the Board of Directors prior to
submission to shareowners. While the Board would consider such amendments, it
would do so consistent with its fiduciary duty to act in a manner it believes to
be in the best interest of Honeywell and all of its shareowners.
The Board disagrees with many of the 'supporting statements' contained in
this proposal.
FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
ITEM 4 -- SHAREOWNER RIGHTS PLANS
This proposal has been submitted by Bartlett Naylor, 1255 North Buchanan,
Arlington, Virginia 22205 (the owner of 187 shares of Common Stock).
Resolved: That shareholders urge that the board of directors will solicit
shareholder approval for any 'shareholder rights' plan that might be adopted,
and that if this approval is not granted in the form of a majority of shares
voted, then any rights plan be redeemed.
Supporting Statement Shareholder rights plans, sometimes called 'poison
pills,' may be adopted by boards at any time. Our company might redeem a pill,
adopt another, and redeem that one, three separate moves, between the time this
resolution is filed and the time of the annual meeting in the spring. Yet I
believe shareholders frequently oppose pills when they are asked in a vote. This
resolution
23
merely urges the board to secure shareholder approval if and when a pill is put
in place by the board. The case of Fleming Companies, Inc. and its unpopular
pill should serve as a cautionary tale to any board that believes its will
supplants shareholder interest. Broadly, the poison pill has come to signify
management insulation.
The debacle of Enron commands shareholders to take greater interest in
oversight of management. Corporate law can frustrate that oversight. Indeed,
shareholders are rarely afforded an opportunity to select between board
candidates (as only one slate is voted on), or between auditors (as only one is
proposed). Moreover, even when shareholders propose resolutions and those
resolutions secure a majority of those voting, boards often choose not to abide
by this majority. Such is the case with Honeywell, where this resolution was
approved by shareholders at the last annual meeting. But by voting for this
resolution, shareholders can declare our intent on keeping a close watch. And
should our board honor a majority vote and adopt a policy that any shareholder
rights plan would be ratified by a shareholder vote, our board could demonstrate
a commitment to insure the greatest management care for shareholders.
-------------------
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Honeywell does not now have a 'shareholder rights' plan, and has no current
intention to adopt one. The Board believes that it will be able to best maximize
shareowner value if it retains the ability to adopt a plan in the future, if
warranted in its judgment, to preserve and protect shareowner interests. The
proponent suggests that rights plans stand between management and shareowners.
To the contrary, the Board of Directors has a fiduciary duty to and is committed
to act in the best interests of Honeywell and its shareowners. This duty applies
to all actions, including any future adoption of a rights plan. The Board
believes that it would be contrary to law for it to redeem a rights plan if the
Board does not believe that such redemption would be in the best interest of
Honeywell and the shareowners.
The economic benefits of a shareholder rights plan to stockholders have been
validated in several studies. A study published in November 1997 by Georgeson &
Company found that companies with shareholder rights plans received $13 billion
dollars in additional takeover premiums during the period 1992 to 1996. The
Georgeson study also concluded that (1) premiums paid to acquire target
companies with shareholder rights plans were on average eight percentage points
higher than premiums paid for target companies that did not have such plans,
(2) the presence of a rights plan did not increase the likelihood of the defeat
of a hostile takeover bid or the withdrawal of a friendly bid, and (3) rights
plans did not reduce the likelihood that a company would become a takeover
target. Thus, evidence suggests that rights plans achieve their principal
objectives: protection against inadequate offers and abusive tactics and
increased bargaining power of the Board resulting in higher value for
stockholders.
The Board believes it is important that it retain the flexibility to adopt a
rights plan without having to conduct a shareholder vote in order to maintain
the plan. A rights plan is designed to improve the Board's ability to protect
and advance the interests of Honeywell and all of its shareowners. It enhances
the ability of the Board to negotiate with potential acquirors and discourages
coercive takeover tactics that would operate to the detriment of our
shareowners. A requirement that we seek shareholder approval for any rights plan
could seriously weaken the Board's negotiating position in a hostile situation
and leave it less able to protect shareowner interests. We believe that adoption
of the proposal would not be in the best interest of our shareowners.
FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
24
ITEM 5 -- LIMIT AUDITORS TO AUDITING ONLY
This proposal is submitted by June Kreutzer and Cathy Snyder, 54 Argyle
Place, Orchard Park, New York 14127 (the owners of 247 shares of Common Stock).
Shareholders request that our Board adopt a policy or bylaw that the
Company's independent accountant/audit firm will provide only audit services to
the Company and not provide any other services. This exclusion of other services
can apply to a spin-off of the audit firm at the discretion of our board.
This proposal is patterned on the 2002 proposal submitted to Walt Disney
Company (DIS) by United Association S&P 500 Index Fund. Disney attempted to
exclude the Index Fund proposal from shareholder vote. However, Disney was
unable to obtain regulatory concurrence from the Securities and Exchange
Commission. The SEC cited:
(1) Widespread public debate concerning the impact of non-audit services
on auditor independence.
(2) The increasing recognition that the independence of auditors raises
significant policy issues.
Disney then adopted a key part of this proposal:
With the Enron scandal still in full bloom, Walt Disney reiterated its new
policy of no longer retaining its auditors for consulting services or other
non-audit functions.
Daily News, Los Angeles, Calif., Feb. 20, 2002
Disney Chairman Michael Eisner said, 'In the current world, it's become more
important than ever to make sure our shareholders -- and the market as a
whole -- have full confidence in our financial reports, including the integrity
of the auditing process.'
The nation's biggest companies paid far more money than previously estimated
to their independent auditing firms for non-audit services in 2000. This renews
questions about whether such fees create conflicts of interest for audit firms.
At issue: How objective can an audit firm be when it is also making millions of
dollars providing non-audit services.
Wall Street Journal, April 10, 2001
The Wall Street Journal reported that of the 307 S&P 500 companies it
surveyed, non-audit service fees averaged nearly 3-times as big as audit fees.
According to the Honeywell 2001 proxy our company paid $32 million to
PricewaterhouseCoopers (PwC) -- yet only $5 million was for auditing. Our
company paid approximately the same amount to its auditors for non-audit work as
Enron did. The current PwC non-audit fees are on page 11 of this publication.
Leading institutional investors urged auditors to not accept non-audit fees.
The California Public Employees' Retirement System's (CalPERS) General Counsel,
Kayla J. Gillan, said: The SEC should draw a bright-line test: no non-audit
services to an audit client. TIAA-CREF's Chairman John H. Biggs wrote:
' . . . independent public audit firms should not be the auditors of any company
for which they simultaneously provide other services.'
It is respectfully submitted that it would be in shareholders' best interest
to adopt a policy or bylaw that henceforth the Company's independent auditors
provide only audit services to the Company.
LIMIT AUDITORS TO AUDITING ONLY
YES ON 5
-------------------
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Honeywell appreciates the importance of auditor independence to shareowner
confidence in the integrity of our accounting and financial reporting system.
For that reason, the Audit Committee of our Board of Directors monitors the
amount and nature of the non-audit services performed by our
25
independent auditors, as well as the safeguards that have been put in place to
assure auditor independence. Our Audit Committee, which is composed entirely of
independent directors, has the responsibility for oversight of the audit process
and the operational and financial integrity of our operations throughout the
year.
The aggregate fees charged to Honeywell for non-audit services in 2000 by
our independent auditors, PricewaterhouseCoopers (PwC), were atypically high
because of one-time tax compliance and refund work that year. The total fees of
$27.8 million for non-audit services in 2000 included $7.7 million attributable
to this non-recurring project, which was an adjunct to their comparable ongoing
tax work on our behalf. Excluding this project, Honeywell had non-audit fees of
$20.1 million in 2000, comparable to our non-audit fees in 2001 of
$17.6 million.
The non-audit projects for which we engage PwC include employee benefit plan
audits, tax compliance and planning services, financial statement audit services
for divested businesses, acquisition audit-related due diligence, and statutory
audits of foreign legal entities. The vast majority of these services are not
traditional consulting services. Such services are essentially audit in nature
or closely related to the audit area, even though they are defined as non-audit
services under SEC guidelines. Honeywell benefits from the efficient use of
resources when information and experience developed during the audit process can
be leveraged in these related activities. Our Audit Committee has reviewed the
nature of these services, and is satisfied they do not compromise auditor
independence.
In addition, the Audit Committee has a policy that Honeywell not engage PwC
for any traditional consulting services without prior notice to the Committee.
Our fees to PwC for traditional consulting services have been relatively minor.
For example, in both 2000 and 2001 we did not engage PwC to provide any
financial information systems design and implementation services at all.
We believe it is important to retain the discretion to determine the best
allocation of work among accounting (and other) firms and, when and where it
does not compromise independence and is efficient and cost effective to do so,
to select our independent auditor to perform certain services. The Proposal's
suggested total prohibition of non-audit services would severely constrain our
ability to access the public capital markets and to divest businesses in the
normal course of executing our portfolio strategy. SEC registration services and
divestiture audit services, which can be performed efficiently only by our
independent accountants, would be precluded under the proposal.
In addition to the Audit Committee's oversight of the audit and non-audit
services provided by PwC and auditor independence generally, Honeywell has
internal safeguards to monitor and manage both the audit and non-audit services
provided by PwC. These safeguards are designed to protect against independence
conflicts and are regularly reviewed by the Audit Committee. PwC also has
various internal safeguards in respect of its engagements for Honeywell, and
confirms its independence in writing each year to the Audit Committee. In
addition to these internal procedures, we annually seek shareowner ratification
of our selection of independent auditors.
The relationship between Honeywell and its external auditor is already one
of independence. An absolute prohibition against the independent auditor
providing non-audit services is not necessary to achieve this goal and would, in
fact, be counterproductive.
FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
26
OTHER INFORMATION
SHAREOWNER PROPOSALS FOR 2003 ANNUAL MEETING
In order for a shareowner proposal to be considered for inclusion in
Honeywell International's proxy statement for the 2003 Annual Meeting
pursuant to Rule 14a-8 of the Securities and Exchange Commission, the
proposal must be received at the Company's offices a reasonable time before
Honeywell begins to print and mail its proxy materials. The Company has set
the deadline for receipt of such proposals as the close of business on
November 29, 2002. Proposals submitted thereafter will be opposed as not
timely filed.
If a shareowner intends to present a proposal for consideration at the 2003
Annual Meeting outside the processes of SEC Rule 14a-8, Honeywell must
receive notice of such proposal on or before January 28, 2003. Otherwise
the proposal will be considered untimely under Honeywell's By-laws. In
addition, Honeywell's proxies will have discretionary voting authority on
any vote with respect to such proposal, if presented at the meeting,
without including information regarding the proposal in its proxy
materials.
Any shareowner who wishes to submit a shareowner proposal, should send it to
the Vice President and Secretary, Honeywell, 101 Columbia Road, Morris Township,
New Jersey 07962.
DIRECTOR NOMINATIONS
Honeywell's By-laws provide that any shareowner of record entitled to vote
at the Annual Meeting who intends to make a nomination for director, must notify
the Secretary of Honeywell in writing not more than 60 days and not less than 30
days prior to the meeting. The notice must meet other requirements contained in
the By-laws, a copy of which can be obtained from the Secretary of Honeywell at
the address set forth above.
EXPENSES OF SOLICITATION
Honeywell pays the cost of preparing, assembling and mailing this
proxy-soliciting material. In addition to the use of the mail, proxies may be
solicited by Honeywell officers and employees by telephone or other means of
communication. Honeywell pays all costs of solicitation, including certain
expenses of brokers and nominees who mail proxy material to their customers or
principals. In addition, Georgeson & Company Inc. has been retained to assist in
the solicitation of proxies for the 2001 Annual Meeting of Shareowners at a fee
of approximately $12,500 plus associated costs and expenses.
By Order of the Board of Directors,
Victor P. Patrick
Vice President and Secretary
June 14, 2002
27
DIRECTIONS TO HONEYWELL'S HEADQUARTERS
101 COLUMBIA ROAD, MORRIS TOWNSHIP, N.J.
[MAP]
FROM RTE. 80 (EAST OR WEST) AND RTE. 287 SOUTH:
Take Rte. 80 to Rte. 287 South to Exit 37 (Rte. 24 East -- Springfield). Follow
Rte. 24 East to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia
Road. At second traffic light, make left into Honeywell.
FROM RTE. 287 NORTH:
Take Rte. 287 North to Exit 37 (Rte. 24 East -- Springfield). Follow Rte. 24
East to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into Honeywell.
FROM NEWARK INTERNATIONAL AIRPORT:
Take Rte. 78 West to Rte. 24 West (Springfield -- Morristown). Follow Rte. 24
West to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into Honeywell.
Appendix I
Annual Meeting of Shareowners
101 Columbia Road
Morris Township, New Jersey
July 29, 2002
10:00 A.M.
You May Vote by
the Internet, by Telephone or by Mail
(see instructions on reverse side)
Electronic Distribution
If you would like to receive future Honeywell proxy statements and annual
reports electronically, please visit http://www.investpower.com. Next, click on
"Enroll to receive mailings via e-mail" to enroll. Please refer to the company
number and account number on top of the reverse side of this card.
YOUR VOTE IS IMPORTANT
CALL TOLL-FREE
IT'S FAST AND CONVENIENT
1-800-PROXIES
PROXY
HONEYWELL
This Proxy is Solicited on Behalf of the Board of Directors of Honeywell
International Inc.
Annual Meeting of Shareowners - July 29, 2002
The undersigned hereby appoints David M. Cote, Peter M. Kreindler and
Victor P. Patrick as proxies (each with the power to act alone and with full
power of substitution) to vote, as designated herein, all shares the undersigned
is entitled to vote at the Annual Meeting of Shareowners of Honeywell
International Inc. to be held on July 29, 2002, and at any and all adjournments
thereof. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the Meeting and any and all adjournments
thereof.
Your vote on the election of Directors and the other prosposals described
in the accompanying Proxy Statement may be specified on the reverse side. The
nominees for Director are: Marshall N. Carter, David M. Cote, Robert P. Luciano,
John R. Stafford and Michael W. Wright.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR, "FOR" PROPOSAL 2 AND
"AGAINST" PROPOSALS 3 THROUGH 5.
Please date and sign your Proxy on the reverse side and return it promptly.
ANNUAL MEETING OF SHAREOWNERS OF
HONEYWELL
July 29, 2002
Co. #_____________ Acct. #_____________
PROXY VOTING INSTRUCTIONS
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
___________________________________
YOUR CONTROL NUMBER IS ___________________________________
The Internet and telephone voting facilities will close at 9:00 a.m. E.D.T. on
July 29, 2002.
Please Detach and Mail in the Envelope Provided
Please mark your
A [X] votes as in this
example.
FOR all nominees Withhold
listed at right Authority
(except as to vote for all A vote "FOR" Proposal 1 is recommended
marked to the nominees by the Board of Directors.
contrary below) listed at right
1. Election of [ ] [ ] Nominees:
Directors: Marshall N. Carter
David M. Cote
Robert P. Luciano
John R. Stafford
Michael W. Wright
(INSTRUCTION: To WITHHOLD AUTHORITY to vote
for any individual nominee(s), write that nominee's
name on the line below:
______________________________________________________
A vote "FOR" Proposal 2 is recommended by the Board of Directors.
2. Appointment of Independent Accountants. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
A vote "AGAINST" Shareowner Proposals 3
through 5 is recommended by the Board of
Directors.
3. Shareowner voting provisions. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Shareowner rights plans. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Limiting auditors to auditing only. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE SIGN AND RETURN THE CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
To change your address, [ ] I plan to attend the [ ]
please mark this box. annual meeting.
I do not wish to receive [ ] To include any [ ]
future annual reports for comments please
this account. mark this box.
SIGNATURE ____________________________________ Date: ____________
SIGNATURE ____________________________________ Date: ____________
NOTE: (Executors, Administrators, etc., should give full title.)
Appendix II
Annual Meeting of Shareowners
101 Columbia Road
Morris Township, New Jersey
July 29, 2002
10:00 A.M.
You May Vote by
the Internet, by Telephone or by Mail
(see instructions on reverse side)
Pursuant to the
Honeywell Savings and Ownership Plan I
Honeywell Savings and Ownership Plan II
Vericor Power Systems Savings Plan
and
Honeywell Truck Brake Systems Company Savings Plan (the "Plans")
YOUR VOTE IS IMPORTANT
CALL TOLL-FREE
IT'S FAST AND CONVENIENT
1-800-PROXIES
PROXY
HONEYWELL
This Proxy is Solicited on Behalf of the Board of Directors of
Honeywell International Inc.
Annual Meeting of Shareowners - July 29, 2002
The undersigned hereby appoints David M. Cote, Peter M. Kreindler and
Victor P. Patrick as proxies (each with the power to act alone and with full
power of substitution) to vote, as designated herein, all shares the undersigned
is entitled to vote at the Annual Meeting of Shareowners of Honeywell
International Inc. to be held on July 29, 2002, and at any and all adjournments
thereof. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the Meeting and any and all adjournments
thereof.
Your vote on the election of Directors and the other prosposals
described in the accompanying Proxy Statement may be specified on the reverse
side. The nominees for Director are: Marshall N. Carter, David M. Cote, Robert
P. Luciano, John R. Stafford and Michael W. Wright.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR, "FOR" PROPOSAL 2 AND
"AGAINST" PROPOSALS 3 THROUGH 5. THE TRUSTEE WILL VOTE SHARES AS TO WHICH NO
INSTRUCTIONS ARE RECEIVED IN THE SAME RATIO AS SHARES WITH RESPECT TO WHICH
INSTRUCTIONS HAVE BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLANS.
Please date and sign your Proxy on the reverse side and return
it promptly.
ANNUAL MEETING OF SHAREOWNERS OF
HONEYWELL
July 29, 2002
Co. #_____________ Acct.# ______________________
PROXY VOTING INSTRUCTIONS
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
|----------------------------------|
YOUR CONTROL NUMBER IS | |
| |
|----------------------------------|
The Internet and telephone voting facilities will close at 5:00 p.m. E.D.T. on
July 25, 2002.
Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
Please mark your
A [X] votes as in this
example.
FOR all nominees Withhold
listed at right Authority
(except as to vote for all A vote "FOR" Proposal 1 is recommended
marked to the nominees by the Board of Directors.
contrary below) listed at right
1. Election of [ ] [ ] Nominees:
Directors: Marshall N. Carter
David M. Cote
Robert P. Luciano
John R. Stafford
Michael W. Wright
(INSTRUCTION: To WITHHOLD AUTHORITY to vote
for any individual nominee(s), write that nominee's
name on the line below:
---------------------------------------------------
A vote "FOR" Proposal 2 is recommended
by the Board of Directors.
FOR AGAINST ABSTAIN
2. Appointment of Independent Accountants. [ ] [ ] [ ]
A vote "AGAINST" Shareowner Proposals 3
through 5 is recommended by the Board of
Directors.
FOR AGAINST ABSTAIN
3. Shareowner voting provisions. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
4. Shareowner rights plans. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
5. Limiting auditors to auditing only. [ ] [ ] [ ]
PLEASE SIGN AND RETURN THE CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
To change your address, I plan to attend the
please mark this box. [ ] annual meeting. [ ]
I do not wish to receive To include any
future annual reports for [ ] comments please [ ]
this account. mark this box.
SIGNATURE _______________________________ Date: __________
SIGNATURE _______________________________ Date: __________
NOTE: (Executors, Administrators, etc., should give full title.)
--------------------------------------------------------------------------------
Appendix III
[Honeywell Logo]
-------------------------------------------------------------------------------
DAVID M. COTE Honeywell
President, Chief Executive Officer P.O. Box 3000
and Chairman-Elect Morristown, NJ 07962-2496
June 14, 2002
Dear Savings Plan Participant:
As Honeywell's Annual Meeting of Shareowners approaches, we find
ourselves on the path to recovery and strengthened performance, while
still facing the challenges of an uncertain economy. One key element of
our recovery plan is a commitment to maintaining the continuity of the
core processes we use to meet our financial commitments, set our
strategies and develop our people. In addition, we have launched five
initiatives to ensure clear focus on the most critical factors for our
success: Growth, Productivity, Cash, People and our Enablers: Six Sigma
and Digitization.
I urge you to exercise your right to direct the Savings Plan Trustee how
to vote on the proposals to be considered at this meeting. The
proposals, along with the recommendations of the Board of Directors, are
described in the enclosed proxy statement. As a Savings Plan
participant, you have the right, under the Plan, to direct the Trustee
how to vote the Honeywell shares attributable to your Savings Plan
account. When the Trustee votes the proxy for the plans, 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.
A card for your confidential voting direction is enclosed. If you
prefer, you can also direct your vote via the Internet or by telephone.
Simply follow the instructions on the proxy voting direction card.
However, if you direct your vote by the Internet or by telephone, do not
return your proxy voting direction card by mail. If you own Honeywell
shares other than through the Savings Plans, you will receive separate
voting instructions for those shares.
On behalf of Honeywell, our leadership and employees worldwide, I thank
you for your continued commitment to our company. Working together, we
will ensure Honeywell's future as a high-performance growth company that
delivers results for our customers and shareowners every day.
Sincerely,
DAVID M. COTE
DAVID M. COTE
President, Chief Executive Officer
and Chairman-Elect
STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as.................. 'r'