Honeywell International Inc. · NASDAQ:HON
Honeywell International — Shareholder Meeting (March 2015)
34 slides from Honeywell International's shareholder meeting presentation, Mar 12, 2015
Slide 1: Honeywell 2015 Annual Meeting Summary of Proxy Matters
Honeywell 2015 Annual Meeting Summary of Proxy Matters March - April, 2015
Slide 2: Forward Looking Statements
2 Discussion Of 2015 Proxy Matters This report contains “forward - looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, pr
Slide 3: Discussion Of 2015 Proxy Matters
3 Discussion Of 2015 Proxy Matters Discussion Of 2015 Proxy Matters • Review of HON Financial Performance - Incentive Plan Performance Targets / Results • 2014 Leadership And Organizational Changes • Executive Compensation - 2014 Annual Compensation Actions - Actions Related To Leadership Changes &
Slide 4: Honeywell Financial Performance
4 Discussion Of 2015 Proxy Matters Honeywell Financial Performance
Slide 5: 2014 Summary
5 Discussion Of 2015 Proxy Matters 2014 Summary 5 th Consecutive Year Of Double - Digit Earnings Growth Sales Segment Margin EPS NPI, HGR Penetration Offsetting Slow Macros Up 3% Reported 3% Organic Exceeded EPS Guidance Range Margin Performance In - Line with 2018 Targets Up 30 bps 70 bps ex - OEM
Slide 6: 2014 Growth Compared To Peer Median
6 Discussion Of 2015 Proxy Matters 2014 Growth Compared To Peer Median Note: Reflects Fiscal Year 2014 Results; HON Net Income And EPS Exclude Pension MTM; Peer Median Reflects Compensation Peer G rou p Median (AA Excluded From Net Income And EPS Due To Loss In 2013); Multi - Industry Peer Median In
Slide 7: Incentive Plan Performance Targets
7 Discussion Of 2015 Proxy Matters Incentive Plan Performance Targets Challenging Goals; Aligned With L - T Growth Targets Performance Targets (Total HON) (3 - Metrics, Equally Weighted – M&A Excluded) 1. Total Sales (for 2 - years): $82.74 Billion » 3.9% CAGR (2013 Sales = $39.06B) 2. 2015 Segment
Slide 8: 5-Year Net Income And EPS Growth
8 Discussion Of 2015 Proxy Matters 5 - Year Net Income And EPS Growth Note: 2009 - 2014 Fiscal Year Data *Net Income attributable to HON and EPS exclude pension mark - to - market adjustment **Comp Peer Med represents median of the Compensation Peer Group excluding AA, JCI, and TXT due to negative e
Slide 9: 5-Year Cumulative TSR
9 Discussion Of 2015 Proxy Matters 5 - Year Cumulative TSR Comp Peer Median Or “Comp” Reflects Compensation Peer Group Median Multi - Industry Peer Median Or “Multi” Includes EMR, GE, MMM & UTX (Peers With Most Similar Profile To HON) As Of Market Close On December 31, 2014 (Total Shareholder Return
Slide 10: 2018 Organic Growth Targets
10 Discussion Of 2015 Proxy Matters ($B) Segment Profit / Margin Sales $46 - 51 18.5 - 20.0 % 17.0% $40.5 • Sales Headwinds ~$1 - 2B Over 5 - Year Plan − Global GDP Growth, F/X • Key Inflection Points In 2016 And 2017 • HGR Momentum Continues • HOS Gold Acceleration Across 74 Enterprises • FT Drives
Slide 11: 2014 Leadership And Organizational Changes
11 Discussion Of 2015 Proxy Matters 2014 Leadership And Organizational Changes
Slide 12: 2014 Leadership Changes
12 Discussion Of 2015 Proxy Matters 2014 Leadership Changes • Retirement of CFO, Dave Anderson; Promotion of Thomas Szlosek - Szlosek joined HON in 2004, served as HON’s Controller and CFO of ACS • Promotion Of Two New Divisional CEOs - Alex Ismail becomes President/CEO of ACS Ismail was formerly
Slide 13: 2014 Organizational Changes
13 Discussion Of 2015 Proxy Matters 2014 Organizational Changes Commitment To Continued Evolution As A Company Aerospace (w/ Transportation Systems) Automation and Control Solutions Performance Materials and Technologies 2014 Sales: $15.8B* 2014 Sales: $14.5B 2014 Sales: $10.2B • Segment Consolidati
Slide 14: Executive Compensation
14 Discussion Of 2015 Proxy Matters Executive Compensation
Slide 15: Executive Compensation Program – 2014
15 Discussion Of 2015 Proxy Matters Executive Compensation Program – 2014 • Base Pay - 2014 Merit Increases: 5% for CEO; 0% - 9% other NEOs. No merits in 2013 - 2 NEO’s with promotional increases (new CFO/ new Vice - Chairman) • ICP – Annual S - T Incentive Plan - Payouts for 2014 ranged from 91% to
Slide 16: Shareowner Value Creation: Mr. Cote's Tenure
16 Discussion Of 2015 Proxy Matters 0 50 100 150 200 250 300 350 400 450 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Shareowner Value Creation: Mr. Cote’s Tenure CEO Track Record: Long - Term Outperformance HON +316% S&P +134% Comp Peers +200% Indexed (January
Slide 17: CEO Track Record 2003-2014
17 Discussion Of 2015 Proxy Matters CEO Track Record 2003 2014 EPS Excludes Pension Mark - to - Market (MTM) Adjustment 2014 Revenue, Segment Profit Exclude 4Q14 $184M OEM Incentives Free Cash Flow = Cash Flow from Operations less Capital Expenditures 2003 2014 2003 2014 2003 2014 2003 2014 Business
Slide 18: CEO Pay-For-Performance Alignment
18 Discussion Of 2015 Proxy Matters CEO Pay - For - Performance Alignment (1) Reflects the year - to - year performance indexed to a 2010 base year for operating performance metrics and 2009 base year for total shareowner return (“TSR”), at 100. The TSR point above each column is the TSR for the pre
Slide 19: Aggregate Change In CEO's Pension Value
19 Discussion Of 2015 Proxy Matters Aggregate Change In CEO’s Pension Value 2014 Pension Increase Driven By Discount Rate Decline 2015 Proxy Anomaly: • Summary Comp Table (SCT) will show a $5.6 million increase in Mr. Cote’s Pension Value for 2014 • $4.6 million of the increase is due exclusively to
Slide 20: Succession Plan-Related Actions: CEO Retention Agreement
20 Discussion Of 2015 Proxy Matters Situational: Succession Plan - Related Actions CEO Retention Agreement - December 2014 Aimed at retaining Dave Cote through at least 12/31/2017 and driving superior relative TSR • Performance Stock Options with target value of $5M; cliff vests on 12/31/2017 - Awar
Slide 21: Shareholder Proposals
21 Discussion Of 2015 Proxy Matters Shareholder Proposals
Slide 22: Separation Of Chair And CEO
22 Discussion Of 2015 Proxy Matters Separation Of Chair And CEO • We made significant changes to address shareowner concerns so that there is “another voice” in the HON Boardroom. • Our Board created the role of “Lead Director” with the following duties, responsibilities and authority: - Term : A mi
Slide 23: Other Factors Related To Vote On Separation
23 Discussion Of 2015 Proxy Matters Other Factors Related To Vote On “Separation” • In addition to new Lead Director role investors should be mindful of the following: - No recent CEO transitions Consistent leadership since 2002 - Director/CEO tenure Average tenure of our board is 7.8 years, ver
Slide 24: The Board Opposes Action By Written Consent
24 Discussion Of 2015 Proxy Matters The Board Opposes Action By Written Consent Written Consent Undermines Annual Proxy Process • Written consent undermines shareowner democracy; allows insurgent shareholders to act outside the shareowners’ meeting: - Compared to formal proxy process, l acks procedu
Slide 25: Political Contributions/Lobbying Disclosure
25 Discussion Of 2015 Proxy Matters No Use Of HON Funds For Political Purposes Political Contributions/Lobbying Disclosure • We revamped our disclosure on political contributions/lobbying - Available on our website at www.honeywell.com (see “Investors/Corporate Governance/Political Contributions”) -
Slide 26: Board Structure/Tenure
26 Discussion Of 2015 Proxy Matters Board Structure/Tenure
Slide 27: Diverse Board With Appropriate Average Tenure
27 Discussion Of 2015 Proxy Matters Diverse Board With Appropriate Average Tenure “Best In Class” Board Composition Director Tenure • The Board carefully considers the appropriate balance among new, mid and long - tenured directors . Director Diversity • Diversity a core value of Honeywell, and Boar
Slide 28: Appendix: Reconciliation of non-GAAP Measures to GAAP Measures
28 Discussion Of 2015 Proxy Matters Appendix Reconciliation of non - GAAP Measures to GAAP Measures
Slide 29: Reconciliation Of Segment Profit To Operating Income
29 Discussion Of 2015 Proxy Matters ($B) 2003 Segment Profit $2.4 Stock Based Compensation (1) - Repositioning and Other (2, 3) (0.2) Pension Ongoing Expense (2) (0.1) Pension Mark-to-Market Adjustment (2) (0.2) Other Postretirement Expense (2) (0.2) Operating Income $1.7 (1) Stock Based Compensatio
Slide 30: Segment Profit To Operating Income And Margins
30 Discussion Of 2015 Proxy Matters Reconciliation Of Segment Profit To Operating Income And Calculation Of Segment Profit And Operating Income Margins ($M) 2010 2011 2012 2013 2014 Segment Profit $4,485 $5,357 $5,879 $6,351 $6,696 Stock Based Compensation (1) (163) (168) (170) (170) (187) Repositio
Slide 31: Reconciliation Of EPS Excluding Pension Mark-to-Market
31 Discussion Of 2015 Proxy Matters Reconciliation Of EPS To EPS, Excluding Pension Mark - to - Market Adjustment 2003 (1) EPS, Previously Reported $1.50 Effect of Pension Accounting Change (0.11) EPS $1.39 Pension Mark-to-Market adjustment 0.12 EPS, Excluding Pension Mark-to-Market Adjustment $1.51
Slide 32: Reconciliation Of Operating Cash Flow To Free Cash Flow
32 Discussion Of 2015 Proxy Matters Reconciliation Of Cash Provided By Operating Activities To Free Cash Flow ($M) 2003 2013 2014 Cash Provided by Operating Activities $2,199 $4,335 $5,024 Expenditures for Property, Plant and Equipment (655) (947) (1,094) Free Cash Flow $1,544 $3,388 $3,930
Slide 33: Reconciliation Of Net Income Excluding Pension Mark-to-Market
33 Discussion Of 2015 Proxy Matters Reconciliation Of Net Income To Net Income, Excluding Pension Mark - to - Market Adjustment ($M) 2009 2014 Net Income Attributable to Honeywell $1,548 $4,239 Pension Mark-to-Market Adjustment, Net of Tax (1) 486 179 Net Income Attributable to Honeywell Excluding $
Slide 34: Discontinued Operations Reconciliation
34 Discussion Of 2015 Proxy Matters Discontinued Operations Reconciliation ($B) 2003 Sales - Total Honeywell $23.1 Sales - CPG 1.0 Sales - Continuing Operations $22.1
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