Honeywell International Inc. · NASDAQ:HON
Honeywell International — Shareholder Meeting (March 2016)
29 slides from Honeywell International's shareholder meeting presentation, Mar 10, 2016
Slide 1: Honeywell Discussion Topics 2016 Annual Meeting of Shareowners
Honeywell Discussion Topics 2016 ANNUAL MEETING OF SHAREOWNERS March 2016
Slide 2: Forward Looking Statements
2 Forward Looking Statements 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, project,
Slide 3: Agenda
3 Agenda • Review of HON Financial Performance - 2015 Results - Financial Performance versus Peer Group and Multi - Industry Peers • Shareowner Outreach • Executive Compensation - Program Design - 2015 Annual Incentive Plan Goals & Performance - 2014 - 2015 Growth Plan Cycle Goals & Performance - Sh
Slide 4: 2015 Financial Summary
4Q 2015 Earnings Release January 29, 2016 Up 10 % Consistent Execution On All Fronts 2015 Financial Summary 4 Sales Segment Margin EPS 2014 2015 $5.5 6 2014 2015 FCF 2014 2015 16.6% 18.8 % $3.9B $4.4B EPS, V% Exclude Any Pension Mark - to - Market Adjustment; FCF = Cash Flow From Operations Less Cap
Slide 5: HON Outperforming Peer Median Growth Compared To Peer Group
4Q 2015 Earnings Release January 29, 2016 HON Outperforming Peer Median Growth Compared To Peer Group Median 5 Sales EPS - 4.6% - 20.1% 8.9% Comp Peer Median Multi - Industry Peer Median HON Net Income 14.1% 11.7% 17.7% Comp Peer Median Multi - Industry Peer Median HON ROIC * - 1.0% - 18.0% 9.7% Com
Slide 6: Top Quartile Performance Without Benefit Of Share Buyback
4Q 2015 Earnings Release January 29, 2016 Top Quartile Performance Without Benefit Of Share Buyback 6 Peer Comparison: Net Income/EPS (5 - Year) - 2% ~Flat 2% 3% 15% - 1% 2% 3% 6% 15% Multi - Industry Peer 1 Multi - Industry Peer 2 Multi - Industry Peer 3 Multi - Industry Peer 4 HON Note: Reflects 2
Slide 7: Consistently Outperforming Peers And Market Total Shareowner Return
4Q 2015 Earnings Release January 29, 2016 Consistently Outperforming Peers And Market Total Shareowner Return 7 Percentages Reflect Cumulative Growth Over The Period Comp Peer Median Reflects Compensation Peer Group Median; Multi - Industry Peer Median Includes GE, EMR, MMM, UTX Updated as of Decemb
Slide 8: Shareowner Outreach
8 Shareowner Outreach
Slide 9: Large Investors Supportive Of HON Compensation
Large Investors Supportive Of HON Compensation 9 Shareowner Outreach • Rigorous year - round engagement with shareowners • Prior to 2015 annual meeting, reached out to top 75 shareowners: 40 of 75 met with us (56% of the vote) • Of the 40 investors, only 2 told us they would vote against HON on Say
Slide 10: Executive Compensation Balanced Program – Aligned With Shareowner Interests
10 Executive Compensation Balanced Program – Aligned With Shareowner Interests 11 Executive Compensation Plan Overview Base Salary 8% Annual Incentive Plan 23% Growth Plan* 28% Stock Options 41% Elements of Incentive Compensation Compensation Element Type of Compensation Link to Performance Short -
Slide 11: Executive Compensation Plan Overview (continued)
Expansion • Awards are non - overlapping so full earned value reported in second year of cycle • Payouts extend into the third and fourth years Equity Stock Options* Performance - Adjusted RSUs • Stock options granted annually. Vest over 4 - years. 2015 Options issued with Strike Price of $103.90. R
Slide 12: Primary Focus On Year-Over-Year Improvement: Annual ICP 2015
Primary Focus On Year - Over - Year Improvement 12 Annual ICP – 2015 We Set Challenging Short - Term Performance Targets and Reward Year - over - Year Improvements $79.1B $82.7B 2014 Actual 2015 Targets 2015 Target vs. 2014 Actual 2015 Actual 2015 Actual vs. 2014 Actual Earnings per Share (EPS) (1)
Slide 13: Payout Reflects Exceptional Operational Performance: 2014-2015 Growth Plan
Payout Reflects Exceptional Operational Performance 13 2014 - 2015 Growth Plan We Issue Quarterly Progress Reports To Participating Executives To Maintain Focus On Goals $79.1B $82.7B Target Improvement Required Vs. 2013 Payout % Total Sales (2-years) $82.74B 3.9% CAGR $79.88B 1.5% CAGR 50% 2015 Seg
Slide 14: HON Outperforming Peer Median: 2014-2015 Growth Plan Relative Performance
HON Outperforming Peer Median 14 2014 - 2015 Growth Plan: Relative Performance Context Reported Sales (2 - Yr CAGR ) EPS (2 - Yr CAGR ) 1.4% - 10.1% 10.2% Comp Peer Median Multi - Industry Peer Median HON Net Income (2 - Yr CAGR ) 9.0% 0.4% 10.8% Comp Peer Median Multi - Industry Peer Median HON - 1
Slide 15: Seeking Approval Of Both Stock Plans In 2016
Seeking Approval Of Both Stock Plans In 2016 2016 Stock Plan Proposals • Seeking Shareowner approval of new Employee & Director Stock Plans in 2016 - Upon approval , no additional shares will be issued under current plans • Equity Spend under Current Plans has been maintained at Acceptable Levels -
Slide 16: Governance Update
16 Governance Update
Slide 17: Overwhelming Shareowner Support For Proxy Access
Overwhelming Shareowner Support For Proxy Access 17 Honeywell Unilaterally Adopted A Proxy Access Bylaw Amendment • Honeywell’s (HON’s) Board of Directors met on December 11, 2015 and unanimously approved a bylaw amendment to adopt proxy access - HON’s proxy access bylaw amendment is substantially s
Slide 18: Bylaw Amendment Consistent With SEC's 2010 Rulemaking
Bylaw Amendment Consistent With SEC’s 2010 Rulemaking 18 Summary Of HON’s Proxy Access Bylaw Amendment • Ownership Threshold : Ownership of 3% of outstanding HON shares • Required Ownership Period : 3 year holding period • Formation of Shareowner Groups : Limit of 20 shareowners to meet the 3% owner
Slide 19: No New Shareowner Proposals In 2016
No New Shareowner Proposals In 2016 19 2016 Shareowner Proposals • Separation of Chairman and CEO Roles: - 8 th year that HON has received this proposal - In 2015, ~29 % voted “For” (down 19% from 2014) - Significant improvement compared to 2014 due largely to implementation of HON’s Lead Director s
Slide 20: Board Diversity/Tenure
20 Board Diversity/Tenure
Slide 21: Balanced Tenure And Diversity
21 Balanced Tenure And Diversity Women Hispanic African-American Non-U.S. Citizen No. of HON Directors 3 3 2 2 % of HON Non-Employee Directors 27% 27% 18% 18% • The Board carefully considers the appropriate balance among new, mid, and long - tenured directors. Director Diversity • Diversity a core v
Slide 22: Appendix
22 Appendix
Slide 23: Honeywell Comparable Working Capital Turns
Finance FP&A And Decision Making Honeywell Confidential Comparable Working Capital Turns* HON Outperforming Except EMR 23 * Obtaining comparable data for all peers is extremely difficult (i.e. COL capitalizes R&D and GE factors its receivable to GECC). Set forth above is an analysis of companies who
Slide 24: Reconciliation of non-GAAP Measures to GAAP Measures
24 Appendix Reconciliation of non - GAAP Measures to GAAP Measures
Slide 25: Core Organic Sales Growth Reconciliation
Core Organic Sales Growth Reconciliation 25 Throughout this presentation, core organic sales growth refers to reported sales growth less the impacts from foreign currency translation, M&A and raw materials pass - through pricing in the Resins & Chemicals business of PMT. The raw materials pricing im
Slide 26: Reconciliation of Segment Profit to Operating Income
Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins 26 ($M) 2014 2015 Segment Profit $6,696 $7,256 Stock Based Compensation (1) (187) (175) Repositioning and Other (1, 2) (634) (576) Pension Ongoing (Expense)/Income (1) 254 430 Pension
Slide 27: Reconciliation of EPS to EPS, Excluding Pension Mark-to-Market Adjustment
Reconciliation of EPS to EPS, Excluding Pension Mark - to - Market Adjustment 27 2009 (1) 2010 (2) 2011 (3) 2012 (4) 2013 (5) 2014 (6) 2015 (7) EPS $2.05 $2.59 $2.61 $3.69 $4.92 $5.33 $6.04 Pension Mark-to-Market Adjustment 0.64 0.41 1.44 0.79 0.05 0.23 0.06 EPS, Excluding Pension Mark-to-Market Adj
Slide 28: Reconciliation of Net Income Excluding Pension Mark-to-Market Adjustment
Reconciliation of Net Income Attributable to Honeywell to Net Income Attributable to Honeywell, Excluding Pension Mark - to - Market Adjustment 28 ($M) 2010 2011 2012 2013 2014 2015 Net Income Attributable to Honeywell $2,022 $2,067 $2,926 $3,924 $4,239 $4,768 Pension Mark-to-Market Adjustment, Net
Slide 29: Reconciliation of Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow 29 ($M) 2014 2015 Cash Provided by Operating Activities $5,024 $5,454 Expenditures for Property, Plant and Equipment ($1,094) ($1,073) Free Cash Flow $3,930 $4,381
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