Honeywell International Inc. · NASDAQ:HON
Honeywell International — Proxy Contest (April 2019)
30 slides from Honeywell International's proxy contest presentation, Apr 12, 2019
Slide 1: April 2019 Honeywell Shareowner Engagement Materials
April 2019 Honeywell shareowner Engagement materials
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments
Slide 3: Discussion Topics
Discussion Topics Honeywell Overview, Financial Performance and Long-Term Plan (pp. 3-6) Shareowner Value Creation (p. 7) Executive Compensation (pp. 8-10) Corporate Governance (pp. 11-15) Best-in-Class Board of Directors (p. 11) Corporate Governance – Updates and Highlights (p. 12) 2019 Shareowner
Slide 4: New Honeywell At A Glance
New Honeywell At A Glance Enhanced Portfolio Driving Strong Results 4 COMMERCIAL AFTERMARKET DEFENSE & SPACE SAFETY PRODUCTIVITY BUILDING MANAGEMENT SYSTEMS – ($0.8B) 1 2 TOTAL 2018 SALES1 ~35 B $12.9B Aerospace COMMERCIAL OE $5.4 $10.7B Performance Materials and Technologies $6.3B Safety and Produc
Slide 5: 2018 Financial Performance
2018 Financial Performance Terrific 2018; Great Financial Performance While Spinning 2 Companies 1 2 3 4 Adjusted EPS Adjusted FCF $41.8B Up 3% 6% Organic $8.011 Up 12% $6.0B2 Up 22% 19.6% Up 60 bps Final Results (incl. spin impact) Sales Segment Margin Adjusted EPS Adjusted FCF $41.8B - $42.5B Up 3
Slide 6: Long-Term Financial Plan
Long-Term Financial Plan Foundation for Long-Term Value Creation Targeting ~100% FCF cash conversion World-class working capital management Prioritizing high-ROI investments (CapEx, M&A) Continued dividend growth and opportunistic share repurchases; however, first priority is bolt-on M&A Robust Cash
Slide 7: Progress Against Long-Term Plan
Progress Against Long-Term Plan Executing on Long-Term Financial Framework Priority Commitment 2018 Result Comments Accelerate Organic Growth LSD - MSD 6% Broad-based strength across the portfolio Growth investments generating returns Expand Margins 30 - 50 bps Improve Cash Conversion ~100% FCF Conv
Slide 8: Shareowner Value Creation
Shareowner Value Creation Outstanding Return Demonstrated Over Short, Medium, and Long-Term Source: Capital IQ as of 12/31/2018 Multi-Industry peer median includes EMR, GE, MMM, UTX; Compensation peer group median includes BA, CAT, DE, ETN, EMR, GD, GE, ITW, IR, JCI, LMT, MMM, PSX, RTN, SLB, UTX Cum
Slide 9: Executive Compensation – Response to Shareowners
Executive Compensation – Response to Shareowners 92% Say on Pay in 2018 Annual Incentive Compensation Plan (ICP) 2016 Shareowner Feedback Long-Term Incentive Compensation Plan (LTI) Better visibility into how objective financial metrics and discretion factor into determining payouts Preference for r
Slide 10: 2018 Annual Incentive Compensation Plan (ICP)
2018 Annual Incentive Compensation Plan (ICP) Quantitative = Calculated Payout multiplied by 80% weighting = 142.7% x 80% = 114.2% Qualitative = Attainment (0%-200%) multiplied by 20% weighting = ranged from 0% to 35% (based on MDCC assessment of performance) Total Payout ranged from 114.2% to 149.2
Slide 11: LTI Mix Transition – CEO Compensation
LTI Mix Transition – CEO Compensation LTI Mix Transition Now Complete in 2018 2016 - Mr. Cote as CEO 2017 & 2018 - Mr. Adamczyk as CEO Includes 2016-2017 cash-based Growth Plan at annualized target value Includes annualized payout value for final 2016-2017 Growth Plan cycle and 2017 portion (50%) of
Slide 12: Best-in-Class Board With Right Mix of Skills and Experiences
Best-in-Class Board With Right Mix of Skills and Experiences Diverse, Independent & Highly-Qualified Board 11 of 12 directors are independent 25% of directors are women 42% of directors are ethnically diverse or non-U.S. 50% of Board committees are chaired by women 5 new directors since 2012 9 of 12
Slide 13: Strong Corporate Governance – Updates and Highlights
Strong Corporate Governance – Updates and Highlights Continued Focus on Best Practices Other Corporate Governance Highlights ü Robust Shareowner Engagement Program ü Board Oversight of Sustainability / Corporate Responsibility ü Proxy Access Right ü Thoughtful Board Evaluation Process ü 15% Threshol
Slide 14: 2019 Shareowner Proposals
2019 Shareowner Proposals Year-Over-Year Shareowner Support for Management on These Proposals Action By Written Consent (AGAINST vote recommended) Honeywell has already adopted related Corporate Governance best practices to ensure best-in-class shareowner protections/rights Importantly, shareowners
Slide 15: Board Oversight of Long-Term Strategy and Risk
Board Oversight of Long-Term Strategy and Risk Board Actively Engages in Oversight and Input on Long-Term Strategy Board has been fully engaged in Honeywell’s transformative strategy and supports our evolution Skills and perspectives of the Board have kept pace with Honeywell’s overall long-term com
Slide 16: Honeywell's Board Practices
Honeywell’s Board Practices Committed to Long-Term Shareowner Interests Implemented enhanced procedures to evaluate incumbent and new Board nominees Annual Board self-evaluation that evaluates whether the directors’ skills, experiences and backgrounds are relevant to business needs to identify the m
Slide 17: Board Oversight of Environmental and Social (E&S) Considerations
Board Oversight of Environmental and Social (E&S) Considerations Honeywell’s Board Owns Strategic Framework Board oversight of E&S issues: Corporate Governance and Responsibility Committee (CGRC) has primary “jurisdiction” for managing risks and opportunities Regular Board updates by senior manageme
Slide 18: Ensuring a Cleaner, Safer and Healthier Future
Ensuring a Cleaner, Safer and Healthier Future High Level of Board Engagement Sustainable Opportunity Policy Integrating health, safety and environment into all aspects of its business, Honeywell: Protects its people, communities, and environment Achieves sustainable growth and accelerated productiv
Slide 19: Environmental Sustainability
Environmental Sustainability Multiple Awards Including “Keep America Beautiful’s” Recognition for Sustainability Commitment Each of our businesses is required to establish annual targets, which must be approved by the CEO, for reducing hazardous waste and diverting waste from landfills. Reducing Was
Slide 20: New Uses from Legacy Properties
New Uses from Legacy Properties ~3,000 Acres Remediated & Restored As Valuable Community Assets Former Chemical Plant in Baltimore, MD, now Harbor Point home to Exelon, a leading energy provider; Morgan Stanley; and Johns Hopkins Medicine Onondaga Lake, Syracuse, NY, former “Most Polluted Lake” now
Slide 21: Commitment to Safety
Commitment to Safety Core to Company Culture Protecting Workers and Employees Workplace Respect Safety Record Honeywell Life Safety Training & Customer Experience Center provides tailored training to help customers build a culture of safety Our safety record is 80%+ better than industry average Glob
Slide 22: Building a Performance Culture
Building a Performance Culture Integrity and Ethics Supporting Diversity Workplace Respect Behaviors Strengthen Organizational Alignment Principles Integrity and Ethics Supporting Diversity Workplace Respect Have a Passion for Winning Beat the competition Fearless accountability for getting results
Slide 23: Integrity, Ethics, and Workplace Respect
Integrity, Ethics, and Workplace Respect Workplace Respect Supporting Employees Mandatory Code of Conduct training for all employees upon entry New annual Code certification and enhanced training mandatory for all employees 24-hour Integrity and Compliance Helpline First Class Incident and Investiga
Slide 24: Inclusion and Diversity
Inclusion and Diversity Workplace Respect Conferences / Partnerships More than half of Honeywell’s workforce are non-U.S. employees Inclusion and diversity councils / networks across businesses and regions Society of Women Engineers / National Society of Black Engineers / Society of Hispanic Enginee
Slide 25: Positioned to Deliver in 2019 and Beyond
Positioned to Deliver in 2019 and Beyond Building a Smarter, Safer, and More Sustainable World Board of Directors actively engages in evaluating vision and setting long-term strategy Innovations span a broad array of industries and offerings Supplier Code of Conduct requires adherence to our high st
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Honeywell
Slide 27: Reconciliation of Organic Sales % Change
Reconciliation of Organic Sales % Change We define organic sales percent as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation, acquisitions, net of divestitures and non-comparable impacts from adoption of th
Slide 28: Reconciliation of Segment Profit to Operating Income
Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins (1) Amounts included in Selling, general and administrative expenses. (2) Includes repositioning, asbestos, environmental expenses and equity income adjustment. (3) Included in Cost of
Slide 29: Reconciliation of EPS to Adjusted EPS
Reconciliation of EPS to Adjusted EPS (1) For the year ended December 31, 2018 and 2017, adjusted earnings per share utilizes weighted average shares 753.0 million and 772.1 million. (2) For the year ended December 31, 2018, separation costs of $732 million including net tax impacts. For the year en
Slide 30: Reconciliation of Cash Provided by Operating Activities to Adjusted Free Cash Flow
Reconciliation of Cash Provided by Operating Activities to Adjusted Free Cash Flow and Calculation of Adjusted Free Cash Flow Conversion We define free cash flow as cash provided by operating activities less cash expenditures for property, plant and equipment. We believe that this metric is useful t