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
.................................................................
(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):
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(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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[Logo]
November 5, 2001
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 Friday, December 7, 2001 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. I look forward to seeing you on December 7.
Sincerely,
LARRY BOSSIDY
LAWRENCE A. BOSSIDY
Chairman and Chief Executive Officer
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................................. 15
EXECUTIVE COMPENSATION...................................... 16
SHAREOWNER PROPOSALS........................................ 23
OTHER INFORMATION........................................... 27
Shareowner Proposals for 2002 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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[Logo]
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The Annual Meeting of Shareowners of Honeywell International Inc. will be
held on Friday, December 7, 2001 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:
1. Election of four directors;
2. Appointment of PricewaterhouseCoopers LLP as independent accountants for
2001;
3. A shareowner proposal regarding shareowner rights plans;
4. A shareowner proposal regarding the annual election of directors;
5. A shareowner proposal regarding shareowner voting provisions; 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 October 19, 2001 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
November 5, 2001
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 Friday, December 7, 2001.
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 Board knows of no other matters to be presented for shareowner action at
the meeting. If other matters are properly brought before the meeting, the
persons named as proxies in the accompanying proxy card intend to vote the
shares represented by them in accordance with their best judgment.
2
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 September 28, 2001, there were approximately
813,188,789 shares of Honeywell common stock outstanding. Each share outstanding
as of the October 19, 2001 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 two special meetings
during 2000. The average attendance at meetings of the Board and Board
Committees during 2000 was 89%.
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 four times in 2000. 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
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.
3
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 2000. 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 2000. The primary
functions of this Committee are 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 five times in
2000. 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.
4
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 2000. 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 four candidates for election as directors for a term ending
at the 2004 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.
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 2004
[PHOTO] JAMES J. HOWARD, Chairman Emeritus of Xcel Energy Inc. (formerly known as
Northern States Power Company)
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., the Federal Reserve
Bank of Minneapolis 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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5
[PHOTO] BRUCE KARATZ, Chairman of the Board and Chief Executive Officer of KB Home
(formerly known as Kaufman and Broad Home Corporation)
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 The Kroger Co. 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 Co-Chief Executive Officer of Verizon
Communications Inc.
Mr. Seidenberg assumed his current position with Verizon Communications, a
telecommunications and information services provider, in 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 American Home
Products Corporation, Boston Properties, Inc., CVS Corporation and Viacom
Inc.
Director since 1995 Age 54
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6
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2002
[PHOTO] LAWRENCE A. BOSSIDY, Chairman of the Board and Chief Executive Officer of
Honeywell International Inc.
Mr. Bossidy was Chief Executive Officer of AlliedSignal Inc. from July 1991
until December 1999 and Chairman of the Board from January 1992 until his
retirement in April 2000. AlliedSignal was renamed Honeywell International
Inc. on December 1, 1999, when it merged with Honeywell Inc. Mr. Bossidy
returned to Honeywell in July 2001 when he assumed his current position. He
previously served in a number of executive and financial positions with
General Electric Company, a diversified services and manufacturing company,
which he joined in 1957. Mr. Bossidy was Chief Operating Officer of General
Electric Credit Corporation (now General Electric Capital Corporation) from
1979 to 1981, Executive Vice President and Sector Executive of GE's Services
and Materials Sector from 1981 to 1984, and Vice Chairman and Executive
Officer of GE from 1984 until he joined AlliedSignal in 1991. He is a
director of Champion International Corporation, J.P. Morgan Chase & Co. and
Merck & Co., Inc.
Director since 2001 Age 66
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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 61
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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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7
[PHOTO] JOHN R. STAFFORD, Chairman of the Board of American Home Products
Corporation
Mr. Stafford has held a number of positions with American Home Products, 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 Deere & Company, J.P. Morgan Chase & Co. and Verizon
Communications Inc.
Director since 1993 Age 64
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[PHOTO] MICHAEL W. WRIGHT, Chairman of the Board of SUPERVALU INC.
Mr. Wright has been Chairman of SUPERVALU INC., a major food distributor and
retailer, since June 2001. He was elected President and Chief Operating
Officer in 1978, Chief Executive Officer in 1981, and Chairman of the Board
in 1982. 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 63
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INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 2003
[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 66
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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, Grupo
Carso and Prodigy Communications. He was a director of Honeywell Inc. from
September 1998 to December 1999.
Director since 1999 Age 51
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9
[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 and the Federal Reserve Bank of New
York.
Director since 1993 Age 50
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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 (ten
during 2000), 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 (11 percent for 2001) 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.
10
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 2001 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 2000 for fees totaling $32.9 million. This included the
following fees:
Audit Fees: $5.1 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: $16.1 million for tax services; $10.5 million for
audit-related services primarily associated with the Company's mergers and
acquisitions activity and various international regulatory filings; and
$1.2 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.
The Committee reviewed and discussed the Company's consolidated financial
statements for the year ended December 31, 2000 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, 2000 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 Number 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
13
objectivity, and recommend that the full Board take appropriate action to
satisfy itself of the auditor's independence.
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.
14
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 2000 except that the sale of 33,422 shares by Donald J. Redlinger,
Senior Vice President, was reported two weeks after the filing deadline.
FIVE PERCENT OWNERS OF COMPANY STOCK
As of June 30, 2001, State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts, 02101 held 68,589,690 shares or approximately 8.5
percent of the outstanding common stock as trustee of certain of Honeywell's
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. State Street disclaims beneficial ownership of the shares referred to
above. State Street also held 17,750,844 shares, or approximately 2.2 percent of
the outstanding common stock in various other fiduciary capacities.
Based on filings available in the SEC's EDGAR system, we believe that as of
June 30, 2001, AXA or its affiliates, including the Mutuelles AXA, AXA
Financial, Inc., Alliance Capital Management L.P. and The Equitable Life
Assurance Society of the United States beneficially owned 42,369,312 shares of
common stock (including 379,000 shares of common stock issuable upon exercise of
options), representing approximately 5.2 percent of the outstanding common
stock. The address of AXA is 25, Avenue Matignon, 75008 Paris, France, and the
address of AXA Financial, Inc. is 1290 Avenue of the Americas, New York, New
York 10104.
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 June 30, 2001, the directors and
executive officers of Honeywell at that time beneficially owned, in the
aggregate, 3,097,435 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 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...................................... 33,748
Gordon M. Bethune..................................... 5,931
Michael R. Bonsignore................................. 2,054,184
Marshall N. Carter.................................... 22,104
Jaime Chico Pardo..................................... 8,430
Giannantonio Ferrari.................................. 234,379
Ann M. Fudge.......................................... 20,453
James J. Howard....................................... 36,509
Robert D. Johnson..................................... 131,205
Bruce Karatz.......................................... 30,689
Peter M. Kreindler.................................... 264,042
Robert M. Luciano..................................... 30,605
Russell E. Palmer..................................... 20,347
Ivan G. Seidenberg.................................... 21,943
John R. Stafford...................................... 44,903
Richard F. Wallman.................................... 438,279
Michael W. Wright..................................... 44,444
(footnotes on next page)
15
(footnotes from previous page)
(1) The total beneficial ownership for any individual is less than 0.2 percent,
and the total for the group is less than 0.5 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,
21,548; Mr. Bethune, 5,131; Mr. Bonsignore, 3,694; Mr. Carter, 6,884;
Mr. Chico Pardo, 8,430; Ms. Fudge, 8,253; Mr. Howard, 31,713; Mr. Johnson,
362; Mr. Karatz, 23,498; Mr. Kreindler, 21,758; Mr. Luciano, 11,405;
Mr. Palmer, 11,147; Mr. Seidenberg, 11,743; Mr. Stafford, 16,703;
Mr. Wallman, 71,703; Mr. Wright, 41,394; and all directors and executive
officers as a group, 296,158.
(3) Includes shares which the following have the right to acquire within 60 days
through the exercise of vested stock options: Mr. Becherer, 12,200;
Mr. Bonsignore, 1,283,194; Mr. Carter, 15,220; Mr. Ferrari, 168,626;
Ms. Fudge, 12,200; Mr. Johnson, 120,000; Mr. Kreindler, 240,000;
Mr. Luciano, 19,200; Mr. Palmer, 9,200; Mr. Seidenberg, 10,200;
Mr. Stafford, 28,200; Mr. Wallman, 364,000; and all directors and executive
officers as a group, 2,550,077.
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.
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 our compensation programs.
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
16
payments for the achievement of aggressive goals. The actual amounts paid for
2000 were determined by performance based on two factors: first, financial
performance, which was measured against objectives established for revenue
growth, free cash flow, earnings per share and productivity increases; 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 share ownership opportunities to all
employees. 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 a retention
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 closing of the merger of Honeywell Inc. and
AlliedSignal Inc. in December 1999, the Committee approved grants of stock
options and restricted units to executive officers, a portion of which vest only
upon satisfaction of performance conditions tied to growth in earnings per share
and meeting certain operating margin targets. These performance conditions
parallel the vesting conditions for Mr. Bonsignore's performance options and
restricted units as provided in his employment agreement. The timing of these
grants was designed to link executive and shareowner interest immediately
following the merger. These awards were intended to replace the annual grant for
2000 that would have typically been made in the first quarter of 2000.
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 Chief Executive Officer receives periodic grants of stock
options with a portion of the stock options vesting with the passage of time and
a portion vesting tied to achievement of specified performance goals.
The primary factors considered in determining Mr. Bonsignore's bonus payment
included performance vs. plan for financial results (including revenue growth,
earnings per share and free cash flow), performance relative to peer companies
and strategic achievements.
Mr. Bonsignore became Chief Executive Officer of Honeywell International
Inc. on December 1, 1999 and he also became Chairman of Honeywell International
Inc. on April 1, 2000. Mr. Bonsignore retired from these positions on July 3,
2001. He served as Chairman and Chief Executive Officer of Honeywell Inc. from
April of 1993.
17
Mr. Bonsignore's salary for 2000 was $1,500,000. Based primarily on
Honeywell's financial performance in terms of revenue growth, earnings per share
growth and free cash flow, Mr. Bonsignore received an annual incentive payment
of $975,000 for 2000.
In accordance with the terms of his employment agreement, Mr. Bonsignore
received a grant in December of 1999 of 1,000,000 stock options. In accordance
with his employment agreement, these stock options vested upon Mr. Bonsignore's
retirement on July 3, 2001.
In accordance with his employment agreement, Mr. Bonsignore also received a
grant of 500,000 stock options that were to vest upon the achievement of certain
earnings per share growth targets. Mr. Bonsignore also received a grant of
375,000 restricted units that were to vest in increments of one-third on each of
April 1, 2001, 2002 and 2003, if Honeywell achieved specified operating margin
targets. Honeywell did not achieve either the earnings per share growth targets
or the specified operating margin targets for 2000. Such awards were forfeited
upon Mr. Bonsignore's retirement.
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS:
Robert P. Luciano (Chair)
Hans W. Becherer
Gordon M. Bethune
Bruce Karatz
Ivan G. Seidenberg
John R. Stafford
18
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash compensation
with respect to Honeywell's Chief Executive Officer at the end of 2000 and the
other four most highly compensated officers of Honeywell during 2000.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
NAME AND PRINCIPAL RESTRICTED OPTIONS LTIP ALL OTHER
POSITION YEAR SALARY($) BONUS($) STOCK UNITS($)(1) (SHARES) PAYOUTS($) COMPENSATION(2)
-------- ---- --------- -------- ----------------- -------- ---------- ---------------
Michael R. Bonsignore(3) 2000 $1,500,000 $ 975,000 -- -- -- $ 356,551
Chairman of the Board 1999 1,087,817 2,000,000 $22,781,250 1,781,249 $2,565,000 1,039,122
and Chief Executive Officer
Giannantonio Ferrari(4) 2000 628,387 325,000 -- -- -- 338,669
Chief Operating Officer and 1999 536,896 775,000 2,039,375 612,251 1,282,500 272,915
Executive Vice President
Robert D. Johnson 2000 550,000 400,000 -- -- 1,187,840(5) 58,913
Chief Operating Officer and 1999 370,833 625,000 1,882,500 400,000 -- 36,469
Executive Vice President 1998 267,917 300,000 -- 190,000 -- 31,505
Peter M. Kreindler 2000 480,000 275,000 -- 250,000 -- 209,625
Sr. Vice President and 1999 462,500 640,000 1,098,125 333,000 -- 386,986
General Counsel 1998 445,000 550,000 -- -- -- 105,705
Richard F. Wallman 2000 480,000 235,000 -- 437,500 -- 211,042
Sr. Vice President and 1999 455,833 590,000 1,098,125 333,000 -- 352,478
Chief Financial Officer 1998 410,000 500,000 -- -- -- 79,136
---------
(1) The total number of units held and their value as of December 31, 2000 were
as follows: Mr. Bonsignore, 375,000 ($17,742,188); Mr. Ferrari, 32,500
($1,537,656); Mr. Johnson, 30,000 ($1,419,375); Mr. Kreindler, 17,500
($827,969); Mr. Wallman, 17,500 ($827,969). Common stock dividend
equivalents are payable on each unit. Restricted units will vest in
increments of one-third each on April 1, 2001, 2002 and 2003 if Honeywell
achieves specified operating margin targets. The operating margin targets
for 2000 were not met, so the one-third increment that would have vested on
April 1, 2001 did not vest. In addition, Mr. Bonsignore's and Mr. Ferrari's
remaining units were forfeited upon their retirement.
(2) Amounts shown for 2000 consists of matching contributions made by Honeywell
under the Savings Plan and Supplemental Savings Plan: for Mr. Bonsignore,
$171,705; Mr. Johnson, $30,475; Mr. Kreindler, $38,269; and Mr. Wallman,
$19,195; the value of life insurance premiums: for Mr. Bonsignore, $98,447;
Mr. Johnson, $28,200; Mr. Kreindler, $21,300; above-market interest earned
on deferred compensation: for Mr. Bonsignore, $22,589; Mr. Johnson, $238;
Mr. Kreindler, $150,056; and Mr. Wallman, $191,847; the value of perquisites
for Mr. Bonsignore, $63,810 which includes a $38,000 cash flexible
perquisite payment and $22,730 for the value of personal use of company
provided aircraft; and relocation allowances in connection with foreign
assignments for Mr. Ferrari, $338,669.
(3) Mr. Bonsignore became an executive officer on December 1, 1999 and retired
July 3, 2001.
(4) Mr. Ferrari became an executive officer on December 1, 1999 and retired
August 31, 2001.
(5) Payment made in 2000 from the Long Term Performance Plan for Key Executives
for the 1998 and 1999 performance period. The plan was discontinued at the
time of the merger of AlliedSignal Inc. and Honeywell Inc.
19
OPTION GRANTS IN LAST FISCAL YEAR
The stock options included in the following table were all granted with an
exercise price equal to the fair market value of the common stock on the date of
grant.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE(1)
---- ---------- ----------- ------ ---- --------
M. R. Bonsignore..................... -- -- -- -- --
G. Ferrari........................... -- -- -- -- --
R. D. Johnson........................ -- -- -- -- --
P. M. Kreindler...................... 250,000(2) 6% $47.8500 03/23/10 $4,510,335
R. F. Wallman........................ 437,500(2) 10% 47.8500 03/23/10 7,893,086
---------
(1) Options are valued using a Black-Scholes option pricing model which assumes
a historic five-year average volatility of 32.25 percent, the average
dividend yield for the three years ended December 31, 2000 (1.43 percent), a
6.5 percent risk-free rate of return (based on the average zero coupon
five-year U.S. Treasury note yield for the month 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 $14.6 billion, and the value of the granted options reflected
in the table will be less than 0.09 percent of the total shareowner
appreciation.
(2) Vests 40 percent on January 1, 2001 and 30 percent on each of January 1,
2002 and 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END(#) AT YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
M. R. Bonsignore(1)...... 286,326 $10,445,920 1,490,986 1,100,000 $11,075,709 --
G. Ferrari(1)............ 253,834 3,836,353 38,626 433,000 -- --
R. D. Johnson............ 100,000 1,722,335 -- 502,000 -- $ 973,635
P. M. Kreindler.......... 540,000 15,244,247 40,000 723,000 236,100 4,312,800
R. F. Wallman............ 550,000 15,657,340 89,000 895,500 1,313,733 3,982,913
---------
(1) Upon their retirement, Messrs. Bonsignore and Ferrari forfeited 500,000 and
108,000 unexercisable options, respectively.
20
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return on the
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, 1995 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, 1995
with dividends reinvested
[PERFORMANCE GRAPH]
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Honeywell $100 $143 $168 $195 $257 $214
S&P 500'r' 100 123 164 211 255 232
S&P'r' Manufacturing
(Diversified) Index 100 138 164 190 234 278
EMPLOYMENT AND TERMINATION ARRANGEMENTS
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 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 of 2001.
When Mr. Ferrari became President of Honeywell Europe in 1992, he entered
into an employment agreement with Honeywell Europe that provided for certain
salary and benefits in accordance with Belgian law. Mr. Ferrari's position as a
chief operating officer of Honeywell was considered to be an international
assignment under his Belgian employment contract; therefore, the contract
remained in effect until his retirement from Honeywell. Mr. Ferrari was also a
party to a change of control agreement with Honeywell Inc. Under this agreement,
as a result of the merger of Honeywell Inc. and AlliedSignal Inc., he was
entitled to a lump sum payment of three times his salary and target incentive
bonus upon his retirement in August of 2001.
21
Under the Severance Plan for Senior Executives, the executive officers named
in the Summary Compensation Table (other than Messrs. Bonsignore and Ferrari)
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 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 40
------------ - -- -- -- ------- -- --
$ 600,000 $ 48,995 $108,995 $ 168,995 $ 228,995 $ 288,995 $ 310,372 $ 354,710
800,000 68,995 148,995 228,995 308,995 388,995 415,372 474,710
1,000,000 88,995 188,995 288,995 388,995 488,995 520,372 594,710
1,200,000 108,995 228,995 348,995 468,995 588,995 625,372 714,710
2,000,000 188,995 388,995 588,995 788,995 988,995 1,045,372 1,194,710
3,000,000 288,995 588,995 888,995 1,188,995 1,488,995 1,570,372 1,794,710
4,000,000 388,995 788,995 1,188,995 1,588,995 1,988,995 2,095,372 2,394,710
The benefit amounts shown in the Pension Table are computed on a straight
life annuity basis. At January 1, 2001, the following individuals had the
indicated number of years of credited service for pension purposes: Mr.
Bonsignore, 31; Mr. Johnson, 6; Mr. Kreindler, 9; and Mr. Wallman, 5. Mr.
Ferrari has 40 years of service, but is covered under a separate Belgian pension
arrangement described below.
The amounts in the Salary and Bonus columns of the Summary Compensation
Table would be included in computing remuneration for pension purposes as well
as any payroll based reward and recognition awards. Average annual remuneration
under the Pension Plan is calculated based on the highest paid 60 consecutive
months of an employee's last 120 months of employment.
Under his employment agreement, Mr. Bonsignore was entitled to receive
during his lifetime, commencing on retirement, Honeywell facilities and services
comparable to those provided prior to his retirement, and a retirement benefit
equivalent to 60 percent of final average compensation (based on his highest
three years of salary and bonus) payable annually for life. Benefits under his
agreement will be reduced by any retirement benefits payable under Honeywell's
retirement and supplemental retirement plans. Mr. Bonsignore's early retirement
agreement increases his retirement benefit to 70 percent of final average
compensation.
Mr. Ferrari is covered by the Belgian pension arrangement, which provides a
benefit of 55 percent of final average compensation after 30 years of service,
through a combination of the plan and equivalent pension plans in other
countries. This arrangement also provides for an additional benefit of 15
percent of final average compensation which is funded by contributions from Mr.
Ferrari.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with certain tax planning, we secured supplemental retirement
payments for three executives by funding them through an escrow arrangement. The
amounts funded through an escrow arrangement in 2000 were $4,000,000 for Mr.
Bonsignore, $2,100,000 for Mr. Wallman, and $1,400,000 for Dr. Barry C. Johnson.
By securing the payments, the executive's tax liability was accelerated. We
loaned each executive an amount equal to the related withholding tax obligation.
We
22
will also loan each executive additional amounts as necessary to cover the
balance of taxes related to securing the payments.
The loans bear interest at 5.53 percent compounded semiannually and are due
December 31, 2004. On December 31, 2000, the amount of loans outstanding totaled
$2,977,590, of which $1,635,200 was loaned to Mr. Bonsignore, $765,450 to
Mr. Wallman and $576,940 to Dr. Johnson. Under Mr. Bonsignore's retirement
agreement, the Company agreed to bear the economic cost of the interest on
Mr. Bonsignore's loan and related taxes.
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 PROPOSAL REGARDING 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 in the fall of 2001, and the time of the 2002 annual meeting
in the spring. Yet I believe shareholders frequently oppose pills when they are
asked in a vote. This resolution 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. By adopting 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 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
23
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.
ITEM 4 -- SHAREOWNER PROPOSAL REGARDING
ANNUAL ELECTION OF DIRECTORS
This proposal has been submitted by John Chevedden, 2215 Nelson Ave., No.
205, Redondo Beach, California 90278 (the owner of 884 shares of Common Stock).
-------------------
Recommend: Elect each director annually. Shareholders request the Board of
Directors take all the necessary steps.
Objective: Proper oversight of the company's returning Chairman, Mr.
Bossidy, and his management team. This is particularly important after the
preceding Bonsignore management team blindsided shareholders and then warned
that 2nd-quarter 2000 earnings would be lower than analysts expected. Honeywell
stock plummeted 25% in days -- Honeywell shocked Wall Street.
This proposal includes that any future change in the frequency of director
election be submitted to a shareholder vote as a stand-alone proposal.
STRONG INSTITUTIONAL INVESTOR SUPPORT
Fifty-four (54) proposals on this topic won an average 52.7% vote in 2000.
Annual election of each director is a core policy for the Council of
Institutional Investors (www.cii.org).
Another CII policy is allowing adoption of shareholder proposals that
receive a majority of votes cast as this proposal did in 2000. Institutional
investors own 68% of Honeywell stock.
MERELY REINSTATES THE LONG-STANDING PRACTICE AT HONEYWELL
This proposal, which won 57% shareholder approval at the 2000 meeting of
shareholders, merely asks the company to reinstate the long-standing practice at
Honeywell before the AlliedSignal-Honeywell combination. This proposal also won
strong support in both 1998 and 1999 (greater than 49% approval each year).
Percentages are based on votes cast yes and no.
DOUBLE STANDARD AT HONEYWELL?
Consistent with the Honeywell board accepting shareholder votes for its own
election, the board should arguably have a policy to give equal value to
shareholder votes for other ballot items. Furthermore, the board need not fear
annual election because each director faces no competing candidate.
GREATER MANAGEMENT ACCOUNTABILITY
Arguably greater management accountability, in part through this proposal,
will make Honeywell better prepared in facing challenges highlighted by these
types of news reports that could reoccur:
24
The 3rd and 4th quarters of 2001 will be down and there aren't a lot of
conclusions we can draw from the latest results, said Howard Rubel, Goldman
Sachs analyst.
Honeywell's second-quarter 2001 income slumped 92% -- hurt by a continuing
drop in revenue, eroding profit margins and the failed GE combination.
There are no guarantees Mr. Bossidy will be as successful as in the past.
A RESPECTED SURVEY SHOWS THAT INSTITUTIONAL INVESTORS ARE PREPARED TO PAY AN 18%
PREMIUM FOR GOOD CORPORATE GOVERNANCE.
Source: Wall Street Journal
To enhance oversight of the company's returning management, vote yes:
ELECT EACH DIRECTOR ANNUALLY
YES ON 4
BOARD OF DIRECTORS RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Honeywell's current system of electing directors by classes was approved by
the shareowners upon its incorporation in 1985. Under this method, as provided
in Honeywell's Certificate of Incorporation and By-laws, approximately one-third
of the directors are elected annually by the shareowners.
The same proponent has presented a proposal to eliminate the classified
Board in each of the last five years. The Board of Directors has once again
reviewed the issues raised in the proposal and, for the reasons indicated below,
continues to believe that the classified Board best serves Honeywell and its
shareowners.
With the classified Board, the likelihood of continuity and stability in the
Board's business strategies and policies is enhanced, since generally two thirds
of the directors at all times will have had prior experience and familiarity
with our business and ongoing affairs. This enables the directors to build on
past experience and plan for a reasonable period into the future.
The classified Board is intended to encourage persons who may seek to
acquire control of Honeywell to initiate such action through negotiations with
the Board. Otherwise, at least two meetings of shareowners would generally be
required to replace a majority of the Board. By reducing the threat of an abrupt
change in the composition of the entire Board, classification of directors would
provide the Board with an adequate opportunity to fulfill its duties to our
shareowners to review any takeover proposal, study appropriate alternatives and
achieve the best results for all shareowners. The Board believes that a
classified Board enhances the ability to negotiate favorable terms with the
proponent of an unfriendly or unsolicited proposal and does not preclude
takeover offers.
The Board believes that directors elected to a classified Board are no less
accountable to shareowners than they would be if all directors were elected
annually. Since at least four directors must stand for election each year, the
shareowners have the opportunity annually to vote against management. The Board
addresses many important issues during the year and disagrees with any
suggestion that its attention to these issues is in any way affected by the
timing of elections.
The Board disagrees with many of the 'supporting statements' contained in
this proposal.
Adoption of this proposal would not automatically eliminate the classified
Board. 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. Under Delaware law, an
amendment to the Certificate of Incorporation requires a recommendation from the
Board of Directors prior to submission to shareowners. While the Board would
consider such an amendment, 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.
FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
25
ITEM 5 -- SHAREOWNER PROPOSAL REGARDING
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 2000 SHAREHOLDER RESOLUTION ADOPTED BY 58.81%* 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 the new mega-managed Honeywell will require greater scrutiny by
shareholders and directors.
Honeywell's Chief Promises Accounting After Profit Warning, Battering of Stock
Wall Street Journal June 21, 2000
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 for DIRECTOR REMOVAL
WITH GOOD CAUSE.
AT LAST YEARS ANNUAL MEETING, ONLY 79% OF TOTAL SHARES OUTSTANDING WERE
REPRESENTED BY PROXY OR IN PERSON. IF HONEYWELL CAN ONLY GARNER 79% OF THE
TOTAL SHARES OUTSTANDING TO VOTE, IT IS LUDICROUS TO EXPECT 80% OF THE SHARES
OUTSTANDING TO APPROVE ANY PARTICULAR ISSUE.
Last year, Honeywell 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
58.81%* approval rate established last year.
RETURN TO SIMPLE MAJORITY VOTE
YES ON 5
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. Consistent with
applicable Delaware law, upon our incorporation in 1985, 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. Similar provisions
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
---------
*58.81% of yes/no votes cast.
26
Board of Directors to reach terms that are fair and provide the best results for
all shareowners. 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.
The Board disagrees with many of the 'supporting statements' contained in
this proposal.
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.
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.
FOR THE REASONS STATED ABOVE, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
OTHER INFORMATION
SHAREOWNER PROPOSALS FOR 2002 ANNUAL MEETING
In order for a shareowner proposal to be considered for inclusion in
Honeywell International's proxy statement for the 2002 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
February 28, 2002. Proposals submitted thereafter will be opposed as not
timely filed.
If a shareowner intends to present a proposal for consideration at the 2002
Annual Meeting outside the processes of SEC Rule 14a-8, Honeywell must
receive notice of such proposal on or before April 30, 2002. 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
November 5, 2001
27
DIRECTIONS TO HONEYWELL'S HEADQUARTERS
101 COLUMBIA ROAD, MORRIS TOWNSHIP, N.J.
[MAP OF DIRECTIONS TO HONEYWELL'S HEADQUARTERS]
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 1
Honeywell YOUR VOTE IS IMPORTANT
VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS AWEEK
INTERNET
https://www.proxyvotenow.com/hon
o Go to the website address listed above.
o Have your proxy card ready.
o Enter your Control Number located in the box
below.
o Follow the simple instructions that appear on your computer screen.
TELEPHONE
1-866-246-8471
o Use any touch-tone telephone.
OR o This is a TOLL-FREE number.
o Have your proxy card ready.
o Enter your Control Number located in the box below.
o Follow the simple recorded instructions.
MAIL
o Mark, sign and date your proxy card.
0R o Detach your proxy card.
o Return your proxy card in the postage-paid envelope provided.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
If you voted by the Internet or by telephone, do not return your proxy card by
mail.
CALL TOLL-FREE TO VOTE
IT'S FAST AND CONVENIENT
1-866-246-8471
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
The Internet and telephone voting facilities will close at 9:00 a.m. E.S.T. on
December 7, 2001.
Please complete (X) in blue or black ink.
[ ] Please sign exactly as name appears on this Proxy. Joint owners
should all sign. Executors, administrators, trustees and others
acting in a representative capacity should indicate title when
signing.
--------------------------------------------------------------------------------
A vote"FOR" Proposals 1 and 2 is recommended by the Board of Directors:
--------------------------------------------------------------------------------
1. Election of Directors (James J. Howard, Bruce Karatz, Russell E. Palmer and
Ivan G. Seidenberg)
FOR all [ ] WITHHOLD AUTHORITY [ ] EXCEPTION [ ]
nominees to vote for all nominees (see instructions)
Instruction: To withhold authority to vote for any individual nominee(s), mark
the "Exceptions" box and write the name(s) on the line below.
2. Appointment of Independent Accountants
FOR [ ] AGAINST [ ] ABSTAIN [ ]
--------------------------------------------------------------------------------
A vote"AGAINST" Proposals 3 through 5 is recommended by the Board of Directors:
--------------------------------------------------------------------------------
3. Shareowner proposal regarding shareholder rights plans
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Shareowner proposal regarding the annual election of directors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Shareowner proposal regarding shareowner voting provisions
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Shareholder sign here Date
----------------------------- -------------------
Co-Owner sign here
------------------------------------------------------------
Honeywell
Annual Meeting of Shareowners
101 Columbia Road
Morris Township, New Jersey
December 7, 2001
10:00 A.M.
You May Vote by
the Internet, by Telephone or by Mail
(see instructions on reverse side)
Your Vote is Important
Detach proxy card here if you are not voting by the Internet or by telephone.
--------------------------------------------------------------------------------
Honeywell
P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors of Honeywell
International Inc. Annual Meeting of Shareowners - December 7, 2001
The undersigned hereby appoints LAWRENCE A. BOSSIDY, PETER M. KREINDLER
and VICTOR P. PATRICK as proxies (each with 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 December 7, 2001, 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 proposals
described in the accompanying Proxy Statement may be specified on the reverse
side. The nominees for Director are: James J. Howard, Bruce Karatz, Russell E.
Palmer and Ivan G. Seidenberg.
NOTE: After signing, please insert this Proxy
in the enclosed envelope so that the address
below shows through the window.
To change your address, [ ] I plan to attend the [ ]
please mark this box. annual meeting.
I agree to access future
To include any comments, [ ] proxy statements and [ ]
please mark this box. annual reports electronically.
I do not wish to receive
future annual reports for [ ]
this account.
HONEYWELL INTERNATIONAL INC.
P.O. BOX 11464
NEW YORK, N.Y. 10203-0464
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.
(SPECIFY CHOICES AND SIGN ON REVERSE SIDE)
Appendix 2
YOU MAY VOTE TOLL-FREE BY TELEPHONE
OR BY INTERNET
(OR BY COMPLETING THE VOTING INSTRUCTION FORM BELOW
AND RETURNING IT BY MAIL)
TO VOTE BY TELEPHONE OR INTERNET, USE THE CONTROL NUMBER IN THE BOX BELOW
YOUR VOTE MUST BE RECEIVED ON OR BEFORE 5:00 P.M. E.S.T. ON DECEMBER 3, 2001
Call Toll-Free
on a Touch-Tone Telephone
24 hours a day, 7 days a week
1-888-216-1304
Have this form available when you call the toll-free number. Then, just enter
your control number and follow the recorded instructions.
-------------------------
YOUR CONTROL NUMBER
-------------------------
To vote by Internet, have this form available and follow the simple directions
that appear on your computer screen. Internet voting site:
www.tabulationsplus.com/hon
(For mailing, detach at the perforation below)
--------------------------------------------------------------------------------
Request for Confidential Instructions
Solicited on Behalf of the Board of Directors of
HONEYWELL INTERNATIONAL INC.
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 CONTROL NUMBER
-------------------------
The undersigned hereby instructs State Street Bank and Trust Company, Trustee
under the Plans, to vote, as designated herein, all shares of common stock with
respect to which the undersigned is entitled to instruct the Trustee as to
voting under the Plans at the Annual Meeting of Shareowners of Honeywell
International Inc. to be held on December 7, 2001, and at any and all
adjournments thereof. The Trustee is also authorized to vote such shares in
connection with the transaction of such other business as may properly come
before the Meeting and any and all adjournments thereof.
Your vote for the election of Directors and the other proposals described in the
accompanying Proxy Statement may be specified on the reverse side. The nominees
for Director are: (01) James J. Howard, (02) Bruce Karatz, (03) Russell E.
Palmer, and (04) Ivan G. Seidenberg.
IF THIS CARD IS PROPERLY SIGNED AND RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO CHOICE IS SPECIFIED, THEY 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.
(CONTINUE AND SIGN ON THE REVERSE SIDE)
To vote toll-free by telephone or by Internet, see instructions on reverse side.
or
complete, sign and date the form below, detach at the perforation,
and mail promptly in the enclosed, postage-paid envelope.
[X] Please mark votes as in the example in black or blue ink.
--------------------------------------------------------------------------------
A vote "FOR" Proposals 1 and 2 is recommended
by the Board of Directors:
--------------------------------------------------------------------------------
1. Election of Directors
NOMINEES:
(01) James J. Howard, (02) Bruce Karatz, (03) Russell E. Palmer,
(04) Ivan G. Seidenberg
FOR WITHHOLD AUTHORITY
ALL NOMINEES To Vote for All Nominees EXCEPTION
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark the "EXCEPTION" box and write the name(s) on the line below.
------------------------------------------------------------
2. Appointment of Independent Accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
--------------------------------------------------------------------------------
A vote "AGAINST" Proposals 3 through 5
is recommended by the Board of Directors:
--------------------------------------------------------------------------------
3. Shareowner proposal regarding shareholder rights plans.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4.Shareowner proposal regarding the annual
election of directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5.Shareowner proposal regarding shareowner voting provisions.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
--------------------------------------------------------------------------------
------------------------------ Date:
Signature -------------------------, 2001
(Please sign your name exactly as imprinted. Do not print.)
Appendix 3
[Logo]
--------------------------------------------------------------------------------
LARRY BOSSIDY Honeywell
Chairman and P.O. Box 3000
Chief Executive Officer Morristown, NJ 07962-2496
November 5, 2001
Dear Savings Plan Participant,
Enclosed are a proxy statement and meeting notice for the 2001 Honeywell
Annual Meeting of Shareowners, which is being held later than usual this
year because of the canceled merger with General Electric. The meeting
will be held on Dec. 7, 2001, at the company's headquarters in
Morristown, N.J.
The proxy statement includes information on the proposals to be voted
on, including the voting recommendations made by your Board of
Directors. Also enclosed are instructions for letting State Street Bank
and Trust Company, the Savings Plan trustee, know how to vote the
Honeywell shares represented in your personal account.
You may vote your shares on-line, over the phone or by returning the
enclosed voting card by the deadline date. I encourage you to vote on
the matters under consideration. If you own Honeywell shares outside of
the Savings Plan, you will receive separate voting instructions and
materials for those shares.
The last two years have been challenging for Honeywell, its employees
and shareowners. Faced with the recent severe decline in the world
economy, we have our work cut out for us. We have taken a number of
decisive actions to significantly improve our performance in 2002,
position ourselves for long-term growth when the economy recovers, and
resume our long history of creating superior shareowner returns.
While we continue to face many challenges, there is reason for optimism
moving forward. Lower interest rates, less expensive raw materials and
government stimuli should help the economy recover in the coming year
and Honeywell will benefit. Our Six Sigma Plus and digitization
initiatives are driving productivity improvements and cost savings
company-wide. And we are aggressively pursuing growth opportunities with
a variety of promising new products, technologies and applications.
Thank you for your continued commitment to Honeywell. The contributions
of Honeywell employees are critically important as we work to achieve
our objectives, make Honeywell a great place to work and continue our
progress toward becoming a premier company that we can all be proud of.
Sincerely,
LARRY BOSSIDY
LARRY BOSSIDY
Chairman and Chief Executive Officer
Enclosures
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as........................'r'