DEFA14A 1 d71432ddefa14a.htm DEFA14A DEFA14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

 

 

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Honeywell International Inc.

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Original 2020 4Q19 4Q20 2019 2020 2020 Sales Pipeline XLI HON 2020 2020 2Q20 3Q20 4Q20 Estimate Actual Operating Capital Cash Flow DeployedOriginal 2020 4Q19 4Q20 2019 2020 2020 Sales Pipeline XLI HON 2020 2020 2Q20 3Q20 4Q20 Estimate Actual Operating Capital Cash Flow Deployed



423% $3.63 HON S&P 500 Industrial Select Sector SPDR (XLI) 267% 212% 140% $1.21 103% 85% 54% 49% 24% 23% 18% 11% 10-Yr 5-Yr 3-Yr 1-Yr 2010 2020423% $3.63 HON S&P 500 Industrial Select Sector SPDR (XLI) 267% 212% 140% $1.21 103% 85% 54% 49% 24% 23% 18% 11% 10-Yr 5-Yr 3-Yr 1-Yr 2010 2020


Pay Element Description Link to Strategy and Performance Base Salary• Base salaries are determined based on scope of • To attract and compensate high-performing and experienced responsibility, years of experience, and individual leaders at a competitive level of cash compensation performance Annual Incentive • 80% based on formulaic determination against pre-• To motivate and reward executives for achieving annual Compensation Plan established financial metrics corporate and business unit goals in key areas of financial (ICP)▪ Adjusted EPS & FCF at corporate level and operational performance ▪ Business unit NEOs – 50% corporate & 50% SBG • Qualitative portion based on assessment of individual • 20% based on assessment of individual performance performance against objectives, advancement of initiatives, • Range of payout on each measure is 0-200% and the impact of significant accomplishments Long-Term Incentive • Performance Plan:• Focuses executives on the achievement of specific longer- Compensation (LTI)▪ 50% of annual LTI term financial performance goals directly aligned with our ▪ Performance Stock Units (PSUs) operating and strategic plans; TSR portion pays based on ▪ Four equally weighted metrics: 3-year relative TSR, three-year return from stock price appreciation and dividends cumulative revenue, avg. segment margin, avg. ROI vs. the compensation peer group • Stock Options:• Directly aligns the interests of our executives with 35% ▪ 35% of annual LTI shareowners. Options only have value for executives if 50% ▪ Vest over 4-Years operating performance results in stock price appreciation 15% • Restricted Stock Units:• Strengthens key executive retention over relevant time ▪ 15% of annual LTI periods to ensure consistency and execution of long-term ▪ Vest over 6-Years strategies Pay Element Description Link to Strategy and Performance Base Salary• Base salaries are determined based on scope of • To attract and compensate high-performing and experienced responsibility, years of experience, and individual leaders at a competitive level of cash compensation performance Annual Incentive • 80% based on formulaic determination against pre-• To motivate and reward executives for achieving annual Compensation Plan established financial metrics corporate and business unit goals in key areas of financial (ICP)▪ Adjusted EPS & FCF at corporate level and operational performance ▪ Business unit NEOs – 50% corporate & 50% SBG • Qualitative portion based on assessment of individual • 20% based on assessment of individual performance performance against objectives, advancement of initiatives, • Range of payout on each measure is 0-200% and the impact of significant accomplishments Long-Term Incentive • Performance Plan:• Focuses executives on the achievement of specific longer- Compensation (LTI)▪ 50% of annual LTI term financial performance goals directly aligned with our ▪ Performance Stock Units (PSUs) operating and strategic plans; TSR portion pays based on ▪ Four equally weighted metrics: 3-year relative TSR, three-year return from stock price appreciation and dividends cumulative revenue, avg. segment margin, avg. ROI vs. the compensation peer group • Stock Options:• Directly aligns the interests of our executives with 35% ▪ 35% of annual LTI shareowners. Options only have value for executives if 50% ▪ Vest over 4-Years operating performance results in stock price appreciation 15% • Restricted Stock Units:• Strengthens key executive retention over relevant time ▪ 15% of annual LTI periods to ensure consistency and execution of long-term ▪ Vest over 6-Years strategies


• • • 2020 • Summary • • • 2021 • Compensation Actions With ▪ Respect to ▪ 2020 ▪ •• • • 2020 • Summary • • • 2021 • Compensation Actions With ▪ Respect to ▪ 2020 ▪ •


2020 ANNUAL DIRECT COMPENSATION NEOS Annual 2020-2022 Restricted Total Annual Base Incentive Performance Stock Stock Direct (1) (2) (3) (4) (5) NEO Position Salary Plan (ICP) Plan Units Options Units Compensation Darius Adamczyk Chairman and CEO $ 1,566,154 $ 2,508,000 $ 7,014,804 $ 4,898,608 $ 2,098,672 $ 18,086,238 Gregory P. Lewis SVP, Chief Financial Officer 753,711 689,000 2,168,555 1,502,982 633,220 5,747,468 Anne T. Madden SVP, General Counsel 825,529 758,000 2,168,555 1,502,982 633,220 5,888,286 Rajeev Gautam President and CEO, PMT 768,394 503,000 2,111,984 1,468,726 615,128 5,467,232 John F. Waldron President and CEO, SPS 704,769 908,000 1,753,701 1,224,652 524,668 5,115,790 (1) Annual ICP payouts determined 80% based on a calculation against pre-set goals. The remaining 20% was based on individual assessments. (2) Grant date value of performance stock units (PSUs) issued on February 14, 2020 for the 2020-2022 plan period. The pandemic-related adjustment to the financial metrics for this cycle, made in the first quarter of 2021 in order to re-affirm the intended pay-for-performance opportunity of this award, is considered an award modification that will result in incremental accounting value that will be reflected as 2021 compensation on the Summary Compensation Table in the 2022 Proxy Statement. Earned shares received are subject to stock ownership and post-vesting holding requirements. (3) All stock option grants awarded to NEOs vest ratably over four years, have a 10-year term, and are subject to stock ownership and post-exercise holding requirements. The strike price for the 2020 annual stock options is $180.92, which was the fair market value of Honeywell stock on the date of grant (February 14, 2020). (4) Restricted stock units vest over six-year periods and are subject to stock ownership and post-vesting holding requirements. (5) Non-SEC Total Annual Compensation from the perspective of the Management Development and Compensation Committee (MDCC) as discussed in Honeywell’s 2021 Proxy Statement. 2020 ANNUAL DIRECT COMPENSATION NEOS Annual 2020-2022 Restricted Total Annual Base Incentive Performance Stock Stock Direct (1) (2) (3) (4) (5) NEO Position Salary Plan (ICP) Plan Units Options Units Compensation Darius Adamczyk Chairman and CEO $ 1,566,154 $ 2,508,000 $ 7,014,804 $ 4,898,608 $ 2,098,672 $ 18,086,238 Gregory P. Lewis SVP, Chief Financial Officer 753,711 689,000 2,168,555 1,502,982 633,220 5,747,468 Anne T. Madden SVP, General Counsel 825,529 758,000 2,168,555 1,502,982 633,220 5,888,286 Rajeev Gautam President and CEO, PMT 768,394 503,000 2,111,984 1,468,726 615,128 5,467,232 John F. Waldron President and CEO, SPS 704,769 908,000 1,753,701 1,224,652 524,668 5,115,790 (1) Annual ICP payouts determined 80% based on a calculation against pre-set goals. The remaining 20% was based on individual assessments. (2) Grant date value of performance stock units (PSUs) issued on February 14, 2020 for the 2020-2022 plan period. The pandemic-related adjustment to the financial metrics for this cycle, made in the first quarter of 2021 in order to re-affirm the intended pay-for-performance opportunity of this award, is considered an award modification that will result in incremental accounting value that will be reflected as 2021 compensation on the Summary Compensation Table in the 2022 Proxy Statement. Earned shares received are subject to stock ownership and post-vesting holding requirements. (3) All stock option grants awarded to NEOs vest ratably over four years, have a 10-year term, and are subject to stock ownership and post-exercise holding requirements. The strike price for the 2020 annual stock options is $180.92, which was the fair market value of Honeywell stock on the date of grant (February 14, 2020). (4) Restricted stock units vest over six-year periods and are subject to stock ownership and post-vesting holding requirements. (5) Non-SEC Total Annual Compensation from the perspective of the Management Development and Compensation Committee (MDCC) as discussed in Honeywell’s 2021 Proxy Statement.


BOARD COMPOSITION ✓ ✓ ✓ ✓ ✓ ✓ ✓BOARD COMPOSITION ✓ ✓ ✓ ✓ ✓ ✓ ✓


CORPORATE GOVERNANCE EXCELLENCE Year Enhancement Year Enhancement • Created independent lead director role 2014- • Completed enhancements to political engagement and trade 2015 • Proactively adopted proxy access association disclosure ▪ Disclosed list of $50K+ trade association • Published Supplier Code of Business Conduct memberships and non-deductible portion of dues 2016 • Initiated significant changes to our executive compensation paid to these associations program in response to shareowner feedback ▪ Received 100% rating from the Center for Political • Amended Corp. Gov. Guidelines to improve board refreshment Accountability 2017• Instituted formal Board skills & experience matrix • Established Advisory Board and governance process to ensure political contributions align with fundamental principles • Enhanced Board self-evaluation process 2020- • Refreshment of Board composition and leadership 2021 • First director nominated under enhanced recruitment process ▪ Elected 2 new directors in anticipation of 3 director 2018 • Reduced ownership threshold to call a special meeting of retirements, including retirements upon reaching shareowners from 20% to 15% mandatory retirement age • Reduced the number of public company boards (including the ▪ Appointed new Lead Director Honeywell Board) on which any director may sit from 5 to 4 ▪ Appointed two new Board committee chairs (CGRC • Formalized equivalency of independent Lead Director and and MDCC) 2019 independent Chairman roles and responsibilities • Sustainability reporting aligned with SASB and TCFD • Formalized Board committee risk oversight responsibilities • Disclosure of director race/ethnicity on an individual basis • Combined Chief Compliance Officer & Corporate Secretary rolesCORPORATE GOVERNANCE EXCELLENCE Year Enhancement Year Enhancement • Created independent lead director role 2014- • Completed enhancements to political engagement and trade 2015 • Proactively adopted proxy access association disclosure ▪ Disclosed list of $50K+ trade association • Published Supplier Code of Business Conduct memberships and non-deductible portion of dues 2016 • Initiated significant changes to our executive compensation paid to these associations program in response to shareowner feedback ▪ Received 100% rating from the Center for Political • Amended Corp. Gov. Guidelines to improve board refreshment Accountability 2017• Instituted formal Board skills & experience matrix • Established Advisory Board and governance process to ensure political contributions align with fundamental principles • Enhanced Board self-evaluation process 2020- • Refreshment of Board composition and leadership 2021 • First director nominated under enhanced recruitment process ▪ Elected 2 new directors in anticipation of 3 director 2018 • Reduced ownership threshold to call a special meeting of retirements, including retirements upon reaching shareowners from 20% to 15% mandatory retirement age • Reduced the number of public company boards (including the ▪ Appointed new Lead Director Honeywell Board) on which any director may sit from 5 to 4 ▪ Appointed two new Board committee chairs (CGRC • Formalized equivalency of independent Lead Director and and MDCC) 2019 independent Chairman roles and responsibilities • Sustainability reporting aligned with SASB and TCFD • Formalized Board committee risk oversight responsibilities • Disclosure of director race/ethnicity on an individual basis • Combined Chief Compliance Officer & Corporate Secretary roles


Shareholder Right to Act by Written Consent (AGAINST vote recommended) • ▪ • ▪ • • • •Shareholder Right to Act by Written Consent (AGAINST vote recommended) • ▪ • ▪ • • • •


CULTURE AS A COMPETITIVE ADVANTAGE Behaviors Foundational Principles Integrity and Ethics • Strong tone and conduct from the top and middle management Have a Be Become Your • Code of Business Conduct with required training and certification Passion for Courageous Best • World’s Most Ethical Companies recognition by Ethisphere Institute Winning Workplace Respect • Mandatory global sexual harassment training • Strong investigations and trend analysis on workplace respect and harassment allegations High Act with Be Committed Performance Inclusion & Diversity Urgency Culture • Zero-tolerance for discrimination and harassment based on race or color • Critical to business strategy and long-term success Establishing Tone From the Top “Let me state up-front and very clearly that we will never tolerate racism at Build Think Big... Be a Zealot for Honeywell. Fully embracing the principles of Inclusion and Diversity and Exceptional Then Make It treating all employees with the utmost respect every day are requirements Growth Talent Happen for working here. If you can’t do this, you don’t belong at Honeywell.“ -- Darius Adamczyk, Chairman and CEO Foundational Principles Are Non-NegotiableCULTURE AS A COMPETITIVE ADVANTAGE Behaviors Foundational Principles Integrity and Ethics • Strong tone and conduct from the top and middle management Have a Be Become Your • Code of Business Conduct with required training and certification Passion for Courageous Best • World’s Most Ethical Companies recognition by Ethisphere Institute Winning Workplace Respect • Mandatory global sexual harassment training • Strong investigations and trend analysis on workplace respect and harassment allegations High Act with Be Committed Performance Inclusion & Diversity Urgency Culture • Zero-tolerance for discrimination and harassment based on race or color • Critical to business strategy and long-term success Establishing Tone From the Top “Let me state up-front and very clearly that we will never tolerate racism at Build Think Big... Be a Zealot for Honeywell. Fully embracing the principles of Inclusion and Diversity and Exceptional Then Make It treating all employees with the utmost respect every day are requirements Growth Talent Happen for working here. If you can’t do this, you don’t belong at Honeywell.“ -- Darius Adamczyk, Chairman and CEO Foundational Principles Are Non-Negotiable


••• • • • ••••• • • • ••


INCLUSION & DIVERSITY Promoting Diversity at Honeywell Leadership Hiring Diverse Talent Retaining Diverse Talent Diverse Board of Directors, with 2 Blacks, 2 Global “Diversity of Slate” requirement when Year-long career advancement program for our Hispanics, and 3 women. A majority of executive hiring for exempt roles in the U.S. and any pipeline of female leaders expanded in 2021 to officers are diverse. Driving diversity included in management, professional, or senior include participation of other minorities. 2021 goals for CEO-staff officers. administrative role globally. Unconscious bias training required globally. University Liaison Program Robust Governance Framework Partnerships to Develop Talent Partnering with historically Black colleges and CEO-sponsored I&D Steering Committee, with Includes partnerships with the National Society universities (HBCUs) to develop and recruit I&D Councils embedded in each business. of Black Engineers, Executive Leadership diverse talent (Clark, Spelman, Morehouse, Redesigned framework provides a scalable Council, Society of Women Engineers, Society of North Carolina A&T, Florida A&M). platform to support employee networks. Hispanic Engineers, and Women in Tech. Supported by Our 5 Key Pillars Talent Talent Branding & Strategic Inclusive Management Communication Partnerships Leadership Acquisition 14INCLUSION & DIVERSITY Promoting Diversity at Honeywell Leadership Hiring Diverse Talent Retaining Diverse Talent Diverse Board of Directors, with 2 Blacks, 2 Global “Diversity of Slate” requirement when Year-long career advancement program for our Hispanics, and 3 women. A majority of executive hiring for exempt roles in the U.S. and any pipeline of female leaders expanded in 2021 to officers are diverse. Driving diversity included in management, professional, or senior include participation of other minorities. 2021 goals for CEO-staff officers. administrative role globally. Unconscious bias training required globally. University Liaison Program Robust Governance Framework Partnerships to Develop Talent Partnering with historically Black colleges and CEO-sponsored I&D Steering Committee, with Includes partnerships with the National Society universities (HBCUs) to develop and recruit I&D Councils embedded in each business. of Black Engineers, Executive Leadership diverse talent (Clark, Spelman, Morehouse, Redesigned framework provides a scalable Council, Society of Women Engineers, Society of North Carolina A&T, Florida A&M). platform to support employee networks. Hispanic Engineers, and Women in Tech. Supported by Our 5 Key Pillars Talent Talent Branding & Strategic Inclusive Management Communication Partnerships Leadership Acquisition 14


COMMITMENT TO A SUSTAINABLE FUTURE Scope 3 15COMMITMENT TO A SUSTAINABLE FUTURE Scope 3 15


Real-Time Tracking and Reporting Improvement Roadmap Auditable Progress to Defined Outcomes Measurement Systems GHG Reduction: LGWP Molecules Energy Audit, Benchmarking & Baselining Fleet Electrification and Smart Logistics Energy Management Services Renewable Power Energy and Water* Conservation Energy Optimization and Energy Storage Predictive Maintenance Biofuels: Green Jet, Green Diesel Flight Management and Smart Logistics Hydrogen: Blue hydrogen, Green hydrogen Healthy Building Technologies Command & Control* For Remote Operations and Security Lifecycle Impact HGW Emissions Monitoring and Remediation Safety Assurance, Emergency and Disaster Response Management Plastics Recycling Virtual Expert*​ Bio-sourced Plastics & Materials Cybersecurity 16Real-Time Tracking and Reporting Improvement Roadmap Auditable Progress to Defined Outcomes Measurement Systems GHG Reduction: LGWP Molecules Energy Audit, Benchmarking & Baselining Fleet Electrification and Smart Logistics Energy Management Services Renewable Power Energy and Water* Conservation Energy Optimization and Energy Storage Predictive Maintenance Biofuels: Green Jet, Green Diesel Flight Management and Smart Logistics Hydrogen: Blue hydrogen, Green hydrogen Healthy Building Technologies Command & Control* For Remote Operations and Security Lifecycle Impact HGW Emissions Monitoring and Remediation Safety Assurance, Emergency and Disaster Response Management Plastics Recycling Virtual Expert*​ Bio-sourced Plastics & Materials Cybersecurity 16


STEM Education Inclusion & Diversity Humanitarian Relief • •• • • • •• • • •• 17STEM Education Inclusion & Diversity Humanitarian Relief • •• • • • •• • • •• 17


Partnered to Coordinate Mass Vaccination Events • • • PPE • • • Employee Support and Recognition • •Partnered to Coordinate Mass Vaccination Events • • • PPE • • • Employee Support and Recognition • •



($M) 2Q19 3Q19 4Q19 2Q20 3Q20 4Q20 Sales $9,243 $9,086 $9,496 $7,477 $7,797 $8,900 Segment profit $1,970 $1,928 $2,032 $1,385 $1,553 $1,879 (1) Stock compensation expense (34) (37) (41) (34) (40) (50) (2,3) Repositioning, Other (137) (109) (259) (295) (161) (111) (4) Pension and other postretirement service costs (37) (30) (37) (38) (41) (42) Operating income $1,762 $1,752 $1,695 $1,018 $1,311 $1,676 Year-over-year change in Segment Profit ($585) ($375) ($153) ÷ Year-over-year change in Net Sales ($1,766) ($1,289) ($596) Decremental Margin 33% 29% 26% (1) Amounts included in Selling, general and administrative expenses. (2) Includes repositioning, asbestos, environmental expenses and equity income adjustment. (3) Included in Cost of products and services sold, Selling, general and administrative expenses, and Other income/expense. (4) Amounts included in Cost of products and services sold and Selling, general and administrative expenses. We define segment profit as operating income, excluding stock compensation expense, pension and other postretirement service costs, and repositioning and other charges. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. ($M) 2Q19 3Q19 4Q19 2Q20 3Q20 4Q20 Sales $9,243 $9,086 $9,496 $7,477 $7,797 $8,900 Segment profit $1,970 $1,928 $2,032 $1,385 $1,553 $1,879 (1) Stock compensation expense (34) (37) (41) (34) (40) (50) (2,3) Repositioning, Other (137) (109) (259) (295) (161) (111) (4) Pension and other postretirement service costs (37) (30) (37) (38) (41) (42) Operating income $1,762 $1,752 $1,695 $1,018 $1,311 $1,676 Year-over-year change in Segment Profit ($585) ($375) ($153) ÷ Year-over-year change in Net Sales ($1,766) ($1,289) ($596) Decremental Margin 33% 29% 26% (1) Amounts included in Selling, general and administrative expenses. (2) Includes repositioning, asbestos, environmental expenses and equity income adjustment. (3) Included in Cost of products and services sold, Selling, general and administrative expenses, and Other income/expense. (4) Amounts included in Cost of products and services sold and Selling, general and administrative expenses. We define segment profit as operating income, excluding stock compensation expense, pension and other postretirement service costs, and repositioning and other charges. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.