<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
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
UNITED TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
UNITED TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
Dear Fellow Shareowner:
You are cordially invited to attend our 1997 Annual Meeting of Shareowners
of United Technologies Corporation to be held April 29, 1997 at THE RITZ-
CARLTON HOTEL, 15 ARLINGTON STREET, BOSTON, MASSACHUSETTS. The doors will open
at 10:30 a.m. and the meeting will begin at 11:00 a.m.
At the meeting, we will report on the operations, progress and plans of the
Corporation, and give you an opportunity to ask questions. The Annual Meeting
is open to all shareowners or their authorized representatives. To attend the
meeting, complete and return the enclosed postage-paid reservation card
directly to the Corporation. An admission ticket will be mailed to you.
If your shares are held of record by a broker or other nominee in street
name and you wish to attend the meeting, your broker or nominee must give
written notice to the Corporation that you are its authorized representative
for those shares.
Your vote is important, and we urge you to sign, date and return the proxy
card in the envelope provided whether or not you plan to attend the meeting.
If you decide to attend the meeting, you may vote your shares in person, if
you wish.
We hope to see you on April 29th.
Robert F. Daniell
Chairman
George David
President and
Chief Executive Officer
Hartford, Connecticut
March 27, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Annual Meeting.................................................. 1
Proxy Statement........................................................... 2
General Information Concerning the Board of Directors..................... 2
Item No. 1--Election of Directors......................................... 4
Item No. 2--Amendment of the Corporation's Restated Certificate of
Incorporation........................................................... 11
Item No. 3--Appointment of Independent Public Accountants................. 12
Item No. 4--Shareowner Proposal........................................... 13
Submission of Shareowner Proposals........................................ 14
Report of the Committee on Compensation and Executive Development......... 15
Compensation of Executive Officers........................................ 18
Other Business............................................................ 22
Proxies and Voting........................................................ 23
Annual Report............................................................. 24
</TABLE>
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
NOTICE OF ANNUAL MEETING
TO BE HELD ON APRIL 29, 1997
To the Owners of Common and Preferred Stock:
The Annual Meeting of Shareowners of United Technologies Corporation will be
held at THE RITZ-CARLTON HOTEL, 15 ARLINGTON STREET, BOSTON, MASSACHUSETTS at
11:00 a.m. on Tuesday, April 29, 1997 to consider and take action on the
following items and such other business as may properly come before the
meeting or any adjournment thereof:
1. Election of thirteen directors.
2. Amendment to the Corporation's Restated Certificate of
Incorporation to increase the authorized Common Stock of the
Corporation.
3. Appointment of Independent Public Accountants.
4. A shareowner proposal regarding executive compensation.
Only owners of Common and Series A ESOP Convertible Preferred Stock of
record at the close of business on March 10, 1997 are entitled to notice of
and to vote at the meeting. A list of such shareowners will be available at
the time and place of the meeting and during the ten days prior to the meeting
at the offices of Kirkpatrick and Lockhart LLP, One International Place,
Boston, Massachusetts.
We urge you to sign and date the enclosed proxy card and return it at once
in the enclosed envelope.
William H. Trachsel
Vice President and Secretary
March 27, 1997
<PAGE>
UNITED TECHNOLOGIES CORPORATION
PROXY STATEMENT
This Proxy Statement is first being mailed to shareowners on or about March
27, 1997 soliciting proxies on behalf of the Board of Directors of United
Technologies Corporation, One Financial Plaza, Hartford, Connecticut 06101,
for the Annual Meeting of Shareowners of the Corporation to be held on
Tuesday, April 29, 1997 at the time and place and for the purposes set forth
in the Notice of Annual Meeting.
RECORD DATE AND OUTSTANDING SHARES
The record date for determining those shareowners entitled to vote at the
Annual Meeting was March 10, 1997. At that date, the Corporation had
outstanding 250,640,969 shares of voting stock consisting of 237,402,687
shares of Common Stock and 13,238,282 shares of Series A ESOP Convertible
Preferred Stock ("ESOP Preferred"). Each share of Common Stock is entitled to
one vote. Each share of ESOP Preferred is entitled to 2.6 votes. The total
number of votes entitled to be cast at the meeting is 271,822,220.
The FMR Corporation, 82 Devonshire Street, Boston, MA 02109, has advised the
Corporation that it exercised as of December 31, 1996, investment discretion
with respect to 12,953,368 shares, or 5.44% of the Common Stock of the
Corporation.
The Corporation knows of no other person who is the beneficial owner of over
5% of its Common Stock. All of the shares of ESOP Preferred are held by
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006, as
trustee on behalf of employees of the Corporation who participate in the
Corporation's Employee Savings Plan, as to which shares Bankers Trust Company
disclaims beneficial ownership.
CUMULATIVE VOTING
In the election of directors of the Corporation, each owner of Common Stock
is entitled to as many votes as equal the number of shares of his or her stock
multiplied by the number of directors to be elected. The owners of the ESOP
Preferred are entitled to as many votes as equal 2.6 times the number of
shares of stock owned multiplied by the number of directors to be elected. By
giving written instructions to the Corporation, shareowners may cast all such
votes for a single director or may distribute such votes among any two or more
of the nominees, as they see fit. If no written instruction is given, the
votes will be evenly distributed among all the management nominees. A
shareowner may withhold a vote for a particular management nominee by writing
the nominee's name on the proxy card in the space provided. Under those
circumstances, unless other instructions are given in writing, the
shareowner's votes will then be evenly cast among the remaining management
nominees.
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board of Directors--Directors are elected annually by the shareowners.
Nominees are selected by the Board upon recommendation of its Nominating
Committee and are chosen for their ability and integrity. As a group, they are
expected to bring to the Board experience in national and international
business matters, an awareness of the appropriate role of the Corporation in
society, and a diversity of opinion and insight. The Board met seven times
during 1996 with an average attendance of 99%. All incumbent directors
attended more than 75% of the aggregate number of meetings of the Board and
the Committees on which he or she served.
The Board has established six permanent committees to assist it in the
discharge of its responsibilities. Their functions are as follows:
2
<PAGE>
Executive Committee--The Executive Committee may exercise all powers of the
Board of Directors in the management of the Corporation except those powers
that the Bylaws specifically reserve to the entire Board (e.g., amend the
Bylaws, declare dividends). Although the Executive Committee has very broad
powers, in practice it meets only when it would be inconvenient to call a
meeting of the Board. The members of the Executive Committee, which did not
meet during 1996, are Robert F. Daniell, Chairman; Antonia Handler Chayes,
George David, Robert H. Malott and Jacqueline G. Wexler.
Audit Review Committee--The Audit Review Committee recommends to the Board a
nominee for Independent Public Accountants of the Corporation and approves
services rendered by and meets with the Independent Public Accountants and
with the Corporation's internal auditors to receive reports with regard to all
auditing matters. The Committee reviews the annual audited financial
statements of the Corporation and the adequacy of internal accounting
controls. The Committee also confers with the internal auditors to review
reports on compliance with the Corporation's policies and procedures, business
ethics, financial controls, and with applicable statutes and regulations. The
members of the Audit Review Committee, which met four times during 1996, are
Howard H. Baker, Jr., Chairman; Antonia Handler Chayes, Robert F. Dee, Pehr G.
Gyllenhammar, Robert H. Malott, Frank P. Popoff, and Jacqueline G. Wexler.
Committee on Compensation and Executive Development--The Committee on
Compensation and Executive Development makes recommendations to the Board on
compensation actions involving senior executives of the Corporation. The
Committee approves compensation actions involving all elected officers of the
Corporation, and periodically reviews in the aggregate, annual salaries of all
executives. The Committee approves long term incentive awards for elected
officers and certain key executives of the Corporation, and reviews and
administers the incentive compensation, long term incentive and other
compensation plans of the Corporation. It also reviews and makes
recommendations to the Board on policies and programs for the development of
management personnel and management structure and organization. The members of
the Committee on Compensation and Executive Development, which met five times
during 1996, are Robert F. Dee, Chairman; Charles W. Duncan, Jr., Jean-Pierre
Garnier, Frank P. Popoff, Harold A. Wagner, and Jacqueline G. Wexler.
Finance Committee--The Finance Committee is responsible for reviewing and
making recommendations to the Board on the management of the financial
resources of the Corporation. This Committee also reviews major financial
strategies and transactions and major acquisitions and divestitures. The
members of the Finance Committee, which met five times during 1996, are
Charles W. Duncan, Jr., Chairman; Robert F. Daniell, George David, Pehr G.
Gyllenhammar, Gerald D. Hines, Charles R. Lee, and Robert H. Malott.
Nominating Committee--The Nominating Committee is responsible for making
recommendations to the Board on candidates for the Board and on the
qualifications and retirement of existing members of the Board. This Committee
also is responsible for matters of corporate governance and other matters
referred to it by the Board. The Nominating Committee considers nominees
recommended to it in writing by shareowners. The members of the Nominating
Committee, which met three times during 1996, are Robert H. Malott, Chairman;
Howard H. Baker, Jr. Robert F. Dee, Charles R. Lee, and Charles W. Duncan, Jr.
Public Issues Review Committee--The Public Issues Review Committee has
oversight responsibility for the Corporation's response to such public issues
as equal employment opportunity, the environment, and safety in the workplace.
In addition, the Committee has oversight responsibility for the Corporation's
contributions program and political action committees. The members of the
Public Issues Review Committee, which met three times during 1996, are
Jacqueline G. Wexler, Chairman; Howard H. Baker, Jr., Antonia Handler Chayes,
Robert F. Dee, Jean-Pierre Garnier, Pehr G. Gyllenhammar, Gerald D. Hines and
Harold A. Wagner.
3
<PAGE>
ITEM NO. 1
ELECTION OF DIRECTORS
Thirteen persons are being nominated for election as directors at the 1997
Annual Meeting. Each of the nominees was elected a director at the 1996 Annual
Meeting, with the exception of Mr. Popoff who joined the Board in June 1996,
Messrs. Garnier and Krapek who became directors in February 1997, and Mr.
Perry who is a nominee for election in April.
Robert F. Daniell, after 40 years of distinguished service to the
Corporation, will resign from the Board upon his retirement in April. Mr.
Daniell has made invaluable contributions to the success of the Corporation
over more than four decades.
Also retiring from the Board in April are Robert F. Dee and Gerald D. Hines,
both of whom have made countless positive contributions to the growth and
strength of the Corporation over many years. The Corporation has been
fortunate to have had the benefit of their wise advice.
The proxy holders intend to vote for the election of the following nominees
unless otherwise instructed on the proxy card. Should any of these nominees
become unavailable to accept nomination or election as a director, the proxy
holders will, at their discretion, vote the shares that they represent for the
election of such other persons as the Board of Directors may recommend, unless
the Board reduces the number of directors.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
[PHOTO APPEARS HERE]
Howard H. Baker, Jr., Partner, Baker, Donelson, Bearman & Caldwell (attorneys).
Senator Baker was a member of the United States Senate from 1967 through 1984,
where he served two terms as Minority Leader and two terms as Majority Leader.
He was the Chief of Staff for the President from February 1987 to July 1988.
Senator Baker is a director of Federal Express Corporation, WMX Technologies,
Inc., and Pennzoil Company, and a trustee of the Mayo Clinic. He is 71 and has
been a director since 1990.
4
<PAGE>
[PHOTO APPEARS HERE]
Antonia Handler Chayes, Senior Advisor and Board Member of Conflict Management
Group (CMG), a non-profit conflict resolution consulting firm and Senior
Consultant to JAMS/Endispute, a firm that provides alternatives to traditional
litigation. Ms. Chayes is an Adjunct Lecturer at the Kennedy School of
Government and is Co-Director of the Project on International Compliance and
Dispute Settlement at the Program on Negotiation at Harvard Law School. She
served as Assistant Secretary of the United States Air Force from 1977 to 1979,
and as Under Secretary from 1979 to 1981. Ms. Chayes served as a Commissioner
with the Commission on Roles and Missions of the United States Armed Forces and
the DOD-CIA Joint Security Commission, and is currently serving as Commissioner
to the Vice President's White House Aviation Safety and Security Commission. She
is a member of the American Law Institute and the Council on Foreign Relations
and serves on the Advisory Boards of Columbia University School for
International and Public Affairs and the Center for Preventive Action at the
Council of Foreign Relations. She is 67 and has been a director of the
Corporation since 1981.
[PHOTO APPEARS HERE]
George David, President and Chief Executive Officer, United Technologies
Corporation. Mr. David served as President and Chief Executive Officer of Otis
Elevator Company from 1986 through 1988, and as Chairman of Otis from 1987
through today. He was elected to the office of Senior Vice President of the
Corporation in 1988, and Executive Vice President and President,
Commercial/Industrial in 1989. In February 1992, Mr. David was elected President
and Chief Operating Officer of the Corporation and in April 1994 he was elected
Chief Executive Officer. Mr. David is President of the Board of Trustees of the
Graduate School of Business Administration at The University of Virginia. He is
54 and has been a director of the Corporation since 1992.
[PHOTO APPEARS HERE]
Charles W. Duncan, Jr., Private Investor, Houston, Texas. Mr. Duncan has been
involved in private investments since 1981. Mr. Duncan served as Secretary of
the United States Department of Energy from 1979 to 1981. He is a director of
American Express Company, American Express Bank, Ltd., The Coca-Cola Company,
Newfield Exploration Co., PanEnergy Corp., and is a member of the International
Advisory Board of Elf Aquitaine. Mr. Duncan is 70 and has been a director of the
Corporation since 1981.
[PHOTO APPEARS HERE]
Jean-Pierre Garnier, Ph.D is the President and Chief Operating Officer and
Executive Member of the Board of Directors of SmithKline Beecham plc,
Philadelphia, PA (pharmaceuticals). He joined SmithKline Beecham in 1990 as
President of its pharmaceutical business in North America and served as
Chairman, Pharmaceuticals from 1994 until his appointment to his current
position in 1995. Dr. Garnier is a director of the Biotechnology Industry
Organization, the Eisenhower Exchange Fellowships and is a member of the
Philadelphia Art Museum Executive Committee. Mr. Garnier is 49 and has been a
director of the Corporation since February, 1997.
5
<PAGE>
[PHOTO APPEARS HERE]
Pehr G. Gyllenhammar, Senior Advisor, Lazard Freres & Co., LLC (investment
banking). Mr. Gyllenhammar is the former Executive Chairman, AB Volvo, Goteborg,
Sweden. He served as Managing Director and Chief Executive Officer of AB Volvo
from 1971 to 1983, as Chairman and Chief Executive Officer until 1990, and as
Executive Chairman from 1990 to December 1993. He is a director of Kissinger
Associates, Inc., Pearson plc., Reuters Holdings plc., and FMC Corporation. He
is also Chairman of Swedish Ships' Mortgage Bank. Mr. Gyllenhammar is 61 and has
been a director of the Corporation since 1981.
[PHOTO APPEARS HERE]
Karl J. Krapek, Executive Vice President of the Corporation and President of
Pratt & Whitney. Mr. Krapek joined the Corporation in 1982 as Vice President of
Operations for Otis Elevator Company. He was named Otis' President in 1989 and
served as President of Carrier Corporation from 1990 to 1992. Mr. Krapek has
served as President, Pratt & Whitney since 1992. He is chairman of the
Connecticut Capitol Region Growth Council, MetroHartford 2010 Steering
Committee, Vice Chairman of the Board of Trustees of the Connecticut State
University System, and a member of the Director's Advisory Board of the Yale
Cancer Center. Mr. Krapek is 48 and became a director of the Corporation in
1997.
[PHOTO APPEARS HERE]
Charles R. Lee, Chairman and Chief Executive Officer of GTE Corporation,
Stamford, Connecticut (telecommunications). Mr. Lee has served since 1992 as
Chairman and Chief Executive Officer of GTE. Since joining GTE in 1983, Mr. Lee
served as Senior Vice President of Finance from 1983 to 1986, Senior Vice
President Finance and Planning from 1986 to 1988, and from 1988 to 1992 he
served as President, Chief Operating Officer and a director of GTE. He is a
director of The Proctor & Gamble Company and USX Corporation. He is a member of
The Business Roundtable and The Business Council, a Trustee Fellow of the Board
of Trustees of Cornell University, a trustee of the National Planning
Association, a director of the New American Schools Development Corporation, a
member of The Conference Board, Harvard Business School's Board of Directors of
the Associates, and a director of the Stamford Hospital Foundation. He is 57 and
has been a director of the Corporation since 1994.
[PHOTO APPEARS HERE]
Robert H. Malott, Chairman of the Executive Committee of the Board and former
Chairman of the Board and Chief Executive Officer, FMC Corporation, Chicago,
Illinois (manufacturer of machinery and chemicals). He is on the Board of Amoco
Corporation and Manchester Tank Corporation. He is on the Board of the National
Museum of Natural History, PBS, the National Park Foundation, The Aspen
Institute, the Lyric Opera of Chicago, the American Enterprise Institute, the
Hoover Institution, and Argonne National Laboratories, and is a member of The
Business Council and the Illinois Business Roundtable. He is on the Board of
Trustees of the University of Chicago. Mr. Malott is 70 and has been a director
of the Corporation since 1980.
6
<PAGE>
[PHOTO APPEARS HERE]
William J. Perry is currently a professor at Stanford University. Mr. Perry
served as U.S. Secretary of Defense in the Clinton administration from 1994 to
1997, and as Deputy Secretary of Defense from 1993 to 1994. He is a director of
Yurie Systems, Inc., a telecommunications company. In 1992 and 1993, prior to
serving at the Department of Defense, Mr. Perry was a member of the
Corporation's Board of Directors. Mr. Perry is 69 and will rejoin the Board as a
director in April 1997.
[PHOTO APPEARS HERE]
Frank P. Popoff, Chairman of Dow Chemical Company, Midland, Michigan. Mr. Popoff
also is a director of American Express Company, US WEST, Inc., Chemical
Financial Corporation and Michigan Molecular Institute. He is a past chairman of
the Chemical Manufacturers Association and a member of the Business Council for
Sustainable Development, The Business Council, the Council for Competitiveness,
the American Chemical Society and honorary director of the Indiana University
Foundation. Mr. Popoff is 61 and has been a director of the Corporation since
1996.
[PHOTO APPEARS HERE]
Harold A. Wagner, Chairman, President and Chief Executive Officer, Air Products
and Chemicals, Inc., Allentown, Pennsylvania (industrial gases and chemicals).
Mr. Wagner served as President, Air Products and Chemicals, Europe 1988-1990,
Executive Vice President, Gases and Equipment 1990-1991, President and Chief
Operating Officer 1991-1992 and Chairman, President and Chief Executive Officer
since 1992. He is a director of Daido-Hoxan, a member of The Business Council,
the Policy Committee of The Business Roundtable, and chairman of the
Pennsylvania Business Roundtable. Mr. Wagner also serves on the Board of
Trustees of Lehigh University. Mr. Wagner is 61 and has been a director of the
Corporation since 1994.
[PHOTO APPEARS HERE]
Jacqueline G. Wexler retired as President of the National Conference of
Christians and Jews, New York, New York, on December 31, 1990. Mrs. Wexler is a
former President of Hunter College of the City University of New York. Mrs.
Wexler joined Academic Consulting Associates as a Senior Associate in 1980 and
was named President the same year. Mrs. Wexler served in that capacity until
1982. Mrs. Wexler is 70 and has been a director of the Corporation since 1978.
7
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Share ownership information set forth in this Proxy Statement has been
restated to give effect to the two-for-one stock split effected as a stock
dividend declared September 29, 1996, and distributed December 10, 1996 to
shareowners of record November 22, 1996.
The following table lists all stock based holdings at January 1, 1997 for
each current director, each of the executive officers named in the Summary
Compensation Table and all directors and executive officers as a group. Mr.
Garnier was not a director on that date. At January 1, 1997, none of such
directors or executive officers owned or had the right to acquire under stock
options exercisable within 60 days, in the aggregate more than 1% of the
Common Stock or the ESOP Preferred. Directors and executive officers as a
group owned, or had the right to acquire under stock options exercisable
within 60 days, 2% of the Common Stock and less than 1% of the ESOP Preferred.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME CLASS OF SECURITIES OWNED AT 1/1/97(1)
---- ------------------- -------------------
<S> <C> <C>
Howard H. Baker, Jr.................... Common(2) 4,000
Antonia Handler Chayes................. Common(2) 3,200
Robert F. Daniell...................... Common 710,772
ESOP Preferred 836
George David........................... Common 1,433,588
ESOP Preferred 818
Robert F. Dee.......................... Common 3,200
Charles W. Duncan, Jr.................. Common(2)(3) 20,800
Jean-Pierre Garnier.................... Common --
Pehr G. Gyllenhammar................... Common(2) 400
Gerald D. Hines........................ Common(2) 10,976
Charles R. Lee......................... Common(2) 6,450
Robert H. Malott....................... Common(2) 3,276
Frank P. Popoff........................ Common(2) 2,000
Harold A. Wagner....................... Common(2) 3,706
Jacqueline G. Wexler................... Common(2) 3,776
Karl J. Krapek......................... Common 706,380
ESOP Preferred 831
Stephen F. Page........................ Common 322,562
ESOP Preferred 246
Jean-Pierre van Rooy................... Common 177,766
ESOP Preferred 797
Directors & Executive Officers as a 4,869,513
Group (32)............................. Common
ESOP Preferred 14,620
</TABLE>
8
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- -------
(1) Included in the number of shares beneficially owned by Messrs. Daniell,
David, Krapek, Page and van Rooy and all directors and executive officers as a
group are 420,592; 1,269,060; 544,000; 304,000; 132,710; and 3,763,534 shares,
respectively, which such persons have the right to acquire within 60 days
pursuant to the exercise of employee stock options and stock appreciation
rights; 262,330; 140,262; 45,610; 10,370; 36,844; and 787,355 shares,
respectively, as to which such persons have sole voting and investment power;
and 27,850; 24,266; 116,770; 8,192; 8,212; and 301,676 shares, respectively,
as to which such persons have sole voting but no investment power. Executive
officers as a group have shared voting and investment power with respect to
8,948 shares of Common Stock and 14,620 shares of ESOP Preferred. The
following directors have sole voting power but no investment power with
respect to the following number of shares: Ms. Chayes, Mrs. Wexler, Messrs.
Baker, Dee, Hines, Lee, Malott, Popoff, and Wagner-2,000 shares. These
directors as well as Mr. Gyllenhammar have sole voting and investment power
with respect to the balance of their holdings of Common Stock.
(2) In addition to shares shown as beneficially owned at January 1, 1997,
nonemployee directors held vested deferred stock units, each unit of which is
valued by reference to one share of Common Stock, as follows:
<TABLE>
<S> <C>
Howard H. Baker, Jr.......................................... 6,162
Antonia Handler Chayes....................................... 6,969
Robert Dee................................................... 8,071
Charles W. Duncan, Jr........................................ 8,637
Jean-Pierre Garnier.......................................... --
Pehr G. Gyllenhammar......................................... 10,006
</TABLE>
<TABLE>
<S> <C>
Gerald D. Hines.............................................. 4,495
Charles R. Lee............................................... 2,746
Robert H. Malott............................................. 8,138
Frank P. Popoff.............................................. 638
Harold A. Wagner............................................. 1,796
Jacqueline G. Wexler......................................... 7,599
</TABLE>
(3) Includes 10,800 shares owned directly by Mr. Duncan as to which he has
sole voting and investment power; 8,000 shares owned by a partnership in which
Mr. Duncan is both a Limited Partner and a General Partner, as to which he has
shared voting and investment power; and 2,000 shares as to which he has sole
voting power but no investment power.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by the Securities and Exchange Commission rules under Section 16
of the Securities Exchange Act of 1934, the Corporation notes that Mr. Gilles
Renaud, an officer, failed to report on his initial Form 3 his other holdings
of Common Stock. The additional holdings were reported in an amendment to the
Form 3. There were no unreported transactions related to these holdings.
CERTAIN TRANSACTIONS
During 1996, Prudential Realty, Inc. purchased Robert F. Daniell's home for
$430,000, a price equal to Prudential's appraisal of the property's fair
market value. The Corporation agreed to reimburse Prudential for its costs of
carrying the property pending resale and for the amount, if any, by which
Prudential's resale price is less than the purchase price. Mr. Daniell, in
turn, has agreed to reimburse the Corporation for any amounts it pays to
Prudential pursuant to this arrangement.
The law firm of Baker, Donelson, Bearman, & Caldwell, of which Senator Baker
is a partner, is retained from time to time for legal services. Lazard Freres
& Co., LLC, of which Mr. Gyllenhammar is a senior advisor, performs investment
banking services and provides financial advisory services to the Corporation.
The Corporation and its subsidiaries have had, and expect in the future to
have, transactions in the ordinary course of business with these firms and
other unaffiliated corporations of which certain of the nonemployee
9
<PAGE>
directors are officers or directors. In the past, the amounts involved have
not been material in relation to its business and the Corporation believes
that such amounts are not material in relation to the businesses of such other
firms and corporations or the interests of the directors involved.
COMPENSATION OF DIRECTORS
Nonemployee directors are paid an annual retainer of $60,000 ($65,000 for
committee chairpersons), with no meeting fees paid for regularly scheduled
Board or Committee meetings. This retainer is paid 60% in stock units under
the United Technologies Corporation Board of Directors Deferred Stock Unit
Plan. Each stock unit is equal in value to a share of Common Stock of the
Corporation and is settled in cash at the time of termination of service as a
director in either a lump sum or installment payments. Stock units credited to
a director's account earn additional stock units equivalent in value to the
amount of dividends paid on Common Stock. There are no voting rights attached
to stock units. The remaining 40% of the retainer is paid either in cash or in
additional stock units, at the election of the director.
Under the United Technologies Corporation Nonemployee Director Stock Option
Plan each nonemployee director also receives an annual grant of 2,000 stock
options. The options, which are awarded each year on the date of the annual
meeting, have a ten year term and become exercisable three years from the date
of grant. The exercise price is equal to the closing market price of Common
Stock on the date of grant.
Upon becoming a director, each nonemployee director receives a one-time
grant of 2,000 shares of restricted Common Stock. Regular quarterly dividends
are paid on each such share of Common Stock. These shares vest ratably over
five years, but may not be sold or otherwise transferred until the director
retires or resigns from the Board. Should a director leave the Board before
all restricted shares vest, the non-vested shares will be forfeited, except
that, in the event of the death or disability of a director, a change in
control, or if a director retires or resigns to accept full time employment in
public or charitable service, all shares not previously vested will vest
immediately.
In lieu of Common Stock, any non-U.S. director is eligible to receive a one-
time grant of 2,000 restricted share units, each unit being equal in value to
one share of Common Stock. Vesting provisions for such units are the same as
for restricted stock. At retirement, a cash payment equal to the then-current
value of a share of Common Stock will be paid to such director for each vested
unit. A quarterly payment equal to the dividend paid on a share of Common
Stock is paid on each stock unit.
As part of its overall program of support for charitable institutions and to
attract and retain qualified directors, the Corporation maintains the
Directors' Charitable Gift Program. This program is funded by life insurance
on the lives of the members of the Board of Directors. Under this program, the
Corporation intends to make charitable contributions of up to a total of $1
million following the death of a director, allocated among up to four
charitable organizations recommended by the director. At this date all current
directors are participants in this program. Beneficiary organizations
recommended by directors must be tax-exempt under Section 501(c)(3) of the
Internal Revenue Code. Donations ultimately paid by the Corporation are
expected to be deductible from taxable income for purposes of federal and
other income taxes payable by the Corporation. Directors derive no financial
benefit from the program since all insurance proceeds and charitable
deductions accrue solely to the Corporation.
10
<PAGE>
ITEM NO. 2
AMENDMENT TO THE CORPORATION'S RESTATED
CERTIFICATE OF INCORPORATION
The Corporation's Board of Directors (the "Board") believes it is advisable
to amend the Corporation's Restated Certificate of Incorporation (the
"Certificate") to increase the authorized shares of Common Stock from
500,000,000 to 1,000,000,000 shares and the total authorized shares from
750,000,000 to 1,250,000,000 and to reduce the par value of the Common Stock
from $5 per share to $1 per share. Accordingly, at its meeting held February
3, 1997, the Board adopted a resolution proposing that an amendment (the
"Amendment") to the first paragraph of Article Fourth of the Certificate be
presented to the shareowners at the Annual Meeting for approval. The Amendment
would change only the number of authorized shares of Common Stock, the total
authorized shares and the par value of the Common Stock.
If approved by the shareowners, the first paragraph of Article Fourth would
read in its entirety as follows:
"FOURTH: The total number of shares of stock of all classes which the
Corporation shall have authority to issue is 1,250,000,000 shares, of
which 250,000,000 shares shall be Preferred Stock of the par value of $1
each (hereinafter called "Preferred Stock') and 1,000,000,000 shares
shall be Common Stock of the par value of $1 each (hereinafter called
"Common Stock')."
Of the 500,000,000 shares of Common Stock presently authorized, as of
December 31, 1996, 237,974,613 shares of Common Stock were outstanding,
18,266,978 shares were reserved for issuance pursuant to stock option and
incentive plans, and 26,519,500 shares were reserved for issuance upon
conversion of outstanding and reserved shares of Series A ESOP Convertible
Preferred Stock ("ESOP Preferred Stock"). The additional shares of Common
Stock proposed by the Amendment would be part of the existing class of Common
Stock and, if and when issued, would have the same rights and privileges as
the shares of Common Stock presently outstanding.
On September 29, 1996, the Corporation declared a two-for-one stock split
which was paid on December 10, 1996 in the form of a stock dividend. The
proposed increase in the number of authorized shares of Common Stock would in
part replenish the shares issued in connection with the stock split and would
give the Board the necessary flexibility to issue Common Stock in the future
in connection with the raising of capital, the acquisition of new businesses,
employee stock benefit plans, future stock splits or dividends, and other
corporate purposes as deemed necessary or appropriate by the Board of
Directors.
Adoption of the Amendment will eliminate the delay and expense involved in
calling a special meeting of shareowners to authorize the additional shares.
If the Amendment is approved, no further action or authorization by the
Corporation's shareowners would be necessary prior to issuance of the
additional shares, except as may be required for a particular transaction by
the Corporation's Restated Certificate of Incorporation, by applicable law or
regulatory agencies or by the rules of any stock exchange on which the
Corporation's Common Stock may then be listed.
The New York Stock Exchange, on which the Corporation's Common Stock is
listed, currently requires shareowner approval as a prerequisite to listing
shares in several instances, including acquisition transactions, where the
present or potential issuance of shares could result in an increase of at
least 20% in the number of shares of Common Stock outstanding. The Corporation
currently has no plans or arrangements for the issuance of shares of Common
Stock other than the issuance of shares of Common Stock pursuant to employee
stock option and other stock related benefit plans. Shareowners of the
Corporation do not have and will not have any preemptive rights with respect
to issuance of shares of Common Stock of the Corporation.
Although a proposal to increase the authorized common stock of a company may
be construed as having an anti-takeover effect, since authorized and unissued
shares of common stock could be issued for the purpose of discouraging an
attempt by another person or entity to take control of the company, neither
the management of
11
<PAGE>
the Corporation nor the Board of Directors views this proposal in that light.
The proposal has not been prompted by any effort by anyone to gain control of
the Corporation, and the Corporation is not aware of any such effort.
Approval of the Amendment would mean that each outstanding share of Common
Stock, which currently has a par value of $5 per share, would thereafter have
a par value of $1 per share. Under the corporate law of Delaware, the
Corporation's jurisdiction of incorporation, the assignment of par value to
capital stock is within the discretion of the Corporation, and the law permits
the issuance of capital stock without any par value. Under Delaware law, the
Corporation must allocate to capital the par value of the capital stock it
issues, including additional shares issued in the form of a dividend.
The Amendment would permit the Corporation to reduce the amount required to
be allocated to capital when it issues Common Stock and to transfer from
capital to surplus the difference between the $5 and the $1 par values with
respect to each outstanding share. Under Delaware law, a corporation is
permitted to pay dividends and to repurchase shares of capital stock out of
surplus but not out of capital. The reduction in par value would not otherwise
change any of the rights of holders of Common Stock.
The consolidated financial statements and related financial information set
forth on pages 28 to 43 of the Corporation's Annual Report to its shareowners
for the fiscal year ended December 31, 1996 are incorporated herein by
reference.
The affirmative vote of the majority of the outstanding shares of the voting
stock of the Corporation entitled to be cast at the meeting, without
determination as to class, is required to adopt the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION.
ITEM NO. 3
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Review Committee has nominated the firm of Price Waterhouse LLP to
be Independent Public Accountants of the Corporation, to act as General
Auditor until the 1998 Annual Meeting. During 1996, Price Waterhouse LLP
provided the Corporation with audit and related services, as well as certain
non-auditing services. Fees for audit and audit-related services totaled
approximately $9 million and fees for non-auditing services totaled
approximately $4.8 million. Services rendered by Price Waterhouse LLP are
approved by the Audit Review Committee and reviewed for any possible effect on
independence; whenever possible, this approval is obtained prior to the
rendering of the service and in other cases as soon thereafter as practicable.
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting and will have the opportunity to make such statements as they
desire. They will also be available to respond to appropriate questions from
shareowners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PRICE WATERHOUSE
LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION.
12
<PAGE>
ITEM NO. 4
SHAREOWNER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building, Suite 215, 2600 Virginia
Avenue, NW, Washington, DC 20037, owner of 100 shares of Common Stock, has
given notice that she intends to introduce a proposal for adoption at the
Annual Meeting which recommends that future proxy statements list the names,
titles and compensation amounts for each executive with a base salary of more
than $100,000.
TEXT OF SHAREOWNER PROPOSAL
"RESOLVED: That the shareholders recommend that the Board take the necessary
steps that United Technologies specifically identify by name and corporate
title in all future proxy statements those executive officers, not otherwise
so identified, who are contractually entitled to receive in excess of $100,000
annually as a base salary, together with whatever other additional
compensation bonuses and other cash payments were due them."
SUPPORTING STATEMENT OF SHAREOWNER
"REASONS: In support of such proposed Resolution it is clear that the
shareholders have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources utilized.
At present only a few of the most senior executive officers are so identified,
and not the many other senior executive officers who should contribute to the
ultimate success of the Corporation. Through such additional identification
the shareholders will then be provided an opportunity to better evaluate the
soundness and efficacy of the overall management.
Last year, the owners of 20,873,614 shares, representing approximately 18.9%
of shares voting, voted FOR this proposal. If you AGREE, please mark your
proxy FOR this proposal."
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board does not agree with Mrs. Davis that publishing the name, title,
salary and compensation data for every officer with an annual salary of
$100,000 or more would be of material assistance to shareowners in making
informed voting and investment decisions. Further, the Board believes that
your Corporation would be put at a competitive disadvantage were it to make
more extensive disclosures on its compensation structure than is mandated for
other public corporations. Accordingly, the suggested report would needlessly
infringe upon individual privacy rights, expose the Corporation to competitive
damage, and do little or nothing to provide useful investment information to
shareowners.
13
<PAGE>
The Securities and Exchange Commission has adopted rules governing proxy
disclosure of executive compensation by public companies. Shareowners receive
significant amounts of compensation information concerning the Chief Executive
Officer and the next four most highly compensated executive officers of this
and other publicly traded companies. This information is furnished to
shareowners in easy to read charts rather than by narrative description. This
simplified format allows shareowners to better understand the compensation
paid to those senior executives most responsible for the Corporation's
performance and to compare this information to that provided by others.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE AGAINST THIS
PROPOSAL.
SUBMISSION OF SHAREOWNER PROPOSALS
Proposals of shareowners intended to be presented at the 1998 annual meeting
must be received by the Corporation no later than November 22, 1997. Proposals
should be addressed to William H. Trachsel, Secretary, United Technologies
Corporation, 1 Financial Plaza, Hartford, Connecticut 06101. Such proposals
may be included in next year's proxy statement if they comply with certain
rules and regulations established by the Securities and Exchange Commission.
The Board of Directors carefully considers all proposals and suggestions
from shareowners. When adoption is clearly in the best interest of the
Corporation and the shareowners, and can be accomplished without shareowner
approval, the proposal is implemented without inclusion in the proxy material.
However, the Board of Directors does not necessarily agree with all shareowner
proposals submitted and must oppose those with which it disagrees to fulfill
the Board's obligations to represent and safeguard the best interests of
shareowners as a whole.
14
<PAGE>
REPORT OF THE COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT
The following report is provided by the Board of Directors' Committee on
Compensation and Executive Development (the "Committee"). The Committee
supervises the Corporation's Executive Compensation Program (the "Program")
and is responsible for all compensation actions affecting the Corporation's
most senior executives.
COMPENSATION PHILOSOPHY AND OBJECTIVES
Objectives
The Program is designed and administered to achieve two principal
objectives. First, the Program is intended to be competitive for the purpose
of assuring that the Corporation is able to attract, motivate and retain
talented executives. Second, the Program is intended to create an alignment of
interests between the Corporation's executives and shareowners so that a
significant portion of each executive's compensation varies with individual
and corporate performance. Consistent with this objective, the Program places
a significant emphasis on the long term and at-risk components of
compensation. The Committee encourages and regularly reviews stock ownership
by the Corporation's most senior executives.
Compensation Peer Group
The Committee utilizes information about other companies' compensation
practices, including data provided by outside consultants. These companies are
not necessarily the same companies that are most appropriate for comparing
shareowner returns in the corporate performance graph. Accordingly, the
competitive information considered by the Committee includes fifteen of the
companies included in the Dow Jones 30 Industrial Index as shown on the
corporate performance graph, as well as twenty-one other companies (the
"Compensation Peer Group"). Compensation Peer Group companies have
characteristics similar to the Corporation such as diversified product lines,
global operations and sales volumes. Such companies often compete with the
Corporation for executive talent. The Corporation targets the value of the
Program for its most senior executives, including the named executive
officers, to be at or above the 50th percentile of the Compensation Peer
Group.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally prevents the
Corporation from claiming a tax deduction for compensation in excess of $1
million paid to the Chief Executive Officer (the "CEO") and to the four other
most highly-paid executive officers of the Corporation. This deduction
limitation however, does not apply to performance-based compensation that
satisfies certain requirements of the Internal Revenue Code. The Committee has
determined that it is in the best interests of the Corporation and its
shareowners to structure the compensation of executive officers, to the extent
practicable, so that compensation will not be subject to the deduction limit.
However, the Committee has in the past and may in the future structure
compensatory arrangements that under certain circumstances may be subject to
the deduction limit.
Base Salary
Executive base salaries are designed to be competitive with salaries paid
for similar positions at Compensation Peer Group companies. Individual
executive performance is evaluated annually against a number
15
<PAGE>
of job specific requirements. These performance evaluations serve as the key
element in determining the amount and timing of any base salary increase.
Compensation Peer Group competitive information is also considered.
Annual Incentive Compensation
The Annual Incentive Compensation Plan is designed to reward performance
relating to annual goals of the Corporation and the business units. Objectives
are established for the corporate headquarters and each business unit. For
1996, the corporate objectives were net income and cash flow, weighted 70% and
30%, respectively. The business units' objectives were earnings before
interest and taxes and cash flow, weighted 70% and 30%, respectively. The
Committee determines the amount available for annual incentive cash awards at
the corporate headquarters, based on achievement of the objectives described
above and an overall judgment of corporate performance. The CEO determines the
amount available for annual incentive cash awards at each business unit.
Individual awards are determined on the basis of performance measured against
objectives and a subjective assessment of the individual's overall
contribution to business unit or corporate results.
Pursuant to a shareowner approved amendment to the Annual Incentive
Compensation Plan intended to qualify awards as performance based and tax
deductible under Section 162(m), the CEO and the four other named executive
officers' annual incentive compensation is now paid solely from a pool equal
to no more than 0.75% of the Corporation's adjusted net income (the
"Performance Pool"). The CEO is eligible to receive up to 30% and the other
four participants are each eligible to receive up to 17.5% of the Performance
Pool. The Committee retains the right to reduce the actual award to an amount
less than a participant's allocated portion of the pool, based on objective
and subjective factors as the Committee deems appropriate.
Long Term Incentive Compensation
The Corporation's Long Term Incentive Plan is designed to provide the
opportunity for competitive financial awards to key employees whose efforts
and achievements contribute to the long term success of the Corporation. Under
the 1996 Continuous Improvement Incentive Program (the "CIIP"), as approved by
the Committee, two award vehicles are available: stock options and dividend
equivalents. These equity-based awards are consistent with the objective of
aligning directly the interests of executives with those of the Corporation's
shareowners.
Stock option awards emphasize long term increase in shareowner value.
Executives vest in stock options three years from the date of grant. The
options will remain exercisable for a period of seven years once vested. The
exercise price of the options is the closing price of the Corporation's stock
on the date of grant.
Dividend Equivalents ("DEs") reinforce the importance of meeting key long
term financial objectives. A DE is the right to receive payments equal to the
quarterly dividend paid to the Corporation's shareowners. Under the CIIP,
executives are awarded one DE for each stock option granted. DEs become vested
and payable solely on the basis of achievement of previously established
corporate and/or business unit financial targets measured over a three-year
period, as determined by the Committee. For 1996, the corporate headquarters'
targets are earnings per share and return on equity, weighted equally. Each
business unit has a financial target of either return on net operating assets
or return on sales. No vesting of DEs occurs if aggregate achievement of
performance targets is less than 90%. Payment of vested DEs awarded in 1996
will begin in March of 1999, and will continue for two to seven years,
depending upon an executive's level. DE payments end when the DE term expires
or the associated stock option is exercised, if sooner.
Individual CIIP grants are based on subjective evaluations of demonstrated
performance, potential and ability to contribute to the achievement of CIIP
targets. The Committee also considers information on long term grants at
Compensation Peer Group companies.
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<PAGE>
Chief Executive Officer Compensation
Compensation decisions affecting the CEO were based on quantitative and
qualitative factors relative to the Corporation's 1996 financial and operating
results as well as strategic achievements. The Committee does not employ a
specific formula in its compensation decisions.
During 1996, under Mr. David's leadership and direction, the Corporation
achieved record sales and profits and demonstrated excellent overall financial
performance. Earnings per share increased 21%, from $2.85 to $3.45 (adjusted
to reflect the 2 for 1 stock split in 1996), net income increased 21% from
$750 million to $906 million, and return on equity was 21.1%, up from 18.6% in
1995. Available cash flow was $1.2 billion and net debt to capital declined to
13% from 22% at year end 1995. During 1996 the Corporation also continued its
practice of making strategic, accretive acquisitions in the Corporation's core
businesses.
Total shareowner return for 1996, including share price appreciation and
dividends from December 30, 1995 to December 31, 1996 was 42%, as compared to
23% for the S&P 500 and 29% for the Dow Jones 30 Industrials.
In 1996, under Mr. David's leadership, the Corporation and its employees
continued to make positive contributions to the communities where it does
business. The Committee took note of the Corporation's Employee Scholar
Program, a unique program that provided work time flexibility and financial
support for employees who return to school. Employees who attain a college or
post-graduate degree are awarded shares of the Corporation's common stock. The
program implements the Corporation's commitments to education and to the
training and competitiveness of its employees.
Base Salary
The Committee has increased Mr. David's salary twice, on thirteen-month
intervals, since his election as CEO in 1994. The Committee considered his
first two years of accomplishments as well as the average increases provided
to the Corporation's other executives and CEOs of the Compensation Peer Group.
The most recent increase positions his salary at approximately the 50th
percentile of salaries paid to CEOs of Compensation Peer Group companies.
Annual Incentive Compensation
Mr. David's 1996 incentive compensation award was $1,350,000. This amount is
based on the Committee's consideration of competitive data for Compensation
Peer Group CEOs and a favorable assessment of the Corporation's performance
for 1996, as described above. This award places Mr. David's total cash
compensation at approximately the 50th percentile of the Compensation Peer
Group CEOs.
Long Term Incentive Compensation
Mr. David's 1996 long term CIIP award was determined using the same
guidelines used for the Corporation's executive population, as described
above. Mr. David was granted 150,000 stock options and associated DEs. During
1996, 500,000 stock options previously awarded to Mr. David became exercisable
after the Corporation's stock price reached the target price of $57 per share.
These stock options were awarded in 1995 when the stock price was $39.125 per
share.
COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT
Robert F. Dee, Chairman Frank P. Popoff
Charles W. Duncan, Jr. Harold A. Wagner
Jean-Pierre Garnier Jacqueline G. Wexler
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1996, Senator Howard H. Baker, Jr. served as a member of the Committee on
Compensation and Executive Development of the Board of Directors until the
1996 Annual Meeting. As noted previously, Senator Baker is a partner in the
law firm of Baker, Donelson, Bearman & Caldwell, which firm is retained from
time to time to provide legal services to the Corporation. The fees paid
during 1996 were not material to total revenues for either the law firm or the
Corporation.
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth for the Corporation's
Chief Executive Officer and the other four most highly compensated executive
officers of the Corporation and its subsidiaries in 1996 (the "named executive
officers") the compensation earned by such persons for services rendered in
all capacities to the Corporation during the three fiscal years ended December
31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ----------------------- -----------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LONG TERM ALL OTHER
COMPENSATION STOCK AWARDS OPTIONS INCENTIVE COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS (1)($) (2) ($) (3)($) /SARS(#) PAYOUTS ($) TION (4) ($)
- --------------------------- ---- ---------- ------------ ------------ ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. F. Daniell,........... 1996 $ 850,000 $ 900,000 $125,205 $ 0 100,000 $ 0 $ 106,111
Chairman 1995 850,000 600,000 109,782 0 100,000 35,637 101,534
1994 922,916 500,000 190,052 0 100,000 863,807 96,713
G. David,................ 1996 $1,025,000 $1,350,000 $ 90,758 $ 0 150,000 $ 0 $ 33,485
President and Chief 1995 976,667 900,000 89,365 0 650,000 44,499 31,499
Executive Officer 1994 906,250 700,000 129,310 0 630,000 1,319,119 27,484
K. Krapek,............... 1996 $ 656,250 $ 600,000 $ 59,223 $ 0 60,000 $ 0 $ 18,860
President 1995 620,000 500,000 111,389 0 260,000 24,600 16,733
Pratt & Whitney 1994 587,500 400,000 68,225 0 160,000 308,801 18,170
S. Page,................. 1996 $ 520,833 $ 425,000 $ 65,698 $ 0 40,000 $ 0 $ 44,224
Executive Vice President 1995 497,917 400,000 62,391 0 240,000 13,087 40,050
and Chief Financial
Officer 1994 468,750 315,000 59,855 0 30,000 12,130 44,614
J. P. van Rooy,.......... 1996 $ 432,083 $ 280,000 $ 54,493 $ 0 34,000 $ 0 $ 37,177
President, Otis 1995 400,000 300,000 55,670 0 234,000 9,840 31,930
1994 370,000 300,000 66,271 0 30,000 182,909 36,405
</TABLE>
- -------
(1) Incentive compensation shown in the Bonus column for the named executive
officers was paid from the Covered Employee Performance Pool of the Annual
Executive Incentive Compensation Plan.
(2) The amounts shown in this column for 1996 include: $35,614 for personal
use of corporate aircraft for security reasons by Mr. David and a perquisite
allowance for Messrs. Daniell, David, Krapek, Page and van Rooy of $52,019,
$38,878, $48,195, $60,000 and $36,208, respectively.
(3) At the close of business on December 31, 1996, one named executive
officer held non-vested time based restricted shares as follows: Mr. Page-
5,000 shares valued at $331,250. These shares vested on January 15, 1997. The
foregoing value was calculated by multiplying the closing market price of the
Common Stock on December 31, 1996 by the number of restricted shares held.
Regular quarterly dividends are paid on all shares of restricted stock.
18
<PAGE>
(4) For 1996, consists of employer matching contributions in the Employee
Savings Plan of $3,000 for Mr. Page and $4,500 for the other four named
executive officers, above market interest rate paid in the Credited Interest
Account in the UTC Deferred Compensation Account of $599, $654, and $147 for
Messrs. Krapek, Page and van Rooy, respectively and life insurance premium
payments of $101,611, $28,985, $13,561, $40,570, and $32,530, respectively for
Messrs. Daniell, David, Krapek, Page and van Rooy.
The following table sets forth information concerning individual grants of
stock options and stock appreciation rights made during the 1996 fiscal year
to each named executive officer.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
--------------------------------------------------------------
% OF TOTAL
NUMBER OF SHARES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES IN FISCAL EXERCISE PRICE EXPIRATION PRESENT VALUE ($)
NAME GRANTED (#)(2) YEAR ($/SH) DATE (3)
- ---- ---------------- ------------------- -------------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
R. Daniell.............. 100,000 2.3% $54.625 02/22/2006 $1,502,188
G. David................ 150,000 3.4% $54.625 02/22/2006 $2,253,281
K. Krapek............... 60,000 1.4% $54.625 02/22/2006 $ 901,313
S. Page................. 40,000 0.9% $54.625 02/22/2006 $ 600,875
J.P. van Rooy........... 34,000 0.8% $54.625 02/22/2006 $ 510,744
</TABLE>
- -------
(1) Under certain circumstances, including a change of control, the Board of
Directors, under the terms of the Corporation's Long Term Incentive Plan, may
accelerate the vesting of option grants, purchase an outstanding grant for the
cash value thereof or provide for other adjustments or modifications to the
outstanding grants. All stock options were granted with an exercise price
equal to the market price of the Common Stock on the date of grant.
(2) These stock options were granted on February 24, 1996 and will become
exercisable on February 24, 1999. The grants include an equal number of
Dividend Equivalents ("DEs"), which will be paid if, and to the extent the
executive vests in the DEs at the end of the three-year performance
measurement period as a result of achieving performance objectives. DEs
entitle the holder to receive a payment equal to the quarterly dividend amount
paid on Common Stock for a stated period of time.
(3) The values listed in this column are based on the Black-Scholes pricing
model. The estimated values are based on a number of variables and include the
following assumptions used in determining the grant: interest rate of 6.8%,
stock price volatility of 0.1809, and a dividend yield of 3.11%. The estimated
values are not intended as a forecast of the future appreciation in the price
of the Corporation's stock. If the Corporation's stock does not increase in
value above the exercise price of the stock options, then the grants described
in the table will have no value. There is no assurance that the value realized
by an executive will be at or near the value estimated by the Black-Scholes
model or any other model applied to value the stock options.
19
<PAGE>
The following table sets forth information concerning the exercise of stock
options during the 1996 fiscal year by each of the named executive officers
and the fiscal year end value of unexercised options. No SARs were exercised
by the named executive officers in 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SHARES IN-THE-MONEY
UNDERLYING OPTIONS/SARS AT
UNEXERCISED OPTIONS/SARS FISCAL YEAR END
AT FISCAL YEAR END (#) ($)(1)
------------------------- -------------------------
SHARES ACQUIRED VALUE REALIZED
NAME ON EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Daniell.............. 0 $ 0 320,592 300,000 $13,175,349 $ 7,706,250
G. David................ 106,000 $4,221,875 1,139,060 930,000 $40,972,276 $27,914,375
K. Krapek............... 37,300 $1,659,313 504,000 280,000 $18,596,250 $ 8,101,250
S. Page................. 0 $ 0 274,000 110,000 $ 8,606,125 $ 2,760,000
J.P. van Rooy........... 11,000 $ 387,750 302,710 98,000 $ 9,852,729 $ 2,491,125
</TABLE>
- -------
(1) The value reported is based either on the closing price of the Common
Stock on the date of exercise or on December 31, 1996, as applicable, and is
calculated by subtracting the exercise price per share of the option from the
applicable closing price.
20
<PAGE>
PERFORMANCE GRAPH
The following graph presents the cumulative total shareowner return for the
five years ending December 31, 1996 on the Corporation's Common Stock, as
compared to the Standard & Poor's 500 Stock Index and to the companies that
comprise the Dow Jones 30 Industrial Average. The Corporation is a component
of both indices. These figures assume that all dividends paid over the five-
year period were reinvested, and that the starting value of each index and the
investment in the Corporation's Common Stock was $100 on December 31, 1991.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
United Technologies $100.00 $92.10 $122.71 $128.19 $198.51 $282.53
S&P 500 Index $100.00 $107.61 $118.41 $120.01 $164.95 $202.72
Dow Jones 30 Industrials $100.00 $107.41 $125.60 $131.96 $180.56 $232.65
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In 1981, the Board of Directors adopted the Senior Executive Severance Plan
(the "Severance Plan"). The Committee on Compensation and Executive
Development has the authority to select the participants under the Severance
Plan. Effective December 31, 1996, there were 33 key executives, including the
five named executive officers, covered under the Severance Plan. The Severance
Plan provides that in the event of termination of the participant's employment
with the Corporation for any reason (other than death, disability or
retirement at or after the normal retirement date) within two years after any
change of control of the Corporation, as defined in the Severance Plan, the
participant will receive: (i) a cash payment equal to three times the
participant's highest annual compensation (including base salary and incentive
compensation) during the preceding three years; (ii) accelerated vesting of
all awards outstanding under the Corporation's Long Term Incentive Plan; (iii)
special supplemental retirement benefits determined as if the participant had
three years additional credited service under the Corporation's pension plans
as of the date of termination; and (iv) continuation of other fringe benefits
or equivalent benefits for a period of three years. The Severance Plan
provides for a supplemental cash payment to Severance Plan participants to the
extent necessary to preserve the level of benefits provided in the Plan in the
event of the imposition on any such participant of excise taxes payable in
respect of "excess parachute payments" under the Internal Revenue Code.
21
<PAGE>
In addition to the Severance Plan, 30 key executives, including the five
named executive officers, are eligible to receive separation benefits at the
time of their termination from employment with the Corporation, subject to
certain limited exceptions. The value of such separation benefits under this
program is 2.5 times base salary at the date of separation. Benefits are
subject to offset against any amounts paid pursuant to the Severance Plan (as
described above).
PENSION PLAN
<TABLE>
<CAPTION>
PENSION PLAN TABLE
-------------------------------------------------------------
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 500,000 $146,600 $195,500 $ 219,400 $ 243,300 $ 267,500 $ 292,500
750,000 221,600 295,500 331,900 368,300 405,000 442,500
1,000,000 296,600 395,500 444,400 493,300 542,500 592,500
1,250,000 371,600 495,500 556,900 618,300 680,000 742,500
1,500,000 445,600 595,500 669,400 743,300 817,500 892,500
1,750,000 521,600 695,500 781,900 868,300 955,000 1,042,500
2,000,000 596,600 795,500 894,400 993,300 1,092,500 1,192,500
2,250,000 671,600 895,500 1,006,900 1,118,300 1,230,000 1,342,500
2,500,000 746,600 995,500 1,119,400 1,243,300 1,367,500 1,492,500
</TABLE>
Compensation covered by the pension plans of the Corporation and its
subsidiaries consists of total cash remuneration in the form of salaries and
wages, including awards paid under the Annual Executive Incentive Compensation
Plan (shown in the Bonus column of the Summary Compensation Table), but
excluding awards paid under the United Technologies Corporation Long Term
Incentive Plan (shown in the Long Term Incentive Compensation columns of the
Summary Compensation Table). Benefits are computed as a single life annuity
payable at age 65. The benefit amount equals a percentage of final average
earnings during the highest five consecutive years out of the last ten years
worked, less a portion of the participant's social security benefit. As a
result of Internal Revenue Code limitations, a substantial portion of senior
executives' pension benefits are excluded from the Corporation's tax qualified
retirement plan and trust and instead are provided through a supplemental plan
that restores the excluded portion of the benefits. Pension benefits paid from
the supplemental plan are paid in the same form of annuity applicable under
the qualified plan or, subject to certain conditions, in a lump sum or annual
installments. Benefits under the supplemental plan are generally not funded in
advance except in the event of a Change of Control.
As of December 31, 1996, the executive officers named in the Summary
Compensation Table had the following full years of credited service for
determining benefits: R. Daniell, 40 years; G. David, 21 years; K. Krapek, 14
years; S. Page, three years; and J.P. van Rooy, 33 years.
OTHER BUSINESS
The Board of Directors knows of no other matters to be voted upon at the
meeting. However, the persons named as proxies in the enclosed proxy card
will, at their discretion, vote the shares they represent upon any other
business that may properly come before the meeting.
22
<PAGE>
PROXIES AND VOTING
TABULATION AND SECRECY OF VOTES
Pursuant to the Bylaws of the Corporation, the Board of Directors has
appointed representatives of First Chicago Trust Company of New York to serve
as Inspectors of Election to supervise the voting at the Annual Meeting. The
Inspectors will decide all questions respecting the qualification of voters,
the validity of the proxies and the acceptance or rejection of votes. None of
the Inspectors is an officer, employee or shareowner of the Corporation. In
addition, the Corporation has engaged the services of First Chicago Trust
Company of New York to receive, inspect, tabulate and maintain custody of
proxies returned to First Chicago Trust Company of New York. The Inspectors
and all other persons, including employees of First Chicago Trust Company of
New York and the Corporation, whose duties require the handling of proxies and
tabulation of votes, have been instructed that the vote of any shareowner will
be kept secret and shall not be disclosed except as may be required for legal
purposes.
SOLICITATION
Solicitation of proxies is being made on behalf of the Board of Directors
through the mail, in person and by telephone. The cost of soliciting proxies
will be borne by the Corporation. In addition, arrangements have been made
with banks and brokerage houses and other custodians to send proxies and proxy
soliciting material to the persons for whom they hold shares, and the
Corporation will reimburse them for their expenses in so doing. The
Corporation has also retained Georgeson & Company Inc., to aid in the
solicitation of proxies at a fee estimated at $15,000, plus out-of-pocket
expenses.
REVOCATION
A shareowner executing and returning a proxy has the power to revoke it at
any time before it is voted by giving written notice of such revocation to the
Secretary of the Corporation, by submission of another proxy bearing a later
date, or by attending the meeting and requesting to vote in person.
SIGNATURES IN CERTAIN CASES
If a shareowner is a corporation, the enclosed proxy card should be signed
in its corporate name by an authorized officer and his/her title should be
indicated. If stock is registered in the names of two or more trustees or
other persons, the proxy card may be signed by one of them. If stock is
registered in the name of a decedent, the proxy card should be signed by an
executor or administrator, whose title as such should follow the signature.
QUORUM AND VOTE REQUIRED FOR APPROVAL
The presence, in person or by proxy, of the owners of shares of ESOP
Preferred Stock and Common Stock representing a majority of votes entitled to
be cast by such owners will constitute a quorum for the transaction of
business at the Annual Meeting. All duly executed proxies received by the
Corporation will be counted for purposes of establishing a quorum, including
proxies as to which an abstention or a broker non-vote is indicated with
respect to a particular matter.
Directors will be elected by a plurality of votes cast. The affirmative vote
of the holders of a majority of the outstanding shares of the voting stock of
the Corporation is required for the approval of the amendment to the
Corporation's Restated Certificate of Incorporation. The affirmative vote, in
person or by proxy, of the owners of a majority of the shares constituting the
quorum is required for the appointment of Price Waterhouse LLP as Independent
Public Accountants, and for the approval of the shareowner proposal. If a
shareowner abstains on any matter, the shareowner's shares will not be voted,
which will have the same legal effect as a vote "against"
23
<PAGE>
the matter. Shares that are the subject of a broker non-vote on a particular
matter also will have the same legal effect as a vote "against" the matter.
ACTION TO BE TAKEN UNDER THE PROXY
In accordance with the recommendations of the Board of Directors, all
proxies will be voted, if no contrary instruction is indicated on the proxy
card, for the election as directors of the persons nominated by the Board of
Directors, for the amendment to the Corporation's Restated Certificate of
Incorporation, for the appointment of Price Waterhouse LLP as Independent
Public Accountants, and against the shareowner proposal.
If any other business should properly come before the meeting, or any
adjournment thereof, the persons named in the proxy will vote on such matters
according to their best judgment.
SAVINGS PLANS
A proxy card has been sent to each employee who participates in a Savings
Plan of the Corporation with an investment in the UTC Stock Fund or in the
Employee Stock Ownership Plan (the "ESOP"). Shares held in the UTC Stock Fund
will be voted by the Trustee in accordance with the employee's directions. If
an employee does not mark instructions on the card or if the employee does not
return the instruction card, the Trustee will vote such shares in accordance
with the instructions it receives with respect to a plurality of the shares
for which instructions are received by the Trustee. All employer stock in the
ESOP Fund that has been allocated to the employees' accounts for which the
Trustee receives voting instructions will be voted in accordance with those
instructions. All employer stock that has been allocated to the employees'
accounts but for which the Trustee has not received voting instructions, and
all unallocated shares in the ESOP account, will be voted by the Trustee in
accordance with the instructions it receives with respect to a plurality of
the shares that are allocated to the employees' ESOP accounts.
ANNUAL REPORT
The Corporation's Annual Report, including financial statements for the year
1996, was mailed to shareowners on or about February 18, 1997.
William H. Trachsel
Vice President and Secretary
Hartford, Connecticut
March 27, 1997
24
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
Proxy Solicited on Behalf of the Board of Directors of
P the Corporation for Annual Meeting, April 29, 1997
R The undersigned hereby appoints Charles W. Duncan, Jr., Robert H. Malott and
Jacqueline G. Wexler, and each of them with power of substitution to each,
O proxies for the undersigned to act and vote at the Annual Meeting of the
Shareowners of United Technologies Corporation to be held April 29, 1997, at
X 11:00 a.m., and at any adjournment thereof, as directed on this card, upon
the matters set forth on the reverse side hereof, all as described in the
Y Proxy Statement, and, in their discretion, upon any other business which may
properly come before said meeting.
This card also constitutes voting instructions to the Trustee under the
United Technologies Corporation Employee Savings Plan to vote, in person or
by proxy, (i) the proportionate interest or the undersigned in the shares of
Common Stock of United Technologies Corporation held by the Trustee under
such Plan, and (ii) the proportionate interest of the undersigned in the
shares of Series A ESOP Convertible Preferred Stock of United Technologies
Corporation held by the Trustee under such Plan, in each case as described in
the Proxy Statement.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your shares unless you sign and return this card.
-----------
SEE REVERSE
SIDE
-----------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
United Technologies Corporation
Annual Meeting of Shareowners
Tuesday, April 29, 1997
11:00 a.m.
The Ritz-Carlton Hotel
15 Arlington Street, Boston, Massachusetts
<PAGE>
Please Mark your
[X] votes as in the
example.
This Proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR all of the Board of
Directors nominees, FOR proposals 2 and 3, and AGAINST proposal 4, or if this
card constitutes voting instructions to a Savings Plan Trustee, such Trustee
will vote as described in the Proxy Statement.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of directors.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [_] [_] NOMINEES: Howard H. Baker, Jr., Antonia
Directors Handler Chayes, George David, Charles W.
Duncan, Jr., Jean-Pierre Garnier, Pehr G.
Gyllenhammer, Karl J. Krapek, Charles R.
Vote for nominees except: Lee, Robert H. Malott, William J. Perry,
Frank P. Popoff, Harold A. Wagner and
Jacqueline G. Wexler.
- -------------------------------------
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 2 and 3.
- --------------------------------------------------------------------------------
For Against Abstain
2. Amendment of the Corporation's [_] [_] [_]
Restated Certificate of
Incorporation
3. Appointment of Independent [_] [_] [_]
Public Accountants
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST proposal 4.
- --------------------------------------------------------------------------------
For Against Abstain
4. Shareowners Proposal [_] [_] [_]
Regarding Executive
Compensation.
- --------------------------------------------------------------------------------
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. The signer hereby revokes all proxies heretofore given by
the signer to vote at said meeting or any adjournments thereof.
------------------------------
------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
SHAREOWNERS SERVICES
Direct Deposit of Dividends
---------------------------
Shareholders receiving a dividend check may have payments deposited directly
into their checking or savings account at any financial institution
participating in the ACH network. Through an Electronic Funds Transfer, your
dividend can be deposited electronically on the dividend payment date. To
participate in Direct Deposit, contact First Chicago Trust Company of New York
at 1-800-870-2340.
Company Information
-------------------
Our 24-hour-a-day toll-free telephone service provides recorded summaries of
UTC's quarterly earnings information and other company news. Callers also may
request copies of our quarterly earnings and news releases, by either fax or
mail, and obtain copies of the UTC Annual Report and Annual Report on Form 10-K.
To access the service, dial 1-800-881-1914.
Additional information about UTC can be found at our Internet site:
http://www.utc.com
