<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. ......................]
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
United Technologies Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule O-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:
---------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------
3) Filing Party:
-------------------------------------------------------
4) Date Filed:
---------------------------------------------------------
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
Dear Fellow Shareowner:
You are cordially invited to attend our 1998 Annual Meeting of Shareowners
of United Technologies Corporation to be held April 30, 1998 at the FOUR
SEASONS HOTEL, ONE LOGAN SQUARE, PHILADELPHIA, PENNSYLVANIA. 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 30th.
George David
Chairman &
Chief Executive Officer
Hartford, Connecticut
March 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Annual Meeting................................................... 1
Proxy Statement............................................................ 2
General Information Concerning the Board of Directors...................... 3
Item No. 1--Election of Directors.......................................... 4
Item No. 2--Appointment of Independent Public Accountants.................. 10
Item No. 3--Shareowner Proposal............................................ 11
Item No. 4--Shareowner Proposal............................................ 11
Item No. 5--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............................................................. 23
Proxies and Voting......................................................... 23
Annual Report.............................................................. 24
</TABLE>
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
NOTICE OF ANNUAL MEETING
TO BE HELD ON APRIL 30, 1998
To the Owners of Common and Preferred Stock:
The Annual Meeting of Shareowners of United Technologies Corporation will be
held at the FOUR SEASONS HOTEL, ONE LOGAN SQUARE, PHILADELPHIA, PENNSYLVANIA,
at 11:00 a.m. on Thursday, April 30, 1998 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. Appointment of Independent Public Accountants.
3. Shareowner proposals described in the accompanying Proxy Statement.
Only owners of record of Common Stock and Series A ESOP Convertible
Preferred Stock of the Corporation at the close of business on March 12, 1998
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 Morgan, Lewis & Bockius
LLP, 2000 One Logan Square, Philadelphia, Pennsylvania 19103-6993.
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 30, 1998
<PAGE>
UNITED TECHNOLOGIES CORPORATION
PROXY STATEMENT
This Proxy Statement is first being mailed to shareowners on or about March
30, 1998 soliciting proxies on behalf of the Board of Directors of United
Technologies Corporation, for the Annual Meeting of Shareowners of the
Corporation to be held on Thursday, April 30, 1998 at the time and place and
for the purposes set forth in the Notice of Annual Meeting. The principal
executive offices of United Technologies Corporation are located at One
Financial Plaza, Hartford, CT 06101.
RECORD DATE AND OUTSTANDING SHARES
The record date for determining those shareowners entitled to vote at the
Annual Meeting was March 12, 1998. At that date, the Corporation had
outstanding 243,060,119 shares of voting stock consisting of 230,167,440
shares of Common Stock and 12,892,679 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 263,688,405.
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Corporation, based on filings on Schedule 13G with
the Securities and Exchange Commission, as of December 31, 1997, the following
entities beneficially owned more than five percent of the outstanding Common
Stock:
<TABLE>
<CAPTION>
SHARES
CLASS OF BENEFICIALLY
SECURITY NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT OF CLASS
- -------- ------------------------------------ ------------- ----------------
<S> <C> <C> <C>
The Equitable Companies Incorporated
1290 Avenue of the Americas
Common Stock New York, NY 10104 13,627,244/1/ 5.95%
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
Common Stock New York, NY 10036 12,097,976/2/ 5.28%
FMR Corporation
82 Devonshire Street
Common Stock Boston, MA 02109 11,544,054/3/ 5.04%
</TABLE>
All of the shares of ESOP Preferred are held by Bankers Trust Company, 130
Liberty Street, New York, NY 10006, as trustee on behalf of employees of the
Corporation who participate in the Corporation's Employee Savings Plan.
Bankers Trust Company disclaims beneficial ownership of all such shares.
- -------
(1) The Equitable Companies Incorporated ("Equitable"), a parent holding
company, has advised that Equitable, along with certain entities that control
Equitable, directly or indirectly, held sole voting power as to 7,932,064
shares, shared voting power as to 1,655,410 shares, sole dispositive power as
to 13,622,399 shares and shared dispositive power as to 4,845 shares.
(2) Morgan Stanley, Dean Witter, Discover & Co. has advised that it held
shared voting power as to 8,863,756 of the shares and shared dispositive power
as to all 12,097,976 of the shares.
(3) FMR Corp., a parent holding company, has advised that (i) it, along with
the principal stockholders of FMR, directly or indirectly had sole dispositive
power as to all 11,544,054 of the shares, sole voting power as to 779,982
shares and no voting power as to 10,764,072 of the shares, and (ii) with the
exception of 6,600 shares, the voting and disposition of such shares is
exercised through controlled entities that serve as advisors to various
investment companies and institutional accounts.
2
<PAGE>
CUMULATIVE VOTING
In the election of directors of the Corporation, each owner of Common Stock
is entitled to a number of votes equal to the number of shares of stock owned
multiplied by the number of directors to be elected. Each owner of ESOP
Preferred is entitled to a number of votes equal to 2.6 times the number of
shares of ESOP Preferred 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 1997 with an average attendance of 95%. 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:
Executive Committee--The Executive Committee may exercise all powers of the
Board of Directors in the management of the Corporation, except those powers
that by law or the Corporation's Bylaws are specifically reserved to the
entire Board (e.g., the power to 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 1997, are George David,
Chairman, Antonia Handler Chayes, Robert H. Malott, Jacqueline G. Wexler and
Howard H. Baker, Jr. (alternate).
Audit Review Committee--The Audit Review Committee recommends to the Board
an accounting firm to serve as Independent Public Accountants for the
Corporation, approves services rendered by the Independent Public Accountants
and meets with such firm 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 1997, are Howard H. Baker, Jr., Chairman, Antonia Handler Chayes,
Charles W. Duncan, Jr., 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 eight times
during 1997, are Harold A. Wagner, Chairman, Charles W. Duncan, Jr., Jean-
Pierre Garnier, Frank P. Popoff and Jacqueline G. Wexler.
3
<PAGE>
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 1997, are
Charles W. Duncan, Jr., Chairman, George David, Pehr G. Gyllenhammar, Charles
R. Lee, Robert H. Malott, William J. Perry and Andre Villeneuve.
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 four times during 1997, are Robert H. Malott, Chairman,
Howard H. Baker, Jr., Charles W. Duncan, Jr., Charles R. Lee and Pehr G.
Gyllenhammar (alternate).
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 four times during 1997, are
Jacqueline G. Wexler, Chairman, Howard H. Baker, Jr., Antonia Handler Chayes,
Jean-Pierre Garnier, Pehr G. Gyllenhammar, William J. Perry, Andre Villeneuve,
Harold A. Wagner and Charles W. Duncan, Jr. (alternate).
ITEM NO. 1
ELECTION OF DIRECTORS
Thirteen persons are being nominated for election as directors at the 1998
Annual Meeting. Each of the nominees was elected a director at the 1997 Annual
Meeting, with the exception of Mr. Villeneuve, who joined the Board in
October, 1997.
Howard H. Baker, Jr. will be retiring from the Board in April. Senator Baker
has made numerous important contributions to the Board and the Corporation is
fortunate to have had the benefit of his 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 nominate, unless
the Board reduces the number of directors to be elected.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Antonia Handler Chayes, Senior Advisor and Board Member of
Conflict Management Group (CMG), a non-profit firm providing
strategic advice on conflict management 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, the DOD-CIA Joint Security Commission, and 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. She is 68 and has been
a director of the Corporation since 1981.
4
<PAGE>
George David, Chairman, 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 1997. 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.
Mr. David was elected President and Chief Operating Officer
of the Corporation in February, 1992, Chief Executive
Officer in April, 1994 and Chairman in April, 1997. Mr.
David is President of the Board of Trustees of the Graduate
School of Business Administration at The University of
Virginia. He is 55 and has been a director of the
Corporation since 1992.
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, and Newfield Exploration Co. Mr. Duncan
is 71 and has been a director of the Corporation since 1981.
Jean-Pierre Garnier, Ph.D, is the Chief Operating Officer
and President 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. Dr. Garnier is
50 and has been a director of the Corporation since 1997.
Pehr G. Gyllenhammar, Deputy Chairman and Chairman
designate, Commercial Union plc (insurance) and 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
Actinova Limited and FMC Corporation, a member of the
Supervisory Board of PolyGram N.V. and a trustee of The
Reuters Founders Share Co. Limited. He is also Chairman of
the Board of Cofinec N.V. and Chairman of Swedish Ships'
Mortgage Bank. Mr. Gyllenhammar is 62 and has been a
director of the Corporation since 1981.
5
<PAGE>
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 Chairman, President and Chief Executive Officer of
Carrier Corporation from 1990 to 1992. Mr. Krapek has served
as President, Pratt & Whitney since 1992. He is chairman of
the Board of Directors of the Connecticut Capitol Region
Growth Council, Chairman of the MetroHartford Millennium
Management Group, Vice Chairman of the Board of Trustees of
the Connecticut State University System, a member of the
Director's Advisory Board of the Yale Cancer Center, and a
director of Saint Francis Care, Inc. Mr. Krapek is 49 and
has been a director of the Corporation since 1997.
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 of the Board of Trustees of Cornell University, 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 58 and
has been a director of the Corporation since 1994.
Robert H. Malott, Retired Chairman of the Board and Chief
Executive Officer, FMC Corporation, Chicago, Illinois
(manufacturer of machinery and chemicals). He is a director
of Manchester Tank Corporation. He also serves on the boards
of the National Museum of Natural History, PBS, the National
Park Foundation, the Lyric Opera of Chicago, the American
Enterprise Institute, the Hoover Institution, Argonne
National Laboratories and the International Executive
Service Corp., 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 71 and
has been a director of the Corporation since 1980.
William J. Perry is the Michael and Barbara Berberian
Professor of Engineering--Economic Systems and Operations
Research, Co-Director, Preventive Defense Project at
Stanford University. Dr. Perry served as U.S. Secretary of
Defense from 1994 to 1997, and as Deputy Secretary of
Defense from 1993 to 1994. He is a director of Hambrecht &
Quist LLC, The Boeing Company and Yurie Systems, Inc., a
telecommunications company. In 1992 and 1993, prior to
serving at the Department of Defense, Dr. Perry was a member
of the Corporation's Board of Directors. Dr. Perry is 70 and
rejoined the Board as a director in 1997.
6
<PAGE>
Frank P. Popoff, Chairman of The Dow Chemical Company,
Midland, Michigan. Mr. Popoff is also 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 director emeritus of the
Indiana University Foundation. Mr. Popoff is 62 and has been
a director of the Corporation since 1996.
Andre Villeneuve, Executive Director of Reuters Holdings
PLC, London, England (worldwide news, information and
services business). Mr. Villeneuve has headed Reuters' three
operating units globally since 1991, and has been a member
of Reuters' board since 1988. He is also Chairman of
Instinet Corp., Reuters' electronic brokerage subsidiary.
After joining Reuters in 1967, Mr. Villeneuve served in
various positions in Europe and North America. He was named
manager, Reuters Europe in 1981, managed the company's
business in North America from 1983 to 1991, assumed
additional responsibility for Latin America in 1989 and
became president, Reuters Asia in 1991. He is also a
director of Commercial Union plc. Mr. Villeneuve is 52 and
has been a director of the Corporation since 1997.
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 CIGNA Corporation and 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 62 and has been
a director of the Corporation since 1994.
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 71 and has been a director of the Corporation since 1978.
7
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table lists, as of January 1, 1998, the beneficial ownership
of UTC equity securities of each current director and nominee, each of the
executive officers named in the Summary Compensation Table and all directors
and executive officers as a group. At January 1, 1998, 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, 1.9%
of the Common Stock and less than 1% of the ESOP Preferred.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME CLASS OF SECURITIES OWNED AT 1/1/98(1)
---- ------------------- -------------------
<S> <C> <C>
Howard H. Baker, Jr.................... Common(2) 4,000
Antonia Handler Chayes................. Common(2) 2,600
George David........................... Common 1,933,197
ESOP Preferred 880
Charles W. Duncan, Jr. ................ Common(2)(3) 20,800
Jean-Pierre Garnier.................... Common(2) 2,000
Pehr G. Gyllenhammar................... Common(2) 400
Karl J. Krapek......................... Common 886,380
ESOP Preferred 892
Charles R. Lee......................... Common(2) 6,450
Robert H. Malott....................... Common(2) 3,276
William J. Perry....................... Common(2) 2,000
Frank P. Popoff........................ Common(2) 2,000
Andre Villeneuve....................... Common(2) 2,000
Harold A. Wagner....................... Common(2) 3,706
Jacqueline G. Wexler................... Common(2) 3,776
Stephen F. Page........................ Common 330,284
ESOP Preferred 292
John R. Lord........................... Common 80,494
ESOP Preferred 1,002
Irving B. Yoskowitz.................... Common 304,169
ESOP Preferred 899
Directors & Executive Officers as a
Group (29)............................ Common 4,387,928
ESOP Preferred 11,379
</TABLE>
- -------
(1) Included in the number of shares of Common Stock beneficially owned by
Messrs. David, Krapek, Page, Lord, Yoskowitz and all directors and executive
officers as a group are 1,755,000; 724,000; 294,000; 57,000; 279,000; and
3,731,232 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; 153,931; 45,610; 13,092; 0; 14,409; and 376,498 shares,
respectively, as to which such persons have sole voting and investment power;
and 24,266; 16,770; 23,192; 23,494; 10,760; and 280,198 shares, respectively,
as to which such persons have sole voting but no investment power. Each person
and group shown as beneficially owning shares of ESOP Preferred Stock has sole
voting and sole investment power as to such shares. Each of the following
directors has sole voting power but no investment power with respect to 2,000
shares of restricted Common Stock: Ms. Chayes, Mrs. Wexler, Messrs. Baker,
Duncan, Garnier, Lee, Malott, Perry, Popoff, Villeneuve and Wagner. Ms.
Chayes, Mrs. Wexler, Messrs. Baker, Garnier, Gyllenhammar, Lee, Malott, Perry,
Popoff, Villeneuve and Wagner have sole voting and investment power with
respect to the balance of their holdings of Common Stock.
8
<PAGE>
(2) In addition to shares shown as beneficially owned at January 1, 1998,
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. ... 7,267
Antonia Handler Chayes.. 7,637
Charles W. Duncan, Jr... 9,781
Jean-Pierre Garnier..... 884
Pehr G. Gyllenhammar.... 10,691
Charles R. Lee.......... 3,718
</TABLE>
<TABLE>
<S> <C>
Robert H. Malott........ 9,274
William J. Perry........ 815
Frank P. Popoff......... 1,577
Andre Villeneuve........ 191
Harold A. Wagner........ 2,423
Jacqueline G. Wexler.... 8,727
</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. Irving
B. Yoskowitz, an officer, inadvertently failed to report on his Form 5 for
1996 a disposition by gift of 58 shares of Common Stock. An amended Form 5 was
filed to report this disposition. The Corporation also notes that Mrs. Antonia
Handler Chayes, a director, inadvertently failed to report on a Form 4 a sale
in 1997 of 600 shares of Common Stock. The sale was later reported on a Form 5
for 1997.
CERTAIN BUSINESS RELATIONSHIPS
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 such firm and other
unaffiliated corporations of which certain of the nonemployee 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. 60% of this retainer is paid in stock units under
the United Technologies Corporation Board of Directors Deferred Stock Unit
Plan, and the remaining 40% is paid in cash or additional stock units, at the
election of the director. Each stock unit has a value equal to one share of
Common Stock of the Corporation and is settled in cash at the time of
termination of service as a director, which is paid to the director in a lump
sum or in installments. Each stock unit credited to a director's account earns
additional stock units equivalent in value to the dividend paid on Common
Stock. There are no voting rights attached to stock units.
Under the United Technologies Corporation Nonemployee Director Stock Option
Plan, each nonemployee director 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.
9
<PAGE>
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. The 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 of the
director's restricted shares vest, the non-vested shares will be forfeited,
except that, in the event of the death or disability of a director or a change
in control of the Corporation, 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 shares of restricted
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 cash 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 have applied to participate or 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.
ITEM NO. 2
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 1999 Annual Meeting. During 1997, 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 $10.5 million and fees for non-auditing services totaled
approximately $5.8 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.
10
<PAGE>
ITEM NO. 3
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 the following proposal for adoption
at the Annual Meeting:
TEXT OF SHAREOWNER PROPOSAL
"RESOLVED: That the shareholders of United Technologies recommend that the
Board take the necessary steps so that future outside directors shall not
serve for more than six years."
SUPPORTING STATEMENT OF SHAREOWNER
"REASONS: The President of the U.S.A. has a term limit, so do Governors of
many states. Newer directors may bring in fresh outlooks and different
approaches with benefits to all shareholders. No director should be able to
feel that his or her directorship is until retirement.
If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors believes that requiring all outside directors to
leave the Board after six years of service would not be in the best interests
of the Board, the Corporation or the shareowners. Such a policy would deprive
the Corporation of the benefit of the experience and insight of directors who
have gained valuable knowledge concerning the Corporation's operations, and
whose tenure has given them an important perspective on the development and
implementation of the long-term strategies of the Corporation. Rather than
adopting fixed term limits, the Board believes it is more beneficial to
periodically review the Board's effectiveness as a group. The Nominating
Committee, which is comprised exclusively of independent members of the Board
of Directors, is responsible for reporting to the Board on its assessment of
the Board's performance.
THEREFORE, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE AGAINST
-------
THIS PROPOSAL.
ITEM NO. 4
SHAREOWNER PROPOSAL
The Sisters of Charity of Saint Elizabeth, P.O. Box 476, Convent Station,
New Jersey 07961-0476, beneficial owners of 1596 shares of Common Stock, have
given notice of their intent to introduce the following proposal for adoption
at the Annual Meeting:
TEXT OF SHAREOWNER PROPOSAL
"CRITERIA FOR THE ACCEPTANCE AND IMPLEMENTATION OF MILITARY CONTRACTS
WHEREAS the proponents of this resolution believe that the Board of United
Technologies should establish criteria to guide management in their defense
contract bidding and implementation activities;
WHEREAS we believe that economic decision making has both an ethical and a
financial component;
11
<PAGE>
WHEREAS we believe our company's ethical responsibilities include analyzing
the effects of its decisions with respect to employees, communities, and
nations;
WHEREAS we believe decisions to develop and to produce weapons can have
great consequences to the lives and/or freedom of people worldwide if the
company has not considered its ethical responsibilities ahead of time;
therefore be it
RESOLVED that the shareholders request the Board of Directors to establish a
committee to research this issue and to develop criteria for the bidding,
acceptance, and implementation of military contracts and to report the results
of its study to shareholders at its 1999 annual meeting. Proprietary
information may be omitted and the cost limited to a reasonable amount."
SUPPORTING STATEMENT OF SHAREOWNER
"The proponents of this resolution believe that all human beings are called
to seek justice and peace. An ethic of stewardship of the earth must include
respect for humanity and for creation. Because we believe that corporate
social responsibility in a successful free enterprise system demands ethical
reflection and action upon activities that are socially useful as well as
economically profitable, we recommend that the Board study include the
following subjects:
. Arms sales to governments that repress their citizens
. The connection between arms sales and geographical or political
instability
. Lobbying and marketing activities, both in the United States and abroad,
including costs
. Sales of weapons, parts, technology, and components convertible to
military use ("dual-use") to foreign governments
. Transfers of technology, including co-production agreements
The criteria proposed by the committee should include guidance for company
management regarding these subjects.
A YES vote recommends that the Board consider the above-listed criteria in a
study of our company's military sales and production activities."
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Corporation's military sales are conducted within the laws and
regulations established by the United States Government. Exports of military
equipment are controlled by the federal government in furtherance of the
national security and foreign policy goals of the United States. Under U.S.
laws, the federal government is responsible for the continuous supervision and
general direction of foreign military sales, financing, cooperative projects
and exports. Current law forbids sales to certain countries and requires that
decisions on licensing of exports take into account whether the export of an
article will contribute to an arms race, support international terrorism or
increase the possibility of outbreak or escalation of conflict.
The Corporation is committed to doing business in full compliance with all
applicable laws and in accordance with the Corporation's Code of Ethics. The
Board believes that these requirements are sufficient and therefore recommends
that shareowners vote against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE AGAINST THIS
-------
PROPOSAL.
12
<PAGE>
ITEM NO. 5
SHAREOWNER PROPOSAL
A representative of the Service Employees International Union Master Trust,
1313 L Street, N.W., Washington, D.C. 20005, the beneficial owner of 39,700
shares of Common Stock, has given notice that the Trust intends to introduce
the following proposal for adoption at the Annual Meeting:
TEXT OF SHAREOWNER PROPOSAL
"WHEREAS the American political election process is the cornerstone of the
country's democratic system of government, serving as the central means by
which all citizens can participate in the public debate of ideas and elect
representatives to protect and promote our collective interest; and
WHEREAS the integrity of the American political election process is of
critical importance to all citizens; and
WHEREAS there has been a significant increase in the amount of money
injected into the political election process in the form of "soft dollar"
contributions from private sector contributors. (Soft dollar contributions are
those financial contributions given by individuals or institutions to national
and state political parties for "party building" purposes); and
WHEREAS the significant increase in the amount of money injected into the
political election system in the form of "soft dollar" contributions from
private sector contributions has contributed to increasing public cynicism
toward an electoral process in which a declining percentage of citizens are
participating; and
WHEREAS the direct contribution of corporate assets, held in the collective
interest of all corporate shareholders, into the political election process
without written contribution guidelines or contribution reporting to
shareholders is inappropriate; therefore, be it
RESOLVED that the shareholders of United Technologies Corp. (the "Company")
urge the Board of Directors to establish corporate political contribution
guidelines and reporting provisions that include the following features:
1. Contribution Guidelines: The Board of Directors would present written
contribution guidelines in the Company's annual report and Form 10-K that
clearly define the issues and interests that the company is seeking to
promote with its "soft dollar" political contributions; and
2. Contribution Reporting: Comprehensive political contributions
reporting would be provided in the Company's annual report and Form 10-K
documenting all the entities that were the recipients of the Company's
political "soft dollar" contributions during the previous twelve-month
period."
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
Federal and state laws restrict the amount and types of contributions that
may be made to political parties and candidates. The Corporation complies with
all applicable federal and state laws concerning political contributions.
Legally permitted contributions to national and state political parties have
been made from time to time in furtherance of the business interests of the
Corporation. The aggregate amount contributed by the Corporation to national
and state political parties is, however, not a material amount for financial
reporting purposes. Contributions to national and state political parties must
also be disclosed by the recipients under applicable federal law and the laws
of certain states.
13
<PAGE>
The Board of Directors therefore concludes that guidelines and reporting
with respect to political contributions are properly a subject for
governmental regulation and recommends that shareowners vote against this
proposal.
THE BOARD OF DIRECTORS ACCORDINGLY RECOMMENDS THAT SHAREOWNERS VOTE AGAINST
-------
THIS PROPOSAL.
SUBMISSION OF SHAREOWNER PROPOSALS
Proposals of shareowners intended to be presented at the 1999 annual meeting
must be received by the Corporation no later than November 29, 1998. Proposals
should be addressed to William H. Trachsel, Secretary, United Technologies
Corporation, One 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.
PROGRAM OBJECTIVES AND PHILOSOPHY
The Program's primary objectives are to assure that the Corporation is able
to attract, motivate and retain talented executives and to create an alignment
of interests between the Corporation's executives and shareowners. Consistent
with these objectives, the Program is designed to be competitive with other
corporations, while placing a significant emphasis on the long term and at-
risk components of compensation that vary with individual and corporate
performance. The Committee encourages and regularly reviews stock ownership by
the Corporation's most senior executives. Through the use of performance based
compensation arrangements, the Committee structures the Program so that
compensation will generally not be subject to the $1 million deduction limit
imposed by Section 162(m) of the Internal Revenue Code. However, compensation
in excess of this limit may be paid when consistent with Program objectives.
COMPENSATION PEER GROUP
The Committee makes use of benchmark information concerning compensation
paid by seventeen of the companies included in the Dow Jones 30 Industrial
Index, as well as nineteen other companies (the "Compensation Peer Group").
Compensation Peer Group companies generally have characteristics similar to
the Corporation such as diversified product lines, global operations and sales
volumes and often compete with the Corporation for executive talent. Utilizing
this benchmark information and other data provided by outside
consultants, the Corporation targets the value of the Program for its most
senior executives, including the named executive officers named in the Summary
Compensation Table, to be at or slightly above the 50th percentile of the
Compensation Peer Group.
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 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
relative to annual goals established for the Corporation and the business
units. For 1997, the corporate headquarters 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 Chief Executive Officer (the "CEO") determines the amount
available for annual incentive cash awards at each business unit based on
achievement of objectives and an overall judgment of each business unit's
performance. Individual awards are based on performance measured against
objectives and a subjective assessment of the individual's overall
contribution to business unit or corporate results.
15
<PAGE>
The CEO and the four other named executive officers' annual incentive
compensation awards are paid solely from a pool of funds 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 Performance 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
Corporation's executives with the opportunity for financial reward directly
correlated with increases in shareowner value and the achievement of pre-
established long term financial objectives. For 1997, awards were granted in
the form of stock options, restricted stock and dividend equivalent awards.
The exercise price of stock options is the closing price of the
Corporation's stock on the date of grant. The value of these awards is thus
directly tied to increases in shareowner value after the date of grant. Stock
options generally vest three years from the date of grant and remain
exercisable for seven years thereafter.
A Dividend Equivalent ("DE") is the right to receive payments equal to the
quarterly dividend paid to the Corporation's shareowners. Under the 1997
Continuous Improvement Incentive Plan (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 approved by the
Committee. For 1997, the corporate headquarter's targets were earnings per
share and return on capital, 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 1997 will begin in March of
2000, and will continue for up to 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.
In 1997, the Committee approved special performance-based stock option
awards designed to provide incentives aligned directly with shareowner
interests and to retain certain key members of the senior management team,
including the named executive officers. The value of these awards will be
measured by share price appreciation above the $75.875 grant price, and thus
the awards are aligned directly with the creation of additional shareowner
value. The awards will not be exercisable for nine years unless UTC's stock
price averages at least $125 per share for thirty consecutive trading days.
The target price of $125 represents an increase of approximately 65% over the
share price on the date of grant.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation decisions affecting the CEO were based on quantitative and
qualitative factors relative to the Corporation's 1997 financial and operating
results. The Committee does not employ a specific formula in its compensation
decisions.
The Committee approved compensation actions affecting the CEO that reflect a
favorable assessment of his performance in 1997, as discussed below.
Information about Compensation Peer Group CEOs and Mr. David's election to
Chairman of the Board of Directors were also considered. Mr. David's base
salary was increased and he received an incentive compensation award (as set
forth in the Summary Compensation Table on page 18) that place his total cash
compensation at approximately the 50th percentile of the Compensation Peer
Group CEOs. Mr. David was granted 125,000 stock options and associated DEs
under the CIIP. In recognition of the value of
16
<PAGE>
Mr. David's leadership of the Corporation in the future, the Committee also
approved a grant of 250,000 performance-based stock options linked to the
target share price of $125. The guidelines for determining these stock option
and DE awards and the vesting criteria for the performance-based stock options
are discussed in "Long Term Compensation" above.
During 1997, the Corporation again achieved record sales and profits.
Diluted earnings per share increased 21%, from $3.48 to $4.21, net income
increased 18% from $906 million to $1.072 billion, and return on equity was
24.5%, up from 21.1% in 1996. Available cash flow was $1.26 billion. Expanding
the Corporation's core businesses through acquisitions, Carrier enhanced its
position in commercial refrigeration and Pratt & Whitney increased its
presence in the aftermarket engine repair and refurbishment business.
Total shareowner return for 1997, including share price appreciation and
dividends, from December 31, 1996 to December 31, 1997 was 12%, less than the
S&P 500 at 33% and the Dow Jones 30 Industrials at 25%. Most of these
differences are attributable to the Corporation's above average percentage of
revenues derived from Asia, to the economic disruption there in the second
half of 1997, and to responses in capital markets. The Committee, and UTC's
Board, believe UTC's global strategies and emphasis to be sound and in the
best interests of shareowners. Beginning with 1994, the year Mr. David became
CEO, through 1997, total return to shareowners equaled 157%, compared to 128%
for the S&P 500 and 132% for the Dow Jones Industrials. Return on equity has
improved from 13.1% to 24.5%. Diluted earnings per share growth has averaged
26% annually, from $1.66 to $4.21.
In addition to sustained and favorable financial performance by the
Corporation, the Committee also considered other factors that reflect Mr.
David's leadership. Significant gains were made in 1997 in environmental,
health and safety measures. The Corporation continued its focus on quality and
process improvements in all phases of its operations, and with significant
successes. In 1997, Mr. David also launched a major supply management and
purchasing economies program that is targeted to achieve recurring, annual
savings exceeding $750 million by the year 2000. The Committee believes that
such long term initiatives aimed at continuously improving quality and
efficiency are fundamental to the long term competitiveness of the
Corporation.
COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT
Harold A. Wagner, Chairman Frank P. Popoff
Charles W. Duncan, Jr. Jacqueline G. Wexler
Jean-Pierre Garnier
17
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth for the Corporation's
Chief Executive Officer and the other four most highly compensated executive
officers of the Corporation and its subsidiaries in 1997 (the "named executive
officers") the compensation earned by such persons for services rendered in
all capacities to the Corporation during each of the three fiscal years ended
December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------- -----------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPENSATION STOCK AWARDS OPTIONS LTIP COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) ($)(3) /SARS(#) PAYOUTS($) TION($)(5)
- --------------------------- ---- ---------- ----------- ------------ ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. David................ 1997 $1,100,000 $1,700,000 $ 92,179 $ 0 375,000 $161,200 $37,271
Chairman & CEO 1996 $1,025,000 $1,350,000 $ 90,758 $ 0 150,000 $ 0 $33,485
1995 $ 976,667 $ 900,000 $ 89,365 $ 0 650,000 $ 44,499 $31,499
K. Krapek............... 1997 $ 695,000 $1,000,000 $ 59,440 $ 0 150,000 $ 74,400 $20,875
President, Pratt &
Whitney 1996 $ 656,250 $ 600,000 $ 59,223 $ 0 60,000 $ 0 $18,860
1995 $ 620,000 $ 500,000 $111,389 $ 0 260,000 $ 24,600 $16,733
S. Page................. 1997 $ 551,250 $ 500,000 $ 86,525 $1,517,500(4) 140,000 $ 37,200 $46,330
President, Otis 1996 $ 520,833 $ 425,000 $ 65,698 $ 0 40,000 $ 0 $44,224
1995 $ 497,917 $ 400,000 $ 62,391 $ 0 240,000 $ 13,087 $40,050
J. Lord................. 1997 $ 442,500 $ 350,000 $ 69,068 $1,517,500(4) 130,000 $ 19,840 $35,410
President, Carrier 1996 $ 408,333 $ 285,000 $ 74,814 $ 0 30,000 $ 0 $33,660
1995 $ 328,606 $ 250,000 $289,409 $ 0 230,000 $ 6,365 $27,990
I. Yoskowitz............ 1997 $ 500,000 $ 275,000 $ 58,815 $ 0 20,000 $ 37,200 $18,078
Executive Vice President 1996 $ 500,000 $ 200,000 $ 62,929 $ 0 30,000 $ 0 $16,591
and General Counsel 1995 $ 497,917 $ 335,000 $ 63,848 $ 0 230,000 $ 19,725 $15,732
</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 1997 include: $32,201 for personal
use of corporate aircraft for security reasons for Mr. David; perquisite
allowances for each of Messrs. David, Krapek, Page, Lord and Yoskowitz of
$46,713, $45,810, $60,000, $34,255 and $48,096, respectively; $26,193 in
personal travel for Mr. Page; and a $17,500 relocation payment to Mr. Lord in
1997 associated with his 1995 transfer to Carrier Headquarters.
(3) At the close of business on December 31, 1997, the following named
executive officers held total non-vested restricted shares as follows: Mr.
Krapek: 100,000 shares valued at $7,281,250; Mr. Page: 20,000 shares valued at
$1,456,250; and Mr. Lord: 20,000 shares valued at $1,456,250. The foregoing
values were calculated by multiplying the closing market price of the Common
Stock on December 31, 1997 by the number of restricted shares held. Regular
quarterly dividends are paid on all shares of restricted stock.
Mr. Krapek's restricted shares were granted with both performance and time-
based restrictions on June 28, 1995 as reported in the 1996 Proxy Statement
table on Long Term Incentive Plans. As a result of achieving the performance
target on September 4, 1996, these shares are now scheduled to vest on June
28, 2000.
18
<PAGE>
(4) Consists of a grant of 20,000 shares of time-based restricted stock to
each of Mr. Page and Mr. Lord, valued at the market price of Common Stock as
of the date of grant. For each grant, 10,000 shares are scheduled to vest
February 24, 1999 and 10,000 are scheduled to vest February 24, 2001.
(5) For 1997, consisted of employer matching contributions in the Employee
Savings Plan of $5,760 for each of the five named executive officers and life
insurance premium payments by the Corporation of $31,511, $15,115, $40,570,
$29,650 and $12,318, respectively, for Messrs. David, Krapek, Page, Lord and
Yoskowitz.
The following table sets forth information concerning individual grants of
stock options made during the 1997 fiscal year to each named executive
officer. No stock appreciation rights were granted during 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-----------------------------------------------------------
% OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE ($)(2)
- ---- -------------------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
G. David................ 125,000(3) 2.6% $75.875 2/23/2007 $2,936,363
250,000(4) 5.3% $75.875 2/23/2007 $5,872,725
K. Krapek............... 50,000(3) 1.1% $75.875 2/23/2007 $1,174,545
100,000(4) 2.1% $75.875 2/23/2007 $2,349,090
S. Page................. 40,000(3) 0.8% $75.875 2/23/2007 $ 939,636
100,000(4) 2.1% $75.875 2/23/2007 $2,349,090
J. Lord................. 30,000(3) 0.6% $75.875 2/23/2007 $ 704,727
100,000(4) 2.1% $75.875 2/23/2007 $2,349,090
I. Yoskowitz............ 20,000(3) 0.4% $75.875 2/23/2007 $ 469,818
</TABLE>
- -------
(1) Under certain circumstances, including a change of control of the
Corporation, 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) 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 value of the grant: interest
rate of 6.25%, stock price volatility of 0.1518, and a dividend yield of
2.00%. 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
values estimated.
(3) These stock options were granted on February 24, 1997, and will vest and
become exercisable on February 24, 2000. These stock options 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 proscribed performance
objectives. Each DE entitles the holder to receive a cash payment equal to the
quarterly dividend paid on one share of Common Stock for a specified period of
time.
19
<PAGE>
(4) These stock options were granted on February 24, 1997, and will vest and
become exercisable upon the earlier of (i) the date the closing price of the
Corporation's Common Stock on the New York Stock Exchange averages $125.00 per
share or higher for thirty consecutive trading days, or (ii) February 24,
2006.
The following table sets forth information concerning the exercise of stock
options and stock appreciation rights during the 1997 fiscal year by each of
the named executive officers and the fiscal year end value of unexercised
options and stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS/SARS MONEY OPTIONS/SARS AT
AT FISCAL YEAR END(#) FISCAL YEAR END($)(1)
------------------------- -----------------------------
SHARES ACQUIRED VALUE REALIZED
NAME ON EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
G. David................ 164,060 $8,891,533 1,605,000 525,000 $ 65,187,813 $8,690,625
K. Krapek............... 0 $ 0 664,000 270,000 $ 28,366,250 $3,476,250
S. Page................. 50,000 $2,262,500 254,000 220,000 $ 9,884,250 $2,317,500
J. Lord................. 0 $ 0 39,000 190,000 $ 1,724,875 $1,720,125
I. Yoskowitz............ 62,000 $3,036,063 249,000 80,000 $ 8,812,375 $1,738,125
</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, 1997, as applicable, and is
calculated by subtracting the exercise price per share of the option or per
stock appreciation right 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, 1997 on the Corporation's Common Stock, as
compared to the Standard & Poor's 500 Stock Index and to the Dow Jones 30
Industrial Average. The Common Stock price 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, 1992.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
United Technologies $100.00 $133.2 $139.2 $215.5 $306.8 $342.6
S&P 500 Index $100.00 $110.1 $111.5 $153.4 $188.6 $251.5
Dow Jones 30 Industrials $100.00 $117.0 $122.8 $168.2 $216.9 $270.9
</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, 1997, there were 26 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, 24 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>
The preceding table sets forth the estimated annual benefits payable upon
retirement at age 65 under the Corporation's defined benefit pension plans,
including the Corporation's supplemental plan for restoring benefits excluded
under the tax qualified plan due to Internal Revenue Code limitations.
Compensation covered by the pension plans 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 is
calculated based on 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, and years of credited service. 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, 1997, the executive officers named in the Summary
Compensation Table had the following full years of credited service for
determining benefits: G. David, 22 years; K. Krapek, 15 years; S. Page, four
years; J. Lord, 16 years; and I. Yoskowitz, 18 years.
22
<PAGE>
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
exercise the authority conferred thereby to vote according to their best
judgment upon any other business that may properly come before the meeting.
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, 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 reasonable 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 card in the form enclosed with
this Proxy Statement has the power to revoke the proxy conferred thereby 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 card 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 must be signed by an
executor or administrator, whose title as such must 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
23
<PAGE>
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, 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 each 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" 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 appointment of Price Waterhouse LLP as Independent Public
---
Accountants, and against each of the shareowner proposals.
-------
If any other business should properly come before the meeting, or any
adjournment thereof, the persons named as proxies 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 and has 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 all such uninstructed
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
1997, was mailed to shareowners on or about February 16, 1998.
William H. Trachsel
Vice President and Secretary
Hartford, Connecticut
March 30, 1998
24
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
<PAGE>
PROXY
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
One Financial Plaza
Hartford, CT 06101
Proxy Solicited on Behalf of the Board of Directors of
the Corporation for Annual Meeting, April 30, 1998
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,
proxies for the undersigned to act and vote at the Annual Meeting of the
Shareowners of United Technologies Corporation to be held April 30, 1998, at
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 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 of 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 holder 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
Thursday, April 30, 1998
11:00 a.m.
Four Seasons Hotel
One Logan Square
Philadelphia, Pennsylvania
<PAGE>
[X] Please mark your 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 nominees
recommended by the Board of Directors, FOR proposal 2, and AGAINST proposals 3,
4, and 5, 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.
- --------------------------------------------------------------------------------
Election of Directors. Nominees:
Antonia Handler Chayes, George David, Charles W. Duncan, Jr., Jean-Pierre
Garnier, Pehr G. Gyllenhammar, Karl J. Krapek, Charles R. Lee, Robert H. Malott,
William J. Perry, Frank P. Popoff, Andre Villeneuve, Harold A. Wagner, and
Jacqueline G. Wexler.
FOR WITHHELD
1. Election of Directors [_] [_]
Vote for all nominees except:
------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 2.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Appointment of Independent
Public Accountants [_] [_] [_]
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST proposals 3, 4, and 5.
- --------------------------------------------------------------------------------
3. Shareowner Proposal Regarding
Director Term Limits [_] [_] [_]
4. Shareowner Proposal Regarding
Military Contracts [_] [_] [_]
5. Shareower Proposal Regarding
Political Contributions [_] [_] [_]
- --------------------------------------------------------------------------------
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof. NOTE: 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.
SIGNATURE(S) Date
-------------------------------------- -------------
................................................................................
FOLD AND DETACH HERE
SHAREOWNER SERVICES
Shareowner Dividend Reinvestment and Stock Purchase Plan
--------------------------------------------------------
The Corporation has adopted a Shareowner Dividend Reinvestment and Stock
Purchase Plan. The Plan provides eligible holders of the Corporation's Common
Stock with a simple and convenient method of investing cash dividends and
voluntary cash payments in additional shares of Common Stock without payment of
a brokerage commission or service charge. Shareowners should carefully review
the Plan Prospectus before investing. For more information and a Plan
prospectus, contact First Chicago Trust Company of New York at 1-800-519-3111.
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
