<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 by written 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>
United Technologies Corporation
One Financial Plaza
Hartford, CT 06103
[LOGO OF UNITED TECHNOLOGIES]
March 27, 2000
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
Dear Fellow Shareowner:
You are cordially invited to attend the 2000 Annual Meeting of Shareowners of
United Technologies Corporation to be held on April 28, 2000 at The
Waldorf=Astoria, 301 Park Avenue, New York, New York. The doors will open at
10:30 a.m. and the meeting will begin at 11:00 a.m. The meeting will address
the following matters:
1. Election of eleven directors.
2. Appointment of independent public accountants.
3. Amendment to Restated Certificate of Incorporation to increase authorized
Common Stock of the Corporation.
4. Approval of Performance Criteria Under the Annual Executive Incentive
Compensation Plan.
5. Approval of Performance Targets Under the Long Term Incentive Plan.
6. Shareowner proposals described in the accompanying Proxy Statement.
7. Other business if properly raised.
You may attend and vote at the meeting if you were an owner of record of Common
Stock or Series A ESOP Convertible Preferred Stock of the Corporation at the
close of business on March 10, 2000, the record date for the meeting. You may
also attend and vote at the meeting if you are the authorized representative by
proxy of a shareowner of record on that date.
Since seating is limited, we ask that you request a ticket in advance to
attend. If your shares are registered directly in your name with our stock
transfer agent or if you are a participant in an employee savings plan of the
Corporation, you can attend the meeting by completing and returning the ticket
request card enclosed with your proxy materials. If your shares are held
through a bank, broker, or other holder of record, your ticket request must be
accompanied by written notice from your holder of record that you are its
authorized representative for those shares.
Your vote is important. Most shareowners have a choice of voting over the
Internet, by telephone or by using a traditional proxy card. Please refer to
your proxy card or the information forwarded by your bank, broker or other
holder of record to see which options are available to you.
George David Karl J. Krapek
Chairman and Chief Executive Officer President and Chief Operating
Officer
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Questions and Answers.................................................... 1
Summary of Business Matters to be Voted on............................... 4
General Information Concerning the Board of Directors.................... 6
Nominees................................................................ 6
Committees.............................................................. 8
Compensation of Directors............................................... 9
Security Ownership of Directors, Nominees and Executive Officers......... 9
Amendment to Restated Certificate of Incorporation....................... 11
Approval of Performance Criteria Under Annual Executive Incentive
Compensation Plan....................................................... 12
Approval of Performance Targets Under Long Term Incentive Plan........... 13
Report of the Committee on Compensation and Executive Development........ 14
Compensation of Executive Officers....................................... 16
Summary Compensation Table.............................................. 16
Option/SAR Grants in Last Fiscal Year................................... 17
Aggregated Option/SAR Exercises and Values.............................. 17
Performance Graph....................................................... 18
Section 16(a) Reporting................................................. 18
Certain Business Relationships.......................................... 18
Employment Contracts.................................................... 19
Pension Plan............................................................ 19
Shareowner Proposals..................................................... 20
Disclosure of Prior Governmental Service................................ 20
Northern Ireland........................................................ 20
Offset Agreements....................................................... 22
</TABLE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
PROXY STATEMENT
YOUR VOTE IS VERY IMPORTANT
Please submit a proxy as soon as possible so that your shares can be voted at
the Annual Meeting in accordance with your instructions, whether or not you
plan to attend. This Proxy Statement describes the matters to be voted on and
available methods of voting.
The Board of Directors is soliciting proxies for the 2000 Annual Meeting of
Shareowners of United Technologies Corporation to be held on April 28, 2000. We
are distributing this Proxy Statement on or about March 27, 2000. The
Corporation's Annual Report, including financial statements for the year 1999,
was mailed to shareowners on or about February 14, 2000.
QUESTIONS AND ANSWERS
What matters will be voted on at the Annual Meeting?
The matters to be submitted to a vote of shareowners are: (1) the election of
eleven directors, (2) the appointment of independent public accountants, (3) a
management proposal to increase the number of authorized shares of common
stock, (4) management proposals to approve performance criteria under the
Annual Executive Incentive Compensation Plan and performance targets under the
Long Term Incentive Plan, and (5) the shareowner proposals described on pages
20 through 24.
How does the Board of Directors recommend I vote on the proposals?
The Board recommends a vote FOR each of the Corporation's nominees for election
as directors, FOR the appointment of PricewaterhouseCoopers LLP as independent
public accountants, FOR the increase in the number of authorized shares of
common stock, FOR the proposals to approve performance criteria under the
Annual Executive Incentive Compensation Plan and performance targets under the
Long Term Incentive Plan, and AGAINST each of the shareowner proposals
described on pages 20 through 24.
Who is entitled to vote?
Owners of Common Stock or Series A ESOP Convertible Preferred Stock of the
Corporation at the close of business on March 10, 2000 are entitled to vote.
This includes shares you held on that date (1) directly in your name as the
shareowner of record, and (2) through a stockbroker, bank or other holder of
record (including any shares held through an employee savings plan of the
Corporation), where the shares were held for you as the beneficial owner. A
list of shareowners of record entitled to vote at the meeting will be available
at the Annual Meeting on April 28, 2000 and for 10 days prior to the meeting at
the offices of Cleary, Gottlieb, Steen & Hamilton, 42nd Floor, 1 Liberty Plaza,
New York, NY 10006.
How do I vote?
Since many shareowners are unable to attend the meeting in person, we send
proxy cards to all shareowners of record which permit each shareowner to direct
the persons designated as proxies on how to vote the shareowner's securities.
Brokers, banks and nominees also send cards to beneficial owners to permit them
to provide instructions as to how they wish their shares to be voted.
How do I vote by mail?
Shareowners of record and employee savings plan participants who wish to vote
by mail may complete the enclosed proxy card to indicate their voting
instructions and then sign, date and mail the proxy card in the postage-paid
envelope provided. Beneficial owners may direct their vote by mail by
completing, signing and returning the voting instruction card provided by their
broker, bank or nominee.
How do I vote by telephone or via the Internet?
Shareowners of record who live in the United States or Canada and participants
in an employee savings plan of the Corporation may submit voting instructions
by telephone by dialing 1-877-PRX-VOTE or 1-877-779-8683, entering the voter
control number found on the proxy card and following the voice prompts.
<PAGE>
Shareowners of record may also submit voting instructions via the Internet by
accessing the following address on the World Wide Web:
http://www.eproxyvote.com/utx, entering the voter control number on your proxy
card and marking the appropriate boxes to enter voting instructions.
If your shares are held through a broker, bank or other nominee, you may submit
voting instructions by telephone or via the Internet if the firm holding your
shares offers these voting methods. Please refer to the voting instructions
provided by your bank, broker or nominee for information.
How will my proxy vote my shares?
The designated proxy holders will vote according to the instructions you submit
on your proxy card, by telephone or via the Internet. If you sign and return
your card or submit voting instructions by telephone or via the Internet but do
not indicate your voting instructions on one or more of the business matters
listed, the proxy holders will vote all uninstructed shares for each of the
Corporation's nominees for election as a director, for the appointment of
PricewaterhouseCoopers LLP as independent public accountants, for the increase
in authorized shares, for the proposals to approve performance criteria under
the Annual Executive Incentive Compensation Plan and performance targets under
the Long Term Incentive Plan, and against the other proposals.
How many shares can vote?
As of the record date, 470,908,739 shares of Common Stock and 12,037,202 shares
of Series A ESOP Convertible Preferred Stock were issued and outstanding.
Owners of Common Stock are entitled to one vote for each share held and owners
of Series A ESOP Convertible Preferred Stock are entitled to 5.2 votes for each
share held. There were therefore a total of 533,502,189 eligible votes as of
the record date.
What is the quorum requirement?
A majority of the Corporation's outstanding shares entitled to vote as of the
record date must be present or represented at the meeting, either by proxy or
in person, in order to conduct the business of the meeting.
How many votes are needed for matters to be adopted at the meeting?
The eleven director nominees receiving the highest number of votes will be
elected. The affirmative vote of the holders of a majority of the outstanding
shares of voting stock of the Corporation is required for the approval of the
amendment to the Restated Certificate of Incorporation. Other matters will be
approved if they receive the affirmative vote of a majority of the shares
constituting the quorum at the Annual Meeting. If a shareowner abstains from
voting on a particular matter, or if a broker is not allowed under stock
exchange rules to vote shares for which a client has not given voting
instructions, the effect will be the same as a vote "against" the matter.
In the election of directors, 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 Series A ESOP Convertible
Preferred Stock is entitled to a number of votes equal to 5.2 times the number
of shares of Series A ESOP Convertible Preferred Stock owned multiplied by the
number of directors to be elected. Shareowners may give instructions that all
of their votes be cast for a single nominee or may distribute the total number
of votes among two or more nominees. If no instruction is given, the votes will
be distributed by the proxy holders among the Corporation's nominees.
Who can attend the Annual Meeting and how do I get a ticket?
All shareowners of record on March 10, 2000 can attend. Since seating is
limited, we ask that you request a ticket in advance to attend. If your shares
are registered directly in your name on the records of First Chicago Trust
Company of New York, the Corporation's stock transfer agent, or if you are an
employee savings plan participant, you can request a ticket by mailing in the
Reservation Card you received with your proxy materials. If you forget to bring
your ticket, you will be admitted to the meeting only if you are listed as a
shareowner of record or savings plan participant as of March 10, 2000 and bring
proof of identification. If your shares are held through a broker, bank or
nominee, and you would like to attend, you may request a ticket by writing to
the Corporate Secretary, United Technologies Corporation, One Financial Plaza,
Hartford, CT 06103, and including a copy of your brokerage account statement or
a legal proxy from your broker or bank, in each case showing your ownership of
shares as of the record date.
2
<PAGE>
Who will count the vote? Is my vote confidential?
Representatives of First Chicago Trust Company of New York will serve as
Inspectors of Election. They will supervise the voting, decide the validity of
proxies and receive, inspect and tabulate proxies. Proxy cards, ballots and
voting tabulations that identify individual shareowners are mailed or returned
directly to First Chicago Trust Company of New York, and handled in a manner
that protects the confidentiality of your vote.
Can I revoke my proxy?
Yes. You may revoke your proxy before it is voted by sending written notice to
the Corporate Secretary, United Technologies Corporation, One Financial Plaza,
Hartford, CT 06103 that you are revoking your proxy; by following the
procedures given for revoking your proxy when voting by telephone or via the
Internet; by submitting a new proxy with a later date; or by voting in person
at the meeting.
How are shares held by the UTC employee savings plans voted?
Participants in the UTC Stock Fund or in the UTC Employee Stock Ownership Plan
may direct the voting of shares by Bankers Trust Company, the savings plan
trustee, by returning a proxy card or by voting by telephone or via the
Internet. If you do not provide voting instructions or if your instructions are
incomplete or unclear, the trustee will vote your shares in proportion to the
way the other savings plan participants voted their savings plan shares. The
trustee will vote unallocated UTC stock in the ESOP Fund in the same proportion
as uninstructed shares.
Can I vote in person at the Annual Meeting?
Persons who have already submitted voting instructions need not vote at the
Annual Meeting. However, we will pass out written ballots to any shareowner of
record or authorized representative of a shareowner of record who wants to vote
in person at the Annual Meeting rather than by proxy. Voting in person will
revoke any voting instructions previously given. If you hold your shares
through a bank, broker or nominee, you must obtain a proxy from your broker,
bank or nominee to vote in person.
How will voting on any other business be conducted?
Although we do not know of any business to be conducted at the 2000 Annual
Meeting other than the matters described in the Proxy Statement, the voting
instructions you submit give authority to the proxy holders to vote on other
matters, if they arise, in accordance with their best judgment.
When are shareowner proposals for the 2001 Annual Meeting due?
A shareowner who wishes to introduce a proposal to be voted on at the
Corporation's 2001 Annual Meeting must send written notice to the Corporate
Secretary, United Technologies Corporation, One Financial Plaza, Hartford, CT
06103. This notice must be received no earlier than December 29, 2000 and no
later than January 28, 2001, and must provide the information specified by the
Bylaws. Any shareowner who wishes to have a shareowner proposal included in the
Corporation's proxy statement for the 2001 Annual Meeting must submit the
proposal in writing to the Corporate Secretary at the same address, for receipt
by November 29, 2000. The proposal must comply with all applicable rules and
regulations of the Securities and Exchange Commission.
How are proxies solicited and how much did this proxy solicitation cost?
The Corporation has hired Georgeson & Company Inc. to assist in the
distribution of proxy materials and the solicitation of proxies for a fee
estimated at $15,500, plus out-of-pocket expenses. Proxies will be solicited on
behalf of the Board of Directors by mail, in person and by telephone. The
Corporation will bear the cost of soliciting proxies. The Corporation also
reimburses brokers and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy materials to the persons
for whom they hold shares.
3
<PAGE>
Who are the largest principal shareowners?
Based upon filings with the Securities and Exchange Commission, the Corporation
is aware that as of December 31, 1999, the following entity was a beneficial
owner of more than five percent of the outstanding Common Stock of the
Corporation:
Largest Principal Shareowners
<TABLE>
- ---------------------------------------------------------------------------------
<CAPTION>
Shares
Beneficially Percent
Class of Security Name and Address Owned of Class
- ----------------- --------------------------- --------------- --------
<S> <C> <C> <C>
Common Stock AXA Financial, Inc. 30,627,808(/1/) 6.45%
1290 Avenue of the Americas
New York, NY 10104
</TABLE>
Bankers Trust Company, 130 Liberty Street, New York, NY 10006 holds all of the
shares of Series A ESOP Convertible Preferred Stock as trustee for employees of
the Corporation who participate in the Corporation's Employee Stock Ownership
Plan. Bankers Trust Company disclaims beneficial ownership of all of the Series
A ESOP Convertible Preferred Stock.
SUMMARY OF BUSINESS
MATTERS TO BE VOTED ON
Item 1. Election of Directors.
The entire Board of Directors is elected annually by the shareowners at the
Annual Meeting. The Board has selected each of the nominees based upon the
recommendation of its Nominating Committee, which evaluates candidates based
upon their ability and integrity. The Nominating Committee seeks directors who
as a group are expected to bring to the Board experience in international
business, an awareness of the appropriate role of the corporation in society,
and a diversity of opinion and insight.
The Board is nominating eleven persons for election to the Board at the Annual
Meeting. Each of the nominees is currently serving as a director of the
Corporation and each was elected a director at the 1999 Annual Meeting, with
the exception of Sanford I. Weill, who joined the Board in December 1999, and
Jamie S. Gorelick, who joined the Board in February 2000.
Pehr G. Gyllenhammar retired from the Board in July 1999 and William J. Perry
is retiring from the Board in April 2000. The Board expresses its appreciation
to Messrs. Gyllenhammar and Perry for their important contributions to the
Corporation.
If any of the nominees becomes unavailable prior to the Annual Meeting to serve
as a director, the proxy holders will, in their discretion, vote the shares
they represent for another person nominated by the Board, unless the Board
reduces the number of directors to be elected.
The Board of Directors recommends that you vote FOR each of the nominees.
Item 2. Appointment of Independent Public Accountants.
The Audit Review Committee has nominated PricewaterhouseCoopers LLP to be
Independent Public Accountants for the Corporation, to act as General Auditor
until the next Annual Meeting in 2001. During 1999,
(/1/)AXA Financial, Inc. ("AXA") (formerly known as The Equitable Companies
Incorporated), a parent holding company, has advised that AXA, along with
certain entities that control AXA, directly or indirectly, held sole
voting power as to 15,524,332 shares, shared voting power as to 7,241,259
shares, sole dispositive power as to 30,467,844 shares and shared
dispositive power as to 130,064 shares.
4
<PAGE>
PricewaterhouseCoopers LLP provided audit and related services to the
Corporation, as well as certain non-auditing services. Fees for audit and
related services totaled approximately $15.5 million and fees for non-auditing
services totaled approximately $47.5 million. The Audit Review Committee
approves services provided by PricewaterhouseCoopers LLP and reviews services
for any possible effect on their independence as auditors.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have an opportunity to make any statements they desire, and will
also be available to respond to appropriate questions from shareowners.
The Board of Directors recommends that you vote FOR approval of
PricewaterhouseCoopers LLP as Independent Public Accountants for the
Corporation.
Item 3. Amendment to Restated Certificate of Incorporation.
The Board of Directors believes it is advisable to amend the Corporation's
Restated Certificate of Incorporation to increase the authorized shares of
Common Stock from 1,000,000,000 shares to 2,000,000,000 shares.
Supporting information concerning this proposal is included beginning at page
11.
The Board of Directors recommends that you vote FOR the adoption of this
amendment to the Restated Certificate of Incorporation.
Item 4. Approval of Performance Criteria Under Annual Executive Incentive
Compensation Plan.
The Board of Directors recommends that shareowners approve continuation of the
Covered Employee Performance Pool as a component of the Annual Executive
Incentive Compensation Plan. The Covered Employee Performance Pool is designed
to preserve federal tax deductions with respect to certain awards paid under
this Plan.
Supporting information concerning this proposal is included beginning at page
12.
Item 5. Approval of Performance Targets Under Long Term Incentive Plan.
The Board of Directors recommends that shareowners approve the continued use by
the Committee on Compensation and Executive Development of certain performance
targets to determine the vesting of dividend equivalent awards under the Long
Term Incentive Plan. The use of such performance targets is intended to
preserve federal tax deductions with respect to amounts paid under such awards.
Supporting information concerning this proposal is included beginning at page
13.
Items 6-8. Shareowner Proposals.
Three shareowner proposals and the responses of the Board of Directors are
included beginning on page 20.
The Board of Directors recommends that you vote AGAINST each of the shareowner
proposals for the reasons given on pages 20 through 24.
The Board of Directors is not aware of any other business matters to be
presented for action at the Annual Meeting. However, in the event that any
other matter properly comes before the meeting, the shareowners present at the
meeting will have an opportunity to vote on the item.
5
<PAGE>
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Nominees.
The following are brief biographical sketches for each person nominated for
election to the Board of Directors:
[PHOTO] ANTONIA HANDLER CHAYES, Senior Advisor and Vice Chair of the
Board of Conflict Management Group, a non-profit conflict
resolution consulting firm and an Adjunct Lecturer at the J.F.
Kennedy School of Government at Harvard University. Dr. Chayes
is also Co-Director of the Project on International Law and
Conflict Management at the Program on Negotiation at Harvard
Law School. She is a member of the American Law Institute, the
Council on Foreign Relations and the Aspen Strategy Core Group.
She is 70 and has been a director of the Corporation since 1981.
[PHOTO] GEORGE DAVID, Chairman and Chief Executive Officer, United
Technologies Corporation. Mr. David served as the Corporation's
President from 1992 to 1999. He was elected Chief Executive
Officer in 1994 and Chairman in 1997. Mr. David is a member of
the Business Roundtable, and Chairman or President of the
Boards of the Graduate School of Business Administration at the
University of Virginia, the National Minority Supplier
Development Council, and the Wadsworth Atheneum Museum of Art
in Hartford, CT. Mr. David is also co-Chairing the TransAtlantic
Business Dialogue for the year 2000. He is 57 and has been a
director of the Corporation since 1992.
[PHOTO] JEAN-PIERRE GARNIER, Ph.D., Chief Operating Officer and
Executive Member of the Board of Directors of SmithKline
Beecham plc, Philadelphia, PA (pharmaceuticals). Following the
announced merger of SmithKline Beecham and Glaxo Wellcome, Dr.
Garnier has been appointed Chief Executive Officer-elect of the
New Glaxo SmithKline Company. He served as Chairman, SB
Pharmaceuticals from 1994 until his appointment to his current
position in 1995. Dr. Garnier is a director of the Eisenhower
Exchange Fellowships. Dr. Garnier is 52 and has been a director
of the Corporation since 1997.
[PHOTO] JAMIE S. GORELICK, Vice Chair of Fannie Mae, a New York Stock
Exchange company that is the nation's largest source of
financing for home mortgages. Prior to joining Fannie Mae in
May 1997, Ms. Gorelick was Deputy Attorney General of the
United States, a position she assumed in March 1994. In
addition to serving on the Board of Fannie Mae, Ms. Gorelick
serves on the Harvard Board of Overseers and the Boards of
America's Promise, the Carnegie Endowment for International
Peace, and the Washington Legal Clinic for the Homeless, as
well as other civic organizations. She is a member of the
Council of the American Law Institute and the Council on
Foreign Relations, and serves on the Central Intelligence
Agency's National Security Advisory Panel. She is 49 and has
been a director of the Corporation since February 2000.
6
<PAGE>
[PHOTO] KARL J. KRAPEK has served as President and Chief Operating
Officer of the Corporation since April 1999. Mr. Krapek served
as Executive Vice President of the Corporation from 1997 to
1999 and as President, Pratt & Whitney from 1992 to 1999. 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, a
director of Saint Francis Care, Inc. and served as 1999 General
Campaign Chairman for the United Way and Combined Health Appeal
Community Campaign in the Hartford area. Mr. Krapek is 51 and
has been a director of the Corporation since 1997.
[PHOTO] CHARLES R. LEE, Chairman and Chief Executive Officer of GTE
Corporation, Irving, TX (telecommunications). Mr. Lee has
served since 1992 as Chairman and Chief Executive Officer of
GTE. Mr. Lee will be Chairman and co-Chief Executive Officer
of the new company to be formed upon completion of the merger
of GTE and Bell Atlantic. He is a director of The Procter &
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 Emeritus Corporation, a member of the
Conference Board, and a director of the Stamford Hospital
Foundation. He is 60 and has been a director of the
Corporation since 1994.
[PHOTO] RICHARD D. MCCORMICK, Chairman Emeritus, U S WEST, Inc.,
Denver, Colorado (telecommunications). Mr. McCormick served as
Chairman of the Board of U S WEST, Inc. from June 1998 until
his retirement in May 1999. He was Chairman, President and
Chief Executive Officer of U S WEST, Inc. from May 1992 until
June 1998. He is also a director of United Airlines, Wells
Fargo and Company and Concept Five Technologies. In addition,
he is Chairman of the United States Council for International
Business, Vice President of the International Chamber of
Commerce, and a director of Creighton University. He is a
member of the Business Council, a trustee of the Denver Art
Museum and board member of the American Indian College Fund.
Mr. McCormick is 59 and has been a director of the Corporation
since February 1999.
[PHOTO] FRANK P. POPOFF, Chairman, The Dow Chemical Company, Midland,
Michigan. Mr. Popoff is also a director of American Express
Company, U S 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 64 and has been a
director of the Corporation since 1996.
[PHOTO] ANDRE VILLENEUVE, Executive Chairman of Instinet Corporation,
an international electronic agency stockbroker based in New
York, NY, and an independently managed subsidiary of Reuters
Holdings PLC. Mr. Villeneuve served as Executive Director of
Reuters Holdings PLC, London, England (worldwide news
information and services business) from 1988 until February
2000. He is also a director of CGU plc. Mr. Villeneuve is 55
and has been a director of the Corporation since 1997.
7
<PAGE>
[PHOTO] HAROLD A. WAGNER, Chairman and Chief Executive Officer, Air
Products and Chemicals, Inc., Allentown, Pennsylvania
(industrial gases and chemicals). Mr. Wagner served as
Chairman, President and Chief Executive Officer, Air Products
and Chemicals, Inc. from 1992 to 1998. He is a director of
CIGNA Corporation, PACCAR Inc. and Daido-Hoxan, a member of
the Business Council, the Policy Committee of the Business
Roundtable, and a member of the Pennsylvania Business
Roundtable. Mr. Wagner also serves on the Board of Trustees of
Lehigh University. Mr. Wagner is 64 and has been a director of
the Corporation since 1994.
[PHOTO] SANFORD I. WEILL, Chairman and Co-Chief Executive Officer of
Citigroup, Inc. Mr. Weill will become Chairman and Chief
Executive Officer of Citigroup, Inc. in April 2000. Prior to
the October 1998 merger of Travelers Group Inc. and Citicorp,
Mr. Weill was Chairman and Chief Executive Officer of
Travelers Group Inc. from 1993 to 1998. Mr. Weill is also a
member of the Board of Directors of Travelers Property
Casualty Corp., AT&T Corporation and E.I. duPont de Nemours &
Company. He is Chairman of the Board of Trustees of Carnegie
Hall and a member of the Business Roundtable, the Business
Council, the Board of Directors of the Baltimore Symphony,
the Board of Governors of New York Presbyterian Hospital, the
Board of Overseers of the Weill Medical College and Graduate
School of Medical Sciences of Cornell University and other
civic organizations. He is 67 and has been a director of the
Corporation since December 1999.
The Board met eight times during 1999 with an average attendance of 91%. All
incumbent directors attended more than 75% of the aggregate number of meetings
of the Board and Committees on which he or she served, except William J. Perry
who attended 73% of such meetings.
Committees.
The Board has established the following committees of the Board:
The Audit Review Committee recommends to the Board an accounting firm to serve
as independent public accountants for the Corporation. The Committee reviews
the annual audited financial statements of the Corporation, the adequacy of
internal accounting controls, and reports on compliance with policies and
procedures, business ethics, financial controls, and applicable laws. During
1999, the Committee held four meetings and Directors Chayes, McCormick, Perry,
Popoff (Chairman), Villeneuve and Wagner were members of the Committee.
The Committee on Compensation and Executive Development approves compensation
actions for senior executives, including long term incentive awards;
administers incentive compensation, long term incentive and other compensation
plans of the Corporation; and reviews management development policies and
programs. During 1999, the Committee held eight meetings and Directors
Garnier, Lee, Popoff and Wagner (Chairman) were members of the Committee.
The Finance Committee reviews and makes recommendations to the Board on the
management of the financial resources of the Corporation. The Committee also
reviews major financial strategies and transactions. During 1999, the
Committee held four meetings and Directors David, Krapek, Lee (Chairman),
Perry, Popoff and Villeneuve were members of the Committee.
The Nominating Committee makes recommendations on candidates for the Board,
director compensation and corporate governance. The Committee considers
nominees recommended to it in writing by shareowners. During 1999, the
Committee held four meetings and Directors Garnier, Lee, McCormick, Perry
(Chairman) and Wagner were members of the Committee.
8
<PAGE>
The Public Issues Review Committee reviews the Corporation's response to public
issues such as equal employment opportunity, the environment, and safety in the
workplace. In addition, the Committee reviews the Corporation's contributions
program and political action committees. During 1999, the Committee held four
meetings and Directors Chayes (Chair), Garnier, McCormick, Perry and Villeneuve
were members of the Committee.
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, at the election of the
director, in additional stock units. 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. Payment may be made either in a lump sum
or in installments at the election of the director. 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.
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 the shares. The shares vest ratably over five years, but may not be
sold or otherwise transferred until the director retires or resigns from the
Board. If a director leaves the Board before all of the 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.
As part of its overall program of support for charitable institutions and to
further enhance the ability of the Corporation 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 will 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 of the 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.
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table shows, as of March 1, 2000, the UTC equity securities
beneficially owned by each current director, each nominee for election to the
Board of Directors, each of the executive officers named in the Summary
Compensation Table on page 16, and all of the directors and executive officers
as a group (after adjustments to reflect the May 17, 1999 100% stock dividend).
As of March 1, 2000, each of the directors and executive officers beneficially
owned or had the right to acquire beneficial ownership
9
<PAGE>
of (upon the exercise of stock options exercisable within 60 days) less than 1%
of the Corporation's Common Stock and less than 1% of the Corporation's Series
A Convertible ESOP Preferred Stock. The directors and executive officers as a
group beneficially owned or had the right to acquire beneficial ownership of
(upon the exercise of stock options exercisable within 60 days) approximately
1.8% of the Common Stock and less than 1% of the Series A Convertible ESOP
Preferred Stock.
Security Ownership of Directors, Nominees and Executive Officers.
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
Shares Beneficially
Name Class of Securities Owned(1)
---- ------------------- -------------------
<S> <C> <C>
Antonia Handler Chayes................ Common(2) 9,200
George David.......................... Common 4,265,343
ESOP Preferred 981
Jean-Pierre Garnier................... Common(2) 8,000
Jamie S. Gorelick..................... Common(2) 2,700
Karl J. Krapek........................ Common 1,635,770
ESOP Preferred 991
Charles R. Lee........................ Common(2) 20,900
Richard D. McCormick.................. Common(2) 14,000
William J. Perry...................... Common(2) 8,000
Frank P. Popoff....................... Common(2) 8,000
Andre Villeneuve...................... Common(2) 4,000
Harold A. Wagner...................... Common(2) 15,412
Sanford I. Weill...................... Common(2) 12,000
Stephen F. Page....................... Common 705,056
ESOP Preferred 365
John R. Lord.......................... Common 451,988
ESOP Preferred 1,107
David J. FitzPatrick.................. Common 14,000
ESOP Preferred 25
Directors & Executive Officers as a
Group (27)........................... Common 8,360,518
ESOP Preferred 9,223
</TABLE>
(1) Included in the number of shares beneficially owned by Messrs. David,
Krapek, Page, Lord, FitzPatrick and all directors and executive officers as a
group are 3,780,000; 1,296,000; 648,000; 412,000; 0; and 7,149,094 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; 436,811; 106,230; 30,672; 13,000; 4,000; and 745,391 shares,
respectively, as to which such persons have sole voting and investment power;
and 48,532; 233,540; 26,384; 26,988; 10,000; and 466,033 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 4,000
shares of restricted Common Stock: Ms. Chayes, Messrs. Garnier, Lee, McCormick,
Perry, Popoff, Villeneuve and Wagner. Ms. Gorelick and Mr. Weill each have
sole voting power but no investment power with respect to 2,000 shares of
restricted Common Stock. Ms. Chayes, Ms. Gorelick, and Messrs. Lee, McCormick,
Wagner and Weill have sole voting and investment power with respect to the
balance of their holdings of Common Stock.
10
<PAGE>
(2) In addition to shares shown as beneficially owned at March 1, 2000,
nonemployee directors held vested deferred stock units acquired under the
Directors Deferred Stock Unit Plan, each unit of which is valued by reference
to one share of Common Stock, as follows:
<TABLE>
<S> <C>
Antonia Handler Chayes.................................................. 18,064
Jean-Pierre Garnier..................................................... 5,590
Jamie S. Gorelick....................................................... 1,172
Charles R. Lee.......................................................... 11,570
Richard D. McCormick.................................................... 1,972
</TABLE>
<TABLE>
<S> <C>
William J. Perry.......................................................... 5,599
Frank P. Popoff........................................................... 7,293
Andre Villeneuve.......................................................... 4,166
Harold A. Wagner.......................................................... 8,338
Sanford I. Weill.......................................................... 960
</TABLE>
AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors believes it is advisable to amend the Corporation's
Restated Certificate of Incorporation to increase the authorized shares of
Common Stock from 1,000,000,000 to 2,000,000,000 shares. Accordingly, at its
meeting held February 7, 2000, the Board adopted a resolution proposing that an
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 and the total
number of authorized shares.
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 2,250,000,000 shares, of which
250,000,000 shares shall be Preferred Stock of the par value of $1 each
(hereinafter called 'Preferred Stock') and 2,000,000,000 shares shall be Common
Stock of the par value of $1 each (hereinafter called 'Common Stock')."
Of the 1,000,000,000 shares of Common Stock presently authorized, as of
December 31, 1999, 474,546,113 shares of Common Stock were outstanding,
45,168,373 shares were reserved for issuance pursuant to stock option and
incentive plans, and 48,946,508 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 to be authorized 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 April 30, 1999, the Corporation declared a two-for-one stock split which was
paid on May 17, 1999, in the form of a stock dividend. The proposed increase in
the number of authorized shares of Common Stock in part would replace, as
shares available for future issuance, the shares of Common Stock issued in
connection with the stock split, and also provide 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 at
the time such issuance may become necessary. 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 by the rules of any stock exchange on which
the Corporation's Common Stock is then listed. For example, under the current
rules of the New York Stock Exchange (the "Exchange"), on which the
Corporation's Common Stock is listed, shareowner approval would still be
required for certain large issuances of shares. Shareowner approval is a
prerequisite to listing additional, newly issued shares in several instances,
including acquisition transactions, where the potential issuance of shares
listed on the Exchange could result in an increase of at least 20% in the
number of shares outstanding.
11
<PAGE>
Except for the issuance of shares of Common Stock pursuant to employee stock
option and other stock related benefit plans, the Corporation currently has no
plans or arrangements for the issuance of shares of Common Stock for any
purpose, including but not limited to rendering more difficult or discouraging
a change in control of the Corporation. Shareowners of the Corporation do not
have any preemptive rights with respect to issuance of any additional shares of
Common Stock of the Corporation.
The consolidated financial statements and related financial information set
forth on pages 2 to 26 of the Corporation's 1999 Annual Report to Shareowners
are incorporated herein by reference.
The Board of Directors therefore recommends that Shareowners vote FOR the
Adoption of the Amendment to the Restated Certificate of Incorporation of the
Corporation.
APPROVAL OF PERFORMANCE CRITERIA UNDER ANNUAL EXECUTIVE INCENTIVE COMPENSATION
PLAN
In 1995, the Corporation's shareowners approved an amendment to the United
Technologies Corporation Annual Executive Incentive Compensation Plan (the
"Plan") establishing the Covered Employee Performance Pool (the "Incentive
Performance Pool") from which annual incentive compensation awards may be paid
to the Corporation's Chief Executive Officer and its four other most highly
paid executive officers ("Covered Employees"). Annual incentive compensation
awards under the Plan to other eligible executives are determined and paid
outside of the Incentive Performance Pool.
The purpose of the Plan is to promote the interests of the Corporation by
providing incentives for those employees of the Corporation whose efforts and
accomplishments contribute to the successful management of the Corporation.
Under Section 162(m) of the Internal Revenue Code ("Section 162(m)"), the
Corporation generally is permitted to deduct, for federal income tax purposes,
compensation paid to Covered Employees in excess of $1,000,000 only if it
qualifies as performance based compensation that meets the requirements of
Section 162(m). The Incentive Performance Pool is designed and administered
with the objective of preserving the Corporation's federal tax deductions with
respect to Plan awards. Section 162(m) requires that shareowners approve
performance-based compensation arrangements such as the Incentive Performance
Pool every 5 years.
The Plan provides for the award of annual bonuses to the Covered Employees
exclusively from the Incentive Performance Pool. The amount of the Pool is
equal to 0.75% of the Corporation's "adjusted net income" for the year, which
is defined as the Corporation's net income reported on its consolidated
financial statements included in its Annual Report on Form 10-K for the year,
adjusted to eliminate (i) restructuring charges to the extent they are
separately disclosed in the Corporation's Annual Report, (ii) the effects of
changes in accounting principles, and (iii) "extraordinary items" determined
under generally accepted accounting principles.
30% of the Incentive Performance Pool is allocated to the Chief Executive
Officer and 17.5% to each of the four other Covered Employees. However, the
Committee on Compensation and Executive Development (the "Committee") may
reduce (but not increase) a Covered Employee's award from the Pool, in its sole
discretion, based on such factors that it deems relevant, including a
subjective assessment of overall performance and peer group compensation data.
The Committee has the sole authority to administer the Incentive Performance
Pool. The amount of the Incentive Performance Pool and the allocation among
participants is determined by the Committee as soon as practicable after the
Corporation closes its financial books for the year. Because the amount of
funds, if any, that will comprise the Incentive Performance Pool for 2000 will
depend on the Corporation's adjusted net income for the year, it is not
possible to determine the awards allocable to any Covered Employee for 2000.
Further, because the amounts payable to each Covered Employee may be reduced in
the Committee's discretion, the award that a Covered
12
<PAGE>
Employee will receive under the Plan in 2000 is not determinable. The awards
made under the Plan to the Covered Employees in 1999 are shown in the Bonus
column of the Summary Compensation Table on page 16.
Vote Required.
The Board of Directors recommends that shareowners approve the continued use of
the Incentive Performance Pool to provide incentive awards to the Chief
Executive Officer and four other most highly compensated executive officers.
The Board of Directors recommends a vote FOR the approval of this proposal.
APPROVAL OF CONTINUED USE OF CERTAIN PERFORMANCE TARGETS UNDER LONG TERM
INCENTIVE PLAN
In 1995, the Corporation's shareowners approved an amendment to the Long Term
Incentive Plan (the "LTIP") specifying certain types of performance targets
applicable to the vesting of dividend equivalent awards ("DEs"). As discussed
in the preceding proposal, Section 162(m) of the Internal Revenue Code
("Section 162(m)") provides that the Corporation may not deduct compensation in
excess of $1 million per year paid to its chief executive officer or to any of
its four other most highly paid executive officers unless it qualifies as
performance-based compensation. DEs that vest subject to the achievement of
performance targets are intended to be deductible as performance-based
compensation under Section 162(m).
A DE is the right to receive a payment equal to the dividend declared and paid
on the Corporation's Common Stock. Under the Continuous Improvement Incentive
Program (the "CIIP"), one DE is awarded with respect to each stock option. DEs
vest subject to the achievement of CIIP performance targets. Vested DEs are
paid for a specified period of time (up to seven years for the Corporation's
most senior executives) or until the associated stock option is exercised, if
sooner. Benefits under the program are based on the number of DEs awarded, the
amount of future dividend payments and the period of time before the associated
stock options are exercised, and therefore are not determinable. No individual
may be awarded more than 6 million DEs over a 36 consecutive month period. The
numbers of DEs awarded to the Covered Employees in 1999 are shown in the
Options/SAR Grants table on page 17.
DE performance targets are established by the Committee each year under one or
more of the following measures of performance: earnings per share ("EPS");
total shareholder return ("TSR"); return on equity ("ROE"); return on sales
("ROS"); return on net operating assets ("RNOA"); and working capital turnover
("WCT"). Specific ROS, RNOA and WCT targets are established for the business
units. The performance measurement period is generally three years and may not
be less than one year. EPS means basic or diluted earnings per share as
determined under generally accepted accounting principles. ROE is equal to net
income available to Common Stock owners divided by average equity. RNOA is
calculated by dividing operating profit before interest expense and income
taxes by average net operating assets. ROS is calculated by dividing operating
profit before interest expense and income taxes by sales. TSR is equal to the
percentage change in the value of a share of Common Stock between the beginning
and end of the measurement period, including the amount of dividends paid
during the measurement period. WCT is equal to the ratio of sales to average
working capital. Working capital means external accounts receivable plus net
inventory less external accounts payable and advances on sales contracts. For
purposes of determining achievement of performance targets, calculations are
adjusted to eliminate: (i) restructuring charges to the extent they are
separately disclosed in the Corporation's Annual Report on Form 10-K; (ii) the
effects of changes in accounting methods; (iii) the translation impact of
changes in foreign currency exchange rates; and (iv) "extraordinary items"
determined under generally accepted accounting principles.
DE awards vest fully if achievement is 100% of target and vest 50% if
achievement is 90% of target. Vesting is prorated if achievement is between 90%
and 100% of target. DEs do not vest if aggregate achievement of
13
<PAGE>
performance targets is less than 90%. If vesting is subject to more than one
performance target, the relative weighting of each target is determined by the
Committee. Vesting for business unit participants may be based on business unit
and corporate performance targets.
CIIP performance targets are established by the Committee no later than 90 days
after the beginning of the performance measurement period and may not be
changed after that date. The Committee reviews and certifies the level of
achievement of CIIP performance targets. In making such determinations, the
Committee relies on audited consolidated financial statements and such other
financial reports and information as it deems necessary and appropriate.
Vote Required.
The Board of Directors recommends that shareowners approve the continued use of
the foregoing performance targets in connection with the vesting of dividend
equivalent awards.
The Board of Directors recommends a vote FOR this proposal.
REPORT OF COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT
Program Structure and Objectives
The Board of Directors' Committee on Compensation and Executive Development is
responsible for the Corporation's Executive Compensation Program. The Program
goal is to support recruitment and retention, and to align management and
shareowner interests. It emphasizes long term, at risk and variable
compensation. Performance based compensation under the Program generally will
not be subject to the $1 million deduction limit imposed by Section 162(m) of
the Internal Revenue Code.
The Committee uses compensation information from a "Compensation Peer Group" of
17 companies in the Dow Jones 30 Industrial Average and 19 other companies with
similar characteristics to the Corporation. Program value for participating
executives, including the named executive officers is targeted at or slightly
above the median of the Compensation Peer Group. The actual value of total
compensation under the Program varies with individual and corporate
performance.
The Annual Incentive Compensation Plan rewards performance against objectives
established for the Corporation and the business units. For 1999, 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, cash flow and working capital turnover, weighted 70%, 20% and 10%,
respectively. The amount available for awards is determined by the Committee
for the corporate headquarters and by the Chief Executive Officer (the "CEO")
for the business units on the basis of achievement of annual objectives and an
overall assessment of corporate or business unit performance. Individual awards
are based on contributions to corporate and business unit results. Annual
incentive compensation awards for the five named executive officers may not
exceed 0.75% of the Corporation's adjusted net income. The CEO receives no more
than 30% of this amount, and each of the other four named executive officers no
more than 17.5%. Subject to these limits, the Committee determines the actual
amount of each award.
14
<PAGE>
Stock option and dividend equivalent awards under the Long Term Incentive Plan
are directly correlated with increases in shareowner value and achievement of
specific performance targets. The value of stock options is contingent on share
price appreciation after the date of grant and is thus directly tied to
increases in shareowner value. Stock options generally vest three years from
the date of grant and remain exercisable for seven years thereafter.
A dividend equivalent ("DE") is a payment equal to the quarterly dividend paid
to the Corporation's shareowners, subject to achievement of three year
performance targets. Under the Continuous Improvement Incentive Plan (the
"CIIP"), executives are awarded one DE for each stock option. For 1999, the
corporate headquarters targets were earnings per share and return on capital,
weighted equally. Business units have specific CIIP targets. No vesting of DEs
occurs if aggregate achievement is less than 90% of target. Payment of DEs
begins following vesting and continues for two to seven years (depending upon
an executive's grade level), or until the earlier exercise of the associated
stock option.
Chief Executive Officer Compensation
Current compensation actions affecting the CEO reflect excellent financial
results for 1999 and the Committee's favorable assessment of the Corporation's
strategic accomplishments. The Committee also rates favorably Mr. David's
ability to lead and develop a strong team, as evidenced by Mr. Krapek's
election as President and Chief Operating Officer. Compensation decisions are
not based on objective formulas, although Compensation Peer Group data is
considered. Mr. David's base salary and incentive compensation for 1999 place
him at the median of CEOs of the Compensation Peer Group. Mr. David received
LTIP grants of 300,000 stock options and an award of 400,000 stock options and
associated DEs under the CIIP.
For 1999 diluted earnings per share increased 19%, from $2.53 to $3.01 and net
income increased 22% from $1.26 billion to $1.53 billion. Segment margins
improved from 10.1% to 11.5%, before the 1999 restructuring program. Available
cash flow before the after-tax effect of cash paid for the 1999 restructuring
and other actions was $1.6 billion, exceeding net income for the fifth year in
a row. These results were achieved in spite of a downturn in the aerospace
cycle, continued sluggishness in Asia and the unfavorable impact of foreign
currency translation.
Total shareowner return for 1999 including share price appreciation and
dividends was 21%, equal to the S&P 500 but less than the Dow Jones 30
Industrials (27%). However, shareowner return exceeded the S&P Aerospace Index
(-2.5%) and the NYSE Composite Index (11%). Over the past five years, annual
total return to shareowners averaged 35% compared with 27% for the Dow Jones
30.
Through acquisition and divestiture transactions in excess of $8.6 billion in
total, the Corporation redeployed assets into core commercial and aerospace
businesses. The successful sale of the automotive business for $2.3 billion
helped facilitate the 1999 restructuring program and several major
acquisitions, including the Sundstrand Corporation for $4.3 billion.
Sundstrand offers an excellent strategic fit with the former Hamilton Standard
division. Other acquisitions expanded Pratt & Whitney's after-market activities
and improved Carrier's and Otis' industry positions and product ranges.
The Committee also judged UTC's corporate citizenship progress and performance
to continue to be excellent, demonstrated by its highly successful
Environmental, Health and Safety program, its compliance with law and ethical
standards, and its trend-setting Employee Scholar Program.
COMMITTEE ON COMPENSATION AND EXECUTIVE DEVELOPMENT
Harold A. Wagner, Chairman Charles R. Lee
Jean-Pierre Garnier Frank P. Popoff
15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table summarizes the compensation provided
to the Corporation's Chief Executive Officer and the other four most highly
compensated executive officers of the Corporation and its subsidiaries in 1999
for services performed for the Corporation in all capacities during each of the
three fiscal years ended December 31, 1999. The numbers of shares of Common
Stock and options, exercise prices for options and prices per share of Common
Stock reflected in the following three compensation tables, footnotes and
performance graph have been adjusted for the May 17, 1999 100% stock dividend.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------- ------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Compensation Awards Options Compensa-
Name and Principal Position Year Salary ($) Bonus ($) (1) ($) (2) ($) (3) /SARs(#) tion ($) (5)
--------------------------- ---- ---------- ------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
George David 1999 $1,200,000 $2,200,000 $109,290 $0 700,000 $43,727
Chairman and Chief Executive 1998 $1,170,833 $1,900,000 $97,300 $0 350,000 $40,267
Officer 1997 $1,100,000 $1,700,000 $92,179 $0 750,000 $37,271
Karl Krapek 1999 $783,333 $1,250,000 $61,196 $0 470,000 $24,240
President and Chief Operating 1998 $729,583 $1,100,000 $85,805 $0 150,000 $21,576
Officer 1997 $695,000 $1,000,000 $59,440 $0 300,000 $20,875
Stephen Page 1999 $602,500 $600,000 $66,594 $0 110,000 $62,500
Executive Vice President and 1998 $576,667 $600,000 $62,200 $0 110,000 $52,490
President, Otis 1997 $551,250 $500,000 $86,525 $1,517,500(4) 280,000 $46,330
John Lord 1999 $487,500 $500,000 $58,261 $0 90,000 $42,560
President, Carrier 1998 $463,333 $475,000 $62,564 $0 90,000 $38,320
1997 $442,500 $350,000 $69,068 $1,517,500(4) 260,000 $35,410
David FitzPatrick 1999 $417,500 $450,000 $60,939 $0 80,000 $39,218
Senior Vice President and 1998 $216,667 $375,000 $86,901 $428,125(4) 200,000 $0
Chief Financial Officer 1997 $0 $0 $0 $0 0 $0
</TABLE>
- --------
(1) Incentive compensation shown in the Bonus column for the named executive
officers was paid under the Annual Executive Incentive Compensation Plan, which
is discussed in the Compensation Committee Report on page 14.
(2) The amounts shown in this column for 1999 include: $56,664 for personal use
of corporate aircraft for security reasons for Mr. David; and perquisite
allowances for each of Messrs. David, Krapek, Page, Lord and FitzPatrick of
$43,387, $48,125, $60,000, $37,461 and $29,756, respectively.
(3) At the close of business on December 31, 1999, the following named
executive officers held total non-vested restricted shares as follows: Mr.
Krapek: 200,000 shares valued at $13,000,000; Mr. Page: 20,000 shares valued at
$1,300,000; Mr. Lord: 20,000 shares valued at $1,300,000; and Mr. FitzPatrick:
10,000 shares valued at $650,000. The foregoing values were calculated by
multiplying the closing market price of the Common Stock on December 31, 1999
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 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.
(4) Consists of a grant of 40,000 shares of time-based restricted stock to each
of Mr. Page and Mr. Lord and 10,000 shares of time-based restricted stock to
Mr. FitzPatrick, valued at the market price of Common Stock as of the date of
grant. For each grant to Mr. Page and Mr. Lord, 20,000 shares vested on
February 24, 1999 and 20,000 are scheduled to vest February 24, 2001. For Mr.
FitzPatrick's grant, 5,000 shares are scheduled to vest on each of June 16,
2000 and June 16, 2002.
(5) For 1999, 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 $37,967, $18,480, $56,740,
$36,800 and $33,458, respectively, for Messrs. David, Krapek, Page, Lord and
FitzPatrick.
The following table provides information concerning individual grants of stock
options made during 1999 to each named executive officer. No stock appreciation
rights were granted during 1999.
16
<PAGE>
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants (1)
-------------------------------------------------------
% of Total
Number of Shares Options/SARs
Underlying Granted to Grant Date
Options/SARs Employees in Exercise Price Expiration Present Value
Name Granted (#) Fiscal Year ($/Sh) Date ($) (2)
---- ---------------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
George David 400,000(3) 3.3% $54.000 1/3/09 $7,348,320
300,000(4) 2.4% $72.438 4/29/09 $7,392,971
Karl Krapek 170,000(3) 1.4% $54.000 1/3/09 $3,123,036
300,000(4) 2.4% $72.438 4/29/09 $7,392,971
Stephen Page 110,000(3) 0.9% $54.000 1/3/09 $2,020,788
John Lord 90,000(3) 0.7% $54.000 1/4/02 $1,653,372
David FitzPatrick 80,000(3) 0.7% $54.000 1/3/09 $1,469,664
</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 0.1864, and a dividend yield of 1.86%. 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 January 4, 1999, and will vest and
become exercisable on January 4, 2002. These stock options include an equal
number of dividend equivalents, which will vest depending on the achievement of
performance goals measured over a three-year vesting period.
(4) These stock options were granted on April 30, 1999, and will vest and
become exercisable at the end of the three-year vesting period on April 30,
2002.
The following table provides information concerning the exercise of stock
options and stock appreciation rights during 1999 by each of the named
executive officers and the fiscal year-end values 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
Unexercised Options/SARs at In-The-Money Options/SARs
Fiscal Year-End (#) at Fiscal Year-End ($) (1)
------------------------------- --------------------------
Value
Shares Acquired Realized
Name on Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- --------------- ---------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
George David 240,000 $13,266,250 3,680,000 1,150,000 $166,844,981 $17,059,375
Karl Krapek 440,000 $22,285,000 1,196,000 720,000 $52,203,492 $8,841,875
Stephen Page 150,000 $8,137,500 568,000 300,000 $23,083,616 $6,503,125
John Lord 0 $0 352,000 240,000 $12,099,872 $5,173,125
David FitzPatrick 0 $0 0 280,000 $0 $5,317,500
</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, 1999, as applicable, and is
calculated by subtracting the exercise price per share from the applicable
closing price.
17
<PAGE>
Performance Graph
The following graph presents the cumulative total shareowner return for the
five years ending December 31, 1999 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 $100.00 on December 31, 1994.
[GRAPH]
1994 1995 1996 1997 1998 1999
United Technologies $100.00 $154.71 $220.05 $245.72 $372.64 $450.64
Standard & Poor's 500 $100.00 $137.45 $168.93 $225.21 $289.43 $349.92
Dow Jones 30 Industrials $100.00 $136.84 $176.31 $220.18 $260.12 $330.93
Section 16(a) Beneficial Ownership Reporting Compliance
The Corporation believes, based upon a review of the forms filed and written
confirmation provided by its officers and directors, that during 1999 all of
its officers and directors filed on a timely basis the reports required by
Section 16(a) of the Securities Exchange Act of 1934, except that there were
three inadvertent errors in a Form 3 filed on behalf of R.F. McKenna at the
time he became subject to Section 16(a); and a report was inadvertently not
filed on a timely basis with respect to a purchase of 1,000 shares of Common
Stock by R.R. Harkin. Reports were later filed to correct these errors and
omission.
Certain Business Relationships
Citigroup Inc., of which Mr. Weill is Chairman and Co-Chief Executive Officer,
provides banking services to the Corporation. Salomon Smith Barney Holdings
Inc., a subsidiary of Citigroup Inc., provides securities underwriting and
financial advisory services to the Corporation, for which it receives customary
compensation. The Corporation and its subsidiaries have had, and expect in the
future to have, transactions in the ordinary course of business with these and
other companies of which certain of the nonemployee directors are officers or
directors. In the past, the amounts involved have not been material in relation
to the business of the Corporation and the Corporation believes that such
amounts were not material in relation to the businesses of such other companies
or the interests, if any, of the directors involved.
18
<PAGE>
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
and the Chief Executive Officer have the authority to select the participants
under the Severance Plan. Effective December 31, 1999, 30 key executives,
including the five executive officers named in the Summary Compensation Table,
were covered under the Severance Plan. The Severance Plan provides that in the
event the participant's employment with the Corporation terminates 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.
In addition to the Severance Plan, 28 key executives, including the five
executive officers named in the Summary Compensation Table, 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 $ 146,200 $ 194,900 $ 218,600 $ 242,400 $ 266,500 $ 291,500
1,000,000 296,200 394,900 443,600 492,400 541,500 591,500
1,500,000 446,200 594,900 668,600 742,400 816,500 891,500
2,000,000 596,200 794,900 893,600 992,400 1,091,500 1,191,500
2,500,000 746,200 994,900 1,118,600 1,242,400 1,366,500 1,491,500
3,000,000 896,200 1,194,900 1,343,600 1,492,400 1,641,500 1,791,500
3,500,000 1,046,200 1,394,900 1,568,600 1,742,400 1,916,500 2,091,500
4,000,000 1,196,200 1,594,900 1,793,600 1,992,400 2,191,500 2,391,500
</TABLE>
The table sets forth estimated annual benefits payable upon retirement at age
65 under the Corporation's defined benefit pension plans. 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 Long Term Incentive Plan (shown in
the Long Term 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 defined by the supplemental plan.
19
<PAGE>
As of December 31, 1999, the executive officers named in the Summary
Compensation Table had the following full years of credited service for
determining benefits: G. David, 24 years; K. Krapek, 17 years; S. Page, 6
years; J. Lord, 18 years; and D. FitzPatrick, 1.5 years.
SHAREOWNER PROPOSALS
Shareowner Proposal Concerning Disclosure of Prior Governmental Service
Mrs. Evelyn Y. Davis, Watergate Office Building, Suite 215, 2600 Virginia
Avenue., N.W., Washington, D.C. 20037, who is the owner of 200 shares of Common
Stock, has given notice that she intends to introduce the following proposal
for adoption at the Annual Meeting:
"RESOLVED: That the stockholders of United Technologies assembled in Annual
Meeting in person and by proxy hereby request the Board of Directors to have
the Company furnish the stockholders each year with a list of people employed
by the Corporation with the rank of Vice President or above, or as a
consultant, or as a lobbyist, or as legal counsel or investment banker or
director, who, in the previous five years have served in any governmental
capacity, whether Federal, City or State, or as a staff member of any
CONGRESSIONAL COMMITTEE or regulatory agency, and to disclose to the
stockholders whether such person was engaged in any matter which had a bearing
on the business of the Corporation and/or its subsidiaries, provided that
information directly affecting the competitive position of the Corporation may
be omitted.
REASONS: Full disclosure on these matters is essential at United Technologies
because of its many dealing with Federal and State agencies, and because of
pending issues forthcoming in Congress and/or State and Regulatory Agencies.
If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors' Statement In Opposition
The Board of Directors recommends a vote AGAINST this proposal.
The Corporation recruits and selects its directors, officers, employees, and
outside professionals on the basis of their qualifications, expertise, and
integrity. The Corporation has adopted an extensive program including a Code of
Ethics and a policy on ethics and conduct in contracting with the U.S.
Government, which include strict rules and procedures to safeguard against
conflicts of interest, the appearance of improper influence, and violations of
the numerous federal, state, and local laws that regulate the activities of
officials after they leave government service.
This proposal would be costly and confers no benefit to shareowners.
The Board of Directors therefore recommends that Shareowners vote AGAINST this
proposal concerning disclosure of prior governmental service.
Shareowner Proposal Concerning Northern Ireland
The New York City Employees' Retirement System, the New York City Teachers'
Retirement System, the New York City Fire Department Pension Fund and the New
York City Police Department Pension Fund, c/o Comptroller of the City of New
York as Custodian, 1 Centre Street, New York, NY 10007-2341, beneficial owners
of 1,695,902 shares of Common Stock, have given notice of their intent to
introduce the following proposal for adoption at the Annual Meeting.
20
<PAGE>
Text of Shareowner Proposal and Supporting Statement.
"WHEREAS, United Technologies Corporation operates a wholly-owned subsidiary in
Northern Ireland;
WHEREAS, the on-going peace process in Northern Ireland encourages us to search
for means of establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by the
International Commission of Jurists as one of the major causes of sectarian
strife in that country;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace
Laureate, has proposed several equal opportunity employment principles to serve
as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from underrepresented religious
groups in the workforce, including managerial, supervisory, administrative,
clerical and technical jobs.
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from under-represented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice, favor
particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial numbers
of current minority employees for skilled jobs, including the expansion of
existing programs and the creation of new programs to train, upgrade, and
improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the company's
affirmative action efforts and the setting up of timetables to carry out
affirmative action principles.
RESOLVED, Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity on
each of the nine MacBride Principles.
Supporting Statement
We believe that our company benefits by hiring from the widest available talent
pool. An employee's ability to do the job should be the primary consideration
in hiring and promotion decisions.
Implementation of the MacBride Principles by United Technologies Corporation
will demonstrate its concern for human rights and equality of opportunity in
its international operations.
Please vote your proxy FOR these concerns."
21
<PAGE>
The Board of Directors' Statement in Opposition
The Corporation's Otis Plc business unit currently employs 62 people at a
facility in Belfast, Northern Ireland. Neither of the two major religious
groups is underrepresented in the Otis Plc workforce in Belfast.
The Otis facility complies with all fair employment legislation, including
requirements to register with the Equality Commission, to submit regular
monitoring returns showing religious composition of the workforce and to
review employment practices on a regular basis. The Equality Commission has
provided training for Otis Plc management concerning fair employment practices
and Otis Plc has a monitoring officer to monitor recruitment practices in
accordance with Equality Commission guidelines. Otis Plc also enforces its own
strict fair employment policy, which includes a prohibition of displays of
religious and/or political emblems. Further, every effort is made to maintain
a safe and secure workplace for employees.
The Corporation has also provided information to the Equality Commission and
to the Investor Responsibility Research Center concerning the employment
practices of the Otis facility in Northern Ireland.
The Corporation's policy is to afford equal employment opportunity to
qualified individuals regardless of their religion. The Corporation also is
committed to providing to all its employees a workplace that is free from
recognized safety and health hazards, and a work environment free from
discrimination, harassment or personal behavior not conducive to a productive
work climate. These principles are embodied in the Corporation's Code of
Ethics, which applies throughout the United Technologies organization
worldwide, including Northern Ireland.
Since the Corporation has already implemented the appropriate and legally
permitted fair employment policies in Northern Ireland, the Board of Directors
believes this proposal is unnecessary and therefore recommends that
Shareowners vote AGAINST this proposal.
Shareowner Proposal Concerning Offset Agreements
Immaculate Heart Missions, Inc., c/o Timothy Smith, Interfaith Center on
Corporate Responsibility, Room 550, 475 Riverside Drive, New York, NY 10115,
and CHRISTUS Health, 2600 North Loop West, Houston, Texas 77092, beneficial
owners of 23,000 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 and Supporting Statement.
"RESOLVED: Shareholders request company disclosure of all current promises
made to foreign governments and foreign firms to offset the cost of weapons
purchases with U.S. dollars, exported jobs, foreign plant construction, and
technology transfers.
WHAT ARE OFFSETS?
Offsets are agreements by U.S. weapons manufacturers and the U.S. government
to direct some benefits--usually jobs or technology--back to the purchasing
country as a condition of sale. The value of offsets frequently exceeds the
weapons' cost.
Direct offsets transfer purchasing dollars and/or work and military technology
(often through licensing or joint production) to the recipient country to
produce a U.S. weapon system, its components, or sub-components.
Indirect offsets may involve investments in the purchasing country, counter-
trade agreements to market foreign goods, or transfers of commercial
technology.
22
<PAGE>
U.S. taxpayers finance offsets by (1) paying for the research and development
of weapons and (2) providing grants, loans and loan guarantees for the sale.
Offsets also lead to the loss of U.S. jobs.
ARE OFFSET AGREEMENTS PROPRIETARY?
The U.S. arms industry guards information on offsets closely, claiming
"proprietary privilege." However, purchasing countries often disclose such
information for their own political purposes: to convince their citizens that
they are gaining some tangible benefits from the millions or billions of
dollars they are spending on arms.
The proponents believe that insofar as U.S. arms manufacturers (1) engage in
foreign policy by negotiating private offset agreements with foreign
governments, and (2) export domestic jobs while claiming that foreign military
sales create jobs, they forfeit their proprietary claims to this information.
Sound public policy demands transparency and public debate on these matters.
OFFSET EXAMPLES
Last year, two U.S. companies offered lucrative production-sharing contracts
with Israeli military manufacturers, in connection with the companies' bidding
on a contract with Israel.
Between 1993 and 1996 U.S. defense companies entered into new offset agreements
valued at $15.1 billion in support of $29.1 billion worth of defense contracts.
For every dollar a U.S. company received from an arms sales associated with
offsets, it returned 52 cents worth of offset obligations to the purchasing
country (December 1998 GAO Report, "Defense Trade: U.S. Contractors Employ
Diverse Activities to Meet Offset Obligations.")
The $5.2 billion Korean Fighter Sale (12 F- 16C/D fighters and 36 kits for
Korean assembly) of 1991 included the right to manufacture an additional 72 F-
16s under license and 30 percent of the contract value--more than $1.5
billion--in undisclosed indirect offsets.
The $1.8 billion sale of F/A-18 fighters to Spain in 1982 included $1.5 billion
in offsets such as agreements to market Spanish-made steel coils, chemicals,
sunflower seed oil, sailboats, paper products, zinc and marble in the United
States.
ARMS EXPORTS DON'T CREATE JOBS
The faith-based proponents submit this resolution for Board consideration
because arms exports do not create jobs. Current weapons proliferation and the
export of jobs and technology through offsets raise profound moral and ethical,
as well as fiscal, questions that shareholders should address."
The Board of Directors' Statement in Opposition
Offset and industrial cooperation programs are commonplace in aerospace and
defense markets. A commitment to perform offset is frequently a precondition to
contracts with foreign customers. Failure by the Corporation to comply with
offset requirements would result in a loss of contracts, often to a foreign
competitor. Conversely, prudent offset practices can actually expand the
Corporation's global presence and help to sustain the Corporation's existing
U.S. employment.
Contracts that obligate the Corporation to perform offset have not created a
net loss of jobs in the U.S. In fact, the Corporation's foreign military sales
are essential to maintaining production lines and jobs that are otherwise
exclusively dependent on shrinking U.S. defense procurements.
23
<PAGE>
Exports of military equipment and related offset agreements are also controlled
by the federal government, in furtherance of the national security and foreign
policy goals of the U.S. Current law forbids exports to certain countries and
requires that decisions on licensing of exports take into account whether the
export will contribute to an arms race, support international terrorism or
increase the possibility of outbreak or escalation of conflict. As required by
law, the Corporation already reports on all new offset agreements to the
Department of Commerce, as well as on each significant transaction for which
offset credits are granted towards satisfying existing offset obligations,
including those that involve the commercial sector. The Department of Commerce
analyzes such data in an annual report. The Board of Directors believes that
public disclosure of individual offset commitments and transactions may
actually serve to increase future expectations and requirements for offset, and
could adversely impact our competitive position in marketing campaigns.
The Board of Directors therefore recommends that Shareowners vote AGAINST this
proposal.
William H. Trachsel
Senior Vice President, General
Counsel
and Secretary
Hartford, Connecticut
24
<PAGE>
[LOGO OF UNITED TECHNOLOGIES APPEARS HERE]
<PAGE>
[LOGO] United
Technologies
One Financial Plaza
Hartford, CT 06103
Proxy Solicited on Behalf of the Board of Directors of
The Corporation for Annual Meeting, April 28, 2000
P The undersigned hereby appoints Antonia Handler Chayes,
R Charles R. Lee and Harold A. Wagner, and each of them with
O power of substitution to each, proxies for the undersigned to
X act and vote at the Annual Meeting of the Shareowners of
Y United Technologies Corporation to be held April 28, 2000 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 each of the United Technologies Corporation employee
savings plans 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 any such plan(s), 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 any such plan(s), in each case as
described in the Proxy Statement.
The nominees for Directors are: (01) Antonia Handler Chayes, (02) George
David, (03) Jean-Pierre Garnier, (04) Jamie S. Gorelick, (05) Karl J.
Krapek, (06) Charles R. Lee, (07) Richard D. McCormick, (08) Frank P.
Popoff, (09) Andre Villeneuve, (10) Harold A. Wagner, and (11) Sanford I.
Weill.
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 holders 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
Friday, April 28, 2000
11:00 a.m.
The Waldorf=Astoria
301 Park Avenue
New York, New York
<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, 3, 4 and 5, and AGAINST proposals 6, 7
and 8, or If this card constitutes voting instructions to a Savings Plan
Trustee, such Trustee will vote as described in the Proxy Statement.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of The Board of Directors recommends a vote FOR proposals
directors. 2, 3, 4 and 5.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
FOR AGAINST ABSTAIN
2. Appointment of Independent [_] [_] [_]
Public Accountants
3. Amendment to Restated Certificate [_] [_] [_]
of Incorporation
4. Approval of Performance Criteria [_] [_] [_]
Under Annual Executive Incentive
FOR WITHHELD Compensation Plan
1. Election of Directors [_] [_] 5. Approval of Performance Targets [_] [_] [_]
(see reverse side) Under Long Term Incentive Plan
-------------------------------------------------------------------
Vote for all nominees except: The Board of Directors recommends a vote AGAINST proposals
6, 7 and 8.
-------------------------------------------------------------------
____________________________________________ 6. Shareowner Proposal Regarding [_] [_] [_]
Disclosure of Prior Governmental
INSTRUCTIONS: To withhold authority to vote for any Service
individual nominee(s), write the name(s) or code(s) 7. Shareowner Proposal Regarding [_] [_] [_]
as listed on the other side of this form, in the Northern Ireland
space provided above. 8. Shareowner Proposal Regarding [_] [_] [_]
Offset Agreements
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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
___________________________________
VOTER CONTROL NUMBER:
___________________________________
VOTE BY MAIL, TELEPHONE OR VIA THE INTERNET
-------------------------------------------
You may return your proxy card by mail, or you may use the telephone or Internet
to vote your shares electronically. You may access the telephone or Internet
voting systems 24 hours a day, 7 days a week by using the voter control number
indicated above just below the perforation.
<TABLE>
<CAPTION>
VOTING BY MAIL TELEPHONE VOTING INTERNET VOTING
-------------- ---------------- ---------------
<S> <C> <C>
Return your signed and If you are calling from the United States or Canada Log on to the Internet and go to the web site
dated proxy in the and using a touch-tone telephone, Http://www.eproxyvote.com/utx
envelope provided. call 1-877-PRX-VOTE (1-877-779-8683)
</TABLE>
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card. If you choose to vote your
shares electronically, there is no need for you to mail back your proxy card.
Please note that if you wish to attend the Annual Meeting you must still return
your pink or blue Reservation Card.
DIRECT REGISTRATION SYSTEM
- --------------------------
UTC participates in the Direct Registration System, which offers new investors
and participating shareowners another way to register their shares without
having a physical certificate issued. For information on this "book-entry"
registration system, call UTC's Company Information line at 1-800-881-1914.
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
any 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.
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
